In fact, Stanley America, as an investment bank, is not qualified to participate in the Fed's decision-making meetings, let alone know what the Fed will do next.

Although the Federal Reserve is the central bank of the United States, it is not legally mandatory, and this alliance of many banks adjusts the rise and fall of the base interest rate through guò regulation of the money supply in the market. Commercial banks can choose to join or not to join, but the Federal Reserve Bank is the largest loose consortium in the United States, and basically the benchmark interest rate level it sets can set the tone for the level of interest rates in the United States.

The Fed's decision-making agenda is voted on by the Federal Open Market Committee (FOMC), which includes seven members of the Federal Reserve Board, the president of the Federal Reserve Bank of New York, and the other four seats are rotated by the presidents of the other 11 Federal Reserve Banks.

Issues such as interest rate adjustments, reserves, and whether to conduct forward and reverse repos are required to be voted on by the FOMC and the results will be announced to the public. Although the big conglomerates may be one of the shareholders of the Fed, the members of the Federal Savings Committee are government agencies nominated by the president and approved by lawmakers, and the other members are high-ranking and not dominant, so even if Stanley is powerful, it is impossible to know the outcome of the Fed's decisions in advance.

They are naturally based on judgments about the shape of the economy and the expectation that changes may follow. Of course, even if they guess correctly, the question of when and how much liquidity will be injected by the Fed is still unknown.

However, in the trap that Soros designed for Zhongshi, this point was also taken into account. They take advantage of information asymmetry. Trying to create a sense that they already knew in advance that the Fed was going to intervene was going to be a boon for the bond market, because the bond market would naturally recover liquidity after the financial institutions got liquidity.

This is a huge benefit, but it is not enough.

Soon, a PR team was on the doorstep of organizations like Standard & Poor's and Moody's, talking behind closed doors with the heads of rating agencies, and no one knew what they were talking about. However, some bonds have been upgraded slightly, with BBB-rated subordinated mortgage-backed bonds being upgraded from "strongly underweight" to "appropriately underweight" in the outlook, and BBB-rated subordinated mortgage-backed bonds being revised from "appropriately underweight" to "hold and wait". A-rated bonds, on the other hand, have become "appropriately overweight". AAA-rated bonds were revised to "strongly build yì overweight".

Coincidentally, this part of the bonds are all the underlying bonds of the ABX index of 07-1, that is, the bonds issued in the first half of 07 on home mortgages, and Stanley is one of the big players in this part of the bond market. There are even those who say that they are the biggest players.

The treacherous clouds in this are naturally not enough for outsiders. However, in the explanations of Moody's, S&P and other institutions. Here's what they say:

“…… Although many financial institutions, including the financial giant HSBC, have suffered losses due to subprime mortgages. Even bankruptcies, the news sent shockwaves through the subprime mortgage bond market. However, after taking a closer look at the market, we believe that the current defaults are limited to the downstream of mortgages. And did not cause very strict consequences. In fact, this is a major reshuffle between industries, and short-term shocks are inevitable. However, after Greenspan's public speech, we have enough reason to conclude that the regulators have begun to take this issue seriously, so it is expected that some changes will inevitably occur in this market...... That's why we've adjusted the judging grades. ”

With the so-called inside information, coupled with the change of words of the rating agency, Stanley is full of confidence in the transfer business.

In fact, the Stanley bond was very tricky because of the large amount, the large losses, and the pessimistic market outlook, in which case they had to look around the world for possible consortia. And Zhongshi's recent large-scale cash-out happened to be observed by them, originally Stanley Company was going to appear at a discount, but under the instigation of Soros, they only spent a small cost to successfully upgrade this part of the bond to a level, so tossed down, the price of this part of the assets was quickly greatly increased, if it were not for Soros and Stanley's words first, I am afraid that Stanley Company would have wanted to sell this part of the assets a long time ago.

Zhong Shi's team soon flew in from Hong Kong, a team of 10 professionals, including bond experts, interest rate experts, economists and M&A experts. Together with Stanley's negotiators at the Waldorf Astoria Hotel, these men began to negotiate the price of the bonds day and night.

First of all, they have to confirm the market price of the bonds, and secondly, they analyze the quality of the bonds to see if there is a possibility of holding them for a long time, and finally the two sides sit down and start bargaining according to the results of their respective analysis.

Naturally, there was a tug-of-war in the process, and the size of the bonds was so large that it cost at least $30 billion when Stanley bought the bonds. And now, although it is not worth that much money according to the market capitalization, who can guarantee that at some point in the future, this part of the position will turn into a profit, or even make a big profit.

The disagreement between the two sides is on the expectation of the future return of this part of the position, Stanley insisted that this part of the position will have a great return in the future, and even for the sake of price reduction, Tianyu Fund is unwilling to admit that their position will have a rich return in the future, so the two sides have a disagreement on the price, and the price quoted by each is very different, basically in a situation where it is impossible to negotiate.

"Zhong Sheng, I think their bonds are very risky, even if we can finally negotiate, I am afraid that under the current situation, this part of the bonds will still have a certain risk of default."

The person who spoke was Zhang Hua, forty-five years old, a middle-aged man in the prime of life. But the temples are already gray, and they look a little old, and there are already wrinkles on their foreheads. However, behind his gold-rimmed glasses, a pair of cloudy eyes occasionally showed a fine light, and it was clear that this was not an ordinary character.

In fact, since the beginning of his work, Zhang Hua has been immersed in the bond market, especially mortgages and derivatives. Originally working for a large hedge fund in the United States, he was hired by Zhong Shi last year to be the investment director of bonds, with an annual salary of $2 million, plus a certain amount of dividends. Of course, his own worth is much more than that.

Breaks in negotiations. Zhong Shi called Zhang Hua to the pantry. After carefully inquiring about the progress of the negotiations, I began to discuss it with the other party in earnest.

Regarding Zhang Hua's judgment, Zhong Shi pretended to be silent for a moment, and then frowned and asked, "According to your judgment." Is it possible that these bonds will be profitable in the future? ”

Hear Zhong Shi's words. Zhang Hua sighed in his heart. He naturally heard Zhong Shi's implication, his boss was not very optimistic about this business, but he had already done so much work in advance. He didn't want to deny it all, and said head-on: "At present, it is unlikely to make a profit." But the market is dynamic, and if that happens, not only will the bonds not have liquidity problems, but they may actually be able to make a profit. ”

"If the U.S. subprime mortgage market continues to deteriorate, even if the Fed does not be able to stop the deterioration of the market, as they say, the Fed will not be able to stop the deterioration of the market, then the value of these derivatives will be greatly discounted, have you considered this?"

Zhong Shi's brow furrowed even tighter, because Zhang Hua was his head in the bond market, but even he was not fully aware of the huge shock that the coming subprime mortgage bond market could bring, let alone anyone else.

Hearing Zhong Shi's words, Zhang Hua's face obviously showed an expression of surprise, he didn't think about this possibility at all, because it was the Federal Reserve that intervened in the market, what role is the Federal Reserve? He knows very well that before the European currency has achieved complete integration, it is not an exaggeration to say that the Federal Reserve can be said to be the world's central bank, although in recent years due to the circulation of the euro, the dominance of the US dollar has been challenged, and the role and function of the Federal Reserve have also been weakened to a certain extent, but at least in the United States, the Federal Reserve can still "call the wind and rain" in economic activities, and has an incomparably huge influence.

The Fed can't intervene to solve it, what a big problem it must be! For a while, Zhang Hua fell into deep contemplation.

Bell Stone didn't push him, knowing that he needed time to think now, and in fact if he hadn't known how Wall Street's giants were so mired in the subprime mortgage bond market and credit default swap market, Bell would never have thought that the Fed's intervention would not calm a market.

In fact, the crisis in the CDS (credit default swap) market, which is 50 times larger than the mortgage bond market, has not yet been highlighted. All securities that can be guaranteed by credit can find corresponding derivatives in the CDS market, and Wall Street has spared no effort to develop new products over the years, and even carbon dioxide, diamonds and other such things can develop financial products, and the CDS market can naturally carry out credit default swaps on financial products with these things as the subject matter, which is enough to show the scope and scale of this market.

And the credit for this qiē naturally comes down to Zhong Shi's paper.

Zhang's misconception is that he does not link the two, and in fact even the collapse of the mortgage bond market is only a trillion-dollar market collapse. And if the CDS market is in turmoil, the entire financial system may tremble.

"But ......" was silent for a long time, Zhang Hua finally didn't understand, although he had figured out the boss's intentions, he still planned to give it a try, after all, years of professionalism did not allow him to bow his head so lightly and admit defeat, "But many consortiums, including the Japanese government pension fund, Singapore's Temasek Fund and the Saudi Oil Fund, have expressed interest in this part of the bond." ”

In addition to the Japanese government pension fund, the other two consortia mentioned are sovereign wealth funds, and they operate a country's foreign exchange reserves, and the natural selection of talents is the top, even on Wall Street. And these people have expressed their favor for this part of the Stanley Company's bonds, could it be that the boss himself has not thought it through enough?

Although Zhong Shi has become a legend, Zhang Hua has not been able to fully appreciate this "legend" since he joined Tianyu Fund, so he secretly thought in his heart, after all, he has a specialization in the art industry, maybe his boss really doesn't know much about the U.S. mortgage market?

Zhong Shi naturally knew about Zhang Hua's thoughts, but he didn't plan to break it, so he smiled slightly, slowed down his tone, and said: "Since these sovereign funds are interested in these bonds, let them buy them." At times like these, it's better not to take that risk, because there are so many unknowable factors, and we're just a small consortium that hasn't reached the scale of Temasek or Saudi Arabia's oil fund yet. Once there is a risk, we may suffer a catastrophe, don't you think? ”

Zhang Hua was speechless for a long time, in his heart he agreed with Zhong Shi's statement, but emotionally he couldn't accept it, because he couldn't imagine that his boss was such a timid person.

Yes, it's timidity!

Previously, he believed that there was a risk of default in this part of the bonds, but based on his trust in his peers and his professional judgment, Zhang Hua believed that this part of the bonds was still worth buying, but the price needed to be discussed carefully. Who doesn't want his "timid" boss to say no in his words, which makes him feel disappointed.

However, an even more disappointing scene soon followed.

"Hi Zhang, I'm really sorry that our negotiations were halted. The Fed is starting to intervene in the market, so we're going to have to talk to the next buyer about this part of the bond. Hopefully we will have the opportunity to work together again! ”

While Zhang Hua was still at war, Stanley's chief negotiator, Richard Greenham, walked out, a sturdy white man with blond hair and blue eyes, and leather shoes. After nodding politely at Zhong Shi, he shrugged his shoulders at Zhang Hua, signaling that there was nothing he could do, and then left with a sneering smile. (To be continued......)

PS: I'm sorry I didn't write it until now...... I'm sorry for the delay in the past two days......