Chapter 837: The Great War Finally Begins

As the days passed, the New York Mercantile Exchange became increasingly lively.

As the bulls and bears continued to place bets, the chips on the table were like a mountain of gold. Many institutions were tempted and increased their bets one after the other, while ordinary investors just watched.

George Berkeley and Wang Qi, who were outside the United States, also took their positions one after the other. Funds poured into the futures trading market like water, quietly swapping for contracts of copper and aluminium futures.

The more you buy in the early stages, the greater the profit you can make from arbitrage if you win later!

Two weeks later.

All the accounts of the Galaxy Fund had already held 58,150 lots of advanced copper futures and 39,200 lots of aluminium futures, worth more than 2 billion US dollars!

What is exposed on the surface is only about one-third of the futures contracts held by the Galaxy Fund, worth 700 million US dollars.

But despite only one-third being exposed, the Galaxy Fund is still one of the most eye-catching big bulls in the market!

Many leaders of financial institutions on Wall Street are very surprised when a strong financial company suddenly pops up on Wall Street!

Because Xia Yu had secretly invested so much capital, even though the shorts were hedging, the prices of high-grade copper futures and aluminium futures had still risen quite a bit. The latest opening prices this morning were US$0.6025/lb for high-grade copper futures and US$1.2455/lb for aluminium futures.

'Boss, the news from Julian Robertson has been confirmed. The company behind those accounts is Phillip Brothers!'

Xia Yugang, of Galaxy Fund's New York branch, was instructing the trader to continue building the position, when Song Yang walked in with a grave expression and whispered in Xia Yugang's ear.

Xia Yugang was not scared, but instead his mouth curled up slightly, and his expression relaxed a little.

Obviously, he was not afraid of the futures giant Phillip Brothers.

He had of course researched Phillip Brothers and had a memory of a previous life, so he knew exactly what the future held for Phillip Brothers.

Although Phillip Brothers was currently the largest futures company in the United States, it was only that, and ranked first in the futures market.

In other financial fields, Phillip Brothers was far from being the best.

In terms of overall strength, Philip Brothers is far inferior to companies such as Morgan Stanley, Merrill Lynch, and Citibank.

So what's there to worry about?

Such a stepping stone is suitable for Xia Yu to step on no matter how you look at it, and compared to Xia Yu's strength, it is just right!

"The news can already be passed on, and the next battle is about to escalate!'

Xia Yu said with a light smile, and then looked at Song Yang and asked, 'What does Xue He say, and what is the situation at the Chicago Mercantile Exchange?'

Before coming here, Song Yang had already spoken to Xue He on the phone and was already well aware of the situation. He immediately reported, 'Boss, due to the influence of the New York Mercantile Exchange, the prices of both senior copper futures and aluminium futures on the Chicago Mercantile Exchange have risen. The current price of the latest senior copper futures is 0.5995 US dollars per pound, and the price of aluminium futures is 1.2430 US dollars per pound.'

Although they are the same futures, the prices on different futures exchanges also differ. Because of this difference, arbitrage trading across markets has emerged.

However, arbitrage across markets is risky. It is a little better if they are in the same country, but if they are in different countries, the risk is even greater. For example, it is necessary to consider the stability of price ratios. Changes in external factors such as tax rates, exchange rates, trade quotas, ocean freight costs, and production process levels can have a significant impact on prices.

In addition, there are market risk, credit risk, time exposure risk, policy risk, etc.

Due to various risks, generally very few institutions will trade across markets, and more often than not, they will use the price ratio of the same commodity in other futures markets as a reference. This kind of off-market factor is also a very important factor affecting the futures price.

Of course, nothing is absolute. If the price difference between the same commodities in different futures exchanges is too large and does not narrow over a long period of time, it will definitely attract a large number of financial institutions to take risks in pursuit of profits.

Having said that,

after hearing Song Yang's report, Xia Yu quickly did some calculations in his head and concluded that the futures price of high-grade copper on the New York Mercantile Exchange was US$0.003/lb higher, and the futures price of aluminium was US$0.0025/lb higher.

Based on the amount of futures currently held by the Galaxy Fund, this difference also represents a difference of nearly US$7 million.

Considering the overall market for high-grade copper futures and aluminium futures, the difference is at least several hundred million US dollars.

This is a bit too much of a difference!

Thinking about this, Xia Yu immediately instructed Song Yang, 'Call Xue He and order him to stop holding back. How can 300 million US dollars be enough! Within three days, the futures value on his side will exceed 800 million US dollars. Increase my position and buy!'

'Yes!'

Song Yang's body trembled, and his response subconsciously increased by a margin.

Then, seeing Xia Yu wave his hand, Song Yang quickly left.

Xia Yu then continued to order the traders to open positions.

The preliminary preparations were almost complete, and it was time to fight!

"Open 500 lots of advanced copper futures at 0.1 cents higher!'

'Open 500 lots of aluminium futures at 0.1 cents higher!'

As soon as Xia Yu finished speaking, buy orders totalling over 20 million US dollars were immediately placed, and the market immediately fluctuated violently.

Immediately after Galaxy Fund made its move, the rare metals futures department of Philip Brothers immediately noticed the situation.

Harlan Dreyden did not hesitate and immediately ordered the opening of short positions.

In less than five minutes, more than 30 million dollars from the senior copper futures department flowed into the market, stabilising the price before it climbed again.

Of course, because the leverage was ten times, the margin was only 3 million dollars.

In the aluminium futures department next door, Sean Andrew gave the same order, and more than 25 million dollars flowed into the market.

At this point, Albert Raphael hurried in and immediately asked:

'Harlan, have the longs stepped up their offensive?'

'Yes, the longs can't wait. In the past five minutes, I've already ordered the sale of 2,000 lots, otherwise the price really won't hold!'

Harlan Dreiden replied with a serious expression.

Albert Raphael narrowed his eyes and pondered for a moment before saying, 'Although the Galaxy Fund's apparent position is only worth about 700 million US dollars, based on the position volume, they have definitely invested more than 1 billion US dollars. They are indeed very strong!'

'Since they don't want to wait, let's do it too. The Galaxy Fund has invested such a large sum of money, they don't want to back down, which is just perfect!'

'Haren, execute the second phase of the plan!'

Haren De Laiden's spirits lifted, and he revealed an excited smile.

It had been a month since the beginning, and he couldn't wait any longer!

Increase the position!

Increase the position significantly!

Both the Philip Brothers and the Galaxy Fund began investing heavily, and the prices of high-grade copper and aluminium futures on the New York Mercantile Exchange fluctuated violently.

Occasionally, orders for hundreds or thousands of lots would appear, causing the onlookers to exclaim in amazement.

At the same time, Philip Brothers took the initiative to release negative news about high-grade copper and aluminium futures, and it was a research report that had been prepared long ago.

The futures giant, Phillip Brothers, was actually a big short!

This news excited the other shorts, who sighed with relief that they had chosen the right side, and increased their bets.

The longs, on the other hand, were all very serious, and there were many who lacked confidence and backed down.

The reputation of Phillip Brothers in the futures market had been built up step by step on the corpses of losers, and many small financial institutions were intimidated by it, so it was only natural that they chose to back down.

And at some point, from an unknown source, all kinds of negative rumours spread like wildfire on the New York Mercantile Exchange and quickly spread across Wall Street.

In an instant, the scales tipped sharply towards the bears, and the situation became very unfavourable for the bulls.

Facing this situation, Xia Yu did not hesitate, waved his hand, and chose to increase his position to stabilise market confidence!