I'm back in 1990

Chapter 933: Step by Step

Zhang Sui came all this way, so she certainly didn't come just to chat.

She came to report and analyze the current market trends to her boss, and she also wanted to hear her boss's predictions for the current market so that she could decide what to do next.

Zhang Sui's report took up the entire afternoon. During this time, Huang Xiaochuan told Gao Song to cancel all his schedules and not to bother him unless there was an emergency.

Gao Song knew that Zhang Sui's arrival must be for something important, so he carried out his boss's orders without hesitation.

Zhang Sui did not come empty-handed; she brought dozens of market analysis reports and explained to Huang Xiaochuan the current position sizes and risk assessments used for short selling.

"Based on our model analysis, the days of a stock market crash for Fannie Mae and Freddie Mac are numbered," Zhang Sui said, pointing to a chart showing the CDS spread.

However, she then stated the prevailing view in the market: "The vast majority of investors still believe that the government will intervene to rescue the market. This view is based on the fact that Fannie Mae and Freddie Mac are too large, and the consequences would be unimaginable if they collapsed."

Huang Xiaochuan did not offer any opinion, but gestured for Zhang Sui to continue, as he wanted to hear the latest market analysis directly.

Zhang Sui continued, "For this reason, several financial and insurance institutions are betting that the authorities will intervene and are very optimistic about the prospects of the CDS they sold."

Hearing this, Huang Xiaochuan said, "These insurance institutions don't just profit from CDS; they have many investment avenues. Don't worry about them, just focus on your own business. According to the plan, the initial returns have basically been settled. So, there's no need to be too aggressive later on; it's better to play it safe. As the saying goes, know when to stop, right?"

Zhang Sui laughed when she heard this.

That's right. From last year to April of this year, Dark Night Capital has achieved a phased victory, and all profits have been settled.

She also admired her boss, who was much younger than her, for his lack of greed, his ability to know when to stop, and his willingness to cooperate with other investment banks, Changhong and Anye. Without his approval, Zhang Sui would not have accepted the investment requests from several major investment banks and internationally renowned funds.

In conclusion, given the current situation, Huang Xiaochuan believes that Zhang Sui no longer needs to be too aggressive and should adopt a more steady and pragmatic strategy. After the first wave of gains, Dark Night Capital's actions will no longer be a secret, and many institutions will be paying attention. Since they are already in the open, they should just follow the market trend step by step.

Zhang Sui was naturally determined to implement Huang Xiaochuan's strategy.

She came and went in a hurry, and Zhang Sui declined the boss's offer and embarked on her journey to the United States.

"I'm fine. In fact, I'm able to rest better on the plane."

Upon hearing this, Huang Xiaochuan thought it made sense. A flight of more than ten hours would be enough for Zhang Sui to get a good night's sleep, so he stopped insisting that she stay another day.

"Alright! Then I won't keep you any longer. Have a safe journey." Huang Xiaochuan shook hands and bid farewell to his capable assistant.

Back in New York, Zhang Sui began to take action. In addition to continuing to reduce her remaining short positions related to subprime mortgages, she also increased her bets on some technology stocks that were currently affected by the crisis. Furthermore, she instructed her subordinates to place small but frequent bets on credit default swaps, but set a warning line, and to stop the operation once the line was reached.

A few days later, her subordinate came to her: "Boss! Morgan Stanley just released a statement saying that it is well-funded and can withstand all market fluctuations."

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Zhang Sui was flipping through relevant documents, not even lifting her eyelids, and asked directly, "What's the market's reaction?"

"The stock price rose by about two percent, so it seems to be having some effect."

Zhang Sui said "oh" to indicate that she understood.

Knowing her temperament well, her subordinates immediately left Zhang Sui's office.

Shortly thereafter, world-renowned rating agencies Moody's and S&P announced downgrades of several bond insurance companies, including ABAC and BIA, two financial bond insurance companies that provided guarantees for subprime financial derivatives.

The market reaction was less optimistic this time, with financial stocks falling across the board and CDS spreads surging again.

Zhang Sui naturally wouldn't let this opportunity slip by, because through multiple acquisitions, Dark Night Capital now held a large number of CDS short positions. However, compared to last year and the beginning of this year, this amount had decreased by many times, but even so, it still attracted the attention of some sensitive institutions.

In the last week of this month, Zhang Sui received a phone call from Jonas Weber, president of Goldman Sachs' fixed investment income division, who was also Zhang Sui's alumnus.

"Zhang, I heard you guys acquired quite a few CDS? Interested in meeting up and having a chat?" Weber got straight to the point, without beating around the bush.

Zhang Sui understood that the other party was already watching her operating methods, but this was within expectations, and she readily agreed to the request to meet.

The meeting took place in a private club in Midtown Manhattan. After the two men greeted each other with a polite hug, they sat down. Their entourage then conducted a thorough inspection of the room to check for any listening devices. After the inspection, they placed a jammer in the room before leaving.

"Zhang, you're being too cautious."

Zhang Sui smiled slightly but did not offer any explanation. In extraordinary times, it is said that one must be wary of others.

Without any pleasantries, Weber went straight to the point: "I've noticed you're increasing your short positions in CDS. Are you betting on a market crash? A major crash at that?"

Zhang Sui replied calmly, "This is risk management, a very basic operation."

Weber tried to glean something from Zhang Sui's expression, but unfortunately, he couldn't discern anything, and Zhang Sui's words were very much in line with market logic.

Weber bluntly stated his true purpose for meeting Zhang Sui: "I want to cooperate with you. I can sense that you seem to have seen risks that others haven't."

"Sure, you know the rules." Zhang Sui readily agreed.

"Of course." Weber felt much more relaxed when he saw that Zhang Sui had agreed. However, they still needed to have some negotiations to confirm some details.

However, the negotiations lasted for a full two hours before the two sides reached an agreement.

When Zhang Sui returned home, her parents and her little girl, who was not yet two years old, were waiting for her.

"Mom, why aren't you asleep yet?"

"Mommy!" The little girl she adopted immediately rushed into her arms when she saw her.

Zhang Sui hugged her: "Xiaoyu, why aren't you asleep yet?"

The little girl held onto Zhang Sui's clothes with her tiny hands but didn't say a word.

Zhang Sui picked her up and said to her parents, "Mom and Dad, you go to sleep first. I'll stay with Xiaoyu for a while."

Upon hearing this, Zhang's mother said, "It's getting late, you should get some rest too."

Zhang Sui nodded: "I know, it's okay, you guys go to sleep!"