Baltic exchange dry index is an indicator of how much stuff is being shipped around the world
This index provides one answer to the question, “Does the rest of the world sneeze when the US catches a cold?”
The first two charts are of the index itself – third chart and on compare the index against commodities (gold, CRB, oil) and then the SP500 index
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Ambac was downgraded from AAA to AA by one of the three rating agencies on friday – other two agencies expected to follow
Ambac insures about $2 trillion (that’s “trillion” with a “t” not a typo) and supposedly has a capital base in the $40-50 billion (that’s “billion” with a “b” not a typo) range
Shareholders of one of the companies (Ambac or MBIA) are publicly saying that it would be better to let the company fail than to inject more capital – and that was before friday’s downgrade
Some investment entities (pension funds, college endowment funds, mutual funds) are contractually limited to ONLY holding AAA bonds – the downgrade of Ambac raises a question about the bonds that they insure – that question is, “Can a bond insured by a non-AAA company be considered AAA?”
I know what my answer to that question is. We will be finding out shortly what the market thinks.
