The Son of Finance of the Great Age

  Chapter 47 The longest day (1)

In Friday's turmoil, Morgan Stanley lost about $30 million, but after paying the margin for the transaction, Morgan Stanley's long position is still standing, without the slightest cut, and it is still long in the market main force.

  During the turbulent October, Morgan Stanley's self-operated department took hedging measures in the stock market and the futures market, which can be regarded as a loss and a gain.

On the other hand, Goldman Sachs earned more than 10 million US dollars on the main contracts in November and December. The difference is that Goldman Sachs is not one of the main players in the short market, and even other financial companies have more positions than Goldman Sachs. Among them is Zhong Shi's net worth.

  In addition to these visible huge positions, there are countless market participants fighting for the main contracts in November and December. In fact, many transactions are completed by programs. Such program transactions generally belong to hedge funds with certain quantitative strategies. They either hedge or arbitrage on futures indexes, and they have also formed a considerable force.

  In addition to these institutions and large outdoors, the participation of many small retail investors is also inevitable, but without strong financial support, they can only use their quick response to try to get a share of Bo Yun's treacherous futures index.

  On October 18th, US Treasury Secretary Baker announced on a nationwide TV program that if Germany does not consider reducing interest rates to stimulate the economy, the United States will consider continuing to let the dollar fall.

  As soon as this remark came out, there was a thousand layers of waves!

  At this time, Germany was still divided into two countries, East Germany and West Germany, which had not yet been unified.

  In the Plaza Accord in 1985, all countries also agreed to allow the mark to appreciate in order to achieve the purpose of depreciating the dollar. Different from the yen, the Mark took the initiative to appreciate and raise interest rates to stimulate domestic consumption and balance the impact on exports caused by the rising currency value.

  Because Germany took the action of raising interest rates first before the mark appreciated, so instead of reducing Germany's exports, it greatly increased profits and improved the grade of exports. The Plaza Accord hardly exerted pressure on the mark.

There are many explanations for the strong growth of the German economy under the Plaza Accord. One of them is that after the Plaza Accord, Germany actively carried out industrial upgrading, making its products more refined, and turning these export products into high value-added products. The product has the pricing power, so it has not been greatly affected.

   There is also a saying that this is the eve of the birth of the European Union, and there is such a huge market in Europe as a whole, which is enough to absorb the impact on capital inflows. In addition, Germany has relaxed the exchange rate between the mark and the US dollar, abandoned the growth of GDP, and strictly controlled its own inflation rate only through the increase of interest rates, so that the impact on the economy will be minimized.

  In fact, the most important thing is that Germany's exports are not supported by wage costs, but by a strong manufacturing industry. Germany's manufacturing industry has advanced technology, excellent quality, and strong competitiveness, and is even known as "the factory of the world's manufacturing factories".

  The U.S. Secretary of the Treasury is obviously very dissatisfied with the appreciation of the mark, but Germany's economic hinterland is in Europe, and he is a bit beyond his reach. He can only achieve the depreciation of the dollar by calling out to the market.

  Although these are just hints, the impact on the market is catastrophic!

With the recovery of the U.S. economy and the prosperity of the U.S. capital market, countless international hot money has flowed into the U.S., especially petrodollars from Middle East countries, overseas capital from the RB consortium, and some large consortiums in Europe. In all aspects of the U.S. economy, the share of the capital market is not a minority.

  If the dollar continues to depreciate, it means that the wealth represented by these funds has shrunk significantly, which is intolerable for these capitals.

  For example, a country in the Middle East invested a billion dollars in capital in the U.S. capital market, bought a 10-year treasury bond, and had a stable return with almost no risk. It is an ideal investment method when the value of the U.S. dollar remains unchanged. However, if the U.S. dollar depreciates, then the money was originally exchanged for 3.5 billion marks, but after the depreciation, it can only be exchanged for 3 billion marks or less. In the German government bond market, even if the return on long-term government bonds is much lower than that of the same period in the United States, people with a discerning eye will be willing to invest capital in Mark.

What's more, countless international capital has invested in the US capital market. It was originally thought that the depreciation of the US dollar would bring about the growth of the US economy, followed by the vigorous development of the US stock market. They all ran into a problem.

   What happens to their money if the dollar goes down?

  Although what the finance minister said was only a possibility, the first reaction of the capital that seeks advantages and avoids disadvantages is: flee the United States!

  After transformation and upgrading, the U.S. economy has been successfully upgraded to be supported by the information industry. Under such circumstances, people seem to see that the U.S. will once again lead the world economy.

Under such circumstances, the U.S. capital market is also thriving. Coupled with the recovery of the manufacturing industry, the entire U.S. economy is developing in a good direction. It is precisely when these international hot money see this that they wantonly enter the U.S. capital market .

   It's just that under the words of Minister Baker, these capitals will retreat in a hurry.

  Profit-seeking is always the nature of capital!

   Zhong Shi, who had been sleeping all day, saw the news in the middle of the night. At this time, he was wearing a nightgown and sneered at the CNBC screen. The time has finally come!

Before he could laugh enough, the phone rang quickly. Lu Hu, who was standing aside, looked at Zhong Shi who was ignoring the phone, his face full of confusion. Zhong Shi first turned to the TV screen full of ghosts. He couldn't stop sneering, the expression on his face was full of complacency, even a little ferocious.

   "Zhong Sheng, have you read the news?" When Lu Rover picked up the microphone, he heard Liao Chengde's anxious voice on the other side of the microphone.

   "What's the matter?" Lu Hu scratched his head, pointed to the microphone to Zhong Shi, indicating that the call was from Liao Chengde. He shook his head, shook off the doubts in his heart, and was about to leave.

   "Brother Hu, are you ready for the Hong Kong stock account?" Zhong Shi stopped Lu Hu's footsteps with one hand, and asked seemingly casually. Some time ago, he asked Land Rover to prepare for the Hong Kong stock market. I believe that after this period of time, Land Rover should be almost done.

   "Xiao Zhong, it's all done, just wait for your order." In private, the two of them are called like this, but outside, Lu Rover's name becomes the respectful "Zhong Sheng".

"Okay, you don't have to accompany me tomorrow, let's watch the market! Remember, just watch, don't move, the time has not come yet!" Zhong Shi ordered lightly, and then he shouted into the microphone: "Old Liao, you He Xiaohua is coming to my house now, remember to be quick!"

  Liao Chengde on the other end of the phone answered and hung up the phone. On the other end of the phone, Zhong Shi faintly heard Liao Xiaohua's heavy snort, obviously Liao Xiaohua was also waiting by the phone.

   "Okay!" Lu Rover nodded without asking why.

The place where Liao Chengde lived was not close to the Repulse Bay of Zhongshi Real Estate, but fifteen minutes later, the Mercedes-Benz of the Liao family drove into the Zhong family mansion. Before the car stopped, Liao Xiaohua hurriedly opened the door and jumped into the car Jumped down, and ran towards the main hall while shouting: "Zhong Sheng, what do you think of the speech of the US Secretary of the Treasury?"

   Liao Chengde, who was following behind him, was not very steady. He followed Liao Xiaohua three steps at a time, his forehead was covered with sweat, obviously he was in a hurry.

   "Xiao Hua, what do you think?" Zhong Shi waited for the Liao family to sit down, took a breath, and then asked. Liao Chengde couldn't understand English, so what he knew must have been told by Liao Xiaohua. This is the time to test Liao Xiaohua.

   "I think it's a good time, especially Baker's blatant threat, maybe the market will fall tomorrow!" Liao Xiaohua took a deep breath, stabilized his emotions, and explained his judgment in detail.

  Liao Chengde was full of doubts. He couldn't explain Liao Xiaohua's judgment, but he believed Zhong Shi's words very much, even to the point of superstition.

   "Yes, Xiao Hua, your judgment is very accurate." Zhong Shi said approvingly. Zhong Shi really underestimated Liao Xiaohua's sensitivity to the market.

   "Dad, am I right! Seeing that Zhong Sheng has praised me!" Liao Xiaohua looked proud, with the corners of his mouth raised, and he glanced at Liao Chengde provocatively, as if to vent his dissatisfaction.

  Liao Chengde's old face was like a tiger, and he stared back viciously, as if he couldn't lose his face, and also seemed to be warning his son not to get too complacent.

   "However, Xiaohua, your judgment is not bold enough!" As soon as Zhong Shi changed his voice, he unceremoniously hit Liao Xiaohua.

  The smug expression on Liao Xiaohua's face suddenly froze. He lowered his head and fell into deep thinking, thinking about which aspect he hadn't considered carefully enough.

"The US official statement this time will have a huge impact on the stock market, even no less than an earthquake. In the next few days, it is foreseeable that major stock markets around the world will fall crazily. The problem!" Zhong Shi unceremoniously used the word "crazy" to characterize the US official statement.

   "What? Crazy? How crazy will it be?" Liao Xiaohua was stunned for a while before asking tentatively. He previously judged that the capital market would fall in response, which was in line with the general environment, but the strength and magnitude of the decline were much worse.

   "If I said that there will be a large-scale stock market crash in the world, even the same as the stock market crash in 1929, what would you think?" Zhong Shi said with a faint smile on his face, seemingly unintentionally.

   "What? The stock market crash in 1929?" Liao Xiaohua stood up with a horrified expression on his face. He said firmly: "This is impossible! This is absolutely impossible!"

  (end of this chapter)