Being able to get Greenspan's attention and make a public speech shows that the crisis of subprime mortgages has generally erupted and even attracted the attention of the US authorities. Although there hasn't been much of a stir so far, with only a handful of mortgage agencies announcing the end of the game, Greenspan and his colleagues are confident that none of this will be a problem as long as risks are actively managed.

But it is clear that they miscalculated.

"The AAA index in ABX07-1 has risen by 3 percentage points and is now 87, the AA index has risen by 2 percentage points and is now 73, and the lowest BBB- has risen by 1 percentage point and is currently at 58."

Just two trading days after Greenspan announced that subprime mortgaged bonds had been brought under control, the market reacted positively, with prices of mortgage-backed bonds of varying magnitude rising across all grades. As Zhong Shi's right and left hand at present, Jiang Shan is reporting to him in detail on today's market situation.

AAA, AA and other represent the ratings given to these bonds by rating agencies, and 07-1 represents mortgage bonds issued in the first half of 07. The bonds were originally measured in $100, according to the ratings given by the rating agencies, and now represent the immediate market price.

Due to the different risks involved, there are different levels of price differences. For example, AAA-rated bonds are the most priced because they have the lowest risk of default. As the lowest level of bonds, BBB is basically a situation where there is a slight risk of default in this part of the bonds. Therefore, the price of this part of the bond is set at the lowest, but if it can be paid in full, this part of the bond is also the largest, so in the ABX index, it is the market volume and transaction scale of this part of the bond.

Bonds rated BBB and below are known as subordinated mortgage bonds, or subordinated debts.

Since New Century Finance and HSBC announced that they had problems with subordinated debt, the entire BBB and below have seen declines in varying degrees, with BBB in particular falling the most severely, while the price of CDS linked to them has skyrocketed.

In the past six months, Jiang Shan has begun to turn to the bond market at the behest of Zhong Shi. In particular, the correlation research of derivatives such as CDO and CDS. The rationale for these things is not very difficult to understand. In fact, there is no need to understand too much, because these are things that bankers only need to understand and cover. What Jiangshan needs to understand is the internal relationship between these derivatives, the influencing factors and the main players in the market.

"What do you think of Greenspan's speech?" Regarding the market's reaction, Zhong Shi just nodded. Greenspan was able to speak up. No matter what the market says, it has to give some face.

"Not good!" Jiangshan bluntly came to a denial. "Unless the Fed or the U.S. Treasury makes some practical policy, this kind of empty rhetoric will not help the market at all. The problem now is that due to the heavy downturn in the subprime market. Financial institutions with a large number of financial institutions will inevitably suffer certain losses, and now that the second quarter statement is about to be disclosed, their accounting department may have to start to write down calculations and write off some bad debts, so it may not be as profitable as expected, or even a loss. In this case, the stock price of these institutions fluctuates or even falls sharply to become a high probability event. ”

"So we should be in a timely position and short their stocks?" Hearing the meticulous analysis of Jiang Shan, Zhong Shi couldn't help but nod secretly, and when he heard the final conclusion, he suddenly asked a rhetorical question.

In fact, if it really develops as analyzed by Jiangshan, it will become inevitable to short the stocks of these financial institutions at this time, just imagine selling at a high level and buying back at a low price, even if there is a 3% range, it is a more objective profit.

"This ......"

Jiang Shan's face was full of embarrassment, he looked at Zhong Shi with some embarrassment, pondered for a long time, and then said: "I'm afraid this is inappropriate, first of all, we don't know who these institutions are; Second, even if we know who they are, it is impossible to conclude that these institutions' quarterly earnings will fall as a result of the decline in subprime mortgage bonds, or that they may see growth in their FICC business, or that some of their direct investments will be significantly profitable. The most important point is that Greenspan spoke at this time! ”

"So, your conclusion is ......"

Although Jiangshan's style tends to be cautious, Zhong Shi is very happy with it, which at least shows that he has thought things through. He needs bold and aggressive traders, as well as solid analysts.

Greenspan's public standing up and speaking at this time is definitely not untargeted. Although he claims that the collapse of the subprime mortgage market has been contained, in reality, without the injection of liquidity, it may be difficult for some financial institutions that are deeply involved in the CDO market to continue to survive, like the New Century Finance Corporation before it. And once the Fed injects liquidity into financial institutions, the basis on which my above analysis is based may not exist, so the variables are still quite large, and we can only wait and see. ”

After Jiang Shan finished speaking, he sighed helplessly. Indeed, according to his previous analysis, the stocks of certain financial institutions will indeed fall, the market value will evaporate, and there will be a shortage of liquidity. But Greenspan stood up at this time, although the motive behind it is not clear, but he has already expressed concern about the subprime mortgage market, and as a derivative CDO of this loan, it is bound to enter the other party's sight, and now the question is in what way and with what strength the Fed will support this market.

And these factors are the key factors affecting the stock price of financial institutions, if a similar situation really happens, when the time comes to short the stocks of these financial institutions, I am afraid that it will be "losing the wife and the soldiers".

Although the logical relationship has been analyzed, there are too many factors that can be influenced. And they are all key factors that can subvert the stock price table, so Jiang Shan can only sigh, and many uncertain factors make him feel helpless.

"You're right, but you've forgotten a little!"

Zhong Shi was extremely satisfied with Jiang Shan's appearance, but he also realized that Jiang Shan was still a little immature after all, and some things could be achieved through research and analysis, "If we are familiar with their financial statements and accounting materials for this quarter, then we are outright insider trading." If you really want to know what is going on inside them, you can talk to their traders, loan officers, or even account managers. Go to Guò to find out about them in a few words. Although these things are not real numbers. However, in a certain way, it can still reflect the development of certain aspects of the business in the quarter. ”

"That's how the analyst works......"

For a while, Jiangshan fell into deep contemplation. Originally, in Hu Ping's team, he only played the role of a trader, although there were also logical analysis roles to be assumed at some point. But in the general direction, Hu Ping is always guiding. And now Zhong Shi's words have relieved him from his role as a trader. Really get into the position of an analyst. Although at the moment he is not yet at the level of a professional analyst. But given time, according to his clever routine, becoming a good analyst is almost a matter of time.

"There's a lot more that an analyst can do. Even in this market, a lot of insider trading happens from time to time, and I believe you should have heard of it. Zhong Shi took out a cigarette, did not light it, but put it under the tip of his nose and sniffed it, and put it back in the cigarette case, "Whether a new drug can pass the guò FDA (Food and Drug Administration) certification has a huge impact on the stock price of a pharmaceutical company. Of course, this must be insider trading, and illegal things cannot be done. ”

After a pause, Zhong Shi continued: "In fact, the capital market is not completely rational, even in this highly mature market where you can short or long. As a good analyst, in addition to being able to deal with people in the industry and capture useful information from a few words, you should also pay attention to some hot and important things that happen around you, because these things can also bring a driving effect to the market. ”

"For example, if a highly influential streamer calls attention to something, such as an oil spill, such as air pollution, then the relevant industry will be taken seriously, and their stock will be followed for a period of time in the future. This is event-driven, and every hot news can be converted into real profits. ”

“……”

Zhong Shi's words made Jiang Shan completely stunned, and after thinking about it for a long time, he somewhat understood what Zhong Shi meant, it turned out that the so-called event drive was like this, but the next moment he was a little confused, "If you say that I can understand oil spills, but air pollution, it is a matter of the last century." The air is ...... now"

"I'm not just talking about the United States, it's possible for other countries. In short, an event that can attract widespread attention from the society can always be linked to the capital market, and these are the issues that event-driven funds should pay attention to. ”

Speaking of this, Zhong Shi waved his hand slightly towards Jiang Shan, signaling him not to speak, and then took out the phone from his arms, and after talking for a long time, he hung up the phone.

"What happened?"

Seeing that Zhong Shi answered the phone, the whole person showed an indescribable taste, and he didn't know whether it was Jiangshan's illusion or the real existence, in short, Jiangshan always felt that Zhong Shi seemed to have unloaded some burden and became relaxed. It was precisely because of this feeling that he dared to ask Zhong Shi bravely.

"We talked about event-driven, and now we're here." Zhong Shi said with a smile, "Just now Stanley contacted me and said that there was a bond with a very attractive price to sell, and because the amount was large, they thought of me. Moreover, these bonds have accurate ratings from rating agencies, and the corresponding mortgage and other procedures are readily available, and they want to sell them to me at a price lower than the market price. ”

"It can't be, right?" Jiang Shan scratched his head, a little puzzled, if this qiē was true, then it was simply a pie falling from the sky. However, he knew very well that in the deceitful capital market, similar good things would never happen, so his first reaction was "this is impossible".

"In addition to these, they also sent another news, one that is enough to shake the market, and it is good!" Zhong Shi did not answer Jiang Shan's question, but said another news with interest.

“……”

Jiang Shan was completely confused, he didn't understand what was going on, so after pondering for a moment, he asked decisively, "Then what are the terms of exchange?" ”

"I don't know yet, but it's certain that the other party must not have any good intentions!" Zhong Shi took out a cigarette from his arms and lit it with a "snap", his face had long since stopped smiling, and became cold and cold. (To be continued......)

PS: Thank you book buddy for awesome tips on this book! Thank you for the gambler, not me to vote for the monthly pass again!