After Friday and Monday, the commodity markets should be about out of sellers for a while. The news cannot get worse. Well, actually it could, but it would be difficult to get a worse attitude about the price outlook.
Yesterday’s market action was all gloom and doom because the market is expecting the Federal Reserve to increase interest rates 75 to 100 basis points (¾ to 1%) each of the next three months to retard economic growth and England, the financial center of the Western Hemisphere, if not the world, has a new prime minister that is going to manage the economy like Ronald Reagan handled the US economy in the 1980’s: supply side economics, aka Freidman’s theory monetary management. UK Prime Minister Liz Truss, like Reagan, is being called a crackpot with her economic policies. The first thing she said will happen is a huge reduction in the tax rates. For a government in financial distress due a struggling economy, cutting taxes sounds crazy. Thus, gloom and doom attitude on both sides of the Atlantic pushed the US dollar sharply higher and the British Pound sharply lower and both were considered bad for the economies of the world, so everything else was sharply lower.
Italy also elected a far right leaning, conservative prime minister over the weekend. Giorgia Meloni is the leader of the far-right Brothers of Italy Political party. She needs to find billions of euros to keep her election pledges to soften energy costs while cutting taxes and block a hike in the retirement age due to kick in on January 1st. Cutting taxes is the foundation of her economic policy to manage the economy with a monetary policy instead of fiscal policy. All the Keynesian economic believers are predicting the end of the world as we know it with these two women in charge of two countries in Europe.