The Last Trade (14 page)

“The black boxes don't make moral decisions. We do. Why,” Havens presses, “why are you taking shorts that are the opposite of your own fund's?”

“I have no idea what you're talking about.”

“Why tech? Why new media? What do you know about what's coming?”

Salvado answers as if reading from a textbook: “A hedge fund is an investment typically open to a limited number of professional or high-income investors. Hedge funds often seek to hedge investment risk using a variety of methods or strategies that are often the proprietary and covert inclinations of the fund manager—”

Havens interrupts, “Why are you zeroing in on a specific set of American-based securities, and why are you killing the person who executes the trade?”

Salvado, attempting to ignore him, continues reading from the imaginary text: “Most hedge funds are exempt from many regulations that govern ordinary investment funds—”

“Why now? Why do something like this when, my God, Rick, you're rich beyond your dreams. If you don't need to kill people for money, then what?”

Salvado glares at him. “Who the hell are you? I'm the manager and CEO of one of the best-performing hedge funds of the twenty-first century, the Rising Fund. Beloved by the media, the politicians. Within a span of ten years, after restarting this thing alone in my apartment in Santa Cruz, I have outperformed every broad measure of the markets and made more than forty-eight billion dollars for my thousands of valued clients, my employees, and myself. I am an American patriot betting big on an American rebound and I have sacrificed my life on this—”

Havens grabs Salvado by the front of his crisp white shirt and shoves him back into the corner near the window. To the west dark clouds press down on the Hudson; beneath them giant machines sit idle on the earth of Ground Zero. “Where is this going, you son of a bitch?”

Salvado is unfazed: “In addition to making money,” he continues, narrowing his eyes, smirking, “one of the fund manager's most important responsibilities is to mitigate, or hedge, risk and minimize losses.”

“Danny Weiss was your hedge?”

“Forget Weiss. He was looking into things that can get a person killed. Things you seem to know more about than me.”

Havens shoves himself away from Salvado, then cocks his right hand back in a fist.

From behind Havens, at the entrance to the room back near the humidor, comes a woman's voice. “Rick?” Salvado's executive assistant, Roxanne. “Everything all right in here?”

Salvado, trembling, nods. “We're fine, Roxy. Drew was just about to leave.”

Havens looks at Roxanne, then back at Salvado. Roxanne half smiles, turns, and walks away. She knows something's wrong but knows enough from past experience not to question Salvado.

“Now you listen,” Salvado says, regaining his bravado. “I suggest you leave and forget you ever worked here. Last chance: We can make the last few days go away and attribute your departure to a growing fundamental difference in our investment philosophies. Personal problems, and God knows you've been through a lot. You will receive a generous severance, your full bonus, and my wholehearted endorsement. But remember, there is nothing you can do to me, no way to substantiate or prove anything.”

“We'll see.”

“But if you try and by some fluke survive, I promise you will be the one to go away. And not to prison. I know people, at every level. People who believe in my fund and my vision.”

“Your lies.”

“That's subjective.”

“What's gonna happen Friday?”

Salvado shakes his head. No idea. “You think you're gonna tell people about some crazy theory and the world is gonna listen to a freak like you and take action? They'd never believe you, even if by some fluke you're right, because investors never want to hear a negative truth. They never want to think that something so horrible could happen to them.”

“Despite the fact that it does, every day.” Havens takes three backward steps toward the door.

“Remember, you are no one. And nobody listens to no ones.”

“When confronted with an overwhelmingly convincing body of evidence, they will.”

“You do not know what kind of shit storm is coming your way, son.”

“Weiss is dead, but he left a nice bread-crumb trail. I'm going to break down every last crumb and follow that trail right back to where you live.”

* * *

Back on the elevator, heart drumming triple time against his rib cage, blood thumping in his ears like a subwoofer. He rushes out at the lobby level, past the preoccupied guard at the security desk, and back onto the street. Walking south toward the pit, toward Ground Zero, he looks up and sees his friend the rainmaker Tommy Rourke approaching, on his way into work.

“Drewski . . . you hear about Weiss?”

“It's crazy, Tommy.”

“That poor bastard,” Rourke says. “I never should have let him move into that building. It's not like he was poor . . .”

“Tom, it wasn't random.”

“What do you mean?”

“It wasn't random. His murder was planned.”

“What?”

“Salvado had him killed because he knew something, Tom. He . . .”

“Rick? Come on, Drew. The guy's a piece of shit, but he's no killer. Why would . . .”

“Weiss knew something about the fund. The crazy direction it's going. I put him up to it, Tom, and now he's gone.”

Rourke raises his eyebrows. “What are you talking about? You sound and look like a paranoid crazy person.”

“That's what I told Weiss when he tried to convince me. I didn't want to listen. Didn't believe him, but, Tommy, he
found
things.”

“Like what?”

“I'm not sure, but obviously he hit a nerve.”

“Shady plays are one thing, Drew, but killing?”

“I was there, Tommy. I found him when the killer was still in the apartment.”

“Jesus.”

“He cut his throat and left him bleeding out.”

“Who?”

“Laslow. Salvado's pimp from the club, the bald guy from Elysian.”

“Listen, Drew. You've been through a lot, there's no denying that, but what you're asking me to believe . . .”

“I'm not asking you, Tom. I realize no one will believe it until I prove it.”

“Why don't you just go to the police and tell them what you know? Wouldn't that be best?”

Havens thinks. If it weren't for Rourke, after Erin's death, after his divorce, he doesn't know if he'd have made it. Besides Miranda, Rourke was the only one to check in on him after the funeral, the only one with the compassion to understand the link between the demands of his job, the death of his only child, and the end of his marriage. But he's thought this through. “Look, no one's been there for me like you, Tom. From everything that happened with my family to telling people to lay off the Rain Man jokes when I started. But if I go to the police without having this thing figured out, they will lock me up. A socially inept, divorced quant with a chip on his shoulder taking on an American icon. Within twenty-four hours Salvado will fix everything so that it all lands on top of me.”

Rourke exhales. “Jesus. You okay?”

“I'm not okay. I'm scared shitless.”

“Listen.” Rourke takes a breath, tries to think. “Why don't we grab a cup of coffee and talk? I'm sure there's something we . . .”

Havens shakes his head. “Trust me, I've thought this through. Every model ends with me in jail. I don't expect you to believe me, Tommy, and I don't blame you for thinking I'm nuts.”

“I don't think you're—”

“I mean,” Havens interrupts, “after Erin, after Miranda . . .”

Rourke shakes his head. No need to go there. “So what can I do?”

“You've helped me enough.”

“And you've helped me plenty over the years. So what?”

Havens considers his friend, then hugs him. “You can keep an eye on Salvado for me. Let me know if he does something radical.”

“Done. Where you going now?”

“To a cave. To figure this shit out.”

2

Hong Kong/Berlin

F
lying commercial makes her feel half-human.

At one point this afternoon Michaud had tried convince Sobieski to hop on a military transport, but she talked him out of it. In theory it would get her into Germany two hours sooner, but she also knew the shorter flight time would entail being strapped into the back of a cargo plane or some speed-of-sound fighter while clutching a barf bag. She begged for commercial, got bumped up to business, is thrilled to see that it's almost empty.

She sips Sauvignon Blanc and skims the American finance rags. She opens a novel—When was the last time I read a novel?—about a fierce and seemingly senseless battle for a hill in Vietnam. She read that it took the author, a Vietnam veteran, more than thirty years to come to terms with it, to get his story right. She loves the story, rips through it the same way she attacks a training session, a case, a poker table, or anything that interests her: all in and all out. But what interests her most is the story that isn't in the book, the story of the man who wrote it.

What compels a person to dedicate his decades to the fictional recreation of a life-changing moment? Is it the hope that the end result will change things back to the way they were, or at least to something better? Or is it all about trying to make sense of the random brutality of the world?

Four hours later, when she finishes the last sentence, she closes the book and looks out at a cloud-scrimmed quarter moon, somewhere over mainland China.

“How was it?”

She looks at the smiling man in the next seat. When he sat just before takeoff, they exchanged the curt hellos of two people who'd prefer not to be bothered. Each soon got lost in a cache of carry-on media. “The book. You're pretty much devouring it.”

“I started it twice at home but got nowhere before today. It's pretty compelling.”

“You know,” the man offers, “it took the author more than thirty years to complete the story.”

Sobieski stares at the man. “You read it?”

“No. But I own it and have read about it. It's near the top of my interesting to talk about but never been read stack.”

Now she smiles. “I have one of those.”

“I have to admit, it's the thirty-years-to-complete part, more than the great-war-novel part, that fascinated me.”

A flight attendant pauses in the aisle with a tray of warm chocolate chip cookies. They each take one. Can't get these on a C-130, Sobieski thinks. Or him. “Well,” she says. “We've got about four more hours until we get to Berlin. You're more than welcome to read it.”

He looks at the laptop on his tray table. “You know what, why not?” He holds out his hand and she gives him the paperback. “I'll read fast and we can have an impromptu book group, let's say in three and a half hours, thirty-seven thousand feet above western Kazakhstan.”

She smiles. “Deal.”

For an hour she sleeps. When she wakes up, she sees that he's well into the book. Perhaps 175 pages. She thinks of what happens at that point in the story and wonders what he thinks of it.

Sensing her gaze, he closes the book. “Amazing. I mean, I've never been to war; I'm a collectibles dealer, so I can't even imagine what it must have been like there. Firefights. Death. Fear. Bravery. The way it must change the way you look at everything when it's over.”

“My dad was in Vietnam,” Sobieski offers.

“Really? Mine, too.”

“Mine's not around, and never spoke about his experience there, but I can understand why.”

He takes a sip of bottled water and swallows before responding. “I bet your dad did some special stuff.”

She tilts her head. “Why?”

“Because he never spoke about it. Isn't that how it goes, the real heroes never talk about it? My dad . . . man. I mean the guy never shut up about ‘the Nam.' His stories got to the point where I began to doubt if he ever made it out of the States.”

“You never know,” Sobieski replies. “Maybe mine didn't talk because he had something to hide. Everyone processes conflict differently. “

The man holds the book out to her. “Here. Listen, I'm a fast reader. But not 622 pages fast.”

She waves him off. “Keep it. Unless your copy's in Berlin. We'll have the book club another time.”

He pulls it back. “That's kind of you.” He holds out his hand. “Marco.”

Sobieski shakes his hand. “Cara.”

She sits up, anticipating that the conversation is about to become more intimate. But after releasing her hand, he reaches back into his carry-on for a folder and prepares to get back to work.

Sobieski tilts her head back and closes her eyes. The one time she wouldn't mind a guy getting a little aggressive on a long flight, he doesn't. She opens her eyes and stares back out the window. Her last look at the map on the seat back in front of her showed the plane cruising somewhere over Poland. Her father used to tell her that they descended from Polish royalty. That a relative, his namesake, King Jan Sobieski, was beloved for saving Vienna from the Turks, and that he had a fairy tale love affair with his queen, and that there was a painting of him hanging in the Sistine Chapel. The painting exists—she's seen it—but he never showed her proof of their link to royalty, and she never asked for it.

She takes a breath, looks back at Marco, and goes for it. “Do you mind if I ask, what exactly is it that you collect?”

3

New York City

A
t the Citi branch on Ninth and 23rd he buzzes himself into the ATM chamber and dips his card. He taps Withdrawal, Cash, and the daily max, $500. The machine says no. He taps $300 and the machine says no. $100: N-O.
Insufficient Funds. See bank administrator.
At the Bank of America one block over it's the same deal. Salvado's already shut down his assets.

He crosses 23rd Street to Eighth Avenue, and halfway down the block he steps into the lobby of the Chelsea Hotel, past, present, and eternal home of writers, artists, actors, and rockers, from Dylan, Hendrix, and Joplin to Twain, Kerouac, and Tennessee Williams. This is the first hotel he and Miranda stayed at as a couple. It was Miranda's choice, not because it was chic or exclusive. She wanted to go because of its musical roots and funky, artistic vibe. When she told Havens that Arthur C. Clarke wrote one of his favorite books,
2001: A Space Odyssey
, at the Chelsea, and that Stanley Kubrick, director of the classic film of the same name, often stayed here, the outer space lover in him was smitten, with her and her seedy hotel.

He pays cash at the desk, then walks upstairs to his room and bolt and chains himself inside. Even after they bought their own place, even after they became rich, once every two or three months they returned to the Chelsea for some sort of spiritual and marital renewal. Having a night away from “parenting,” from Erin, was also part of it. Of course now the thought of ever wanting to spend a night away from Erin sickens him with shame.

Another Chelsea resident of note, Havens recalls, was Sid Vicious of the Sex Pistols, one of Danny Weiss's punk rock rebel heroes, who supposedly killed his girlfriend, Nancy Spungen, in one of the rooms. It comforts Havens that Weiss would approve.

He boots up his laptop and plugs in Weiss's flash drive. While the tracking software loads, he plays an early eighties punk playlist compiled by and given to him by Weiss. The Ramones, the Stooges, the Dead Kennedys, the Misfits, the Clash, the Sex Pistols, Jim Carroll, Joe Jackson. The first song up is “Mommy's Little Monster” by Social Distortion. First he tracks the holdings of the Rising Fund, looking for any out-of-the-ordinary movement in addition to the heavy tech shorts that came out of Hong Kong. Nothing. Then he takes a closer look at the trades in Dubai. The deal there totals almost a billion in shorts, all from the same firm, in direct opposition to Salvado's Rising longs in the tech sector. They are almost exclusively American tech stocks. If Rick Salvado was Mr. Red, White, and Blue regarding U.S. tech, whoever was taking this position, in Dubai of all places, was the opposite. Insert paranoid Moslem terror conspiracy here.

He's still trying to connect Hong Kong and Dubai when he starts picking up movement coming out of South Africa. Out of Johannesburg, and Havens is watching it happen in real time. A buyer there is all over a group of U.S.-based new media stocks. The same ones that Salvado predicted would form the foundation for an American economic and innovation renaissance. But instead of one heavy short bet, the Jo'burg firm is taking a steady stream of smaller ones, just as the firms in Hong Kong and Dubai did. The only conclusion that Havens can draw is that whoever is placing the orders is “Smurfing,” or executing so many small trades instead of larger, lump-sum trades to avoid detection by the authorities. He used to see this with money being wired into the States while he worked at Citi. Everyone knew those deals smelled funny, but because they were technically legal, and there were commissions to be made, they looked the other way.

He's anxious to begin constructing models around this information—Brownian motion, Black Scholes option pricing, Gaussian copulas—and indeed at least one compartment of his brain is already teasing out variables and hypotheses. But first he needs to gather as much hard information as he can. He probes “Hong Kong Hang Seng.” Then: “Dubai Zayed Capital.” Then: “Johannesburg Rosehall.” With the abilities of a mathematical savant and the guile of a hacker, he manipulates the computing power of the software to access transactions, employee records, and their in-house trading accounts. This leads to the names of two of the brokers who executed the trades: Patrick Lau in Hong Kong and Nasseem Al Mar in Dubai.

Havens looks around. His heart rate is raging. The next song is the Misfits' “Mommy Can I Go Out and Kill Tonight?” He looks into the brokers' residences, education, credit ratings, employment. and bank accounts. He thinks of the trader Lau. Killed in his apartment within hours of completing what was surely the biggest transaction of his life. So far there is no such evidence of death for Al Mar.

He continues to try to make sense of these strange trades. He teases out a few perfunctory models, weighing risk and volatility and the law of large numbers. He looks for a fat tail in his distribution curves that may point to a surprise catastrophic “black swan” event that can only be rationalized later, but he hits a wall. He needs more information, fewer variables. He had always been frustrated in those moments when life circumstance prevented a robust sample set from which patterns might be recognized. More than anyone, he should know the biggest fallacies of data usage is a small sample size and here he is making the biggest mistake of all—trying to force a truth from a sample size of one.

As dumbfounded as he is by Salvado's unjustifiably long positions on these securities, he's equally perplexed by these moves that are the exact opposite. The only common denominator is the securities. One side predicts widespread success, the other catastrophic failure. That's not quite right: The other common denominator is dead financial guys. Lau and Danny Weiss and perhaps Al Mar.

Then, finally: What about South Africa? What about the person who is right now executing the big short on American new media stocks out of Johannesburg? Within seconds he has the name of the firm and the broker, who, it turns out, is not a he.

He's looking up information on Sawa Luhabe at Rosehall in Johannesburg when his computer screen blinks on and off. On the upper left corner of his screen a green box appears that contains the subject header “MALWARE ALERT!” Beneath the heading is the list of a New York–based Internet provider address and another IP address that originates in Germany. Berlin. He stares at the address, thinking of Weiss's second text and, of course, Siren Securities.

 

Berlin. 12.42-6

Maybe whoever tracked Weiss is tracking him.

He unplugs the flash drive and stands. Spooked, he walks to the window and looks out onto the mid-morning traffic of 23rd Street. There's not enough hard data. Not enough of anything to form the roughest analytical model, to construct the simplest narrative. For instance, the Gaussian copula he used to call the sub-prime crisis predicted the price correlations (or copulations) between collateralized debt variables. When X happens (a loan defaults), there's a Y chance that Z will happen (more default, and banks and economies collapse). In this case he only knows that Weiss's death and these strange trades are the X. When and if Z happens, and how catastrophic an event it may be, is unknown.

One more peek through the curtain. Autumnal morning light knifes down 23rd from the east. A man chases the crosstown bus that's stopped just short of the corner at Eighth. The bus pulls away a second before the man reaches it. Havens watches him jog in pursuit, pounding his fist on the bus door until it stops at a red light ten feet away. The man is still pounding when Havens looks away.

Holding off from calling Miranda these past few hours has been one of the hardest things he's ever done, but he doesn't want to overwhelm her or electronically implicate her. Not having anyone else to call doesn't help. This is what happens when you give up every aspect of your life to live a job that has suddenly become intent on killing you. He knew it was going to eventually kill him one way or another, but his versions usually included things such as a Black Monday coronary or a stress-related aneurism, some stranger in a downtown EMS truck applying the paddles.

Not this.

He paces. He runs numbers in his head, spitballs theories—most of which feature Salvado behind some grand comic-book-villain scheme—but nothing makes sense. Maybe what Miranda used to say is true. He can construct a rational model for everything except reality. Every few minutes he checks his watch. At 10
A.M.
he turns on the small television on his dresser. The news. He pays careful attention to the headline stories and the type crawl on New York 1 to see if there is anything about the murder of Danny Weiss, the fugitive Andrew Havens, or some impending financial disaster.

Nothing.

He goes back to the laptop, eschews the flash drive, and clicks on the photo of the board in Weiss's apartment. He stares at the numbers, but his eyes keep tracking back on the words:

 

The gods may love a man, but they can't help him

when cold death comes . . .

On a hunch, he decides to run some numbers based on an obscure financial indicator he's never taken seriously. The Hindenburg Omen is a technical analysis pattern that is said to portend a major stock market crash. It's named after the crash of the German zeppelin on May 6, 1937. The rationale is that, under “normal conditions,” a substantial number of stocks on the NYSE set new annual highs
or
annual lows, but not both at the same time. When there is a simultaneous presence of significantly above average new highs
and
lows, according to the Hindenburg Omen, a substantial to catastrophic market decline is likely to follow. Havens's problem with the construct is that it is at best an imperfect model and at worst the ammunition of quacks. He finds the criteria to be too random in nature and feels that with such an enormous data bank and numerous variables, any number of correlations can be found, and few really have predictive significance.

As much as he likes to discredit the Hindenburg Omen, he sits up and pays increased attention with the first result: On September 30 there were 91 and 82 fifty-two-week highs and lows on the NYSE. This would qualify as significantly more than the norm. He looks for an explanation in the news of the day—for instance a poor earnings report from Apple, a natural disaster, or geopolitical turmoil. Nothing. He moves on and within a minute is stopped in his tracks again. Last week, on October 12, there were 83 highs and 93 lows. Same deal: on the surface, no logical or numerical rhyme or reason. However, when he lays The Rising's holdings against the highs and lows of both days, he sees that a disproportionate number—more than half of its portfolio—experienced highs and lows. He cracks his knuckles, then runs his hands over his face.

He stands. On TV a gray cartoon cloud wobbles over the Northeast. Men in black masks hurl stones at unseen targets in Greece. A Cardinal pumps his fist as he rounds third on a play-off home run trot. Then the numbers. Yesterday's numbers, last night's numbers, job numbers, revealed over images of hectic Japanese traders, a North Atlantic oil platform, the six Corinthian columns of the New York Stock Exchange building topped by the triangular pedimental sculpture by John Quincy Adams titled
Integrity Protecting the Works of Man
. As if any of it matters. The building, so substantial and massive, as if to give the impression that no single thing can bring it down, except of course the on-screen numbers that are ghosted over it.

He looks back at his computer. Personal, human fear prevents him from wanting to look further, but the addictive pull of the numbers compels him to. He types and waits. The screen blinks and there it is. For the third time in the last thirty days he discovers a Hindenburg Omen, 74 highs and 102 lows. That third time was close of market yesterday.

Havens tries to come up with an explanation or model to dispel the facts in front of him. The most encouraging thing to note, he tells himself, is that not every Hindenburg Omen portends a full-blown crash. Seventy-seven percent of the time, a market dip of 5 percent occurs within thirty days of confirmed signals. Forty-one percent of the time a panic sell-off occurs. Almost one quarter of the time there's a full-blown market crash. Havens mines deeper into the data looking for instances of not one but three confirmed signal days within a month, but he can't. In the history of the NYSE, it's never happened.

Again he tries to take solace in the fact that not every Hindenburg Omen portends a crash. But then again, every major stock market crash of the past seventy-five years has been preceded by a confirmed Hindenburg Omen. Next he wonders, but doesn't bother to search, how many major crashes were preceded by the murders of brokers around the world.

He looks out his window and glimpses a section of the old Chelsea Hotel sign mounted on the building's exterior. Danny Weiss's ghost is spinning “Smash It Up” by the Damned on his player. It's been said that the ghosts of past residents such as Eugene O'Neill, Thomas Wolfe, Sid Vicious, and the poet Dylan Thomas have all been seen at the Chelsea. So why not Weiss? He certainly deserves it, Havens thinks. After bingeing downtown at the White Horse, Thomas staggered back here and collapsed, perhaps in this very room, before finally going gently into that good night: a coma. Four days later he died at St. Vincent's on 11th Street. Perhaps, Havens thinks, he and Miranda were drawn to the Chelsea because as much as it's associated with creativity, it's associated with death. And perhaps that's why he often came here alone after Erin's death, after the divorce, to think about the ghosts of his past. Erin was never a resident of the Chelsea Hotel, but he's done the math, and she may very well have been conceived here. He's thinking fondly of the ghosts of friends, celebrities, and loved ones when he looks back down at the street and sees Laslow's bald head get out of a taxi in front of the hotel and disappear under the awning and into the lobby.