What's wrong with me being a rich man?

Chapter 474 Big Hand
From automaker stocks and global stock markets to credit markets, commodities, and even the euro exchange rate, an emissions scandal triggered by a peak is increasingly exhibiting characteristics of a domino effect.

After crossing the mountain peak, we found a very wet and long snow track, then pushed down a small snowball, and then it became... spectacular.

The situation is becoming increasingly serious.

The European Central Bank (ECB) issued a direct warning, stating that the European financial system is facing a transmission threat from industry risk to credit risk and then to liquidity risk, and that it is necessary to be vigilant against the spread of the crisis to non-automotive sectors.

Sources close to the ECB indicate that the European Central Bank is already considering launching emergency liquidity assistance, and may inject tens of billions of euros directly into the money market in the future to maintain stability.

全球知名的投行和机构同样发出警告，摩根士丹利注意到欧洲汽车行业投资级债利差已经从5月份之前的120基点增加至270基点，这甚至超过了2012年欧债危机期间的250基点。

If the crisis continues, the default rate on European high-yield bonds could rise from 2.1% to around 4%, with the default rate for auto parts companies potentially exceeding 6%.

Morgan Stanley, Goldman Sachs, and other institutions have given similar advice, suggesting that clients should reduce their holdings of all European auto-related bonds, especially the €50 billion Volkswagen bonds maturing in 2018, and increase their holdings of safe-haven assets such as German government bonds and US Treasury bonds.

截至到目前为止，大众的50亿欧元债券已经从100美元跌至82美元，收益率也从2.3%升至5.8%。

On the morning of May 21, Zhang Yangxu walked into the president's office of the Silicon Carbon Group with documents in his hand and found that President Yu, who was reading a newspaper, had a very serious expression.

He placed the documents on the table, poured himself another cup of tea, and sat quietly to one side, preparing to remind his boss of the work for the afternoon.

Yu Xing put down the newspaper, let out a long breath, and felt a tingling sensation on his scalp.

this……

Are these dominoes really that long?

He resisted the urge to call Liu Wanying immediately, glanced at his secretary, and noticed that Zhang Yangxu looked somewhat listless. He casually asked, "Xiao Zhang, what's wrong? Are you not feeling well? Staying up late watching the news?"

Zhang Yangxu shook his head, hesitated for a moment, and then said truthfully, "I'm heartbroken..."

Yu Xing was taken aback; he hadn't paid attention to his secretary's love life before.

He tossed him a cigarette, and seeing Zhang Yangxu's rather dejected look, he thought for a moment and said, "When you first break up, you might feel like the sky is falling, but after a few years, you'll realize that it's probably the easiest setback in life to accept."

Yu Xing pointed to the newspaper and sighed, "Look at the damage caused by the mountain peak, look at the commodities, look at the euro's drop... the mountain peak has gone a bit crazy."

“Going over the mountain peak is just an exposure. The biggest problem is the fraud by those European car companies. If they didn’t commit fraud, nothing would have happened.” Zhang Yangxu pursed his lips, still listless. “President Yu, I haven’t seen the news about the mountain peak these past two days. Sigh, it has nothing to do with me.”

Yu Xing took a couple of puffs of his cigarette and thought of a way to distract him: "How about this, Xiao Zhang, you don't need to work in the president's office anymore. Go work on the front lines. We'll be setting up the sales system in the second half of the year anyway."

Zhang Yangxu looked up in astonishment, feeling completely at a loss in the face of the sudden transfer order.

Yu Xing waited for about ten seconds, then suddenly revealed a mischievous smile: "How about it? No time to think about heartbreak now, right?"

Zhang Yangxu nodded immediately; for a fleeting moment, he had completely forgotten his heartbreak…

Now I understand what the boss is implying, the transfer order probably isn't real...

"Go on, I'll call you if anything comes up." Yu Xing waved his hand, his thoughts returning to the chaos at Guoshan Peak.

Zhang Yangxu got up and moved his feet slowly and reluctantly.

Yu Xing stubbed out his cigarette and laughed, "No need to go to the front line, close the door."

Zhang Yangxu breathed a sigh of relief and immediately slipped out of the president's office.

Yu Xing's smile faded as he reread the latest news on his computer. The main focus was on the crisis's development and potential measures, with almost no disclosure regarding the investigation into Shan Feng. However, given the scale of this operation, the investigation must be ongoing.

He had just finished his tea when he casually refreshed the page and his gaze sharpened as he saw the latest development from the European Commission, which announced the launch of a comprehensive diesel emissions review program, requiring all automakers to submit self-inspection reports on their emissions control systems within 90 days.

In other words, the subsequent exposure of this industry emissions problem will be directly handled by the government, rather than being led by a third party.

The problem is that this cannot eliminate the crisis in the financial markets. As long as the problem exists, short selling surrounding listed automakers and their supply chains will continue.

As Yu Xing pondered the effects of the EU's actions, he soon noticed Germany's follow-up measures: the Ministry of Transport urgently suspended the certification of all diesel vehicles produced in 2014 and required all automakers to provide raw emissions test data.

He couldn't help but light another cigarette, but before he could even take two puffs, he received a call from Liu Wanying.

“The regulatory policies in Europe have been adjusted urgently, and it looks like this will continue to impact the financial markets,” Yu Xing said immediately, sharing the latest news and his own views. He then sighed, “The situation seems to be getting a bit out of control.”

Liu Wanying's voice was a little hoarse, clearly indicating that she was under a lot of pressure: "Yes, I really didn't expect that they would also be making moves in commodities and the foreign exchange market. This is something we should learn from."

Yu Xing: "..."

So your situation is out of control, right? You missed a great opportunity because you didn't consider the bigger market changes.

He pondered for a moment and said, "This is a huge matter; I don't know how much regulation will be applied."

“I suspect something big is coming.” Liu Wanying’s tone turned serious. “Some botnets received phone calls and were hinted at adjusting their CDS contracts, it was the kind of subtle hint that was a warning.”

Yu Xing didn't quite understand: "What does it represent?"

Liu Wanying did not answer immediately, but replied after a few seconds: "There is no problem with the CDS contracts for broiler chickens. They will be profitable once the public resumes trading, but this hint is likely to trigger strong market intervention."

She paused, then added, "This is my guess, and also the guess of several analysts in Europe. It's not certain yet, but Europe certainly won't sit idly by and watch the risk spread. They, along with the United States, implemented temporary restrictive policies during the financial crisis in 2008."

Yu Xing understood somewhat: "They can't sit idly by and let a hard landing happen; they want a soft landing, so they need to implement both restrictive and stimulus policies."

From hard to soft, policies can have a significant effect. If A's assets drop from 200 million to 100 million, the 100 million loss is a hard landing, and he will find it difficult to withstand huge losses.

If policy incentives are used to introduce intermediaries, A transfers assets to B for 180 million, B to C for 160 million, C to D for 140 million, D to E for 120 million, and E to F for 100 million. With the same drop in value, each person bears a loss of 20, which is relatively acceptable and constitutes a soft landing.

Risks are diversified, and the impact is controllable.

"Well, it's not a good situation anyway." Liu Wanying sighed. "Fortunately, we did consider this possibility, so we adjusted some of the funds this time and used American channels. The constraints from European policies and American institutions are probably relatively better."

Seeing that she was in a bad mood, Yu Xing tried to ease the tension by saying, "Earning less is just a loss."

Liu Wanying chuckled: "Yes, earning less is a loss."

For those who ride the wave, earning less is a loss, but for the swarming short sellers, this means real losses.

At 8 p.m. on May 22, the German Federal Financial Supervisory Authority (BaFin) cited the EU regulation that "member state regulators may take temporary restrictive measures in the event of an adverse event that seriously threatens financial stability or market confidence," and decided to implement the ban because the sharp drop in the share prices of listed companies, including Volkswagen and Daimler, as DAX 30 constituents and benchmark companies, could trigger systemic risks.

Five minutes later, the European Securities and Markets Authority (ESMA) announced its support for BaFin's policy, deeming the measure appropriate.

In other words, Germany issued a short-selling ban in response to the emissions cheating scandal.

For a moment... the mountain peak remained silent, European domestic funds found it difficult to speak up, but the American hedge funds that flocked in immediately caused an uproar, this was directly overturning the table and forcing the short sellers to cut their losses!

(End of this chapter)