America's Road to Wealth

January 4th.

Goldman Sachs headquarters.

In the trading department.

Many people watched the USD/JPY currency pair go short to around 105.900.

They couldn't help but admire the company's CEO, Mr. Paulson.

To know before this.

The reason why Smith Capital began to short USD/JPY aggressively.

Many people at Goldman Sachs want to be like last month.

Enter the market like Merrill Lynch, Lehman Brothers, etc.

They wanted to see if they could get a bite or two out of Smith Capital like they did last time.

But it was CEO Paulson who made this decision last time.

This time, the views of these people at Goldman Sachs were rejected.

Paulson didn't give a reason. He simply used the authority of the CEO to get them to obey orders.

These elites at Goldman Sachs didn't understand this at first.

But now we see this kind of long-to-short situation, it is still a very fast long-to-short market trend.

Everyone couldn't help but admire Paulson a little.

This would have been if Goldman Sachs had entered the market like other Wall Street investment banks.

The rush that other investment banks are now is going to be what Goldman Sachs is now.

Look at the investment banks that were long before.

At this time, one or two people were busy turning long and short.

Everyone is trying to ensure that floating profits turn into profits.

It's not that easy.

Goldman Sachs avoided this and was able to watch from the sidelines.

Paulson's investment ability this time made everyone more convinced of him.

But in reality, Paulson is also secretly glad.

You must know that Paulson did not let Goldman Sachs go down this time.

Not because of his investing abilities.

It's because of Paulson, who is getting closer and closer to Texas.

Through some channels, I learned about Abel's close connection with the Shrub family.

This guy wanted to give himself a way out and for his future development.

Paulson decided not to antagonize Abel as much as possible.

To prevent Abel's influence from affecting his future career.

This made Paulson decide that Goldman Sachs would not give up this time.

To put it bluntly, Paulson's decision was a bit selfish.

It goes against Goldman Sachs' interests.

Unexpectedly, what might have been a bad thing for Goldman Sachs has now turned into a good thing.

Goldman Sachs, which has no end, does not have to be as busy as other Wall Street investment banks at this time.

Facing the awe-filled looks from his subordinates, Paulson felt refreshed.

But with an enigmatic expression on his face, Paulson asked the head of the Market Supervision Department:

"What is the current account situation of the major investment banks and Smith Capital?"

Goldman Sachs’s market surveillance department is among similar departments throughout Wall Street.

It can definitely be ranked at the forefront. This department specializes in collecting capital market intelligence, as well as various business intelligence around the world.

It has brought a lot of accurate business intelligence to Goldman Sachs, and indirectly brought a lot of profits to Goldman Sachs.

This also makes this department very valued at Goldman Sachs.

Goldman Sachs has invested a lot in it and has generated good positive feedback.

The more resources are invested, the more excellent and accurate this department's business intelligence collection capabilities will be.

In response to a query from the CEO, the head of Goldman Sachs’ market surveillance department responded:

"Mr. Paulson. From what we know and what we have observed."

"More than a dozen major investment banks, including Morgan Stanley, Lehman Brothers, Merrill Lynch, Bear Stearns, etc., have basically begun to complete the transformation from long to short."

Paulson nodded.

This situation is very common.

When the market is bullish, everyone likes to go long.

When the market is bearish, everyone likes to go short.

In normal times, it is too common for Wall Street investment banks to switch between long and short.

But what the person in charge said next surprised Paulson.

The head of Goldman Sachs’ market surveillance department said:

"But according to other information we have learned, in the second half of the market yesterday, Smith Capital closed all their short positions."

"And after that, Smith Capital established a large number of long orders."

"According to the intelligence we know, Smith Capital has at least opened a long position of more than 20 billion U.S. dollars."

"Is Smith Capital idling too much?" Paulson asked in surprise.

"That's right." The person in charge of the Market Supervision Department replied.

Paulson couldn't help but frown.

Paulson at this moment is just like David Mellon yesterday.

I can’t figure out why Abel did this.

The Federal Reserve has cut interest rates, so why does it go too far?

Although every time the Federal Reserve cuts interest rates, the currencies of other countries will also choose to cut interest rates along with it.

As a result, the dollar's depreciation cycle is often only a few days.

Therefore, this short market will not last long.

But soon, it will usually have a short market that lasts for four or five days.

Four or five days is enough time to trade in the foreign exchange market several times.

In other words, at least visible to the naked eye within a few days.

USD/JPY will go short.

Abel's short position previously established still has at least four or five days of profit time.

As a result, Abel did not make any profits, but went long against the general trend of the market.

This is just like his previous shorting against the general trend of the market, which puzzled Wall Street.

Fortunately, Paulson was also determined not to interfere.

Therefore, whether Abel is long or short, it has nothing to do with Goldman Sachs.

He just asked the people from the Market Supervision Department to continue watching the market.

Goldman Sachs's indifference was mainly due to Paulson's personal reasons.

But other Wall Street investment banks will not sit back and watch this "good thing" indifferently.

Lehman Brothers Bank.

In the trading department.

Chief Executive Officer Mr Richard Fuld.

He was currently staring at a subordinate he was talking to on the phone.

The subordinate was talking on the phone in fluent neon dialect.

Richard Fuld couldn't understand the neon language and could only wait nearby.

A few minutes later.

The neon-speaking subordinate ended the call.

Richard Fuld immediately asked impatiently: "How is it? Is there any definite news?"

The subordinate who spoke neon words respectfully replied:

"According to our news channels over there."

"Our informant in Neon Central Bank said that within a short period of time."

"Subject to pressure from the Federal Reserve and the White House, they will not cut interest rates immediately like other currencies."

After hearing the news, Richard Fuld's face suddenly showed an expression of ecstasy.

Already said before.

After the Federal Reserve decided to cut interest rates.

Most countries in the world will follow suit and cut interest rates.

In this way, the US dollar depreciates, and others depreciate more, which is reflected in the US dollar. On the contrary, the US dollar appreciates, and the US dollar index continues to rise.

But in essence, when the Fed cuts interest rates, the dollar still depreciates.

What's more, there are still a few days of reaction time, and the dollar will definitely depreciate during these days.

Richard Fuld, an informant from Lehman Brothers on the Neon side.

After learning the news that the Neon Central Bank was forced not to follow the Federal Reserve's interest rate cut.

The bulldog of Wall Street suddenly beamed with joy.

Because as long as Neon doesn’t follow the Fed in cutting interest rates.

That means that the Japanese yen will continue to maintain its current exchange rate strength.

The dollar depreciated, the yen maintained.

This is completely opposite to the previous three-year bull market, which is conducive to the continued shorting of USD/JPY.

Richard Fuld still cannot fully trust this news channel.

This kind of transaction involving tens or tens of billions of dollars requires, of course, the more accurate the intelligence, the better.

Wall Street Bulldog, another few hours.

This news was confirmed in many ways through many channels.

Determine why Neon is threatened by the White House.

Neon really will not cut interest rates along with the US dollar this time.

After truly confirming that this news is true.

In the trading department, Richard Fuld decisively made the decision to short USD/JPY.

In one fell swoop, he placed more than 30,000 USD/JPY short orders.

It increased to more than 80,000 lots.

Not only Lehman Brothers got the news that Neon would not cut interest rates this time.

Other well-informed Wall Street investment banks also got the news.

These people make the same judgments as Richard Fuld.

The US dollar cuts interest rates, but the Japanese yen does not follow suit.

That is bullish for JPY/USD and the yen will appreciate.

In turn, it is negative for USD/JPY, and the USD will depreciate.

Some people may think that USD/JPY and JPY/USD are not the same?

Aren't they just the exchange of two currencies?

Between normal forex exchanges, they are indeed the same.

But in the international foreign exchange futures market.

USD/JPY is USD/JPY.

JPY/USD is JPY/USD.

The two are two different currency exchanges.

Even though they generally appear in pairs in the foreign exchange market.

USD/JPY is based on the US dollar.

Conversely, JPY/USD is based on the Japanese yen.

Let’s put it this way, USD/JPY 107.500 means that one U.S. dollar can be exchanged for 107.5 U.S. dollars.

If it goes short and becomes 107.300, one dollar can only be exchanged for 107.3 yen.

One U.S. dollar can be exchanged for fewer Japanese yen, so the U.S. dollar depreciates and USD/JPY goes short.

If 107.500 is reversed, it becomes 107.600.

That is, one dollar can be exchanged for more yen.

For the U.S. dollar, that means the U.S. dollar appreciates and the yen depreciates.

USD/JPY, which is based on the U.S. dollar, naturally goes long.

At this time, the Neon Central Bank was pressured by the United States not to cut interest rates, but the United States itself cut interest rates.

That is, the dollar depreciates and there are fewer yen available for exchange.

This is reflected in the current intense battle between bulls and bears on the USD/JPY currency pair.

Normally, USD/JPY will continue to go short.

It will remain short until the U.S. deadline for neon not to cut interest rates ends, and only after neon starts to cut interest rates will it be possible to go long again.

This is undoubtedly a very favorable condition for Wall Street investment banks that are short the yen.

This is why Stanley O'Neal and the others did it before.

Will seriously doubt the reason why Abel colluded with the White House.

This situation will not only be beneficial to strengthening the U.S. economy.

There is no doubt that it will also have huge benefits for Abel, who was shorting USD/JPY at that time!

It was precisely because Abel benefited the most at that time that Wall Street investment banks suspected his collusion with the White House.

But now

Not only Goldman Sachs discovered that Smith Capital went from idle to long, and started to go long USD/JPY out of a bad idea.

Goldman Sachs found out, but Paulson chose not to step down due to personal reasons.

But other Wall Street investment banks, after confirming these two pieces of news.

They won't be polite.

Richard Fuld of Lehman Brothers placed 50,000 new short positions at once.

Stanley O'Neill of Merrill Lynch was not polite, and also confirmed these two pieces of news.

The most powerful black man on Wall Street even directly asked Merrill Lynch to place a short order of 100,000 lots.

In the afternoon of January 4th, the international foreign exchange market.

There are hundreds of thousands of empty orders in USD/JPY.

The long-term long position that had been saved for more than two years was instantly flattened.

USD/JPY maintained the exchange rate around 106.100 for a day, and then moved downward again, falling below 106.

in the Smith Building.

Traders at Smith Capital.

They looked at Smith Capital's account with some despair.

There were 410,000 USD/JPY long orders, with accumulated floating losses exceeding US$1 billion.

If it weren't for the fact that Smith Capital's main fund provider this time was Pacific Commercial Bank, Abel's own bank.

The bank intermediaries are losing money to this extent.

I will definitely recommend Smith Capital to close the position, or ask Smith Capital to increase the margin.

But this kind of loss is already scary.

The total deposit was only 3 billion US dollars, which was a loss of one-third.

It is not far away from the forced liquidation line, that is, the liquidation.

In response, David Mellon had to find Abel himself.

"Boss, the situation looks very bad."

David Mellon said worriedly:

"If we continue, even if Pacific Commercial Bank does not need to make a margin call, Citigroup and Wells Fargo will definitely require us to make a margin call."

Margin calls are common in financial investments.

But the problem is that now there are only hundreds of millions of dollars left in Smith Capital's account.

These hundreds of millions of dollars are for emergencies, so we can't all fill them here.

And even if you fill it in, it may not be enough later.

Of course Abel knew this.

But the more this happens, the more relaxed the expression on his face looks.

"To put it simply, we are short of money, right?"

Abel asked with a smile.

David Mellon hesitated and nodded slightly.

Because strictly speaking, we are really short of money.

If there is no shortage of money, you can ensure the maintenance of the margin, and you are not afraid of any floating losses.

"Can we still squeeze in at Pacific Commercial Bank?" Abel's first thought was his own bank.

David Mellon shook his head and said:

"I have contacted John over there. I'm afraid it can't be done. It has reached the critical line. If it crosses the line, John said it may attract the attention of the FDIC and OCC. There is a high probability that it will lead to a lawsuit."

This time Smith Capital's foreign exchange investment.

Pacific Bank of Commerce both provided $25 billion in funding.

Its assets under custody are only about US$100 billion.

Most of them are still immovable assets.

In fact, it can be said that all available funds have been used to support the boss.

It would be a bit too much to ask Pacific Commercial Bank to contribute.

Besides, strictly speaking.

If something goes wrong with Smith Capital’s investment this time.

Pacific Commercial Bank will definitely be hurt by this.

It may even lead to bankruptcy.

There is nothing your bank can do.

There were only two ways that Abel could still scrape together a large amount of money.

One was a mortgage from Pacific Bank of Commerce.

Pacific Commercial Bank is now a medium-sized bank with more than 10 billion US dollars in own assets.

Use it as collateral to get loans from those large banks.

At the very least, a loan of several billion dollars can be obtained.

That's it, it's a bit too much for Pacific Bank of Commerce.

They have already risked violating regulations and going bankrupt to contribute.

Now it has to be mortgaged in exchange for money.

Before reaching the last step, Abel didn't want to do this.

He has another source of funding.

"Then let's first withdraw some of our funds from U.S. stocks."

Abel spoke.

Smith Capital has invested in 131 stocks in the US stock market.

The total investment exceeds US$14 billion.

The purchase time has been more than half a month.

In the past half month, each of them has experienced a certain increase.

"Sell the ones that have risen the most and have the best market prices." Abel told David Mellon.

David also knew about the funds.

Smith Capital’s US$14 billion investment in U.S. stocks.

In half a month, Smith Capital has made almost three billion U.S. dollars.

Many of these stocks will continue to rise, and you can make more profits if you hold them for a while.

David was reluctant to part with it.

But Abel insisted on doing so, and David could only order the traders to take action immediately.

Because the market was very good, Abel selected 31 of the 131 stocks to sell.

Sold quickly.

In these thirty-one stocks, Smith Capital invested approximately US$3.1 billion.

After selling them all, Smith Capital had an extra $4.8 billion in its account.

In other words, these shares gave Smith Capital a profit of $1.7 billion.

This made David realize something.

He asked Abel: "Boss, it seems that you think they won't rise any more, so you chose to sell them, right?"

Abel smiled and said nothing.

But it was exactly what David had guessed.

Abel did not choose to sell stocks that would continue to rise and make money.

Most of the 31 stocks sold have finished their gains.

In other words, there won’t be any large-scale increases in the future.

Therefore, the liquidation of these stocks will have little impact on Smith Capital’s investment profits in the US stock market.

The extra US$4.8 billion in funds also made Smith Capital's funds suddenly abundant and flexible.

It's after Abel has so much extra free funds.

He immediately issued another order that frightened David.

Abel requested that Smith Capital continue to increase short selling on USD/JPY!

By continuing to invest margin, transfer money to margin accounts at Wells Fargo and Citibank.

It’s January 6th.

Smith Capital's foreign exchange account.

Already holding more than 550,000 USD/JPY long orders.

The account's floating losses exceeded US$2 billion.

At the same time on the 6th.

Neon time is 6pm.

Neon Central Bank, announced a new policy of theirs.