Trader Jack -The Story of Jack Miner (The Story of Jack Miner Series)

by Neil Behrmann

'Hello Jack, me fine,' said Fulvio.

  'Do you expect a mild winter?'

  Sergio translated and Fulvio spoke for a lengthy time in Portuguese. We looked at each other and waited, the room full of tension.

  'He said that in recent years the frosts were mild,' said Sergio. 'Most people think this winter will be the same. But something happened to him. Fulvio swims all year round. So we went to the beach yesterday. It was very sunny. Quite a hot day for this time of the year, but Fulvio felt that the sea was much colder than normal. It reminded him of the seventies.'

  Again there was a conversation in Portuguese.

  'He says that in 1975 people also thought that a bad frost was unlikely. Then it suddenly became very cold. Winter was terrible.'

  'What are the weather people saying?'

  'They say that a bad frost is highly unlikely, but he's sure that they'll be wrong. People are in for a nasty surprise.'

  'Ask him what he thinks about the crop?'

  Another Portuguese conversation and Sergio interpreted: 'He thinks that it could be even worse than the seventies.

  A few months ago, the spring drought hit the crop. A frost will damage it even more. It's going to be very bad. He feels it in his bones.'

  'What about Brazil's coffee inventories?'

  'If Fulvio's right our warehouses will have to supply the market. But there's a problem.'

  'What problem?'

  'We opened a few of the bags and tested the coffee. The quality isn't good. I think the coffee-roasting companies will reject the bags.'

  'So you think coffee is going to be scarce?' queried Maffie.

  'If Fulvio's right, there won't be enough coffee to supply customers, Maffie.'

  Ruffish wrote something on a piece of paper and passed it to Maffie.

  'We want to send you and Fulvio a present. For all your help and time,' said Maffie. 'I want to make sure of your addresses. Can you email them to me?'

  'I don't want anything. Send them to Fulvio and people on the farm.'

  Sergio translated what Ruff had said and they were in deep conversation again.

  'Is there a problem, Sergio?' Maffie asked.

  'Our farmers need help. They tell us that drug barons have come to their farms and have put pressure on them. They want them to store coca. Use their coffee farms as a cover for cocaine production,' said Sergio. 'The farmers don't want to take that risk.'

  'I thought that the drug barons were based in Colombia,' said Maffie.

  'They're everywhere.'

  'Your farmers don't need to be involved in the drugs trade. Coffee prices are now much higher,' said Maffie, angrily. 'Why put themselves at risk? They are beginning to make profits from coffee farming.'

  'The gangsters have done a deal with the Russian mafia,' Sergio continued. 'The Russians are buying coca from farmers in Colombia, Bolivia and Peru and are converting it into cocaine. They're transporting coca and cocaine through Brazil and are selling it in America, Western and Eastern Europe.'

  'Why don't the Colombian barons do that themselves?'

  'I'm not sure. I think the Russians provide the money and the sales outlets. I've also heard that the Russians are trying to push down the price of coffee on the world market. It's part of the deal with the Colombians.'

  Our room was silent as we tried to take it all in.

  'We must go now, Sergio,' Maffie said. 'Thanks very much for your help. Please phone us if it gets colder. Good luck.'

  'I'm not sure what all this means,' said Bess, pouring us cups of tea.

  'Colombian and other South and Central American coffee farmers couldn't make a living in the past few years. Prices were far too low,' said Maffie. 'Cocaine dealers encouraged them to pull out coffee trees and plant coca instead. The drug barons paid them much higher prices for their coca and made cocaine. Low coffee prices suit the gangsters, as they encourage more farmers to grow coca.'

  'Now it seems that the Russian mafia are involved,' said Ruff.

  I felt nervous when they mentioned the Russian mafia and quickly called Danny Dovetail in New York to find out if he knew anything.

  'Hi Jack, wanna sell some coffee? The market looks bad.'

  'No thanks, Danny. Not now.'

  'You shouldn't wait much longer, it's beginning to look sick. Some big boys are dumping it. They've built up huge short positions.'

  'That's what I'm phoning you about. You mentioned something about hedge funds yesterday. Do you know who they are?'

  'Two big ones. They trade through several brokers. I can't identify them, but I heard that they're Russian. Have offices in Moscow and New York. Every time coffee rallies, they hit it.'

  'Are they using Blaby?'

  'You know very well that I can't tell you that, Jack! But as it happens, no.'

  'Thanks Danny.'

  I put down the phone.

  'Some coincidence,' said Maffie. 'Russian hedge funds dumping coffee and a Russian deal with Columbian cocaine traders who want lower prices.'

  'I don't like the sound of it. I think we should get out,' I said. Anything involving the Russian mafia scared me witless.

  Maffie patted my shoulder: 'Strange that Fulvio is staying with Sergio; that the sea has turned cold. Maybe it's a sign.'

  'Getting into Zulu mysticism are we?' scoffed Ruffish.

  'If the old man is right, the market's going to be caught on the wrong foot,' said Krishna who was looking at the screen.

  'Let's vote on it. Go with the market and dump our positions, or listen to the Old Man and hold on,' said Ruffish. He voted 'out'. I put aside my Russian fears, followed the rest and voted 'in!'

  'Let's take a break and mull it over. I want you guys to be completely sure. A lot's at stake,' said Ruffish.

  We took out some beer and cold drinks from the fridge in the meeting room, opened a hatch in the ceiling with a pole and pulled down a ladder. On the roof terrace, that cloudless summer's day, I looked around at the view. To our left were the trees of Green Park and a glimpse of Buckingham Palace. The Hilton and Continental Hotels and Hyde Park were about centre and down below were Charles Street and Berkley Square. In the distance, to the right, Oxford and Bond Streets.

  This was Mayfair, hedge fund land; home of the money managers who cater for the super rich. I was one of them and had just turned seventeen. How many guys had achieved that! Most of them were wasting time at school and university, scrambling for work experience for zero money. They were either getting into debt or living off their parents. Not me. I was a player. A serious player! Already a name in the market! A headhunter had even called me. As I finished off my beer, I observed the others.

  Krishna, one of the nicest guys I had ever met, was throwing and catching a squash ball. He wasn't only brilliant, but a good sportsman, keen on tennis, squash and cricket. He came from a poor immigrant family in Rishikesh, close to the Ganges, in northern India. I would sometimes come up to the roof terrace with him. He would change into shorts, put down a mat and do some yoga exercises. He tried to teach me the 'asanas' and showed me how to meditate. Not for me. I was fairly spiritual before, but Pearl had drummed into me that it was better to get on with the practical things in life. Make money. With money came respect, power and largesse. When I told Krishna what Pearl had said, he just smiled and shook his head. Inner peace was his thing.

  Krishna noticed when I was down the other day: 'There are plenty of girls around, Jack. Be patient. The right one will come along.'

  Nice guy, Krishna, but what did he know about my relationship with Pearl? When you're mad about someone and they don't feel the same about you? He had an arranged marriage. A baby was already on the way.

  Ruffish was a mystery man, keeping his family life to himself. He lived in stockbroker land, near Maidenhead, Berkshire. He had a family photo in his office. His wife was quite attractive and seemed to be about his age and his son and daughter didn't look much older than me. Ruff was drinking sparkling water, as he had been on a diet in the past few months. He
now looked fit and young for a guy in his mid fifties. Ruff was talking earnestly to Maffie, who looked great.

  Maffie was another closed book. As far as I knew she didn't have a boyfriend. We had great fun together, going to the movies, shows and parties, but she never let me get near her. After all these months, our friendship was platonic. It was frustrating at first, but I got used to it. Anyway Pearl came along and filled the gap. That is until I screwed up our relationship!

  Bess Trilingham-Marsh was not only pretty and nice, but highly intelligent. She was the daughter of a leading criminal lawyer, Maffie had told me. Bess had studied languages at Manchester University and was still going out with a guy who she had met there.

  It was about 5pm on that Friday summer afternoon and the terrace was bathed in sunlight. Staff could relax and sometimes entertain clients in our very own office garden with pot plants and garden chairs. Completely at ease, I took off my shirt.

  'You're not on holiday here,' grinned Ruffish, pulling up a chair and raising the large umbrella. 'Thinking time is work time.'

  We sat in a circle.

  'The best form of defence is attack,' said Maffie.

  'Chief Shaka again,' I mumbled, closing my eyes for a second.

  'Yes Jack, Just what Shaka would do. We should buy coffee.'

  'Have you gone mad, we're thinking of dumping the stuff and you want to buy?' sighed Ruffish.

  'Not immediately. Only if Sergio and Fulvio warn us that a frost is imminent.'

  'What happens if it gets warmer and the price falls a lot further? We're already down,' said Ruffish. 'The logical thing to do is to cut our losses and get out.'

  'And the logical thing for the Russian bears, is to go with the momentum. Build up their short positions,' argued Maffie. 'Danny believes that they're already massive. Who are at greater risk? Them or us?'

  'Them of course! Ruff,' said Krishna. 'We don't have to cut losses. We still have a large cushion of profits. We've already banked more than $3 million. We left excess profits in the options market. OK, so our options profit is down $1 million to $5 million and could fall further, but it is still profit. We're in a very comfortable position.'

  'But aren't the bears also making money?' I asked.

  'Yes some are, but they have also been building up big short positions, around current prices. Maffie's right. They must be on edge,' said Krishna.

  'You've lost me. Can you explain what's going on,' said Bess, who wanted to become a fund manager.

  'Sure Bess. We're the bulls, the optimists,' explained Krishna. 'We bought coffee futures and options at low prices. The prices have gone up a lot and we have made money. The price has fallen from the top, but we still have a big profit.'

  'And the bears?'

  'They are the pessimists. They believe that coffee prices will fall. They have used futures and options to sell coffee short. They hope to buy it back at lower prices. They'll make profits if the price falls and lose if it rises,' Krishna continued.

  'They are playing with highly leveraged futures and options,' said Maffie. 'If the price rises by ten per cent or more, they'll be big losers. They either have to put up more margin, or buy back the coffee at a loss.'

  'So who's in greater danger, Bess, them or us?' smiled Krishna.

  'It seems like a game of poker,' said Bess, who had card parties with her friends. 'Players with winnings are comfortable and can put more money on the table. Others who are even, or are losing, are nervous. To me it doesn't matter whether you are bulls or bears. It depends on your hand. I guess it also depends on how you bluff.'

  'That's precisely what we should do, Bess, play a game of bluff. How do you bluff in poker?' asked Maffie.

  'Well you need luck, of course, but you bluff when you have a bad hand. You want your opponents to think that you have a better hand than them. Then they will throw down their cards on the table and you take the winnings.'

  'Or you bluff with a good hand, a great hand, a Straight Flush,' said Maffie. 'That's a double bluff. You make the other guys feel that you are bluffing with a bad hand, so they put more money on the table. They ask to "see you" and you show your hand. It beats them all.'

  'We must have luck, lots of luck, Maffie. One of the other players may have a Royal Flush and finish us,' cautioned Ruffish.

  'Sure Ruff, I'm not saying we should move now. All I'm saying is that we shouldn't leave the table yet. We need just one more card, a card with frost on the edges. The game isn't over.'

  * * *

  The flowers worked. After a week or so, Pearl phoned me.

  'I'm off to New York, Jack. Business. Want to join me?' she asked casually.

  I was taken aback. I thought our affair was over and now this offer! Pearl certainly blew hot and cold.

  'Sure, if my boss lets me.'

  'Persuade him. Now! I'm flying in a few hours and will be there for a week.'

  I bolted into Ruff's office while he was having a meeting with Maffie.

  'Why don't you guys knock before you enter?' exclaimed Ruff.

  'Because we can see you through the glass walls,' I said. 'Would you mind if I go to New York tonight? I'll be back next week.'

  'What if coffee takes off?'

  'I'll get on a plane straight away and be back the next morning.'

  'What do you think Maffie?'

  'Nothing's happening in the market at the moment. The Brazilian weather forecast is mild for the next fortnight. I can handle his fund for him.'

  'How come you want to go to New York again? You were there in the spring, ' said Ruff, suspiciously.

  'Pearl is going there on business. She asked me to go along with her.'

  'I thought that you had broken up with her Jack,' said Maffie, surprised.

  'It's on with her again,' I grinned.

  'Does your girl know what we do here?' asked Ruff with a stern face.

  'No! Promise Ruff. Only general stuff. Told her that we manage hedge funds, but I've never gone into detail. She doesn't know anything about our trading.'

  'It had better stay that way Jack. Especially now. We have very special information,' said Maffie.

  'Promise you Maff, my lips are sealed.'

  'OK. You can go to New York. But you're going to do some research for us,' said Ruff. 'Danny Dovetail is a broker who I can trust. Have dinner with him and ask him everything he knows about those Russian hedge fund managers.'

  'Good idea, Ruff,' said Maffie. 'Jack should get more information in New York. We want to know who their brokers are. Where they are based, where they hang out. Everything! Do it as subtly as possible.'

  'How do I introduce the subject?'

  'Just say that we are thinking of getting out of the market, but we want to make sure what's going on.'

  'OK.'

  'If we need you here quickly, you'll be on the next plane, right!'

  'Sure Maffie, I promise.'

  * * *

  With Pearl, air travel was nothing less than business class. Compared to my economy flights to Rio and New York, the trip was heaven. Champagne, seafood and easy on the legs. We arrived at the Peninsula Hotel on Fifth Avenue at 10pm, New York time. The place was so luxurious that I felt embarrassed to be there.

  'Is this on expenses, Pearl?' I asked.

  'No, of course not. You're paying, Jack.'

  My mouth dropped: 'What! Our room costs almost $800 a night!'

  'You can afford it Jack,' said Pearl grinning. 'Get used to it.'

  'What!'

  'Just joking, Jack, just joking. Of course it's on expenses. My client is paying.'

  'Who is your client?'

  'What are you doing in the markets?'

  'Touché!'

  A light meal was served in our room, which had awesome views of Manhattan. We had showers separately and that night Pearl wasn't interested in making love. Pity, it was a king sized bed and would have been great for sex. It was the wrong time of the month, she said. My luck! Pearl rushed off early in the morning and I tried
out the fitness facilities on the rooftop. There was a gym and pool and I swam a few lengths. With Pearl busy, it was a good opportunity to meet with Danny. To keep it as discrete as possible, I suggested that we have a drink after the market closed and go for a walk in Battery Park.

  To kill time, I dropped in at Tiffany's. One of the girls helped me choose some diamond studs for Pearl. Stan and Leila had encouraged me to visit the Museum of Modern Art. I was more interested in sport than culture, but I was learning fast and especially liked Kandinsky and the strange paintings of Dalí. I thought about the vast majority of artists who struggled and died in poverty, long before their works were sold for millions. No justice in this world. Those guys had serious talent whereas traders like me merely had to take bets on the market and make loads of money.

  Danny was waiting in a café in the Winter Garden of the World Financial Centre.

  'How ya doing Jack? What brings you to New York?'

  'My girlfriend's here on business. Asked me to join her.'

  'Where you staying?'

  'Peninsula.'

  'Wow! That must cost an arm and a leg.'

  'She has a big expense account for branding and marketing. That sort of stuff. She has to impress people.'

  'Are you going to do any work? Take another course?'

  'Thought I would make use of my time and meet with you. Find out what's happening in the market.'

  'Coffee's down again, Jack. It's looking bad for you guys. Maybe you should get out.'

  'Maybe. Are those hedge funds still selling?'

  'Big time. They wait for the market to rally and then dump the stuff.'

  We left the café and walked past the yachts in North Cove harbour, alongside the waterfront, towards Battery Park.

  'Who are these Russian hedge fund managers?'

  'I got some more information since I last spoke to you. The funds are called Veruschka and Borodino. I'm told that they manage as much as $10 billion.'

  'Wow! They must have massive positions with that kind of money.'

  'That's not all. Some US and Swiss hedge funds are following them and are also selling coffee short. They're betting that the price will fall below $2.'

  'We're not far from there now. It's a crucial support level. If it cracks two bucks, the price could collapse.'