dognovel Chapter 55 Waltz on the Cliff
Chapter 55 Waltz on the Cliff
(The stage is ready, the lights are on. Ladies and gentlemen, are your dresses ready?)
October 14, 1987, Wednesday.
Tokyo's nights are ablaze with neon lights.
Azabu Juban, The Club.
Inside the Deer Hall, the enormous Austrian crystal chandelier was blazing brightly, its refracted light almost blinding. The air was filled with the sound of expensive champagne towers cascading down, mixed with the strong smell of Cuban cigars and the men's exceptionally loud laughter, fueled by extreme confidence.
"Three million one hundred thousand! Today's closing price is another new high!"
A portly real estate company president held up a wine glass, his cheeks flushed a deep purplish-red from alcohol and excitement.
"NTT! This is the power of Japan! What do those Americans know? Their AT&T is just a phone bill collector, our NTT is the future!"
The surrounding crowd erupted in a burst of laughter in agreement.
"You're right! President Tanaka!"
An official from the Ministry of International Trade and Industry next to him loosened his tie and exhaled a puff of smoke.
"The US right now is a bankrupt country drowning in debt. I heard their trade deficit data is going to explode again this morning? Hahaha, let them run a deficit! In the end, it's us Japanese who will be using dollars to buy their buildings anyway!"
"I've already instructed the finance department to prepare five billion; we'll go buy up Manhattan properties next week!"
"Cheers! To a powerful Japan!"
"Cheers!"
The crisp sound of glasses clinking echoed throughout the room.
Shuichi stood in a corner of the banquet hall, holding a glass of soda water.
He wore a well-tailored suit, with his signature gentle smile on his face, and occasionally nodded to passersby who greeted him.
But his palms were covered in cold sweat.
The Tokyo stock market has been absolutely insane these past few days. The Nikkei index is like a bull in heat, ignoring all warnings and just charging upwards. Everyone's gone crazy; even the maid in the Shu family's house is discussing whether to take out a loan to buy some odds of NTT stock.
Behind this fervor, Shuichi felt as if he were carrying a time bomb in his arms.
SA Investment pledged almost all of its core technology stocks in its New York account, receiving hundreds of millions of dollars in cash in return.
It's a big gamble.
If US stocks continue to rise, they will have to pay high interest rates and miss out on this surge. If US stocks fall…
"Father."
A childish voice interrupted his thoughts.
Xiu lowered his head.
Satsuki had walked up to him without him noticing. She was wearing a little black dress today, with a pearl hair clip in her hair. In this world of fame and fortune filled with adult men, she looked like a doll that had wandered in by mistake.
But only Shuichi knew that this doll was the most dangerous hunter here.
"Aren't you going to get some snacks? That French snails are pretty good." Shuichi forced a smile.
"I have no appetite."
Satsuki glanced at the president in the center of the hall, who was boasting about buying the letter of intent for Rockefeller Center, and a hint of pity flashed in her eyes.
"Father, did you hear that sound?"
"A sound? What sound? Everyone's laughing."
Shuichi knew his daughter was about to start her riddle-solving game again, so he played along.
"No."
Satsuki shook her head.
"It's the sound of ice cracking."
She tugged at Shuichi's sleeve.
"Go to the study. Frank is about to call."
……
Second floor, private study.
The heavy soundproof door completely shut out the noise from downstairs.
There was only one fax machine here, constantly printing out price quotes and emitting a monotonous "buzzing" sound.
"Ring ring—"
The red secure phone rang precisely on time.
Shuichi took a deep breath and grabbed the receiver.
"Feed?"
"Is it the big boss? No... something's happened!"
Frank's voice was clearly panting, and the background noise was a chaotic roar, with the sound of someone banging on a keyboard.
"The U.S. Commerce Department just released the August trade deficit! $15.7 billion! Far exceeding the expected figure! Wall Street is in an uproar!"
The Dow Jones Industrial Average plunged at the open! Both blue-chip and tech stocks were falling!
Shuichi's heart clenched suddenly.
It fell.
It finally fell.
"How much has it fallen?" Satsuki asked calmly.
"It's down 3% right now! It may not seem like much, but the momentum is strong! The selling pressure is coming in too fast!"
Frank's voice carried a hint of anxiety.
"Boss, the stocks we've pledged to the bank... their market value is shrinking. Although it hasn't reached the warning line yet, the bank's risk control department just called to warn me. If it continues to fall, they might require additional margin!"
"This is what I want to see."
Satsuki sat in a high-backed chair, her fingers lightly tapping the table.
"Frank, forget about those stocks. Even if they crash, we can just give them to the bank."
"Now, I want you to do something with the cash you have."
"Buy".
"Buy?!" Frank was stunned. "Trying to buy at the bottom now? That's too early! The knife has just fallen!"
"Who gave you permission to buy stocks?"
Satsuki gave a cold laugh.
"I want you to buy put options."
"S&P 500 index, deeply out-of-the-money. Strike price set at 80% of the current price. Expiry date next month."
There was a deathly silence on the other end of the phone.
Several seconds later, the sound of Frank swallowing his saliva could be heard.
"Boss... are you crazy?"
"80% of the current price? That means you're betting the market will drop 20% within a month?"
"This is impossible! Nothing like this has ever happened since World War II! It's like throwing money into the water!"
"Moreover, although option premiums are cheap now, the position would need to be very large if we were to cover the losses from stock price declines..."
"Then turn it up higher."
Satsuki's voice was completely flat, as if she were talking about today's weather.
"Use 80% of your cash to buy put options."
"All in."
"That's an order."
"implement."
"..."
Frank remained silent for a long time on the other end.
Finally, he let out a groan that was almost desperate.
"Fine. You're the boss, you call the shots."
"If I lose this time, I'll set up a hot dog stand under the Brooklyn Bridge."
"Go ahead. You'll thank me."
Satsuki hung up the phone.
Xiu Yi slumped onto the sofa, feeling as if all his strength had been drained away.
All in.
They put hundreds of millions of dollars in cash into lottery tickets that "only pay out on the day the world ends." If the stock market only drops by 10%, or even just slowly declines, that money will be completely lost.
"Satsuki... will it really drop that much?" Shuichi's voice trembled slightly. "20%? In one day?"
"Father, are you familiar with 'algorithmic trading'?"
Satsuki walked to the window and looked at the dark night sky outside.
"To protect the returns of large funds, Wall Street has invented something called 'portfolio insurance.' Whenever the stock market falls, the computer automatically sells stock index futures to hedge the risk."
"Sounds perfect, doesn't it?"
Satsuki stretched out her hand and drew a downward zigzag line on the fogged glass.
"However, they forgot a fatal problem."
"When all computers use the same logic and set the same stop-loss point."
"Once it falls below that point."
"All machines will issue 'sell' orders simultaneously."
"The decline in futures prices dragged down spot prices. The decline in spot prices triggered more machines to sell futures."
"This is a vicious cycle."
She slashed her finger downwards heavily.
"At that time, there will be no buyers in the market. Only machines frantically shouting 'Sell' into thin air."
"That's free fall."
"What we need to do is spread out a net at the bottom of the cliff."
……
Friday, October 16, 1987.
It was a gloomy day.
At the close of trading on the Tokyo Stock Exchange, the Nikkei index fell slightly by a few hundred points, influenced by the US stock market.
But within The Club, optimism still prevails.
"It's just an adjustment! A technical adjustment!"
The real estate company president was still shouting.
"The weekend will be over! Monday will definitely open higher! We should have faith in the resilience of the Japanese economy!"
Meanwhile, on the other side of the ocean in New York.
When the closing bell rang on Friday, the Dow Jones Industrial Average fell 108 points, or 4.6%.
Although the drop was significant, many experienced traders felt it was still within a manageable range. After all, the price had risen so much before, a correction was to be expected.
In the trading hall, the brokers, exhausted, loosened their ties and made plans to go to a bar for a drink.
"It's finally over. This week was fucking awful."
"Yeah, get a good night's sleep over the weekend. It should rebound on Monday."
"Those damn machines have messed up the market, but big institutions will definitely step in to support it."
They comforted each other and walked out of Wall Street.
Nobody knows.
This is just the first drop of rain before the storm.
Tokyo, Saionji Main House.
Satsuki stood in front of the calendar, holding a red marker in her hand.
She drew an X on the box for "October 16th".
Then, her gaze shifted to the row next to hers.
There are two blanks: October 17 (Saturday) and October 18 (Sunday).
This will be the longest and most agonizing weekend in human financial history.
Fear doesn't rest on weekends. Instead, it ferments, expands, and mutates wildly on people's dinner tables, on the phone, and in newspaper headlines.
Retail investors who watched Friday's sharp drop in data will become increasingly fearful over the weekend.
Fund managers who use leverage will spend the weekend sleepless, calculating the margin shortfall when the market opens on Monday.
Wait until the sun rises on Monday morning.
The fear that has accumulated over the past two days will, like a tsunami, instantly breach that fragile breakwater.
"Two more days."
Satsuki drew a heavy circle on the box for "October 19th".
The red circle, like a bloodshot eye, coldly gazes upon this greedy world.
"Are you ready, Father?"
Satsuki turned around and looked at Shuichi, who was sitting on the sofa, clutching his prayer beads tightly in his hand.
"We're going to The Club on Monday morning."
"Go and witness the most magnificent fireworks display in history."
Xiu closed his eyes and flicked a Buddhist rosary.
"Namo..."
He didn't know if he was praying for the Saionji family or for those who were about to jump off buildings.
Outside the window, the wind had stopped.
This extreme silence is more suffocating than a raging storm.
The waltz on the edge of the cliff has reached its last note.
The dancer is still spinning, but the floor beneath her feet has disappeared.