We sold both positions before Janet Yellen’s speech. The global markets have been challenged by the stronger US dollar however during Yellen’s speech she reiterated the support for a weaker dollar to support oil prices and inflation. She sees employment improving while ignoring the lowering employment participation rate and sees the recent slowing economy as an aberration. Consequently, she sees the Fed tightening when the US economy resumes its strength. Though global equity markets are lower, US equities are near historic highs as the outlook for a Fed tightening of short term interest rates is less likely and P/Es become more inflated.

Our thesis for aggressively selling the market here is, deflation continues to be a concern and is growing. The recent weak domestic auto sales is reflective of the change in the US economy from ownership to sharing. Though automobile activity will grow, ownership of autos will decrease as companies such as Uber will fill the demand. Airbnb is the example in housing. Therefore, excess supply rather than excess demand continues to challenge global economies and as long as the Fed does not tighten short term interest rates, the equity markets will inflate P/Es and try to ignore the slowing economy.

The question moving forward is, can US equity market strength support global equity markets or will a weak dollar begin to take its toll on the economies of exporting nations?

Monday, June 6th in the morning we sold the German Dax at an equivalent index price of 10,140 and the S&P index at an equivalent price of 2108. Currently, we are long the US 10yr note, short the German Dax and S&P and are 75% 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 +27.19% with a Graduated 10% Hurdle Rate

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Disclaimer:

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.