Omni Macro Fund was down -0.33 percent in March with losses in short Eurodollar interest rates and gold. Incidentally the fund initiated and then exited short positions in gold last month, which is unlucky as the metal is breaking its record of maximum decline as of today. Omni Macro has barely managed to stay up with a total return of +0.08 percent in 1Q 2013.
The fund took profits in short trades of South African rand against the US dollar and Hungarian forint against the US dollar while short EUR/JPY also gained.
Managers conclude that it would be impossible for Germany to keep growing as crisis unravels and worsens in the rest of the Eurozone. The weakness in Germany was also exemplified by the recent weak PMI data. For this reason, Omni Macro has held onto its short in stocks on Deutsche Aktienindex (DAX), the German stock exchange. However the position has not started turning profits for the fund yet.
Omni Macro’s managers are seeing cyclical weakness in U.S. data where the economy is strained from high debt. Based on their thesis that the market is not showing real growth but is only riding along on liquidity-induced asset flows, the fund exited longs in the Russell 2000 index. It looks like Omni Macro is looking at a market correction in the next few month in the U.S.
Other than tactical gold shorts that Omni Macro added and exited in March, the fund also opened and then reduced short trades in U.S. fixed income assets like Eurodollar futures. However for now it looks like bond yields will keep rallying to lower numbers, so the fund decided to look into this position at some later point. The managers see a point when both stocks and bonds will give back what they gained in their long rally.
The fund also lost in short-term trades in GBP/USD, GBP/EUR and some gains in short EURO STOXX positions.