‘Carl, you can’t be serious,’ said Rachel.
‘I am serious,’ he said. ‘Sorry, Rachel.’
‘If you refuse to pay us the money you owe us, we’ll cancel Project Platform,’ I said, ‘and then we’ll sue you.’
Jenson held up his hands. ‘If that’s the way you want to play it. You think about it. I’m flying back to the States now. Call me tomorrow and tell me whether you want to go ahead.’ He sprung up from his chair. ‘Be good,’ he said, and he was gone.
I put my head in my hands. Oh shit. This was it. This had to be the end. There was no way in hell FairSystems was going to make it now. It was less than two weeks since I had taken over Richard’s company, and already it was finished.
I sat up. Rachel still looked stunned. ‘Did you expect that?’ I asked.
‘No. It doesn’t make sense. We’re too important to Jenson for him to dump us.’
‘Well, that’s what he’s done.’
‘Do we carry on with Project Platform?’ Rachel asked.
‘Do we hell!’ I said, angrily. Then I thought for a moment. ‘Well, maybe you should keep working on it. Just don’t give Jenson anything new. Is that possible?’
‘I suppose it is.’
‘Good. I’d like the project still to be alive if Jenson changes his mind so we can respond quickly. I hope I never have to deal with him again, but we may have no choice. He’s right; it’s our only hope. Now, I suppose I’d better tell the others.’
A couple of minutes later, David and Willie had joined us. I told them the news.
Willie sucked in through his teeth, and muttered ‘dear dear’ to himself several times. David didn’t seem bothered at all. In fact, he seemed quite pleased.
’What do we do now?’ asked Willie.
‘How long do you think we can last without the Jenson money?’
Willie pulled out his projections. ‘We might make it through the next four weeks. I doubt we’ll make the June payroll.’
It was 19 May today. FairSystems paid its employees on the fifteenth. We had less than a month.
I returned to Kirkhaven that night depressed. I drove slowly along the quay, but didn’t see any sign of Doogie. Or, more importantly, his dog. I walked out along the harbour wall, and sat down to think; or rather to brood.
I had failed. There was no other word for it. I had let down all the people for whom I most cared. Karen. My father. Richard. His company would be lucky if it survived him by two months.
I knew it wasn’t all my fault. But I was used to winning, to having luck on my side, to making money. Secretly I believed that you made your own luck, and only losers failed because of ‘circumstances beyond their control’.
The truth was that I knew nothing about virtual reality, and nothing about running a business. I had done my best to ignore this fact, trusting to my own intelligence and common sense to overcome all problems, but my initial self-confidence had reached a low ebb. Sorenson’s trust in me had been totally misplaced.
And I still had no idea who had killed Richard.
I looked out to sea. The wind blew against my cheeks. It was cold. I couldn’t see the sun behind the layers of cloud. Suddenly I felt moisture against my face; it wasn’t spray but rain. I huddled beneath my jacket.
What the hell was I doing here?
It was probably seventy degrees in London right now. I could be drinking a beer on my terrace, waiting for Karen to come home. Suddenly the hubbub of the Harrison Brothers trading room beckoned, like a large family painfully missed. Greg, Ed, the other traders, the screens, the buying and selling.
And then there was Karen. I felt a long way away from her. It might have been my imagination, but I felt that the physical distance between us was affecting our relationship. Well, if that was true, what was I doing up here, piddling about with a lost cause? I should have been spending more time with her, not less.
So, I arranged to spend the weekend with Karen, and Monday at Harrison Brothers.
‘Tell me about it,’ Karen said. She was curled up on the sofa with a glass of wine. She looked lovely, her fine blonde hair rested lightly on her shoulders, which were turning light brown under the first showing of May sunshine. Her slim calves were seductively tucked up under a blue summer dress.
We had spent the afternoon racing at Sandown. It had been a good day. Busker’s Boy had run for the first time in a two-mile flat race, and I’d put a hundred pounds on him to win. I had lost it when he had come second by a length, but he had run well, and I didn’t feel a complete fool. And Karen had managed to pick three winners by betting on yellow. She was fifty pounds ahead, and that had put her in a very good mood.
I had cooked supper, and we unwound in each other’s company Until now, Karen had stayed clear of the subject of FairSystems, and I had been grateful.
But now I was eager to talk. ‘I think FairSystems is going bust,’ I said.
‘Well, if the shares are down to three dollars, it must be bad.’
‘Oh, I don’t think the market knows how bad it really is. That fall was on worries that VR systems kill people. Which is bad enough. But what’s worse is that we’ve just lost our biggest customer.’
I told her all about Jenson, and what I knew about Project Platform. I also told her about Doogie’s threats.
She listened sympathetically. ‘It’s not your fault.’
‘Of course it is,’ I snapped. Karen looked startled. ‘Sorry,’ I said. ‘But I’ve let you down, I’ve let everyone down.’
‘Bullshit. There was nothing you could have done. Where’s this famous trader’s detachment? You’re getting emotionally involved.’
‘Of course I am! It is my brother’s company after all!’
‘OK, OK,’ said Karen, ‘Mark, I know FairSystems is important to you. But you’ve tried and done your best. There’s no more you can do. No more anyone can do. Face it, you’ve got this trade wrong, but there’s still time to get out with something. Take your losses.’
Her words cut through the clouds of worry and despair like a ray of common sense.
‘How long have you got till the cash runs out?’
‘A month, maybe less.’
‘That still might be enough time to sell the company. You mentioned there were buyers about. Sell out and salvage what you can. Forget FairSystems. Forget that nutcase, Doogie. Come back to London.’
I thought through what she had just said. Nothing short of a miracle would keep the company afloat now. If it went bust, it wouldn’t help anyone. At least if it were sold, the workforce would keep their jobs and Richard’s technology would live on. Dad might not like it. Rachel might not like it. But there was no choice.
‘You’re right,’ I said.‘I’ll sell the company.’
We made love that night. It had been a while. I had missed Karen, and we had had a good day together. But once again it didn’t quite work.
Was it me? Was it her? I didn’t know.
Afterwards, I asked, ‘Is anything wrong?’
‘No,’ she said. ‘Everything’s fine.’
Puzzled, I rolled over and went to sleep.
It was amazing how, once I had taken the decision to sell, my mind cleared. I still felt bad about it. I had failed. I felt guilty that I was betraying Richard in his wish that FairSystems should remain independent. And I had let down my father.
Also, I had failed completely to find out any more about Richard’s death. I was sure it was tied up with FairSystems in some way, but I had no idea how. And if fifty of Fife’s finest couldn’t work it out, how could I?
Karen was right. I was in a losing position. There was nothing I could do to make it better. I should take my losses, get out and move on to the next opportunity.
One thing I didn’t like was giving Doogie the idea that he had scared me into running away. But that was only pride. And, truth be told, it would be nice not to see that bloody dog again.
I called Sorenson on Sunday evening, and told him my decision. He was
supportive, encouraging even. He had been unable to produce a miraculous solution when I had told him about Jenson’s withdrawal of the advance payments. He didn’t seem to blame me for what had happened, and he agreed wholeheartedly with my decision to sell.
He said he would talk to my father, who rang me half an hour later.
‘Walter’s spoken to me,’ he said.
‘I’m sorry, Dad. But we have to sell.’
He sighed. ‘Yes, I know. It’s a shame.’
Silence.
‘Walter told me this had nothing to do with you,’ he said. ‘Thanks for trying.’
‘That’s OK.’ They were kind words, but I still felt I had let him down. And, to my annoyance, I cared.
I plunged into the familiar buzz of the Harrison Brothers trading room. I strode towards my desk with anticipation. According to the weekend papers, the trade that Ed and I had put on the previous month was finally coming right.
I got to my desk and turned on my machines. ‘Hi, Ed,’ I said as I tapped in the page number for the US treasury market. He was on the phone, but he gave me a wave.
I was right! The spread between the two-and ten-year US treasury bonds had tightened from 1.40 to 1.28 per cent. I did some quick calculations in my head. That was nearly a point profit on a hundred million dollars, or just under a million bucks! Not bad.
Ed finished his call. ‘Look at this!’ I called over to him. ‘Did we get it right, or did we get it right?’
He winced and scratched the back of his head. Something was wrong. I looked at him and thought.
‘We have still got the trade on, haven’t we?’
‘Not exactly,’ said Ed.
‘What do you mean, not exactly?’
‘I took it off last week.’
‘Oh. How much of a profit did you lock in?’
Ed was writhing in his chair. He had developed a devastating itch behind his shoulder blade, which he rubbed as he screwed up his face.
‘It was more like a loss. A two hundred and forty thousand loss, to be precise. The market had a hiccup at the long end for a couple of days last week. A big account sold ten years and bought three years. The trade moved against us, so I cut it. Then it came right back.’
I couldn’t believe it. I had told Ed to leave the trade on. How could he possibly have lost that much? I felt a complete fool for having trusted him. The guy must be a total moron.
Ed read my expression and winced in pain again. ‘Etienne told me to take it off.’
‘Etienne? What do you mean?’
‘Well, he’s been looking over my shoulder every day since you left. As soon as the trade went underwater, Etienne noticed and told me to cut my losses.’
‘Why didn’t you call me at FairSystems?’
‘I did, but you weren’t there.’ I remembered receiving a message that Ed had called. I had ignored it; I’d been too preoccupied with what was going on at the company. ‘Besides, Etienne told me to take it off right away. Two hours after I sold the position the trade started to go our way.’
I was furious, but not with Ed. I was mostly angry with myself. And I wanted to kill Etienne.
‘OK, Ed, don’t worry about it,’ I said, and I stood up to discuss the matter with Etienne.
Ed picked up the phone, cowered in his chair, and kept his eyes glued to the screen.
‘Etienne, may I have a word,’ I said moving over to where he was standing next to Greg.
‘Not now, mate, I am busy,’ said Etienne in his strange French bond trader accent. His English was very good but there were certain words that mixed cockney and Parisian. The effect in one so smooth was bizarre.
‘Yes, now,’ I replied. ‘Why did you tell Ed Bayliss to sell my treasury position?’
‘I said not now. I said I am busy,’ Etienne answered, without looking at me. He picked up Greg’s phone.
I pulled it out of its socket. Etienne turned to me, anger flaring in his eyes.
‘We could have made a million dollars from that trade, instead of losing two hundred grand!’ I was aware that the trading room had suddenly gone quiet.
‘The trade was too big for Ed to handle,’ he replied, his voice a barely controlled growl. ‘He is only a kid. He had lost two hundred thousand. How long should I have waited? Until he lost half a million?’
‘I was in control. You could have called me.’
Etienne turned to look at me. ‘How many times did you call in in the last two weeks, hein?’
I was momentarily at a loss for words. ‘Uh, well . . .’
‘None!’ shouted Etienne. ‘You leave a kid with three months’ experience a four hundred million dollar position to manage in the most dangerous markets we have seen for years, and you don’t even call in! You are dangerous, mate. Bloody dangerous.’
I didn’t say anything. If Etienne had just let Ed handle it we would have been well on the way to making back the $2.4 million. I was angry with Etienne, but also angry with myself. I knew that in a way he was right, I should have checked in. If only I had answered Ed’s call.
But I forced myself to turn on my heel and walk the five paces back to my desk. Ed cowered next to me.
Etienne disappeared out of the trading room in disgust, and Greg strolled over.
‘Guess that trade didn’t work too well, huh?’
‘Piss off,’ I said.
He leaned against my desk. ‘How are you doing, buddy?’
‘I’ve been better,’ I muttered.
‘How’s it going in Scotland?’
‘Not good. I think I’m going to have to sell FairSystems.’
‘Too bad,’ Greg said. ‘But that means you’ll be back here soon?’
‘I expect so.’
‘Good. We’ve missed you.’ He nodded to Ed. ‘This guy’s been doing well without you. I’m sorry I couldn’t stop Etienne taking that trade off. But Ed’s pointed out some great opportunities for me on that Bondscape machine.’
‘Good for you.’
‘No, seriously. He’s done well.’ And with that Greg sauntered off towards the coffee machine.
I turned to Ed. ‘OK, I made a mistake. From now on you don’t take a trade off without checking with me first. And I will call in regularly. OK?’
‘OK.’
‘So what do we do now?’ I asked. ‘The ten-year two-year trade hasn’t got much left in it, so there’s no point in putting it back on. But I’m determined to make back that money we lost last month.’
‘I have an idea,’ Ed said, looking at me nervously.
I relaxed. Greg was right. Ed was a bright kid. If he had a good idea, I didn’t want to scare him off. ‘OK. Let’s hear it,’ I said in as encouraging a voice as I could muster.
‘Take a look at this,’ he gestured to the Bondscape glasses lying beside him. Bondscape was now permanently installed at his desk, adding to the considerable clutter that was already there.
I moved my chair next to his, and put on the glasses. I was transported into the Bondscape world of gently rolling green hills and scattered buildings. There was something both thrilling and restful about it. Thrilling because you felt yourself literally surrounded by the world’s billions of financial instruments. The sheer size and might of the global capital markets pressed in all around you. When the markets moved rapidly, it was scary, you felt you would be crushed by the sliding buildings, which grew and shrank above and below you.
But on quiet days like today, the buildings languished peacefully in the virtual sunlight as they rested on gently sloping hills. The eagle wheeled serenely overhead.
I found myself at the foot of a very tall building surrounded by a cluster of much smaller ones. Italian flags flew above each of them. The tall building covered a large area. This suggested it was a big Italian government issue, and it had a much higher yield than other similar issues.
‘It’s the CCTs of August oh-one,’ said Ed.
The bonds he meant were the Certificati di Credito del Tesoro maturing August 2001. The
y had the full backing of the Italian government.
I checked the roof of the building for the yield. ‘It’s two and a half per cent over LIBOR! That’s ridiculous,’ I said. Two and a half per cent over LIBOR meant it would be possible to borrow money, buy this bond and lock in a profit of two and a half per cent with little risk. That is what is technically called a ‘free lunch’.
I took the glasses off. ‘Why is it so cheap?’
‘All sorts of reasons. The Italians have just decided to levy withholding tax on CCTs, so everyone has been dumping them. Then, in their wisdom, the Italian treasury decided to launch their biggest CCT issue ever.’
‘And it was a flop?’
‘A total disaster. It’s at a price of ninety-five, and it should be trading at ninety-eight.’
‘Where’s the catch?’
‘There isn’t one,’ said Ed.
I spent half an hour running through the details of the bond with him. He was right. No catch.
So we bought a hundred million dollars of the CCTs, and I went back up to Scotland.
17
‘We have no choice but to sell,’ I said. ‘I’ve spoken to Walter about it and he agrees. I’ll call Scott Wagner this afternoon and get him to work on it.’
I looked for reactions. Willie was relieved. David just smiled.
Rachel didn’t like it.
‘Are you asking us or telling us?’ Her voice was cutting.
‘I’m afraid I’m telling you,’ I said. ‘But we can put it to a vote if you like.’ I sensed that Willie and David were on my side.
‘Can’t we persuade Jenson to change his mind?’
‘I tried. He was pretty adamant.’
‘What about banks? You should have contacts in the City. Can’t you arrange something?’
‘No bank in its right mind would lend us money in our current state. It would be pouring money down the drain.’
‘Well, I’m against it,’ said Rachel. ‘We all know Richard would never have sold out, so I don’t think we should, just because he’s . . . dead.’ Rachel was getting quite upset. Colour had rushed to her cheeks, and her voice was wavering. It took us all aback. We weren’t used to Rachel getting emotional about anything.
Trading Reality Page 23
