We believe, not until the central banks recognize “the impact of monetary is nonlinear” and move back to 0% will the markets stop deflating. That being said, the equity market most at risk of deflation is the Japanese Nikkei as their 10yr note goes below 0% for the first time in history. Janet Yellen during her semiannual monetary policy report in front of Congress Wednesday - Thursday has the opportunity to lessen the expectation of Fed tightening. If the Fed comes out and suggests the 25bp tightening off of 0% was more impactful than they expected the markets will view this positively. So unless the Fed is trying to liquidate their balance sheet by deflating the markets, to drive long term interest to historic lows to enable the Fed to sell at historic highs, the Fed needs to stabilize the markets by suggesting smaller 5bp increments with a suggestion of moving Fed Funds to 20bp. Until that time we are negative on global asset prices and bullish on bonds.
As we mentioned in our last email, we would sell “German bund at just below 0.30% yield, yields move in opposite direction of price” which we did on February 3rd at 0.29%. Monday, February 8th on the close we sold our German Dax long at 8,975 for a loss. We are currently short the Japanese Nikkei and German Bund and 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 +72.68% with an 8% Hurdle rate
In 2016, modeled performance net of all fees is -0.65% 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.