newsletter 11102016 final volume 2 issue 7-1

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SIGNALS

We economists would call the

Cubs World Series victory a

“Black Swan” event. What the

2016 Cubs should teach us is

that Black Swans are

real. Just because

something has never

happened, just be-

cause something has

not happened in a

long time, or just be-

cause the chance of

something happening

is near zero does not mean that

it can’t or won’t happen.

One hundred and eight, that’s

right, it took the Cubs 108 years

to win the World Series. For Cubs fans,

it seems longer… it may as well be a

million and eight because it had not

happened in our lifetime, and it would

not happen in our life-

time because the Cubs

are cursed. There have

been some close

calls... the Cubs have

flirted with greatness,

but the “Curse of the

Billy Goat” always held

true. After an epic sea-

son and a miracle comeback being

down 3 games to 1 in the World Series,

they did it! The Cubs won the World Se-

ries, and it only took a short 108 years.

108 BLACK SWANS

I N S I D E T H I S I S S U E :

Swans Continued 2

Precious Metals 3

Crude Oil 5

Natural Gas 7

Cattle 9

About EQS 10

Terms and Disclosures 11

E Q S T R A D E R E C O M M E N D A T I O N S

T H E S OU RC E

F O R C O MMOD ITY

T RA DING S IG NA LS

Volume 2, Issue 7 November 10, 2016

An EQS Publication on the Commodity Markets

©

Commodity Symbol Daily SettleDaily Price

Change

Current

PositionEntry Date Entry Price Stoploss

Actual Current

Position Return

Actual

MTD

Return

Actual YTD

Return

Actual Average Annual

Return Since Inception

(Oct 2015-current)

Actual Sharpe Ratio

Since Inception

(Oct 2015-current)

Back-tested Average

Annual Returns

(past 11 Years)

Back-tested

Sharpe Ratio

(past 11 years)

WTI Crude Oil CLZ16 45.27$ 0.29 Short 10/21/2016 50.43$ 2.62% 11.39% 2.93% -2.73% 8.69% 0.13 57.31% 1.47

Brent Crude Oil EBF17 46.36$ 0.32 Short 10/19/2016 51.68$ 2.95% 11.04% 3.70% 12.62% 19.27% 0.51 61.07% 1.61

Diesel HOZ16 1.4411$ 0.00 Short 10/24/2016 1.57$ 2.95% 7.50% 5.10% -24.78% -2.50% -0.15 38.88% 1.23

Gasoline RBZ16 1.3572$ (0.01) Short 10/27/2016 1.48$ 2.90% 8.80% 9.13% -6.93% -13.25% -0.25 76.13% 1.69

Natural Gas NGZ16 2.690$ 0.06 Long 6/1/2016 2.29$ 3.20% 15.32% -8.52% -7.11% 27.93% 1.07 77.68% 1.46

Gold GCZ16 1,273.50$ (1.00) Short 10/13/2016 1,253.80$ 1.04% -3.07% -0.14% -8.03% -12.01% -0.66 22.22% 1.27

Silver SIZ16 18.38$ 0.02 Short 10/3/2016 19.21$ 0.77% -4.51% 0.99% -15.35% -6.67% -0.49 110.05% 2.48

Live Cattle LCZ16 103.48$ 0.88 Short 9/9/2016 101.40$ 1.30% 3.66% 1.54% -5.40% -6.31% -0.83 16.70% 1.29

EQS Portfolio (see note below on allocation) 8.08% -0.34% -4.89% 12.75% 0.88 47.12% 2.80

Month EQS Portfolio GSCI SG CTA S&P Year EQS Portfolio GSCI SG CTA S&P

Oct-15 8.69% 1.28% -1.20% 8.30% 2005 57.18% 38.79% 3.08% 2.86%

Nov-15 4.44% -7.59% 2.66% 0.05% 2006 70.84% 0.30% 5.75% 13.62%

Dec-15 7.21% -7.04% -1.35% -1.75% 2007 27.68% 40.62% 8.05% 3.53%

Jan-16 -2.10% -3.54% 4.18% -5.07% 2008 58.86% -43.28% 13.07% -38.49%

Feb-16 1.16% 1.05% 2.97% -0.41% 2009 54.67% 51.95% -4.30% 23.45%

Mar-16 -2.46% 6.01% -3.00% 6.60% 2010 42.61% 20.76% 9.26% 12.78%

Apr-16 -3.06% 11.68% -2.22% 0.27% 2011 53.99% 2.05% -4.45% 0.00%

May-16 1.61% 2.69% -2.04% 1.53% 2012 60.76% 0.19% -2.87% 13.41%

Jun-16 2.90% 1.09% 4.52% 0.09% 2013 32.08% -2.34% 0.73% 29.60%

Jul-16 1.24% -9.35% 1.24% 3.56% 2014 27.21% -33.77% 15.66% 11.39%

Aug-16 -4.80% 2.59% -3.12% -0.12% 2015 32.39% -25.51% 0.03% -0.73%

Sep-16 0.01% 4.60% -1.20% -0.12% 2016 NA NA NA NA

Oct-16 -0.91% -0.65% -2.57% -1.94% Average Return 47.12% 4.52% 4.00% 6.49%

Annual Return 12.75% 0.68% -1.47% 9.91% Sharpe Ratio 2.80 0.13 0.55 0.34

Sharpe Ratio 0.88 0.18 0.15 0.91 Max Draw Down -11.98% -66.15% -12.58% -56.78%

Max Draw Down -12.74% -27.97% -8.83% -13.31% Correlation 1.00 (0.05) 0.09 (0.09)

Correlation 1.00 (0.49) 0.20 0.27

BENCHMARKS VS EQS ACTUAL BENCHMARKS VS EQS BACKTESTNo leverage used on individual commodities. Leverage used in portfolio in on average 1.0. Daily stop loss recommendations are applied to postions. Estimates are in Italics. Actual results of trade signal recommendations

published by EQS Trading are shown in brown font. Back-tested performance is shown in Red Font. Portfolio returns are net management and performance fees.

Portfolio allocations for actual results are:• 55% Oil/products, 45% Natural Gas (Oct-Dec 2015).• 45% Oil/products, 35% Natural Gas, 20% Precious Metals (Jan-July

2016).

• 40% Oil/products, 30% Natural Gas, 20% Precious Metals, 10% Livestock (Aug 2016-current).

Portfolio allocation for back-test results are: 40% Oil/products, 30% Natural Gas, 20% Precious Metals, 10% Livestock.

Benchmarks include the GSCI (Goldman Sachs Commodity Index), SG CTA (Society Generale CTA Index which tracks performance of top Commodity Trading Advisors), and the S&P 500.



The American economy has not had a depression since one began in 1929 and

ended in 1939. Like the Cubs making the playoffs; the economy has flirted with

the big one — a few reces-

sions since 1939, but simi-

lar to the Cubs, the Curse of

the Billy Goat lingers and the

FED has kept a depression

at bay.

The Great Recession of

2007-2009 should have

been a wake-up call. Eco-

nomic cycles are real, and

you can’t grow forever. His-

tory will show if government

intervention from the FED is the right thing to do, or if the FED is really the Curse

of the Billy Goat, and when those Black Swans come swimming in, nothing can

protect us from a total collapse.

It would seem like “good times” are here again. The DOW, NASDAQ, and S&P are

at or near all-time highs, and interest rates are still historically low (even if the

FED rises in December). Building is booming again, and the labor market is

strong. What could possibly go wrong? Ask the Cleveland Indians; they were up 3

-1, the World Series was theirs to win, and after all, it has been 68

years since Cleveland won it all. The economy is in a dogfight of a

baseball game, and we are nearing the 9th inning. Can the FED cre-

ate a rain delay and take us to extra innings?

The Cubs won the World Series and it only took 108 times, but it

did happen. We live in a small and connected world. Very small

problems can turn massive in a blink of the eye. Black Swans are

real, and even though they don’t swim by every day, we should be

prepared.

Just like cheering for a losing baseball team for 108 years, going

through a recession is not fun. The reality is that you cannot win

every year, and losses get you much closer to winning. The reces-

sion is one of those necessary evils; it is the forest fire that is needed to clear

out the underbrush to keep the next fire from totally destroying the land. The

economy is on a nice long winning streak, but a loss is around the corner. Can

the FED keep that loss at bay, or will the next loss be the Black Swan that the

Cubs have shown is very much alive and well? At least the Billy Goat is dead,

may he rest in peace.

108 BL AC K SWA NS (CO NT I NU E D )

The American economy has

not had a depression since one

began in 1929.



The rise in gold prices has been impressive during 2016, starting the year at

$1063/ounce and rising as high as $1375/ounce. Gold prices seem poised

to close the year higher, reversing the yearly declines during each of the past

four years. The postponement of interest rate hikes by the Fed has been a

key contributor to 2016’s gold performance. The Fed hiked rates in Decem-

ber of 2015, the first time since 2006, and stated that four more interest

rates hikes were in the cards for 2016. Many analysts were on board with

the Fed’s thinking, and Goldman Sachs announced that its highest convic-

tion trade was to “short” gold. Gold tends to have an inverse relationship

with interest

rates as high-

er rates make

gold less at-

tractive

against yield-

bearing as-

sets like

treasuries.

However, we

are yet to see

the Fed hike

interest rates

this year. Last Wednesday, the Federal Reserve left interest rates un-

changed, but indicated that it would likely move in December. Some analysts

are skeptical that Fed will raise rates as the US economy is still too fragile

with anemic GDP growth, which is on average less than 2% during the first

three-quarters this year. Rising rates might tip the global economy into reces-

sion, but at the same time, extended periods of low rates have encouraged

the accumulation of massive amounts of debt in governments and in the pri-

vate sector. The IMF warns that global debt has ballooned to an all-time high

of $152 trillion and represents 225 percent of the gross domestic product,

and signifies the extent to which increases in borrowing have outpaced eco-

nomic growth dur-

ing the period.

Hence, it is easy

to see why the

Fed is cautious to

raise rates con-

sidering the huge

amounts of debt,

but at the same

time, the econo-

my needs rates to

rise to hinder the

urge to borrow.

P R E C I O U S M E T A L S , I N T E R E S T R AT E S , & G L O BA L D E B T

The IMF warns,

global debt has

ballooned to an

all-time high of

$152 trillion and

represents 225

percent of gross

domestic product.

Bearish

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1/4/16 2/4/16 3/4/16 4/4/16 5/4/16 6/4/16 7/4/16 8/4/16 9/4/16 10/4/16 11/4/16

Expected Inflation: 10-year T-note Breakeven Rate



It’s important to emphasize that the Fed does not control interest rates. The Fed can influence rates

through its actions, but in the long run, the market ultimately determines the direction of interest rates.

Although it is possible that the Fed may not raise rates this year and the next, rates may move higher

as determined by the laws of supply and demand. Consequently, the lack of clarity regarding price di-

rection has caused the range bound action in gold since the middle of the year.

The potential for rising interest rates may not be all bad news for gold. A modest rise in nominal rates

shouldn’t be too hard on gold as long as there is enough inflation to ensure that “real” interest rates

remain low. The real interest rate allows for the effects of inflation and the 10-year T-note breakeven

rate, which represents a measure of expected inflation, posted a 1-year high recently (see chart on pre-

vious page). If inflation continues to rise relative to interest rates, it may be time to add length to pre-

cious metals.

Technically, EQS is keeping an eye on a key resistance line that has been in place since 2011. This line

has been tested many times this year, and most recently, Tuesday evening on the news of a Trump vic-

tory, where gold rallied as much as 5% – the market does not like surprises as expectations were for a

Clinton victory. So, when the news began to surface that Trump took the lead, the equity market

tanked, and gold was boosted as a safe haven trade. However, by the end of the day, equities bounced

back and gold sold off sharply after testing the resistance line. In conclusion, until inflation shows

signs of a sustained rise and until gold prices breach the resistance line, EQS recommends staying

short.

PR E C I O U S M E TA L S (C O N T I N U E D )

Gold Price Weekly Chart



The oil market appeared to be breaking down during late September until

OPEC surprised the market by announcing a cut in production at the

meeting in Algiers on September 28. Just before the announcement, pric-

es were trading near $44/bbl, and a 3 handle seemed imminent. Howev-

er, the announcement hit the airwaves of an agreement to cut production

and prices staged a furious reversal and broke through key resistance

levels. The Algiers announcement came as a surprise because OPEC

downplayed the meeting before the announcement, stating that “the

meeting would be informal for consultations and not for decision mak-

ing.” The announcement to cut production allowed market sentiment to

turn around and prices eventually marched upward toward $52/bbl dur-

ing the next several weeks.

Of course, the deal in Algiers came with a catch! OPEC announced that

the agreement was preliminary, and the final details would be worked out

during its meeting in Vienna on November 30th. The Deputy Crown

Prince, Mohammed Bin Salman has made clear his ambition to reduce

Saudi’s fiscal deficit in 2017, and indeed, higher oil prices are a goal of

his. However, this goal is harder than it seems as the Saudis continue to

lose market share to US Shale oil. As seen from the following chart, the

shift in market share appears to have an inflection point in 2010 and US

Shale has continued to gain market share since. Further complicating the

situation is the re-entry of Iranian oil production following the removal of

sanctions. Analysts suggest oil prices in the $40-$60/bbl range suites

Saudi Arabia’s fiscal goals and this makes sense as OPEC tends to inter-

vene when prices approach or drop below $40/bbl.

To determine Saudi Arabia’s next move as well as the outcome of the Vi-

enna meeting, let us consider game theory. Achieving higher oil prices

and gaining market share are the primary objectives of the Saudis head-

ing into the Vienna meeting. With the oil market oversupplied, a coordi-

nated cut

among OPEC

members

would take a

step towards

addressing

the supply

problem, and

perhaps sta-

bilize oil pric-

es for the

time being.

Oil, OPEC, and Game Theory

Commitment of Traders report

shows that after the Algiers meeting, speculator net

length continued to increase and hit an

all-time record.

Bearish

Oil Market Share — SA vs. US



However, even though an agreement to cut production would temporarily send

prices higher, any cut by OPEC would be offset by gains in production from US

Shale. Hence, OPEC cutting production would cause them to lose further market

share to the US. This is evident because US oil rigs have rebounded with higher

prices, and although oil production declined for some time, it seems to be pick-

ing up again. Given this, Saudi Arabia’s next move is not as straightforward as it

may seem.

Although many scenarios could be imagined using game theory, I narrowed it

down to two. The first scenario suggests that Saudi’s view is that the global

economy is growing enough to support a robust outlook for oil demand, which is

reasonable considering the October global composite PMI of 53.3. The Saudis

may then feel there is enough oil demand to go around so to speak, and there-

fore, it makes sense to cut production to stabilize prices. This scenario seems to

be what the market is expecting. However, humans are competitive by nature,

and because this scenario does not address the market share issue with US Shale, it could present a problem

at the upcoming meeting.

So this brings me to the second

scenario which is extreme and

involves market manipulation and a way for OPEC to gain financially

while riding the oil roller coaster

ride and inflict pain on US shale.

Consider the following: Just be-

fore the Algiers announcement

(recall oil was trading at $44/bb),

OPEC speculates and buys oil fu-

tures and then announces the deal to cut production, knowing that prices will

rise. After the announcement, OPEC continues to buy oil futures to influence the

market. Note that the Commitment of Traders report shows that after the Algiers

meeting, speculator net length continued to increase and hit an all-time record,

which OPEC could be a major part. But this scenario does not stop here. Prices

continue to gain in momentum and eventually exceed $50/bbl at a point when

OPEC starts unloading their long positions and begin shorting oil futures to

hedge their production. OPEC members continue to talk up the November 30th

meeting, announcing to the press that a deal is likely. Then November 30th

comes along, and the Vienna meeting takes place, and it falls apart with OPEC

not reaching an agreement to cut production. Oil prices, then collapse

and head to $20/bbl as 2016 comes to a close. Remember, OPEC

financially hedged their position at over $50/bbl, so they are not af-

fected by the price slide. This scenario may seem extreme and unlike-

ly, but it financially benefits OPEC from the oil price roller coaster, se-

cures their production price at over $50/bbl, and allows them to gain

market share from US shale producers. Such a situation is plausible

by game theory and would confirm that OPEC has indeed mastered

the art of market manipulation. Either way, EQS mentions these sce-

narios because they should factor in your trading playbook in the

weeks leading up to, during, and after November 30th.

Oil (Continued)

Commitment of Traders report

shows that after the Algiers meeting, speculator net

length continued to increase and hit an

all-time record.

Bearish



From January to mid-October, natural gas prices rose a remarkable 50% from

$2.24/mmbtu to $3.36/mmbtu. But since peaking October, prices have con-

tinued to slide. A chart of the 12-month strip on the following page illustrates

what a roller coaster ride the month of October has been. During the week of

October 25th, the chart illustrates that prices

broke through a major support level and col-

lapsed. Technical analysis reveals that once

support is broken, it becomes resistance and

the chart is a perfect illustration of this concept

as prices rebounded only to later fail once

touching the level again. Another application of

support becoming resistance can be seen in the prompt month weekly fu-

tures chart for natural gas. As the following chart illustrates, prices gapped

down and broke through the support during mid-December 2014, after which

triggered and downhill slide in prices for 2015. Prices began to rebound in

2016 and eventually made it back to the line where the gap was and failed

this level. This particular line is important, and natural gas must settle above

this line in order to take a run at the $4 level.

We have discussed in prior newsletters how the combination of reduced as-

sociated gas, declining production, and increased power demand for natural

gas have all played a part in natural gas’s rise in prices during 2016. When

oil prices are high compared to natural gas prices (like a couple of years ago),

producers drill in regions that produce oil primarily, and although the wells

are labeled “oil wells,” associated natural gas is produced with the oil, re-

gardless if the market needs the natural gas or not. Natural gas became so

abundant as a result of the shale boom that when drilling for oil, the associat-

ed natural gas was cheaper to flare than transport off to sell it.

N AT U R A L G A S — TH E B U L L S A R E T A K I N G A S I E S TA . . .

Since September 2015, associated

gas production has fallen by nearly 9% or about 2.5 billion

cubic feet a day, according to Bentek

data.

Bullish

Bullish Factors Dominate

Natural Gas Prompt-Month Weekly Chart

Gapped Down

Support

Resistance



Today, it’s different. Low crude prices have lead US oil producers to idle more

than a thousand rigs over the past two years, resulting in a big decline in as-

sociated gas. Associated natu-

ral gas typically represents

40% of total supply, but its

production isn’t particularly

responsive to gas prices. Since

September 2015, associated

gas production has fallen by

nearly 9% or about 2.5 billion

cubic feet a day, according to

Bentek data. That drop is

enough to fuel 13 million US

homes daily, and while natural

gas heats about half of all US homes, another third are heated by electricity

which is increasingly generated by burning natural gas.

Increased demand from the power sector has also been a factor in rising pric-

es as 24% of 2016 new additions in the power sector are dedicated to natu-

ral gas, due to stricter environmental standards. Although natural gas is gain-

ing market share from coal and oil, heating degree days have been half of

normal levels this time of year, meaning less commercial and residential de-

mand and a cold winter may be needed to shrink the ever-growing surplus in

storage. This past week, natural gas storage rose above the bearish 4 TCF

psychological mark which makes the second breach of this level two years in

a row. Although US gas production in September was about 2.4% lower than

a year earlier, and down 2-5% from its peak in February, it has not, however,

fallen enough to make a dent in storage.

EQS is bullish on natural gas and prices around

$2.55/mmbtu seem to be an attractive entry. As

illustrated in the chart above, natural gas prices are

the cheapest among the fossil fuels for power gen-

eration and oil prices are low enough to discourage

production of associated gas. The 4 TCF storage

level is behind us and winter is upon us and there-

fore the time to buy is now. EQS realizes, however,

the market needs a catalyst to turn market senti-

ment around. A jolt of cold weather with above nor-

mal heating degree days could trigger the reversal,

but until then, beware as prices could overshoot to

the downside.

NAT U R AL GAS (CO NTI NU E D )

Natural Gas 12-Month Strip



Beginning in 2015, cattle prices have and continued to drop off a cliff. The

precipitous drop was actually preceded by a sudden boom, following a com-

mon pattern for commodity prices. In the fall of 2014, cattle prices hit record

highs due to strong demand and a lack of inventory, leading many ranchers

to acquire more land and invest in producing more animals. In 2014, the to-

tal number of cattle in the United States fell to a 70-year-low, partly due to a

drought. The tight

supply caused

prices to rise to

historical levels,

and many ana-

lysts expected

those prices to

last three or four

years, but instead

they suddenly be-

gan to collapse in

2015.

Before the price

collapse, the Unit-

ed States had been in a rebuilding phase, where cattle operations were fo-

cused on producing more animals. This was expected to eventually bring

down the price as with most commodity cycles when the price shoots up and

gives everyone an incentive to rebuild. But new supply in the cattle market

does not happen overnight. When you rebuild, there’s a two-year lag before

everyone brings animals to the market and an overreaction in prices can oc-

cur in the meantime.

Ranchers got between $2.50 to $2.75 per pound as recently as a year and a

half ago, but those same animals are now fetching be-

tween $1.10 and $1.30 per pound. The crash in prices

has thousands of ranchers all over the US scrambling to

try to save their livelihoods. According to analysts, ranch-

ers in the US on an average break-even at about $1.65

per pound, and because prices are about 30 cents below

that, many ranchers are losing money.

EQS remains bearish on cattle prices as the supply and

demand balance is currently in surplus. However, with the

price so far under breakeven, we are searching for an in-

flection point. Until this occurs, the trend is your friend,

and the direction is still pointing down.

CATT LE M AR K ET —B O OM A N D BU S T

In 2014, the total number of cattle in the United States fell to a 70-year-

low, partly due to a drought.

Bearish

Live Cattle Prices: Boom and Bust



Services

Through its

subscription

service, EQS

Trading pro-

vides traders

and hedgers

easy to follow

trading signals

for major

commodity

futures mar-

kets, including

crude oil, natural gas, gold, silver and many others. Now, strategies used by

institutions and hedge funds are at your fingertips. The subscription service

includes both daily trading signals and the weekly Signals Newsletter, which

provides in-depth insight to the commodity markets.

EQS Capital Management also offers a commodity hedge fund (EQS Commodity

Fund LLC), which employs the same signals in its subscription service in a pri-

vate placement fund for accredited investors and institutions. Because EQS uses

a “long” and “short” strategy, it is designed to generate returns, regardless of

which way the market is moving. EQS Commodity Fund imbeds strict risk man-

agement principles through diversifying its portfolio (energy, metals, and agricul-

ture) and actively managing stop loss limits.

About EQS

Economic Quantitative Strategy (aka EQS) is an investment and trading strategy

that translates economic data and technical indicators into price direction for

commodities. Because of its quantitative nature, EQS has been rigorously back-

tested with 15 years of historical data to ensure the strategy works in a variety of

market conditions. Furthermore, because the global economy changes over

time, EQS employs dynamic parameters that evolve as the market changes.

About Us

Management

Richard C. Rhodes

Mr. Richard C. Rhodes is the President

and Founder of EQS Capital Management

(EQS). Richard holds a Bachelor of Sci-

ence in Mechanical Engineering from

Texas A&M University with honors and a

Masters of Business Administration from

Duke University. He brings over 23 years

of diverse experience covering all phases of the commodities value chain

from producer to end-user. Richard possesses 14 years of leadership experi-

ence and spent the last 15 years of his career developing trading, investment,

and risk management strategies in the commodity sector. Richard is a li-

censed Series 3 Commodity Trading Advisor with the Commodity Futures

Trading Commission and a member of the National Futures Association.

In 1991, Richard started his profession on a drilling rig in West Texas with

Conoco and then continued his career with Koch Industries (Ranked as the

largest privately owned company in the US) where he worked in midstream,

refining, pipeline, and distribution operations and led a strategic technology

initiative which earned a top 5 finalist for the 1999 Smithsonian Award in the

Field of Environment, Energy, and Agriculture. With Koch, Richard began as

a project engineer and later found his true passion in trading, which leveraged

his twin interests in mathematics and economics. During this transitional

period, Richard turned his deep appreciation of the physical commodities

business into a trading edge in the financial markets. After 8 years with Koch,

Richard joined Progress Energy in 2002 (now Duke Energy, the one of the

largest utilities in the nation) where he launched several grass-roots trading

programs, which ultimately grew to assets over $500 million with an average

return of 23.5%. During his successful 10-year career at Duke Energy, Rich-

ard earned The Pinnacle Award, the company’s Highest Honor. Richard then

left Duke Energy to launch EQS Capital Management in November of 2012.

Jonathan M. Lamb

Mr. Jonathan M. Lamb is the Director of Business

Development at EQS Trading. As a four year

varsity hurdler on the track team at Ball State

University, Jonathan earned a Bachelor of Sci-

ence degree in Risk Management, Insurance, and

Economics, and later obtained a Masters of Busi-

ness Administration from North Carolina State

University.

As part of the first wave of Millennials to join the

work force, Jonathan started his professional career almost 15 year ago,

joining ACES Power Marketing as an Operations Specialist, providing de-

mand side economics for Co-Op Power Providers before becoming a Real-

Time Electricity Power Trader. He continued his career trading power for

seven years with Progress Energy (now Duke Energy, one of the largest

utilities in the nation) as a Senior Real Time Trader. Jonathan then opted to

become an entrepreneur and started a consulting firm specializing in finance

and economics, owning and running seven different small businesses before

joining EQS in 2015.



EQS Trading

A Division of EQS Capital Management, LLC

8480 Honeycutt Road, Suite 200

Raleigh, NC 27615

Phone: 919.714.7453

www.EQStrading.com

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In no event will EQS, its affiliates, nor any of its officers, partners or employees be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of it, or in any connection with, your use of the Subscrip-tion or the failure of performance, error, omission, interruption, delay in operation or transmis-sion. Use of the Subscription Service shall be governed by all applicable Federal laws of the United States of America and the laws of the State of Delaware. The user hereby acknowledges and agrees that EQS may be harmed irreparably by any violation of this Agreement and that EQS shall be entitled to injunctive relief to enforce this Agreement. The information contained has been prepared solely for informational purposes and is not an offer to sell or purchase or a solici-tation of an offer to sell or purchase any interests or shares in funds managed by EQS. Any such offer will be made only pursuant to an offering memorandum and the documents relating thereto describing such securities. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. HYPOTHETICAL PERFORMANCE RE-SULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESEN-TATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMI-LAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPO-THETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RE-SULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HY-POTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN AD-VERSELY AFFECT ACTUAL TRADING RESULTS. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THERE-FORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FI-NANCIAL CONDITION. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN COMMODITY INTEREST TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. THE REGULATIONS OF THE COMMODITY FUTURES TRADING COMMISSION ("CFTC") REQUIRE THAT PROSPECTIVE CLIENTS OF A CTA RECEIVE A DISCLOSURE DOCUMENT WHEN THEY ARE SOLICITED TO ENTER INTO AN AGREEMENT WHEREBY THE CTA WILL DIRECT OR GUIDE THE CLIENT'S COMMODITY INTEREST TRADING AND THAT CERTAIN RISK FACTORS BE HIGHLIGHTED. YOU MAY REQUEST A COPY OF THE DISCLOSURE DOCUMENT BY EMAILING EQS. THE CFTC HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS TRADING PROGRAM NOR ON THE ADEQUACY OR ACCURACY OF THE DIS-CLOSURE DOCUMENT. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL OF THE RISKS AND OTHER SIG-NIFICANT ASPECTS OF THE COMMODITY MARKETS. THEREFORE, YOU SHOULD PROCEED DIRECTLY TO THE DISCLOSURE DOCUMENT AND STUDY IT CAREFULLY TO DETERMINE WHETHER SUCH TRADING IS APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. EQS CAPITAL LLC IS A CFTC REGISTERED COMMODITY TRADING ADVISOR AND COMMODITY POOL OPERATOR. PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN CONNECTION WITH POOLS WHOSE PARTICIPANTS ARE LIMITED TO QUALIFIED ELIGIBLE PERSONS, AN OFFERING MEMORANDUM FOR THIS POOL IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A FUND OR UPON THE ADEQUACY OR ACCURACY OF AN OFFERING MEMORANDUM. CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION HAS NOT RE-VIEWED OR APPROVED THIS OFFERING OR ANY OFFERING MEMORANDUM FOR THIS FUND. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EX-CHANGE COMMISSION (THE “SEC”) OR ANY STATE SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS AS A PRIVATE PLACEMENT MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OF-FENSE.

T H E S OU RC E

F O R C O MMOD ITY

T RA DING S IG NA LS

TERMS and DISCLOSURES

newsletter 11102016 final volume 2 issue 7-1

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