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

by Neil Behrmann

  'I'll double my chips,' said Bess.

  Maffie went to the board in front of us and held up the blue and red felt pens.

  'If you guys don't mind, I'm going to head operations,' said Maffie. 'I'll decide when to buy and sell.'

  'Good on you General, what's Miner going to do?' asked Aram.

  'Jack's going to be the front man. He'll execute the orders.'

  'Will do,' I said.

  I wasn't annoyed that Maffie was taking over. I was relieved. Since I had seen the Russians in New York, I had become so jittery that I wasn't thinking straight.

  'Krishna will do the calculations and choose the best options for Jack,' Maffie continued. 'He and I will remain in the background.'

  'I presume I'll buy as soon as the market opens this morning,' I said.

  'That's right. But you're going to buy and sell simultaneously Jack. You're going to sell 20 coffee options through two or three brokers and ask Danny and another broker to buy 50.'

  I was puzzled. 'Why can't I just buy 30, Maffie?'

  'It's like poker, Jack. You'll be bluffing,' said Bess. 'Some people will think that you're buying; others that you're selling. They won't be sure of your hand.'

  'Precisely, Bess,' said Maffie. 'We want to buy our coffee at the lowest possible prices, but also send a message to the bears that they could be wrong. The aim is to stop them selling. We want the price to first settle and then rise.'

  'Do you seriously believe that this boy will influence the market?' scoffed Aram.

  'What's Jack's age got to do with it? He's trading on the phone and they think that he's older. Anyway who cares?' retorted Maffie. 'Jack's already made money in the coffee market. He's now well known in the dealing community. His friends call him Trader Jack and jealous dealers and brokers gossip about the teen trader. Brokers will talk. All brokers do. The NYMEX trading pit will be rife with gossip.'

  'Jack's been out of the coffee market for a few weeks. Believe me, when Trader Jack starts buying again, they'll take notice,' said Krishna.

  'OK, so that's the start. What's the overall battle plan, Maffie?' I asked.

  'We'll follow Shaka's strategy,' she said.

  'Oh no! It's not going to sound like a computer game, is it?' groaned Ruffish.

  Maffie laughed and then drew two thick horizontal lines on the whiteboard. The bottom blue line was Aquarium and the red line above, represented our enemy, the Russian bears.

  'Similarly to Shaka's tactics we won't attack the Russian hedge funds immediately,' explained Maffie. 'We will advance slowly by carefully building up our option positions. If prices rise we will attack in earnest and buy a lot more.'

  To illustrate her plan, Maffie drew two vertical blue lines that rose from each side of the lower blue Aquarium line towards the red line. These were Shaka's 'horns of the buffalo' that advanced towards the right and left flanks of the enemy. Maffie then curved the blue horns inwards so that the red Russian bear battle line was totally surrounded. That action represented the final coffee purchases that would encircle and squeeze the bears.

  'Seems so simple. Hope your military game plan works,' said Ruffish with a half laugh. 'If you're wrong? If there isn't a frost in Brazil?'

  'Highly unlikely,' said Maffie confidently as she looked at the screen. 'But if we're wrong, we'll retreat with less profits, not a loss.'

  'OK, so we begin to advance towards the red line. But we're small and they're big. Who will help us?' I asked.

  'The market will provide our extra regiments. As soon as the coffee roasters and others notice that the price is rising, they will follow us and buy,' said Maffie confidently.

  Carefully following Maffie's instructions, I phoned Danny at Blaby just before the opening of the New York market: 'Hi Danny, sorry about the other day, we were cut off.'

  'I was going to tell you about . . .'

  'No time. Thanks to you, I'm back in London, Danny. I really appreciate what you did for me. By the way where's most of the selling coming from? Which brokers?'

  'Darlington and Halesburg. Thinking of selling Jack? The price was down another 5 cents yesterday.' 'No. We want to buy. Here's the order . . .'

  'What the . . .!'

  We bought a lot of coffee options through Blaby and another broker at the opening of the New York market and simultaneously sold fewer options through Darlington and Halesburg. At the close of trade our net option positions had risen to almost 5 million pounds of coffee worth $10 million. Maffie's plan was working. The coffee price bounced off the bottom, but wasn't running away yet. The wires reported that evening that there was a sudden cold front in Brazil and the coffee price rose at the opening on Friday morning. We steadily continued to buy more coffee options as the price turned around and began rising. The Russian bears and their allies tried to counter the price rally and sold even more coffee short. Prices slipped when they sold, but quickly rose again when we and some other firms bought. This was another sign that the battle was beginning to swing in our favour. At the end of the trading day, Aquarium fund owned 200 options, giving us the right to buy 7.5 million pounds or 50,000 bags of coffee in warehouses worth about $18 million. We had completed our buying. Now we had to wait and see what the market was going to do.

  * * *

  Fulvio was proven right. Brazil had another, more severe, cold front on Saturday. I was on edge on Sunday and to relax decided to take the dogs for a walk. My mobile rang. It was Pearl.

  'Hi Jack, I'm back home. Sorry I lost my temper and hit you.'

  'No problem, Pearl. It should be me who should apologise. I let you down. You were entitled to be angry.'

  'Let's make up,' said Pearl. 'Why don't we meet in Primrose Hill?'

  That evening we went for dinner at a Greek restaurant in Primrose Hill, a London village, just north of Regent's Park. Pearl looked great in skinny white jeans and a black camisole, but seemed down.

  She had chicken and I had some mixed grilled fish. We finished a bottle of wine and were silent most of the time.

  'How's your Mum, Pearl?'

  'OK, I suppose. I found the visit depressing. She and my stepfather are oblivious to everyone else. I miss my own Dad.'

  'Where is he?'

  'Moscow . . .' she stopped, as if she had made a mistake.

  'Moscow? I thought that you were Ukrainian. How come your Dad's in Moscow?'

  'Ukrainians speak Russian, do business with Russians why shouldn't he be there?' she snapped.

  'Stop being oversensitive, Pearl, I'm just interested,' I insisted, holding up my hands.

  How would she know about my experience with Russians? My paranoia. There were many millions of good Russians. Only some were bad. Still, why had she never talked about her real father? We left the restaurant and went for a walk in Primrose Hill's park near the village. It was almost 9.30pm, but was still light that lovely mid summer's evening. At the top of the Hill we looked towards the Aviary in front of London Zoo, the greenery of Regent's Park, the Post Office Tower in the West End and St Paul's Cathedral and the City further to the east. We sat on a bench and I put my arm around Pearl and gave her a peck on the cheek. She turned towards me and kissed me. This time, thankfully, I tasted Turkish delights, mixed with coffee. Not cigarettes. Feeling romantic, I pulled her closer, but this time she pushed me away.

  'You don't trust me Jack. You never tell me what you're doing. You also lied to me. You told me that coffee was going to go down. Instead the price has gone up a lot.'

  Another fib was necessary: 'Sorry Pearl, we thought that the market was weak. The weather took us by surprise.'

  'You've embarrassed me, Jack. My client's furious! I've had to do a lot of explaining.'

  Aquarium had already completed all its purchases of coffee, so I could give her some information.

  'We think that the coffee price is going to rise further. You can tell the client that.'

  'So you're no longer bearish? You're now bulls? Thanks a lot, Jack,' she replied sarcastically.


  'We have to be flexible in volatile markets, Pearl. You know that we have confidentiality rules.'

  'I thought that I could trust you.'

  'You can, Pearl, you can. I'll tell you all I know about coffee, except our trading strategies and details.' Again sarcasm: 'Sure Jack, sure. You'll tell me all.'

  I tried to put my arm around her, but she wriggled away and walked along one of the paths down the hill. I followed, tried to grab her hand but she pulled it away. She didn't want any physical contact. Pearl now had a vacant expression. Wasn't interested in anything. This wasn't the extroverted Pearl, I knew. She was normally full of life, full of fun. But she wasn't faking this. She was down, really down. Was it her parents or me? I couldn't be certain. Should I tell her? Help her in her branding exercise? I felt guilty that I had let her down. All these mixed feelings. Part love, part distrust. Maybe tell her later next week. Not yet. On Friday, Maffie and Ruff had given me strict instructions yet again: 'Keep your mouth shut!'

  On one of the paths, about two to three hundred yards below, I thought I recognised a couple. Looked like Maggie and her husband Hal. They walked into a shadow and were soon indistinct. Time had passed swiftly. Memories were becoming distant; Maggie and the loch; Ivor Ensworth and the twins; the Scottish dances.

  'Want to go to Cape Town for Christmas, I've got some good friends there?' I suggested.

  'Maybe . . . If we're still together,' mumbled Pearl.

  That hurt me, but it served me right. If I had been in her position, I would have felt the same. We walked in silence for about half a mile. From the park, through Primrose Hill village again and over a railway bridge towards her Chalk Farm flat. That night, we had a few drinks. She wasn't interested in making love or even being cuddled. She smoked some pot in an attempt to cheer herself up and offered me some. Not for me! No way was I going to be spaced out ahead of trading, the next day.

  The weed didn't change her mood. It made it worse. Pearl, even more vacant and depressed, walked out of the living room into her bedroom. I watched some football highlights on TV and about ten minutes later went into her bedroom. Pearl was fast asleep on her bed with her clothes on. She woke up briefly and turned away from me when I tried to undress her. No point. She didn't want me there, so I gloomily went home and scrolled the Internet until about midnight to get my mind off her. News about South America showed that a severe frost had enveloped Brazil. The market was going to go crazy.

  * * *

  Early Monday morning, Krishna was hard at work on his calculations while I examined my figures and charts and drew a new aquarium. The brown fish had risen from the bottom of the tank and were breaking through the membrane into a higher compartment. The turnaround had been rapid. We expected pandemonium in the market. A severe frost would destroy at least half of Brazil's crop and it was the biggest coffee producer in the world. There was going to be a global coffee shortage. Manufacturers like Nestle, Kraft and Lavazza would be doing their utmost to buy as much coffee as they could to supply their customers. They were already bidding robusta coffee prices higher on the London market. Bess was busy scrolling the Net for weather and other news and calling out snippets and prices from Bloomberg trading screens.

  Maffie and Ruffish entered the office together. They were talking excitedly.

  'You're going to experience something unusual in the market today, Bess,' said Maffie. 'An acute bear squeeze.'

  'Does this mean that the bears are now cornered and the horns of the bull are encircling them?' asked Bess.

  'Yep, there's going to be one hell of a panic,' said Maffie. 'The bears have to buy back the multi million pounds of coffee futures and options that they've sold.'

  'No one is going to be keen to sell,' I said.

  'From my information and calculations, the Russian hedge funds and other bears must be already beginning to lose on their short positions,' said Krishna. 'They'll be forced to bid prices higher and higher to get out.'

  We waited for the opening on the New York Coffee, Cocoa and Sugar Exchange.

  Danny was on the speaker phone: 'Hey guys, they're filming the market on CNBC. Put your TV on. The Brazilian frost is the worst in years.'

  We rushed to the TV and sure enough, the lead story was coffee. Traders and their clerks were huddling together. A few of them seemed tense. The bell rang and there was bedlam. Dealers shouted and screamed, signalling with their palms and fingers, 'Buy! Buy! Buy.' Two dealers who held up their palms to indicate that they were sellers, were overwhelmed. They disappeared under a heap of scrambling bodies and emerged severely shaken. Within minutes, the price was 'limit up' which meant that the market couldn't cope with the volume of buy orders. The price was frozen at $2.80 a pound, a new high for the year. The market had come to a halt.

  'This isn't normal buying,' shouted the CNBC reporter. 'It appears to be coming from distressed bears. They sold short, hoping to profit from a price fall. But the price is surging and they are worried about losing. They're desperately trying to buy.'

  'Aren't there enough sellers around?' asked the presenter.

  'Never seen anything like it. It's a buying panic,' shouted the reporter.

  'Do you think it's a bear squeeze?' asked the presenter.

  'I'm not sure, but as you can see, dealers are frantic!'

  'How are they going to get out?' asked Bess.

  'It's going to be "limit up" for a few days and then selling will come in,' said Krishna. 'That means the exchange imposes a maximum price at the end of each day to try and calm the market. That could go on for a while, so it will have to raise the limit each day.'

  'How much coffee do you think the Russian hedge funds sold short, Krishna?' I asked.

  'I can only make a shrewd guess. They've been keeping the price down for months, selling the coffee to Nestle and other manufacturers. They'll either have to cover their sales by buying on the futures and options market, or deliver the coffee. On actual global production and consumption figures, the shortage could be around 10 to 15 million bags of coffee.

  That's about 50,000 contracts equivalent to around $5 billion at current prices.'

  'Imagine being those guys! Their toilets will run out of paper.'

  'We've doubled our money today, Jack. Let's not be smug,' chided Maffie.

  'When do you think we should sell?'

  'No hurry. The Russian hedge funds will be forced to bid prices higher and higher. We'll get well over three bucks, I guess.'

  The predictions of Maffie and Krishna were spot on. During the next fortnight, roasters and cornered bears pushed coffee prices through the all time seventies peak of $3.50 a pound. Our phones didn't stop ringing. Brokers acting on behalf of desperate bears tried to buy back the coffee that they had sold short. They begged us to sell, but we decided to hang on.

  * * *

  Maffie and Krishna were the brains behind the operation, but since I was the front man, traders and the press concentrated on me. Rumours were rife that a young hedge fund trader had bought huge quantities of coffee. These purchases played a major part in causing the surge in coffee prices and an ultimate bear squeeze. Reporters from the wires and newspapers called Hastings & Ruffish in an attempt to talk to me. We all agreed that I should keep a low profile. That suited me because I feared the very real possibility of a Russian reaction. I knew what they could do. Bess blocked calls, but that policy encouraged the rumour mill to spew out even more stories. Some newspapers wrote articles saying that speculators had pushed up the price of coffee to ludicrous heights. Sure, farmers were entitled to a living, but prices were now excessive, they wrote.

  Maffie and Ruffish eventually felt that Hastings & Ruffish had to make a statement. It was simple and to the point: 'We're not commenting on our trading. All our dealings are above board. The severe Brazilian frost is responsible for the price surge. Coffee manufacturers can complain, but they have made large profits for years. Now at last, poverty stricken farmers can obtain a decent price for their coffee.'

&n
bsp; That statement, which was altered slightly from time to time, did not stop market gossip about a mysterious teen trader. To keep away from reporters I slipped into the office very early in the morning and left late. I shaved off my military moustache and put on my designer dark glasses.

  After profit taking, our remaining 170 options contracts controlled almost 6.5 million pounds, or 42,500 bags of coffee. That was small, relative to total world supplies, but the market thought that we had a lot more.

  * * *

  Big event in my life. My very own personal present to myself for passing my driving test. A red Ferrari F430 Scuderia with a V8 engine! Cost a packet. More than 200K, but it was worth waiting for. After going for a spin with Harry, it was time to test it on Pearl.

  Whether it was work, mistrust on both sides, or Pearl's mood changes, our relationship was beginning to cool off. Pearl had become unreliable and even stood me up after I waited more than an hour at a new fashionable restaurant in Knightsbridge. In the end, I tried it out alone, eating exquisitely presented, but miserly portions. The people around me, according to the friendly waiter, were movie, sport and media celebrities. They were so into themselves that they didn't even notice me. On the one hand, I wanted to be incognito, on the other, I wished that I was well known.

  It was no fun being alone and about a week later I called Pearl.

  'Hi Pearl, how are you?'

  'Fine Jack. Sorry I haven't been around. Too busy.'

  'Busy on what? I haven't seen you for weeks.'

  'Not that long? Surely?'

  'I've got something to show you. A new car.'

  'At last Jack. Maybe we can go for a spin in the country. Let me check out a few hotels and I'll get back to you. What is it?'

  'Surprise. When should I pick you up?'

  'This evening, after the traffic dies down. See you.'

  That was hopeful. Maybe there would be a fresh start to our relationship.

  That Friday, we were off on a weekend together. Pearl loved the Ferrari as we weaved in and out of the motorway traffic. Pity that there were so many speed traps, limiting our maximum speed to seventy miles an hour. We went off on a slip road and Pearl tried out the car and was mad about it. It was a beautiful evening and the roof was down as we entered a glorious country estate that had been converted into a hotel. There were a few Jags and Mercedes in the car park, but it was great to see that the only Ferrari was mine.