Riyu's Back File 2011

"Go to Merrill Lynch in the next city first." After hearing the driver's question, Miyazaki Cangsuke said his goal today.The driver is arranged by the hotel for the customers of the presidential suite. A black uncle who has served for more than 15 years. Of course, the price of this service is not low. Basically, the charge per night is calculated in 10,000.

After receiving the first royalties from Art Spring and Autumn, Miyazaki Sosuke quickly exchanged 200 million yen for more than 2 million U.S. dollars. At this time, the exchange rate between the U.S. dollar and the yen was at the lowest level in history, one U.S. dollar. It can be exchanged for about 80 yen.

After half an hour, in the office of Merrill Lynch’s New York business department, Aosuke Miyazaki was discussing something with the business manager in charge of the reception.

Although Miyazaki Sosuke worked hard in the field of investment banking in his previous life, it does not mean that he knows nothing about the business of the trading department.Every investment bank has strict confidentiality measures between different business departments. Sometimes you have worked in the company for several years, and you may still not know any colleagues in other departments except the person you are docking with.In order to prevent leaks and insider trading between departments, for example, the investment banking department confirmed an M&A case today, and the transaction department has done more M&A targets in advance, and the regulatory department has set strict evaluation standards for each financial company. In the event of breaches such as leaks, these will receive huge fines.

However, strict secrecy measures are just for the top management of investment banks to stop the supervision.Can you expect a financial company whose goal is profit, to keep all kinds of inside information unwavering?This is impossible.

But Sosuke Miyazaki is here today not for insider trading or to find a new investment bank job, to return to Wall Street, etc.But to make a deal with Merrill Lynch.

2011 was a thrilling year for the US stock market. Although the final annual changes of the three major stock indexes were not very large, the whole process was ups and downs.Especially the August Super Roller Coaster market not only surprised Wall Street trading veterans, but even Miyazaki Cangsuke also remembered deeply under the continuous bombardment of the media and companies.

"This is the contract I want to sell. You can take a look." After some greetings, Miyazaki Cangsuke took out a document from his bag and put it on the table, and slid it to the representative of Merrill Lynch sitting opposite. .

After receiving the documents from Miyazaki Sosuke, the people at Merrill Lynch eagerly opened the folder, took out all the contents in one brain, and flipped through it from beginning to end.

There are a total of two documents in the folder, the upper one is the Dow short sale contract, and the lower one is the opposite short sale contract.

The manager of Merrill Lynch glanced at the content of the contract. The A4 printed paper was densely written with various clauses, covering more than 20 pages from beginning to end.According to the content of the contract, in the first contract, Miyazaki Sosuke shorted the Dow to Merrill Lynch at a margin rate of 25%. The contract amount was 10 million U.S. dollars, and the period was one week, starting on August 2nd. The transaction will close for settlement on August 8.The second short-buy contract is based on the same margin rate, starting on August 9 to short the Dow for two weeks.The settlement time is August 23, and the contract amount is 16 million U.S. dollars.

The reason for this arrangement is that Miyazaki deeply remembers that the first wave of the roller coaster in August was triggered by the US debt ceiling crisis starting on August 4.The US debt crisis has continued to ferment since July, and the incompetence of the US Congress reached its peak in early August. The two parties could hardly reach an agreement on the US debt ceiling before the deadline.

Since August 5 is the day when the important monthly employment report in the United States is announced, investor sentiment is very nervous, and the number of economists who expect the second recession of the US economy has risen sharply.So on the fourth day, the Dow fell by 512 points, a drop of more than 4%, creating the worst day for US stocks since the 2008 financial crisis.

Immediately on the evening of August 5, Standard & Poor’s announced an unprecedented downgrade of the 3A sovereign rating of the United States. The horrifying story officially began. After the fermentation of the two-day holiday on the 6th and 7th, the global market before the opening of US stocks on August 8 It has already plunged, and investor fear has reached its peak.That day, the US stock market became the worst day of 2011, with the Dow falling by more than 6%.However, at the time, people may not have thought that this was just the prelude to the crazy market for the next two weeks.In the next two weeks, although U.S. stocks experienced fluctuations such as the European debt crisis, due to the announcement of ultra-low interest rates in the United States and the record low number of unemployment benefits, the Dow rose by more than 10% in just two weeks. To the position in July.

So Miyazaki Aosuke, who is familiar with the general trend of the US stock crazy roller coaster, can only choose to buy and sell the Dow, rather than specific stocks.As for why the margin ratio was set at a high point of 25%, it was because before the subprime mortgage crisis, U.S. stocks had very high leverage and low cost of securities lending, which resulted in the market being prone to short-selling when occasional negative news came out. The stock has plummeted.In 2009, Citibank was shorted by many institutions for a month, fell below the market value of one dollar and almost delisted.After the subprime mortgage crisis, the U.S. Securities and Exchange Commission (SEC) noticed this problem and successively introduced policies to restrict short selling. Among them, it stipulated that the maximum leverage of securities lending should not exceed 2005, and stock downtick (low-price transactions are conducted on the stock exchange. The price is lower than the previous transaction).

By 2011, short-selling in US stocks has been suitable and perfected. Short-selling and short-selling are basically 50%. The only large-leverage ones are in futures options and some derivatives transactions.Except for specialized institutional short sellers like Muddy Waters, which can get higher leverage, it is difficult for other investors or institutions to leverage short shorts.And Aosuke Miyazaki also took this into consideration, and chose a ratio that is not high or low to short the Dow. It was also Aosuke Miyazaki who worked at Merrill Lynch in his previous life. He knew the biggest bottom line that he could give to customers, so the ratio was just right. At the point of 25%.

"Mr. Mike, we have no objection to the content of the contract. Merrill Lynch is willing to provide you with services. Although the margin ratio is generally only 50%, we are willing to give 25% to large customers like you." Merrill Lynch’s manager whispered. After discussing it, I felt that tens of millions of orders would be a very good performance, and the margin ratio was appropriately reduced.

Miyazaki Sosuke walked out of the Merrill Lynch Building, feeling particularly comfortable.Compared to the investment banking sector, which is more akin to the service industry, the trading sector is more stimulating.After signing the contract, Miyazaki Aosuke was still in the mood to stroll around New York, and went to the Lincoln Center for a concert.

In the next two weeks, the U.S. Congress really lived up to expectations and began to attack.

On August 3, US Treasury Secretary Geithner indicated that he was worried that due to some emergency measures to maintain the borrowing capacity, the US government’s payment of expenditures was delayed until August 2, 2011 at most.From the 3rd, the US government will begin to shut down until the two parties reach an agreement on the debt ceiling.

Immediately after August 5, Standard & Poor's stated that the United States must ensure its AAA sovereign rating, while increasing its debt limit of 2.4 trillion yuan, and at the same time, it needs to cut fiscal expenditures of at least US$4 trillion in the next ten years. It is difficult to achieve in the long run.Therefore, in view of the development trend of the US debt ceiling crisis, the US sovereign rating was lowered from three A to two A in an unprecedented way.

This move caused market shock. The President of the United States told the media that the United States is still the most reliable country in the world, and he expressed regret for the behavior of Standard & Poor's.

Successive events made the market react strongly, but when Miyazaki Sosuke walked into Merrill Lynch’s New York office on August 9, his 2.5 million US dollars had become more than 4 million US dollars, deducting transaction fees and management fees. After that, only one transfer was made and returned to Merrill Lynch's margin account. The second short buy contract will be fulfilled today.

"Mr. Mike, I'm really curious. Why would you choose to buy short at this time? You know that the market is declining now, and everyone is not optimistic about the prospects of the stock market. Especially after today's Standard & Poor’s downgrade caused the market to drop sharply. , I think if there are no major positives, there will be no upside prospects in the short term." The manager who entertained Miyazaki Sosuke was still the manager who signed him.

"Never waste a good crisis." Miyazaki Sosuke got up and adjusted his clothes, stretched out his right hand and shook it with Merrill Lynch's manager, and Chunfeng proudly walked out of the conference room door.Seeing a beautiful intern in the lobby who was copying materials, she threw a wink to the other person too much, chewing gum and left the Merrill Lynch building.

###Peter Johnson###

"Mike, I'll just call you Mike." In the box of the Aikens Club in New York, a gray-haired old man dressed in a custom suit on Savile Street, with a red tie, half leaning against an office chair, playing French The shirt's cufflinks-a black and gold sword, said to Miyazaki Cangsuke.

"Mike, I come from a horse town, western Texas. Our family makes a living by raising horses, American quarter horses, do you know?" The old man asked Miyazaki Aosuke slowly, but continued without waiting for the other party to reply. , "Those foals can sell for a good price, so we are very friendly to these goods. We will use bait, which is the kind of stallion you put in the stable at the beginning. Just to ensure that the mares are in heat and do a good job of breeding This bait is not to make it really mate, but to make the mare estrus."

"Let the mare kick two feet, and want to climb up, you have to get more kicks." Talking about the rise, the old man would still gesture to Miyazaki Aosuke, "God knows, even with that bait, that stallion is annoyed in the process. What does it matter when you get up?"

"When the mare is ready, we will pull the bait away and let the real stallions mate. The bait can only be used with the haystack to get a bucket of oats." The old man returned one to Miyazaki after he said it. A meaningful smile.

"It's cruel!" Miyazaki Cangsuke took a sip of the coffee brought in by the waiter, and turned the coffee cup in his hand.

"Yes, nature is like this. Now, you are the bait, aren't you?" The old man leaned his head back, frowning slightly, his eyes half-squinted at the opposite young man, his hands folded on his stomach. .

When Miyazaki heard this, he was not angry, nor did he show any unexpected emotions. He just picked up the documents on the table. The cover said the high-speed yield bond, which seemed to be a financial derivative from the name.

"I just want to make friends with Goldman Sachs. If Mr. Peter thinks I am a bait, I am afraid I will disappoint you. Mr. Atsushi Yoshikawa of Nomura Securities not only promised to give me all five-thousandths of the net income, but also Willing to provide me with some small help in other ways." Miyazaki Sosuke put down the coffee in his hand and turned over the papers in his hand.

I saw the documents show that the high-speed yield bond is a financial derivative design that Miyazaki has a patent.The so-called financial derivatives is actually a kind of financial investment product, and can also be regarded as a contract. After decades of development on Wall Street, the global financial derivatives market has already expanded to hundreds of billions of dollars.Investors can purchase financial derivatives from financial companies and banks. Since all kinds of financial derivatives are designed to avoid increasing financial risks, the price discovery function is conducive to the price of the target to be more in line with the law of value, and the risks are compared to stocks and futures. Lower, but the income is much higher than the deposit interest rate, so investors are favored.

The design of financial derivatives is ever-changing, but in the final analysis, they are all considered from two aspects.One is to ensure that banks and financial institutions can make profits in the process of selling financial derivatives, and the other is to ensure that investors can be attracted by potential gains and buy.But what makes people troublesome is that in the process of the game between the two parties, the income of the bank and the interest of the investor are often contradictory. Therefore, the design of many financial derivatives is often very complicated and deceived in a way that is not clear to investors. The other party misleads the other party to invest.There are very few financial derivatives that can truly be a win-win situation, but the benefits that can be obtained are very high because they are extremely favored by investors.

But Miyazaki Sosuke's "High-Speed ​​Yield Bond" is a product that can be "win-win". There are a large number of potential buyers and the benefits are considerable.

"That's because you are all RB people. Atsushi Yoshikawa is worried about Tokyo's reaction. I am not afraid. Even Naoto Kan can't control one or two small traffic accidents in New York City." The old man Peter sat up and faced him. After Miyazaki finished the threatening words, he walked to the wine rack behind him.Peter already knew the origin of Miyazaki Sosuke,

"Of course Prime Minister Naoto Kan can't protect me, but Mr. Schneiderman, should I be able to protect my safety in New York?" Miyazaki Aosuke replied casually after flipping through the papers and putting the documents in his bag.

"Eric? That lunatic?" Peter Johnson frowned and returned to his seat, holding a bottle of whiskey in his hand.Eric Schneiderman mentioned in the conversation is the new attorney general of New York State and the only federal law enforcement official with direct jurisdiction over Wall Street.

"Yes, after the high-speed yield bond is sold, one-thousandth of the total proceeds will become political contributions to the Liberal Democratic Party in the form of various donations. I think in this case, Mr. Schneiderman should be better than Prime Minister Naoto Kan. I care more about my safety." Miyazaki Sosuke grabbed the glass and whiskey from the table and poured himself a glass.

"It seems that the bait has become a stallion!" Peter Johnson raised the glass in his hand and gestured to Miyazaki Cangsuke, taking a sip."what do you want?"

"I want Goldman Sachs to help me deal with the Tokyo Governor Ishihara faction, especially the Tokyo Metropolitan Government. I hope I can see them at the right time." Miyazaki Aosuke said his purpose, "As a price, "High Speed Goldman Sachs can get 10 billion for the first tranche of 30 billion in the first tranche of "Income Bonds". The subsequent share depends on sales. You will bid against each other. Goldman Sachs has the priority to choose under the same conditions."

"I come from a hometown of baseball, and our people know it when they are young. In a tie, it's just a base run. Of course, I have no objection. I have confidence in Goldman Sachs's competitiveness." Peter Johnson smiled. Nodded."With one additional condition, in the future, Mike your fund, Goldman Sachs has the right to have priority in partnership. Sugimoto Kazuma of Tokyo SVB are excellent partners of Goldman Sachs. I believe you will be happy to meet him."

"Yes, if I have investment, I will give priority to choosing Goldman Sachs as a partner." Miyazaki Cangsuke was taken aback when he heard the request. He didn't expect the old man to be so optimistic about him.He raised his glass and gestured to Peter, took a sip, and said with a smile."But Mr. Peter, didn't you just say that you are from Macheng?"

"West Texas is a diverse place, Mike." When the old man heard Miyazaki Sosuke's question, his originally smiling face slowly cooled down, his head turned up, and he answered seriously.

The temperature in the air dropped for a few seconds, and the two laughed at the same time.After a sip of the whiskey in his hand, he squeezed both hands tightly.

"Happy cooperation, Mr. Peter."

"Happy cooperation, Mr. Mike."

………

"Gentlemen and ladies, what you see now is our upcoming financial derivative structure, senior bond contract, a wonderful little thing..." In the conference room of the headquarters building of Wall Street Goldman Sachs Group in Lower New York, A young man in a dark blue suit was speaking on the podium, his hair covered with hairspray, and shimmering shimmering under the lights of the conference room reflected.At the same time, the representatives of many institutions that have business dealings with Goldman Sachs are sitting below, accepting Goldman Sachs's product promotion recommendations.At the same moment, the same thing happened at the headquarters of seven other banks in New York.

"On the basis of the one-year bond, the "Senior Bond Contract" stipulates that within the investment period, the bond does not accrue coupons, and the maturity income is linked to the corresponding stock index." The young man stood on stage and looked at the crowd. Talking freely, the projector presents the PPT of the product in detail in front of everyone."Its income calculation method is very simple. If the level of the stock index on the maturity date is lower than the level of its original payday, investors will suffer a one-to-one loss, that is, the stock index will fall by 5% on the maturity date. The principal lost 5%. However, if the level of the stock index rises, investors will bear a three-fold yield, that is, if the stock index rises by 5%, the investor’s income will become 15%. Think about it, The gain is three times the loss, how attractive it will be to investors."

"Then I would like to ask, how can our organization profit from the sale of these products?" A middle-aged person off the stage interrupted the speech of the young man on the stage, raised his hand and raised a question, which caused many organizations off the stage. The person in charge whispered.

"Good question!" The young man shook his body and snapped his fingers."First of all, everyone can take a commission from the bond sales. This is the most basic income for everyone. Okay, this is nonsense." His words caused a good laugh.

"The reason why we call "High-Speed ​​Yield Bonds" a win-win product is because we also have a concept of yield capping. For example, when our total bond yield reaches 200%, customers only We can share the highest return agreed in the contract, and the remaining profit will be ours. In other words, after the bond is sold, we transfer the risk to the customer, and we can use the bond-raised funds to enter the stock market and foreign exchange market for operations , I have earned us, and lost the customer. Of course, this is also very attractive to customers..."

The young people on the stage talked in front of everyone, while Miyazaki Aosuke and Peter Johnson chatted in his partner's office.The total amount of the first tranche of high-speed yield bonds was set at 30 billion yuan after discussions between Miyazaki Sosuke and a major investment bank.Among them, Goldman Sachs received a share of 10 billion at a price of five thousandths of net income.And Nomura won 3 billion, no more, no less, purely because Nomura's North American business is not very competitive. Although Nomura Securities has ushered in a period of rapid development in North America after the acquisition of Lehman Brothers' investment banking business, Compared with large groups such as Morgan Stanley and Bank of America, it still lacks competitiveness.

When high-speed yield bonds appeared in the U.S. financial sector, the stock index volatility like a roller coaster in August was ignored by the investment banks, and they revealed that they were in the competition of 30 billion shares.The cleverest people in the world can see from this genius contract, its attractiveness to customers, and its potential huge benefits.

######

On August 19th, the Federal Deposit Insurance Corporation of the United States issued a report stating that the health of the US banking industry is being installed.The number of failed banks has fallen for the first time in five years, and the number of problematic financial institutions has dropped from 888 to 865.After seeing this news, Miyazaki Sosuke boarded a flight from New York to Tokyo before the stock market opened next week to digest the good news.

In the first-class cabin, Miyazaki Aosuke looked at the blue sky and white clouds outside the window, shaking champagne in his hand from time to time, and the golden liquid tentatively on the edge of the glass wall.