Caught off guard by the unexpected statement, Landon straightened up and asked again.
"So you're planning to close out all of the short positions?"
Sinking back into the plush buffalo-leather sofa, Seok-won gave a small nod.
"That's right."
"With the economy entering a downturn due to recession and the stock market already crashing, it's almost a given that the Fed will cut rates again at this FOMC meeting."
Landon glanced at him briefly, then continued cautiously.
"Honestly, I thought you'd keep the short positions open for longer, boss."
"Why do you think that?"
Seok-won asked with a look of interest, and Landon met his gaze as he replied.
"The stock market still hasn't escaped panic, and even if the Fed cuts rates again, there are still major negative factors hanging over the market, so the effect won't be that significant."
"You're talking about the large-scale military action against the terrorist forces hiding in Afghanistan that's expected to happen soon."
"Yes."
Leaning forward, Landon continued in a serious tone.
"You're aware that U.S. and British fighter jets destroyed southern Iraqi air defense sites just two days ago."
"They've been showing the airstrike footage nonstop on CNN. Hard to miss."
"Long-range bombers like the B-52 and B-1 have been forward-deployed to Guam, and four carrier strike groups, including the Carl Vinson and the Enterprise, have moved into waters near Pakistan. Given all that, a major attack is clearly imminent."
"I think the same. The U.S. mainland was attacked. If the president does nothing but issue statements, public criticism will pour down on President Bush. Military action is inevitable."
"There are also reports that Defense Secretary Brad Morris briefed NATO defense ministers in Brussels on counterterrorism retaliation plans. From the looks of it, an attack could happen as soon as this weekend."
Catching the implication, Seok-won responded calmly.
"So you're saying that even if the Fed delivers another large rate cut at this FOMC meeting, the effect will be diluted once the United States launches a full-scale attack on Afghanistan."
"Yes. This won't end with a few airstrikes on terrorist camps like before. There's a strong chance it escalates into a full ground operation like the Gulf War. That would act as a negative for the stock market rather than a positive."
Seok-won nodded as if he shared the same view.
"With investor sentiment already extremely fragile, adding the uncertainty of war will only make things worse. Instead of putting money into risky assets like stocks, most people will choose to sit on the sidelines and wait."
"That's exactly my point."
At that moment, Seok-won placed both hands on the sofa's armrests and spoke with clear emphasis.
"But there's one thing you're overlooking."
"Excuse me?"
"The additional tax cuts and large-scale stimulus measures the Bush administration is preparing."
"…!"
"It's true that concerns over a war on terror are significant. But if successive rate cuts push the benchmark rate down by more than one percent, and massive liquidity is injected into the market through tax cuts and stimulus, the stock market's free fall will inevitably come to a halt."
"That may be true, but wouldn't it take some time for liquidity to fully flow into the market and for investor anxiety to ease enough for people to start buying stocks again?"
For a while, the three major indices would likely continue falling. He felt it would be a waste to unwind positions too early and miss out on profits that could still be captured in the meantime.
Seok-won asked in an even tone.
"Excluding Enron, how large is the position we're currently holding?"
"Including our exposure in Japan and Hong Kong, about two hundred billion dollars."
As he answered, a realization flashed through his mind.
"Ah…"
Seeing Landon let out a small exclamation as realization dawned on him, Seok-won continued.
"We're holding one hundred forty billion dollars in positions in the U.S. alone. No matter how large the New York market is, short covering on that scale, all at once, is bound to move the market."
Landon nodded, clearly understanding.
"So you're saying we should start covering from the bottom, before the market makes a sharp rebound and traps us before we're done unwinding."
"Exactly."
A satisfied smile crossed Seok-won's face.
Then he interlaced his fingers and spoke with a serious expression.
"If we start unwinding positions now, we'll be able to lock in the maximum possible profit."
"I understand exactly what you mean."
Landon replied with complete conviction, then suddenly looked at Seok-won as another thought struck him.
"Then are we closing out the Enron short as well?"
Seok-won shook his head.
"No, leave Enron as it is."
"It's already fallen below four dollars a share as of yesterday's close. Do you really think it can drop further from here?"
Seok-won curled one corner of his mouth upward as he met his gaze.
"I told you from the very start that the target price was one dollar."
"Huh… right, you did say that."
Landon clicked his tongue in admiration.
"I never doubted your investing skills, boss, but when you said one dollar, I thought it was just an abstract target. I didn't realize you actually had that price in mind."
"It was a sandcastle built on lies from the very beginning. Once the mask comes off and its true face is exposed, collapse is inevitable."
"That may be true, but when the opponent is a massive corporation ranked seventh in the U.S., holding assets worth tens of billions of dollars, it's still not an easy bet to make, even if you're aware of accounting fraud."
Seok-won said nothing, only wearing a faint smile at the corner of his lips.
"Anyway, start unwinding the positions from today, and make sure to pass the instructions along to Director Porter in Japan as well."
"I'll take care of it."
***
The next day.
The Eldorado Fund trading floor, located in southern Manhattan, was bustling once again.
With large-scale short position unwinding having begun in earnest since yesterday, the atmosphere was even more hectic than usual.
Dan Baradan, the chief investment officer, stood tall with his arms crossed, his eyes sharp and focused.
He monitored the movements of the three major indices and individual stocks across six monitors installed on his desk, while also overseeing the traders to make sure transactions were being executed without mistakes.
"Intel! Buy twenty-eight thousand shares at the current price."
"Five dollars sixty-five cents? Okay. Done!"
"What? Thirteen dollars twenty-one cents? Do I look like an idiot? I'm not buying at that price!"
"Merrill Lynch and Salomon Smith Barney just downgraded their investment outlook on semiconductor stocks again!"
"Oracle, buy fifteen thousand. No, make that twenty thousand shares!"
With expectations surrounding the soon-to-be-announced FOMC meeting results mixed together with concerns over corporate earnings, the stock market was showing a choppy, mixed pattern.
As Dan was surveying the trading floor, someone tapped him on the shoulder, and he turned his head.
"Ah. You're here."
He bowed his head in greeting when he saw Seok-won had already come down.
As always, Landon and Andrew, the CIO, were with him.
"How's the market mood?"
"As you can see, expectations of a rate cut have stopped the decline, but without a major rebound, the market is continuing to move sideways."
Andrew naturally chimed in.
"The fact that the slide has been broken likely has a lot to do with us entering short covering."
Seok-won nodded in agreement, then turned back to Dan.
"How much have we covered so far, as of today?"
Dan answered immediately, without hesitation.
"We've passed ten billion dollars."
No matter how large the New York stock market's trading volume was, buying ten billion dollars' worth in just a day and a half was more than enough to influence the market's direction.
"More than anything, the fact that we've started buying again likely made other investors hesitate to sell and act more cautiously."
As Landon shrugged and spoke, Dan let a small smile spread across his face.
"That's right. Since we began short covering, the wave of panic selling has clearly calmed."
It was proof of just how enormous Eldorado Fund's influence on Wall Street had become.
"Then after the FOMC announcement, let's pause buying for a bit during the afternoon session."
Catching his intent immediately, Andrew's eyes lit up.
"You're planning to control the tension and prevent the indices from rebounding too sharply."
"Exactly. If possible, wouldn't it be better to buy stocks even a dollar cheaper?"
"Haha. That's absolutely right."
Dan, who was standing in front of them, asked,
"Then how long should we halt buying?"
Seok-won stroked his cleanly shaven chin with one hand and turned to Landon.
"You said it looks like airstrikes on Afghanistan will begin around this weekend, right?"
"That's correct."
Turning his gaze forward again, Seok-won spoke to Dan.
"Then let's sit tight until the weekend and resume buying starting next week."
"Understood."
Just as Dan nodded, someone on the trading floor shouted loudly.
"The FOMC meeting results are being announced!"
Naturally, Seok-won's gaze shifted toward the large television installed on one side of the trading floor.
With flags bearing the U.S. flag and the emblem of the Federal Reserve lined up behind him, Federal Reserve Chairman David Stanway entered the press-filled briefing room, holding a file folder in one hand.
In an instant, the trading floor fell silent. Everyone stopped trading, holding their breath as they stared at the television.
At that moment, Chairman Stanway filled the screen. Standing at the podium with a stiff, rigid expression, he cleared his throat softly and began to speak.
[Let me brief you on the outcome of today's FOMC meeting. While the horrific terrorist attack on the 11th resulted in many casualties and economic losses, the fundamentals of the U.S. economy remain stable and solid. In light of the recent surge in international oil prices and in order to stabilize the economic situation, we have decided to cut the benchmark interest rate by an additional 50 basis points from the current 3 percent, bringing it down to 2.5 percent. This is the lowest interest rate in 39 years.]
In less than a month, the Fed had taken another big step, sharply cutting the benchmark rate once again. However, perhaps because the outcome had already been anticipated, the traders' reactions were largely subdued.
The three standing with Seok-won were no different.
Watching Chairman Stanway leave the stage after finishing the announcement, Andrew spoke in a flat tone.
"As expected, they cut it by another 0.5 percent."
"How's the market reacting?"
At Seok-won's question, Dan immediately leaned forward and checked the movements of the three major indices displayed on the monitor, along with the Bloomberg terminal.
"There's some buying coming into a few high-tech and blue-chip stocks, but since the announcement was expected, there's no dramatic change yet."
Seok-won nodded as if he had anticipated this.
"With so many major sources of uncertainty still hanging over the market, a lot of players are probably staying on the sidelines. For now, let's stop short covering today as instructed earlier and resume buying after the weekend."
"Yes. We'll do that."
Seok-won glanced briefly at the large market board, where the market was still moving sideways, then turned and left his seat.