Economic Scenario 3 is playing out before us, and by looking at CFTC positioning, consensus is really going to be caught off sides on this one based on our findings.  Consensus is now long of small caps and short of U.S. treasuries – no no no says our model when staring a “Stagflationary” Environment square in the face.  Stagflation = slowing growth, accelerating inflation.  The model is now tracking Q4 2019 GDP at a paltry 0.36%.

Conditions are not what they seem to be….

My 2.5 yr old daughter has been on a Wizard of Oz binge lately, and I caught myself laughing out loud last night at the part where the Wizard is exposed for being a fraud, pulling levers and blowing smoke feeding the apparition that hovers over Dorothy, the Scarecrow, Tin Man, and Lion.

A lot of smoke and mirrors are present….

Pay no attention to the slowing economic data behind the curtain!! – Look over here at the greatest Soybean trade deal in the history of soybean trade deals!!   

Soybean Deal with China

A slowing economic cycle

I’ve been called a cynic, a detractor, a doubter for expressing some of these views on here, but I’m sorry, I’m not sorry – We called the peak of the cycle in Q3 2018, and THAT’S A FACT (and auditable with previous trade signal/market insight emails to back it up) as we positioned clients long of U.S. treasury’s in Aug/Sept of last year just prior to the Q4 2018 swoon.

Inflation is accelerating while growth deteriorates and I’ll be damned if I’m going to be caught off sides chasing year-end FOMO/Performance long of U.S. small caps!

But I digress…

I’m actually thankful for this opportunity.  We’ll once again get to smartly position ourselves for the next “big” macro move in markets!  Remember, we’ll likely (according to our G/I Model) be in Scenario 3 thru Q1 2020, but we’re once again tracking to Scenario 4 (Growth Slowing/Inflation Slowing) in Q2 2020.  Have a great day!

Feel free to reach out to John Caruso at or 1-800-669-5354 if you’d like to get a 2 month free trial of our proprietary trade recommendations by email. 

Also, be sure you sign up for our exclusive RJO Futures PRO simulated demo account here.

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John Caruso

Senior Market Strategist
Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.
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