Golden Spoon Investment Portfolio - Chapter 71

—————
This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
—————

71. The Bond Massacre.

Hannam-dong, Seoul.
On this cold early morning, I stepped into the garden wearing a thick cardigan.
Snow had fallen yesterday, but today the sky stretched clear and cloudless above me as I gazed upward with my hands clasped behind my back, murmuring softly.

“What a beautiful day.”

Then I naturally lowered my gaze and glanced around cautiously.
Confirming that no one else occupied the expansive garden, I quietly made my way toward the wooden deck on the left terrace.
After carefully checking both directions once more, I crouched before the wooden deck and fished something from my cardigan pocket with deliberate movements.
I unfolded a black plastic bag with a rustling sound, retrieved some dried anchovies, and called out in a hushed voice.

“Nabi.”

At that, a thin mewing sound emerged as a mackerel tabby cat poked her head out from beneath the wooden deck.

“Meow.”

Seeing the cat, I gently waved the anchovies in my hand.

“Come here, come here. That’s right—come eat these.”

As the tabby cat raised her tail and emerged from beneath the deck, two other Tricolor Cats—a mother and her offspring—appeared right behind her.
The tabby, as if accustomed to being fed, approached fearlessly and quickly snatched the anchovies from my hand with her mouth.
Soon the other cats came forward as well, meowing insistently for their share.

Meow. Meow.
Meoooow.

“Now, now, little ones. I’ll give you all some—just wait patiently.”

Speaking to the cats as though we were having a conversation, I spread the plastic bag full of dried anchovies wide and set it down on the grass.
The cats gathered around in a circle, dipping their heads into the bag and making soft crunching sounds as they began to eat the dried anchovies.

“You little rascals.”

Watching this scene, Park Tae-hong couldn’t help but break into a paternal smile.
The mother cat then approached him gratefully, rubbing her body against his legs, and Park Tae-hong welcomed her affection by gently stroking her back.
In truth, Park Tae-hong had known that his second son was feeding the pregnant stray cat, but he hadn’t paid it much attention at first.
It wasn’t that he disliked animals, but he couldn’t say he was particularly fond of them either, so he simply chose not to concern himself with it.
Then, when the stray cat established herself beneath the wooden deck of the garden terrace and began raising her kittens, not only his second son but also his wife and the household staff began to dote on and care for them.
His wife was especially fond of the kittens, and though their occasional cries were bothersome, Park Tae-hong simply turned a blind eye.
About a month ago, as Park Tae-hong sat alone at the garden parasol table, lost in thought while sipping warm coffee, a tabby cat appeared before him.
The tabby cat, which had suddenly emerged from the flower bed he had planted, stared intently at Park Tae-hong before approaching, rubbing her body against his legs, letting out a brief meow, and then vanishing in a flash.
From that moment on, whenever she approached, I would pet her or toss her a morsel of food, and before I knew it, I had grown completely attached to the cat family.
I never imagined in my wildest dreams that I would find myself crouching in a corner of the garden like this, feeding cats, so a wry smile crossed my lips.

“You little rascals. You’re living the high life, aren’t you?”

Yet Park Tae-hong’s hand never ceased stroking the mother cat as she rubbed against him, seeking affection.
After feeding the cats for quite some time and returning inside, Jo Deok-rye asked with a puzzled expression.

“Where did you go out in this cold?”
“The air was nice, so I sat at the garden table for a bit.”
“You should have dressed warmly before going out. What if you catch a cold?”
“Back in the day, I used to do cold water rubs in winter and was fine. This is nothing.”
“That was when you were young. Is it the same now?”
“What’s this? I’m still in my prime.”

At that, Jo Deok-rye shook her head with an exasperated expression.

“Oh my. It must be nice to be so young. Anyway, breakfast is almost ready, so just wait a moment.”
“Got it.”

As Jo Deok-rye entered the kitchen, she noticed Park Tae-hong following behind and asked.

“What is it? Do you need something?”
“Give me a glass of cold water.”
“You just said you were sitting outside in the cold, and now you’re asking for cold water? There’s no stopping you.”

Jo Deok-rye took a water pitcher from the refrigerator and poured it into a cup, handing it to him.
Then she noticed the Gunsan Housekeeper searching for something at the sink and spoke.

“Why is Gunsan Housekeeper fussing about again?”
“Well… I set aside a bag of dried anchovies to make broth for tomorrow’s potato kalguksu, but it’s gone. Did you perhaps put it away, ma’am?”
“No. I haven’t even seen it.”
“That’s strange. Where could it have gone?”

Park Tae-hong, setting down his water glass, felt a guilty twinge wash over him from behind.

“You’re certain you left it there?”
“Yes. I definitely put it in here, but it vanished without a trace.”
“It might be tucked in a corner somewhere. Search carefully.”
“I’m sure I left it right here…”

Gunsan Housekeeper tilted her head repeatedly, opening the cabinet doors and rummaging through them.
The portion had been perfectly divided into convenient amounts, so I’d grabbed it without hesitation—only to discover she’d set it aside for her own use.
Park Tae-hong, having already scattered the entire bag among the cats, felt so guilty that he pretended ignorance and quietly slipped away into the living room.

“Ahem.”

Settling onto the leather sofa, Park Tae-hong picked up the newspaper arranged neatly on the table to hide his embarrassment.

[Recent Yen Strength Likely a Temporary Phenomenon
Multiple private economic research institutes, including Sasong, have diagnosed the recent sharp decline in the yen’s dollar exchange rate as an artificially engineered political currency spike created by the U.S. government to pressure Japan into opening its markets further.
Accordingly, once Japan accepts American demands and opens its markets, the exchange rate is expected to return to its original level immediately.
Sasong Economic Research Institute believes Japan’s economic structure is not robust enough to withstand the multifaceted market-opening pressure from the United States, including maintaining yen strength, so Japan will likely concede before long.
When that happens, the yen-to-dollar exchange rate is predicted to rise from 110 yen to 115 yen per dollar.
Additionally, the rise in dollar value due to America’s economic recovery, interest rate increases, and…]

After reading the article, Park Tae-hong’s expression grew slightly wistful.

“Well, it doesn’t directly concern us, but if the yen had remained strong longer, it would have been a tremendous boost to our exports. A shame.”

Since Korea competed with Japan not only in steel and shipbuilding but also in consumer electronics, a stronger yen would have enhanced Korean exporters’ price competitiveness and given them a significant advantage.

“Dear. Breakfast is ready.”
“Ah, yes.”

At Jo Deok-rye’s call, Park Tae-hong set down the newspaper in his hands and rose from his seat.

* * *

Just as Seok-won had anticipated, the yen’s surge, orchestrated by the White House, shook Japan before crossing the vast Pacific as a colossal tempest, striking Wall Street in New York with devastating force.
Mundell, who had hastily abandoned his leisurely Mediterranean vacation with his wife, bellowed across the Trading Floor—a scene resembling a war zone—until his voice grew hoarse.

“What are you doing? The price keeps falling!”

Jacob, the chief trader, turned to face him with a helpless expression.

“We’re placing sell orders, but we can’t find buyers.”

Within a week, the yen surged over 7%, inflicting massive losses on hedge funds holding short positions in the currency.
Mundell Partners was among them, hemorrhaging over $700 million in mere days.
The investment banks that had extended leverage demanded margin calls for additional collateral to cover the losses.
Forced to raise capital, the hedge funds dumped massive quantities of bonds they held, triggering a cascading shock through the bond market itself.
Buyers vanished from the market, leaving only sell orders in their wake as bond prices plummeted relentlessly.
Mundell stared at Jacob with bloodshot eyes and erupted.

“You think we’re just going to sit here like fools? We don’t have the luxury of haggling over price. Just sell it—any way you can!”

Jacob exhaled a heavy sigh, his face etched with uncertainty.

“Understood.”

Watching Jacob relay instructions to the traders, Mundell bit down hard on his lower lip.

“Damn those Federal Reserve bastards. What is this mess?”

Just days ago, he had been lounging on a sun bed along the beautiful Mediterranean coast with his wife, sunglasses perched on their faces.
They had been discussing whether to purchase a wine farm in France with his year-end bonus or embark on a luxury cruise.
But circumstances had shifted abruptly, plunging him into a nightmarish predicament—he couldn’t help but curse.
Yet Mundell refused to surrender hope.

“Do you think I’ll crumble at this? Not a chance.”

Though the losses were substantial, his remaining assets still outweighed them.
And there was one more thing he could rely on.

“Having witnessed this catastrophe unfold from their reckless meddling, those Federal Reserve bastards must be terrified. They won’t dare raise rates again.”

If the Federal Reserve, startled by the market’s panic, hit the brakes and halted rate increases, bond prices would stabilize once more.
In fact, they had to.
It was the only path for Mundell and the fund to survive and recover.
Standing there with fists clenched, staring down at the trading terminal where transactions were unfolding, Jacob covered the phone receiver with one hand and spoke with an awkward expression.

“Goldman is demanding additional margin. What should we do?”

Mundell’s brow furrowed as he opened his mouth.

“I thought we agreed to deposit it by this afternoon.”
“The collateral value has dropped further since yesterday. They’re asking us to deposit a larger amount than originally requested.”

Checking the terminal in alarm, I saw that the yields on Spanish and Italian government bonds—our collateral—had plummeted by more than 25 basis points.

“Damn it!”

The curse escaped my lips unbidden, and I straightened my upper body.
Then, looking at Jacob, I asked irritably.

“How much more are they asking for?”
“Four million dollars.”
“How much leverage did we receive from Goldman?”
“We’re currently using 100x leverage.”

My expression twisted the moment I heard the answer.
With 100x leverage in play, a margin call of four million dollars meant I had to liquidate 400 million dollars in bonds.

“This is insane!”

With bond prices collapsing, I didn’t need to calculate the losses from selling such a massive volume—the damage would be catastrophic.
Moreover, with buying interest completely evaporated, selling bonds at all seemed uncertain.
Yet if I failed to meet the margin requirement on time, my entire position could be liquidated, so I had to raise the funds somehow.

“We have no choice. Sell more bonds!”

The bonds I’d already put on the market weren’t selling, and if I added more volume now, what would happen to prices was as clear as day.
But knowing there was no other option, Jacob started to speak before stopping himself.

“Understood.”

Watching Jacob place additional sell orders with a listless demeanor, I took a deep breath, deliberately trying to mask my growing anxiety.

“It’s difficult, but we just need to hold on a little longer. Then we can weather this crisis.”

I muttered these words to myself several times, as if making a solemn vow.
But the situation refused to flow in the direction that I and the other hedge funds desperately hoped for.

* * *

While a perfect storm ravaged the bond market and shook all of Wall Street, only the Eldorado Fund remained sheltered from the fierce tempest.
Having positioned ourselves on the opposite side, we watched with ease as the yen surged and bond prices plummeted.
Landon Shore, seated on the sofa in the executive office, gazed at Seok-won in the center with admiring eyes and spoke.

“Just as you predicted, the yen has risen over 7%, breaking through 101 yen.”

Andrew, sitting across from him, interjected with a smile spreading across his face.

“The upward momentum continues. It’s only a matter of time before we break through the previous high of 100.40 yen from August last year, and the yen likely surges into the 90s.”

Seok-won, dressed in a perfectly tailored luxury suit and sitting with one leg crossed, responded in a composed manner.

“I wish that were the case, but the yen won’t rise much further.”

Everyone expected yen strength, but when Seok-won, who had bet long first, unexpectedly offered a contrary opinion, both men wore expressions of bewilderment.

“You believe the yen won’t rise any further?”

Seok-won nodded in response to Landon Shore’s question.

“That’s right. Everyone seems to have forgotten, but the yen is a quasi-reserve currency used globally, second only to the dollar and the pound.”
“….”
“That means Japan can release large quantities of yen at any time to lower the exchange rate if necessary.”

Andrew then leaned forward in his seat and countered.

“That’s a fair point, but would the United States simply stand by and watch Japan artificially manipulate the exchange rate?”

Landon Shore nodded in agreement and added to the point.

“That’s right. Moreover, the White House deliberately encouraged this yen strength to pressure Japan, so it will be even more pronounced.”
“That makes sense. But….”

Seok-won seemed to concede the point, then suddenly reversed course.

“The White House certainly fostered yen appreciation, but that was purely to apply pressure—not to destroy Japan’s economy.”

Seok-won highlighted the oversight everyone else had missed.

“If Japan’s economy, already crawling through the Lost Decade, stumbles again here, it won’t benefit America either.”

As the world’s second-largest economy after the United States, any wavering in Japan would inevitably ripple back across the Pacific.

‘You can see it immediately just by looking at the staggering losses hedge funds are taking from yen strength alone.’

Seok-won lifted the teacup before him, took a sip of coffee, set it down, and continued with measured composure.

“Moreover, Japan still carries the vivid nightmare of the bubble collapse. So no matter how much the Japanese government defers to American interests, they won’t simply stand idle watching yen strength that evokes memories of the Plaza Accord.”

Andrew nodded slowly as he considered Seok-won’s reasoning.

“Now that you mention it, that does seem plausible.”
“Right—with their economy on the verge of collapse, they won’t just sit back and do nothing.”

Landon Shore also nodded in agreement.

“If we assume the White House will turn a blind eye to some extent, yen strength will continue, but it won’t break through 100 and surge further.”
“So we’re at the peak right now?”
“Exactly.”

He turned his head to look at Andrew as he answered Landon Shore’s question.

“Begin liquidating our yen positions gradually from here on.”
“Understood.”

With the yen’s rise already having generated profits exceeding 600 million dollars, Andrew accepted the instruction without hesitation.

“Will you be holding the bonds longer?”

Landon asked with curiosity.
Since Andrew held far more positions in bonds than in yen, he also turned to look at Seok-won.

“Bonds still have meat on the bone, so let’s just leave them alone for now.”

Seok-won answered without hesitation.

“They’ve already fallen quite a bit. Are you saying prices will drop even further from here?”
“The inflation statistics come out next week. If those numbers come in worse than expected, we’ll see another massive crash.”

Andrew’s eyes gleamed as he grasped the implication.

“So you’re betting that if inflation concerns resurface, the Federal Reserve will have no choice but to raise rates again.”
“Exactly right.”

Seok-won’s lips curled into a smile.
Landon whistled in amazement at that.

“With the market already in panic mode, if inflation concerns really intensify as you predict, the bond market will be an absolute bloodbath.”

The more devastated the bond market became, the greater the profits for Eldorado Fund, and my smile deepened.

—————
This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
—————