Rebirth of the Capital Legend

Chapter 263 The market expects a change in direction!
Just as both long and short institutions are studying and exploring the motives of their opponents and making immediate adjustments to their trading strategies.

Late at night, US trading session.

A hawkish speech by a key figure of the Federal Reserve at a financial summit instantly disrupted the market's expectation that the Federal Reserve would continue its loose monetary policy and postpone the pace of interest rate hikes, causing the U.S. dollar index to soar by nearly 50 basis points at around or a.m. China time.

The surge in the U.S. dollar index...

It also led to a rapid decline in non-US currency exchange rates and gold spot prices in the global foreign exchange market.

Wait until Su Yi wakes up, has breakfast and comes to the company.

During the global trading session, when re-entering the Asian session, the pound exchange rate was affected by the surge in the US dollar index and has fallen from last night's highest level of 1.5420 to around 1.5360 points, a full retreat of nearly 60 points.

"Boss Su, market expectations seem to have changed, which should be good for us." In the trading room, Qu Zecai saw that market expectations about the U.S. dollar were changing after the speech of the core figures of the Federal Reserve last night, and he couldn't help but smile and said, "The stronger the U.S. dollar is, the more bearish it is for all non-U.S. currencies in the foreign exchange market. Naturally, the pound exchange rate will also be under pressure. In addition, the leverage multiples of opening positions in the pound exchange rate market have been adjusted. In this case... it may not be so easy for these long institutions to continue to force a short squeeze. We should be able to take a breather in the short term."

Su Yi glanced at the K-line trend of the pound exchange rate and said with a smile: "Not necessarily. The short-term strength of the US dollar index will indeed put pressure on the exchange rates of all non-US currencies, but the pound exchange rate is temporarily supported by the Bank of England's open market operations. At the same time, there is also news that the short positions held by our institutions are on the verge of liquidation. Faced with the temptation of forcing the main short positions in the market to trample on each other, these main long institutions in the market will not give up easily."

"What Mr. Su means is..." Qu Zecai said, "will these major long institutions in the market continue to invest a large amount of funds to further increase the pound exchange rate?"

Su Yi nodded slightly and said, "Of course it will. After all, with the Bank of England as a bull support force, the confidence of the bulls will not diminish. At the same time, although the Federal Reserve has released some hawkish remarks, it has given a shot of prevention for possible interest rate hikes in the future and changed some market expectations.

However, as far as the current actual situation is concerned.

It is still too early for the Federal Reserve to exit its loose monetary policy and officially start raising interest rates.

In other words, the short-term strength of the US dollar index will not form a trend. It is likely to rebound for a while before falling into a volatile situation again.

Since the US dollar index cannot form an upward trend and there is no such market expectation.

Then, during the decline after the rebound of the US dollar index, the pound sterling exchange rate will inevitably turn upward again.

Add to that the current monetary policy and open market operation strategy of the Bank of England, and facing the huge temptation of short squeeze profits, how can these major long institutions in the market resist?"

"Since Mr. Su has analyzed that the pound exchange rate will continue to rise, why don't we temporarily cover some long positions, and when the pound exchange rate hits the 1.5400 mark again, we will close the long orders and continue to increase short orders?" Qu Zecai asked, "This will not only reduce our current short position losses, but also alleviate our capital pressure."

Su Yi smiled and said, "Some short-term expected profits in the market cannot be earned, because this will disrupt the overall trading strategy and trading ideas. At the same time, there must be differences between our expectations and the actual market trends. What if the actual market trends do not develop as I expected? Then we will be disrupting our own position by establishing a long position to cover the losses."

"That's true." Qu Zecai nodded slightly.

"Let's continue with the original plan and strategy." Su Yi said, "Since we firmly believe that the pound exchange rate cannot be maintained above the 1.5000 mark for a long time, and we also believe that the UK's referendum on June 6 to leave the EU will be a heavy blow to the pound exchange rate trend, and the trend of the UK economy stagnating and declining cannot be changed, then we don't need to worry about short-term market disturbances."

"Okay." Qu Zecai nodded.

Then, he continued to direct the traders to trade according to the established trading strategies.

After the two talked...

As the market trading time progressed, the trend was almost the same as Su Yi predicted.

As the market trading time gradually moved from the relatively light Asian session to the European session, the British pound exchange rate, thanks to the efforts of the market bulls, indeed fluctuated upward and regained the 1.5400 point mark, repairing the sharp dive in the US session last night.

And as the pound sterling exchange rate regained the 1.5400 mark.

Fang Wanqing also called Su Yi again and asked him to meet at a restaurant in Gangcheng at 6 o'clock in the evening.

When Su Yi heard Fang Wanqing's words, he knew that what he had told her last night was probably going to be solved, so he couldn't help but hurriedly thank her twice.

Then, as the time approached 6 p.m.

He left the company and came to the place where he had agreed to meet Fang Wanqing independently.

When he walked into the restaurant's private room, he saw Fang Wanqing and Ms. Li were both there, and in addition to the two of them, there were three middle-aged men in the room.

"Ms. Fang, Ms. Li..."

Su Yi greeted the two of them with a smile and took the opportunity to look at the other three.

"I heard that you have lost more than 3 million US dollars in the British pound exchange rate market?" Ms. Li looked at Su Yi, "I also heard that the short positions held by your Huayi Capital are on the verge of liquidation? I also heard that you are sick? At present, it seems... there are probably a lot of rumors here!"

Su Yi smiled and sat down, responding, "Ms. Li is very insightful. These rumors are indeed all rumors. In fact, the loss of our short position in the British pound in Huayi Capital is not as high as 3 million US dollars. At the same time, our cash reserves are still quite abundant. As for the rumor that I am sick, that is even more nonsense. It's just that... I hope that at this stage, the more rumors in this regard, the better."

"Oh?" Ms. Li was slightly stunned. "Why is that?"

Su Yi smiled and did not answer, but turned his gaze to the other three people.

Seeing Su Yi's expression, Ms. Li also hurriedly introduced him with a smile: "This is Zhang Yanshun, the general manager of Huayin International's asset management business. We knew each other when Lao Zhang was at Huajin Company. After all these years... we still have some friendship. Last time we had dinner, I mentioned you to Lao Zhang, and he was very interested in you, so I took the opportunity to let you two meet and exchange ideas."

"Hello, Mr. Zhang!" Su Yi stood up and took the initiative to extend his hand to greet him.

Zhang Yanshun looked at Su Yi carefully, smiled and stretched out his hand to shake his hand, saying: "Mr. Su is indeed a young hero, extraordinary and full of courage!"

"Mr. Zhang, thank you for the compliment." Su Yi said, "I can't bear the title of 'young hero'."

Zhang Yanshun replied, "I can afford it. I can afford it. This time, General Su has gambled billions of dollars on the pound exchange rate, inciting global capital to play a long-short game on the pound exchange rate. It's not easy, it's not easy! Oh... By the way, you just said that you hope there will be more bad rumors about your organization in the market. What does that mean?"

Su Yi responded: "The more bad rumors about our institution, the more the long institutions in the market will feel that they have a sure win, and they will invest more money in short selling, and they will fall deeper and deeper into this 'long trap'." "You said that the current market trend of the pound exchange rate is a 'long trap'?" A slightly younger man next to Zhang Yanshun couldn't help asking, "Why do you say that?"

"Who is this..." Su Yi asked.

Zhang Yanshun replied, "This is Kong Fansheng, the manager of our investment department. Kong is also one of my old subordinates. The investment department he is in charge of also involves the foreign exchange market."

"Oh, Manager Kong, hello." Su Yi shook hands with him with a smile and continued, "The net long position in the current pound exchange rate market has reached nearly 80 lots, but according to the information I have received, within the UK, except for core cities such as London, there is not much difference between the people who support Brexit and those who do not support Brexit. In general, there is still considerable uncertainty about the outcome of the entire Brexit referendum.

In addition, the British cabinet passed a referendum resolution.

And before the referendum began, the Bank of England continued to release rumors and conduct open market operations to stabilize the exchange rate.

It can be analyzed that among the British cabinet members and important government officials, there are no longer a minority of people who support Brexit.

Comprehensively review the performance of UK economic data and trend development in previous years.

You can see...

In the years since the UK joined the EU, it has not gained any substantial benefits. Instead, it has assumed a lot of obligations, given up a lot of markets, and provided economic subsidies to many member states with less favorable economic conditions.

Previously, the economic structure of the UK was relatively good, and its economic vitality and economic growth potential were also good.

Relying on pillar industrial finance and high-value-added high-end manufacturing industries, we can also harvest global capital, and the people can still have relatively good lives and welfare benefits.

But now, with the shift of global manufacturing center and the shift of global financial center.

The economic structure of the UK is becoming increasingly hollow, with lower and lower development potential. Naturally, it is powerless and does not want to bear some of the obligations of the EU, nor does it want to share the cake in its hands with relatively poor relatives and neighbors.

And I think this is the fundamental reason why the British Cabinet passed the Brexit bill at this time.

Since the essence is for national interests.

So from the perspective of national interests, it seems that it is impossible to generalize whether Brexit or not, which is more beneficial to the future economic development of the UK.

But from the perspective of people’s lives.

From the perspective of ordinary individuals and families, Brexit is definitely more beneficial to everyone.

Since the assistance to other "poor relatives" has been reduced, the welfare benefits and the pieces of the pie they receive will naturally appear to be larger.

That is, think from the people's point of view.

There may be more people who support Brexit.

Currently, the referendum assessment data from major institutions around the world are basically preliminary sampling data from major cities. I think this is obviously biased.

But no matter what the referendum result is.

A rift in interests between the UK and the EU has already emerged.

A crisis of trust between the two has already occurred.

This means that if their core interests are inconsistent, the two will go their separate ways sooner or later.

Since such expectations have actually been generated, the supporting logic of European currencies, especially the pound sterling exchange rate, will naturally change.

In addition, there are too many net long positions in the pound exchange rate market at this time.

Once there is a change in the news, longs will rush to cover their positions. How will the market change? I think Mr. Kong already has an idea of ​​what will happen, right? "

"Boss Su's analysis is really good." Another middle-aged man beside Kong Fansheng said with a smile, "I said before that in the current pound exchange rate market, most of the aggressive long institutions are going to fall. Now listening to what Boss Su said, this 'long trap' is indeed becoming clearer and clearer. No wonder Mr. Frederick of the 'Aberdeen Asset Evolution No. 1' hedge fund would follow Boss Su to gamble."

"May I know your name, sir?" Su Yi looked at the middle-aged man and asked.

The middle-aged man extended his hand and shook hands with Su Yi, and replied: "Meng Shengfei, the manager of the second investment department of Huayin International. You can just call me Lao Meng."

"It turned out to be Manager Meng." Su Yi smiled and nodded, "It seems that we heroes think alike!"

Meng Shengfei responded: "My opinion is not as profound as Mr. Su's. I have heard of Mr. Su's great name for a long time. After meeting him today, I found that his reputation is well-deserved."

"Thank you for the compliment, Manager Meng." Su Yi replied.

"According to what Mr. Su said just now..." Kong Fansheng pondered for a while and then said, "From the very beginning, you established a short position in the pound exchange rate to lure the longs into the market and squeeze them out, and then use the UK referendum on June 6 to trigger this long-short war in the exchange rate market?"

Su Yi nodded slightly and said, "Almost. But my personal ability and the capital reserves of our Huayi Capital are really not enough to face the hunting of so many long-term institutions independently."

"So, you found us," Kong Fansheng said. "You hope that we can enter the market to short and help you resist the continuous short squeeze by the longs, so as to prevent you from being forced by the long institutions in the market to stop loss and cover your positions before the UK referendum day on June 6?"

Su Yi replied: "I'm not asking for your help, I just think this is a good opportunity to launch a full-scale short-selling attack."

"Hey, Lao Kong, don't think people are so evil." Meng Shengfei said with a smile, "Boss Su, this is also well-intentioned, and... I really think this is a good opportunity to short. With so many net long positions, just think about it... once the market changes direction and the longs rush to cover their positions, what kind of extreme market conditions will be caused, and what kind of huge profit opportunities will be triggered?"

(End of this chapter)