The stronger the dollar gets, the better it seems to be for the sharemarket. Or maybe that should be the other way around.

Regardless, our market is proving a beacon for global money, including hedge funds.

They can get much higher returns here and ride the China boom without all the complications of, well, China.

But there's something brewing that threatens both the dollar and the sharemarket: the Baltic Dry Index, which is a measure of shipping freight rates.

This index crashed three months before Wall Street did the same. It hit rock bottom in December, while it took Wall Street and our market until March.

The index tends to move slightly ahead of the sharemarket over time and is highly sensitive to changes in demand.

Since it takes a good two years to build a new one, the number of bulk cargo ships available can't change no matter how freight rates move.

It's gloriously one-sided. The supply is fixed, so the Baltic Dry Index can only move due to a change in demand.

And so earlier in the year, when China was stockpiling iron ore and coal, the index shot up. As did their prices.

In fact the Baltic Dry Index and the CRB Index, a well-regarded measure of commodity prices, always go the same way.

Many economists swear by the Baltic Dry Index but they would. Not only has it proved to be a leading indicator of commodity prices, even though freight rates are based on volumes, it provides a source of almost instantaneous information.

And it doesn't have to be seasonally adjusted, revised or otherwise doctored with.

Oh, did I mention it isn't confined to Baltic shipping, by the way? That's a misnomer because it measures global shipping costs for raw materials.

Like any statistic, it isn't perfect. In this case, because it's measured in US dollars, the greenback's troubles might be exaggerating its fluctuations.

But it's also unusually transparent. Unlike the sharemarket or futures contracts or even bond yields, nobody can play games with it.

Either more cargo is being shipped or it isn't. At the risk of speaking too soon, there's no way speculators are going to hire ships to shunt iron ore around the Mediterranean for months on end.

Besides, they couldn't afford to – remember there are only so many ships so the extra demand would push freight rates up to ridiculously high levels.

So what's the Baltic Dry Index doing now? Thought you might ask.

It's dropped about 33 per cent to about 2700 since the last high tide of 4291 on June 3.

But Wall Street has climbed 13 per cent over the same period, as has our market.

Likewise, the Baltic and CRB indexes were holding hands until March. Since then they've gone in opposite directions. The CRB has climbed by about one-quarter but the Baltic index has slumped by one-third.

Remember the CRB can be pushed by speculators – wouldn't you know, there's even a CRB futures contract – but the Baltic Dry Index can't.

Talk about a slow boat to China.

The index is saying pretty much the same thing as economists: there's a global economic recovery going on but, like turning a ship, it's going to take its time.

Which suggests the rush into the sharemarket, and Australian dollar, has gone too far overboard.