Chapter 193

Chapter 193 The butcher knife of the capital falls

The policy announced by Neon Central Bank of course does not mean that interest rates will decrease.

Baba's request, how dare the neon light cabinet ignore it.

Neon policy announced by the central bank.

It will buy more than 30 trillion yen worth of medium- and long-term domestic bonds over the next three months.

Generally speaking. A country's national debt is issued by that country's Ministry of Finance.

The banking platform is only responsible for underwriting, which is the process of selling government bonds to investors.

Before the Neon Central Bank began buying its own country's national debt on a large scale.

The central banks of very few countries in the world will support the purchase of national bonds issued by their own finance ministries.

The main thing is to do this, which is equivalent to borrowing money from the left hand to the right hand. This right hand is always the hand that can print money.

It's no different than printing money directly, it's just better in name.

In doing so, the yield on the national debt will decrease significantly.

The side effect is to make buyers of other sovereign debt suspicious of their own sovereign debt.

The most direct role is to issue a large amount of the country's domestic currency to the market. In economic jargon, this behavior is called "quantitative easing."

Subsequent generations in the United States have also repeatedly used quantitative easing excessively.

But the inventor of quantitative easing was actually Neon.

Quantitative easing can pump a lot of money into the market.

That is, under quantitative easing, the monetary policy implemented by the Neon Central Bank on its country's economy is not an adjustment but a direct strong medicine.

Neon Central Bank will make this decision once announced. USD/JPY This pair will skyrocket immediately.

Almost five minutes after the announcement.

USD/JPY rose to 107,500 from 104,300 at the intraday low on January 6.

There is a time difference of about thirteen hours between Tokyo and New York.

Neon Central Xing announced this news at 7:30 p.m. Tokyo time. When this news broke, it was around 6:30 a.m. on January 6, Eastern New York time.

News says Neon Central Bank is about to launch quantitative easing.

The CEOs of most Wall Street investment banks, their phone numbers and contact information are exploding.

Manhattan, New York.

Located in a luxury apartment complex next to Central Park. Paulson was awakened by his wife, who pointed to the ringing phone on the other side of the bed.

"Phone! Hurry up and answer the phone, I'll be too noisy!"

She is the wife of the chairman of Goldman Sachs. Paulson's wife often wakes up in the middle of the night or very early in the morning or at other times.

Even though she's used to it, when she wakes up, she still complains and gets angry.

Paulson has long been used to that. He patted his face a few times to fully wake up.

The CEO picked up the phone, and the voice of the head of the Goldman Sachs market surveillance department rang out from the other end.

"Mr. Paulson! Just now Neon Central Bank announced that it will buy a large amount of Neon government bonds today!"

This huge black swan incident immediately woke Paulson up.

Paulson picked up the cordless phone, walked quickly into the bathroom, and said loudly, "Are you sure?"

"Confirmed! Just a few minutes later, the Yen quickly lost more than a hundred points in value!"

"Oh! Madfak! Didn't they come here two years ago?"

Paulson cursed and walked toward the bathroom door. Paulson suddenly remembered...

Goldman Sachs does not appear to be investing in yen-denominated assets lately.

He was a little unsure so he asked the director of the surveillance department.

The manager replied: "Well, as a result of your request, Goldman Sachs has actually not invested in Japanese yen assets on a large scale recently.

Paulson breathed a sigh of relief.

His washing movements in the bathroom also slowed down a lot. Because Goldman Sachs does not have large-scale asset investments in yen.

Neon Central Bank's quantitative easing will not have a major impact on Goldman Sachs.

Paulson is of course in no hurry.

"Hey~" Paulson, who was holding the wireless phone, relaxed his tone.

"I will quickly go to the company. Ha ~ But right now, Richard and the others are definitely more worried than me ~ Ha ~ I hope they aren't too worried.

The manager also smiled and said on the other side of the phone:

"Yes. Lately, they've really invested a lot of money in Japanese Yen assets! Especially. Most of them are still shorting the dollar!"

Paulson heard contempt in the manager's tone.

In fact, Paulson is in a similar mood right now.

The President smiled and hung up the phone, then began to get dressed quietly. Exactly what Paulson said in his conversation with the manager.

In this large USD/JPY market.

Wall Street investment banks sell the USD/JPY currency pair in large quantities.

Their manager, there's really no way to sleep late right now.

Wall Street's bulldog, Richard Fuld, CEO of Lehman Brothers. He was drawn into the company by his subordinates' deadly serial calls, right under the beautiful secretary's bed.

Because there was no time, Richard Fuld didn't even have time to get dressed.

He only wears one suit and doesn't even wash it.

rushed to the headquarters of Lehman Brothers, located on Seventh Avenue near Times Square in Manhattan.

Halfway through, Richard Fuld understood why. This made the bulldogs on Wall Street unable to help but curse Neon Central Bank to the end.

"Madefake Neon Wardrobe Madefake!"

Richard Fuld, who was screaming at that time, was no longer as comfortable as he was two days ago. And last night before going to bed, I saw the exaggerated floating profit in Lehman Brothers' foreign exchange account with a happy look on my face.

When he went to Lehman Brothers bank, in the trading department.

Lehman Brothers foreign exchange account. Yesterday's floating profit fell from $950 million to $79 million.

"Madfake! Close position! Close position! Close position!" » Richard Fuld shouted.

A few minutes ago, he last received that floating profit figure.

They have about $150 million more.

It had been less than five minutes and they had reduced it by half. And it only took twenty minutes, he was called from the phone and rushed to the company.

In 20 minutes, the fake profit of 950 million US dollars will soon become a fake loss.

CFO Bryn Bulley, who was in charge last night and had been monitoring this transaction all night, said helplessly:

"Sir, the stampede has formed. Fifteen minutes ago I ordered the liquidation of this position. But so far we have not even closed a thousand lots."

In international transactions in foreign exchange, futures contracts, etc., whether long-term or short-term. If you want to close a position, there will be prerequisites.

This is in contrast to a buy/sell bet, which is only if you are willing to accept your order.

Because frankly, whether it's currency or futures, what you're playing is gambling.

Since this is a gamble, it is naturally a zero-sum game.

That means in betting, one person must lose money and the other person must win money. I'm about to lose money, I want to close my short/long position.

The opposition must be present at this number to accept your order.

If no one takes orders continuously, you must continue to lose money, and if you lose money until the margin is insufficient, you will immediately liquidate your position.

It's a bit like a stock market phenomenon.

This is when people search for titles.

It began to skyrocket and its holders refused to sell it. There will be prices but no transactions in the market, and the stock price will continue to increase sharply, because buy orders are much higher than sell orders, or there will be almost no sell orders.

In return, a title collapse. When everyone sells stocks and no one buys.

The stock will then decrease.

The stock will keep falling until the number of buyers and sellers is roughly equal. The difference is that you can buy stocks as long as you don't use leverage as long as you don't borrow money.

No matter how low the stock falls, it is always there in the end.

Even if the stock ends up rotting in the hands, it is still stock.

If the company doesn't go bankrupt, close its doors, or get delisted, there may finally be some hope for the stock.

But bet on forex and futures. If you end up losing, you will actually be liquidated directly. The entire capital was lost, even the money owed to the intermediary after liquidation!

If leverage is used

Lehman Brothers' current blank orders look like this.

A wave of fleeing short sellers has formed. Short sellers, who above all have an absolute advantage, want above all to run away to secure profits.

In an instant, hundreds of thousands of empty orders wanted to close their positions. There is no corresponding response on the long side.

With these empty orders, there is no way to immediately close the position and terminate the playing contract.

The current market situation, along with the quantitative easing policy of Nihong Central Bank.

A bear massacre occurred.

No long position will choose to close the position and exit it at this time. This means that most orders are short.

There is no way to close the position immediately.

Compared to other investment banking executives on Wall Street, Richard Fuld is more assertive.

After receiving this news from the financial director.

Richard Fuld immediately made his decision:

"If you cut meat, you have to leave the field! Try to minimize losses!"

Meaning of Richard Fuld. This is directly based on the current USD/JPY exchange rate, directly thanks to a score.

I would rather let the bulls on the other side directly make a little more money right now.

You should also close your positions in advance to avoid possible larger losses in the future.

"Understand." Bryn Bulley responded immediately.

Lehman Brothers' chief financial officer then reviews the latest market. USD/JPY increased to 108.560.

Brin Bully was a little desperate, because by that time Lehman Brothers had begun to record a lot of floating losses.

"Sir, what value should we choose to close the positions?!" Bryn Bully asked the CEO again.

The value of 108,560 made Richard Fuld equally desperate.

But he only despaired for a few seconds and the value fell from 108,560 to 108,590. The bulls went crazy, not even giving the short sellers a chance to surrender.

Currently, it can be said that cows have become a general trend.

It is estimated that short positions in the market without full positions will become long positions at that time.

"111! " Richard Fuld gritted his teeth and bled, he shouted: "Close all leverage positions at 111 yuan immediately!

Choose to close the position at 111,000 USD/JPY.

Lehman Brothers' investment in the USD/JPY pair this time is really strong. The loss is almost more than half.

CEOs are ready to take on such responsibilities so Bryn Bulley naturally jumped into action and prepared to cut the meat and close positions.

Richard Fuld also immediately got out of his idle state.

He ordered Bryn Bulley to re-open a long position and used very high leverage in the hope of being able to cover the loss on this short position.

Take long and short positions simultaneously and the leverage ratio is different. This is what the industry calls "hedging."

Hedge funds are what they do.

There are only decisive people like Richard Fuld, and there are a lot of them on Wall Street.

In addition, a long list does not mean it can be opened immediately upon opening.

It's okay if the number of songs is small, but if the number of songs is high, there aren't many new blank singles on the market. At this point, start spinning more, but it's not as easy as the previous stop.

Lehman Brothers closed out 10,000 short positions as USD/JPY reached 109.950.

Lehman Brothers' highly leveraged long positions were successfully opened with less than a few hundred hands.

The bear massacre was formed, how could there be so many iron bears?

At this time, the meat cutting warehouse at 111 is also a bit flat. Bryn Bulley turned around and wanted to ask the President for countermeasures, but when he saw the President sitting down in his chair, his eyes were a bit dazed.

US East Coast Time.

January 6 (Asia time zone is earlier than US time zone).

On the New York Stock Exchange, investors holding short positions in USD/JPY currency futures contracts more than halved in a day.

The second and third days are Saturdays and weekends. US futures markets are closed and there is no trading.

January 9.

On Monday, the US futures market opened and USD/JPY crossed the 118.950 mark a few hours later.

After midday, the main US stock exchanges temporarily closed.

Wall Street's financial predators are currently experiencing both sadness and joy. Building 3, World Financial Center, New York.

At the New York branch of PNC Financial Services Group, located in the same building as Merrill Lynch.

Broken!

"Honey, open a bottle of champagne!" said Sally Winston, CEO of PNC Financial Services Group.

He happily leaned back in his office chair, crossed his legs, held a cigar in one hand, and the other was swimming comfortably behind the secretary when he suddenly slapped him hard.

"It's so cold! Lincoln will come later, I have to celebrate with him!"

"What do you want for lunch?" My dear boss, let me help you understand!

The secretary smiled stupidly, intentionally pouting to make her boss feel more comfortable.

"Besides money, I only have desires for you. But Lincoln is a Puritan, he doesn't like toying with you and me."

Sally Winston laughed.

Last week, he learned about Abe Smith and Smith Capital with Lincoln, the company's investment fund manager, when he suddenly came out of idleness.

He and Lincoln, the head of investment at BlackRock Fund, talked privately for an afternoon. Finally, the two giants of PNC Financial Services Group unanimously decided to bet big on many contracts.

Initially, due to falling US dollar interest rates, USD/JPY switched from buying to selling.

The fall made the eyelids of the two giants of PNC Financial Services Group tremble.

Abel's losses then amounted to about two billion US dollars.

He didn't know this at PNC Financial Services Group because he was so bullish about his investing style. PNC Financial Services Group also lost nearly 500 million USD.

Just when Sally Winston and Lincoln are a little wary of life.

Neon Central Bank announces quantitative easing policy.

The situation suddenly reversed.

After that, major countries around the world continuously announced interest rate cuts, along with the USD. The window period for the dollar to fall is quickly disappearing.

Combined with Neon Central Bank's quantitative easing policy.

The US dollar has become stronger again, and at the same time, the central bank is also using quantitative easing to devalue the yen.

This causes PNC Financial Services Group's USD/JPY investment over the next few days, floating profits to continue to rise like wild horses.

Currently, PNC Financial Services Group's floating profit is at $1.5 billion. Sally Winston's bet with Lincoln was a big win.

"What should I do this afternoon?"

Sally Winston thought while tasting the delicious wine and her secretary's beautiful lips.

Stanley O'Neill, a black Merrill Lynch executive, worked in the same office building as Sally Winston.

But not as easy as Sally Winston, nor as lucky as Sally Winston.

Stanley O'Neill was currently sitting in a chair with bloodshot eyes and his head in his hands. The most powerful black man on Wall Street is currently immersed in endless regret.

Because recently, Merrill Lynch had up to 150,000 empty orders, while USD/JPY reached 118,900.

Complete liquidation of all positions.

More than $3.5 billion of Merrill Lynch's deposits and funds were wiped out.

Liquidation is good. The loss amounted to 3.5 billion USD, still not enough for Merrill Lynch.

But

Since this is a VS bet, liquidation sometimes does not necessarily solve the problem.

Because liquidation is just losing the deposit on the account.

If there is no way to close the position, the account position contract will continue to lose money.

Just like now, if USD/JPY continues to rise. Merrill Lynch also lost $3.5 billion in addition to the liquidation.

Contract positions that have not been closed will continue to lose money.

There is no deposit with the intermediary and this becomes a debt.

What should I do if I owe money? First, I need to get my money back.

If compensation is insufficient, the intermediary has the right to recover the debt. If the debt is too long, the intermediary can also sue to recover the debt.

That means, after losing $3.5 billion, Merrill Lynch must continue to make money later.

Contract positions held by Merrill Lynch were added until all positions were successfully closed and the issue was reviewed.

Fortunately, after USD/JPY reached a value of 119, it finally stopped its crazy increase.

The butcher knife wielded by the bulls is ultimately not sharp amid a possible earnings pullback and anti-short situation. Now, Merrill Lynch can essentially close out the position as long as it has an additional $500 million to $600 million in margin.

but do

That was never a good thing for Stanley O'Neill.

Stanley O'Neill was now desperate and wondering if he should continue asking for a deposit.

Continue making margin calls if USD/JPY is likely to fall again.

Merrill Lynch Securities can then reduce losses and even turn them into profits. It is also possible to increase margin, continue to liquidate positions and continue to owe money.

It's a difficult problem.

First, cut the meat and leave it directly. Merrill Lynch will lose more than $4 billion this time.

Stanley O'Neal for the previous three years.

In total, Merrill Lynch, not to mention more than two billion dollars in losses, earned on the dollar/yen. Merrill Lynch had to pay more than a billion USD for this.

If you select this option, it will essentially declare that Stanley O'Neill has completely ended his employment at Merrill Lynch.

Even the second half of a person's life can be considered a real social death.

The company has lost a lot of money, can Merrill Lynch shareholders let Stanley O'Neill go?

Forget!

How is that possible? Stanley O'Neill also knew that taking another step back would be a dead end.

The black president gritted his teeth and considered going all the way in the dark.

However, as soon as he thought about it, he prepared for the company to continue increasing profit margins.

Stanley O'Neill had just arrived at the trading desk and was about to give orders to continue the attack to the panicked and desperate traders.

At the same time, let other departments of the company adjust additional funding to support their own needs. Stanley O'Neal met at the door of the sales department.

The company's CEO, David Komansky, pushed open the door and entered.

Stanley O'Neal saw a smile on David Komanski's face that he had never seen before.

That's the smile David Komansky would be happy with if Merrill Lynch lost four billion dollars.

Look at David Komansky's smile. Stanley O'Neill suddenly let out a groan in his heart.

The most powerful black man on Wall Street, he knew it was over.

(end of this chapter)