Gary --  A couple of more factoids:

•  The ships storing oil do not impact the BDI which is for dry bulk carriers carrying coal, iron, wheat, etc. That factor might impact tanker rates.
• There is some dry bulkers than have been chartered by China for coastal service mostly hauling coal and are therefore not hauling transoceanic cargo. However those ships are mostly very old and very inefficient as transoceanic carriers and would generally have been converted to scrap metal if it weren't for the Chinese coastal trade.
• The thing that has also contributed to the charter surge is a market realization that the projected tsunami of new ships (perhaps half or more) scheduled for delivery over the next two years aren't going to be there because a) the shipyard itself hasn't been built, b) the shipyard has never built a ship that large and c) with the credit crisis a lot of planned ships have not been able to secure financing.

In short As master said demand is booming and supply is constrained.

The Fed Giveth and the Fed can Taketh Away -- Between Oil and the Fed Mr. Market didn't have a chance.

It is a little early to tell for sure but a second 200 point drop in the Dow in a row was too much. One can't easily say there was no technical damage today as Norbert posted yesterday. A quick glance shows several intermediate uptrends from the March low broke down signaling a reversal. Perhaps more disturbing was most major averages failed to hold their 200 ema. The Technical term for that is "Not Good".

Stocks were generally discouraged -- so much so they disconnected from underlying commodity gains. Oil stocks declined while the price of oil soared apparently unconcerned Congress is siccing our lawyers on OPEC for price fixing--  at least lawyers is one area in which we have a national advantage. On the bright side maybe oil is forming a blowoff top it sure looks like it it might be given the parabolic rise but it isn't a top until oil stops going up. (The glow we all notice is UH lighting candles in thanks he closed his short oil position.)

Strangely my energy infrastructure investments went up ignoring the rest of the energy stocks which fell a lot.

MOO (Ag stocks) also fell but agricultural commodities rose. The degree of separation was unusually large 4% or so in one day. In the meantime Bush vetoed the Farm Bill and apparently has the votes to make the veto stick.

Financials and Homebuilders really got pounded by the news from the Fed that they were off lower rates life support. Homebuilders fell more than 5% today. But I must be kind and say something nice ---------------- they did finish the day very very oversold.

Overall declining volume exceeded upside volume by more than 4:1. Still the market perhaps moved from Bifurcated to Schizophrenic as new Highs exceeded new Lows today 132:81. Yes --  that Bifurcation was sufficient for yet another Omen moving the perilous period to about July 20.

Despite the fact the Fed strongly indicated it was done lowering rates, the US$ failed to rally and ended the day down hard for the second day in a row --  not necessarily what one would expect.

Finally a personal note to Mr. Market -- I know I said I welcomed a big down day to test the defensive characteristics of my current portfolio. Thank you but I did not ask for two. One was quite enough.

DI - first, thanks for the detail on the BDI. Also, this Omen thing - should it happen, just what kind of drop could we see?

garyp:

DI - first, thanks for the detail on the BDI. Also, this Omen thing - should it happen, just what kind of drop could we see?

From a post I made May 8 ----

"Today was Day 1 of a Hindenburg Omen signal -- one of the most elaborately constructed T/A signals and as its name indicates perhaps the most ominous of all signals. It is named after the Hindenburg airship disaster of 1937. Its primary distinguishing characteristic is a larger number of new highs and new lows on the same trading day which is considered abnormal and indicative of future turbulence and a possible change of direction may be imminent.

For those that don't remember the Omen last summer that proceeded the market selloff as we discussed then while not infallible the Hindenburg Omen has a good track record of predicting declines. It is not a signal to be frivolously dismissed. According to one T/A source:

"Looking back at historical data, the probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen within the next 41 days after its occurrence was 77%, the probability of a panic sellout was 41% and the probability of a major stock market crash was 24%. The occurrence of a confirmed Hindenburg Omen does not necessarily mean that the stock market will go down, although every NYSE crash since 1985 has been preceded by a Hindenburg Omen."

To be valid a Hindenburg Omen must be confirmed by a second such day within 36 days of the first omen day."

Note -- it was confirmed the next day and several times thereafter.

Hope this helps.

" (The glow we all notice is UH lighting candles in thanks he closed his short oil position.)"   I may not be bright, but I am humble.   Trainable too..  LOL

For those who might have some concern about the current decline turning into a rout, I would suggest watching the value of the USD as a gauge.  During the last 2 days the USD has dropped significantly in value, but is still within an established short term trading range.  If the dollar drops thru that trading range, we could see further rapid drops in value.  My expectation is that the PPT will once again come to the rescue, but the possibility does exist that there isn't much they can do.  We should have the answer before fridays close. 

uh 

uncleharley:

My expectation is that the PPT will once again come to the rescue, but the possibility does exist that there isn't much they can do. 

uh 

Somewhere in Washington, D.C., a solitary, lonely light burns into the night in a federal office building.  Three desperate men, grim and resolute look to wrest victory from the jaws of certain defeat...

[Bernanke]  How is our ammunition?

[Lazear]  Almost gone.             

[Paulson]  Sir, we're running out.  We don't have much left to shoot with.  Some of the boys, they got nothing at all.              

[Lazear]  What do we do for ammunition?               

[Paulson]  We ought to pull out...

[Bernanke]  No, we can't do that...                

[Paulson]  We can't hold them again, sir, you know that...               

[Bernanke]  If we don't, they go right over the hill and the flank [market] caves in...    

... to be continued...        

Look at this fascinating Morgan Stanley piece by Richard Berner:  Pushback.

He is acknowledging the resistance to Morgan's bearish calls.  Snippet:

Investors and issuers alike are pushing back on our bearish calls for economies and markets.  Small wonder: They are relieved that the economic slowdown has so far been mild both here and abroad, and they hope that a rebound in US and global growth is coming.  In the US, the hope is that tax rebates will sustain consumers until the lagged impact of an easier monetary policy bolsters credit-sensitive outlays, especially housing.  The rebound in global equity markets over the past two months − ranging from 12% in the US to more than 20% in Japan and some emerging markets − has gone beyond typical bear-market rallies.  Thus, it’s critical for us honestly and objectively to acknowledge and vet the bullish case.

He proceeds to run through the bullish arguments, which I will not quote here.  Then he lowers the boom.

In my view, however, the downside risks outweigh those positives. 

Snippets:

Financial conditions are still tightening and are only beginning to affect credit-sensitive demand. 

In housing, the prospective further declines in home prices and associated rise in foreclosures means that writedowns at financial institutions have further to go. 

In addition, cautious businesses, who are beginning to see operating rates slip and profit margins erode, are apt to cut back on capital spending. 

Finally, US state and local officials are also turning cautious, tightening their belts in several regions.

Berner's conclusion:

I think the bulls’ strongest case is that equity valuations don’t seem stretched, debt seems reasonably priced, and with cash on the sidelines, appetite for risk in debt and equities is substantial.  The bear case now is that there is a fair amount of good economic and earnings news in the price, so any downside surprises now pose risks.  I see that as a recipe for taking profits.

If growth fades further, and operating rates continue to slide, that might offer some relief from soaring commodity price hikes.  But under those circumstances, operating leverage, pricing power, and profit margins may also crumble.  Conversely, if the bulls are right and growth does prove more sustainable, there is a risk that the inflation and interest-rate backdrop will prove significantly less benign than investors believe.  Higher inflation and/or interest rates will not be kind to multiples in either US or overseas equity markets.

I am growing increasingly concerned that the rebate stimulus is going to have less impact than I had assumed. Admittedly the rebate program was poorly designed from the start  but I continue to hear people tell me that their rebate is going into the gas tank or to buy food -- not much economic stimulus in that and it may have the effect of delaying any demand destruction in gasoline and food.

 I  had assumed Q2 and Q3 numbers would show a measurable bump up in economic activity --  just in time for the election as incumbents hoped. Now I am worried the bump will be smaller.

For those interested in economic forecasts -- ECRI which is a well regarded private economics forecaster which Audrey and I have quoted often over the years has enhanced their free subscription data and it is much more useful. For those interested you can sign up HERE. Registration is required to acess some of the data. Click on Recession Watch. There is no charge for the basic service.

Apparently we will make it to the end of the week.  Foreign markets are mostly red this morning which frequently signals the opposite for domestic markets.  Stock futures indicate a positive bias to the S&P and the Nasdaq.  TNX is up 8 Basis points since the open [PPT to the rescue] which should give some temporary support to the USD.  Precious metals have backed down a bit as oil continues to rise.

Speaking of oil, this article at Bloomberg indicates that the pro's have been covering their shorts for about a year.   http://www.bloomberg.com/apps/news?pid=20601087&sid=amO.EpcDfEls&refer=home

uh