2024 election: What Biden, Trump could mean for commodities

Presidential policies can have a ripple effect throughout the economy and broader markets. With the 2024 presidential election coming up — and the first debate happening on Thursday, June 27 — uncertainty around several sectors arises as candidates President Joe Biden and Former President Donald Trump have very different views on how to run the country.

One of those markets that could shift drastically on policy alone is commodities, with crude oil (BZ=F, CL=F) and gas prices (RB=F) already facing pressure from geopolitical volatility.

Blue Line Futures Chief Market Strategist Phil Streible joins Market Domination to provide insights into what investors should keep in mind with the commodity market during an election year and how each candidate may impact the market:

"Energies are one of the top focuses that we're going to be watching. Under Trump, we were energy independent. We did also have a hard stance on Iran. 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."

Streible continues: "With the 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 going to see more elevated energy prices with Biden around."

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Nicholas Jacobino

Video transcript

President Biden and former president Donald Trump take the debate stage tomorrow night with the election fast approaching.

We're taking a look at how the uncertainty in election years affects commodity prices.

In today's investor playbook, we're joined by friable 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 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 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 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.

Well, 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 going to see more elevated energy prices with Biden around had between now and the election though, Phil, you know, sort of more near intermediate term.

I'm just curious, you know, with Brent, we're just under 85 here.

Where do you see us headed from here again?

Near intermediate term?

Yeah, we, we, we, we've had an incredible run up here just recently on the crude oil product and it looks like we are running 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 that are lingering out there.

It looks like, you know, Israel has finished up with, with their first initiative, they might, 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 will be front and center geopolitical 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 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 while you'll start to see some of these commodities, some of these inflation pressures start to rise because naturally speculators are going to come back into 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 in 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, and, and the, the precious metals and it's a lot of other commodities out there that could really play a role, you know, the FED is supposed to be, it's perceived as apo, but I mean, if they make that first interest rate cut, they could really boost some momentum within the economy ahead of that.

Phil.

I want to switch the medals and specifically gold and get your thoughts there as you point out, Phil, gold futures hit that all time high.

May 20th since then corrected.

Consolidated.

What, what do you see ahead, Phil?

Yeah.

Really tough.

Um, tough month a bit to date on the gold market down about 2%.

The dollar next, making a 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 steepen again.

So no real clear signs from the fed.

One minute you get uh Mary Daly coming out and she's very dobbs the next.

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 that hard to believe.

And then the other problem is that you have Europe, they're really having some problems going on.

They're gonna have to cut rates probably two more times the inverse correlation of the dollar boost.

The dollar index up weighs in on precious metals and other commodities out there.

Um 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 looked like from November 1st 2020 through January 30th of 2021.

And we see sort of a sideways to slightly lower movement here.

So what do you think we can potentially expect this, this time around and how some people 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, it took off.

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 that, 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 though has kind of a floor because of the fiscal spending that we've had the uncontrollable debt.

And I think that central banks is globally are just not only D dollar, but they're also just the currency.

They're getting rid of currencies that they don't necessarily find as 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 will be on, especially if the fed cuts rates.

Phil.

Good to have you on the show.

That was a great discussion.

Thanks for joining us.

Thanks for having me.