The Son of Finance of the Great Age

  Chapter 708 The first hedge fund (fourteen)

   "It's actually the Federal Reserve!"

   Gross sat slumped on the seat, his eyelids drooped, his face trembled slightly, his whole body seemed to collapse, and he couldn't see a trace of energy at all.

   "Why would the Fed choose to take action at this time?"

Elian Muhammad was still puzzled, pulling his hair vigorously, his face full of confusion, "According to reason, even if they want to implement the QE policy, they shouldn't do it at this time .It doesn't make sense, they've ruined our whole plan now."

  After the market closed, the Federal Reserve posted a message on its official website, announcing that the Federal Reserve will implement a quantitative easing policy, or QE, within the next half month. Long-term interest rates will be reduced to a level of 2.5% to 2.8% by purchasing long-term treasury bonds.

  In the announcement, the Federal Reserve explained in detail the reasons for implementing this policy. It is nothing more than because the U.S. economy continues to decline. In the process of low interest rate policy stimulus, long-term liquidity needs to be released to cooperate. The purpose of releasing liquidity to the market this time is to guide capital flow to the production sector by lowering long-term interest rates. But in order to avoid inflation, the scale and quantity will not be too much. Corresponding follow-up measures, wait half a year later to see the trend of economic data before deciding whether to continue to implement the QE policy and so on.

  For institutions participating in the bond market, these nonsense only represent one meaning: the Federal Reserve bought bonds and acted as the market leader!

   If you want to say that the richest institution in the world is the Federal Reserve, because they print US dollar bills. As long as there is a need, they start the money printing machine, which can produce the largest number of dollars in the world. Therefore, in terms of funds, no institution can match it, which also determines the invincible status of the Federal Reserve.

   Therefore, when the Federal Reserve announced the implementation of the QE policy, the siege of Tianyu Fund was immediately broken, and all the efforts of short sellers instantly came to naught, including Pacific Investment Management Corporation and Quantum Fund.

  When he heard the news, Gross's chest felt as if he had been hit by a heavy hammer, and he could hardly breathe at that moment. When he came back to his senses and knew that the situation was over, his energy was taken away, and he could only slump weakly on the seat, like a paralyzed person.

  He is very clear that Tianyu Fund is holding a thigh, and it is the thickest thigh in the world, a thigh that no one can shake. Even if he tried his best, it was of no avail in the end.

  Compared to him, Elian Muhammad is considered a bit better. After knowing that things cannot be done, he began to actively reflect on all this. It's just that he couldn't figure out why the Federal Reserve chose to rescue the Tianyu Fund in crisis at this time.

"Maybe they wanted to make a move a long time ago, but because of the market situation, they didn't announce it before the whole thing is known." Gross slapped his head and said angrily, "Perhaps less than 4.0% is their bottom line, and We touched it without knowing it, so they decisively chose to shoot."

   "So, we did something bad with good intentions?"

  Erian Muhammad tilted his head and thought for a while, thinking that it was very possible, he sighed after a long time, "Oh, if we can give us another week, or if we don't touch this line..."

  It's a pity that the hypothetical problem does not exist, and failure is failure, an iron fact.

   "Tomorrow's trading hours, let traders sell as much as possible and quickly cover their positions from the market."

   After regretting for ten minutes, Gross barely pulled himself together, supported his body and said, "We can't let the floating loss continue to expand."

   "Our loss this time?"

  Erian Muhammad asked cautiously. He knew that Gross was very taboo to talk about this issue, but as the CEO of the company, he had to know the possible loss figures so that he could plan ahead.

   "Between $500 million and $1 billion!"

Gross frowned imperceptibly, as if he hated discussing this topic, but his brows relaxed again in the next moment, "This is only a preliminary estimate. But based on past experience, this number should be more reliable. "

   "It's strange to be reliable!"

  Familiar with Gross' speaking style, Elian Muhammad is very clear that the so-called "500 million to 1 billion US dollars" is very likely to end up with a figure of 1 billion US dollars, or even more than this figure. But he dared not speak out, because Gross is the cash cow of the entire fund, and his prestige far exceeds that of his false CEO. So even if Gross spoke lightly and had a perfunctory attitude, he could only endure it.

  Because during this period, Gross built positions frantically, and the entire Pacific Investment Management Company sold more than US$10 billion of ten-year treasury bonds. The other side of the decline in yields was the rise in prices, which brought them huge losses. Fortunately, they sold a large number of positions when the yield was 3.2%, and successfully pulled down the average price, otherwise it would never be more than $1 billion.

   "This must not go on like this!"

  A thought suddenly appeared in Elian Muhammad's mind, "Investment should be diversified, and it can no longer be limited to the bond market!"

  He secretly made up his mind.

  Pimco civil strife sowed the seeds of disaster.

  …

   "Impossible, absolutely impossible!"

  Soros jumped into a rage and roared in a high-pitched voice. He didn't believe what Rodney Jones analyzed at all. Just a few minutes ago, like Gross, he was dumbfounded when he got the news of the Fed's implementation of QE.

   Like PIMCO, Quantum Fund will also suffer huge losses. But unlike Gross, Soros never believed the whole thing was accidental.

   "Could it be that they can bribe the Fed?"

  Rodney Jones shook his head straight, disapproving of Soros's reaction, "Or, do you think they can influence the Fed's decision? This is absolutely impossible!"

   "No, no..." Soros' voice slowly weakened. Rodney Jones' words hit his heart like a bullet, and the two possibilities mentioned by the other party can never exist.

  Even if the asset management scale is as Pacific Investment Management Corporation, or as the top hedge fund Bridgewater Associates, it is absolutely impossible to affect the decision of the Federal Reserve, let alone Tianyu Fund, a foreign fund.

"What is the reason?"

  But when it comes to Tianyu Fund relying on its own judgment to accurately predict the actions of the Federal Reserve, Soros is even more unconvinced. From the beginning to the end, this layout was carefully prepared and planned by him. It can be said that no one else knew about it before it was officially announced. Naturally, it was even more impossible for him to believe that Zhong Shi guessed what he was thinking in his heart and joined forces with the Federal Reserve to create a bigger ambush for him.

   "What's the problem? Where is it?" Soros held his head and slowly squatted on the ground with a painful and grim expression. It would be difficult for anyone to miss such an opportunity, let alone the vengeful Soros.

   Rodney Jones quietly looked at the painful Soros, a trace of unbearable flashed in his eyes. But the facts are in front of us. Even if Soros thinks hard, he may not be able to figure out the connection between the Fed and Zhongshi. Because in Rodney Jones' view, there is no connection between the two.

   "George, let's think about how to end it!"

Rodney Jones said in a low voice, "I roughly estimated that this time we lost at least 700 million US dollars. This is definitely not a small amount, especially under the current circumstances. We must earn an astronomical figure this year, otherwise Our customers would leave us."

   "I don't **** care!"

Soros looked like a crazy tiger, and roared loudly, "At worst, I will lose all this money. You must know that I have a similar amount of net worth now, and at most close the Quantum Fund! No matter what, I must make that kid pay the price! "

  He said, with a bitter and bitter expression on his face. Apparently, even such a failure did not diminish his hatred for Zhongshi in the slightest.

   Rodney Jones sighed secretly, and shook his head imperceptibly. He knew that under the current situation, it was useless to say anything, and Soros had already fallen into deep paranoia. At that moment, he quietly walked out of Soros' office and closed the door gently.

  …

   "It turned out to be the Fed!"

  The thrilling disk battle is finally over, and everyone in Tianyu Fund is relieved. When seeing the "allies" attack like a rainbow, the entire Tianyu Fund boiled.

  But it was not until the early hours after the market closed that they realized the identity of this brave "alliance". It turned out to be the Federal Reserve that everyone knew. Before that, no one thought that their "ally" turned out to be the Federal Reserve.

   This time, the last trace of worry about the possible lack of funds of "Allies" disappeared without a trace.

   "Zhong Sheng, how did you think it was the Federal Reserve?"

  People outside the door were cheering and celebrating. Jiang Shan sneaked into Zhong Shi’s office while everyone was not paying attention, and asked secretly, “But I still haven’t figured it out. When did you get in touch with the Federal Reserve?”

   "Actually, we have no contact!"

Zhong Shi was in a good mood with a smile on his face, and the Parker pen in his right hand was spinning rapidly between his fingers, dazzled, "Around November, I realized that the US economy was not good, and it was very likely to implement the QE policy again. So in Before that, I started to pay attention to the U.S. economic data, and finally in December, I made up my mind to take a gamble on the 10-year Treasury bond market. As you can see, I won the bet!"

   "But if the economy turns warmer, what if the Fed doesn't implement QE?" Jiang Shan said cautiously, "There is also inflation data. If this data rises, bond yields will inevitably rise accordingly. Don't we..."

   "If you want to gamble, of course it's risky!"

Zhong Shi waved his hand indifferently, "What you need to know is that although the Fed's behavior conforms to all the norms of hedge funds, their ultimate goal is not to make money. Promote employment, stabilize prices, and moderate long-term interest rates. Their real purpose. During the economic depression, it is impossible for them to directly inject liquidity, and before that, there was already enough liquidity, and it was the sense of risk aversion that prevented these liquidity from flowing to the means of production market in a timely manner. If If the data does not improve, they will definitely take more measures, and QE is the most likely one.”

"As for what happened later, the Federal Reserve thought that I was helping the Chinese government to absorb positions, and specially sent someone to warn me. As a result, their idea of ​​implementing QE was confirmed. So even at the last moment, I None of them are very afraid of the gains and losses of this part of the position. But if I hadn’t used some tricks, I’m afraid the Fed wouldn’t have made a move today!”

  As for the little trick mentioned, he naturally didn't intend to explain it to Jiang Shan.

   "You mean, even though they've taken it all, none of the profits they're making are what they want?"

Jiang Shan thought about it for a while, and finally understood Zhong Shi's meaning, "That is to say, the greater the profit on their balance sheet, the stronger they will implement QE? And when there is a loss, is it exactly what they want? Yes, yes, that is indeed the case.”

   "With what they do, which institution in the world can compete with them?"

  Zhong Shi said sincerely, "The outside world has always heard that we are the number one hedge fund, but how can we be the number one hedge fund? The real number one hedge fund is the Federal Reserve!"

   Thanks to book friends seanju1 and Amy, it was not me who voted for the monthly ticket last night! The author will work hard, I hope more book friends can support this book, vote more, bookmark more, thank you~

  (end of this chapter)