We sold the Dow Jones Industrials prior to the unemployment report with the expectation the Federal Reserve will raise interest rates next week to 1% on strong employment growth. The US equity markets have had a great run from the election results to the speech to the joint session of Congress and it is not imprudent to take some profits. We sold the industrials, as they would be most affected by the raise in interest rates. We are long term bullish and will be looking to get long the US equity markets at lower prices. In the meantime, we expect depository institutions will do better, as they will now be receiving over $20 billion a year in interest from the Federal Reserve bank on over $2 trillion of excess bank reserves. If the US$ weakens, we expect Japan and/or Europe to strengthen. We are already witnessing $Yen and EuroYen rally supporting the Japanese Nikkei. Interestly enough, $Yen and the yield on the US 10yr are correlated.

The Federal Open Market Committee believes full employment is inflationary and is most comfortable with operating monetary policy by raising short term interest rates. By raising interest rates, there are some on the committee that believe it helps raise inflation. These tightenings shift the FOMC from supporting the US economy to supporting savers. We are starting to see lower oil prices reflect the expectation for slower US economic growth. Let me hedge myself and say, lower oil prices might reflect the Administration's opportunity for building infrastructure by replacing the 2 - 3 millions roofs a year in the United States with Tesla shingles. This would employ 100’s of thousands of workers and make American self reliant on energy while leaving a far less carbon footprint.

The FOMC is slowing the US economy down by ignoring the Natural Equilibrium of Interest Rates is 0%, when excess bank reserves are greater than 0. Instead of letting the over $2 trillion in excess bank reserves be invested in the US economy the FOMC is choosing to pay interest on these reserves to raise short term interest rates. The FOMC believes full employment is inflationary and seems to be ignoring the lower participation rate and the downward pressure on wages in a global economy. My concern is Janet Yellen will resign next February claiming victory on full employment and 2% inflation, and as such, not be exploring the solutions to solve the excess bank reserves, the Fed’s balance sheet and the looming entitlement crisis coming in the next 5 - 10 years. I am working on a paper on "Dynamic Taxation" as a solution to healthcare and entitlements in general.

Thursday night, March 9th we sold the mini-Dow futures at an equivalent index price of 20,930. Currently, this DJI short is our only position.

In 2012 modeled performance (7 ½ 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 +52.12% with a Graduated 10% Hurdle Rate
In 2017, Fund performance net of all fees is 0% 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.