The Son of Finance of the Great Age

  Chapter 612 Great Melee (4)

  July 11, this day is destined to be recorded in the history of world finance.

  Because on this day, the "Wall Street Journal", the world's largest financial newspaper, released an unprecedented amount of heavy news, and these news hit the financial markets of the world, including the United States, one after another, causing a bloodbath. And the subsequent changes let people see what it means to be ups and downs and changeable.

  First, there is a piece of news about Freddie Mac and Fannie Mae. An anonymous person from the Ministry of Finance confirmed that Secretary Paulson is discussing with Chairman Bernanke the feasibility of taking over the two houses. As a result, there was a great panic in the market. Although the bonds, stocks and other securities of the two companies would not have the risk of bankruptcy with the national credit as the endorsement, but thinking of the former Bear Stearns, the stock price of the merger was almost the same as bankruptcy. . This made them lose confidence in the stocks of the "two rooms" and began to sell them in the market frantically.

Another possibility is also mentioned in this article: If the custody is not considered for the time being, the Ministry of Finance and the Federal Reserve are considering financing the "two rooms", and the scale of financing will be huge, at least 50 billion US dollars. Solve the current "two rooms" plight. Whether to issue additional stocks or bonds has not yet been decided, but there is no doubt that whether it is stocks or bonds, in the current market environment, they will have a strong impact on their previous securities.

  Because of these two pieces of information, the stocks of Fannie Mae and Freddie Mac have plummeted since the opening of the market. At one point, they fell by more than 50%, and their market value evaporated by half. At this time, Treasury Secretary Paulson, who just issued a statement yesterday, couldn't sit still. Although it is very embarrassing to issue a statement for two consecutive days, in order to prevent the "two rooms" from falling into an unmanageable situation, he Had to bite the bullet and issued a statement again, declaring that the US government is not considering taking over Fannie Mae and Freddie Mac for the time being, and has no intention of issuing additional financing in the short term.

  After Paulson issued this statement, the stocks of Fannie Mae and Freddie Mac barely stopped the decline and slowly recovered. As of the close, Freddie Mac's stock fell 3.1%, showing a deep V trend. Fannie Mae, on the other hand, was even worse, falling 22% all day. Compared with the highest drop of 49% in the whole day, it only rebounded 27%.

   But these news are just appetizers, "The Wall Street Journal" also reported some news that caused a stir in the market today.

David Einhorn, the founder and fund manager of the hedge fund giant Greenlight Capital, was summoned by the SEC, along with dozens of managers of other hedge funds, large and small, on the grounds that they were suspected of malicious Allegations of shorting stocks and manipulating stock prices. Although this matter has not yet risen to the legal level, there is no doubt that an obvious signal released by this behavior is that the people of Raymond Brothers have begun to fight back.

   While such subpoenas are routine for hedge funds, they smell a little different at this sensitive time. Shares of Lehman Brothers jumped 15.7% as a result. However, according to market analysis, this increase cannot cover up the current internal problems of Leihman Brothers. I believe that the market will revise its valuation of Leihman Brothers again in a short time.

  In addition to these two pieces of news, the most explosive piece of news is: Soros is secretly shorting Stanley's stock.

   For a long time, although there were crazy rumors in the market that some hedge fund tycoons were shorting the stocks of financial institutions, and there was even a lot of rumors at one time, no official media had ever disseminated these news. This is because once they have no chance to verify, there is no way to check the authenticity; more importantly, there are a large number of small and medium-sized hedge funds jumping out to declare or imply that they are involved. In this way, it becomes less important to dig deep into whether there is a big boss behind it.

  The reason why those small and medium-sized hedge funds do this is naturally to promote their reputation. This does not rule out that they have gained benefits in the collapse of investment banks such as Bear Stearns, but relatively speaking, most of the benefits have been taken away by the giants.

   And the news that broke out now is the first time that those high-ranking hedge fund bosses have been targeted. Although Soros's name was not mentioned in the full text of the report, words such as "participating in the 1992 British Pound Crisis" and "leading the 1997 Asian Financial Crisis" still linked him to the report.

In this report, the reporter quoted an unnamed person who said, "In the collapse of Bear Stearns, a certain hedge fund and its allies played an extremely disgraceful role, and they took away the last of Bear Stearns. Liquidity caused Bear Stearns to collapse in an instant. Before that, they had vowed to guarantee that they would not withdraw the cash in the Bear Stearns account.”

The source added: "With the experience of the last time, they are starting to plan bigger plans. What is surprising is that they always seem to be targeting institutions related to subprime debt issuance. Now although Not sure who the next target is, but the rumors about Lehman Brothers are in line with their usual style. Market conditions show that Stanley, the investment bank ranked second on Wall Street, seems to have entered their short-selling range. Some brokers said , I have recently received frequent inquiries about whether there is any Stanley stock in stock."

   At the end of the article, the reporter briefly mentioned this "person who did not want to be named". It is rumored that he is also an industry person and manages a large-scale hedge fund. It is precisely because of his professional background and identity that he knows so many inside stories that are difficult for outsiders to know.

   Once this news was disclosed, it immediately caused a sensation in the entire market, far more lethal than the previous two news. The fog that has been hanging over investors' minds for so long has finally been lifted, not just because everyone figured out why Bear Stearns collapsed so quickly, but because investors finally figured out why Rayman Brothers got all the bad press , Rumors are flying everywhere. At the same time, they also knew that Stanley was very likely to be the next target.

  Stanley's stock price immediately fell by 10%. Although it recovered slightly during the session, it still fell by 4.3% until the close. Although Stanley executives did not issue an announcement statement, the market generally predicts that in these two days, they may start to issue a public statement to explain the current situation. As for whether to fight back forcefully or defend tactfully, it depends on their determination and financial resources.

  …

   "Damn it, who leaked the news?"

  In Soros's office, when he got today's "Wall Street Journal", he couldn't help being furious, "My God, now all our plans are known, what should we do?"

  Unknowingly shorting financial institutions and fighting each other to determine the outcome are basically two things of two natures. The former is more concealed, spends less money, and has fewer grievances. But now everything is different. The report of the "Wall Street Journal" directly pushed him to the forefront. If there is only a slight change at this time, the content of the report will be completely confirmed. Neither he nor John Mark Might be redeemed again.

  After thinking about it, Soros couldn't find anyone suspicious, because in his loose alliance, no one would disclose the news to the press, after all, no one would have trouble with money. So he decided to call John Mark first to explain the situation.

   "John, it's me, Soros!" Soros first announced his family name, and then faltered, "Well... I don't know if you read today's newspaper? Yes... it is today... "The Wall Street Journal."

   "Not yet, what happened, George? Your voice sounds strange." John Mark's voice came from the microphone, and it didn't sound like anything special. However, it is also possible that Soros did not hear clearly, because the noise in the other party's microphone was too loud, and the roar of the plane was humming.

"It's like this. The reporters wrote some messy things today. I think it's necessary to clarify to you that they are not talking about me." Soros breathed a sigh of relief, and then asked pretendingly puzzled Said, "John, what are you doing? I think I heard the sound of an airplane."

"That's right, I'm just about to board the plane!" John Mark smiled at the crew members, took a copy of today's "Wall Street Journal" from them, and said as he walked, "I'm rushing back to New York now. Still at Charles de Gaulle. What's the matter, Georges, what's in the paper?"

"It's nothing, it's just some nonsense." Soros replied disapprovingly, "They are saying that I planned to short Stanley's stock, and that I caused the current situation of Raymond Brothers, do you think so? Ridiculous?"

  The noise in the microphone suddenly disappeared, presumably John Mark had already boarded the plane. As the surroundings quieted down, John Mark's words became serious, and he didn't know whether it was because of a change of occasion or hearing the news, he asked seriously: "So, George, I ask you very seriously, what are you doing?" Are you shorting our company's stock?"

"No!" Soros decisively denied without the slightest hesitation, but then he said hesitantly, "But John, I hold some short-term options on Stanley, but you You can rest assured that the position size of this part is very small, and it is mainly used for hedging purposes. I am still very optimistic about the long-term development of your company."

"A little option?" John Mark pondered for a while, and then said in a pretended relaxed tone, "Well, George, these are your investment freedoms, and I can't interfere. Of course, as your old friend, I will solemnly advise you not to fight against our company."

   "Nonsense, this guy is too arrogant!"

   After hanging up the phone, Soros roared angrily. Although the other party said it very lightly, he still smelled a strong sense of disdain. Although he must admit that the other party does have such confidence, the financial statements are quite beautiful, the asset management scale has reached as much as 500 billion U.S. dollars, and the FICC business is the best in the world, and most importantly, just last year, they introduced from China Without major shareholders, cash reserves are not a problem. As long as those toxic subprime bonds can be dealt with, the day of Stanley's turnaround will come soon.

   And now it is obviously unwise to choose to be their enemy. But extraordinary people are extraordinary because they think differently from ordinary people. So Soros quickly put these unhappiness behind him, and began to think seriously about such a giant as shorting.

  The previous strategy must not be used anymore, because the opponent will definitely be vigilant. In this case, switching to a new strategy has become inevitable.

  In fact, their alliance is also selling shares of Lehman Brothers and even Merrill Lynch Securities in full swing in the market, even earlier than David Einhorn's team. It's just because of their low-key style that the outside world doesn't know their plan at all.

  What Soros didn't know was that shortly after talking with him, John Mark picked up today's "Wall Street Journal" and read it seriously. It didn't take long for him to slap the newspaper on the table angrily. John Mark didn't figure out the purpose of Soros' call until now, so he was naturally very dissatisfied.

If it was a day ago, John Mark might have believed Soros' words, but since the phone call with Dick Foud of Lehman Brothers, John Mark has already become deeply vigilant about the situation facing his company, And Soros's "justification" confirmed his doubts.

  How can this not make him frightened and angry? How does this allow him to trust Soros?

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  (end of this chapter)