Baltic Dry Shipping Index

The Baltic Dry Shipping Index is now at a 3-year low. Unfortunately, the chart only goes back five years. If the 2004 low is taken out, we won't even know how long its been. Now, part of this collapse is due to overbuilding of ships. But most of the collapse is due to a much smaller global economy.

David Rosenberg has a nice chart of the S&P 500 that shows market cap is still 78% of GDP. The post WWII average is 40%. The peak was reached at 130% in 2000, just before the dot-com bust.

And one more little thing. According to the LA Business Journal, housing prices fell by 5%. In September. There are $12 trillion in mortgages out there. But the real question is, how much leverage is still on those bad loans?

So, I remain bullish over the next week or two. But I believe that the stock market will make new lows, maybe not this year, but certainly next.