The Icarus Prediction: Betting it all has its price (11 page)

CHAPTER NINE

Tbilisi, Georgia

It was past midnight as the Skoda truck cruised by dilapidated warehouses in the rundown section of Tbilisi, the capital and largest city of the Georgian nation.

Elbruk Matsil was weary from the long and tension-laced journey and from being an audience of one to the likes of Shamil Basayev. Between catnaps, Basayev would regale him with tales of how he outwitted the foolish Russians at every turn, to the point of making the FSB believe they’d killed him.

Elbruk was genuinely curious about that and probed with a gentle inquiry. He received a wave of the hand and an over-the-shoulder response that the body the Russians claimed was Basayev was in fact, “A distant cousin with a terminal illness. A hero who gave up his leg for the deception.”

Elbruk let his passenger drone on because just the fact that Basayev was alive would mean a huge bonus from his American case officer. Anything he could add would be icing on the cake.

Basayev had been sending and receiving text messages on his cell phone as they weaved through the city. Finally he said, “Turn in up ahead.”

He was about to ask where to turn when an overhead door rose and a light from within a warehouse was revealed. Elbruk wheeled into the building, and the overhead door closed.

Basayev exited the cab and was surrounded by eight burly men who closed in on him with an enthusiastic group hug. Rapid jabbering in Chechen and Russian was followed by backslapping in a terrorist’s version of a class reunion.

As the classmates caught up, Elbruk looked around the dimly lit chamber. Yes, it was surely a warehouse of some kind, with crates stacked here and there. But there was also a string of cots, a table with some chairs, a workbench with a computer, and a makeshift kitchen. Over in the corner was some video equipment with some kind of lights rigged overhead.

Basayev was ebullient as he introduced Elbruk as his “brother” who’d brought him safely out of Russia. Elbruk acknowledged the welcome while concealing his desire to get the hell out of there, for this crowd looked meaner and crazier than the Chechens he typically hung out with. And he hadn’t thought that was possible.

Basayev turned to the dude Elbruk figured was on-the-scene commander. “Has Lemontov reported in?”

“Da,” replied the understudy. “He says all is in readiness.”

“Excellent.” He looked at the video equipment. “It appears I will go on the air like an American film star to announce our great offensive against the infidels.”

Hearty laughs all around.

“But tonight let us break bread together and then sleep. The days to come will have excitement aplenty.”

With the rest, Elbruk nodded his assent, hoping he could sneak out during what was left of the night.

*

New York City

For the second time in twenty-four hours, Jarrod was at the Guilford Bar, but this time he was nursing a San Pelligrino sparkling water with lime while Sergei was on his third shot of Finlandia vodka.

The Russian tossed it down and shook his head. “Half a billion in an unhedged position. Got to be some kind of record.”

“I didn’t know insanity was measurable, but yes, in that vein it probably is some kind of record.”

Sergei looked at the ceiling. “But why take such a risk?”

Stryker shrugged. “I don’t see it as a risk. Simply the lesser of two evils. If we did nothing, there was no way to claw back from the hole William dug for us. You’ve already got a retirement stashed away, or you could go back to teaching. But for me and the rest of the team, we’d be pariahs on the street once the firm imploded. In fact, we would probably be prosecuted and at the very least we would be fighting for the next 10 years to clear our names. This way, we at least have a real chance to dodge this bullet—or should I say artillery shell?”

“What you call in American football a Hail Mary?”

Jarrod raised his glass and clinked the Russian’s. “Exactly.”

“Have you telled William?”

Jarrod shook his head. “I’m all in. The bets have been placed. I’ll tell him tomorrow after I get some sleep. Nothing else to do, really.”

“I tink I stay and have another,” said the Russian.

*

Stavropol Krai Province, Russia

Arkady Lemontov observed carefully as Mitrofan Markov—a bookish man known as the Professor—applied his ministrations to the fire hydrant-like device. He used a socket wrench to attach a circular plate that was forty-two inches in diameter to the tail end of the hydrant. The plate had an inner lip that held a large spool of filament line of some kind, making it look something akin to an open fishing reel. In fact, the line was slightly thicker than what you’d find on a fishing reel, but not by much.

After pulling on the wrench until it wouldn’t pull any more, the Professor looked at Lemontov and nodded.

There was no smile or emotion from Lemontov. Any soul he possessed had been extinguished long ago in the rubble of Grozny. A Hind helicopter gunship had sent a barrage of rockets into the house where his wife and children were hiding. Since then, he’d only had one purpose: to inflict as much pain on the Russian bear as possible. He’d longed to get his hands on a nuclear weapon instead of the pitiful gnat bites of suicide bombers. But Basayev—wow! He had convinced him this would inflict as much mayhem on the Kremlin oppressors as a nuclear blast, perhaps more. It had taken years of planning, but now all was in readiness, and the green light had been given.

He heard the satellite phone chirp on the workbench. He opened the screen cover and saw the word POMEGRANATE. Lemontov sent a “Da” reply and looked at the Professor. “Shamil is in Tbilisi. We execute in twenty-four hours.”

CHAPTER TEN

New York City

Jarrod Stryker walked down the carpeted hallway toward William Blackenford’s throne room, and this time there was no confrontation with Rosita. He was expected.

Rosita murmured into the phone, then nodded, indicating that he was permitted to enter. He walked through the doors, strode directly to his boss’s desk, and sat down.

“William, I have something to tell you.”

Blackenford’s tone was guarded. “And what would that be?”

“I will cut to the chase. You put the firm in an $850 million hole. EIGHT-HUNDRED-AND-FIFTY-MILLION-DOLLARS! With the liquidation of assets, the
Valkyrie
sale, and the profit made from energy trades this past month, there is still a $500 million deficit hanging over us. You have pledged the capital from the client discretionary equity accounts to cover this deficit. While in a legal sense as general partner you are empowered to do this, the reality is that when a half a billion in client dollars goes up in smoke, the firm, you, me, and everyone else with fingerprints on Blackenford Capital will be toast.”

William’s face was turning pink.

“Simply put, if we try to rely on conventional means, there is absolutely no way we could close the half-billion dollar deficit inside of a few weeks. If the firm is going to have a snowflake’s chance of surviving, then extraordinary measures have to be taken.”

Jarrod took a breath. He kept his voice even. “In my capacity as executive in charge of the energy trading desk, I have authority over all funds in client discretionary trading accounts, which is separate and distinct from the client equity accounts you pledged.”

Blackenford’s face started to twist up—sort of like when the surface of the earth deforms just before a volcano explodes.

But Jarrod would not be distracted and continued on. “Upon my orders yesterday, the firm’s energy capital position was closed out, and the cash was transferred into the firm’s admin account to help cover the Euclid Bank payment due tomorrow. After hedge position expenses, transaction fees, and so forth, the net amount transferred was approximately $90 million.”

Blackenford seemed to relax a bit but then asked, “You mentioned the client discretionary trading accounts?”

“I did. Yesterday, upon my orders, the client accounts were all closed out and put into put options at $81 per barrel.”

“And the hedge position?”

“No hedge position, William. It’s all riding on the downward pricing slope.”

The face skipped red in the color spectrum and went from pink to purple.

“
What?
You put all the client trading capital in unhedged options!” The volcano had blown. Droplets of sweat appeared instantly on his brow. “Are you insane? How much did you put down?”

Jarrod ignored the seething man across the desk and calmly replied, “Just over 500 million.”

“Half a billion dollars in unhedged options? I thought you had a good head on your shoulders, but you
are
insane!” He rose, fists planted on the desktop. “You’re fired! Get out of here! You’ve destroyed any hope I had of salvaging my firm, my reputation, my—”

“Shut the hell up, William! I am your only hope to climb out of the hole you’ve dug for us. After that if you want to fire me, go ahead. But for now, sit down and for once in your life
listen
.”

Fuming, Blackenford slowly lowered himself back onto his leather chair.

“The numbers are straightforward, William. Five hundred million in put options at a strike of $81. To climb out of your half-billion-dollar hole, oil prices have to drop far enough for our 20 percent cut to equal 500 million. For every dollar oil drops, we net about $250 million. It’s that simple.”

Jarrod was referring to the management fee Blackenford Capital received on trading profits from client accounts. For every dollar generated in trading profits, twenty cents went to Blackenford. “So,” he continued, “in order to generate 500 million in fees, the position taken will have to generate 2.5 billion in gross profit. In order for that to happen, plus cover the cost of the position, the price has to drop $10 to $71 within two weeks.”

William started to exhale, and it looked like he would lose the battle for his temper. But he sat down instead and managed not to yell. He calmly said, “So you got lucky betting on the upside track, I’ll give you that. But if the price goes up, we’re done for.”

Jarrod held up a hand. “Check your Bloomberg.”

Blackenford squinted a questioning glance, then turned to his personal Bloomberg financial terminal that was the electronic umbilical all financial traders kept at their elbows. Michael Bloomberg, the Mayor of New York City, had made his fortune by providing arcane financial data no one but the banking gnomes could understand. Blackenford tapped the keyboard, squinted again, and then turned to Jarrod.

“West Texas Intermediate is at $76.25.”

Jarrod nodded. “Right. Now look at what came over the Bloomberg wire an hour ago about Saudi production.”

Rapid taps—well, as rapid as William could muster with his pudgy fingers.

“What? The Khurais field is coming on stream?”

“That news just hit the street. It means an extra million barrels a day pumped onto the market in addition to the increases the Saudis already made to compensate for the oil boycott on the Iranians. We knew about the Khurais field yesterday before I placed the position.”

William stared at the screen again. “But at $76.25, that means…”

“We’re almost halfway home. And if we get a drop past $71, we may actually turn a dollar or two for the firm, and you can start paying the partners again.”

Blackenford could only gape at the younger man with an expression that was equal parts shock, awe, and hope of redemption.

“The contracts on the Tribeca tankers are being placed by the Saudis as we speak, so that should depress the price past the threshold mark over the next week or so. Then we’ll see if any profit margin emerges beyond that.”

Contrition was not part of William Blackenford’s essence, but he was contrite now as he looked down and said, “Jarrod, I…I don’t know what to say. I was a fool to have made a play like that on those damned CDOs. You…you may have just saved me, saved the firm…our reputations.”

Stryker shrugged. “As Yogi Berra said, ‘It ain’t over till it’s over.’ Now comes the hardest part. The waiting game. Why don’t you go meet your Bridgemount buddies for a bridge game? I hear they’ve been missing you.”

He nodded. “Perhaps you’re right.”

“I better get back and mind the store.” And with that, he rose and walked to the door.

“Jarrod?”

He stopped and turned. “Yes?”

“Thank you,” the older man whispered.

Jarrod walked out of the room with an air of invincibility.