Referring back to the previous post on FRO, note that `forward freight agreements, traded by brokers and used to bet on
future transport costs, are anticipating unprofitable charter
rates for at least two more years.`
Translated that simply means lower global demand for goods and hence services…
Take that and combine it with all the other macro indicators we've been pointing out and you get a pretty clear picture that low growth is here to stay for a while.
So then why would we be interested in a little trade in FRO to the long side? We are talking about different timeframes here. For a few weeks the broader tape here might well lift higher and hence may take FRO along with it. Beyond that is when the more bearish picture sets back in from what we see here today…so we would avoid FRO after a few weeks from now.