On the Edge

by Michael Ridpath

  ‘Uh-huh. And what’s your view?’

  Tarek didn’t answer straight away. In the quick-fire activity of the Bloomfield Weiss trading floor, he had learned the power of the pause. He was a slight man, balding, with a large moustache. Although he appeared to be in his forties at least, he was only thirty-five. He had a reputation as a top trader, a king of the bazaar, but actually his skills were more subtle than haggling for the best price. He had a highly developed sense of intuition, and an understanding of people. He also had a PhD in international relations from Johns Hopkins University in Washington, DC.

  The worry beads clacked for several seconds. Carr-Jones sat, waiting.

  ‘Actually, if she chooses to, I think that she has a right to be heard,’ Tarek said at last.

  Carr-Jones smiled. ‘I’m sure she has a perfect right.’ He stood up to leave. ‘Oh, one of my team spotted something in one of the German papers last week. The police there are trying to track down a man called Omar al-Seesi. He was last seen in Hamburg. He’s some kind of al-Qaeda activist, apparently.’

  Tarek fiddled with his beads.

  ‘No relation, is he?’

  Tarek looked steadily at Carr-Jones, his soft brown eyes giving nothing away.

  ‘Don’t worry,’ Carr-Jones said. ‘It’s probably just a coincidence. I doubt anyone at Bloomfield Weiss in New York reads the German papers anyway. And it was just a tiny paragraph. Good thing too. You know how touchy some of these Americans can be about terrorists these days.’

  Tarek sighed. ‘Thanks for stopping by, Justin.’

  ‘No problem.’

  As Carr-Jones turned to leave the room Tarek muttered under his breath a long and satisfyingly complicated obscenity in Arabic, which involved Carr-Jones’s maternal ancestry, various anatomical combinations and a camel.

  Justin paused. ‘What was that?’

  ‘You could say it was a kind of prayer,’ Tarek replied with a small smile. ‘Difficult to translate.’

  When he had gone, Tarek wondered whether his mother knew that her wayward youngest son was now living in Hamburg. He decided not to tell her. Omar had caused them all enough heartache over the years.

  5

  Tagliaferi’s Democratic National Party reduces gap in latest opinion poll. Rumours of possible alliance with the Northern League.

  Jean-Luc Martel stared at the story for the twentieth time that morning. Now that really should have been good news for him. The Northern League was the right-wing Lombardy party who were pushing for more independence for the north. They held the balance of power in the Italian Parliament. An alliance with them should improve the chances of Tagliaferi winning power, especially with the opinion polls trending his way. He was cleverly outflanking the government’s mildly anti-European stance, and the centre-left coalition, staunchly pro-European, were running a feeble campaign. Suddenly the idea of Italy leaving the euro was openly being discussed in Italian newspapers, although most commentators still thought it a bad idea. That should have hurt the Italian bond market. But prices hadn’t budged.

  Martel was having a bad day. In fact he was having a bad week. Following the brief spike down of the Italian bond market after the news about Gallotti joining Tagliaferi, prices had done nothing but strengthen. Slowly, relentlessly, powerfully, on steady volume. Martel had developed a feeling about markets, and this one felt like it was at the beginning of an upward move, which for Martel was not good. The market was rallying, a quarter of a point a day. And Martel was short. Short, short, short.

  His unrealized losses on the Italy trade were now over five hundred million and rising. He had been forced to sell all his positions in other markets to cover them.

  He glanced at the cutting from the Wall Street Journal which topped one of the piles of paper nearest him. ‘Eagle Swoops on Euro from Eyrie in Rocky Mountains’. It was a flattering article, and a good Journal-style line drawing of him. He thought he had made a strong case for Italy leaving the euro. But no one seemed to have agreed.

  He had held off bugging Walter Lesser, but he could stand it no longer. He sent him an IM:

  Walt Did you get my Italian law professor’s report?

  The response took a couple of minutes.

  Sure did. Thanks.

  Martel took a deep breath and tapped out:

  Are you doing anything?

  The reply was quick to come:

  Nah. Not convinced.

  Merde! If Walter wasn’t convinced then his hedge-fund friends probably weren’t convinced. Suddenly Martel felt a sharp pain throughout his body. It started in his stomach, then coursed like an electrical current through his limbs to the tips of his fingers and toes. Perhaps Walter and his friends were up to something after all.

  He called Alberto Mosti, a contact in Harrison Brothers in Milan, and asked him the question. ‘Have you seen any hedge-fund activity in the BTPs? Apart from ourselves.’

  ‘No, Jean-Luc. Nothing.’

  Martel ignored his denial. ‘Because I know about Walter Lesser.’

  There was a sigh on the other end of the phone. ‘I’m sorry, Jean-Luc. You know how you hedge-fund guys are. Secretive as hell.’

  Martel exploded. ‘You listen to me! I’ve put billions of euros of business through you with this trade alone. I expect information for that. Good information.’

  ‘But client confidentiality …’

  ‘Bullshit, Alberto. I am your best client!’ Martel was shouting. ‘You treat me like your best client. Your only client. Always! Or I do no more trades with you. Not just that. Every time I hear you are trading I will trade against you. I will fuck you! Do you understand? Fuck you!’

  ‘Yes, Jean-Luc. I’m sorry, Jean-Luc, I quite understand.’

  Alberto sounded severely rattled. Which was just as he should be.

  ‘OK, Alberto. I’m glad we’ve straightened that out. Now who else is buying? Hein?’

  Silence.

  ‘Alberto?’

  ‘There is a rumour that the Bank of Italy is just about to order some of the big Italian banks to buy BTPs. In size.’

  ‘When?’

  ‘Tomorrow. The day after.’

  Martel closed his eyes.

  ‘Jean-Luc? Do you want to do anything? Close out some of your position?’

  Martel just slammed the phone down.

  The Italian government was fighting back. Once the banks started buying bonds, the struggle would really be on. The sharp twist in Martel’s stomach reappeared, a twist that he recognized instantly. It was accompanied by a stiffening of the muscles in his shoulders and an increase in his heart rate. It was fear.

  On good days, Martel thought he could read the markets. On bad days, he thought he was just lucky.

  The first really large position the Teton Fund had taken was to sell the yen in 1998. The yen had continued to rise but Martel had kept selling. He would sell to anyone and everyone who would let him. Until he ran out of cash. His brokers demanded margin payments, daily transfers of cash to his account with them to cover his losses. Then two days before there would be no more cash to transfer the market had scrambled his way. After a month he looked like a genius. Perhaps he was a genius. Or perhaps he was just lucky.

  A year later he had ridden the internet bubble up into the stratosphere. He held on to high-tech stocks far later than most of the other hedge funds thought made any sense, and made a killing. Then in late 1999 he too became bearish and began to sell. Selling internet stocks short was an expensive business, especially at that time. To sell the stocks, Martel had to borrow them from someone, a task that became increasingly difficult. Early in 2000, once again it looked as if he would have to give up, buy back his Amazons and E-Bays and Pricelines at much higher prices than he had sold them, get rid of the ranch and leave Wyoming. But then the market slipped and slid, and the Teton Fund lived to short again.

  The Iraq war in 2003 was easier. The price of crude oil had soared over fears that Middle East supplies might be seriously disrupted
in a messy conflict. But it was clear to Martel that the war would be a walk-over for the Americans, so he sold crude, tankers full of the stuff. A couple of months later American soldiers drove into Baghdad, oil prices crashed and Martel banked millions. Hundreds of millions.

  The lesson Martel had drawn from these experiences was that he was always right, and sometimes he had to fight to buy himself enough time to be proved right. This was one of those times.

  But what if he was wrong? What if the euro was as impregnable as every bond trader in the world seemed to believe? What if he had merely been lucky on those three previous occasions and it was now his turn to be unlucky?

  His stomach flipped.

  Insecurity ran in the family. His father was a civil servant in the Treasury in Paris, an educated and intelligent man who was frustrated by his inability to achieve promotion. Martel remembered conversations at dinner in which his parents blamed this on prejudice against his father’s Polish ancestry. They had even gone so far as to change the family name, from Młotek, which meant hammer, to Martel, which was the ancient French word for the same implement, as well as being a surname of some distinction.

  His mother realized that her gangling son was intelligent, and had pushed him as hard as she could academically. He had responded, winning himself a place to study mathematics at the elite École Normale Supérieure. But although he scored consistently highly in exams, his abilities never seemed to Martel to be recognized by either his teachers or his peers. Most of the time, he was convinced that this was to do with his Polish background. Despite the change of name, people knew. But occasionally, when suffering from those excruciating moments of self-doubt which assailed him even then, he worried that people didn’t like him, thought him cocky, arrogant, uncouth, clumsy. Sometimes he even wondered if that had been the real stumbling block with his father’s career: after all, the French finance ministry was riddled with people with Eastern European names.

  So, after an uninspiring year in the trade-credit department of a French bank, he had turned his back on Paris, and headed for America. He had attended business school at Wharton, and then joined one of the top investment banks, avoiding a posting to Paris and staying in New York. There he had discovered the markets, or the markets had discovered him. He had been propelled by the success of his ever greater gambles from Wall Street to here, this valley high up in the Rockies.

  They said that people who came to the mountains were escaping from something. If that was true, he wasn’t doing a very good job of it.

  He closed his eyes and took deep breaths. Courage, mon brave. This wasn’t the time to give up. He had felt this way before and every time he had come through. The only thing to do was to fight it out.

  He called Andy and Vikram into his office and discussed the situation with them. He wanted to short more BTPs. This was easier said than done. The Teton Fund was already short billions of Italian government bonds it didn’t own. It had to borrow the bonds, usually from investment banks or brokers, so that it could deliver them to whoever it had sold them to. The problem was that every broker placed a limit on the amount of bonds that they were willing to lend to each of their counterparties, and the Teton Fund was up to its limits with everyone. No more bonds to be borrowed.

  There was only one way left to increase the size of his position. Buy more IGLOO notes from Bloomfield Weiss.

  ‘How many?’ asked Vikram.

  ‘Six hundred million.’

  Vikram whistled. ‘That would take us up to eight hundred. I don’t know whether Bloomfield Weiss will do that much.’

  One of the many beauties of the IGLOO trades was that it didn’t involve borrowing any government bonds from anyone. But it did rely on Bloomfield Weiss lending the Teton Fund cash to buy the notes.

  ‘I know investment banks,’ said Martel. ‘With the fees we’ll let them make off this deal, they’ll force it through their risk control department somehow.’

  Vikram smiled. ‘I’ll call Perumal.’

  Martel still felt tense as he drove the three miles or so out of town to his ranch. It had cost him three million dollars when he had bought it in 1994, but it was now worth several times that. The very wealthy who were serious about the outdoors had been flocking to Jackson Hole over the previous decade in a mass scramble to buy privacy and isolation. Teton County had the highest per capita income in the country, and it was rising fast. Jackson had become a wealthy cowboy town, a rich man’s playground, with outstanding hiking, fishing, rafting, horseback riding, and some of the most challenging skiing in the US.

  Martel’s ranch was built of logs and river stone and set on thirty very expensive acres. It nestled in aspen and pine woods on the bank of the Snake River, right at the foot of the Tetons. What Martel liked most about it was the view of his beloved mountains, so close it seemed you need only to skip over the river to touch them, soaring seven thousand feet into the sky.

  Martel parked the Range Rover in the garage and went looking for his wife. She was sitting in the great room, reading by a roaring log fire, one hand fiddling with a strand of her thick honey-coloured hair. She looked up as she heard him come in. Her blue eyes flashed, her cheeks glowed in the firelight, and the warmth of her smile drew him to her. Despite the horrible day he had had, despite the weight that seemed to be pressing in on his heart, his lungs and his intestines, his spirits lifted.

  After six years of marriage, Martel was still very much in love with his wife.

  They had met in Hamilton, Bermuda, where the Teton Fund was administered and legally located. She was a junior accountant in a business suit working for the firm that audited the fund. She captivated Martel the moment he saw her. She was so young, so innocent, so wholesome, so untouchable, so damn American. Martel had slept with many women, some gorgeous, some less so, but none like Cheryl. The partner of the firm had some quibble about the Teton Fund’s accounting practices, which Martel had brushed off, but Cheryl wouldn’t let it go. She had gone at him with an earnestness that had bewitched him.

  He had to have that woman.

  She was based in New York, so next time Martel was in the city he had asked her to dinner. She had said no. Opera? No. Jackson Hole, skiing? Definitely not. But Martel didn’t give up. He knew he wasn’t being strung along. He could tell she liked him, he could tell she was intrigued by his Frenchness, his age, his experience, his wealth; he could tell she wanted to say yes. But there was a boyfriend in Wisconsin. And it wouldn’t be proper – he was a client of her firm.

  Eventually she cracked. He invited her boss and his wife and Cheryl to dinner on a yacht he had chartered in New York Harbor. He charmed her and played the perfect French gentleman throughout. At the end of the evening, when he had asked her to dine alone with him at Le Cirque the following week, she couldn’t refuse.

  Six months later, and Martel was further gone. It turned out that Cheryl’s sexual appetite was just as healthy as the rest of her. But she still infuriated him, refusing to accompany him to certain social events. Then she tried to break off the relationship, saying she didn’t want to become a rich man’s mistress. Martel asked her to come and live with him in Jackson Hole; she said she had her career to think about. Martel had no choice. He asked her to marry him. But Cheryl did have a choice. There was their religion to consider, after all – he was Catholic and she was Lutheran. It took her three months to say yes.

  At first Cheryl had enjoyed Jackson Hole. She had taken up skiing, and had quickly become proficient. She loved to ride her horse over the backcountry in the summer. And Martel had a pottery studio built for her, where she could indulge a passion for making American Indian-style jars and vases. Martel offered to open her own gallery in town, but she refused, saying her work wasn’t good enough. Martel was willing to pay people secretly to come into her shop and buy her stuff, no matter how good or bad it was, but Cheryl had anticipated this. So there was a storeroom out back filling up with hundreds of pots and jars.

  He bent down to kiss h
er. He smelled her perfume, mixed with the sweet aroma of the pinyon wood that was burning in the fireplace.

  ‘Honey. You’re all tense,’ she said.

  Martel nodded and collapsed into an armchair. Cheryl put down her book and swung her legs off the sofa. She was wearing tight blue jeans and a light blue T-shirt. He watched her as she moved behind him. She began to rub his shoulders.

  ‘Aah! That feels wonderful.’

  ‘Markets bad today?’

  ‘You could say that,’ Martel grunted. He was careful not to give Cheryl any details about what he did during the day. Not because she wouldn’t understand it. On the contrary, she would understand it perfectly well and it would scare the hell out of her.

  ‘You should quit, you know,’ she said. ‘The stress is doing bad things to you.’

  ‘Maybe next year.’

  ‘Why not now?’ her hands ceased moving. Martel wanted to ask her to carry on, but thought his best bet was to keep quiet and hope she began again of her own accord. ‘You’ve got all the money we could possibly need. There are lots of things you could do. Maybe raise money for the museum, for instance. It’s all very well just giving them donations.’

  Cheryl was on the board of the National Museum of Wildlife Art, a spectacular building a couple of miles north of Jackson. She was passionate about it. Martel did his best to indulge her passion, although his own private opinion was when you’ve seen one painting of a buffalo, you’ve seen them all.

  ‘You don’t understand,’ he said. ‘The trade I am working on at the moment. If it works … when it works … everyone will know that I am the master of hedge funds.’

  Cheryl laughed.

  ‘Hey! I want some respect from my wife,’ Martel protested, reaching up to her with his long arms. She allowed herself to be pulled forward over the chair and they both ended up with a thud on the rug. She was still giggling when he kissed her. They undressed slowly in front of the fire. As her pale skin shimmered in the firelight Martel felt a surge of arousal. Eagerly he kissed her. And then … And then … And then, nothing.