Mediterranean hegemon

"Who does he think he is? Why should he dictate to us!" Benjamin Strong, a Federal Reserve official and President of the Federal Reserve Bank of New York, angrily criticized the New York Times reporter who came to interview him in his luxurious office.

Although he didn't mention him by name, he knew it was Contini at a glance.

The interviewer couldn't help laughing: "He is the president, the richest capitalist in Italy and even Europe. Does he have the qualifications to speak?"

"Is it a big deal to be rich?"

"Sorry, in his mind, maybe having money means he can do whatever he wants." The reporter said humorously, "Do you need me to publish what you just said?"

"Forget it!" Strong sighed, "I don't have the same experience as this Mussolini bitch. As you write, the Federal Reserve has always adhered to the principle of policy neutrality and will adhere to market realities, economic development prospects, credit conditions, and economic conditions. We use data to make judgments and put forward relevant opinions and policies based on our scientific decision-making procedures. The entire process is completely democratic and scientific, reflecting the professional management capabilities of the Federal Reserve. We oppose anyone making comments regardless of the facts or even spreading rumors and slanders, let alone Allow other countries or other foreigners to interfere in our internal affairs!”

There is not a word about Contini in it, but everyone knows that the president and the Fed are now starting to fight, and observers are waiting for a good show to begin.

After the war of words ended, the two sides calmed down for a few days, and new variables appeared in the market: due to high interest rates in the United States, speculative capital from European countries began to pour in. After all, it is not common to see a 20% lending rate for stock purchases. High interest rates, and the interest rates lent to long-term industrial capital have reached 9-10%, causing profit-seeking capital to pour in like sharks smelling blood.

These funds must have gone straight to the most profitable places, and they were too lazy to make long-term loans. This caused the index to continue to rise in late June, heading towards 370 points. Faced with the stock market rebounding little by little again, Federal Reserve officials finally understood: The American people have not lost confidence in the stock market. In other words, the bull market is still not exhausted, and only a catastrophe can completely cool down the bull market. Come down.

On June 27, the third day after Capello became Italy’s Minister of Education, the Dow Jones Index exceeded 370 points and stock prices rose again, marking the complete failure of the Federal Reserve’s New Deal. As the index re-consolidated and rose, Contini's pace of reducing stock holdings accelerated significantly in June. In one month, he reduced his stock holdings by more than 300 million U.S. dollars. Currently, the remaining stocks have a market value of only more than 200 million U.S. dollars. Of course, the funds reduced are not The more than 300 million that Contini reduced his holdings did not flow out of the stock market and was returned to the banks. The banks then changed hands and loaned money to other people who continued to bet on the rise of the stock market.

In this round of transfers, stocks and loans were transferred from Contini to American investors. Since there was no capital outflow, the stock market was very stable. Only a few foresighted people were reducing their holdings, but there were really not many such people. , Livermore is one, and Joseph Kennedy is one (Historically, President Kennedy’s father relied on this crisis to make his fortune). He said to his friends: "If even shoe shiners are buying stocks, I will I don’t want to stay in it anymore!” This wise choice allowed him to withdraw funds early and laid the foundation for his family’s future. However, their amount was not large, with a total market value of just over 10 million US dollars, which was just a drop in the bucket.

Faced with the continued rise in the stock market, Contini believes it is time to take a further view. On July 5, when he was inspecting agriculture in the southern United States, he once again accepted an exclusive interview with reporters to express his views on the stock market:

"The stock market has now completed its shock and consolidation, and has exceeded the 370-point mark. I think it is a good thing, indicating that our calls for a period of time have been effective. This effect is inseparable from the Federal Reserve because the Federal Reserve is stupid and stubborn The high interest rate system has attracted a large amount of European capital inflows. On the surface, this capital has injected momentum into the rise of the stock market, but on the other hand, this is a very dangerous thing. The target of this cross-border capital inflow. It is not the industrial and commercial market, but the speculative market. Once there is a disturbance in the capital market, they will have a collapse effect, so if the stock market can continue to rise, the crisis may be gradually overcome, but what if it falls?”

Contini knew very well that the reason why the Great Crisis of 1929 lasted for more than six months despite such severe policy pressure in March was essentially due to the injection of European speculative capital, especially Jewish speculative capital from Britain and France. They looted Germany a few years ago, and a few years later they set their sights on the United States. Of course, speculative capital has a very keen sense of smell. Once it finds something is wrong, it will leave immediately. At this time, the superimposed effect will be reflected. Of course, Wall Street also knows this. One point is that everyone is getting rich with their eyes closed. Why does the CEO want to break it?

Now everyone including Rockefeller, Mellon, Morgan and others think Contini's idea is strange. Isn't this guy angry with the Federal Reserve over this matter? However, looking at Contini's consistent performance, they think it is very possible. It is said that this is a boss who will never suffer losses and lose face. The Federal Reserve is probably also depressed: How can such a person stay in the United States and not leave? If you analyze it carefully, you will see that Contini has spent more time in the United States in the past two years than anywhere else in the world. Even when the Italian navy fleet came to change the guard one after another, Contini still did not leave. Meaning, if we continue to dictate policy matters, who hates Contini the most, the Fed is probably doing their part.

A reporter from the New York Times had an exaggerated headline in which the CEO warned of a crisis. Other newspapers had relatively weaker headlines in which the CEO warned not to let speculative capital destroy our market.

Livermore saw it clearly: Contini was now speaking more and more neutrally, and he began to work on his own plan. Beginning on July 6, Livermore began to intervene in experimental short selling, and Union Bank provided relevant financial support. In order to strengthen supervision, Francisco, the president of Union Bank, personally sat in the New York branch. From July 6 to July 25, there were only 15 trading days. Livermore deployed nearly 400 million short stock orders. Now shorting is easy. Everyone is optimistic about the rise. Brokers are eager for someone to borrow stocks to short.

The position of US$400 million seems large, but it is actually slightly smaller than the stock position held by Union Bank itself. There is almost US$500 million here. At best, it is a hedging to lock in profits rather than naked short selling.

On July 29, at the investor consultation meeting, Contini, as president of United Group, made further remarks:

“The stock market has reached a high level now. I don’t know how much more it can rise, but the upward momentum needs to be much stronger and more powerful than the decline. Now the market value of the entire U.S. stock market has exceeded 60 billion, and it will take 6 billion US dollars to continue to rise by 10%, even if According to 5 times leverage, 1.2 billion US dollars of capital are needed, and the 20% borrowing capital cost makes a 10% increase boring. It needs to increase by at least 20% to be profitable, so I think investment is risky, and it is necessary to enter the market. cautious……

The stock performance of United Group is not bad: in the semi-annual report and prospectus disclosed in advance, the net profit of United Pharmaceuticals exceeded 5.4 million US dollars, the crude oil production of the two United Petroleum companies has exceeded 5 million tons, and the order schedule of United Motors is still more than 6 months. My advice is very clear: If you want to invest in the next step, you must find the right stocks. Those stocks that have only concepts and no performance and are going up in a rush are likely to face a decline. This is not an era when all stocks can rise, nor is it a fool's errand. It’s an era where you can make money by buying things like crazy. "

A reporter asked sensitively: "Do you think the stock market will face a decline next?"

"A drop will definitely come, it just depends on when and where. The Fed's idiotic policy will never give up until the stock market is brought down, so there will definitely be a sharp drop, but..." Contini said slyly Yi smiled, "What I want to remind you today is not that everyone knows that the stock market will fall. What I want to remind you today is that not all stocks will rise in the coming era."

"I see!"

This is the first time that Contini has mentioned the possibility of a stock market decline in public. He used the word "sure" that the blame still lies with the Federal Reserve. He also used the word "idiot" to describe it. As for the weak rise, no one took it seriously. The president analyzes specific issues in detail, and at least he is optimistic about United Group's stocks.

This is also the reason why Contini has not left in July. Late July is the most important time point for United Group. A large number of American shareholders holding convertible bonds will soon face a choice. Whether to keep the bonds or convert them into stocks. They can only keep the bonds. You can earn 1.5% interest, but it is different when converted into stocks. The current conversion price is about 30% lower than the market price. In other words, after deducting fees and interest, shareholders can earn 30%, and this There is only one time window. Should I choose 30% potential profit or continue to hold bonds that guarantee 100% redemption?

Although the current stock market situation is confusing, everyone is still enthusiastic. They voted with their feet on August 1. A total of 1.49 billion of the 1.5 billion convertible bonds were converted into stocks, and only less than 10 million US dollars remained as bonds. Public opinion believes that these 10 million bond holders must have lost their minds or forgotten. Fools all know that if the convertible bonds are used as bonds, they can only collect 1.5% interest a year, and now the interest is easily 18-20%. It's not worth mentioning at all, but there is a 30% potential benefit in converting to stocks, so why not switch? Change!

On the day when the stock conversion was completed, Contini reduced the money in the last account in his hand: the account left by Adriana, and finally received 10.4 million. He had someone transfer the money to Adriana. In the past four months, she has tirelessly warned about stock risks and predicted a decline in the radio column. If she had not said so in interviews and comments, everyone would have thought that she had become an unreliable stock commentator...