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Gartman: Ignore This Global Economic Indicator

Once considered a key gauge of global economic activity, the Baltic Dry Shipping Index has withered to its lowest levels in 25 years. But the indicator has outlived its usefulness, investor Dennis Gartman said Wednesday.

“I used to look to them as an indicator of economic activity. Now I look at them as an indicator ship owner stupidity,” publisher of the widely followed Gartman Letter said on “Fast Money.”

The index has long been used by market insiders to gauge demand for dry commodities.

But Gartman said that correlation no longer holds true.

A couple of years ago when the Baltic index approached 11,000, “every ship owner in the world build new ships,” scrapping small ships for “monstrous” ones, he said.

“It has nothing to do with the global economy now. It has everything to do with bad banking and stupid ship owners.”

Contrarian trader and Veracruz founder Steve Cortes issued a broader warning beyond Gartman’s point.

“Shipping stocks are definitely names to be avoided, even if he’s right that Baltic dry is not indicative of the global economy these stocks have traded as poorly as the Baltic index,” he said.

Names to be avoided, Cortes said, include Diana Shipping, which traded at $8.32 midday, down 29 percent year over year, and Frontline, trading at $5.02, down 80 percent year over year.

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Trader disclosure: On Feb. 1, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Weiss is long POT; Weiss is long EUO; Weiss is long AAPL (SHORT PUTS); Weiss is long BRCM; Weiss is long FCX; Weiss is long WLP; Weiss is long QCOM; Weiss is long SNDK; Weiss is long HAIN; Weiss is long UGL; Weiss is long VZ; Weiss is long KO; Weiss is long WLT; Cortes is long MO; Cortes is long SO; Cortes is long Treasuries; Cortes is short FSLR; Cortes is short Crude; Cortes is short Canadian Dollar;

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