We still don’t really understand how Obama’s latest infrastructure pronouncement is spurring today’s rally — didn’t everyone already know this before this weekend’s radio address? — but it does look like the industrial, heavy equipment companies like Caterpillar (CAT) are the big winners, as you would expect. Oil is having a strong day, as well.
But the best performers are the shipping stocks. Marquee name DryShips (DRYS) is up over 50%. Excel Maritime (EXM) is up about 40%. Others are seeing similar pops These guys have been absolutely crushed, so they’re naturally going to have a lot of room to spike. But even the fundamentals are inherently leveraged to global activity.
The Baltic Dry Index, the general measure of the shippers’ day rates is down some 95% since its peak early this summer. The actual volume is off far more modestly like that. So if you figure that we have to get all this concrete, oil and steel for the infrastructure from somewhere, and we know that slight changes in volume can produce huge changes price swings, it’s easy to see why investors might bet on some sort of spike in the industry.