by Green, Carey
“What are you doing? Brooding?” “Sort of. Come in. Have a seat.”
Dylan got up from the chair and pulled a document from the printer. He sat back down, retrieved a pen from the desk, and signed the document in front of him. He then placed it in an envelope and handed it to Steve.
“Here’s the back rent, plus the upcoming rent that’s due next week.”
“Wow,” Steve said, his face filled with surprise. “I wasn’t expecting this.”
“I didn’t think so. Neither was I a week ago.”
“Thank you much, sir. This thing isn’t going to bounce on me, is it?”
“I like you, Steve. I only bounce checks to people I don’t like.”
“That’s good to know.”
“You want a glass of wine? After all, it’s a party.”
“Any good?”
“Sure. Best mail-order wine money can buy.”
Steve laughed. “Sure. I’ll have a glass.”
Dylan retrieved a bottle of wine. Reaching into Samantha’s desk, he took out a corkscrew and removed the cork from the wine. He poured the wine into two plastic cups and handed one to Steve.
“How did you pull this off?” Steve asked.
“Buy cheap wine?”
“No, the check.”
“Oh, I got a signing bonus.”
“In this economy? Boy, you must be a genius.”
“Not a genius. Just got lucky, I guess.”
“Not a lot of luck on the street these days.”
“Please, I know so many well-educated people who are unemployed. It’s ridiculous.”
“Times are tough.” Steve took another sip of his wine. “I want to ask you something.”
“Sure. As long as it’s not about my old job.”
“No, it’s not that,” Steve said. A bewildered look came over his face. “I wanted to ask you about derivatives.”
“Derivatives?”
“Yeah. How do derivatives work?”
“You mean, financial derivates? That’s a big subject, and one not usually discussed over wine in an art gallery. Besides, don’t you deal with this at work?”
“Uh, no. My specialty is airplane leases. How does this stuff work?”
“Sure. I’ll give it a shot. On the simplest level it’s pretty easy. A derivative is simply a financial contract whose value is generally determined by something else. For example, mortgage-backed securities. Those are derivatives. Imagine if someone has taken a thousand mortgages, big and small, risky and non-risky, and packaged them into one big mortgage. Then you take that big mortgage, and you sell it off in little chunks. That’s how credit works. When somebody buys a house, the bank doesn’t keep that loan forever. They might for awhile, but typically they would sell it to someone else, who would do the same thing, on down the line. The bank extends credit, but they also can’t always wait thirty years to get their capital back. So they sell it to someone else. Way back when, that’s how banks did it manually. They used to actually sell each loan, one at a time. So when derivatives came along, and they were now able to buy and sell thousands of mortgages bundled up as one, it became very useful for them. They could focus on the lending business, knowing that there was a means of repackaging and selling the loans on a large scale. They use computer models to create these baskets, And in theory, it makes it less risky, because you are buying a small piece of thousands of loans that have been balanced between large and small, risky creditors, and non-risky creditors. Of course, now we’re learning that some of those models didn’t work so well.”
“So what’s the answer?”
Dylan picked up his glass and took a sip of wine. “You mean, ‘How to fix’ what’s going on in these markets?’” Dylan shrugged. “Who knows? A lot of people smarter than me can’t figure that out, so I sure don’t have the answers.”
Steve got up and began to pace around the room. Dylan watched him as he walked away from the desk and towards the window.
“I’ve lost a fortune by not selling this building. Two years ago, I had an offer on the table for almost ten million dollars. Today, I don’t think I could get five.”
“Five is still a lot of money. I’ve lost most of what I’ve earned in the last few years.”
“That money is not just for me, Dylan. There are a lot of people expecting a piece of that. Some of them won’t take to kindly receiving a fraction of what they anticipated.”
“It’s still Soho. Manhattan is not going away. If you hold onto it, it will come back.”
“I hope so,” Steve said. “I hope so.”
“Hope is all we can do right now. Some people can’t even pay their bills.”
“I know. I shouldn’t be complaining.”
“It is what it is. I went through this after 9/11. The markets were in shambles. After that, I swore that I’d put my financial house back in order. Now, I’m back where I was five years ago in the same damn place, and I don’t have the stomach for it anymore.”
“Maybe you should find a new line of work?”
“Doing what? I’m thirty-five. All I’ve done since I got out of school was trade. I could teach high school math. Nothing else comes to mind.”
“Start a business?”
“That’s a great idea. In fact, I think I’ll start an art gallery!”
“Yeah,” Steve said, with a chuckle. “There’s an easy way to make a fortune.”
Dylan shrugged as if to say never mind. He then got up from his chair and grabbed the wine bottle. He dangled it over Steve’s glass as he began to pour.
“I’d like to propose a toast,” Dylan said.
“To?”
“To better times,” Dylan said. “And when better times come, as they always do, you and I will find more meaningful ways of living our lives.”
“Salut,” Neuman said, as they lifted their glass and drank. They heard a knock at the door. Laurel stuck her head in.
She was twenty-two, red haired and freckled, and the only paid employee of Silverlight galleries. During the day, she was an Art History student at NYU, and thrilled to be working in a New York gallery, albeit an unsuccessful one. She had volunteered to work for free; her family apparently was affluent, but Dylan had decided to pay her a small hourly wage.
“Dylan,” Laurel said. “You have a guest.”
“Is it Binky?”
“Uh, no. She said her name is Vanessa. Vanessa Remerling.”
“Oh,” Dylan said, slowly. He froze, saying nothing for several seconds. When he glanced back towards her, Laurel was staring at him.
“Would you like me to bring her back here?”
“No, no. I’ll be with her in one second.” Dylan turned towards Steve who was smiling at him.
“You okay?”
“Sure. I’m fine. Just forgot she was coming.” Almost as an afterthought, he added, “Why don’t head out front. I’ll be out in a few minutes.”
“Sure.”
After Steve had closed the door, Dylan sat on the desk and began to gather his thoughts. Why had she come here? He had no reason to be nervous. He had done nothing wrong, at least not so far. The knot that was gathering in his stomach suggested otherwise. Perhaps it was the stress of the gallery, the new job, or his finances; he wondered how he was going to hold it all together. All of these things were on his mind as he made his way into the gallery space.
He spotted Vanessa from across the room. It wasn’t difficult, as she was tallest woman present. The frumpiness of her clothes earlier that day had hidden the fact that she was a stunner. Vanessa was dressed in tight black jeans, an open black leather jacket, and a silk top, with a silver cross around her neck. Dylan couldn’t help but notice her shapely and ample breasts plastered to the top of her blouse. Her lips were colored a bright ruby red, and her long blonde hair was slicked back, punctuated with a poof just above her forehead. The way that she smiled at him told him that trouble was the furthest thing from her mind.
“Funny meeting you here,” Vanessa sa
id, as she extended her hand, and Dylan shook it.
“Funny meeting YOU here. You look great, by the way.”
“Well, thank you. So this is your place?”
“Yes, this is my place. Did you come to buy art, or are you investigating me?”
“Maybe both.”
“Are you wearing a gun?”
“Do you want me to wear a gun?” He secretly wondered if she carried handcuffs.
“No comment,” she said. Dylan realized that he was blushing.
Vanessa then swiped a flute of champagne from a passing waiter. She downed it in a loud, disconsolate gulp. “So tell me about the artist.”
“Sure,” Dylan said. “But do you like art?”
“I wrote a research paper on Brancusi.”
“Well, we don’t sell Brancusi here, but we have stuff that I think is better. Let me show you.”
He gently grasped her elbow as he started the tour, and began to guide her through the crowd.
“His work is getting expensive. In a year he’ll be too expensive for us. His stuff will be selling for astronomical prices to the Wall Street and hedge fund crowd.”
“Your friends, huh?”
“No, not my friends. Besides, we’re losing money here.”
“Then why not shut it down?”
Dylan coughed nervously into his hand. “I lose many on every deal, but I make up for it in volume.” Vanessa laughed.
“Funny.”
“It’s a good question. I mean, running a failing business is inherently undignified. But how do you shut down your dream?”
“Dream? I’m impressed. People still have those. I thought maybe this was your rock star fantasy. Own a cute little gallery so you can meet all the young chicks.”
“No, no, not at all. I’m an aspiring artist myself.”
“You?” Vanessa asked as she turned towards him suddenly and cocked her head.
“Yes! Me! I paint a little bit. I used to, anyway.”
“You paint? You mean like Picsasso?” Dylan laughed.
“No, I don’t paint like Picasso, but I do paint.”
Vanessa had a wide smirk on her face.
“What’s so funny?”
“Do you wear a beret with a cigarette holder? That’s not very Wall Street”
“A lot of things about me aren’t very Wall Street. And I’m not a great painter. Not good enough to be serious at it, but enough to have an interest in it.”
“Wow. You learn something new every day. But why painting?”
“You really want to know?”
“I did ask.”
“Let me show you why.”
Dylan led Vanessa through the gallery to the crowd, back towards the office in the rear. Dylan went to the closet and retrieved a package wrapped in brown paper. He put it on the desk and removed the packing material.
“What is it?”
“It’s a painting from Italy. This painting was done by a group of artists called the Machiaolli. They were called the Italian impressionists, from the period around 1560. I first studied them when I was in college. That got me interested. I swore that one day, when I had enough money, I was going to buy one of these paintings.”
“So you did it. And this is it?”
“Yep.”
“How much did it cost you?”
Dylan laughed. “Most of my bonus last year.”
“You’re joking.”
“I wish. I’m trying to sell it now.”
“That’s crazy!”
“No, it’s not crazy. I guess I’m a cliché : the bored banker who wants to be someone else. I mean, anyone can work on Wall Street.”
“Not anyone.”
“No, I don’t mean anyone. But you go to a certain school, you get good grades, you’re bright and social enough to be picked by one of the firms; next thing you know, you’re on Wall Street. It pays well. We all have dreams we’d rather be following, but most of them don’t pay very well.”
“Then come up with another dream. Who says there has to be only one? My passion was tennis, but when tennis didn’t work out, I found this. You’ve got a long way to go. Why do you have to settle for one thing?”
“You’re right,” Dylan said. “Food for thought.”
“Food for thought.” They held the gaze longer than either of them expected. Dylan walked her back out to the gallery and continued the tour.
Chapter 17
That morning was quiet on the trading floor, a usual condition of the trading world during summer. Volume on the exchanges was light. By late July, traders were often out in the Hamptons or Greenwich or West Palm Beach. Dylan had not even paused to think of recreation in months.
Though the conversation with the FBI had scared him initially, Dylan was confident that it was baseless. Accusations such as this were now commonplace, a misguided hatred toward hedge funds. Binky had scrubbed down the trading database several times, and hand found only several tiny compliance infractions that were well below the threshold that the S.E.C. would question. Dylan saw no issue and focused on the issue at hand: trading. Making money was his business and he was good at it. Corbin Brothers had capital to trade, and Dylan was eager to put that capital to work.
The previous six sessions had been successful. Dylan had so far managed a five percent return on the money that Kay had invested. Not bad for six days work. He was now beginning to believe that the other five percent was easily achievable.
Binky was there, of course. It appeared that Binky had worked at least one hundred hours that week, refining the computer models to a degree beyond imagination. He was growing a beard now that he was free from the constraints of corporate America. Binky had replaced his suits with khaki’s and tie-dyed shirts. Still, he was too clean to look like a hippie. Sometimes, Dylan forgot that the Corbin Brothers had no dress code.
Binky had his noise-canceling earphones on, listening to tunes while he worked. At their previous firm, that would have been a definite “no no”. At Corbin Brothers, anything was fair game.
You love that thing don’t you?” Dylan pointed towards Binky’s iPhone.
“Yeah. It’s great. When I plug the device in, it backs up everything on the computer. That way I can never lose any work.”
“Cool. So how’s the work coming?”
“It’s going well. I’m almost finished.”
“Almost, or finished?”
“Two or three more days and I’m done.”
“Good job,” Dylan said. Binky had completed in days what would have taken most people weeks. This is why Dylan had hired him.
Though Ray had ordered Josh to turn everything over to Binky and Dylan, Josh had only partially complied and had done so reluctantly. It had taken at least one dozen emails and several visits by Dylan to Josh’s office. Josh would usually agree to hand the work over, but would never get around to actually doing it. It had probably slowed Binky down by several days.
Ray had now asked Dylan to lead the morning meetings. The only trader on the floor that morning was Steve Wong. Richard King was missing. Dylan thought about canceling the morning meeting but decided it was best to make an appearance. He would gather Binky along with Wong and walk them through the morning charts. Ray Corbin sat at the back and watched quietly.
“Alright,” Dylan said. “We have consumer price index information on the way, and the Fed is expected to speak later today on interest rates. Of the two pieces of news, the bigger piece of news will obviously be the interest rates. Many are expecting a rate cut of at least twenty-five basis points.” A basis point was one-hundredth of one percent. Basis points were how traders thought of trading spreads and profit and loss because most profits were made in increments that were less than one percent.
“What do we do if there is indeed a cut? First of all, I’m turning off my automated trading software today to try and manually focus on the situation at hand. In other words, I’m going to be watching my charts and price action as it unfolds. Though my primary t
rade mechanism is algorithmic, days like this are often best traded based on group dynamics and social moods. So here’s what I’m thinking.” Dylan went to the board and picked up a marker.
“Let’s start with the S&P.” Dylan began to draw a slanted up line from the bottom of the whiteboard towards the top. In the middle of the board, he interrupted the straight line, with a downward zig zag that resembled a “v”. He then continued the line until it reached the top of the whiteboard. “We can see a clear three-wave up pattern in price. After all, human progress often unfolds in patterns of three.” Dylan took the marker and drew a halo-like circle at the top of his line.
“Here we have broken and clustered resistance, an extension of the 78.6 Fibonacci retracement of price. My trading plan is to fade the news: If rates are cut, undoubtedly we will get an overreaction when the Fed chairman tries to sell us on a story, even he no longer believes it. I expect this overreaction to drive price upward, where we will fade the rally monkeys and the blind trend-following crowd. As over-excitement of the news kicks in, the S&P will zoom upward, as it makes a last gasp terminal push higher. However, I fully believe that price will respect the two-hundred-day exponential moving average, and price action higher will quickly begin to wilt. It is there that I will establish short positions against the S&P.”
Dylan took the marker and drew a line straight down on the board, crowning his felt tipped mountain with a steep cliff down to the bottom. “By the time the news has faded on this grim economy and the bulls are exhausted and spent, it is then that I believe that we will begin to make fresh lows on the S&P.”
“So, that’s my plan. But again, don’t just mechanically set orders to sell short at the top of the resistance curve. I mean, try to see what is going on in there before you dive in, you know? Try to see if the price action is impulsive or corrective. In either case, be prepared to bail out any positions heading into Saturday, as we don’t want a meltdown over the weekend. Remember, anything can happen, so control your risk. Good luck.”
Steve Wong got up and went back to his desk. Ray seemed to linger in his seat. Dylan collected his notes and whispered to Binky.
“How was I? Was I too short?”