Chapter 196: [I want to short these bonds]

, The latest chapter in the latest global monopoly of technology!
one week later.
The head of the Legacy Fund, Michael Barry, was sitting where John Paulson was, and the person sitting face to face with him was Luo Sheng.
After the meeting, there was a huge gap between Michael's image and Luo Sheng's impression. He couldn't see John Paulson's straight-fitting financial male suit.
A T-shirt + shorts is standard for Michael. He has a habit of running around the office barefoot, and has a drum in his office.
When Michael was a kid, he lost one eye because of cancer. Now he has a false eye.
He began to learn about stock market knowledge when he was in the second grade. At the beginning, he simulated investment. By middle school, he has begun to invest real money in stock market transactions.
In fact, he almost became a doctor in the beginning.
However, the investment attracted a lot of his attention, and he spent almost all of his free time all night, and started a special blog for this.
This caused him to fall asleep while standing during a complicated surgical operation, and damaged the patient's oxygen tent. He was eventually driven out of the operating room by the doctor. At the age of 29, he bid farewell to his doctor's career, and set foot on Wall Street. Become a trader.
Those who know him are used to calling him Dr. Michael, not Mr. Michael.
It turns out that Michael belongs to Wall Street, and he was born an excellent trader.
He founded Successor Capital in 2001 and created a pretty amazing return for investors. In the year he founded, he brought in a horrific return of 55.44% for investors.
At this moment, Luo Sheng watched Michael. He didn't know what the heir of the successor's capital was. If it didn't work, he would prefer to take care of the remaining $ 2.9 billion in Paulson's hedge fund.
So Luo Sheng decided to play every time and asked: "I now have $ 2.9 billion in cash lying in the bank, and I lose tens of thousands of dollars a day. The return on investment of inherited capital is quite amazing. I will take care of this $ 2.9 billion for you. Michael, but before that, I need you to answer my two questions, how much cash does the First Heir Fund now have, and what will you do with my money? "
Michael immediately responded without any hesitation: "$ 1.3 billion. If you give me $ 2.9 billion, I will bet against the US housing market and credit default swaps."
Suddenly, Luo Sheng stared at the halter with a blank look, and subconsciously said, "What?"
Michael recognized it when he saw Luo Sheng. A technology giant from China, the super rich among the top ten in the world's richest list, is also the youngest billionaire in the world.
However, Michael does not think that he can be as easy to handle in the financial market as in the technology industry. In his opinion, Luo Sheng contacted him this time, mostly because he had passed on the decent return of investor capital to investors, so he wanted Entrust a sum of funds to inject the hedging capital to hedge or appreciate, and nothing more.
To attract such a super rich, Michael is still a little proud in his heart.
So he said to Luo Sheng: "In the 1930s, the housing market in the United States plummeted by about 80%, and half of the loans were in default, but there are many signs beforehand, and everyone can see it. For example, in the investment boom One feature is the increasing complexity and rate of financial fraud. Do you know that these issues are rising at the moment? And they have reached a new high since the 1930s. "
Luo Sheng shook his head: "So, what does this have to do with your gambling market?"
Michael smiled and said, "You may be confused by the level of mortgage-backed securities, subprime mortgages, and bonds, but this is normal. Wall Street likes to use these seemingly high terms to make non-professionals think they are professional, even Make investors incapable of questioning those investments. "
It's dinner time, and Luo Sheng is invited.
He personally poured a glass of wine for Michael, and then looked around at the delicious food on the table, pondering that it should start with that plate, and said casually: "Eat while drinking and talking, the best thing is to make me a non-professional listener understand."
"Thank you for your wine."
Michael responded politely and continued with a sip: "The so-called mortgage bonds are making the big banks crazy, they earn billions of dollars on a 2% commission on each bond, but later find that there are not enough loans The house is limited to those who have good jobs and can afford it. Banks have to fill up with higher-risk credits and keep their money-making machines running. These high-risk credits are subprime loans. "
"But it's just a bunch of AAA-grade home loans. In the past, there was a federal government guarantee. But now it's different. There is no guarantee. It is divided into a bunch of levels. The highest level is AAA, and you can get the repayment first. The lowest level is B, the slowest to get the repayment, was the first to default, but the B-level profit is good, but the risk is high, and sometimes it will default, and if B and BB continue to develop, they will go from low risk to almost garbage. "
Michael took another sip of wine and commented that Luo Sheng bowed down for dinner, saying with the spirit of wine: "This is the lowest level of consumer credit rating. No proof of income is required. Floating interest rates are also junk. The default rate has risen from 1% to 4%, and as long as it rises to 8%, there will be a lot of BBB grades return to zero. So I want to short these bonds, which means betting. "
Luo Sheng looked up at him immediately: "You said that the default value of 8% of bonds will be zero, and it is now 4% ..."
Michael: "Yes!"
Luo Sheng: "How about 8%?"
Michael even leaned back in his seat, hugged his arms for a moment, and then looked at Luo Sheng: "If it reaches 8% ... the economic situation in the United States will ... Bo! It will even cause a comprehensive economic disaster. Sooner or later, someone will find this investment target, Mr. Luo, we must act quickly. "
Luo Sheng was still calm and asked, "You want to use my money to sell unsecured mortgage bonds. How can you confirm that these bonds are worthless?"
Michael replied patiently: "I have done a quantitative analysis and research. The housing market is supported by these bad debts. This is a time bomb. I want to short it!"
Luo Sheng asked again, "What to do? My company also bought real estate in the Bay Area. As far as I know, mortgage bonds do not seem to have insurance contracts or options."
Michael replied methodically: "Sir, this is what I do. I want the bank to help me tailor insurance, and then I will buy credit default swaps, just like bond insurance. As long as bonds default, credit default swaps It will compensate me. Mortgage bonds will definitely collapse slowly. If you give me $ 2.9 billion, I can bring you tens of billions of dollars of short-term excess returns. "
Luo Sheng chewed on the food and said a moment later: "It's a very enticing statement, but at the foot of Wall Street, why didn't anyone notice this?"
Michael laughed sarcastically: "The entire Wall Street is in a carnival moment, greed and madness, are busy selling bonds to collect fees."
Luo Sheng asked again: "Is the bond really so bad? Is it legal?"
Michael replied: "No one knows the contents of the bonds. I have seen 65% of AAA mortgage bonds, but 95% of them are subprime loans with a consumer credit rating below 550. What happens when the market thinks the risk is too high? Secured claims can turn the housing crisis into a national economic catastrophe, even from the United States to the world. "
Speaking of which, Michael stared at Luo Sheng awaiting his reply, who was picking up a napkin and wiping his mouth.
After a while, Luo Sheng said calmly: "She is my assistant, and tomorrow she will charge $ 2.9 billion to play."
Michael couldn't help but pause for a while ~ EbookFREE.me ~ After returning to God, he took a long subconscious breath and finally showed a bright smile. Xiang Luo Sheng said solemnly: "Thank you Mr. Luo, thank you for your trust in me."
Soon after, Michael Barry left.
He took away 2.9 billion US dollars of investment from Luo Sheng. Of course, it cannot be cash. This money has been prepared for a long time and can be remitted to the account of the successor fund the next day.
As soon as Michael Barry left, Qin Weimu stared at Luo Sheng with a smile: "You guys have quite a set of acting skills and can't see any flaws."
"Various talents are also rich in money." Luo Sheng laughed, suddenly adding in his heart quickly: "It's late, so why not stay here for one night, eh?"
In fact, it was just around seven in the evening.
Qin Weimu was too lazy to ignore him, and soon left Luo Sheng's room. She was going to prepare the contract materials for the successor fund tomorrow.
...