Troy Marshall

November 3, 2016

4 Min Read
Making sense of a nonsensical world

What if I told you that our primary election season saw both parties clamoring for change, voting for insurgent candidates whose greatest attribute was being non-establishment? And then I told you that polls show that more than 70% of people think the country is heading in the wrong direction, that well over 60% feel the last administration’s programs, principally economic and foreign policy, were failures. Plus, the landmark legislation on health care was failing by everyone’s account and now disapproved by the electorate by a greater than 20% margin.

What if I was to tell you that one presidential candidate represented the establishment and the status quo and a continuation of the same policies that the electorate sees as being a failure? Throw in the idea that the establishment candidate was not likable and considered untrustworthy, and likely to be facing crushing legal and ethical scandals upon her election?

You’d probably conclude, as would most reasonable people, that the election was positioned very favorably for the anti-establishment candidate who represents significant changes in all of the failed policy areas – economic, foreign policy and health care.

Well, reasonable people would be wrong. The “outsider” candidate somehow has garnered higher negatives than his opponent and instead of allowing the election to be a referendum on continuing these failed policies, instead allowed the election to be solely about his personality. In fact, the establishment candidate who should be losing by 30% is projected by some not merely to win, but win by a landslide.

Now imagine a market that saw all-time historical highs a couple of years ago, and is now seeing calf prices decline as much as 60% with relatively minor changes in both demand and supply, at least when compared with the reaction in prices. Again, it sounds almost farcical to believe. Electorates and markets are not supposed to respond this way. They are supposed to be more accurate reflections of voters’ and consumers’ real concerns, desires and needs.

And yet, this is the world we are living in. Most would say it is nonsensical.

Sure, the polls are tightening and voters could surprise the pundits by voting for the changes they say they support. The low may be in the marketplace and prices will return to a more accurate reflection of supply and demand fundamentals. It is possible that the election will be close and it is possible that prices will stabilize. But how many people are willing to bet against the current trends?

The Clinton campaign is masterful and has been successful up to this point in making the election a referendum on Trump’s personality rather than on the issues and the current direction of the country. Historically high margins for the packing, wholesaling and retail segments are also very positive signs that the downward trend in the cattle markets will have to subside.

We have two choices. We can believe that the rules of the political game have been rewritten or we can believe that this is an aberration with a deeply flawed candidate bringing voters to defy their beliefs on the key issues. With the market, we can believe that the perfect storm of volatility and depressed prices are the industry’s new reality or that they are a short-term blip brought on by fear and greed.

On the election side, I have to believe that a country that resoundingly believes we are heading in the wrong direction is only doubling down on those same policies because the alternative is too inexperienced. I have to believe that ultimately the market will self-correct and that market fundamentals will eventually overcome the perfect storm.

After all, if we don’t believe that, then we have to conclude that the two-party system is no longer viable, and that price discovery needs to be totally transformed to more accurately reflect market conditions.

In the case of the electorate, we may have to wait for four years to see if the minority party is no longer a legitimate counterbalance. Conversely, if in six months we still see the market being driven by factors outside the realm of normal supply and demand constraints, then we will know that the system is irrefutably broken and must be recreated. I sleep better believing this is an aberration. If I’m proven wrong, then we have some real work ahead of us.

The opinions of Troy Marshall are not necessarily those of and the Penton Agriculture Group.


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