The Conglomerate Family Became A Villain [EN]: Chapter 206

206. Oil Shock (1)

As 1986 dawned, the world wasn’t shaken by Victoria Fund’s investment in Japan, Gorbachev’s peace initiatives, or President Reagan’s claims of America’s resurgence.

January 12, 1986.

New York, Wall Street.

Crude oil dealers watched the plummeting oil prices, their faces ashen.

“How is this even possible?”

No matter how grim the forecasts, this crash was unprecedented.

“Bob! Do something!”

At his boss’s bellow, Bob Roy swiveled around.

“What can I do?”

“Sell!”

Was he being told to add fuel to the fire during a market collapse?

Bob Roy’s hands trembled.

‘Sell now? The losses will be astronomical!’

The potential losses from futures trading dwarfed those from physical commodity sales.

“Are you sure I should sell?”

His boss’s voice boomed with impatience.

“Bob! A million dollars just vanished while you were asking that!”

It was no exaggeration.

Oil prices were free-falling in real-time.

“Damn it!”

Bob Roy gritted his teeth and punched in the sell order. But the order remained unexecuted because the price was dropping faster than he could react.

‘I need to revise the order, lower the price.’

His fingers flew across the keyboard, but he couldn’t keep pace with the accelerating decline.

To guarantee the transaction, he’d have to enter a significantly lower price.

But that could mean losses of tens of millions of dollars, not just a few million.

“Done!”

The instant he pulled his hands away from the console, cold sweat plastered his shirt to his back.

“Hoo…”

He’d heard rumors that Saudi Arabia was about to make an announcement.

But he hadn’t imagined it would trigger such a cataclysmic reaction.

“Bob, did you sell?”

“I sold.”

“Everything?”

“I sold everything!”

“Good job!”

The boss mopped his brow and approached Bob Roy.

“Well done.”

Bob Roy turned to him, his face etched with worry.

“What on earth is going on?”

The boss explained.

“Saudi Arabia refused to cut production.”

They wouldn’t reduce crude oil production. That single statement had sent prices into a tailspin.

“Does that mean they’re increasing production, even heading into the summer season?”

It was still winter, but futures traders were already anticipating summer demand.

“It seems there’s some kind of internal issue on the Saudi side.”

Otherwise, they might be trying to maximize their dollar revenue while prices were still relatively high, anticipating a further drop.

“What happens if oil prices keep falling?”

The boss answered.

“If oil prices fall, ordinary people will benefit. Living expenses will be lower, right?”

Bob Roy nodded.

“So, it’s a good thing, overall.”

“Of course, it’s not all rosy for us. How much do you think we lost today?”

Bob Roy swallowed hard.

“I think I lost about 3 million dollars, personally.”

The boss gave a wry smile.

“The losses for our entire team are probably closer to 10 million dollars.”

The scale of the losses was staggering because they were Exxon Mobil’s oil trading team.

At the same time, across Wall Street.

Shouts of panic erupted from trading floors everywhere.

Those trading derivatives were particularly hard hit.

“What happens if oil prices keep crashing like this?”

“Damn it, I have no idea.”

Not just stock traders, but also foreign exchange traders were in a frenzy.

“Let’s liquidate everything!”

“At a loss?”

“What if it drops even further?”

“It could rebound. Falling oil prices mean the end of inflation.”

“Think the opposite! This could be a harbinger of a recession.”

Victoria Fund’s CEO, John Peer, was also alarmed. He immediately called Jung Hyun-woo (referred to as Charlie).

“Charlie, New York is in complete chaos.”

Jung Hyun-woo answered calmly.

“John, what’s wrong?”

“Saudi Arabia just dropped a bombshell on the crude oil market.”

Jung Hyun-woo frowned at the word “bombshell.”

“A bombshell?”

“They announced they won’t cut production, even as we approach the summer season.”

“Hmm, oil prices must have plummeted.”

Jung Hyun-woo’s voice remained even. He hadn’t made any oil-related investments.

“Charlie, this isn’t something to dismiss lightly.”

“Not something to dismiss lightly?”

“It could be a sign of an impending recession.”

Jung Hyun-woo knew that the “Three Lows” boom [low oil prices, low interest rates, and a weak dollar] of the 1980s had fueled the global economy.

‘And it all came crashing down in the 1990s.’

He said softly.

“Don’t worry, everything will be alright.”

John Peer’s eyes widened.

“Everything will be alright?”

Jung Hyun-woo explained.

“Falling oil prices mean the end of inflation. And didn’t we just secure a $12 billion loan?”

Of course, the $12 billion Jung Hyun-woo had applied for was denominated in dollars for conversion purposes; the actual loan was in Japanese yen.

“Falling oil prices mean the end of inflation, and the end of inflation means interest rates will fall.”

John Peer was speechless.

‘Is Charlie saying he anticipated the end of inflation and deliberately took out a variable-rate loan?’

Until now, he’d been uneasy about Jung Hyun-woo’s decision to opt for a variable interest rate.

But Jung Hyun-woo’s judgment had proven accurate once again. If interest rates fell by more than 1%, Victoria Fund could save hundreds of millions of dollars.

“This might not be so bad for us, after all.”

“I see.”

“I have a meeting, so I’ll have to hang up now.”

Click.

As Jung Hyun-woo ended the call, Sarah asked.

“Was that Mr. Peer?”

“Yes, John called in a panic this morning.”

Sarah had overheard snippets of the conversation.

“It was about the oil price crash, right?”

“Because Saudi Arabia refused to cut production.”

“I wonder why they did that?”

“Probably to sell as much as possible while prices are still relatively high.”

“If money is the issue, wouldn’t it be better to cut production and stabilize prices?”

Jung Hyun-woo sighed.

“Sometimes, production cuts can’t prevent prices from falling.”

To extract as much profit as possible before everyone else goes down with the ship.

It was a selfish strategy, but in the ruthless world of international relations, selfishness was rarely condemned.

‘International relations are inherently ruthless.’

No one cared where there was no profit to be made, even if millions were being massacred.

“You mentioned a meeting this afternoon, right?”

“Yes. Miss Lyra Marine is coming.”

Sarah frowned slightly.

“Miss Marine?”

“We didn’t consult with Bank of America at all before investing in Japan.”

They hadn’t even had in-depth discussions when Victoria Fund was initially established.

“Hmm, you’re saying Bank of America is visiting to express their displeasure.”

“We need to keep her happy.”

Sarah raised a finger, caution in her eyes.

“But don’t be too accommodating.”

Jung Hyun-woo nodded.

“I understand.”

He considered the meeting with Lyra Marine the most pressing task of the day.

‘I need to maintain good relationships with Bank of America and Citibank.’

Both companies were crucial partners for Victoria Corporation.

“Sarah.”

Sarah, about to leave the office, turned back.

“Yes?”

“Please oversee CES [Consumer Electronics Show]. I’m swamped with work this year.”

Thanks to Victoria Fund, Jung Hyun-woo’s workload had become unmanageable without working overtime.

“Okay, I’ll handle it.”

Sarah’s responsibilities had also increased significantly since becoming COO [Chief Operating Officer]. If anyone at Victoria Corporation had seen their workload decrease, it was Robert, who had stepped down as CTO [Chief Technology Officer].

“Come to think of it, we haven’t heard from Robert.”

Sarah said, opening the door.

“Robert took a vacation.”

“Pardon?”

“Didn’t you know?”

“I haven’t seen him since yesterday morning, but…”

Sarah asked.

“Are you annoyed?”

“It’s not that I’m annoyed, but it would have been nice if he’d told me.”

“Robert didn’t mean any harm. You were probably in a meeting or on a call.”

Jung Hyun-woo had experienced similar communication issues in Japan.

‘That’s how I had problems with John.’

He nodded in understanding.

“If he calls, please thank him.”

Robert had been responsible for protecting Victoria Corporation while he and Sarah were away.

* * *

A cafe in downtown Boston.

Jung Hyun-woo tilted his head after sitting down.

“A cafe?”

He seemed surprised.

Lyra Marine stirred her coffee and replied.

“I found this cafe on my last visit and I really like the atmosphere.”

The cafe’s interior was sleek and modern.

‘Hmm, Miss Marine’s taste leans this way.’

He nodded.

“The cafe is clean and sophisticated.”

Lyra Marine responded softly.

“I appreciate smart and reliable people.”

Jung Hyun-woo felt a strange undercurrent, like a blind date.

‘It’s not the first or second time I’ve met her, but this feels…’

Perhaps it was Lyra Marine’s attire. She was wearing casual clothes rather than a business suit.

‘No, it’s more the ambiance than her outfit.’

The interior resembled the cafes in 21st-century Korea where he’d been on a few unsuccessful blind dates.

‘Come to think of it, I never had a successful one.’

He’d never had good luck with blind dates in his past life.

‘That’s not the issue now.’

Jung Hyun-woo refocused on Boston in 1986. He bowed slightly.

“First, I want to apologize for the Japan situation.”

Lyra Marine sighed at his earnest apology.

“Hah… It would have been nice if you’d given me a heads-up before making such a significant move.”

She didn’t hide the fact that the Japanese investment was the reason for her visit.

“Miss Marine, please understand that I had to maintain confidentiality.”

Lyra Marine’s voice rose slightly.

“Charlie, are you going to do this again in the future?”

Jung Hyun-woo answered honestly.

“If necessary, I will keep secrets.”

“I’m disappointed.”

“It’s unavoidable for the success of the project. However, I can promise you one thing.”

Lyra Marine tilted her head.

“What’s that?”

“If there’s anything that could harm Bank of America, I’ll definitely inform you first.”

Lyra Marine smiled faintly.

“So, this particular venture won’t harm Bank of America?”

“Absolutely not.”

“Aren’t you being a bit too assertive?”

Jung Hyun-woo straightened his posture.

“The Japanese investment is already profitable.”

Lyra Marine raised her eyebrows.

“Already profitable?”

It had only been a few days since Jung Hyun-woo’s return from Japan.

“I transferred funds to Japan and profited from the exchange rate fluctuations.”

Lyra Marine exclaimed softly.

“Ah! The yen appreciated…”

“It’s up 1.2% if you combine yesterday and today’s gains.”

A 1.2% increase.

It might not seem like much to some, but on an investment of 3 billion dollars, it was a different story.

1. 2% of 3 billion dollars is 36 million dollars.

That was more than the total annual payroll of a Major League Baseball team.

“Is that a profit of 36 million dollars in just two days?”

Jung Hyun-woo shook his head.

“No, it will be more.”

“More? Don’t tell me you invested more in Japan than you initially announced?”

“That’s not the case.”

“Hmm, I don’t understand. Please explain in detail.”

Jung Hyun-woo obliged.

“I took out a loan in Japan the day before yesterday.”

“Without collateral?”

“The 3 billion dollar investment served as collateral.”

Lyra Marine paused.

“Wasn’t the loan supposed to be secured by the real estate you were planning to purchase?”

Jung Hyun-woo shook his head.

“No. Kajima Bank agreed to use our 3 billion dollar investment as collateral.”

The reason the investment fund could serve as collateral, rather than real estate, was thanks to Kajima Jiro, the chairman of the Kajima Group. Of course, this could spark controversy over preferential treatment for foreign companies.

But Japan was experiencing an unprecedented economic boom, so no one questioned it. The Japanese people were too busy watching their own wealth grow at an astonishing rate.

“So, you’re saying it’s 1.2% of 15 billion dollars.”

Before fees and taxes, Victoria Fund’s exchange rate profit was a staggering 180 million dollars.

“Not a bad deal.”

Lyra Marine mused.

‘Charlie’s investment instincts are truly remarkable.’

Among all the people she’d met, Jung Hyun-woo possessed the most exceptional investment acumen.

“Victoria Fund’s profits will continue to increase?”

Jung Hyun-woo replied calmly.

“I expect we’ll earn over 500 million dollars by next week.”

He claimed a profit of 500 million dollars without a single real estate transaction.

“Is that all from exchange rate gains?”

“No.”

“Then?”

“The Japanese base interest rate will fall next week.”

Jung Hyun-woo knew that Japanese interest rates would continue to decline.

‘They’ll keep falling until the bubble bursts.’

And at the peak of the bubble, the interest rate would become a sharp needle, puncturing it.

“Listening to you, it’s hard to understand why anyone wouldn’t invest in Japan.”

Jung Hyun-woo raised his right hand, palms open on the table.

“Miss Marine, the investments I make aren’t always guaranteed to succeed.”

“Why is that?”

“I pursue high risk, high reward strategies.”

Jung Hyun-woo didn’t deny the risks associated with his Japanese investment.

“Are you saying it’s a gamble where you could lose a significant amount?”

“Of course.”

Lyra Marine clasped her hands together.

“Charlie seems remarkably relaxed for someone who just admitted that.”

“Is that so?”

“Yes, you seem very composed.”

“It’s not always like that…”

Lyra Marine cut him off.

“It’s not always like that. When you were feuding with JP Morgan, you weren’t nearly as calm as you are now.”

Jung Hyun-woo scratched his head.

“Oh dear… I can’t fool you, Miss Marine.”

Lyra Marine asked.

“You were confident this time, weren’t you?”

Jung Hyun-woo nodded.

“That’s right.”

“Did you receive inside information from a high-level source?”

Lyra Marine wondered if Jung Hyun-woo had obtained investment intelligence from the American political sphere.

“No.”

“Is that so?”

“I based my decision on the Plaza Accord [a 1985 agreement among major economies to depreciate the U.S. dollar].”

Jung Hyun-woo claimed his investment was based on conclusions drawn from the Plaza Accord.

Lyra Marine remained skeptical.