America's No. 1 financial conglomerate

Chapter 584 Wall Street's Attitude

A stock in the gaming industry, after only six months, has once again stirred up the capital markets of Wall Street with tremendous force.

This battle between bulls and bears has evolved from a simple contest between the two sides into a pack of wolves hunting for capital.

With major hedge funds entering the market one after another, this battle between bulls and bears has become even more unpredictable.

Goldman Sachs goes without saying. As the leader in this short-selling of the JPMorgan Chase, at this point, there's no right or wrong, only life or death.

"After the market opened today, YueDong Games' stock price fell another 3.23%, and has now fallen below $218."

"It is worth noting that YueDong Games has not yet taken any substantive financial countermeasures. Apart from the routine press conference held the day before yesterday and sending senior executives to visit White's family yesterday, no information has been released in the capital market, which is somewhat unusual." The secretary reported solemnly, holding a detailed market analysis report.

Inside the office, Henry Paulson sat solemnly at his desk. Now, the first thing he did every day upon arriving at the office was to hear a report on the latest market developments regarding Jumping Games.

"3.23%? This drop is completely unexpected." Paulson's brows furrowed suddenly, and the movement of picking up his coffee cup abruptly stopped in mid-air, a sharp glint flashing in his eyes.

He tapped his fingertips lightly on the smooth mahogany desk, his mind racing.

According to the latest data disclosed by the U.S. Securities and Exchange Commission, 11 new financial institutions have entered the market to short Leap Games. Although the scale of each institution's short selling is relatively limited, coupled with Goldman Sachs' previous continuous dumping operations and the prevailing negative sentiment in the market, the stock price decline should theoretically not be so mild.

Something was wrong. He looked up at his secretary, waiting for an explanation. The secretary looked helpless and then added, "This is mainly due to the overall market environment. The Nasdaq Composite Index rose sharply by 2.1% yesterday, and the entire internet sector is experiencing an unprecedented boom."

"Right now, market funds are frantically chasing tech stocks, especially those with interactive entertainment concepts. Almost every related company's stock price is leading the gains."

"Amazon's fourth-quarter earnings report projected a 367% year-over-year increase in losses, but the stock price not only remained unaffected but also bucked the trend, reaching a new all-time high, with its latest market capitalization exceeding $247 billion."

"Walmart has already started its next round of financing just over a month after its online launch, with a valuation reportedly reaching $100 billion."

"Furthermore, the lingering effects of the Asian financial crisis continue to unfold, and the investment environment in emerging markets continues to deteriorate, leading to a large outflow of safe-haven hot money from emerging markets and a concentrated inflow into US technology stocks. This fundamental rise driven by macro-level funding is something we cannot stop."

"And no matter what, YueDong Games' revenue and profits are real and tangible, so it's perfectly normal for someone to take them over."

"Those damn Europeans and oil tycoons!" Paulson couldn't help but mutter a curse under his breath.

The entire United States knows the specific reasons behind this multi-air battle against Jumping Games.

With Goldman Sachs and Citigroup leading the short selling, no American institution dared to risk offending half of Wall Street by stepping forward to support YueDong Games and act as its white knight.

Even if they knew the truth of public opinion and that YueDong Games' stock was currently at a low level, no one would dare to rush in and buy shares.

At this point, only European institutions and Middle Eastern funds dared to buy in.

After a brief silence, Paulson's gaze hardened, a sharp glint flashing in his eyes. "Since the market's influence has led to a smaller-than-expected drop, let's proactively create a market that exceeds expectations." He looked at his secretary and gave a clear instruction: "Immediately notify the public relations department to work with our partner financial media and industry analysts to intensify our media offensive against YueDong Games."

"The report emphasizes the market competition risks of its core products and the potential for slowing user growth, while also releasing speculative reports that its financial data may be inflated, further amplifying market panic."

As soon as he finished speaking, Paulson seemed to suddenly remember something and changed the subject, "I've heard rumors that the Federal Reserve is planning another interest rate cut?"

The secretary immediately nodded in response, "Yes, there are indeed related rumors circulating within the financial sector, but the Federal Reserve has not made any official statement or released any related signals through formal channels."

"Help me schedule an appointment with Greenspan, the sooner the better," Paulson said, his tone leaving no room for argument.

The secretary immediately understood and tentatively confirmed, "You mean you hope to cool down the overheated tech stock market through the Federal Reserve's stance?"

There is an ironclad rule on Wall Street: never go against the Federal Reserve.

The news of the Federal Reserve's interest rate cut is a major boon for the US stock market, especially for the Nasdaq, which is currently booming.

But if the news at this time is that the Federal Reserve is going to raise interest rates, that's a different story.

Greenspan doesn't need to make any statements. He only needs to give a meaningful look when asked by reporters, or he doesn't need to say anything or make any expression at all. The market will naturally interpret it according to Goldman Sachs's meaning.

At the same moment Paulson deployed his operation, in a luxuriously decorated top-floor conference room at Citigroup headquarters on the other side of Wall Street, a heated debate was taking place over the topic of the Jumping Game.

Citigroup's hedging department was headed by John Reed, a staunch supporter of short selling. From the outset, Reed insisted that Citigroup fully participate in the short selling of Leap Games. He was adamant that Citigroup should short Leap Games' stock, and no one could dissuade him.

However, Citigroup's fixed income division was controlled by Sandy Weir, which naturally served as a check on John Reid.

The conference room door was pushed open again, and John Reed returned to his seat after finishing the phone call.

"Paulson just called me. Goldman Sachs will be intensifying its media offensive against Leap Games," John Reed said excitedly.

"At that time, several European game companies will file intellectual property lawsuits against YueDong Games on the grounds that the game engine is suspected of plagiarism, which will further release negative news and undermine market confidence."

"And then there's the Federal Reserve. Paulson has made an appointment with Greenspan and wants me to accompany him."

The executives present were all seasoned veterans of the financial world, and they instantly understood the deeper meaning behind these messages without John Reid needing to explain.

Goldman Sachs is using a combination of media hype, legal pressure, and policy influence to comprehensively suppress YueDong Games' stock price. John Reid is making this clear, hoping that Citigroup will further increase its short-selling efforts.

John Reid scanned the room and reiterated firmly, "I said there is no real risk in shorting YueDong Games. The continued decline in YueDong Games' stock price is inevitable, and Citigroup cannot miss this opportunity."

As soon as he finished speaking, all the executives in the conference room turned their gazes to Sandy Weir, who was sitting on the other side.

Is this a short-lived, high-flying game?

Within Citigroup, this was no longer just about shorting a gaming company; it was a power struggle. "Increase the short selling?" Sandy Weir slowly raised his head, calmly meeting John Reed's gaze, and said in a flat tone, "That's your business; I have no right to interfere."

He picked up the Wall Street Journal from the table, flipped to the financial news section, and then threw the newspaper on the conference table.

The page prominently featured a report with the eye-catching title: "Technology Stock Frenzy Sweeps US Stocks, Nasdaq Hits New High for the Year, Funds Inflow Exceed 100 Billion."

"But to short sell, you have to increase the margin." This was Sandy Weir's way of checking John Reed.

You can short sell, but according to regulations, the shares of YueDong Games held by Citigroup must be placed in the fixed income department.

According to SEC regulations, Citigroup, as one of YueDong Games' shareholders, is allowed to conduct short selling, but it must strictly separate its own shareholdings from its securities lending business.

The fixed income department's holdings of YueDong Games stock need to be managed according to the operating model of an independent brokerage firm. If the hedging department wants to borrow the stock, it must meet strict margin requirements.

Sandy Weill's demand for additional margin at this time was clearly an attempt to obstruct John Reid's short-selling operation.

"You're being unreasonable!" John Reed roared, slamming his fist on the table. "I told you, Paulson has met with Greenspan, the Fed's policy direction is about to shift, and the tech stock frenzy will soon cool down."

Faced with John Reed's anger, Sandy Weir remained calm and said, "I am requesting additional margin, not because the tech stock market is booming. The market's heat is simply an objectively existing risk factor."

"Yuedong Games has not taken any targeted financial countermeasures in the face of large-scale short selling. Based on this alone, I have reason to ask you to make up the margin."

"There's also the issue of the shareholding institutions of YueDong Games. You can't find specific information about many of them, which is also a potential problem." "That's just your subjective conjecture!" John Reed completely disagreed with Sandy Weir's judgment, waving his hand dismissively. "Our risk control department has conducted thorough research, and we have contacted a number of shareholding institutions. They have clearly expressed their willingness to consider short selling and borrowing to support our expansion of short selling."

"Faced with an attack from the entire Wall Street, Leap Games has no chance of fighting back; it's just a lamb waiting to be fed."

While Goldman Sachs and Citigroup, two giants, were either exchanging words or on the verge of conflict, the topic of conversation at the headquarters of another top Wall Street investment bank, Lehman Brothers, was also none other than the Leap Games.

Richard Fuld, the CEO of Lehman Brothers, was sitting in his spacious office, listening to a report from his secretary, Humphries.

"There are indeed some strange things happening in the market right now regarding motion games."

"However, on the surface, the short-selling camp, led by Goldman Sachs, is still showing a flat-out trend."

Humphries looked up at Richard Fuld and cautiously asked, "Many institutions in the market have already chosen to enter the short-selling phase. Should we join in and get a piece of the pie?"

After all, given the coordinated action of most Wall Street giants, the short-term gains from shorting the Jump game seem certain.

Richard Fold slowly raised his head, his gaze deep as he looked at Humphries, and asked in return, "Get involved? Then tell me, who are we supposed to help?"

"Helping Goldman Sachs?"

"Half of Wall Street will join in. The profit margin is too low at this point. It's not worth offending Ernst for such a small profit."

Richard Fuld shook his head, a hint of wariness in his voice. "Besides, the more smoothly Wall Street shorts things out, the more suspicious I feel there's something fishy about this whole thing." "That's not the kind of guy who'll just sit around being slaughtered. From what I know of him, he's the kind of person who, even in dire straits, will fight back with all his might and stab his opponent twice before he dies."

"He was too calm. He neither had YueDong Games release positive news to stabilize the stock price, nor did he join forces with capital to support the market, nor did he even use legal means to fight back against the short sellers' propaganda attacks."

"The calmer it is, the more unsettling it becomes; I can already sense a strong sense of risk."

Richard looked out the window, towards Goldman Sachs. "If I had to choose, I'd bet on Ernst, but that would break the rules."

When Goldman Sachs shorted YueDong Games, it had already informed these industry giants. If they dared to act as white knights now, they would be defying public opinion.