US commodity and financial markets have been quiet in advance of Tuesday’s election. Now that the voting is over, the market will focus, not so much on who is in the White House, but how Washington will deal with financial issues and monetary policy. Jim Bower, with Bower Trading, says that, short term, the market is looking for a reflationary economy, “If we see a continuation of the easy money policy of the past few years, it will be a boost to commodity prices.” But Bower worries that, if the US continues to spend money and then print money to cover the spending, we will head down the same path as Greece, Spain, and France, “It is the market’s job to discipline government spending, and that discipline may be down the road.”
Bower told HAT these monetary issues pose a big risk for agriculture, “Agriculture would be hit hard by tax hikes, poor exports, and a stronger dollar.” He noted the ag economy has been enjoying several years of prosperity which is at risk is these economic issues are not resolved.
The US election is not the only political outcome the market is watching. China is also electing new leaders this month. He said the new leadership in China will have an impact on China’s economic and monetary policy, and that could impact the sizeable level of Chinese farm imports.