The Bank of Japan has been successful in talking down the Yen which has supported their equity market. However, the Fed has not embraced a stronger US dollar policy to become the economic engine of the global marketplace - as evidenced by the strength of the Euro$. Consequently, any support from a weaker Yen may not continue and asset prices may resume their sell-off. Our thesis is lack of demand - deflation - is driving asset prices and interest rates lower.
Given the Fed’s dual mandate of full employment and 2% inflation, the Fed has used a weaker US dollar to stimulate employment and to prop up commodity prices to support inflation. The academic side of the Fed believes inflation is right around the corner and wants to tighten further. What the academics have failed to realize is ever since the 80’s, excess demand has been met with global supply. The practitioners at the Fed recognize excess global supply is the challenge and the central banks need to find the tools to stimulate demand.
We believe the Fed should embrace a near-zero monetary policy while unwinding the long end of their balance sheet to steepen the yield curve. In short, the Fed needs to keep short term rates near 0% to stimulate demand and strengthen the US dollar by unwinding the $4 trillion it just printed with quantitative easing.
On Tuesday, May 10th, we sold the S&P at equivalent index price of 2078. Currently, we are short both the Japanese Nikkei 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 +72.68% with an 8% Hurdle rate
In 2016, modeled performance net of all fees is +22.20% 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.