Chapter 101： Bond market still booming

When William Chen returned to New York, Meta Investments had moved from Building 666 to the 35th floor of the Troupe Headquarters Building.

At this time, the Meta investment company occupied an entire floor and looked like a big company.

When the elevator is opened from the 35th floor, the logo and logo of Meta Investment Company are on the front.

"Hello, Mr. William."

Annie is still the front desk of the company. She greeted William Chen enthusiastically after she came to the company.

"Annie, you are still so beautiful."

After a brief chat with her, William Chen arrived at his new office here under the guidance of Erica.

"Looks like I'm going to find another assistant?" Erica said to William Chen with some ill will.

Because up to now, Li Ying has not come back, so she has this question.

At present, Li Ying and his subordinates are following up on Meta Investment Company's investment in Huayi Company. Chen William also transferred the 300 million US dollars lent from Future Bank to Meta Investment's account in the form of loans. The 100 million will be transferred to the Huayi company account.

Moreover, she has to go through the follow-up procedures for the courtyard building and the docking with the decoration design company for Chen William, so she should not be able to return to New York in the short term.

Through her work in Huaguo this time, Chen William is quite satisfied with Li Ying's ability, so she intends to keep her in Huaguo for a long time and set up an office there to be responsible for the future business of Meta Investment Company in Huaguo.

Therefore, after telling Erica about this, William Chen also suggested that she find two more assistants. Moreover, Chen William now still recognizes Erica's vision, just like Li Ying she found before, and her ability is very strong, so finding two more assistants can also become a talent pool for future preparations.

From Erica, William Chen also learned about the current situation of Building 666. At present, the tenants in the building have been cleared, and Gared has begun the ambitious renovation project of the building.

Chen William didn't know the other party's specific thoughts, and he didn't know if he was aware of the current real estate market situation.

However, William Chen believes that with so many years of real estate experience of Kushnar Company, he should feel the abnormal atmosphere to some extent.

But there is no turning back, the agreement has been signed, the financing has been completed with the bank, and the initial cost of the transformation has been spent a lot, so we must continue no matter what, and hope that the transformation can be completed.

Thinking of this, William Chen approached John Paulson to ask about the recent real estate market.

"I was just about to tell you, boss, now that real estate prices have stopped rising, and according to my investigation, there have been more mortgage loan cuts in some places."

"What about bonds?" William Chen asked curiously.

"Just a few days ago, Goldman Sachs stopped short-selling services for CDO bonds, and until today, many banks have followed suit, and Morgan Stanley and other banks have also suspended this service one after another. The reason is based on the emergence of the market. Uncontrollable risks."

"Goldman Sachs stopped short-selling services, will it affect us?"

"They just stopped short-selling securities lending services, the previous ones are not affected, and all the funds of our No. 1 Fund have already completed the construction of positions, which has no impact on us. All we need to worry about is the final redemption. question."

In the Huaguo securities market, the supervision of bonds is stricter than that of stocks. In the United States, on the contrary, because there are more individual investors in the stock market, if there are great fluctuations, it will cause greater political influence and cause dissatisfaction among the people, so the supervision is very strict; while the securities market is just the opposite, participating in this market. Most of them are institutional investors, and the threshold is still relatively high, so the supervision is relatively lax, and even in many cases, the confusion is surprising.

Take Goldman Sachs as an example. What they do is similar to the stock exchanges that issue stocks. In recent years, they have issued two CDO bonds, including Abacus Securities and GSAMP (Goldman Sachs Optional Mortgage Product) Trust2006-S3, and sold them to the stock exchange. Those investors who actively buy such securities.

Because of the continuous rise in prices of this type of bonds, and Goldman Sachs packaging it as a low-risk high-yield product, it is extremely popular in the market.

In order to obtain greater profits, under the trend of greed, investors often use extremely high leverage to buy these CDO products. Therefore, under a conservative estimate, Goldman Sachs alone will sell more than 50 billion US dollars of these bonds. .

This is only the CDO bond size of Goldman Sachs. The five major investment banks on Wall Street, plus the rest of the banks, and even investment institutions in Europe, Asia and other places have entered the market because of greed, resulting in the overall size of CDO bonds. fear.

At the same time, in order to obtain greater profits, they also provide short-selling services for CDO bonds, that is, securities lending services. The principle is not complicated -

If investors are not optimistic about the future price of this type of bond, they can use margin to borrow a certain CDO bond, buy high price, buy low price, and then return the bond.

So in fact, the counterparties involved in shorting CDO bonds are not banks like Goldman Sachs -- they don't put themselves in this danger, but investors who buy CDO bonds. Of course, there are also some banks who see the profits of CDO bonds and use their own funds to buy these products.

Now Goldman Sachs is suspending this type of securities lending services and no longer lends CDO bonds. John Paulson speculates that the issuers of these subprime loan bonds should have smelled the danger, so they will not Then lend out CDO bonds to make others short. You must know that in the end, if CDO bonds really fall, the losses will not only be the investment institutions that bought the CDO bonds they lent at high prices, but also Goldman Sachs themselves. A pile of returned bonds in hand.

And William Chen's role in choosing John Paulson to lead these investments is reflected. Among the many CDO bonds - conservatively estimated, there are thousands of CDO bonds in the market - John Paulson can Based on his years of research on this market, he helped Chen William to choose the most profitable varieties, and allocate investment funds, diversify opponents, and make the investment obtain the greatest possible profit redemption.

"The market is very crazy now, and people have been disclosing the phenomenon of housing loan cessation, and it is clear that the 5% mortgage cessation rate claimed by those CDO bonds at that time is absolutely false, but the bond market does not seem to be able to see those negative news. The same, still prosperous, and there are still institutions selling CDS bonds in a big way…”

John Paulson said with a look of disbelief: "Few institutions are aware of the risk, and I got a call from Goldman Sachs asking if I could repurchase some of the CDS securities they had sold me before, and some cautious. Institutions have begun to buy CDS securities to hedge risks. But there are still too many banks that are still crazy about promoting the high expected returns of CDO securities. It's like tickling."

"Wouldn't that be great? Mr. Paulson, I still have $200 million here, and I hope you can seize this rare window - those top agencies wanting to run for their lives, and they're going to show some safety. , and even began to deceive other institutions and investors who know nothing about this market. This window is hard to come by, use this money and continue to overweight CDS bonds.”

...

Walking on Fifth Avenue in New York, the city was still prosperous at this time. William Chen looked at the passing pedestrians, the elites who were in a hurry, and the ladies in high-end fashion.

I don’t know how their fate will change when the subprime mortgage crisis arrives. Will they become unemployed, or become impoverished after going bankrupt, or will they start a careful life because of the sharp drop in income?

I just discussed the consequences of the subprime mortgage crisis with John Paulson, and at this time William Chen couldn't help but have these thoughts in his mind. One thing is certain - the sooner any crisis erupts, the less destructive it will be.

And the subprime mortgage crisis has been delayed for two years, just like the boulder that was about to fall has been pushed to a higher peak. Then when it rolls down, it must be more powerful and more damaging.

William Chen walked near Building 666, found a coffee shop, and took a seat by the window.

Through the window, you can just see the building not far away. Gared moved very quickly. At this time, the surrounding of Building 666 had been surrounded, and the construction of the renovation of the building had already started in full swing.

"Did you just come back today? William."

When William Chen was immersed in his own thoughts, Uncle Tom had already sat in front of him.

"Yes, just arrived in New York this morning, Uncle Tom, how are you doing?"

Tom gestured towards Building 666 and said, "You see, the Kushnar Group is fully promoting the renovation of the building."

"It wasn't like this a few days ago. Gared proposed to us to postpone the renovation and revise the agreement signed at that time, but we rejected it according to your instructions. And we hired Deloitte to monitor the whole process of 666 The funds in the special account for the renovation of Building No. 1, so they can only speed up the progress.”