Golden Spoon Investment Portfolio - Chapter 73

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This chapter was translated by Lunox Novels. To support us and help keep this series going, visit our website: LunoxScans.com
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73. It was no ordinary gamble, after all.

The bond prices, which had been plummeting relentlessly, halted their freefall on expectations of the CPI report and showed a slight rebound.
But it was short-lived.
The moment the CPI figures came in disappointing, they delivered a devastating blow to the bond market.
While inflation hadn’t yet materialized, the unmistakable evidence that prices were rising erased all expectations of a rate hold from the market entirely.
The moment that fragile hope collapsed, selling pressure erupted from every direction.
Mundell stood at the trading desk, watching his fund crumble into dust before his eyes.

“This… this can’t be happening.”

Since the sudden rate hike announcement, Mundell hadn’t slept properly, and his face bore the haggard marks of exhaustion.
With bloodshot eyes fixed on the monitors, he tried to deny reality, but even that was denied to him.
Jacob, the chief trader, stood beside him, his face ashen as he cried out urgently.

“It’s not just US Treasuries—bonds from Europe and Japan are all collapsing!”

Mundell snapped to attention and, seeing the bond market had become a literal bloodbath on the monitors, cursed.

“Damn it!”

The gains he’d painstakingly built up over time were crumbling into sand before his eyes—there was no other way to feel.
Selling orders flooded in, but with no one willing to buy, bond prices were in free fall with no bottom in sight.
Then, as if pronouncing a death sentence, telephones began shrieking from every corner.

Ring! Ring!

Undoubtedly, the banks were calling again, demanding additional margin as they watched the bond prices plummet.
Determined not to give up, Mundell clenched his lips and, seeing his employees staring at him with anxious faces, bellowed.

“Sell! Dump every single bond we’re holding!”

One of the traders responded weakly.

“There are no buy orders. We can’t sell.”

Mundell glared savagely at the trader who’d answered and snarled.

“Then dump the entire inventory at whatever price it takes to move it!”

It was a last resort, but there was no other option now.
To survive the fierce tempest sweeping across the entire market, I had to liquidate every bond in my portfolio, even at fire-sale prices.

* * *

At the same moment, in the Quantum Fund office at 555 Madison Avenue, Manhattan, New York.
Rodney, the CIO, sat in the prime seat of the private office sofa and set down the printed sheet bearing the just-released CPI results, his voice heavy and grave.

“I had a bad feeling about this, and sure enough, here we are.”

Ian, seated on the sofa to the left, responded with a taut expression.

“The moment the announcement dropped, the 30-year Treasury yield surged past 7%, and the bond market descended into complete panic.”
“It was below 6% just through year-end, and now it’s jumped over 1%. Anyone holding substantial bond positions must be getting decimated right now.”
“Margin calls demanding additional collateral are already pouring in.”
“Bond prices are clearly headed lower—it’s inevitable. The investment banks that extended leverage will naturally demand more collateral to cover themselves.”

A flood of selling pressure emerged as firms scrambled to raise additional collateral, driving bond prices down further, and the investment banks responded by demanding even more margin against those depreciated assets—a vicious, inescapable cycle.

“Soon we’ll see bankruptcies cascading across the market.”

Rodney leaned back against the sofa and nodded slightly.

“Everyone maxed out their leverage to squeeze every last drop of profit. The weak ones will start falling like dominoes.”

Ian’s expression darkened as he spoke, the thought alone disturbing him.

“Couldn’t this spiral into a full financial crisis?”

It wasn’t merely the problem of one or two recklessly invested funds—all of Wall Street was perched atop an enormous pyramid of leverage, making such a scenario entirely plausible.
If it came to that, the fallout would be far more catastrophic and destructive than the savings and loan crisis that had erupted years ago.

“The bond market will be a wasteland for a while, but I don’t think it’ll deteriorate into the worst-case scenario.”

Ian leaned forward, drawn by Rodney’s confident tone, and asked:

“Do you think the Federal Reserve will step in and prevent this?”
“This crisis was triggered by a misjudgment born from their complacency. To avoid blame, the Federal Reserve will do whatever it takes to contain the situation.”

Ian nodded in agreement, his head bobbing slightly.

“Now that you mention it, that makes sense. If they let this spiral unchecked, they’ll be branded as the architects of a financial catastrophe.”

By now, Chairman Monroe and the Federal Reserve officials were undoubtedly in a state of panic as events unfolded in ways they never anticipated.

‘Incompetent fools.’

The market moved like a living organism, and Rodney couldn’t help but smile coldly at the Federal Reserve’s failure to grasp this fundamental truth, resulting in such a catastrophic blunder.

“The White House won’t want this to escalate further either. They’ll definitely implement some kind of intervention.”
“If the situation becomes critical, they’ll have to write off the midterm elections scheduled for a few months from now.”
“But they can’t save everyone. They’ll selectively protect only the investment banks and insurance companies.”

Insurance companies had invested a substantial portion of their holdings in bonds to ensure stable returns.
Naturally, when bond prices collapsed as they had now, they had to absorb all the losses themselves.

“Then what about the funds….”

Rodney, feeling the weight of their attention, responded in a cold voice.

“When disaster strikes, someone has to take the fall.”

The implication was unmistakable.
Ian swallowed hard and asked carefully.

“You mean they’ll use the funds as scapegoats?”

Rodney shrugged.

“Do you really think those sanctimonious bastards in the White House and Federal Reserve will willingly admit their own mistakes? Not a chance in hell.”

To win the midterm elections, they needed to redirect all blame elsewhere by any means necessary.

“The funds are perfect scapegoats—they even have the original sin of excessively inflating leverage for profit.”
“To evade responsibility, they’ll have to destroy the funds.”

As Ian nodded, Rodney prophesied the grim future that loomed ahead.

“Wall Street will reek of blood for quite some time.”

Ian’s expression grew heavy as he listened to these words.
Quantum Fund had also invested heavily in bonds and suffered considerable losses from this catastrophe.
However, upon hearing that Eldorado Fund had liquidated all its bond holdings and even shorted the market, Rodney—seized by an ominous premonition—had drastically reduced his positions, thereby minimizing the damage.
Recalling this, Rodney spoke.

“I didn’t expect it, but Eldorado Fund’s bet proved correct once again.”
“Indeed. If they orchestrated this knowing such a catastrophe would unfold, that’s truly remarkable, isn’t it?”

Rodney’s mind conjured the face of Seok-won from their previous meeting, and his eyes gleamed with intrigue as he murmured softly.

“He’s no ordinary player.”

* * *

New York Plaza Hotel Penthouse.
Dressed in comfortable linen trousers and a shirt, Seok-won sat with Landon Shore at a round table positioned before the floor-to-ceiling glass doors of the balcony, sharing an evening meal ordered through room service.

“Last night, the Federal Reserve chairman personally called the major Wall Street investment banks to barely prevent Struthers Bank from collapsing.”

Seok-won cut into a perfectly cooked steak with his knife, placed it in his mouth, and answered calmly.

“In such a precarious situation, a bank failure would become truly unmanageable, so that’s why they acted.”
“Precisely. With credit already severely frozen, if Struthers Bank had closed its doors, it would have triggered a cascade of bankruptcies among banks and insurance companies.”

Seok-won lifted his wine glass, took a sip, and gazed at Landon Shore across from him before asking.

“What about the funds?”

Landon Shore shook his head slowly.

“It’s complete devastation over there. From what I hear, countless funds have already lost over 30% of their capital. If bonds fall any further, funds unable to withstand margin calls will collapse en masse.”

The situation of the funds sounded grave even in mere description, but Seok-won, having already anticipated this outcome, remained composed.

“Greed always invites calamity.”

Watching Seok-won, Landon Shore posed a question that had been circling in his mind.

“Before I came in, I checked and the two-year U.S. Treasury yield was up 10 basis points from the previous day. When are you thinking of unwinding your position?”

Seok-won, whose appetite had been sufficiently satisfied, dabbed his mouth with a napkin and answered calmly.

“In a few days, when the March FOMC results come out, bond prices will sink again. For now, let’s leave things as they are.”

Landon then set down his fork and asked.

“With all this chaos, you really think the Federal Reserve will raise rates again?”

Seok-won nodded without the slightest hesitation.

“If they had done nothing at all, it would be different. But once you’ve stepped on the accelerator, stopping the car isn’t an easy decision to make.”
“….”
“Moreover, the recent CPI data confirmed that inflation concerns are real. So the Federal Reserve has no choice but to act.”

Landon pondered Seok-won’s words for a moment, then nodded.

“True. Rather than scramble to contain the damage after things have already spiraled, they might seize this opportunity to definitively burst the bubble.”
“The financial markets have spent decades repeating the same cycle—bubbles inflate, burst, and new ones form shortly after.”
“Indeed.”

Seok-won’s voice carried a calm authority that naturally commanded attention and focus.
Landon Shore, too, had straightened his posture and was listening intently.

“The Federal Reserve recognizes how dire the bond situation is. They’ll raise rates by only 0.25% to minimize the shock. And they’ll protect the investment banks and insurance companies whose collapse would have systemic consequences.”

Landon’s eyes gleamed as he leaned forward slightly.

“So if we scoop up investment banks and insurance companies whose stock prices have fallen sharply right now, we could make a tidy profit.”

Seeing that Landon Shore had developed a keen eye for the market, Seok-won smiled faintly.

“You’ve got it exactly right. When you think we’ve hit bottom, prepare to sweep up shares of investment banks and insurance companies.”

Landon Shore rubbed his hands together eagerly, as if he had been waiting for precisely those words.

“I’m already looking forward to seeing how much profit you’ll make from this.”

At that, Seok-won smiled faintly and brought the wine glass he’d been leisurely rolling in his hand to his lips.

“Ah, yes.”

Then Landon Shore, who had just remembered there was one more thing to report, spoke up.

“We’ve finished liquidating all our yen positions.”
“Is that so? How much did we make?”

As he set down his wine glass and asked, Landon Shore broke into a satisfied smile.

“After deducting all commissions, we netted 670 million dollars in profit.”

Upon hearing the figure, Seok-won’s mouth curved upward slightly.

“That’s quite respectable.”
“Just as you predicted, the moment the yen approached breaking 100, the Bank of Japan and the government immediately intervened.”

Seok-won replied as though it were obvious.

“There’s no benefit to them if the yen strengthens any further.”

Landon Shore gazed at him with admiration, his expression showing genuine amazement at Seok-won’s composure.

“As a result, we liquidated our entire position at the peak. Ha, did you actually see the future or something?”

Landon Shore laughed as he joked.
But I felt a twinge of guilt inside and showed no sign of it on my face, only offering a thin smile.
Just then, as the mobile phone sitting on one corner of the table began to ring, I excused myself briefly and answered the call.

“Hello.”
[It’s Tom. Sorry to call so suddenly, but can you come here right away?]

At Tom Harper’s voice, which was clearly flustered, I furrowed my brow.

“What’s wrong? Did something happen?”
[It’s possible… we might have to close the company.]
“…What?”

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