Vol 5 Chapter 12: Electronic nomads

After Soros returned to New York, he immediately called Robert John.
　　 Robert is a currency expert. He is in the process of resigning from Bankers Trust to join the Soros Fund. Now, Soros is sure that Lira will fall because of Schlesinger's speech, but now his eyes have gone beyond this point, it is time for more changes in the rules of the game.
　　 Now it is undoubtedly the best way to consult with a trusted currency expert.
　　 However, Robert John did not answer Soros's question, which made Soros excited to wonder if it was because of the quality of the call.
　　 "Robert, what do you think will happen to the pound?"
　　Baifu Bank Marketing Office, Robert John looked around his colleagues, hesitated, there were people everywhere, obviously not the time to discuss this issue.
　　 "I think I'd better come and find you."
　　 Manhattan is not a big place, and Wall Street is not far from Seventh Avenue.
　　Walking out of the Beifu Bank office, John stopped a taxi and reached Soros' office at 888 Seventh Avenue in five minutes.
　　 With tape on the office carpet, Druckenmiller was thinking about several computers on the computer desk. Seeing John coming, the two said hello and walked into Soros' office together.
A small conference table, no outsiders around, even Drucken Maitreya’s full-time secretary is not qualified to come here, as for the others in the Quantum Fund... well, even though the Quantum Fund is in New York There are more than fifty employees, but now, Soros knows no more than three.
"Germany is strong, and the Italian lira will inevitably bear huge downward pressure. I am sure that as long as we sell enough positions, the Bank of Italy will not be able to stop it. But now, I want to know if we build a huge amount on the pound Position, how much risk we will face."
　　 Before thinking about winning, thinking about defeat first.
　　 Obviously, Soros is a risk averse.
　　 "Well, the pound is very liquid. If your position is unfavorable, you can exit at any time." John replied, after a pause, he added: "You may lose up to about 0.5%."
　　 "So if the pound falls, how much profit can we make from this position?" Druckenmiller asked.
　　 "If the pound plummets, in theory, the Quantum Fund is likely to make a profit of 15% or 20%. I think the pound can depreciate at least so much."
　　 "What is the probability of such a thing happening?" Druckenmiller asked.
　　 "Within three months," Johnson replied, "the probability of this happening is around 90%."
　　 Before going to work at Bankers Trust, Robert John was a mathematician. Ninety percent of what he said made George Soros and Stanley Drucken Miller unable to sit still.
　　 There is a 90% probability that the pound will fall 15% to 20%. What does this mean?
　　 The market has a ceiling. After all, the UK is an old European developed country, not comparable to countries such as Finland and Italy. If the pound falls by 20%, it means that a larger position can be established in the pound.
　　 Druckenmiller and Soros both glanced at each other. Whether they cooperated, they both saw the excitement of each other.
　　 "How much do you invest in your own foundation?"
　　 Soros asked, he was referring to John's investment management portfolio at Bankers Trust.
"This is an unprecedented opportunity. With a 90% chance of winning, there is no higher probability. I will use marginal leverage to seize this opportunity. If possible, I will invest 3% of my existing capital. To five times."
　　 John's portfolio assets under management at Bankers Trust are as high as US$1 billion, three to five times that would be a terrifying figure.
Druckenmiller is still very young after all, just like Soros often teased him. He has always been very timid. Hearing that John had to use three to five times the lever, his eyes were wide and his whole body muscles. They all contracted instinctively, and as the blood flowed faster, breathing heavily, just like a basketball player who bounces and shoots.
　　 Leverage has always been a double-edged sword. If it is used correctly, it will indeed bring profit for multiplication increase, but if it is used incorrectly, the loss will increase geometrically.
　　 And leverage, when it is too large, is almost indistinguishable from suicide.
　　 "Oh, buy Karma! Are you sure you want to use three to five times the leverage?"
"Yes, I'm sure. The Bank of England has only 22 billion pounds worth of foreign exchange reserves." Johnson continued: "The total is about 44 billion U.S. dollars. But in light of Schlesinger's speech, I believe, There are very few other buyers. The only possibility to buy the pound to support the pound exchange rate is the Bank of England."
Under the 　　 short-selling mechanism, borrowing, selling, and buying are an unbreakable relationship.
　　 If you want to make a profit if you are short on a target, you must first borrow it. Now, if you want to sell pounds, you must first borrow enough pounds.
　　This is not difficult.
　　 The British pound has a long history, and British banks and financial institutions are equally old. As long as they have sufficient assets, it is not difficult to find banks to borrow more money.
　　 The problem is to sell.
If you want to sell a product, you must have a buyer. It can be expected that as Schlesinger's speech is fermented under the guidance of the media, the only major buyer who can buy the British pound is the Bank of England. Of course , There will be some nomads, but individual speculators are just like cannon fodder, which can be completely ignored.
　　 This means that once the Bank of England’s foreign exchange reserves are used up, it will not be possible to sell the pound further. Therefore, US$44 billion may be the largest ceiling in the pound market.
　　 Such a simple squeeze out knowledge ~EbookFREE.me~ Who would not understand the three present.
　　 and Soros looked at each other again, and with Soros's support, Drucken Maitreya took a few deep breaths.
　　 "Maybe we can get a share of 15 billion U.S. dollars." Druckenmiller said, "The Quantum Foundation will increase the size of its current position tenfold."
　　 "How long do you think they can last?" Soros asked.
　　 "Can't last a few months."
　　 "......"
　　 "......"
　　 At the end of the small meeting, Drucken Maitreya returned to the office, picked up the phone, and called Scott Besan in London.
　　 Soon, the phone was connected.
　　 When Besan heard Drucken Maitreya's worries, it was as if he had been beaten with blood, and he was crazy.
"Listen, Stanley. You don't know how bad the UK is now. The arrogance and arrogance and stupidity of that guy from Lamont completely angered Germany. Schlesinger has made it clear that he cannot determine the future interest rate. He almost said, There will be no rate cuts.
　　 And now, the British house is like a looking for a wild man. No one wants it. The British government dare not raise interest rates.
The lesson learned from Finland is that if there is a choice between the death caused by a more severe economic recession and the devaluation of the pound, the British government will definitely choose devaluation, which will make the devaluation of the pound more than anyone expected. To be early.
　　 Don’t forget, that oriental demon has already shown the horror of the triple killing of stocks and debts. "
　　"..."