November 2025 DDD

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• Inflation isn’t dead – policymakers are inviting it back.
• The commodity roadmap is unfolding exactly as it should.
• Be the one still standing when oil finally moves.

“These are the times that try men’s souls,” Thomas Paine wrote in 1776. “The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country.”

That’s one of the greatest lines ever written. And it’s one of the greatest metaphors for trading.

Because right now, everywhere you look, you’re surrounded by summer soldiers: Traders who love a trend until it asks something of them.

Oil drops 4% and suddenly the same people who were screaming for $150 crude six months ago tell you the inflation trade is dead.

But the structure hasn’t changed. The cycle hasn’t changed. The roadmap hasn’t changed. Only the emotional tourists have.

And that’s where Paine’s words matter: The harder the conflict, the more glorious the triumph.

This is one of those moments.

Inflation Is Setting Up for Another Leg Higher​

Let’s zoom out. Ignore the noise and look at what policymakers are actually doing, not what they say on television.

The Fed is still cutting rates. There’s a growing probability they cut again in December.

Fiscal authorities are openly talking about stimulus checks again. A 50-year mortgage is being discussed – not because it makes sense, but because it keeps home prices elevated and the economy humming.

That’s liquidity. That’s fuel.

And now we’re watching something even more important: a quiet admission that the old 2% inflation framework is dead.

Kevin Hassett says he’s “comfortable” with 3%. The Fed hints 3% is acceptable “for now.” Trump dismisses affordability outright.

Translation: They are telling you inflation doesn’t bother them anymore.

If the people in charge are normalizing 3% inflation, cutting rates, and handing out checks, they’re not fighting inflation. They’re feeding it. They’re waving it in like an air-traffic controller on a runway.

And when you combine that with a global commodity complex that’s already tightening under the surface… you get a very familiar setup.

If they’re trying to make inflation move higher… they’re going to get it.

The Yield Curve Knows What’s Coming​

Now look at the charts, specifically, the CRB Index on top and the 3-month vs 10-year yield curve on the bottom:

Every time the curve bottomed and started steepening (green arrows), commodities followed:

• 2001: Curve steepens → huge commodity bull market.
• 2008: Curve steepens → post-crisis reflation.
• 2020: Curve steepens → commodity boom.

And here we are again.

We’ve flipped from inversion to bull steepening – short-term yields falling faster than long-term yields.

That only happens when central banks hit the gas on cuts and liquidity starts flooding the system.

A steepening curve doesn’t kill inflation. It’s what gives inflation its oxygen.

This is inflationary by design.

The Fed Can Move the Short End but Not the Long End​

People forget the most basic thing about the bond market: The Fed controls short-term rates, but the world controls long-term rates.

When the short end collapses thanks to cuts – while the long end stays elevated because investors expect inflation and growth – you get a bull steepener.

That steepener supports risk assets. It fuels commodity cycles. It’s exactly what preceded every major commodity move in the last 25 years.

We’re not at a “top” for commodities. We’re in the transition phase that comes before commodities explode.

The Sequence: Gold → Copper → Oil​

Now let’s bring in the second set of charts, the gold-copper-oil sequence:

This is one of the cleanest roadmaps in the entire commodity universe, and it’s playing out again right now.

Gold starts the move.​

And Gold already ripped, hard. It broke out, miners doubled, and some names went 4x, even 5x.

Gold is the liquidity barometer. When gold launches, it’s because real yields are falling and the system is awash in liquidity.

That has already happened.

Copper leads oil.​

Copper held its trend all year despite every recession headline. Metals & Mining stocks are up about 60% year to date. That’s not random.

Copper is the industrial heartbeat: It tells you what’s happening in the real economy before Wall Street catches on.

Copper already moved.

Oil moves last.​

This is the part everyone forgets.

Oil is late. Always. It frustrates you. It chops around. It pretends to die. And then, right as people give up, it rips and makes up all the lost ground in one thrust.

Look at the long-term arrows:

Gold → Copper → Oil.

It happened in the 1980s. It happened in the 2000s. It happened in 2020. And it’s happening again.

We’ve got the first two. The third is peeking over the fence.

XLE Is Coiled and Nobody Has Patience​

The XLE chart doesn’t lie. It’s sitting right under the key levels – 97 and 101 – the same zone it stalled under in 2008, 2014, and 2022. You clear that level and it’s gone.

But this is exactly where summer soldiers lose their minds:

Oil drops 4% and they scream, “Energy’s done.” A pullback hits and suddenly “the cycle is over.”

No. Nothing changed except their nerves.

Supply is tight. Demand is steady. Policy is inflationary. Liquidity is rising. The yield curve is steepening.

Energy isn’t dead. It’s coiling.

And this is where professionals separate from tourists.

The Hardest Part of Trading: Sitting​

Here’s where the mental game meets the macro.

I’m exhausted saying it: Oil is going to work. I’ve been early. I’ve been wrong on timing. I’ve heard every argument for why this time is different.

Doesn’t matter.

I’m not paid to cry about yesterday’s trade. I’m paid to take the next damn signal.

You think Steph Curry sits on the bench replaying the shot he bricked?

Hell no. He’s locked on the next release. That’s how you survive volatility, not by obsessing over the last swing, but by staying focused on the next one.

As Jesse Livermore said, “It was never my thinking that made the big money for me. It was always my sitting.”

We’ve been sitting through this rotation for months.

Gold moved. Copper moved. Refiners moved. Metals & Mining exploded.

Oil is the last shoe.

The Lesson: Don’t Be the Summer Soldier​

This moment demands endurance. Not emotion. Not panic. Not doom-scrolling weakness.

Zoom out. Follow the liquidity. Respect the sequence. Let the structure lead you, not Twitter.

Thomas Paine wrote about a different kind of battle, but he captured the essence of this one: “The harder the conflict, the more glorious the triumph.”

Inflation is being invited back in. The yield curve is confirming it.
The commodity roadmap is lighting up.

Oil is late. But it’s coming.

So stay focused. Stay disciplined.

And whatever you do…

Don’t be the summer soldier.

Be the one who’s still standing when the next leg begins.

Save the bees,

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• It’s The Economist vs Papa Dow.
• We do more of what’s working, less of what’s not working.
• We’re buying stocks in sectors that are going higher.

A funny thing happened this week: The Dow Jones Industrial Average closed at its highest level in nearly 130 years.

And it’s not just the U.S. putting up records. Europe and Japan are hitting new all-time highs. Latin America and Southeast Asia are clocking fresh cycle highs. It’s been a global bull market, plain and simple.

But you wouldn’t know it from listening to investors. Or journalists.

So what’s going on here? Is this what a bubble looks like?

Or is all this skepticism – in the face of rising prices – exactly the fuel that keeps a bull market running straight into next year?

The Economist Strikes Again!​

We like to follow magazine covers around here because journalists are exceptionally good at capturing whatever people are obsessing over – the fears, the hopes, the panic, the euphoria. Nobody spots the crowd’s mood swings better.

And few do it more reliably than The Economist.

Remember back in April when everyone thought the stock market was about to fall apart? The Economist called it the “Age of Chaos.” As it turned out, the following six months were some of the calmest, least chaotic, and most profitable stretches in market history.

Well… they’re back.

Literally the day after the Dow Jones Industrial Average closed at its highest level ever, The Economist dropped this masterpiece:

I genuinely thought it was fake at first. They turned the guy’s skis into giant red down-arrows… while they’re still strapped to his feet. And he’s upside down with his head buried in the snow.

Oh, and don’t miss the map of the earth on his butt. Truly inspired.

Here’s the thing: When The Economist gets this pessimistic, it usually pays to take the other side. I’ve been tracking these covers for decades. I probably have one of the best collections of contrarian magazine covers on the planet.

If someone has a better one, I’d love to compare notes.

What’s unusual this time is when this cover showed up. You normally see these doomsday specials after major corrections – not the day after the U.S., Europe, and Japan all hit fresh all-time highs.

But remember: We have been in a correction, even if just a stealth one. It all comes down to time horizons.

Take the NYSE Composite, for example. The percentage of stocks in uptrends (above their 200-day moving average) actually peaked back on September 11. That was more than two months ago.

Since then, we’ve seen some churn under the surface. Not weakness. Just rotation.

About 60% of NYSE stocks remain in uptrends, which is perfectly consistent with a healthy bull market. But leadership has been shifting, and people with too much concentrated exposure to the former leaders don’t like that.

And here’s where people always get confused: Sector rotation is not breadth deterioration. New groups stepping up while former leaders catch their breath is exactly what bull markets do.

Just look at Energy and Healthcare. They’re breaking out every day while other areas consolidate. That’s not weakness. That’s a baton handoff.

Half the Individuals Are Bearish​

Every week, the American Association of Individual Investors (AAII) asks its members whether they’re bullish, bearish, or neutral on the stock market over the next six months.

This spring, they logged the longest bearish streak in the survey’s history – right before one of the strongest stock market rallies of all time.

And here we are again.

Despite this global bull market ripping to new highs, half of individual investors say they’re bearish on stocks over the next six months.

You can’t make this stuff up:

This doesn’t scream “euphoria.” It screams the absenceof it. In true bubbles, everyone believes prices are going higher… right up until there’s no one left to buy.

But when half of individual investors are outright bearish – and The Economist is warning you that markets are about to topple the global economy – it sure looks like there are still plenty of buyers waiting in the wings.

So what’s the plan?

We stick to our plan.

How should we be spending our time? Hunting for stocks to sell… or hunting for stocks to buy?

Money has been rotating for months – nothing new there. And we’ve been buying the areas that money has been rotating into.

We did it last week. We did it again this week. We’ll keep doing it.

At TrendLabs, the process is simple: Do more of what’s working. Do less – or none – of what isn’t.

We don’t own any of these quantum or AI names everyone is crying about on Twitter. So we couldn’t care less.

We’ve been buying Healthcare and Energy – the groups no one wanted – and they’re working.

Because while everyone else is busy panicking, debating, and doom-scrolling, we’re over here doing the only thing that actually makes money in a bull market: buying strength.

‍Policy Near Neutral: Markets have priced out a sustained easing cycle after the Fed’s hawkish cut, leaving policy near neutral. Firm break evens and elevated real yields suggest sticky inflation and a structurally higher neutral rate.

Liquidity Tightening at the Margin: Conditions remain loose, but liquidity and stress indicators show emerging tightening. The QT suspension stabilises reserves, yet high term premia and weak long-end demand limit duration upside.

Credit Market Reaction to AI-Driven Cap Ex: U.S. corporates continue scaling AI-related capex, often via bond issuance. Most AI-linked issuers show muted CDS moves, though leverage-heavy names still face spread-widening risk. Credit Steady, Income-Driven: Credit returns rely more on carry than valuation. Higher-grade bonds act as duration proxies, while lower-rated credit gains from stronger income. High-yield and loans reflect rotation toward neutral-rate backdrop.

Insights

Across structural, curve, and policy models, the nominal neutral rate now sits above its historical median, reflecting economic resilience and elevated inflation expectations.

The October 2025 25bps cut likely placed policy near or slightly above neutral—tight enough to contain inflation but close to levels that could curb growth.

This gives the Fed room for one more cut but argues against a sustained easing cycle, as excess accommodation could reignite inflation still above the 2%target.

Insights

Breakeven and real yields remain firm, signaling a persistent disinflation plateau and adjustment to a higher structural regime.

The 5-year breakeven stays slightly above the Fed’s target, reflecting sticky prices tied to resilient services inflation and a still-tight labour market supporting wage growth.

Similarly, elevated 10-year TIPS yields and steady 5y5y break evens show real rates above pre-pandemic norms and anchored—but not easing—long-term expectations.

Together, these trends support a cautious policy stance until clearer disinflation evidence emerges.

Insights

Most financial-condition indicators remain broadly accommodative—supported by firm credit sentiment and elevated risk tolerance—making a sustained rate-cut cycle unlikely.

Still, a tightening trend has emerged, particularly across liquidity measures, signalling early signs of policy transmission.

With the policy rate sitting slightly above most neutral estimates, this shift is becoming increasingly relevant for the labour market, where alternative indicators already point to some softening—see Macrobond charts related to alternative labour market data.

If liquidity tightens further, maintaining policy above neutral could amplify labour-demand pressures.

Insights

‍Following the October 2025 “hawkish cut”, in which the Fed Chair stressed that a December move “is not a foregone conclusion”, markets have largely priced out expectations of a sustained easing cycle.

While investors still assign some probability to a December reduction, the hawkish delivery and subsequent Fed communication have introduced meaningful uncertainty. A December cut is now virtually a coin-toss, with some pricing pointing to a possible shift into January 2026 instead—allowing the Fed to evaluate the impact of the prior consecutive cuts. After a December-or-January adjustment, markets foresee policy remaining on hold until at least mid-2026.

Again, this shift reinforces the view that policy is nearing neutral.

Insights

With the October 2025 decision, the Fed suspended quantitative tightening (QT),holding the balance sheet steady rather than resuming easing. This implies renewed Treasury and MBS demand, even as overall financial conditions stay loose.

The pause reflects lessons from 2019, when QT-driven reserve scarcity stressed funding markets. With liquidity tightening at the margin, the Fed aims to preserve market functioning and avoid similar strains.

Historically, QT pauses align with lower yields and tighter risk premia, though high-yield spreads can widen as credit risk is repriced. The current setup signals cautious rebalancing, not a new easing phase.

Insights

Building on our earlier Macro Trends discussion, the hawkish tone accompanying the October 2025 cut pushed the curve higher in a near-parallel move, flattening it and reinforcing expectations that policy is nearing neutral.

Despite the QT suspension, long yields also rose—likely due to the Treasury’s bill-heavy issuance offsetting the usual support from a QT pause.

Investors’ reallocation of duration toward high-grade credit may be another factor, as many issuers now offer spreads comparable to Treasuries.

Similar dynamics appear in other major markets, where fiscal uncertainty continues to constrain sovereign-bond demand.

Insights

The QT suspension could support longer-dated Treasuries, though Treasury secondary-market operations have already eased pressure in the 10–30-yearsector.

Still, elevated real yields—driven by sticky inflation and firmer term premia—limit room for a long-end rally. Demand also remains uneven, with several 20- and30-year auctions earlier this year showing weak appetite and prompting deeper Treasury intervention.

Using Macrobond’s PCA function, the yield-curve term structure can seamlessly be derived across its key components—level, slope, and curvature.

Overall, the curve has eased slightly but remains balanced, consistent with policy stability and a neutral stance.

Insights

U.S. firms have announced major AI-related capex plans in data centers, networking ,and custom chips.

Amazon, for instance, projects over USD 100 billion in 2025, while others like Alphabet have issued multi-tranche USD and EUR bonds to fund similar projects.

Despite these commitments, credit-market reactions remain muted, with CDS spreads for most AI-linked issuers stable—reflecting confidence in earnings strength and capacity to absorb higher spending.

The picture is not uniform, however. Oracle’s USD35 billion multi-year capex plan has driven spread widening amid rising leverage, weaker free cash flow, and uncertainty over long-term returns.

Insights

Credit conditions have shifted toward a more neutral stance, with sub-investment-grade performance now driven more by rate sensitivity and funding costs than broad repricing. High-yield (HY) bonds—being fixed-rate and duration-exposed—have outperformed as policy expectations eased and cuts materialised.

Credit-risk premia have continued to tighten, hinting that markets still favor additional accommodation. This has boosted leveraged loans (LL), which have regained momentum as the HY–LL spread narrowed, signaling a move toward neutral-rate dynamics.

However, another cut could briefly restore support for HY, though its durability would hinge on further liquidity improvement.

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jog on
duc