The continued weakness of the US$ is becoming a challenge for both Asia and Europe. Both the Bank of Japan and European Central Bank are driving interest rates further negative to weaken their currency. Unfortunately, negative interest rates are deflationary which weakens asset prices and consequently raises the purchasing power of their currency. Not until short interest rates move back to 0% will their economies begin to recover causing the yield curve to steepen and long term interest rates to rise. We suspect the BOJ and the ECB feel their sovereign nations will not be able to finance their debt long term without artificially low interest rates and are reluctant to move their debt to the front end of the curve. Consequently, if the BOJ and ECB are going to fight deflation with deflationary monetary policy, global equities are at risk relative to US equities. Global bonds can only stay at historic highs, if their central banks maintain quantitative easing or if their economy truly is in deflation. In short, the Federal Reserve and all central banks should allow funds to gravitate to 0% creating a near infinite amount of capital and wait until their economy utilizes all excess bank reserves pushing interest rates naturally higher.
Monday, September 26th on the close we bought the German 10yr bund at an equivalent yield at -0.114%, yields moves in opposite direction price. Currently, we are long the S&P, Euro$ and short the Japanese Nikkei.
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 +34.16% 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.