Newsletter 112315 Final Volume 1 Issue 22

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SIGNALS

Wikipedia calls a Unicorn “A Legendary

beast with a large, pointed, spiraling horn

projected from its forehead.” Basically a

Unicorn is the magical pony of every school

girls’ daydream. Recently though Unicorns

have taken on a whole new fantasy, those of

investors. You cannot read a business jour-

nal, newspaper, or tune into business TV or

radio without mention of unicorn valuations,

startups, and rich 20-something tech entre-

preneurs that are on the verge of taking

their companies public.

So for investors that are not small school

aged girls, unicorns are private companies

that have a $1 billion or higher valuation

based on fundraising.

The term was coined by

Aileen Lee of Cowboy

Ventures in 2013. Ven-

ture Capital (VC) is a

very unique business

model, one of which

invests in many busi-

nesses and knows that

they will strike-out many

times, with the goal of

hitting a towering home-

run to make up for all

the misses (and then

some). Some Venture

Capitalists are great,

and some are not. It is

a bit of skill, a bit of

luck, but it at the end of

the day it is a giant game of unicorn hunting.

Silicon Valley has become breeding ground for tech-

nology company startups and has become the big

game hunting land of choice for VC hunters. Every

VC hunter wants to land the next Apple and that lead

to a big boom in the 1990s. VC lead private equity

invests in thousands of start-ups and the 1990’s

boom went from investments of 0.058% of GDP in

1994 and grew almost 1,900% to peak out at

1.089% of GDP in 2000. The dot.com bust in the

early 2000s was equally spectacular as the compa-

nies that were taken pubic peaked the Nasdaq at

5,046 in March of 2000 before losing 78% of value

and falling to 1,114 by 2002. The

dot.com bubble burst sent VC run-

ning to hide in the woods, but did

not cause tech extinction in the

magical forest that is Silicon Valley.

The bust caused private equity to

review the strategy of taking invest-

ments public as soon as possible

and since the bust VC has made

larger investments, held compa-

nies longer, and sponsored more

late stage funding which has al-

lowed today’s investments (still

mostly technology driven, and

many “social media” type invest-

ments) to surpass the $1 billion

valuation point prior to going pub-

lic. (continued on Page 2)

UNICORN HUNTING

Current EQS Short Recom-mendations have gained an average of 11%!

**You can achieve these results with discipline and by following the EQS daily trade recommendations and using the daily EQS Stop Loss guidance

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

Unicorns Continued 2

Oil and Products 3

Natural Gas 4

About EQS 5

Terms and Disclosures 6

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 O U R C E

F O R C O M M O D I T Y

T R A D I N G S I G N A L S

Volume 1, Issue 22 November 23, 2015

A Weekly Publication on the Commodity Markets

©



So what? You are not an aspiring tech entrepreneur, an investor of private companies, or a speculator in IPOs, so unicorns don’t matter to

you, right? Wrong! This is simply not true, unicorns are a big deal, and this is why should you care.

Unicorns spark the imagination of investments and markets. A healthy unicorn market is a healthy market. The late 1990s were boom

times for just about all markets, from retail, to automotive, to commodities, to manufacturing, to homebuilding, to tech.

One of Alan Greenspan’s legacies will be his analogy of the FED controlling the market by using the punch to get the party going, and then

taking away the punch bowl before the party got out of hand. Though the FED does not, and cannot control IPO and tech valuations, it

would seem like IPO and tech valuations have largely set the tone for market parties since World War II. Think about it, the birth of corpo-

rate efficiency gains after the war, the birth of the PC market, the birth of the internet, advances in science and medicine, and today’s mo-

bile technology and social media boom have all lead major market rallies, not the FED.

We live in a very dynamic economy where real goods and services, exchanging hands at real locations, fueled by real inputs and people fuel

our world. The “real world” that has been the bright spot since the Great Recession, but it is the technology and unicorns that have given

investors’ hopes and saved millions of people’s retirement funds. It has not been traditional brick and mortar businesses; it has been Face-

book, Apple, Amazon, Netflix, and Google and other technology plays that have rallied the stock market from collapse. For the most part it

has not been weak demand that has driven down oil and natural gas prices, it has been supply efficiency gains that were spurred by what?,

Technology!

Wal-Mart is the largest retailer in the world, and the 3rd largest employer in the world. Wal-Mart made $3.93 billion last quarter, which is

$43,667,000 a day! Wal-Mart makes a “unicorn” worth of profit about every 3 weeks, yet when Wal-Mart hits earnings it is business as

usual, and when they miss things get ugly for a few days and may cause their stock to drift down (which it has this year) but it does not set

the market tone and cause panic, it should, but it doesn’t. Now look at Amazon. Amazon is publically traded so it is a “former” unicorn, but

it is the FUTURE growth that is driving Amazon past the market value of Wal-Mart and captivating the imagination of investors.

Amazon has averaged $16,500,000 in earnings over 2013 and 2014, and only in the last few quarters has it even returned to profitably, or

in terms of “unicorns” at profitability of the last two years it would take Amazon 60.61 years to make the same $1 billion unicorn worth of

profits that Wal-Mart makes in 3 weeks. Amazon’s 3rd Quarter earnings announcement of $0.17 per $564 share at the time jumped the

stock $55 on the announcement. Based on an EPS of $0.17 Amazon was priced at 3,317 times earnings before the news, and on the

news they added a staggering additional 323 times earnings!

The argument is not that Amazon and other technology firms may be overvalued, the argument is that as private equity holds companies

longer, invests in companies to grow them over the $1 billion unicorn level, there is hope that the current herd of unicorns can fuel, and can

continue to fuel the imagination of investors and keep growth alive across many different markets even as other sectors lag.

A soft stock market has shelved many recent public offerings, but the recent IPO of Square has put unicorns back in the spotlight. All eyes

will be on Square, as it is not only important to VC firms, and tech entrepreneurs, but important to all markets as unicorns are the brick and

mortar future of our economy and will be setting the tone for where our markets go no matter what the FED does.

UN I CO R N S…(C O N TI NU ED )



U.S. oil prices dipped below $40 a barrel several times this past week as heavy stockpiles contin-

ued to push crude lower. Light, sweet crude for December delivery fell as low as $39.89 a barrel

on the New York Mercantile Exchange, the lowest intraday level since August, before it settled

down 21 cents, or 0.5%, at $40.54 a barrel, only to again claw back under $40 and test the Au-

gust lows again at the end of the

week.

Inventories have seen strong

growth at Cushing, Oklahoma, the

delivery point for the benchmark

U.S. futures contract, as the recent

pattern of pushing out the bulls

after the release of the weekly EIA

storage data. Inventory rose 2.1

million barrels in the week ended

Tuesday, with 1.8 million of those

barrels coming since Friday, ac-

cording to the data. The addition

comes on top of data from Wednes-

day showing nationwide crude sup-

plies increased by 300,000 barrels

last week, according to the U.S.

Energy Information Administration.

The build in the EIA report was less than analysts expected but it was counter to a draw reported

by the American Petroleum Institute, which had bulls excited prior to the EIA report. The inventory

report showed resilience in U.S. shale oil

production, which at 9.182 million barrels

a day last week was only 3,000 barrels a

day fewer than the previous week.

The data continues to put pressure on

Saudi Arabia to agree to a compromise

with other producers in the Organization of

the Petroleum Exporting Countries, as

other OPEC producers hope they can drive

prices up by getting the Kingdome to slow

its rampant production. OPEC plans to

meet Dec. 4, but most analysts’ say Saudi

Arabia will not back down from its efforts

to keep customers by pumping more and

undercutting competition.

A likely U.S. interest rate rise in December has contin-

ued to strengthen the dollar, which has also been

increasing pressure on global oil prices, which are

denominated in dollars. With stockpiles nearing his-

toric highs, a mild winter and limited heating demand

common during the continuing weather phenomenon

El Nio could push oil toward $20 a barrel, analysts at

Goldman Sachs Group Inc. said in their note on com-

modities that was sent to reporters on Thursday.

Other industry experts still see prices rising to the

$60s and $70s over the next 12 to 18 months, but for

now it looks like as we approach Thanksgiving prices

will be camped out around $40 as the turkey gets

carved and the Christmas decorations go up.

O I L C O O K S B U L L ’ S “TU R K E Y”

Oil and Refined Products

A likely U.S.

interest rate rise

in December has

continued to

strengthen the

dollar, which has

also been

increasing

pressure on

global oil prices.

Bearish



Natural gas futures tumbled this past week,

sharply retreating following the release of U.S.

Energy Information Administration storage data

that offered an atypical injection for the week that

ended Nov. 13 and delivered a fresh record high

total gas supply. The latest addition was above

both the 9-Bcf injection seen in the corresponding

week in 2014 and the 12-Bcf five-year average

addition, and left total stocks 404 Bcf higher than

last year at this time and 207 Bcf above the five-

year average of 3,793 Bcf.

The EIA released its first storage report under a

new five-region breakout that outlined a net 15

Bcf injected into natural gas inventories in the

Lower 48 during the week ended Nov. 13. As the

result of the switch to the five-region structure,

along with rounding, the EIA revised its storage

figure for the week to Nov. 6 from a build of 49

Bcf to a 54-Bcf injection, which combined with

this week's injection brought total U.S. working

gas supply to a new record high of 4.0 Tcf.

NATU RA L GA S : SW IMM I NG IN I T !

Bearish

Natural Gas

Despite the storage miss against expectations

the uncharacteristic build for the review week,

amid lackluster demand and ongoing strong

production heaped renewed pressure on the

market that has been struggling to find a bot-

tom, with recent short-covering rallies that lack

the fundamental support to be sustained. Fun-

damentals remain weak as weather forecasts

call for mild conditions in key heating markets

through early December as contracting natural

gas production remains above the prior-year

level.

US Natural gas storage saw a second refill dur-

ing the traditional “withdrawal season” as tem-

peratures remained above normal and produc-

tion is about 2 Bcf/ a day higher year-over-year.

Mild weather in the Northeast and Midwest

during the current week is expected to have

driven another small injection into natural gas

supply when the EIA releases its next report

Nov. 25, a day earlier than usual due to the

upcoming Thanksgiving Day holiday. Early pro-

jections for the forthcoming inventory report

span a range of builds from 7 Bcf to as much as

30 Bcf for the week ended Nov. 20.

The National Oceanic and Atmospheric Admini-

stration sees above-average temperatures

spanning across the Northeast, portions of the

Mid-Atlantic, Midwest, central U.S., Southeast,

Gulf and portions of the Southwest. Average

temperatures are expected in areas of the Mid-

Atlantic, Southeast, Gulf, central U.S. and

Southwest, while below-average temperatures

will dominate the Northwest and grip portions of

the west-north central U.S.

For the eight- to 14-day period,

below-average temperatures

expand to grip nearly the entire

western two thirds of the U.S.,

while a band of average tem-

peratures span from a small

portion of the central U.S. into

Louisiana and across South

Texas, separating above-

average temperatures that

dominate the eastern third of

the country. So for all you bulls

out there you need to start your

gas ovens now to cook the tur-

key in hopes that you can burn

off some of the storage glut.

EIA revised its storage

figure for the week to

Nov. 6 from a build of

49 Bcf to a 54-Bcf

injection, which

combined with this

week's injection brought

total U.S. working gas

supply to a new record

high of 4.0 Tcf.



Why You Need EQS

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What is EQS?

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About Us

Who is EQS?

Richard C. Rhodes

Mr. Richard C. Rhodes is the President and Founder of EQS Capital

Management LLC. Richard has a Bachelor of Science with honors in

Mechanical Engineering from Texas A&M University and an MBA

from Duke University. He brings almost 25 years of diverse energy

experience, covering all phases of the oil and natural gas value chain

from producer to end-user. Richard is a li-

censed Series 3 CTA (Commodity Trading

Advisor) with the Commodity Futures Trading

Commission and a member of the National

Futures Association.

Richard began his professional career on a

drilling rig in West Texas with Conoco Explo-

ration and Production. Richard continued his

oil and gas career with Koch Industries

(ranked as one of the largest privately-owned companies in the U.S.)

where he worked in midstream, refining, pipeline, and distribution

operations. During his eight years with Koch Industries, Richard be-

gan as an operations engineer and later found his true passion in

trading, which leveraged his professional interests in mathematics

and economics. Richard joined Duke Energy in 2002, where he spent

ten years working in the energy trading department and earned The

Pinnacle Award, the company’s highest honor. Richard then left Duke

Energy to launch EQS Capital Management in 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 Bachelor of Science de-

grees in Risk Management, Insurance, and

Economics, and started working on his PhD

in Economics at North Carolina State Uni-

versity before focusing on business and

trading.

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

demand 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, the

largest utility 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.



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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

T H E S O U R C E

F O R C O M M O D I T Y

T R A D I N G S I G N A L S

TERMS and DISCLOSURES

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Newsletter 112315 Final Volume 1 Issue 22