Baltic Dry Index and Other Transport Indicators Are Unworthy

Various freight and transport indicators have some worried the stock market's current rally is built on sand. The Baltic Dry Index, a gauge of shipping costs, is tanking. The Dow Jones Transportation Average (DJTA) is lagging the Dow Jones Industrials (DJIA), allegedly failing to confirm the latter's recent uptrend. Meanwhile, measures of freight shipping—like railcar loadings—are weak. Because of their focus on moving goods from point to point, some investors see these as real-time snapshots of demand, implying their tumble (or lackluster performance) is a sign of lurking economic weakness broader stock markets haven't yet priced. But in our view, some gaping holes in this theory render these indicators less than telling.

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