In New York, Manhattan, among the towering skyscrapers that reach into the clouds, two identical tower buildings stand out prominently. These are the World Trade Center, one of New York's landmarks, standing at the southwestern tip of Manhattan Island.
The World Trade Center, designed by the American-born Japanese architect Minoru Yamasaki, took seven years to build and was completed in 1973. It covers 6.5 hectares and consists of two 110-story, 411-meter-high tower buildings, four office buildings, and a hotel. At the time of its completion, it was the tallest skyscraper in the world.
Morgan Stanley, a world-renowned investment bank, occupies 1.2 million square feet of office space in the World Trade Center, which serves as the headquarters of this famous multinational company.
As a large investment bank with operations around the globe, Morgan Stanley has branches in all major financial markets. Its Asia-Pacific headquarters is located in Hong Kong, excluding Tokyo.
Morgan Stanley originally started as the investment department of J.P. Morgan. However, after the 1929 stock market crash and the subsequent Great Depression, the U.S. Congress passed the famous Glass-Steagall Act, which prohibited banks from engaging in mixed business operations. As a result, the investment banking department was separated and a new company was formed to focus on investment banking.
After decades of operation, Morgan Stanley's profitability and influence miraculously surpassed that of its former parent company, becoming a dominant force in the capital markets. Therefore, some people refer to Morgan Stanley as "Big M" and J.P. Morgan as "Little M."
In the investment bank, the core business units are the Investment Banking Department and the Sales and Trading Department. The main business of the Investment Banking Department is to help companies go public, earning underwriting fees in the process. The Trading Department, on the other hand, seeks arbitrage opportunities in the rapidly changing market to generate profits for the investment bank.
The 10,000-lot long position in the S&P 500 in September came from Morgan Stanley's Trading Department.
Although it was already night, the World Trade Center was still brightly lit, especially in the trading department of Morgan Stanley, where traders were still intently watching the flashing numbers on their screens, either summarizing the day's profits or contemplating future trends.
At this point, the trading focus had shifted to the Eastern Hemisphere, where traders in Tokyo were beginning to operate in the opening market, taking advantage of every small price fluctuation to execute trades quickly and profit from the massive capital flows.
"Mike, have you figured out the source of today's funds?" A middle-aged man with a white shirt, brown hair, and green eyes asked a young man who was rapidly typing on a keyboard.
"Still investigating. We know it came from an E.F. Hutton seat, but we haven't identified the specific person yet," the young man frowned, unsure.
"British? No way! Don't they know about our agreement?" the middle-aged man mused.
Given the historical ties between the Morgan family and Britain, there was a good relationship between British financial groups and Morgan Stanley. After consulting with experts, the British financial groups decided to cooperate with American financial groups led by Morgan Stanley to short the U.S. stock market and go long on S&P 500 futures to hedge against risks.
Goldman Sachs, Morgan Stanley's arch-rival, joined forces with some American financial groups to go long on the stock market and short on futures, opposing Morgan Stanley.
Neither Morgan Stanley nor Goldman Sachs expected the Japanese financial groups and Zhongshi to intervene.
"It's not the British! Then who could it be? Hong Kong? India?" The middle-aged man's expression changed as he considered other possibilities.
Hong Kong and India, either former or current British colonies, had a high likelihood of using British brokers to disrupt the market. India is the world's second-largest market after China, and Hong Kong has become a major financial center in recent years.
"There's no clear lead. We can't identify the source, but we did find out who is on the opposite side of the trade. It's the proprietary trading channel of Sakura Bank in Japan. It must be their proprietary trading department!" The thin young man quickly typed on the keyboard, a proud smile on his face.
Although the Chicago Mercantile Exchange's system is said to be impregnable, it still has vulnerabilities in the eyes of top hackers. The thin young man is one of the world's top computer hackers.
In today's era of computerized trading, major investment banks have invested huge sums in their IT departments to improve their computer trading systems and gain a better understanding of market trends.
Mike Taylor is such a talent, recruited as a computer engineer to Morgan Stanley's IT department. Officially, he is part of the back-office control team, but in reality, he is tasked with tracing the sources of large amounts of funds.
"Japanese financial groups? It seems they are not content to stay out of the game and want to get involved!" The middle-aged man sucked in a breath, his tone revealing deep concern.
Since the yen was forced to appreciate by several Western countries, Japanese financial groups have quickly found ways to overcome their difficulties. In recent years, a large amount of Japanese capital has flowed into the U.S. capital market, so much so that American financial groups are somewhat afraid.
Japanese capital is present in the foreign exchange market, bond market, and stock market. In the first few months of 1987 alone, Japanese capital flooded into the U.S. stock market, estimated at over $10 billion, playing a crucial role in driving the Dow Jones Industrial Average higher.
"If that's the case, it's going to be troublesome! But why would this capital think of going short? Could they have seen through our plan?" The middle-aged man frowned, still unable to think of any other possibilities. He had no idea that this was all Sakata's own initiative, unrelated to the major operations of the Japanese financial groups.
Most of the Japanese capital invested in the U.S. stock market has gone into the bond market, as bonds offer stable returns and minimal risk, making them an excellent choice for preserving value.
The high-yield-seeking capital has been invested in the U.S. stock market, but since this is the home turf of American financial groups, the Japanese financial groups have been cautious, not wanting to overstep. Even so, American financial groups have been shouting "the wolves are coming."
"I have an idea, Mr. Sargent!" Mike raised his hand, speaking hesitantly.
"Oh, what do you think? Please share!" Sargent was surprised, as he had always thought that this computer genius was only interested in technology and not much else.
"Look at these trading records!" Mike pointed to the numbers on the screen, explaining excitedly, "See how the Japanese funds move in the opposite direction with several times the amount when there's activity at the E.F. Hutton seat. This behavior seems like a child's tantrum or a deliberate attack on E.F. Hutton's trades, which we accidentally disrupted!"
"Hmm?" Sargent stared intently at the numbers on the screen for a long time, then tapped his fingers in approval, "Mike, you're a genius! To think of this! It seems the Japanese financial groups must know the source of this capital, or perhaps we can do something about it!"
With that, he laughed heartily, leaving Mike looking bewildered.
"Do something? Like team up? Do they really think I'm an idiot? These arrogant traders really think they're part of the one percent?" Once Sargent was out of earshot, Mike's bewildered expression turned to disdain, and he said sarcastically.
As a renowned investment bank, Morgan Stanley recruits only the best graduates from Ivy League universities, with an average GPA of over 4.5, and some are required to speak three languages and have dual degrees. They go through dozens of rounds of interviews to get an offer, and these campus elites finally land a job.
Therefore, the main business departments of Morgan Stanley often display a sense of superiority when looking at the back-office staff, whether intentionally or unintentionally.
In fact, within the investment bank, the two major profit-generating departments, the Investment Banking Department and the Trading Department, often look down on each other, and there is no shortage of open and covert competition. The back-office staff are well aware of this.
An even more amusing anecdote comes from Morgan Stanley's arch-rival, Goldman Sachs. When Goldman Sachs formed its quantitative department, they hired two Nobel Prize-winning physicists, which upset the arrogant traders in the trading department. One time, as the two physicists were chatting, a trader passed by, sarcastically choking himself and saying, "What a powerful force field, I can't breathe!" before stumbling away, leaving the two academic giants bewildered.
Although Mike is a computer genius, it doesn't mean he's a fool in securities investment. In fact, over the years, he has used his position in the back office to follow large capital movements and make a significant profit in the stock market. However, being cautious by nature and not using his own account, he has never been discovered.
"Looks like my chance to make money is here! I just need to understand the stock index futures, which shouldn't take more than a few nights. Once I figure it out, I'll quietly follow them and take advantage of their 'fighting like fish and clams, the fisherman benefits.'"
Mike closed his computer screen, feeling pleased with himself. A smile of excitement appeared on his face, but it quickly faded as he straightened his expression and began to tidy up his desk, as if nothing had happened.
He has been learning Chinese recently and is quite proficient with idioms. (Please click, recommend, and collect, thank you.)