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Economic Activity Picking Up?

I've written before that one of the best leading indicators for world economic activity, particularly in the emerging markets is the Baltic Dry Index.

The chart above shows you the Baltic Dry Index compared to the stock price for Freeport McMoran, a primary copper producer.

The economic stimulus plan from China is starting to have real impact on the leading indicators. Basic materials are being shipped there as people are being put to work to build railroads and infrastructure.

Let's hope the Senate takes note of how a stimulus package should work and dumps the Pelosi spending bill in favor of one that will actually have an impact.

As long as the Baltic Dry Index continues to move higher ( and it reflects shipping rates for actual cargo moving across the ocean – higher demand for cargo going to Asia means the rates go up ) we should see that a bottom has been put in for basic materials used in infrastructure buildout.

This should have a positive impact on the iron and steel companies, and probably the Ag companies as well.

Mark