Currently, our view is the Fed will not raise rates in March and have become more dovish as the Fed recognizes the Phillips curve no longer applies in a global economy. After Mario Draghi’s press conference the markets reacted to the European Central Bank’s change in policy as they pushed banking reserve interest rates further negative. Our view is that a move either negatively or positively by the central banks off of 0% is deflationary. We saw this move by the ECB as deflationary and hence hedged up our short in the US 10yr, interest rates move in opposite direction of price. However, when you read the fine print the ECB is also lending money at 0% interest rates to enable the banks to clean up their balance sheet. If in fact the ECB is embracing 0% interest rates, this will cause inflationary pressure to counterbalance the region’s 0.1% inflation rate. Furthermore, this near infinite amount of capital will support asset prices and cause long term interest rates to rise.
Thursday, March 10th in the morning we bought the US 10yr note at equivalent yield at 1.91% which hedges up our short from 1.575%, yields move in opposite direction to price. However, a close above 1.99% on the US 10yr would cause us to execute our synthetic option. Currently, we are in a synthetic option on the US 10yr bias to the long side and long the S&P, Japanese Nikkei and $Yen. We are 87% 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 +16.51% 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.