It’s the Old “Squeeze Play”

By Robert Kunkel

In baseball a well-placed bunt with a runner on third creates what is called a “squeeze play”. To be successful, it must be planned and executed with the bunt laid down at the right moment and runners timing their rush to home plate perfectly. Played poorly, the “squeeze” ends up with the runner trapped between the catcher and third basemen with nowhere to run.

The dry bulk sector seems to be picking up the game of baseball. No one is hitting home runs at this point, but the first half of 2010 showed some improvement on the back of China’s continued demand. In the second half of 2010, the news was a bit more guarded. The start of 2011 does not look rosy with the Baltic Dry Index (BDI) falling to a new two-year low, Capesize rates are moving downward and the smaller size ships are drifitng away from the Far East, looking for activity in the Atlantic. At this point, it’s not fair to lump the dry sector into a single market analysis, as the BDI does. With Capesize dropping, Panamax moving sideways, Supramax falling steadily and Handys holding their own, a single BDI measurement does not address the actual complexity of the market. Dry bulk needs a new game plan.

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It’s the Old “Squeeze Play”

By Robert Kunkel

In baseball a well-placed bunt with a runner on third creates what is called a “squeeze play”. To be successful, it must be planned and executed with the bunt laid down at the right moment and runners timing their rush to home plate perfectly. Played poorly, the “squeeze” ends up with the runner trapped between the catcher and third basemen with nowhere to run.

The dry bulk sector seems to be picking up the game of baseball. No one is hitting home runs at this point, but the first half of 2010 showed some improvement on the back of China’s continued demand. In the second half of 2010, the news was a bit more guarded. The start of 2011 does not look rosy with the Baltic Dry Index (BDI) falling to a new two-year low, Capesize rates are moving downward and the smaller size ships are drifitng away from the Far East, looking for activity in the Atlantic. At this point, it’s not fair to lump the dry sector into a single market analysis, as the BDI does. With Capesize dropping, Panamax moving sideways, Supramax falling steadily and Handys holding their own, a single BDI measurement does not address the actual complexity of the market. Dry bulk needs a new game plan.

Continue Reading

Bottoming Out?

Over the past week, we have experienced the first market rally from a recession trough. Asian stock markets rallied to some of their highest since mid October as investors take confidence in China’s economic recovery. The manufacturing purchasing managers’ index in China rose from 44.8 in March to 51.1 in April, passing the 50-point mark that separates contraction and expansion for the first time in 9 months.

In a market report published last Friday, JP Morgan presented an optimistic view, suggesting that “we are indeed very close to the bottom in global economic activity, and may already be there, with the world economy set to start expanding again in coming months” but acknowledged that there are still many inherent risks since banks and households are still in balance sheet repair mode and a swine flu pandemic cannot be ruled out. Continue Reading