America's No. 1 financial conglomerate

Chapter 373 Shorting Wall Street

Ernst clearly had no intention of giving Richard much room to maneuver. He sat opposite him, his eyes sharp, as if he had already seen through Richard's thoughts.

When Richard tried again to subtly suggest adjusting the interest rate, Ernst interrupted him directly, "About 3.75%..."

Regarding the interest rate, I think we don't need to discuss it much further. If we can talk, we'll continue; if not, as you know, there are many other banks waiting to cooperate with me.

These words were like a bucket of cold water poured on Richard, instantly sobering him up.

He knew perfectly well that Ernst was not bluffing.

Richard weighed the pros and cons in his mind, and finally lowered his head helplessly, a bitter look on his face.

He knew that he had no leverage in this negotiation and could only choose to concede.

Watching Ernst deftly move his wrist across several documents, the pen tip gliding across the paper, he quickly signed his name.

After signing, Richard took a check from his entourage and gently pushed it in front of Ernst.

The check, worth two billion US dollars, gleamed softly under the lights, officially signaling the end of the negotiations.

Ernst stood up, extended his hand, and said with a victorious smile, "It's been a pleasure working with you."

Richard quickly stood up, grasped Ernst's hand, and forced a smile. "It's a pleasure working with you!"

Although he was still somewhat unwilling, he was in a pretty good mood because he had secured this important client.

Even if Wells Fargo didn't make much of a profit from this loan, the $2 billion base still meant there was still room for profit.

If we calculate the net profit, tens of millions or even hundreds of millions of US dollars are still guaranteed.

Most importantly, he can finally go back and report to the board of directors.

As for how to explain this lower interest rate to the board, he already had countless reasons in mind.

Lowering interest rates is much better than watching ourselves lose this major client, and I believe the board members understand this as well.

"Regarding your personal credit loan, we will expedite the process. The funds will be deposited into your Wells Fargo account in as little as three days and at the latest within a week."

Richard added that he was trying to demonstrate Wells Fargo's sincerity and efficiency after this somewhat passive negotiation, and to continue to strengthen the relationship between the two sides.

Personal credit loans are different from asset-backed loans. This time, Ernst used shares of YueDong Games as collateral for a loan of 2 billion. They had already discussed this on the phone before, and today was the finalization process.

However, personal credit loans involve many steps, and even if Wells Fargo wanted to speed things up, it would have to follow the normal procedures step by step.

Ernst nodded slightly, his tone sincere. "Thank you very much. I also believe that Wells Fargo and I can maintain this friendly cooperative relationship and develop together."

Richard's expression turned serious. He looked into Ernst's eyes and said solemnly, "Of course, Wells Fargo is now your best business partner, and we will continue to give you our utmost support as always."

After exchanging a few more pleasantries, Ernst had his secretary see off the Wells Fargo staff.

As they disappeared through the doorway, the conference room fell silent, leaving only Ernst and Jane Fraser.

Jane Fraser could no longer contain her curiosity and asked first, "What exactly do you want?"

In her view, Ernst's massive loan of $2.6 billion must have been part of an unusual plan, and most likely related to the financial markets.

Otherwise, he shouldn't have chosen Ernst Asset Management as the location for his meeting with Wells Fargo, and the documents shouldn't have been reviewed by the company's lawyers, but by people from Wenger's law firm.

"What are you doing?" Ernst's lips curled up slightly, a sly glint in his eyes, before his expression suddenly turned cold. He said, word by word, "I'm going to short the stocks of major Wall Street banks and buy put options on the S&P Financial Index."

""

"What?" Jane Fraser jumped up from her chair instantly, staring intently at Ernst, her body motionless. If someone who didn't know the situation saw this, they might think they were filming a movie, a time-frozen scene.

It was quite a while later, when Ernst looked at her without reacting and reached out to touch her, that she suddenly came to her senses.

Then he paced back and forth in the small meeting room, his steps appearing somewhat hurried.

After stopping, she grabbed her hair with both hands, her face filled with disbelief, her voice trembling slightly, "Are you crazy? Do you know how hot the financial index is right now? It's been rising for almost two months straight, how could you even think about shorting it at this time?"

Ernst sat calmly in his chair and slowly said, "Of course I know."

In the past two months, the financial index has surged by more than 20%, and there is still a significant inflow of funds.

The entire financial world has been in an uproar ever since Citibank announced its acquisition of Travelers Group on April 6.

This is the largest financial merger in global history, involving a staggering $820 billion.

The merged Citigroup instantly became the world's largest financial services company, with total assets reaching $7000 billion and its stock price soaring.

The media went wild, announcing that the era of separate operations in the financial industry was coming to an end.

Before this rally had completely subsided, Goldman Sachs went public on the NYSE, and its stock price rose 33% on the first day.

If it weren't for the fact that YueDong Games listed on Nasdaq and attracted some attention, the investment community's attention would have been drawn to the NYSE for the past two months, and the financial sector would have stolen the spotlight from all stock market investors.

"But you can't deny that the financial sector has been fluctuating for the past week or so," Ernst said, shifting his focus to a key phenomenon.

Jane Fraser stood across the table, her hands resting on the surface, her expression serious. She hoped to persuade Ernst to abandon this crazy idea through her eyes.

"I know about the fluctuations, but it's just a normal correction. The financial sector has risen so sharply, so some fluctuations are normal. Moreover, the overall trend of the financial sector is positive. You can't judge that it will fall just because of this small fluctuation."

Ernst pointed to the chair opposite him, indicating that Jane Fraser should sit down and talk first.

Just then, the conference room door was pushed open, and Ernst's secretary returned to report to him after seeing off the Wells Fargo people.

"Make us two cups of coffee and bring them in," Ernst said to his secretary.

Just as the secretary turned to leave, Ernst's voice rang out again, "By the way, a cup of black coffee, please. Our CEO needs to clear her head and calm down."

Upon hearing this, the secretary paused, a hint of confusion on her face.

She wondered to herself: How did things turn out like this between the boss and the CEO when she was only gone for a few minutes?

However, it was obvious that her boss didn't want her to hear it, and she was clear about that, otherwise she wouldn't have had to wait for her to come back to make coffee.

The secretary smiled and nodded, then turned and walked out of the conference room, gently closing the door behind her.

The meeting room fell silent again. Ernst looked away and turned to Jane Fraser, who had been staring intently at him.

"You've overlooked an important point, which is the impact of the Asian financial crisis."

Seeing Jane Fraser deep in thought, Ernst added, "While this financial crisis hasn't fully impacted the entire world, it will certainly have an effect on the global economy."

"Asian markets will inevitably tighten spending in response to the crisis, which will lead to a decline in exports from Europe and the United States to Asia. Moreover, countries like Japan and South Korea may launch price wars to quickly revive their economies, in which European and American companies have no advantage."

He paused for a moment, then his eyes suddenly hardened. "I predict that when the second-quarter earnings reports are released, the single-quarter profit growth rate of US-listed companies will definitely fall into negative territory."

"At that time, investors will doubt the future profitability of companies, which will lead to stock market turmoil. As for the financial industry, by then, the impact of the Asian financial crisis will have almost reached the European financial market, and Wall Street bank stocks will definitely be affected."

Jane Fraser looked up at Ernst, then slowly lowered her head again, lost in thought.

Undeniably, Ernst's analysis is quite reasonable.

Since the outbreak of the Asian financial crisis last year, the Philippine peso, Malaysian ringgit, Singapore dollar, and Thai baht have all fallen sharply, the Japanese yen has also depreciated significantly, and the Korean currency has almost become worthless.

At the beginning of this year, Indonesia was plunged into political and economic turmoil, and the Southeast Asian financial crisis showed signs of resurgence, which directly led to turmoil in Western foreign exchange markets.

As a vital economic region globally, Asia's unstable financial markets inevitably raise concerns among investors about global economic growth, and American companies will naturally be impacted as well.

When corporate profits decline, companies become more cautious in their finances, reducing loan investments for production expansion. Some companies may even go bankrupt due to broken cash flow, resulting in a large number of bad debts for banks and severely impacting the financial industry.

Therefore, it seems that the stock market may indeed fall when the second-quarter financial reports are released in July.

But Jane Fraser quickly realized a crucial issue: the financial crisis had not fully affected Europe and the United States, and even if the stock market fell, the extent of the decline should be limited.

Borrowing over two billion dollars to short the market in anticipation of a potentially limited decline is a risk that is far too disproportionate to the potential reward.

Thinking of this, Jane Fraser looked at Ernst again with a scrutinizing gaze, her tone tinged with suspicion, "Is there something else you're hiding from me?"

Ernst felt a little strange and couldn't help but chuckle and tease, "Why does this sound like something you would say to Kane?"

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