How to trade commodities around the debate

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Transcript: , we’re taking a look at how the uncertainty in election years affects commodity prices. And today’s investor playbook. We’re joined by Phil Struble, Chief Market Strategist at Blue Line futures. Phil, it’s great to see you, as always, let’s sort of tackle the oil and gas complex first, because although it’s very complex, obviously, because we’ve heard some rhetoric from President Biden, but the oil and gas industry has flourished as he’s been President. So what should we be looking out for? And how could that actually affect the underlying commodities? Well,
really, I mean, trading in any of these commodities, whether it’s metals, precious metals, energies, or agricultural products, I mean, the candidates are so far apart, that it really opens up the door for a wide range of volatility. I mean, energies are one of the top focus so that we’re going to be watching under Trump, we were energy independent, we did also have a hard stance on Iran. So you know, it makes a play for lower energy prices. If Trump was to come into office where we are much more dependent on OPEC, South American oil, it’s very difficult for oil and gas exploration companies to get those permits to expand wells. And with a green energy initiative, front and center under the Biden administration, it’s just really tough with the regulations in order to boost that output. So you’re gonna see more elevated energy prices, with Biden around
being hidden between now and the election, though, Phil, you know, so I’m more near intermediate term. And just curious, you know, with Brent, we’re just under 85. Here, where do you see us headed from here, again, near intermediate term, yet
where we we’ve had an incredible run up here just recently on on the crude oil product. And it looks like we are running to some short term resistance, we could see a small setback, but not too deep of a setback whatsoever, there are still a lot of geopolitical headlines are lingering out there. It looks like you know, Israel has finished up with with their first initiative, they may might take something more on the Lebanon border. So you might see things heat up there a bit. And then all of a sudden oil be front and center, geopolitical risks will be rising. So that’s going to be something to keep an eye on. Well,
and Phil at the same time, obviously, gasoline prices are a big pain point for the current administration and President Biden’s poll numbers. And so are we going to see is there I guess what I’m asking is, is there going to be a ceiling on gasoline prices, and maybe oil prices by extension in the run up to the election? Are there any levers that we can expect them to pull
so the the thing that we’re really watching is is shifting more towards the Fed, because we think that the Fed, if they cut interest rates ahead of that election, it’s going to work as a double edged sword? Well, you’re starting to see some of these commodities, some of these inflation pressures start to rise, because naturally, speculators are going to come back and in the market, but if you do get also the interest rate cut, you’ll see like housing prices come down debt burdens and things like that. Gasoline is tough, it works off of a lot of seasonal factors, and things like that. It’s us production and other things, something else that people really got to pay attention to, if they’re watching the debate is going to be, you know, Trump’s stance on China, he was so hard on China. And because of that, we saw this trade war and agricultural prices had dipped significantly in the US, as China shifted focus to buying eggs from South America. So it’s not it’s not only, you know, just metals and energies and the precious metals, and it’s a lot of other commodities out there that can really play a role. You know, the fat is supposed to be it’s perceived as a political, but I mean, if they make that first interest rate cut, they could really boost some momentum within the economy ahead of that.
So I want to switch the metals and specifically gold and get your thoughts there. As you point out, Phil, gold futures hit that all time high, May 20. Since then, corrected, consolidated, what do you see ahead fell?
Yeah, really tough, tough month to date on the gold market down about 2%. The dollar index making two month highs right now you look at the two year and the 10 year note, they both broke out to the upside twos versus 10. The yield is start yield curve steepening again, so no real clear signs from the Fed one minute you get Mary Daly coming out. And she’s very dovish. The next day, you get Michelle Bowman and other fed speaker coming out very hawkish on the market saying that, you know, if inflation ramps up, they might have to raise rates again, I find it hard to believe. And then the other problem is that you have Europe, they’re really having some problems going on, they’re going to have to cut rates probably two more times the inverse correlation to the dollar boost the dollar index, so weighs in on precious metals and other commodities out there.
And I know that you were looking at the history of what gold has done in these past cycles. So I think we have a chart of what gold looks like from November 1 2020 through January 30 of 2021. And we see sort of a sideways to slightly lower movement here. So what You think we can potentially expect this time around and problem position?
Yeah, the problem with looking at gold. And if you’re going to compare, like the first year that Trump was in office, it took off because well, in the end, it took off because of the fact that we had COVID. We were, you know, I mean, it was things were dire, they were sending out government was sending out payments and things, the, you know, the printing press was, you know, we’re just trying to stabilize and backstop things, I really think that it’s going to be the Fed that determines that you’re going to get some maybe a little bit of geopolitical risks. I think if Trump was in office, he would take a much harder stance, you know, on certain countries like Russia, and then also on Iran, and then that could create some problems, you could get North Korea, they start to chime in and they start to shoot rockets and things like that. So, you know, some of these risks will come up. I think gold dough has kind of a floor because of the fiscal spending that we’ve had the uncontrollable debt. And I think that central banks globally are just did not only D dollar rising, but they’re also just D currency. They’re getting rid of currencies, that they don’t necessarily find his trading partners anymore, and they’re taking a natural shift to owning gold. So if we get central bank buying, again from China and gold, I think the party he’ll be on especially if the Fed cuts rates fail.
Good to have you on the show. That was a great discussion. Thanks for joining us. Thanks, Fred. And while wrapping up today’s market domination, don’t go anywhere. We’ve got you covered with all the action Taco Bell, including the latest earnings reports from micron

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