21
Black Monday
MONDAY 19TH JANUARY 2009
Looking at the downward market movements on her computer screen, Blaze saw that the value of her stocks was falling. Since Moonshot Capital’s inception in October, most of her investment decisions had gone the wrong way: her fund was losing money on crude oil, Apple and bank stocks. Their biggest position, £75 million in an Indian telecom business, had turned out to be the worst performer; Blaze had been correct in predicting that the Indian mobile-phone market would expand quickly but wrong in assuming that the providers would make money; that investment halved in value. She pushed back her chair and took a sharpened pencil and piece of paper from her desk, then went back over her calculations.
Moonshot Capital had raised £500 million, but Blaze had made two mistakes: the first was to invest in the wrong companies, the second was to leave £200 million in cash. Her competitors, Sleet and Wolfe, had made big bets, mainly by shorting ailing companies, and were up 10 and 12 per cent respectively. Her self-confidence was wavering: had she lost her touch? Why was she, known for her steely, unemotional persona, suddenly so indecisive? She tried to attribute it to her father’s death but the real reason was that, since New Year’s Eve, Blaze had thought of little else but Wolfe, going over and over the events and coming to the same conclusion: she had thrown away her greatest, perhaps her only, chance of happiness.
Looking through the glass window of her office to the trading floor, she saw six pinched, worried faces. She called TiLing on the intercom.
“Do you have a minute?”
TiLing tore her eyes away from the screen and came in, closing the door behind her.
“Have you seen the latest results?”
TiLing nodded.
“Have I lost my touch?”
TiLing leaned against the door and shook her head. “You’ve lost your concentration. You are physically present but mentally absent. In the past you thought deeply, you researched and interrogated decisions, ran the ideas and strategies through computer simulations, debated their worth and rehearsed outcomes. Recently you have been whimsical and illogical, making the craziest decisions against your colleagues’ advice. We’re sitting on £200 million of cash and our investors want to see some return. They could make more money by sticking it in a high-yield-interest bank account.”
Blaze was silent; TiLing was right. “Who’s that?” she asked, pointing to a new face in a corner of the back office.
TiLing looked over her shoulder. “An intern,” she said distractedly. “Joe Smith or Jones or something.”
“Why do we need an intern?”
“We took him on as a favour for a friend of a friend.” TiLing wished Blaze would focus on what really mattered.
“What happens if he’s a spy?” Blaze said, looking at the young man.
“If only we had something to hide.”
Blaze picked up a pencil and began doodling on a piece of paper. This time she drew clouds hanging over a stick woman.
“My mother’s carer walked out. I’ve been trying to find a replacement. You’ve no idea how difficult it is to persuade people to go to Cornwall.”
Overcome by frustration, TiLing sprang across the room and smacked her hand on the desk. Blaze jumped.
TiLing leaned towards her. “Please, can you concentrate on business during office hours? On Friday, during the investment committee, you wittered on about cream teas and burial sites. This morning you bought more Microsoft shares when it’s perfectly obvious that few will buy new computers during a recession. Last week, our analysts advised that the Indian government’s decision to issue licences to eight new mobile-phone providers would lead to a tariff war and margin pressure; you ignored the advice. Even though there’s an oil glut, you went out and bought more crude.”
“Those investments will come good.” Blaze hoped the doubt in her mind wasn’t audible. “We have to play a long game.”
“Spalding are thinking of switching back to Kerkyra,” TiLing replied. The insurance company’s decision to move to Moonshot had been their biggest triumph; if word got out that Spalding had lost confidence, others would be bound to follow.
“It’s a few weeks into the new year. Why are they so skittish?” Blaze asked.
“If you haven’t noticed, the markets are in free-fall.” TiLing couldn’t believe she was having to explain this to Blaze, of all people.
She handed Blaze a letter.
Blaze recognised the headed paper; it was another of their major investors. Your decision to stay underinvested and long in cash is lamentable; you’re looking like a one-trick pony, able to call a crash but unable to navigate a recession. I’m out. It was signed Jim Treherne, Kingsland Asset Management, who had put £25 million into Moonshot Capital.
“Is this a joke?” she asked, knowing that it wasn’t.
“Three guesses where he’s moved his money?”
“Kerkyra,” Blaze said.
TiLing nodded.
Blaze looked across at the intern who was talking into a phone with his hand cupped over the receiver.
“I want that man’s CV. I don’t trust him.”
TiLing’s desperation eviscerated any politeness. “Stop thinking about an intern, start thinking about where to put our money. Three other clients are threatening to switch to JW Inc.”
At the mention of Wolfe’s company, Blaze flinched. She had left several apologetic messages on his voicemail, but he hadn’t returned any of her calls. Knowing TiLing’s eyes were on her, she turned away towards the window. The large office block on the opposite side of the road, once a hive of activity, full of traders and stock pickers, was now empty. Empty buildings were like ghost ships of former businesses. In their street there was only one whose lights were on: Barclays Bank. Blaze got up and, leaning her head against the cool glass, tried to think. She had to make a decision, any decision would be better than none; it was time to get back in the market and behave like a conviction investor.
“What do you want to do?” TiLing asked.
“We’re going to make a big investment. I’m going to raise £1 billion, using all of our assets as leverage,” Blaze said in a bright but unconvincing tone.
“There is no liquidity in the market and, with our performance, who’s going to lend us more money?” TiLing replied, thinking about Sleet’s ongoing campaign to discredit Blaze.
“Do you remember Helmut Myer of PNB?”
“The Prussian bank?”
Blaze nodded. “I saw him at Sleet’s party; he told me to come to him with any good ideas.”
“I’m looking forward to hearing those.” TiLing sat down wearily on the small sofa in Blaze’s office.
“We have to take a risk and be bold. Fortunes are never made on the back of timid decisions.” As she spoke, Blaze ran through a list of investment ideas. She didn’t like any of them in particular.
“For months you’ve been saying there’s nowhere safe to put our money. How are you planning to rework the narrative?”
Blaze looked at the building up the road, at the hum of activity in Barclays, wondering why she hadn’t considered it before. “We’re going to buy bank stocks.”
“They’re riddled with problems.”
“Governments learned their lesson by letting Lehman’s go down. Bush has pumped billions into the economy; Obama will follow suit. There’s no way they’ll let another big institution fail.” Blaze felt a bubble of excitement rise in her chest.
“Look at their balance sheets. Banks are mired in debt after years of reckless decisions. Even if central banks prop up the rotten businesses, they can’t control the share prices. My strong recommendation is that we use our liquidity and diversify from our existing bank holdings.” Frustration propelled TiLing to her feet. It took all her resolve not to punch the wall.
Although every word her colleague said made sense, Blaze couldn’t agree. “The G20 will create fiscal stimuli and institute programmes of quantitative easing. They’ll slash interest rates and pour more money into the economy.”
“What’s happened? Where’s this new strategy come from?” TiLing couldn’t understand why Blaze, so timid in recent weeks, had changed her mind.
“I’ve been thinking about the macro situation—the U.S. government provided the Bank of America with another $20 billion and the British government put £500 billion into the economy in October and are considering doing more. The rest of Europe, bankrolled by the U.S, are bound to follow suit. We must buy as much as possible, markets are certain to rise.” Blaze turned around to face TiLing and spoke in a low, determined voice. “I am going to take a big position in Barclays.”
“Barclays?” TiLing spat out the name. “It’s not worth the paper its shares are written on. If you remember, we bought £5 million worth at 150 pence per share at the end of last year. As of today, they are at 90 pence.”
“It was worth over 500 pence a share; the government can’t let it go down.”
“The share price can and will go a lot lower,” TiLing argued.
“This is exactly the time to double our holdings; triple or maybe quadruple them. We can make up our early losses. We have to be bold, hold our nerve.”
TiLing was exasperated. “You’re crazy. Where the hell did you get that idea from? Look at the balance sheets, listen to the rumours about their results. Barclays are bust, Blaze. They are overleveraged, have bought badly and are run by people who put their own bonuses before their shareholders’ interests.” This time she couldn’t contain her irritation and, slamming her hand on Blaze’s desk, sent a pot of pencils flying.
But Blaze had made up her mind. “I’m going to put another £1.4 billion into the market.”
“If you do this, I’m leaving,” TiLing said.
“That’s your decision.” Blaze’s tone was icy.
TiLing shook her head sadly and left the room, closing the door hard behind her. Through the glass panel, Blaze saw her address her team. There was a brief discussion and then all six employees packed up their possessions and made their way out of the office, one or two throwing their erstwhile CEO a reproachful glance. Before he departed, the intern made a call, all the while his eyes on Blaze. TiLing was the last to leave. Turning to Blaze for the final time, she shrugged and didn’t smile.
Blaze put in a call to Helmut Myer and outlined her plan; she’d provide security of all of Moonshot’s remaining assets in return for a loan of £1 billion. One hour later the banker got back to her: PNB would lend her £600 million at LIBOR plus 1.3 per cent. They were expensive terms but Blaze had no alternative. The credit line was opened and at 4 p.m. she bought £400 million worth of Barclays shares at 82 pence per share. It was an audacious move but she felt confident. The markets closed with Barclays down a fraction at 81.29. She ran off any misgivings in the gym, pounding on the treadmill for an hour and a half. Later she ate a pizza and drank half a bottle of wine in the local trattoria, watched a suitably vacuous romantic comedy on her PC, curled up on the sofa opposite her desk and went to sleep. She felt wretched for TiLing and her team, who had given up other jobs to join Moonshot Capital; but this was the nature of a business that valued money over security and excitement over ease.
Sleet and Ayesha were having lunch on his boat, moored near Antibes. The young woman had accepted his invitation to join him in the South of France on condition that he provided a suite at the nearby Eden Roc hotel and agreed that this trip, like all their other meetings, was chaste. Sleet had to concede Ayesha was playing an enticing game. The week before he had bought her the entire new Prada collection; her thanks was a short message. Three days later he followed up by sending her an exquisite Monet sketch of the River Thames, which she acknowledged briefly. Now she sat opposite him, refusing the glass of vintage champagne, caviar and truffles, toying instead with a small green salad, her beautiful face composed in a perfect study of boredom. Sleet was amused by her game: he knew he’d win in the end. His intention had been to seduce and then abandon the girl; as the daughter of Kitto and Anastasia, it was what she deserved. For now, he was enjoying her spirited defence but knew she wouldn’t hold out for long: penniless little nobodies never could.
Sleet had come a long way from Delaware. All the scars of his early childhood had been expunged. He had, through hard work, self-belief and achievement, changed his circumstances and risen like a phoenix from the ashes of impoverishment and the paucity of opportunity. Scholarships had carried him from an undistinguished one-room school to Yale, Oxford and Harvard Business School. Acumen landed him a job first at Goldman Sachs, and determination and complete lack of any personal scruples led to his success as an activist, stripping company after company of their fat and positioning them as slimmed-down, money-making machines.
He used the profits to build a spectacular collection of Impressionist paintings. He had a yacht, a plane and seven houses scattered across the most desirable parts of the world. His suits were cut by the best tailors, his food prepared by the greatest private chef. But something was missing: however hard he tried, however much money he made, he seemed to lack that elusive, desirable and unquantifiable accolade—class; and however low the Trelawneys sank, they exuded and oozed insouciant, effortless style and utter certainty about their place in the world. He slavishly copied their idiosyncrasies, employing a man just to wear out the elbows of his cashmere jumpers; he wore a watch, like Kitto and his father, on the outside of his shirt cuffs; he bought a pair of engraved Purdey shotguns and took enough lessons to pass as an excellent shot. There were certain mores he couldn’t adopt: the aristocracy’s apparent disdain for cleanliness, and an unwavering affinity with Labradors and Scotland.
Since that moment of utter humiliation at Anastasia’s feet, Sleet had been determined to eradicate the Trelawneys’ sense of superiority and his own feeling of inferiority. Bit by bit he bought land and had amassed as much as the Trelawneys owned at their zenith, including parcels of their former estates. He had shorted Acorn’s stock, partly to make money but mainly to ensure that Kitto was forever unemployable. He hired the dunderhead Ambrose just to belittle him. Through his spy Joe Smith, posing as an intern at Moonshot Capital, he kept tabs on Blaze: it turned out that she was good at prophesying loss, incapable of capturing any upsides. It wouldn’t be long before he bankrupted her and took over Moonshot; it was all a question of waiting and he had become good at waiting.
Looking across the lunch table, he saw that Ayesha was texting on her mobile phone.
“Who is more important than me?” he asked, unable to keep the irritation from his voice.
Ayesha put the phone down. “No one is more important than you,” she said and then, to his surprise, leaned over the table, took his head in her hands and kissed him on the mouth for the first time. Sleet grinned broadly and tried to grab her by the wrist.
“Let’s go to my cabin.”
Ayesha shook her head. “I’m not that kind of woman.”
“What kind are you?” Sleet failed to hide his disappointment. The prize was so near and yet so damnably elusive.
“I am a virgin and will stay one until my wedding night.”
Sleet’s mouth fell open. This was the last thing he’d expected. “You’re nineteen. Even my fifteen-year-old daughter has—”
Ayesha held up a hand to silence him. “I don’t need to know.”
Sleet sat back and laughed. He had to admire her gall. Marriage was absolutely not happening; it was far too expensive and he had enough heirs; no way was he wasting more than a few days on this girl.
Ayesha stretched slowly, unfurling each of her long fingers and limbs, all the while looking Sleet directly in the eye. She knew exactly what he was thinking but, unlike him, she knew the outcome.
“I’m going back to the hotel now. For a little nap in my room. Why don’t we go dancing tonight?”
“I have to return to London, to work,” Sleet said.
“What a pity. I don’t need to be home until tomorrow. Be a poppet and send the plane back to get me.” Without waiting for an answer, she blew him a kiss and walked off towards the yacht’s tender for a ride back to shore. Ayesha knew she was playing a high-risk strategy; she could only keep Sleet at bay and interested for a finite amount of time. Climbing down the steps into the waiting speedboat, she offered a silent prayer. Let’s hope you trained me well enough, Mummy darling.
Blaze woke early the following morning in her office and took a hand shower in the bathroom. She wiped her face clean of yesterday’s make-up and put on a coat of bright red lipstick. She made a cup of coffee and, opening her desk drawer, took out a bottle of vodka. Pouring a tot into the steaming black liquid, she offered herself a toast in the glowing computer screen. “Here’s to success,” she said with little enthusiasm.
She played a game of solitaire on her PC until the markets opened at 9 a.m. Barclays’ shares had started at 82.21 pence. She punched the air; she’d made a couple of million overnight. The tide had turned. Barclays was coming back—and so was she. Tapping codes into her computer, she spent the remaining £600 million of borrowed money on more Barclays stock and sat back to watch. For the first hour, the market reacted to her investment and Barclays rose to 113 pence as others followed her lead. In less than sixty minutes, her stock rose further; on paper she made several more million. Her spirits soared further. But shortly after 11 a.m., the picture changed and the price started to slip. Sitting with eyes fixed on her computer screen, Blaze watched in horror as her money evaporated before her eyes. Within an hour, Barclays had fallen to 72 pence; over the next two hours, she lost £43 million. The shares closed at 67.34.
She left the office in a daze. Drunk on fear and adrenalin, she wandered aimlessly along unknown streets. It was nearly midnight when she got back to her apartment. A bottle of wine and two sleeping pills later, she fell into a fitful sleep. As dawn broke, she got up and went to the gym. Two hours of running and weights failed to calm her nerves. At 9 a.m., when the markets opened, she received the first of many calls from Helmut Myer—what did she think was happening? The telephone rang incessantly: worried clients seeking reassurance; reporters, tipped off by someone, circling like vultures. By Wednesday night, Barclays shares had dipped to 61 pence. By Thursday they had fallen to just under 55 pence. Helmut Myer rang every thirty minutes: PNB needed urgent additional security or they would require her to sell shares to limit their losses.
“If you sell out now,” Blaze said, “my clients will lose all of their money. The only thing to do is sit tight and wait for recovery.”
“If you can raise another £100 million, we will wait a few days.”
Doug Smith, the CEO of Spalding Trust, was equally nervous.
“How did you know?” Blaze asked, wondering how Moonshot’s investors were so well informed.
“Sleet’s been helpful” was the invariable reply.
At 10 a.m. on Friday, with Barclays’ share price still falling, Helmut Myer issued an ultimatum. “We need a margin call by 4 p.m. or we are calling the loan.”
Blaze hadn’t slept for three nights. In a frantic attempt to save her company and her investors’ money, she contacted every person she knew, bar Sleet or Wolfe, praying she would find someone willing to commit enough money to keep Moonshot afloat. No one was interested. All she’d worked so hard for, the sacrifices she had made and the future of Trelawney were in peril. Worst of all, she had promised her clients a safe haven and had let them down. Her heart twisted when she thought of the pensioners at Spalding—the lady from Newcastle who’d sold her house, the small farmer in Wales who’d taken out a mortgage on his property in the hope of getting out of debt.
There were two people left on her list. With a heavy heart, she picked up the phone and punched in a number.
“I’ve been waiting for this,” Sleet answered. “My friend Helmut is very upset.”
“So I don’t have to explain what I need,” Blaze said. As she spoke she could see her ghostly reflection in the window.
“I’ll put up £100 million.”
Blaze exhaled slowly. “Thank you.”
“You haven’t heard my terms,” Sleet added.
“I’m listening.”
“In return, I get 100 per cent of Moonshot and your head on a platter. The moment the ink is dry, you’re out.”
Blaze couldn’t believe what he was asking. “I created this company.”
“See it as saving your reputation.”
“And what happens to me?”
“You can go back to Cornwall and lick your wounds. If the share price recovers, you’ll get some of your money back. Eventually.” He let the syllables of the last word roll pleasantly and slowly around his mouth.
“You are a bastard.”
“I told you that I’d own you. There’s no escape,” he said.
“Is revenge worth all this money?” Blaze asked incredulously. The deal was hardly risk-free for Sleet; if Barclays didn’t recover, he stood to lose up to £100 million.
Sleet, as if reading her mind, burst out laughing. “I could lose a lot more and enjoy the ride. Just be grateful you have the clothes you’re wearing and your licence. My lawyers will be with you at 4 p.m. with the necessary paperwork. Sign up or sink.” He laughed again. “Oh, and by the way, I’m taking your niece out to dinner again tonight. We’re getting on well.”
Blaze’s heart lurched. “I’ll kill you.”
“Have fun trying.” Sleet hung up.
Blaze sat in front of her computer watching the share price fall to 50, then 49 and then 48 pence. Wolfe was the only person who could now help, but he wasn’t returning her calls. For the sake of her shareholders, she had no choice but to accept Sleet’s deal. Looking around her spartan room, she saw how little imprint she had made or left. Through the glass, in the empty outer office, the computers were like gravestones glowing in neon light. The only hints of former human occupation were cardboard coffee cups, balls of paper, a pizza box and an old tennis ball. In her own room, there were no framed photographs or lucky mascots to take home, only a laptop and her phone. A few might remember her as a one-trick pony—the perils of following your own conviction. Twenty years earlier she had arrived at Paddington Station with £50; today she was leaving her office with even less. Her licence to trade would almost certainly be rescinded by the Financial Services Authority.
Sleet’s lawyers arrived at exactly 4 p.m., carrying the relevant paperwork. Blaze, numbed by humiliation, signed in the necessary places. Opening up her desk computer, she typed in a code that automatically transferred everything to Sleet’s account. She took off her high-heeled shoes and, putting them into the bin next to her desk, slipped on a pair of trainers. Her life in the City was over. She double-locked the office door and left the keys at the front desk. She felt nothing: neither despair nor fear.
The weekend, behind locked doors at Moonshot Wharf, passed in a blur of vodka and sleeping pills. Saturday must have slipped into Sunday which became Monday or maybe Tuesday—she didn’t care; she had nothing to get up for. When Ayesha finally shook her awake, Blaze tried to fight her off, but the young woman was determined.
Ayesha put a cup of coffee on the bedside table.
Blaze sat up in bed and rubbed her eyes. “What day is it?”
“Tuesday. You smell and look terrible. You’re going to have a shower now. There’s a man here to see you.”
“The bailiff,” Blaze said.
Ayesha ignored her and, pulling her out of bed, marched her to the bathroom. Blaze let herself be washed and dried.
“You look like a bag of bloody bones,” Ayesha grumbled, forcing her aunt’s limbs into a white silk shirt and a pair of black trousers. She combed Blaze’s hair and pushed her into the living room. “I’m going out. You two need to talk.” Taking her bag, she walked out of the apartment.
Blaze looked up. Sitting on the edge of her large white sofa was Joshua Wolfe.
“While you were sleeping, Barclays’ shares climbed to a high of 84 pence.”
Blaze couldn’t hear what he was saying; all she wanted to know was why he was in her apartment.
“Why have you come?” she asked. An acute hangover seemed to have shrivelled her brain and made her tongue too large for her mouth.
“Barclays’ directors published a letter claiming to have £17 billion over and above their debt. The bank is back on the road. You were right.” Wolfe remained seated. His voice was calm but his eyes roved around her face.
Blaze hoped she looked better than she felt. “Lucky Sleet. You should congratulate him. I sold out to him on Friday. He owns everything, even this apartment.” She grimaced. “I have only my own recklessness to blame. I’m out, finished.”
“You’re far from finished.” Wolfe got up from the sofa and took a step towards her. “I bought Moonshot yesterday morning for £1. Sleet didn’t want it; buying your business was simply a means to humiliate you. The company is still operational. Helmut Myer is prepared to continue with the loan.”
Blaze looked at him, dumbfounded. “Why?”
“Because I believe in you. Buying Barclays was a good decision, even if your timing was off by a few days. You bought too early but your judgement was correct. By the end of the week, you’ll make back your money and, if your hunch is right, you’ll treble the value of your investment by the end of the year. Sleet will look an idiot for selling at the bottom of the rout.” He hesitated. “I will make sure everyone knows it; he can’t be allowed to behave like he did with no consequences.”
Wolfe was now so close that Blaze only had to raise a hand to touch his. She clenched her fists to stop herself. “You didn’t return my calls.”
Wolfe shrugged. “I was angry. Hurt. And I suspected you were calling me about business, not about what happened.” He took another step forwards. “Blaze, come back to work. Moonshot is your fund. I will be a hands-off investor. Your portfolio will be one of many on my books.”
Now it was her turn to feel disappointed; Wolfe was only here on business. Blaze shook her head. “I’m done with the City.”
“You’re one of the best, Blaze; you can’t walk away.” His voice rose slightly.
Blaze smiled at him. “I am pleased that you’ve made your money back and grateful that you came here to tell me. You’ve saved me from the ignominy of being struck off and, more importantly, my clients won’t lose their investments. But my heart’s not in it any more. I used to love taking risks but when I bought the Barclays shares, something had changed: my pulse didn’t race; my nerves didn’t fizz. I did it because a sixth sense told me, not for the thrill of the chase. To be a great investor, you have to be a gambler and be prepared to risk everything: for me, the excitement of winning and losing has gone.”
“You were right!” Wolfe insisted.
“I don’t feel vindicated, just empty.”
“You’re tired. Take a few weeks off. Get your mojo back.” He wanted Blaze to look at him, but she stared at the carpet, tracing an invisible pattern in the wool with her toe.
“Selling Moonshot didn’t frighten or appall me. I felt an overwhelming sense of relief: I was finished, it was over and I wouldn’t have to fight any more.”
“Without you, there won’t be Moonshot.”
“My number two, TiLing Tang, is steady, professional and knows the portfolio as well as I do.” She paused. “I behaved appallingly to you—imagined the worst, stamped my foot like a child. Why have you done this? Why take the risk?”
Wolfe shrugged. “I believe in you.”
“As an investor.” Blaze tried not to sound too sad.
“As a person as well.”
He reached over and, taking her hand in his, traced her lifeline with his finger. “It took a bit of time to calm down but I’d like to see you again.”
Blaze looked at him and smiled. “Thank you,” she said with sincerity.
He leaned in and tried to kiss her.
“I’m sorry, Joshua, but I can’t do this.” Blaze stepped backwards and pulled her hand out of his.
Wolfe, unable to hide his disappointment, closed his eyes and rubbed his forehead with his hands. “What are you going to do?” he asked after a few moments.
“I’m going home. I’m going to Trelawney.”