Chapter 37 Long and short strangulation

   Entering July and August, under Andrew's cautious operation, Zhongyi's account has established a short position of 20 million US dollars. Although he has been very careful, such a large amount of money still attracted the attention of the market.

  In fact, the U.S. stock market has been rising since 1982. By December 1986, the Dow Jones Industrial Index in New York had reached 1896 points, an increase of 78% over 1982.

   Not only that, the U.S. government has also liberalized the control of the financial market, and has also implemented tax cuts to stimulate stock investment. Under the benefits of the dual policies, a huge amount of international hot money has poured into the U.S. stock market, promoting the stock price to continue to rise. Among these hot money, the consortium from RB is the most fierce. In the first nine months of 1987, the new funds flowing into US stocks from RB alone reached 15 billion U.S. dollars, and the stock price has clearly appeared. up the bubbles. The Dow Jones Industrial Average hit a record high of 2,722 in August.

   At the same time, the real economy supporting the virtual economy has not shown a momentum of rapid growth like the stock market. In 1986, the U.S. economy had changed from high-speed development to slow development, and the fear of economic recession has been hanging over people's minds. Moreover, the U.S. trade deficit and fiscal deficit are also growing at an astonishing rate. In 1985, the U.S. once again became a net debtor country with a debt of more than 100 billion U.S. dollars, making it the world’s number one debtor country. years to further increase. In this case, the growth of the stock market does not make sense.

  In fact, this is indeed the case. Since entering August, the New York stock market has experienced large fluctuations. Since the appearance of 2722 points, the Dow has stopped its upward momentum and has been oscillating continuously.

  …

  RB, Tokyo, Trading Department of Sakura Bank, Taro Sakata stood upright, but his head was lowered, and he kept saying "Hay".

Sitting in front of him was a middle-aged man in his forties with a goatee and a traditional kimono. On his feet were a pair of clogs. In this office with suits, leather shoes, ties and shoes The environment is particularly dazzling.

  This person is Kagawa Kaoru, the vice president of Sakura Bank, who is responsible for the international business of Sakura Bank. This person usually has an old-fashioned style, and he is extremely protective of RB's traditional culture, so he also wears a pair of traditional clothes during working hours.

   "Sakata-kun, what do you think about this matter?" Kagawa Kaoru knelt on the tatami, picked up the tea cup at hand, drank it, and said slowly.

   "Yes, it's all my fault this time, and I will take all the responsibilities." Sakata Taro's head pounded like a chicken pecking at rice.

"No, it's not your fault this time. In fact, without your bold pricing, we would have lost even more." Kagawa Kaoru shook his head slowly with a blank expression, and started to boil tea on his own .

   "Yes." Sakata Taro said hastily, lowering his head even lower. Now he didn't understand Kagawa Kaoru's reason for summoning him.

After waiting for a meal, until the tea in the red clay teapot in front of Kagawa Kaoru was brewed three times, and the taste was a bit weak, Kagawa Kaoru stopped what he was doing and called Sakata Taro: "Sit down and talk. Bar!"

  RB has a strict social hierarchy, and it is the same in enterprises. Although superiors and subordinates can sit together for meetings, but in such informal occasions, there is only one tatami mat, and Taro Sakata would never dare to sit down.

   "No, I'll just stand up!" Sakata Taro replied respectfully after a first pause.

"Alright, let's not gossip, I plan to let you be in charge of the futures market, specifically stock index futures, I don't know what you want?" Kagawa Kaoru put down his teacup, looked straight, stared at Taro Sakata, and asked solemnly .

   Taro Sakata studied in the United States, graduated from the famous University of California, Los Angeles, and worked in the famous Chase Bank after graduation. However, the rapid growth of the RB economy in recent years has increased the demand for such talents. Naturally, Japanese talents who were born in RB and have worked in the US capital market are the favorites of the RB consortium.

Sakata is a senior talent dug by Sakura Bank from the United States. Originally, the senior management of Sakura Bank wanted him to be the director of the derivatives trading department. However, due to the strict hierarchy of RB society, he could only start as a junior trader. As a trader, he is directly responsible to the vice president and is equivalent to half a department head. This is why Sakata has such a big say in option pricing.

   "Yes, I will do my best and die!" Seeing that he was not punished and was transferred to a higher-level department, Sakata Taro was ecstatic and agreed repeatedly.

  Different from the options department, the trading volume of the stock index futures market is much larger, and the daily operating funds are in the hundreds of millions (US dollars), and the futures department is also one of the most profitable departments.

  RB's banks are not subject to the supervision of the separation law in the U.S. capital market. Coupled with the appreciation of the yen, RB banks with a large amount of U.S. dollar capital are looking for opportunities in the U.S. capital market.

"According to the report of the research department, the economic slowdown in the United States is not in line with the rapid growth of the capital market, especially the stock market. Therefore, this time, the high-level officials decided to allocate another 100 million US dollars due to the market in addition to the previously invested capital. , I hope to gain something in it.”

   Kagawa Kaoru nodded, and told Sakata Taro about his plan fully. He has enough confidence in the respectful Sakata in front of him.

  In fact, within Sakura Bank, they all hold a favorable attitude towards Taro Sakata’s work two years ago, but the appreciation of the yen is too strong, far exceeding market expectations.

  The option on Zhongshi was the biggest loss of Sakura Bank in the options market. Although the loss of tens of billions of yen will not hurt Sakura Bank, it will also cause a big laughing stock among the RB consortium.

  In recent years, Sakura Bank’s expansion strategy has been very aggressive, especially in overseas operations, and it is even ahead of RB Bank. But this time they suffered such a big somersault overseas, which made the RB Bank behind them see it as a joke. Therefore, Sakura Bank is preparing to make a fortune in the US financial market and regain lost face.

   "I know how to do it!" Sakata Taro said hi, seeing that Kagawa Kaoru had no more orders, he quietly backed out.

  …

In July and August, Sakura Bank's account was also quietly absorbing S&P 500 futures. Unlike Zhongshi, Sakata's direction was to go long, and in the early stage of entering the market, he also took advantage of the opportunity of the stock market to make a profit. A lot of money.

"What? That account is taking empty orders again, and it is said that there are already tens of millions of dollars in positions?" Although he made a lot of money from the market, Sakata did not relax his vigilance. They all exist, so don't be careless.

  By chance, Sakata found an account on the market, quietly absorbing empty orders every day, each time the amount was not large, but his attitude towards holding positions was very firm, and he never saw a decrease in holdings. Sakata immediately became interested, and stepped up the monitoring of this account in addition to daily trading.

  Through some invisible means, Sakata found out that this account turned out to be the brokerage firm that had previously made a large sum of money from Sakura Bank, and it is said that the funds also came from Hong Kong, which is highly consistent with the deal that defeated him!

  This discovery made Sakata very excited. He never expected that the two would meet again so soon, and this time in a different market.

It's just that there are billions of dollars in gambling funds every day on the main monthly contract of the S&P 500, and the daily additional margin is as much as 100 million US dollars. Although Sakata has hundreds of millions of dollars in funds that can be deployed, he has to deal with such A small short, obviously a bit of a cannon to beat mosquitoes.

Another reason why Sakata has been standing still is that although this account is losing money every day, he has not changed his operating strategy and is still unswervingly absorbing empty orders, which puzzles him very much. Understand the rules of futures operation?

  He thought about it again, and dismissed the idea. If he is really a guy who doesn't understand anything, how can he know how to use hedging to get such a large profit!

  The opponent must be a master! This is the conclusion he drew from it, and it also made him secretly vigilant. He thought that the other party must be waiting for the opportunity to exert strength. When he thought of competing with this mysterious opponent, Sakata couldn't help being excited, trembling all over, washing away his shame. The opportunity has come!

  After the Dow reached 2722, it stopped going up, but turned to go down, which caught many people by surprise. Sakata also began to feel pressured. While opening short positions to hedge risks, he kept a close eye on the movement of the mysterious account.

   Sure enough, after experiencing the initial loss, the rate of absorbing chips in this account accelerated sharply in August, opening short positions at a rate of millions of dollars every day, and floating profits gradually increased.

   "Sure enough, he is a master!" Sakata thought to himself, but with the abundant funds in his hands, he was not afraid of anything.

   "Open a long position of 1,000 lots, set at 350, see if anyone takes it?" Sakata ordered the traders under him while staring at the continuously scrolling numbers on the screen.

  According to the margin ratio of the Chicago Stock Exchange, the price of this long order is about 4.4 million US dollars, which is already a large order.

To Sakata's surprise, this long order has always been at the forefront of the transaction rankings, and no funds are interested in this long order. Just when Sakata was about to withdraw the order, a transaction message suddenly appeared on the screen. The account quietly accepted Sakata's long order.

   "Double opening..." Sakata was stunned for a long time, and he couldn't believe his eyes. When he came back to his senses, he decisively shouted to the trader who was still in a daze: "Open again, 3000 lots, see if he takes it or not!"

(Today, the government reached a preliminary settlement with U.S. regulators for selling mortgage securities during the financial crisis, paying a fine of $13 billion. These fines will settle all civil lawsuits against the government. Quiet.**** accused of defrauding investors during the financial crisis, resulting in the latter losing more than $20 billion in mortgage-backed securities (MBS) underwritten by Bear Stearns.)

  (end of this chapter)