January 5, 1996
The sky was overcast from the morning, heavy with clouds, as if another snowfall was imminent.
Seok-won, having had a simple breakfast via room service, now sat on the penthouse living room sofa, sipping a cup of rich, aromatic coffee while reading The Wall Street Journal.
[US Federal Governnt Shutdown: Day 20]
The federal governnt shutdown, caused by a standoff between the White House and the Republican-controlled Congress over this year's budget, has now entered its twentieth day.
Hopes were high that a dramatic resolution would be reached at the start of the new year, but contrary to expectations, both sides remain locked in a stalemate.
President Clinton sharply criticized Speaker Savitz and the Republican Party, stating, "Their unilateral and hardline stance is not only detrintal to national security but is also tarnishing Arica's reputation on the global stage."
anwhile, Speaker Savitz...
The shutdown dominated the entire front page.
Seok-won muttered to himself as he skimd the article.
"Patience must be running thin by now."
On the first trading day of the year, Wall Street had surged, fueling investor optimism.
However, as budget negotiations stalled and the shutdown dragged on longer than anticipated, the market had lost montum, fluctuating in uncertainty.
Just as he had predicted, anxiety was now overshadowing hope.
"What are you reading so intently?"
Turning his head, Seok-won saw Landon, who had just entered, casually holding his gray cashre coat in one hand.
Landon walked over and sat down on the empty sofa to Seok-won's left, glancing briefly at the newspaper before shaking his head.
"It really seed like a deal was imminent, but both sides are just too stubborn."
"That's how it looks. Would you have any tea?"
"Ah, no. I'm fine, thanks."
As Landon declined, Seok-won leaned back into his seat and spoke.
"I heard that freshman Republican lawmakers are particularly insistent on passing the budget as is, without any andnts."
"Yes, and because of that, even though public opinion is turning against them, the moderates within the party aren't able to push back effectively."
"It's not just blind stubbornness—they have a legitimate argunt about the need for a balanced budget to reduce the deficit. Even if Republican leadership wants to reach a compromise and wrap this up, they can't just strong-arm their own mbers into submission."
"Exactly. That's why the market is growing increasingly uneasy, fearing the shutdown could drag on even longer."
"With the shutdown already breaking records and no resolution in sight, that's to be expected."
Seok-won took a sip of coffee before setting the cup back down, his tone calm and composed.
"In truth, the market has been blinded by the frenzy of the internet boom, underestimating political risk—until now. Only now are they realizing the severity of the situation."
Landon leaned forward slightly, his expression serious.
"Considering the surge in futures selling at the end of yesterday's session, we might see a full-blown sell-off today, driven by panic."
Seok-won nodded slightly, having arrived at the sa conclusion.
"It's Friday—if they don't sell today, they'll be fully exposed to risk over the weekend. Anyone still in profit will be tempted to cash out now."
"That makes sense."
Landon smirked, one corner of his mouth curling up as his eyes glead with anticipation.
"The market's already on thin ice, with everyone just watching and waiting. If a major sell-off starts sowhere, panic will spread, and people will start dumping their shares left and right. Then, finally, the crash we've been waiting for will hit."
His voice was filled with excitent.
A stock market crash would an massive profits for Eldorado Fund, which had taken a strong short position.
Moreover, since the market had been climbing against their bet, they had poured an additional $2 billion in margin deposits just to maintain their position. With that much at stake, they had every reason to root for a downturn.
But contrary to expectations, Seok-won remained utterly calm, his expression showing not even a hint of excitent.
"A wave of selling will push the index down, but the market still has so strength left—it won't be as drastic as you're expecting."
Landon frowned slightly, puzzled by the unexpected response.
Seok-won continued, holding his gaze.
"If the market starts to tumble, it could put pressure on politicians who've been dragging their feet. There's a real chance they'll rush to strike a dramatic budget deal over the weekend."
Landon's brows furrowed even deeper as he asked, "A market crash would be serious, sure. But do you really think it has enough power to break the deadlock on a budget that's been stuck for over a year?"
"Absolutely."
Seok-won calmly laid out his reasoning.
"The shutdown has put federal employees on pause, but state governnts are still operating as usual, right?"
"Right." Landon nodded.
"That ans while there are inconveniences, the average citizen—aside from federal employees missing paychecks—hasn't been affected severely enough to cause public outrage."
Landon tilted his head slightly. "But a stock market crash would be different, is that what you're saying?"
"Exactly. You're familiar with 401(k) plans, aren't you?"
"Of course."
A 401(k) was a U.S. retirent savings plan where employers contributed at least one-twelfth of an employee's annual salary to an individual investnt account. Employees could then allocate these funds into various investnt options, including banks, insurance firms, and brokerage firms.
It was nad after Section 401(k) of the U.S. Internal Revenue Code and was the cornerstone of retirent planning for millions of Arican workers, ensuring they could live comfortably after leaving the workforce.
Seok-won leaned forward slightly.
"Many participants invest in bonds for stability, but the majority allocate a significant portion of their portfolios to stocks—especially in the U.S. market."
Landon's eyes widened slightly as realization dawned on him.
"...!"
"It's undeniable that companies like Intel, Microsoft, and Netscape—constantly pushing the boundaries of innovation—are the foundation of the U.S. stock market's long-term upward trajectory. But another key factor driving the market is the steady flow of investnt capital coming in through 401(k) plans."
Seok-won spoke in a calm, asured tone as he observed Landon, who was listening intently. Then, he asked,
"Now, what do you think will happen if the stock market, where so many Arican workers have invested their retirent savings, suddenly crashes?"
Landon's eyes widened with realization. "The public would revolt. Their future savings would shrink, and they'd be furious."
Seok-won gave a small nod. "Exactly. Politicians can't afford to ignore voter outrage—especially in an election year. And don't forget, it's not just the presidency at stake this year; congressional seats are up for grabs, too."
Unlike in South Korea, where all lawmakers were elected in a single cycle, the U.S. Congress staggered its elections, with the entire House and one-third of the Senate facing re-election every two years.
Landon muttered as he processed the implications. "If they're not careful, they could lose their seats. They'll have no choice but to be mindful of public sentint."
But then, his expression stiffened as he grasped the downside of this realization.
"Wait… If the budget deal goes through this weekend, we're in trouble!"
A resolution to the governnt shutdown would remove a major source of market uncertainty, and the stock market, which had been weighed down by pessimism, would almost certainly rebound sharply.
That would spell disaster for Eldorado Fund, which had taken a heavy short position.
Even worse, their short-sale prices were already relatively low. Unless the S&P 500 dropped by more than 15 points today, avoiding losses would be nearly impossible.
Landon grew visibly anxious.
But Seok-won, in contrast, remained relaxed, as if none of this concerned him.
"Even if the budget deal is finalized this weekend and the shutdown ends, there's nothing to worry about."
Landon's head snapped toward him. "What? What do you an?"
Seok-won leaned back, still perfectly composed.
"Sure, the market might rally on Monday. But it won't last long. It'll drop again—hard."
"...?"
Landon was completely baffled.
The biggest risk factor—the governnt shutdown—would be resolved. Why would the market collapse instead of rallying?
Seok-won glanced at him with a knowing look. "The federal governnt may reopen, but sothing far more important to investors is coming up soon."
Landon frowned, trying to piece it together. Then, suddenly, his eyes widened as the answer clicked.
"You an… the upcoming corporate earnings reports?"
A satisfied smile played on Seok-won's lips.
"Exactly. Apple, HP, Coca-Cola, GE—all the major companies will soon be releasing their Q4 earnings. Now, imagine what happens if their results turn out to be disappointing… especially when the market has surged so high on internet hype."
Landon's mouth fell slightly open as he let out a low exclamation.
"With expectations so high, disappointnt will trigger a massive sell-off."
Seok-won gave an approving nod. "Exactly. And given the reports warning that the shutdown has negatively impacted corporate earnings, investor anxiety will only grow."
Landon, who had now relaxed, his earlier tension dissipating, responded with a gleam in his eyes.
"Since the market has already surged and many investors are sitting on substantial gains, they'll prefer locking in profits rather than taking on unnecessary risk. Most will sell first and decide what to do after seeing the earnings reports."
Seok-won continued, his tone unwavering.
"Once profit-taking begins, even those who planned to hold their positions will start worrying about shrinking gains. As more investors rush to sell, the sudden wave of liquidations will trigger a sharp plunge."
Landon looked at Seok-won with admiration.
"So, once the front-runners start running, the rest will blindly follow—just like a herd of lemmings rushing off a cliff."
Seok-won smirked. "Fear spreads faster and more ferociously than anything else."
Landon gave an understanding nod.
Seok-won casually crossed one leg over the other, interlacing his fingers atop his knee.
"That's when the real crash will happen. Once the S&P 500 breaks below 580, we'll liquidate our entire short position and get out before the earnings season kicks into full gear."
Landon hesitated before asking, "So, contrary to analysts' expectations, you believe earnings won't be that bad?"
"We're still in an expansion phase—there's no real reason for earnings to be poor. And even if they disappoint, the market will quickly regain optimism about future growth, driving stocks back up."
Seok-won spoke with the confidence of soone who knew exactly when to strike and when to retreat.
"Once the dust settles, all fears will fade, and the New York market will begin its next relentless climb. That's when we switch positions—start buying S&P 500 futures aggressively."
Landon's expression turned serious. "How much should we bet?"
Seok-won ran a hand over his freshly shaven jaw, briefly contemplating before answering.
"We shorted $20 billion this ti. Let's keep it light—double the position."
Landon blinked. "That's $40 billion. And you call that 'light'... Only you would say sothing like that, boss."
Shaking his head in disbelief, Landon watched as Seok-won threw his head back and let out a hearty, unabashed laugh.
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