There has been an alarming development for the obscure, yet instructive Baltic Dry Index…[which] tracks the cost of shipping major raw materials (iron ore, coal, grain, cement, copper, sand and gravel, fertilizer and even plastic granules)…It is down 48.4% in the last month…[and] down 54.4% in the last three months. [Let me explain why and how to invest accordingly.]

So says Louis Basenese (www.wallstreetdaily.com)  in edited excerpts from his original article*.

Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) has edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) the article below for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

Basenese goes on to say:
 
Simply [put, the Index]…tracks the precursors of economic output [and,] as such, provides a measurement of the volume of global trade at the earliest possible stage.

As you can see in the chart above, the Index is down 48.4% in the last month and it’s down 54.4% in the last three months. The culprit? Why, Europe, of course. You’ll recall that European sovereign debt fears spiked (again) last October – and that’s precisely when the Baltic Dry Index also began its descent. Coincidence? I think not.

The obvious takeaway from today’s chart? Steer clear of companies that sell cyclical products exclusively in European markets and…avoid U.S. stocks with heavy European exposure. A recession is afoot in Europe, if not already underway.

* http://www.wallstreetdaily.com/2012/01/20/most-alarming-chart-all-week-2/

read more

This post is syndicated, read original article.