Trading Reality (3 page)

‘Oh God,’ I groaned. ‘Nothing like some early morning humiliation to set me up for the weekend.’

‘What do you mean? You might win. You’ve won before.’

‘Yes, twice.’

‘This could be the third.’

‘OK,’ I sighed. ‘I’ll play.’

Karen was a much better tennis player than me. She was a better skier too. And swimmer. She was athletic, co-ordinated, and she liked to win. I just sweated a lot and hit the ball too hard.

A studious-looking man of about my own age hovered at Karen’s shoulder. ‘Peter! How are you?’ she said, holding out her cheek to be kissed. ‘Thanks for inviting me.’ She looked around her. ‘This building is amazing!’

‘It is rather good, isn’t it,’ said Peter. ‘Much better than the rabbit warren we’re used to.’

‘When did you actually move in?’

‘Last week. We’re still trying to get the phones to work. As you know.’

‘Don’t I just! It’s been a nightmare getting through to you. Oh, by the way, this is Mark Fairfax. He trades the proprietary book at Harrison. Mark, this is Peter Tewson, from BGL Asset Managers.’

I smiled at him. He nodded quickly towards me, and then turned back to Karen. ‘You were dead right about Chrysler. It’s up over ten per cent since you recommended it.’

‘I’m glad it’s working out,’ said Karen. ‘You know, when I hear something, I want to make sure my best accounts hear it too.’

This I knew wasn’t true. Karen had researched Chrysler thoroughly before tipping it. But she knew that her clients would be quicker to act if they thought they were the first to hear a rumour.

I let them talk, and watched the crowd, looking for Barry.

A tall, silver-haired man glided across to us. Peter saw him coming, stiffened, and shut up.

‘Good evening, Peter, how are you?’ said the man in a French accent.

‘Very well, thank you, er, Henri,’ stammered Peter. ‘Henri Bourger, head of our London office. Er, this is Karen Chilcott from Harrison Brothers, and this is, um . . .’

‘Mark Fairfax,’ I said, holding out my hand.

‘I was just remarking how wonderful these offices are,’ said Karen.

‘Thank you,’ Bourger replied, politely.

‘They look very similar to your New York building. But I think this central space works much better. Was this designed by Fearon as well?’

Bourger’s eyes lit up. ‘Well yes it was as a matter of fact,’ he said, and he launched into a long description of how and why BGL had commissioned Fearon for London. Trust Karen to look up the architect before coming here.

I felt a touch on my elbow. ‘All right, Mark? How are you, old son?’

It was the bulky figure of Barry, BGL’s head trader.

I winced. ‘I’ve had better days.’

‘You’re telling me. My lads have been shitting bricks all afternoon.’

I looked around and grimaced. ‘Why am I here, Barry?’

Barry laughed. ‘Not your scene, is it? Well, it’s not mine either. Come here, I want you to meet someone.’ He pulled me over towards the far side of the atrium. ‘He’s our head of trading, worldwide.’

So that’s what it was. They were sounding me out for a job, and Barry wanted to show me to his boss before he made the first approach. It was flattering, but I wasn’t interested. In my business, Harrison Brothers was one of the best firms in the world. BGL was an enthusiastic amateur with deep pockets, and big trading losses. One day I might cash in my experience at Harrison Brothers for a big ticket elsewhere, but not yet. I was still learning my trade, and enjoying it. The money was secondary.

I was polite to Barry’s boss, and we talked for half an hour, neither of us giving much away. When eventually I did break free, I saw Karen standing by herself near the entrance, looking around agitatedly. She was relieved to see me.

‘Can we go?’

‘If you like,’ I said. ‘I won’t keep you. What’s up?’

Karen bit her lip, and didn’t reply.

I hailed a taxi outside, and we jumped in. ‘Barry’s going to offer me a job, I’m sure of it,’ I said.

Karen didn’t respond. She stared out of the window, her shoulders hunched.

I was worried. I hadn’t seen Karen like this for several months.

We sat in silence until the taxi pulled up the narrow cobbled mews just off Holland Park Road where I lived. Karen went straight into the bedroom to change. I went up to the large sitting room at the top of the house. It was my favourite room. It was sparsely furnished with a sofa, an armchair, a TV, stereo, a small fridge, and my mother’s piano, which I had no idea how to play, but which I couldn’t face getting rid of. The evening sun shone in from a large sliding window that opened out on to a tiny terrace. I grabbed a can of Stella from the fridge, and walked out on to the terrace to watch the sun setting over West London. The little town gardens were dotted with the white and pink of cherry blossom. I quickly checked the house next door. No luck. A famous footballer was supposed to live there, but I had yet to see any sign of him.

I had bought the house six months before, helped by the proceeds of last year’s bonus, and it was my first. After six years cooped up in small flats in various parts of London, it was wonderful to be able to move up and down stairs between rooms.

It wasn’t very big, but I loved it. When I’d bought it, it had been a sickly pudding of orange, black and brown. Lots of velours, lots of dust. Even I hadn’t been able to handle that. So the painters had been in, and I was pleased with the result. The place was now light and airy, under-furnished with the randomly assembled pieces from my much smaller flat.

I took a swig of my beer. Things were going well. The house. The job. Karen.

But what was wrong with her this evening? I didn’t think I had said or done anything to upset her. She had seemed perfectly fine at the beginning of the party. Whatever it was, I was confident I would sort it out.

I heard her footsteps coming up the stairs.

‘Glass of wine?’

She nodded, a barely perceptible movement of her chin. I opened a bottle and poured her a glass. I sat next to her on the sofa. ‘What’s up?’

She took the wine and stared ahead of her.

I waited.

‘I saw him,’ she said at last. ‘He was there, at the party.’

‘Who?’

She didn’t say anything, but she bit her lip.

‘Who?’ I repeated. Then I realised. ‘Oh no. Not him?’

She nodded. I took a deep breath. This was trouble. I put my arm round her.

‘Did you talk to him?’

She shook her head.

‘No, but . . .’

‘But what?’

‘He . . . looked at me. Like . . . I don’t know.’ She turned away from me.

I took her hand, and gripped it, and waited. Damn! After all the work I had done – no, we had done, the last thing we needed was for her old lover to show up.

I’d never found out much about him. I didn’t even know his name. He was married, and a lot older than her. They had been having an affair for a couple of years, when Karen had given him the choice of her or his wife. She hadn’t liked the answer.

They had split up. She’d been distraught. I’d been considerate and friendly. Rather than probe the depths of her pain, I’d tried to take her mind off it. We’d clicked. There was a lot about each other that we genuinely liked. Underneath all that confidence, she was vulnerable, unsure of herself. I never could fully understand why, but I found that mystery alluring. Why she liked me, I didn’t know for sure either. I think I relaxed her. I was fun, in a safe kind of way. Over the last eighteen months I had won her trust, her confidence, and now, I hoped, her love. She had her own flat in Maida Vale, but a couple of months before she had effectively moved in with me. She hadn’t said anything, nothing was discussed. It was just that now she spent almost every night at my house, and little by little, her things were migrating from her place to mine.

We kept it quiet. An open relationship in a trading room would be bound to cause problems somewhere along the line. Only Greg and Ed knew. If there was gossip, none of it had got back to us yet.

And now she had seen him again. As I sat next to her, watching the tension in her face and her body, feeling it in the pressure of her hand, a slow fear began to grip me. I didn’t want to lose her now.

At last she sighed deeply. Her shoulders relaxed, and she turned to me with a small smile.

‘Oh Mark, I’m sorry to put you through that again. You’ve been really good to me.’ She touched my face. ‘And he was a real shit. I don’t know what I ever saw in him.’

She reached up and kissed me.

Half an hour later, as we were lying naked on the sitting room floor, with the last of the twilight creeping out of the room, I thought of telling her that I loved her. Love was something we never talked about, never mentioned. But it was a good description for the overwhelming feeling of affection I felt for her right then. But I was afraid. Afraid of something. Not exactly rejection. More the part of Karen I didn’t yet know, but which I had glimpsed that evening. Anyway, I didn’t want to risk the moment.

She stirred. ‘What is it, Mark?’

‘Nothing.’

I was at my desk by seven fifteen the next morning clasping a cup of coffee and a croissant. I wasn’t surprised to see quite a few others in so early. We all had a lot to do.

With trepidation I switched on the computer in front of me. It had a large light grey screen on which I could display a whole range of prices from Reuters and Telerate, and then manipulate them however I liked. Next to it was the smaller, squat Bloomberg box, which provided graphics of the relationship of everything against everything else. As the screens warmed up, I glanced at what the market had done to me overnight.

Well, it had held in New York’s afternoon, but come off again in Tokyo. The Renaults I had bought yesterday had opened lower, giving me a small loss on my trade. Still, it was early days. Greg’s eights of twenty-one were also down a touch.

I looked across towards him. He had just put down his phone, and was already writing a ticket to record a trade. ‘Greg, sorry about those bonds you bought yesterday!’ I called over to him.

He turned and grinned. ‘Hey, it’s the spring sales! They’re a quarter of a point cheaper, so I bought another fifty!’

I had to admit, Greg had more balls than me. We both ended up making the same amount in the long run, but my profits tended to come in equal monthly instalments. Greg’s came in large dollops, and went in spectacular blow-ups.

Ed came in, surprised to see me in so early. He had dark rings around his eyes, magnified by his thick glasses.

‘No sleep?’ I asked.

He looked embarrassed. ‘Not much. I was on the phone to Tokyo.’

Modern technology means that you can keep in touch with the market twenty-four hours a day. But human frailty means that anyone who tries to deal in the middle of the night often makes mistakes. So I usually sleep, and let the market go its own sweet way.

Bob Forrester came over. ‘Well, how did that machine do?’ he asked, nodding at the Bondscape computer by my desk.

It was an unfair question, and he knew it. ‘It’s too early to tell yet,’ I said. ‘But our positions have real potential. We’ll get our money back, I’m sure of it.’

‘We’d better. You’re a good trader, son. I don’t want you wasting all your time on expensive gizmos. You can keep it here till the end of next week, but if you don’t have any results by then, I want it off my trading floor. Understand?’

I understood. As he walked away, I turned to Ed. ‘OK, let’s get this thing powered up. We’ve two million dollars to make back from somewhere. All we have to do is work out where.’

We donned the little headsets, one pair each, both plugged into the computer. The familiar landscape stretched in front of us. The day before, we had looked for bonds that had temporarily shifted out of line. Now, I wanted to focus on new trends that had been set in motion by the hike in interest rates.

My attention was drawn to the flattening of the slope of the hillside more or less everywhere. It was particularly true in the American section. The difference in yield between US two-year and ten-year government bonds had narrowed from 1.6 per cent to 1.4 per cent. Far from expecting this relationship to return to previous levels, I expected it to narrow further. Before Greenspan’s announcement, US interest rates had been too low and there had been a real risk of inflation rearing its head again. Now, the Federal Reserve’s chairman seemed determined to raise short-term rates despite political opposition from the Treasury Department. If he stuck with that view, and I thought he would, then short-term rates would rise further, and expectations of inflation in the long run would diminish. Sell two-year government bonds, and buy ten-years.

So, we sold four hundred million dollars of two-year treasuries and bought one hundred million dollars of ten-years.

Now all we had to do was wait.

Later that morning, my brother called.

‘I tried Bondscape for real today,’ I said.

‘Oh yes? How did it go?’ I could feel the anticipation in his voice.

‘It was terrific! Truly brilliant. It was as though I was actually inside the market, feeling it move.’

‘How was the landscape metaphor? Did it work? Or did it just get in the way?’

‘No, it worked very well.’ I, and the financial software company that was working with Richard, had thought that Bondscape should show graphs of bond yields. Richard had felt that a moving landscape would provide the information more effectively, since it would be in a form that humans could intuitively understand. As usual, he was right.

I described in detail how Bondscape had performed. Richard listened closely for a couple of minutes, but then he interrupted me. ‘I’m just leaving to catch a plane to London. I’ve got a meeting this afternoon. Do you mind if I drop by later on? There’s something I want to ask you and Karen.’