Chapter 15 - 15 The Nearby Month
Steve had been getting excited talking about technical matters with the newly welcomed Cyril, but he had not forgotten to deal with Viscount Karsh's copper price manipulation as requested by Aurora. Today he was at Emmanuel's trading company in Sowell Land, but for the past few days, he had been teleporting to Sowell Land to instruct brokers to sell copper futures.
Today was for confirming those positions. The morning trading session had just ended.
"The Salieri Trading Company has taken the lead, and 503 sell contracts have been established. The average execution price is 200 gold coins. Well, Valier and his associates bought up everything we put out as limit sell orders," Emmanuel reported to Steve.
The Salieri Trading Company was a purveyor to Margrave Sowell, headed by a merchant named Morgan Salieri. One futures contract represented an order for one ton. Since the leverage was 100x, one could place an order by putting up a margin equivalent to one kilogram. It was a gamble involving roughly 1,000 gold coins in margin.
"That's sufficient for the opening battle. How much did you trade on your own account, Emmanuel?"
"Ten contracts for our firm. We have other procurement to handle, so we couldn't sink too much capital into this."
"Well, that makes sense. You aren't doing business with just this, after all."
Incidentally, Steve currently held 30 short positions in futures. He had wanted to sell more, but Brian had stopped him, telling him to give it a rest. As a father, Brian wanted to believe in his son's victory, but considering the possibility of the unthinkable, he hesitated to plunge the entirety of the family's fortune into it.
"Well, I'm glad the orders I requested went through. I'm going to see the Margrave now, but I think the price will collapse starting from the afternoon session. I'll give you instructions on the timing for the short cover."
"Understood."
With that, Steve left Emmanuel's trading company and stepped into a deserted back alley. From there, he moved to Aurora's office using Teleportation magic.
Aurora and Harry were waiting inside the room.
"I apologize for the wait, Your Excellency."
When Steve greeted her with a polite attitude, Aurora responded with a smile.
"Between you and me, such formalities are unnecessary. Besides, you're right on time, so I haven't been waiting."
"If I visit through the front, it inevitably takes time for identity verification and the like."
Since Steve moved to Sowell Land via Teleportation magic, he did not have a carriage bearing his house's crest. Therefore, even when coming to see Aurora, time would be taken up by the guards' verification. To avoid this, he had received permission to teleport directly into the office.
Aurora had assumed Steve would naturally arrive on time; steam was rising from the tea prepared on the table. The temperature was just right for drinking. The conversation resumed once Steve sat on the sofa and took a sip of tea.
"So, the final trading day for the nearby month (T/N: the contract month closest to expiration) is coming up soon. Will it go well?" Aurora asked Steve. The "nearby month" referred to the futures with the most immediate deadline—in this case, those with the price finalized at the end of the current month and delivery on the 3rd of the following month.
"As I requested, have the preparations for the copper inventory been made?"
"Yes. Arrangements have been made for Salieri to start selling physical stock during the afternoon session. Along with that, there's a rumor that we are releasing our inventory to stabilize prices. I wonder if such a rumor will be effective?"
"Anxiety is what causes people to make errors in judgment, after all."
"Very well. Let us see how you handle this."
Then, Steve accompanied Aurora to the exchange.
The exchange buzzed for a moment due to Aurora's arrival, but as soon as trading began, everyone immediately switched their focus back to buying and selling. In that regard, they were all veteran merchants.
Then, a large amount of copper brought in by the Salieri Trading Company was put up for sale on the spot market. One merchant, surprised, spoke to the merchant next to him.
"Hey, hey, they've put a massive amount up for sale right when a rise in copper prices is certain. It's okay to buy that, right?"
The merchant he spoke to replied:
"Word is that the rise in copper prices is affecting the lives of the commoners, so Her Excellency the Margrave decided to release her own reserve stockpiles. Look, the Salieri Trading Company has been selling futures lately too, right? Apparently, they had been consulted by Her Excellency about the release of physical stock, and knowing it early, they sold the futures."
"Good grief. If I'm going to be glared at by Her Excellency, I've got no choice but to sell the copper I have on hand too."
This was a setup. This merchant was a shill prepared by Aurora. He was proselytizing that the seller was Aurora so that the surrounding merchants could hear. Furthermore, with Aurora herself being present here, it was thought that it must be the truth. At this point, the market sentiment shifted all at once toward selling. Those who could not prepare physical stock immediately sold futures to hedge for the time being. Speculators aiming for profit margins also turned to selling as if this were their big chance.
At this time, Valier was unfortunately not in Sowell Land. Judging that victory in this month's market was certain, he had left Sowell Land, leaving the trading company to his subordinates, in order to deliver a portion of the profits to Viscount Karsh.
Valier's subordinates could not make the judgment to support the price by buying; instead, to minimize losses, they conducted offsetting trades for their futures. It was a cautious decision, but a mistake was a mistake. Due to the selling by the Valier Trading Company—the main pillar of the buying side—the futures market collapsed significantly. Then, following that lead, the physical stock also became a fire sale. Those who could prepare physical stock put it up for sale in the market, but in such a state, no buyers could be found.
From then on, day after day, huge sell orders were placed without any executions, leading up to the final trading day of the month. Due to the overshoot of sell orders, the copper price, which had been 200 gold coins per ton, plummeted to 60 gold coins. Then, just before the close of this day, a massive buy order appeared.
Of course, it was the short-covering buy by the Salieri Trading Company under Steve's instruction. Furthermore, they picked up the physical stock being offered for sale. However, because the method of offsetting the futures had been exposed, and other sellers were trying to buy cheap physical stock to secure the goods for physical delivery, the copper purchased by the Salieri Trading Company was limited to about 10 tons.
From the perspective of other merchants, it was a great victory, but the goal of crushing the Viscount Karsh faction had not been achieved. The Valier Trading Company had closed its positions early, so the damage was minimal. Moreover, since the copper they owned was produced in Viscount Karsh's territory, the procurement price was a reasonable amount. However, among the nobles of Viscount Karsh's faction who were late to escape, some suffered considerable losses.
After the trading for the month ended, Aurora summoned Steve to her office.
"First of all, it can be said that we won the opening battle, but we cannot say we achieved our initial objective with this."
Aurora asked Steve for an explanation of the next strategy. The deadline was only one month away, and if they used the same method for the next contract month, the opponent's losses would be negligible. Furthermore, the magic to create copper that Steve had shown her had not been used yet.
"Your Excellency, this is a provocation to keep the opponent from leaving the field of battle. The opponent knows that we bought physical copper. Seeing that, they will realize the rumor that our goal was to lower the copper price was wrong. After all, if we buy copper, the circulating supply decreases again and the price rises."
"True. They will realize they were deceived."
"In that case, I believe they will come to grasp the amount of physical copper held by the Salieri Trading Company or Your Excellency next. There, we will let the opponent 'discover' that we actually hold almost no physical copper. Please maintain the pretense of not knowing that this information has reached the opponent."
When Steve said that much, Aurora understood the general aim. Then, she flashed a smile like a snake that had found its prey.
"I see. So we'll take advantage of them thinking we're ignorant and keep selling futures just like before."
"Yes. The opponent will think we are aiming to crush the futures price by relying on financial power. If we have no physical stock, the Viscount will surely think he can win if he can just hold out without going bust until the delivery date."
To explain once more, selling futures is a promise to sell that amount of physical stock on the delivery date. If one does not have the physical stock, they have no choice but to close the position by buying futures or to obtain the physical stock from somewhere. Since futures trading has only just begun and there is no precedent, one would incur a massive penalty in the unlikely event that they could not provide the physical stock.
Under such rules, if Viscount Karsh, who can control the circulating supply of copper, bought futures in an attempt to drive up the price, the sellers would be in an overwhelmingly disadvantageous position. Furthermore, Viscount Karsh has money and would not be troubled by the margin for futures. No matter who was in Viscount Karsh's position, they would likely be unable to imagine losing.
"In addition to the conditions for a certain victory, there is the anger of having fallen for our scheme and missing out on profits in the previous contract month. If it's the prideful Viscount, he will surely raise the stakes to win this time no matter what."
"Yes. And he will likely have the nobles of his faction invest their funds as well. In particular, those who suffered large losses this time will surely follow the Viscount's lead even if they have to borrow money to win it back."
Aurora looked exasperated at Steve's words.
"Are you really ten years old? Even I couldn't read other people's psychology that well when I was ten. I'd like to see your parents' faces to know what kind of education produces a child with such a twisted personality."
"Have you forgotten the face of my father, who swears loyalty to Your Excellency? I can imagine the face of my father, who prides himself on being the most loyal retainer in the Western faction, turning sad."
"That's right. I've remembered your honorable father's name and face. When I'm talking to you, other things just slip my mind. I wish you wouldn't surprise me so much."
Aurora spoke playfully. However, behind that, she was watching Steve with a sharp, observant eye. In truth, even Aurora did not understand how Brian had raised Steve to this point. As a knight, he was excellent, but as a politician, while not incompetent, he wasn't that outstanding.
In the first place, if Brian were that excellent, the Archibalt territory wouldn't have been suffering in extreme poverty until now. Even if Steve had talent for magic, that had nothing to do with administrative ability. This was because not all mages were capable of domestic administration.
Since she could not arrive at the answer that Steve possessed experiences and memories from a previous life, the source of Steve's ability remained a mystery to Aurora, which brought her an indescribable sense of unease.
Harry, who had served by her side for a long time, felt her unease keenly and was on edge, wondering when she might explode.
"Oh right, for the next contract month, I would like Your Excellency to make a show of procuring copper by ship. Well, it's fine if just such a rumor spreads."
Steve made that request to Aurora, unconcerned by her unease.
"Very well, I'll give instructions for that. Seeing us in trouble will surely make the opponent happily raise the stakes. Is there anything else to be done?"
"No, I have another strategy I'm thinking of on my end, but I will handle that myself."
"Oh, how cold. We're close, aren't we? You could at least tell me what kind of strategy it is."
"No, no, this is a matter for this person."
So saying, Steve raised his index finger and pointed to the ceiling. This was a gesture indicating the King. Since it involved the King, even the great Aurora did not pursue it further.
"I'm amazed. You intend to involve His Majesty in this battle. It's truly not something a ten-year-old or thereabouts would think of."
"Your Excellency, rather, it is precisely because I am a child that I think of and execute such unconventional things."
"Children take unconventional actions because they don't realize they are unconventional. You, at least, are not a child in the sense found in a dictionary. I don't care what you do. However, I will have no part in involving His Majesty, nor will I take responsibility for it."
Aurora gave Steve a warning. No matter how great a noble of the Western region she was, if it came to a conflict with the King, the outcome was decided from the start. If it were discovered that she had clumsily made use of him and incurred his wrath, there was no telling what kind of damage would occur. In fact, she even thought it would have been better if she hadn't asked.
"Please do not worry on that point. I am not asking for a royal visit in person, nor am I impersonating the Royal Family. It's just that it will involve national secrets a little bit, so I simply cannot speak of it here."
"I can't be at ease, but I'll trust you on that."
"Then, as I have various preparations of my own, I shall take my leave for today."
"Yes. I look forward to the next time we meet."
Steve gave his greetings and returned to his territory via Teleportation magic.
Aurora and Harry remained in the room. Harry let out a long, deep breath.
"As always, that boy never ceases to amaze. I never imagined he would use His Majesty."
"Truly. I thought to put Viscount Karsh in his place, but it seems I've joined hands with an extraordinary partner. Do you think my child could be raised like that?"
Aurora asked Harry while resting her chin on her hand.
"It would likely be impossible. Since the tutor is excellent, I believe they will thoroughly instill common sense. And because they know common sense, they won't think to do anything that deviates from it. If they are to inherit the House of Margrave Sowell, it would be a problem otherwise."
"That's true. I'll have to give my child the ability to make use of that boy. There's no need for us to become unconventional. Though, I suppose it will be difficult to control him."
Her head was filled with thoughts of how she should manage Steve.