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Prologue

Beirut, Lebanon July 27, 2006

“Quite the wake-up call,” muttered Jarrod. “Maybe we should order something from room service.”A dull thud punched through the morning air, causing Jarrod Stryker to turn and scan the distant rooftops of the Beirut skyline. An acrid mushroom cloud rose in the distance as two F-16s emblazoned with the Star of David screamed overhead en route back to their homeland.

His lame attempt at humor elicited no response from his companion, who kept her eye glued to the scope mounted on the Styr sniper rifle pointed down the street.

They were lying side by side on two sniper pads on the rooftop of an abandoned warehouse on the southern outskirts of Beirut. It was a down-market area filled with tenements, warehouses, some light industrial buildings, and a population without a shred of hope.

Beirut, once the jewel of the Middle East, had been largely destroyed in the long civil war from 1975 to 1990. But in the following years, it had been on a trajectory toward its former stature when the extremists of

 

Hezbollah decided to take some missile potshots at Israeli settlements across the border. The Lebanese government—an oxymoron if there ever was one—had turned a blind eye to Hezbollah’s takeover of Southern Lebanon and the missile attacks. In 2006, Israel decided to hold the Lebanese accountable for the attacks and was methodically dismantling the country’s infrastructure to prod the government into action.

Hezbollah, however, had other ideas. It had turned into something of a tough nut. The vaunted Israeli tank forces had invaded Southern Lebanon like a flabby, middle-aged prizefighter stepping in the ring with a younger, meaner adversary. Using modern antitank weaponry, the Hezbollah legion stopped the Israeli advance cold.

The Israeli Air Force, however, was a different matter. They had been buzzing and blasting Beirut for weeks with impunity. They were running out of targets and were randomly targeting buildings with even the faintest hint of impropriety.

“You know,” observed Jarrod. “Maybe you should have gone to law school here.”

Sarah Kashvilli’s green eyes darted at him for a moment. “What?”

“Where was it you were accepted? Duke?”

“That and Stanford. But my career plans changed.”

“Clearly. But one of the oldest law schools of the Roman Empire was founded right here under the Severan dynasty, one of only three recognized by the Roman Empire. Not many people know that.”

She sighed and rolled her eyes. “Thank you for the factoid. Too bad Harvard Business School didn’t have a Beirut campus.”

“Would have been warmer than Cambridge, I must say.”

 

She sighed again. “Jesus. Can we just stay focused on the matter at hand?”

“Ah, yes, the matter at hand.”

Despite the bombing around them, the Hezbollah- Israeli conflict had nothing to do with the matter at hand.

After 9/11, the enormity of the American intelligence failure was manifest, and it came to light that the CIA did not have a single asset in place within the al- Qaeda organization. Five years, countless failures, and suitcases of money later, only one emerged. Tariq was a keeper. Born in New York City to Syrian parents, Tariq al- Fada had grown up speaking Arabic with a Damascene accent before he learned English. On 9/11, he’d been on traffic duty with NYPD for two years when he was yanked by CIA recruiters desperate for Arabic-speaking assets.

Five years later, posing as a Syrian malcontent, he’d worked his way up the al-Qaeda organizational chart to where he was knocking on the door of the inner circle. He’d run al-Qaeda’s Beirut cell successfully, earning the confidence of bin Laden’s supreme council. And apparently something was in the works. Nobody knew what, and Tariq was slated for a high-level meeting in the warehouse that was currently in the crosshairs of Sarah’s riflescope.

The meeting was with a Big Fish indeed. Ramsa al- Shehhi was the elder brother of Marwanal-Shehhi, the 9/11 hijacker who’d piloted United Flight 175 into the South Tower of the World Trade Center. After the capture of Khalid Sheikh Mohammed and the expulsion of al- Qaeda from Afghanistan, Ramsa had been placed in charge of the next Big One by bin Laden himself. This was the agenda for Ramsa’s initial meeting with Tariq.

And to provide Tariq’s backup, the Agency had brought in their A-team: Jarrod Stryker and Sarah Kashvilli. They were Top Gun graduates at the Farm and two of the youngest recipients of the Blue Heart CIA medal for valor.

 

A curious thing about the Blue Heart medal: the recipients can’t take it home and put it on the mantle. Instead, they’re taken into a dimly lit room in Langley’s basement, where it is awarded in a solemn ceremony. Then it’s taken back and put in a vault, and recipients never see it again until their retirement ceremony.

“Tariq is getting nervous, I hear,” observed Jarrod. “Nervous? Why should he be nervous?”

“Oh, I don’t know. Living a false identity for years in a den of vipers and never knowing the balance of his 401(k). It would make anyone nervous. And he told his case officer that he felt he was under suspicion.”

“So is this meeting a strategy get-together, or an execution?”

Jarrod shrugged. “The case officer said he was somewhat confident it was the former, because he’s heard from other sources our Tariq is a rising star within al- Qaeda. However, he also said he would rather play Twister with a porcupine than trade places with Tariq.”

“Umm,” was the only response.

“OK, let’s go over the drill one more time.” “I know the drill,” replied Sarah.

“I know you know the drill, but for the sake of my comfort level, give it to me again.”

Robotically, she replied, “Ramsa will arrive first— when, we don’t know. Tariq arrives at nine-thirty wearing a blue baseball cap. He goes to the meeting. If he leaves wearing the cap, everything is copasetic. If he’s not wearing the cap, it means trouble. Ramsa doesn’t leave alive, and you hit the button on the detonator.” She nodded at the black box lying between them with the antenna sticking out. “Assuming you did your job and wired the building correctly.”

“Aren’t we testy today?” Jarrod replied. “We don’t have any Predators here so I had to do it the old-fashioned way. There’s enough Semtex in that basement to send

 

Ramsa back to Kabul. Or someplace less inviting. You just cover Tariq’s back if he needs it.”

“I’ll cover,” she said evenly.

Seventy-two hours ago, he’d been enthralled to once again be in Sarah Kashvilli’s presence, and initially she seemed similarly attuned. But ever since they received their briefing in the safe room of the American Embassy in Beirut, her demeanor had changed. She’d become remote, cryptic in her responses, and prickly. The harder he pushed, the more resistant she became. So he figured there was no reason to hold back.

“You know, Sarah, I always dreamed about us spending another night together. But this wasn’t exactly what I had in mind.”

Was there a hint of a smile? It disappeared. “Heads up,” she said.

Jarrod peered through the binoculars on the small tripod and saw two open SUVs coming down the street, both of them bristling with rocket-propelled grenade launchers. They cruised by the meeting place, then circled the block twice. It was Ramsa’s horde of bodyguards.

On the last pass, four of them got out and entered the building, and Jarrod thought about the Semtex he had hidden behind the ceiling tiles of the basement and whether he had left any traces behind. He took a deep breath and tried to relax.

Four minutes later, one of the henchmen came outside and muttered something into a handheld radio.

As if on cue, three more SUVs with RPG accessories came around the corner. In most urban settings, a convoy of RPG-toting thugs would raise some eyebrows. But this was Beirut. The convoy pulled up, and a half-dozen bodyguards formed a picket up and down the street. Jarrod heard Sarah’s breath catch as Ramsa stepped out of the SUV and surveyed the landscape. He appeared no different from other young Arab men dressed in jeans and a pullover. He turned in Jarrod’s direction and the

 

cold stare caused Jarrod to stay absolutely still. Then Ramsa turned away and entered the warehouse.

They remained motionless as the sun slowly rose in morning sky. More Israeli jets buzzed around, causing the bodyguards to crouch and point their RPGs ineffectually at the heavens.

But then another Arab young man came around the corner. This one was a bit pudgy, wearing jeans, a polo shirt, and a baseball cap. As he approached the warehouse, the first bodyguard in the picket stopped him and patted him down. Then he was escorted into the lair.

Time passed. Then more time passed. Finally, Jarrod whispered, “You can hit them at this range if you need to, right?”

“You already know I can hit them at any range you’d care to mention,” replied Sarah.

“I guess that’s why you were tapped for this gig. I hear you were the best shooter of any class at the Farm. Did you seduce the range master or something?”

“I didn’t need to seduce anyone.” “Oh, then you—”

“Zip it. I’m not in the mood.”

So they settled into a tense silence as the minutes stretched into an hour and beyond. He decided this really wasn’t the right time to revisit that many-splendored night so long ago at the Farm. The truth be told, she had gotten to him—past those defenses— into that vulnerable realm where no one else had penetrated. But then she’d pulled duty in the Philippines, and he’d been shipped out to Kabul and then Somalia. She had become a distant but indelible memory. Until three days ago.

“There he is,” she whispered.

Ninety-seven minutes after he went in, Tariq emerged wearing his baseball cap and started up the road. They watched carefully as he walked past the last picket and turned around the corner.

 

“OK,” said Jarrod in a soft voice, his eyes glued to the binoculars. “Looks like our guy is bringing home the bacon. We’ll just lay low until—”

A stupefying BAAHWHUMP! interrupted Jarrod. The warehouse convulsed in a giant fulmination, sending a concussion wave across the roof like a tornado, blowing dust and grit violently into his face.

For a moment, Jarrod thought it might have been an errant Israeli bomb. But then he looked down and saw Sarah’s finger on the button of the black box with the antenna.

What the hell are you doing?” he screamed. “Tariq was out clean!”

He would always remember those green eyes as she coldly stared him down and said, “My sister was in the South Tower.”


Chapter 1

New York City – Present Day

The jet black Lincoln Town Car wove through the late morning traffic, the smartly dressed driver avoiding the abrupt stop/start motions most chauffeurs and cab drivers inflicted on their passengers. His rider, Jarrod Stryker, was scanning the Financial Times, the orangey-sheeted counterpoint to the Wall Street Journal that he felt was leaner, meaner, and smarter than the gray-slated paper. Even in this era of ubiquitous technology sprawl, he still liked reading a real newspaper on his way in to work. As the car wheeled into the curb, the driver gently braked and said, “We’re here, Mr. Stryker.”

Jarrod looked up from his paper. “Thanks, Jimmy. You can go back in the pool. I’m probably here for the duration today…and tonight.”

“Right, sir. Have a good day. Buy low. Sell high.” “Thanks for the tip,” Jarrod said with a smile.

“See you tomorrow.”

Jarrod exited the car and walked toward the entrance of Arcadia Towers, a pristine new glass-and-steel structure in New York’s financial district. Although this piece of real estate was separate to Ground Zero, its previous structure had suffered heavy collateral damage

 

and been torn down. He paused at the revolving door and looked back to see the car pull away. Within another ninety days, he’d be hopefully be a partner and would be entitled to his own stretch limousine and driver. The question was, did he want it? A few years ago, he would have said no, but now he wasn’t so sure. The acquired taste of luxury took no effort to get used to.

He entered the marbled lobby and made his way to the elevator. The morning crush had passed, and a lone woman entered the elevator with him. The phone in his holster vibrated. He reviewed his Bloomberg updates, aware that she took a moment to discreetly look him over with an appraising eye.

At six-foot-one, with inky black hair, Paul Newman blues, and a square jaw, he was used to admiring glances. The Armani suit and stylish Hermès pocket square didn’t hurt, either. He glanced over and caught her gaze, then turned on his brightest smile. Caught in the act, she went weak in the knees, knowing she’d just had the high point of her day.

The elevator stopped and the doors opened. Jarrod began to step out but looked up from his phone and was brought up short. He was a couple of floors shy of his destination, the sign on the other wall reading Arcadia Properties. That was the management office for the building. A bald, roundish man with wire-framed glasses and a crimson complexion entered the car and stood between Jarrod and the woman.

“Morning Don,” offered Jarrod, and he received a curt nod in reply.

Donald Pippin was the office admin partner and controller at Blackenford Capital Management. Knowing Don as he did, Jarrod figured Don was probably harassing the property manager about the lack of soap in the men’s room or some such nonsense, for he was one of those folk who liked to major in minors. And he always seemed

 

to have a chip on his shoulder where Jarrod was concerned.

The elevator opened again, and Jarrod left the woman behind with the parting shot of a smile. Being a Southern gentleman and an Auburn grad, his manners always set him apart from the ingrained rudeness of New Yorkers. And in the diseased, egocentric world of hedge funds, it set him further apart. He’d never met a client his charms couldn’t close, and if the client was of the female persuasion, so much the better—as long as he could persuade them to keep the portfolio where he said to keep it and could keep things strictly business. He used his skills from the Farm as much as the skills from Harvard Business School, but neither place offered a class on strong-arming rich widows in their curriculums.

And with his successful trading record, Blackenford was doing less and less with individual investors and more and more with institutions. Bigger clients, bigger trades, bigger fees. He was finally leaving Beirut behind.

He walked into the main reception area that was calibrated to send the message that serious wealth resided here. Gold-plated lettering spelled out Blackenford Capital Management on a teak-paneled wall above a striking receptionist in a Chanel suit.

“Good morning, Jarrod.”

“Mawnin’, Rebecca,” he replied, turning up the gain on his usually undetectable Southern accent because he knew she hailed from Savannah, Georgia. He strolled past the heavy leather furniture and the rather pretentious portrait of the firm’s founder, Admiral Gregory Blackenford, the great-grandfather of the current proprietor.

The official company history failed to mention the firm’s initial seed capital came from Admiral Blackenford using navy vessels under his command to import distilled spirits from Canada during Prohibition, just like another

 

financial wizard named Joseph P. Kennedy, Sr., who would go on to sire a president. Ah, yes, quite a few financial dynasties seem to have had a rogue who started it all.

He walked by the main conference room, which had an ebony table about the size of the flight deck on the USS Nimitz. Pushing through the glass doors he entered the main trading room of the firm.

The changeover from the client area was stark. Here, high-tech reigned supreme, and as he arrived at his trading pit, it looked like something akin to the bridge of a starship. A dozen big LED screens were arranged on brackets above a long bench where six members of his team monitored them incessantly. Smaller flat-screen monitors were everywhere. And as if that weren’t enough, everybody seemed to have two mobile phones out on their workspace as well, one for personal and one for business, although in this business the line of demarcation between the two was somewhat blurred.

Jarrod nodded to his team members as he took off his suit jacket and draped it over the leather swivel chair.

Coffee spontaneously appeared in a china cup on his desk from his assistant, Gwen. Unlike the trendy fashion-mavens favored by most partners in the firm, Gwen was an acerbic, middle-aged Jewish grandmother who’d seen it all and was smart as a whip. She’d recognized Jarrod early on as the new rising star and hitched her wagon to his when her previous boss flamed out with a coronary at the ripe old age of forty-seven.

As a principal in the firm, Jarrod was entitled to an office. Had one, in fact. But trading was nothing but the monetization of information, and the closer you were to the raw information, the greater your chances of success. Jarrod often chuckled at how CNN and CNBC postured themselves as purveyors of the immediacy of financial news. In fact, by the time any trading news hit the news wires, that monetization train had already left the station.

 

Trades in stocks and commodities were precursors of news, not the other way around.

Jarrod remembered when the Pentagon had experimented with “terror futures” as a means to identify impending terrorist attacks—i.e., providing investors a way to, say, bet on a biological attack on Israel. Congress put the kibosh on that politically incorrect idea, but the official Pentagon statement on the debacle actually rang true: “Research indicates that markets are extremely efficient, effective, and timely aggregators of dispersed and even hidden information.”

Jarrod had taken that to heart but went one step further. Successful trades meant going upstream to obtain data that was three days old when it hit CNN—an eternity in the trading game. So he had created a “flat” organization chart in his department that focused on energy trades, calling for immediate cross-fertilization of data from him to the lowly analyst and back again. No bureaucracy. No formality. Just information and actionable intelligence. Still, everybody knew he was the boss.

Jarrod turned to one of the newly hired business school graduates in his group, Mark Watson, who was analyzing an inventory chart on one of his monitors. “Hey Melvin, Did you catch that insane buzzer beater last night?”

The response was delivered with a mixture of respect and underlying resentment.

“No, I was busy working on the inventory data you asked me to compile… late last night. And you know my name is Mark, not Melvin!”

Jarrod didn’t miss a beat, “Good Answer Melvin, any other response would have gotten you fired on the spot.”

Mark mumbled under his breath, “Good, go fire

Melvin then.”

 

Jarrod couldn’t help crack a smile knowing he’d gone through the same ribbing only a few years ago.

He turned his attention to the broader team and raised his voice a few decibels.

“OK, how are things shaping up?”

“West Texas Intermediate up a quarter and holding just under seventy-nine,” replied Chet Delaney. Delaney was his Wharton wunderkind who knew more about the stats of the domestic market than the CEOs of Exxon and Chevron did.

“Inventory movement?” asked Jarrod.

“Reports just in. Refinery outflows appear to be outpacing deliveries by 1 to 2 percent over the last forty- eight hours.”

Jarrod sighed. If the refiners would just provide web access to their inventory databases, it would be so much easier. But they didn’t, so Blackenford subscribed to a service of “watchers.” Outside major domestic refineries, a number of remote surveillance cameras watched the traffic going in and out. On the Houston Ship Channel and the Mississippi River, another set of cameras kept track of oil tankers unloading their cargo of crude via the submerged pipeline.

Jarrod’s crew knew the capacity of every floating tanker on the high seas. And the tanker capacity of eighteen-wheelers was standard. So when you did the math—something Jarrod’s crew did very well—you could figure out whether refinery stockpiles were growing or decreasing. Growing inventories meant less pressure to refill them, which caused prices to slip. It was simple supply and demand. Broader factors could come into play, of course—weather, economic trends, terrorism, elections, OPEC etc. But in a peaceful world, inventory trends were the best bellwethers.

“The firm’s position?” asked Jarrod. Although he knew it, he liked to hear it.

 

Delaney replied, “It’s 9.52 million barrels long at

68.50. At a gain of 10 dollars and 29 cents per barrel, the return on this trade is positive 98 million less 8 million for the hedge, leaving a net gain of 90 million minus fees.”

It always amazed Jarrod how those dancing numbers on those screens could create wealth out of thin air. Ninety million dollars inside of thirty days. Not bad for a month’s work. Indeed, it almost seemed criminal. But this seemingly effortless way to make money had only come after Jarrod turned himself into a highly successful stock trader and continuously pressured his team to do more and to do it faster than anyone else.

It had started three months ago when Jarrod had picked up on a wrinkle no one else seemed to notice in the ocean of data his team monitored in the hurly-burly of the Iran situation. An obscure press release by Tribeca Shipping stated the company was phasing out some of their older tankers and upgrading their entire fleet with newly constructed vessels. Separate and distinct from that, via his back-channel contacts as a CIA alumnus, he’d heard something had occurred in Saudi Arabia that was yet to hit CNN. A food riot had broken out in al-Kharfah, a small village in the Saudi outback, and neighboring villages were close to joining the party.

Most Westerners considered Saudi Arabia to be a wealthy welfare state. In fact, the wealth of the nation was largely siphoned off by about seven thousand royal princes, leaving millions in abject poverty. The royal family used the jackboot to keep the populace suppressed, but when the Saudi riyal was devalued and food prices went up, those who had nothing to lose rebelled.

Having learned how the Arab mind worked in his days with the Agency, Jarrod swung into action. First, he took the firm’s Gulfstream and high-tailed it to Galveston and then to Baton Rouge. He made himself look like a longshoreman and staked out the docks until he found a Tribeca tanker. He followed

 

some crewmen to a dump of a bar and started buying rounds of shots to get the inside scoop.

“Yeah,” the crewman said. “The old girl is going to be cut up for scrap, they just told me today.”

The crew was going to a new tanker coming out of a South Korean yard in a month or so, and they were going to enjoy a few weeks of paid leave. And wow! That new ship was a colossus. It was triple the capacity of their old vessel, and another eleven vessels were about to be delivered as part a group of ships dubbed the Daedalus fleet. Amazing what $186 in tequila could buy you.

Jarrod heard the same story from three other Tribeca crews, meaning the new ships coming online, after some sea trials, would increase Tribeca’s transport capacity dramatically in a compressed timeframe. And all the Tribeca tankers were under exclusive contract to the Arabian-American Oil Company (ARAMCO), which was to say that all the oil shipped via Tribeca vessels went directly into Saudi coffers, as opposed to an Exxon or Chevron tanker, where the spoils were split up via various concession agreements.

He boarded the Gulfstream to go to Dubai. After the jet touched down, Jarrod looked up his old bud, who was now deputy CIA station chief after transferring from Riyadh. In a palatial hotel bar that served only fruit juice, Jarrod learned that, yes, there had indeed been a food riot in al-Kharfah. Between that and the Arab Spring uprisings, the royal family was scared shitless. They had to placate the masses and had announced they were going to launch a staggering program of $250 billion to build low-cost housing and get food prices down. That meant they needed more revenue, and that meant shipping more oil. OPEC be damned, which was usually the case anyway.

Over the next sixty days, Tribeca’s tanker capacity was going offline as crews switched to the new vessels. This would put a major dent in ARAMCO’s shipping capacity, temporarily making supply look constrained and

 

driving prices up. However, when the new tankers came online, the capacity would spike, flooding the market with an abundance of oil and driving prices way down.

With these seemingly disparate pieces of information—all blurred by the angst over the Iranian situation—Jarrod realized he was the only one to tie them together and see a “whipsaw” in the making.

In trading speak, a “whipsaw” referred to a wide swing in price that first goes one way, then the other. And as long as you have the right position on the trade, you can make money if the price goes up or down. But of course, if you bet on the wrong direction, you’re cremated.

So Jarrod clambered back on the Gulfstream and rocketed back to New York. In his capacity as head of energy trading for the firm, he had authority over $50 million of the firm’s own capital to employ, which was in a separate bucket from the $500 million and change he traded on behalf of Blackenford’s clients. He could have gone upstairs to the Big Cheese to ask for more, but he was taking enough risk as it was. He drove his staff mercilessly over the next week, culling through every shred of data. Then he closed out the firm’s positions and deployed the capital in a new trade betting on oil to go up. The bottom line was that if the price did not swing well north of current pricing within sixty days, Blackenford Capital would be taking a $20 million bath, and Jarrod would be out on the street.

In other words, just another day at the office for a big-time Wall Street trader.

“OK, what’s the status of the Tribeca tankers?” he asked Delaney.

“This just in. Our spotter at the Strait of Malacca in Indonesia confirms the Charteris and Ming Po just transited from the Pacific and have entered the Indian Ocean.”

“Good. That puts them seven days out from Hormuz. Latest back channel on Abqaiq?”

 

The Saudi oil processing facility of Abqaiq near the Persian Gulf Coast was a colossal installation where the bulk of Saudi petroleum is transformed from heavy to light crude. It was stored and then shipped via pipeline to the offshore loading terminal at Ras Tanura in the Gulf.

“Word is the Saudi tank farms are full and waiting for more tanker capacity.”

“I love it when a plan comes together.”

The younger man asked, “Think we should start closing out the positions?”

“Pretty soon. The tankers have to make it to Ras Tanura, take on the juice. Another couple of weeks to market, but I’ll have a chat with our quant.”

In Wall Street parlance, a quant had a PhD in math, physics, or statistics and applied their wizardry to the machinations of financial markets. Jarrod’s team had its own quant, Sergei Dobrinin, who helped Jarrod beat his fiscal targets on a regular basis.

Jarrod moved up and down the trading bench like a coach on the sidelines, coaxing, bantering, and keeping the team focused. He was on top of the firm’s capital, and a $500 million chunk of the $2.3 billion in client money that Blackenford managed. Some of those client accounts were linked to the same energy trades as the firm’s accounts, but each client had customized nuances—stop- loss orders and the like—the team had to look after.

After he’d played cheerleader long enough, he peeled off to one of the windowed offices along the wall where Sergei did most of his deep thinking. He courteously knocked on the open door and received a wave in reply.

Sergei had his back turned to Jarrod and his nose in the computer, as usual. A smoky haze filled the room despite two air purifiers humming away, and most of the floor space was taken up by stacks of technical journals on math, statistics and artificial intelligence.

 

Finally, the chair spun round, revealing a gray-and- sandy-haired, middle-aged man wearing horn-rimmed glasses. With a rumpled shirt and tie and a cigarette dangling from his lower lip, he looked the part of the absent-minded professor, which is exactly what he was.

Leaning on the doorframe, Jarrod observed laconically, “You know, one day we’re going to get a visit from the fire marshal, and he’s going to shut us down. We’re probably violating a dozen ordinances, firm policy, and who the hell knows what else.”

The professor shrugged and replied in a thick Russian accent, “You want me, you get my ceegarettes as well. In my contract. You lucky my Cubans I don’t roll at work.”

Jarrod sat down and put his feet up on the desk. “Sergei, how is Icarus doing. Did he validate our

calculations?”

“Sorry boss, Icarus was having bad day, I had to kick him a little, he is ok now and I’ll ask for his thoughts, but I need some time.”

Icarus was a state of the art supercomputer Jarrod had acquired for his group about 6 months prior. And this was no ordinary number crunching box of processors; this was an 8 million dollar work of wizardry. Icarus used an artificial intelligence chipset that combined the creativity of human thinking with lighting speed execution. Amazingly, it was capable of taking disparate pieces of data like weather forecasts, and blog posts and churn out creepily accurate financial recommendations analyzing billions of pieces of data per second. Icarus even scoured social sources like LinkedIn, Twitter and Facebook to help tailor research and maximize trading recommendations. The system was only about the size of a filing cabinet adorned with a few dozen rows of green LED lights flashing rapidly in random patterns. A stealthy Silicon Valley startup company supposedly employed a bunch of

 

ex-DARPA engineers, PhDs and even a few hackers to create Icarus.

For the first few months, Jarrod and the team had played around with Icarus as if it was the latest new gadget, but in the last few weeks, they were starting to really believe in its capabilities. It was however still in “beta” mode, so some of the recommendations Icarus would generate were buggy or cryptic. Not to mention you would often need your own team of brainiacs to properly interpret it. Just a few weeks prior, Icarus had suggested Jarrod sell shares of a well known energy company with one of the best CEOs in the industry due to a 81% likelihood of an “adverse social event” triggering “potential organizational changes” which would exert “eventual downward price pressure” on the stock. At the time, Jarrod brushed it off as errant computer babble, but no less than a week later the CEO stepped down and the stock tanked as it was revealed that he was having an inappropriate affair with a much younger intern at the company.

Although it wasn’t clear at the time, Icarus made the discovery based on language and context clues between the CEO and intern based on data mining of recent social media posts and twitter feeds. However, it didn’t seem possible that Icarus called the affair from just those pieces of info. From that eye opening moment forward, Jarrod started using Icarus to validate his investment ideas.

Sergei stubbed out his Marlboro and fired up another in one fluid motion. “Da, Icarus seems more stable today, it was not processing model properly yesterday, it seem angry. It keep beeping at me.”

Jarrod clasped his hands behind his head and said with a smirk, “Angry? Icarus is a glorified desktop computer, not Chucky from Child’s Play. Anyway lets sit and focus on our exit strategy, we have got a long day ahead of us. If we screw this up like Martin did with the

 

ridiculous Zambian bond fiasco, we are all going to be raked over the coals.” Sergei nodded and chimed in, “Da, I pretty sure he is going to be fired next week.”

Jarrod continued, “Pretty tough considering he was trending towards being the golden boy of the firm a few short months ago.”

As if on cue, Sergei, leading with his chin, motioned slightly towards the door. Jarrod turned around to see a distraught Martin standing against the doorway with a “deer in headlights” look. Martin, or “Marty” as he was known throughout the office was a 5 foot 4 boyish looking “nerdling” 3 years out of b-school (In his defense, he did graduate in 1 year). On a wet day, he was probably pushing 125 pounds and often asked for his ID to prove his age (or rather prove the fact that he was really an adult). He had gotten lucky on some trades earlier in the year until things fell apart in a big way.

Martin traded looks between the pair. “I’m going to get fired?” he squeaked.

Jarrod interjected trying to be as convincing as possible. “No, of course not, I was just joking with Sergei here to make a point.” Unfortunately, Sergei didn’t get the memo and his bluntness got the better of him.

“Marty, you weel not be fired today. But next week, da, you will be gone I pretty sure. Time start packing your tings.”

With that, Martin turned into a heartbroken schoolgirl and literally ran down the hall in tears, tripping along the way over a potted fern.

Jarrod turned back towards Sergei and he pointed towards the now vacant doorway. “Seriously? Now I have to go clean up this mess with HR!”

Sergei was not apologetic. “I help him, he needs to be man. He smells like lilies.”

Jarrod shook his head in annoyance and decided to tackle the bigger fish on his plate first.

“Ok, lets just focus on this trade.”

 

Jarrod rescanned his terminal. “West Texas Intermediate is at $79.50. Inventory stocks running at a daily net outflow of 1 to 2 percent. The new tankers are seven days out from Hormuz and tank farms at Abqaiq are brim-full. Update the model, get the granular data from Chet, and give me the best close-out point.”

Dobrinin nodded as he scribbled on a pad. “I weel do it, but to be safe, I would not go past three days. The Saudis will start putting out contracts on the excess production two or three days prior to loading. That will start depressing the price. And hopefully the Israelis and Iranians won’t do anything crazy in the meantime.”

“I agree but run the model anyway. The Saudis are not fools. They’re probably doing the same thing we’re doing, only with inside information.”

“Of course. Are you going to flip the whole position?”

“Might as well. Opportunities like this don’t come along every day. Within a few days, we could exceed our profit targets for the next two years.”

“Joost in time for your coronation as Blackenford’s new general partner and a slice of riches. How convenient.”

Jarrod couldn’t suppress a smile and subtly agreed. “William did say he would make the selection based on profit and profit alone.”

In the push for a competitive edge, investment banking firms and hedge funds had come to rely more on quants. And when combined with complex program trading, the algorithms these quants created were like some kind of science fiction Wizard of Oz that had taken over the economy. Trades in the billions were made, purely from machine to machine, with humans out of the loop except to tweak the software and algorithms. Indeed, that was expected to take profits to yet another level. “Make money while you sleep.” That was the mantra of the quants. But the truth was that with global markets,

 

traders never really turned out the lights. In the immortal words of Gordon Gecko, “Money never sleeps.”

Before the financial meltdown and the Great Recession, quants had taken over Wall Street, spinning their magic in a mathematical jargon only they could understand. And as long as it worked, nobody tampered with the genies they had created. But the old adage of “garbage in, garbage out” came home to roost on the quants. Because the algorithms were based on continued increases in home prices, and it had held true for so long, no one—not the army of PhDs or “smart” wealth managers—ever challenged that fundamental assumption until the house of cards fell.

Sergei Dobrinin had a stellar academic record, receiving his PhD in mathematics from Moscow State University with a focus on artificial intelligence back when everyone thought it was a far-off pipe dream. He’d been recruited into the KGB’s cryptology division just before the Berlin Wall came down. After that, career prospects looked grim in Moscow, and Sergei made his way to New York, where he scored a job teaching math at a junior college. His brilliance soon became evident, and a technical paper he authored about multivariate analysis caught the eye of a talent spotter at Morgan Stanley.

After years at Morgan Stanley and another hedge fund, he’d settled in to a comfortable life in Greenwich and was contemplating a return to teaching. That’s when a young man had approached him at a technical conference and asked him to come to work at Blackenford Capital. Ordinarily he’d have dismissed an overture from a boutique firm, but something about this fellow named Stryker told him he was cut from a different cloth. The garden-variety hedge fund managers had such frail egos that they tried to make up for it with bluster or the latest Lamborghini. Jarrod had that intangible of self-confidence that no amount of money could replace, and to his surprise, Sergei found himself signing on with this junior

 

trader. The combination of Russian KGB academic and Alabama CIA alumnus created a formidable team. They generated extraordinary results throughout the Great Recession because they refused to accept conventional wisdom—and they catapulted Blackenford into a sought- after wealth management firm.

“Have you seen William this morning?” asked Sergei tentatively.

Jarrod shook his head. “No. I’ll see him at the department head meeting at two.”

Sergei stubbed out his Marlboro. “I hear he on warpath today.”

Jarrod chuckled. “Is William ever not on the warpath?”

“Today it sound different.”

The younger man shrugged. He’d always been able to charm William Blackenford into his fold. “The firm is making money hand over fist, so maybe it’s male menopause. What could be the problem?”

“Have no idea.”

“Oh, well, as long as the results come in this, too, will pass. But maybe that explains Pippin this morning.”

“Pippin? Our chief bottle washer?”

“Yeah. Saw him in the elevator this morning. William must have ripped him a new one for some infraction. Ordered the wrong kind of paperclips or something.” Jarrod looked at his Rolex President wristwatch—a birthday present to himself. “Speaking of the department meeting, I need to touch up my PowerPoint.”

“I look at numbers. We 93 percent of firm’s profits this month.”

Jarrod grinned. “Nothing succeeds like success.” Sergei had returned to his computer. “Hmmm.” “What is it?”

Looking at his screen, the Russian said, “The company party on the firm’s yacht for Friday night.”

 

“Yeah, what about it?” “Just got canceled.”

“Canceled? Are you kidding?”

Sergei peered at the screen. “Apparently some mechanical problem. Sounds like BS, da?”

“Too bad. I was looking forward to it. That vessel is a beauty.”

Sergei nodded. “And a floating art collection. William has a Pissarro on board more than the boat is worth.”

“Speaking of William, I better get on with it.” And Jarrod walked into his adjoining office.

He didn’t spend much time in his private abode, preferring to be out on the floor, but with his department

$90 million ahead on the firm’s capital account, this was the juncture to really “seal the deal” in ascending to his partnership. Jarrod wouldn’t toot his own horn. He would subtly let the numbers do the talking. There would be envy from the other partners, of course, but that was their problem, not his. And beyond the numbers, there was his relationship with William. William was in his late fifties and divorced twice with a few estranged daughters to boot, and Blackenford Capital had been William’s entire life—except for the yacht, the Gulfstream, the art collection, the Hamptons estate, the lodge at Gstaad, the race horses, and the other toys that made his life worthwhile. William spoke so fondly of past memories with his daughters, especially “Lynn” and an apparent former family life that seemed to have taken a turn for the worse years before Jarrod had even joined Blackenford. The conversations, however, never revealed any details, and William apparently never had enough time to visit his family. Other folks had portraits, paintings, and ugly arts and crafts on their desks; William just had a six-by-eight frame of Winston Churchill adorning his. Nevertheless, It was an open secret he regarded Jarrod as the son he never had. Jarrod was the only one who could push back—

 

respectfully, but firmly—in management meetings on issues that ran counter to William Blackenford’s myopic view of reality. But no pushback needed today. Just cruise control and collect the accolades. He was brushing up the presentation when a fresh cup appeared at his elbow. He leaned back and smiled at Gwen.

“Prepping for this afternoon, are we?” she asked, somewhat smugly.

“You got that right. But then, you usually do.”

Gwen Birnbaum was not immune to her boss’s charms as she peered over her reading glasses. “You flatter me.”

“And why not?” He pulled on the coffee. “Anything on the grapevine before I go into the management meeting?”

She chortled. “Just the ooohs and aahhhhs about your numbers this month. The partners are grumbling about the new ‘golden boy.’”

He grinned. “That kind of grumbling among the troops is the kind I can take. And they’ll swallow the bitter fruit when they get their piece of it in their bonus distribution.”

“Nothing like a healthy sense of entitlement,” she observed.

His mood turned. “Anything else? I don’t want to get blindsided by anything at this meeting.”

She shook her head. “No. Just that Rosita looks white as a ghost. Probably, you know…”

She didn’t finish the thought and didn’t have to. Rosita Suarez had been William Blackenford’s saving grace for a quarter century—no mean feat in itself. A single parent, she’d bootstrapped herself out of the Puerto Rican barrio and into a secretarial job and then to a beachhead at Blackenford. But her twenty-something son was every mother’s nightmare: in and out of every rehab there was and now in and out of jail.

 

A secret side of William Blackenford’s crusty exterior was that he personally underwrote the cost of treatments and lawyers for Rosita’s son—all to no avail.

“What a shame,” he observed. Gwen nodded and left.