The Icarus Prediction: Betting it all has its price (2 page)

CHAPTER ONE

New York City

Present Day

The jet black Lincoln Town Car wove through the late morning traffic, the smartly dressed driver avoiding the abrupt stop/start motions most chauffeurs and cab drivers inflicted on their passengers. His rider, Jarrod Stryker, was scanning the
Financial Times
, the orangey-sheeted counterpoint to the
Wall Street Journal
that he felt was leaner, meaner, and smarter than the gray-slated paper. Even in this era of ubiquitous technology sprawl, he still liked reading a real newspaper on his way in to work. As the car wheeled into the curb, the driver gently braked and said, “We’re here, Mr. Stryker.”

Jarrod looked up from his paper. “Thanks, Jimmy. You can go back in the pool. I’m probably here for the duration today…and tonight.”

“Right, sir. Have a good day. Buy low. Sell high.”

“Thanks for the tip,” Jarrod said with a smile. “See you tomorrow.”

Jarrod exited the car and walked toward the entrance of Arcadia Towers, a pristine new glass-and-steel structure in New York’s financial district. Although this piece of real estate was separate to Ground Zero, its previous structure had suffered heavy collateral damage and been torn down. He paused at the revolving door and looked back to see the car pull away. Within another ninety days, he’d be hopefully be a partner and would be entitled to his own stretch limousine and driver. The question was, did he want it? A few years ago, he would have said no, but now he wasn’t so sure. The acquired taste of luxury took no effort to get used to.

He entered the marbled lobby and made his way to the elevator. The morning crush had passed, and a lone woman entered the elevator with him. The phone in his holster vibrated. He reviewed his Bloomberg updates, aware that she took a moment to discreetly look him over with an appraising eye.

At six-foot-one, with inky black hair, Paul Newman blues, and a square jaw, he was used to admiring glances. The Armani suit and stylish Hermès pocket square didn’t hurt, either. He glanced over and caught her gaze, then turned on his brightest smile. Caught in the act, she went weak in the knees, knowing she’d just had the high point of her day.

The elevator stopped and the doors opened. Jarrod began to step out but looked up from his phone and was brought up short. He was a couple of floors shy of his destination, the sign on the other wall reading Arcadia Properties. That was the management office for the building. A bald, roundish man with wire-framed glasses and a crimson complexion entered the car and stood between Jarrod and the woman.

“Morning Don,” offered Jarrod, and he received a curt nod in reply.

Donald Pippin was the office admin partner and controller at Blackenford Capital Management. Knowing Don as he did, Jarrod figured Don was probably harassing the property manager about the lack of soap in the men’s room or some such nonsense, for he was one of those folk who liked to major in minors. And he always seemed to have a chip on his shoulder where Jarrod was concerned.

The elevator opened again, and Jarrod left the woman behind with the parting shot of a smile. Being a Southern gentleman and an Auburn grad, his manners always set him apart from the ingrained rudeness of New Yorkers. And in the diseased, egocentric world of hedge funds, it set him further apart. He’d never met a client his charms couldn’t close, and if the client was of the female persuasion, so much the better—as long as he could persuade them to keep the portfolio where he said to keep it and could keep things strictly business. He used his skills from the Farm as much as the skills from Harvard Business School, but neither place offered a class on strong-arming rich widows in their curriculums.

And with his successful trading record, Blackenford was doing less and less with individual investors and more and more with institutions. Bigger clients, bigger trades, bigger fees. He was finally leaving Beirut behind.

He walked into the main reception area that was calibrated to send the message that serious wealth resided here. Gold-plated lettering spelled out Blackenford Capital Management on a teak-paneled wall above a striking receptionist in a Chanel suit.

“Good morning, Jarrod.”

“Mawnin’, Rebecca,” he replied, turning up the gain on his usually undetectable Southern accent because he knew she hailed from Savannah, Georgia. He strolled past the heavy leather furniture and the rather pretentious portrait of the firm’s founder, Admiral Gregory Blackenford, the great-grandfather of the current proprietor.

The official company history failed to mention the firm’s initial seed capital came from Admiral Blackenford using navy vessels under his command to import distilled spirits from Canada during Prohibition, just like another financial wizard named Joseph P. Kennedy, Sr., who would go on to sire a president. Ah, yes, quite a few financial dynasties seem to have had a rogue who started it all.

He walked by the main conference room, which had an ebony table about the size of the flight deck on the USS
Nimitz.
Pushing through the glass doors he entered the main trading room of the firm.

The changeover from the client area was stark. Here, high-tech reigned supreme, and as he arrived at his trading pit, it looked like something akin to the bridge of a starship. A dozen big LED screens were arranged on brackets above a long bench where six members of his team monitored them incessantly. Smaller flat-screen monitors were everywhere. And as if that weren’t enough, everybody seemed to have two mobile phones out on their workspace as well, one for personal and one for business, although in this business the line of demarcation between the two was somewhat blurred.

Jarrod nodded to his team members as he took off his suit jacket and draped it over the leather swivel chair.

Coffee spontaneously appeared in a china cup on his desk from his assistant, Gwen. Unlike the trendy fashion-mavens favored by most partners in the firm, Gwen was an acerbic, middle-aged Jewish grandmother who’d seen it all and was smart as a whip. She’d recognized Jarrod early on as the new rising star and hitched her wagon to his when her previous boss flamed out with a coronary at the ripe old age of forty-seven.

As a principal in the firm, Jarrod was entitled to an office. Had one, in fact. But trading was nothing but the monetization of information, and the closer you were to the raw information, the greater your chances of success. Jarrod often chuckled at how CNN and CNBC postured themselves as purveyors of the immediacy of financial news. In fact, by the time any trading news hit the news wires, that monetization train had already left the station. Trades in stocks and commodities were precursors of news, not the other way around.

Jarrod remembered when the Pentagon had experimented with “terror futures” as a means with to identify impending terrorist attacks—i.e., providing investors a way to, say, bet on a biological attack on Israel. Congress put the kibosh on that politically incorrect idea, but the official Pentagon statement on the debacle actually rang true: “Research indicates that markets are extremely efficient, effective, and timely aggregators of dispersed and even hidden information.”

Jarrod had taken that to heart but went one step further. Successful trades meant going upstream to obtain data that was three days old when it hit CNN—an eternity in the trading game. So he had created a “flat” organization chart in his department that focused on energy trades, calling for immediate cross-fertilization of data from him to the lowly analyst and back again. No bureaucracy. No formality. Just information and actionable intelligence. Still, everybody knew he was the boss.

Jarrod turned to one of the newly hired business school graduates in his group, Mark Watson, who was analyzing an inventory chart on one of his monitors. “Hey
Melvin
, Did you catch that insane buzzer beater last night?”

The response was delivered with a mixture of respect and underlying resentment.

“No, I was busy working on the inventory data you asked me to compile… late last night.
And you know my name is Mark, not Melvin!”

Jarrod didn’t miss a beat, “Good Answer Melvin, any other response would have gotten you fired
on the spot
.”

Mark mumbled under his breath, “Good, go fire
Melvin
then.”

Jarrod couldn’t help crack a smile knowing he’d gone through the same ribbing only a few years ago.

He turned his attention to the broader team and raised his voice a few decibels.

“OK, how are things shaping up?”

“West Texas Intermediate up a quarter and holding just under seventy-nine,” replied Chet Delaney. Delaney was his Wharton
wunderkind
who knew more about the stats of the domestic market than the CEOs of Exxon and Chevron did.

“Inventory movement?” asked Jarrod.

“Reports just in. Refinery outflows appear to be outpacing deliveries by 1 to 2 percent over the last forty-eight hours.”

Jarrod sighed. If the refiners would just provide web access to their inventory databases, it would be so much easier. But they didn’t, so Blackenford subscribed to a service of “watchers.” Outside major domestic refineries, a number of remote surveillance cameras watched the traffic going in and out. On the Houston Ship Channel and the Mississippi River, another set of cameras kept track of oil tankers unloading their cargo of crude via the submerged pipeline.

Jarrod’s crew knew the capacity of every floating tanker on the high seas. And the tanker capacity of eighteen-wheelers was standard. So when you did the math—something Jarrod’s crew did very well—you could figure out whether refinery stockpiles were growing or decreasing. Growing inventories meant less pressure to refill them, which caused prices to slip. It was simple supply and demand. Broader factors could come into play, of course—weather, economic trends, terrorism, elections, OPEC
etc.
But in a peaceful world, inventory trends were the best bellwethers.

“The firm’s position?” asked Jarrod. Although he knew it, he liked to hear it.

Delaney replied, “It’s 9.52 million barrels long at 68.50. At a gain of 10 dollars and 29 cents per barrel, the return on this trade is positive 98 million less 8 million for the hedge, leaving a net gain of 90 million minus fees.”

It always amazed Jarrod how those dancing numbers on those screens could create wealth out of thin air. Ninety million dollars inside of thirty days. Not bad for a month’s work. Indeed, it almost seemed criminal. But this seemingly effortless way to make money had only come after Jarrod turned himself into a highly successful stock trader and continuously pressured his team to do more and to do it faster than anyone else.

It had started three months ago when Jarrod had picked up on a wrinkle no one else seemed to notice in the ocean of data his team monitored in the hurly-burly of the Iran situation. An obscure press release by Tribeca Shipping stated the company was phasing out some of their older tankers and upgrading their entire fleet with newly constructed vessels. Separate and distinct from that, via his back-channel contacts as a CIA alumnus, he’d heard something had occurred in Saudi Arabia that was yet to hit CNN. A food riot had broken out in al-Kharfah, a small village in the Saudi outback, and neighboring villages were close to joining the party.

Most Westerners considered Saudi Arabia to be a wealthy welfare state. In fact, the wealth of the nation was largely siphoned off by about seven thousand royal princes, leaving millions in abject poverty. The royal family used the jackboot to keep the populace suppressed, but when the Saudi riyal was devalued and food prices went up, those who had nothing to lose rebelled.

Having learned how the Arab mind worked in his days with the Agency, Jarrod swung into action. First, he took the firm’s Gulfstream and high-tailed it to Galveston and then to Baton Rouge. He made himself look like a longshoreman and staked out the docks until he found a Tribeca tanker.
H
e
follow
e
d some
c
r
e
wmen to
a
dump of a
b
a
r
a
nd sta
r
ted buying rounds of shots to get the inside scoop.

“Yeah,” the crewman said. “The old girl is going to be cut up for scrap, they just told me today.”