Founder’s Note: Senior Analyst Jason Perz knows how to work through the hardest parts of what we do.
He’s particularly good at taking big ideas and turning them into digestible morsels.
Here’s Jason with a great piece on what it means to be patient. – JC
By Jason Perz
“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,
Jason Perz
Senior Analyst, TrendLabs