The Baltic Dry Index, (though not very familiar to investors), is an interesting market indicator that measures global costs of raw material shipments between countries. Since raw materials are the basis of all other goods, the Baltic dry index can expose economic trends in global demand of such materials, which can be seen as a leading indicator for economic progress. This index is reliable because it takes a long time to build new ships for transporting. Therefore, when the index goes up it typically suggests an increase in shipping costs and an increased demand for raw materials, which often times also suggests a positive economic recovery. During the 2008 recession, the Baltic Dry Index hit historic lows, and has been recovering since, like the rest of the economy.
Since the beginning of the calendar year, the Baltic Dry Index has shown signs of an upward trend. It is interesting to note that another clue for a recovering economy comes from Claymore/Delta Global Shipping – (traded as SEA) which has also experienced an upward trend, especially in the past 6 months.
As a case study, Viral Technologies analyzed trends of social media mentions of four main raw materials: coal, grain, iron ore and cement. The intent was to see if social media would specifically give any insight on the subject. All four categories showed a stable upward trend, with a peak in velocity during the last quarter of 2012.
Using unique sentiment algorithms, Viral Technologies analyzed sentiment on over 2 million social media mentions relating to the global shipment of goods and supplies from the beginning of 2012. The results indicate that more than 60% of social media posts analyzed were positive or somewhat positive.
Viral Technologies uses untraditional methodologies in the collection and analysis of social media insights to discover leading indicators for global markets and e-commerce ecosystems.
