For asset prices to rise, we must have strong central banks that protect against rapid deleveraging, by adding liquidity when needed and removing it when economic strength is inflationary. The dual mandate for the Fed is correct, 2% inflation and full employment, all are happy and it solves the problem of paying off the national debt and providing the budget for the government the populus wants.
That being said, the Fed is tightening and the People’s Bank of China has forgotten that reducing their currency affects Chinese asset prices. The PBOC move in currencies is a recognition that domestic Chinese growth has slowed and needs the export market to make up the growth. The challenge for the markets is the rapid deleveraging of Chinese assets with a Fed that is tightening.
Originally, in betting on the central banks, we bought the German Dax figuring the European Central Bank would have the greatest ammunition to support their markets. Sunday night’s purchase of the S&P is because of our Proprietary Approach. It also recognizes, if assets prices are to rise in Europe and the US, this is the spot they need to hold. Otherwise the central banks run the risk of losing control of the markets, unable to halt the negative loop created by deleveraging. The challenge for the markets is the PBOC has lost its way and the Fed is tightening. Therefore, we need to hear dovish talk out of the ECB and the Fed to support asset prices and during this time of deleveraging, the deflationary pressures will keep long term interest rates low.
Sunday night, January 10th, near the opening we bought the mini-S&P futures at an equivalent index price of 1905. Currently we are long the German Dax and S&P and are 50% invested.
In 2012 modeled performance (7 ˝ mo.) net of all fees was +12.46% with a 10% Hurdle rate
In 2013, modeled performance net of all fees was +19.73% with a 10% Hurdle rate
In 2014, modeled performance net of all fees was +56.42% with a 10% Hurdle rate
In 2015, modeled performance net of all fees is 72.02% with an 8% Hurdle rate
In 2016, modeled performance net of all fees is 0.31% with a Graduated 10% Hurdle Rate
The Unicorn Macro Fund, LP (“Fund”) operates under the SEC rules of 506(c) of Regulation D. This rule allows general solicitation as long as all purchasers of the Fund are accredited investors and the Fund takes reasonable steps to verify that purchasers are accredited investors. The 506(c) rule benefits funds that perform better than their peers, because for the first time, Regulation D funds can post their results publicly.
The Fund trades both long and short positions in a variety of global markets and its performance is not correlated to any one market. Performance of the model of the Fund is measured by Net Asset Value (NAV) which is net of all fees, is unaudited, and may include the use of estimates. Individual results will vary based on the timing of an investment and past performance is no guarantee of future results and there is a possibility of loss.
The modeled results are based only on capital appreciation from macro style trades. The results do not include dividend reinvestment or any other form of cash flow and are taxed as ordinary income. All trades have a risk/reward objective of at least 3 to 1 and each full position risks no more than 2% of assets. There will be times when market conditions may alter these objectives. Since the inception of the model our trading of the methodology has become more precise.