Chapter 41: No Material Misrepresentation

February 26, 1984, Chicago, Illinois

"You made her day when you offered to allow her to showcase your condo," Deanna observed.

"It's the least I could do, given the rules say I can't pay her."

"No, but she wants to repay you for your offer! You can imagine how!"

I chuckled, "Good to know, but not necessary."

"Of course not, and it wasn't you who suggested it or, worse, demanded it."

"I take it that happens?" I asked.

"Seriously, Jonathan? Where do you work?"

"Never mind! Of course it happens."

I excused myself and went up to my room so I could place my weekly call to my mom.

"Hi, Mom!" I said when she answered.

"Hi, Jonathan. Have you heard from Bev at all?"

"No, and I don't expect to."

"She filed a lawsuit against her parents to get Heather back. They were served late on Friday afternoon."

"Wonderful. Right now, I think it's best for Heather if she stays with Jim and Julie, at least until Bev gets her act together. I have no doubt Family Court will do the right thing. But I didn't call to talk about Bev. How is Judge Pierce?"

"You can call him Mitchell outside his courtroom!"

"I hope to never be inside his courtroom!"

Mom laughed, "Good point. We're doing fine, but nobody is printing wedding invitations just yet."

"Just be happy, Mom. That's what matters."

"How are you doing?"

"OK. I had a very good talk with Deanna yesterday, and between her, Bianca, Violet, and Beth, I'm working on getting my feelings in some semblance of order."

"That balm won't work, Jonathan."

"Given I was referring to having deep conversations about life, not what you were implying, I'd say it will."

"Sorry; I shouldn't have said that."

"Apology accepted. And how do YOU know it won't work?"

Mom laughed, "What? You don't trust my extensive experience with relationships?"

"Considering you didn't date from the time you signaled the stork to bring me until after I left home, no!"

"You're a brat!"

"I try," I chuckled.

We chatted for another five minutes, and after we ended the call, I went downstairs to hang out with my housemates until bedtime.

February 27, 1984, Chicago, Illinois

My phone rang just before 11:00am on Monday.

"Research; Kane."

"Mr. Kane? Please hold for Thomas Hart."

He was on the line about ten seconds later.

"Good morning, Jonathan."

"Good morning, Mr. Hart. What can I do for you?"

"Are you free for lunch tomorrow?"

"I am."

"Let's meet in my office at 12:15pm. I'll have lunch brought in."

I considered asking the agenda, but given I had asked Violet to set up meetings with all of my clients, I decided to wait to see what he had to say face-to-face. I was reasonably sure there were no problems, as individual partners and associates were continuing to add to their accounts on a monthly basis, and the pension fund deposit had been received on the 15th.

"I'll see you then," I said.

I ended the call just as a building engineer arrived to install the fasteners in my office so I could hang 'Cherry Blossom' and 'Rising Sun'. He worked quickly, and then Violet and I hung the paintings before joining Bianca for lunch. After we ate, the three of us went to the gym.

During the afternoon, I spent time analyzing the precious metals market, then called in Tony, Steve Mansour from the Commodities team, and Scott Moreland from the FX/Banking team for a discussion.

"The model from the data analytics team predicts gold will fall precipitously. It's rising at the moment. Thoughts?"

"Those models are like Voodoo," Scott said. "Change the input parameters slightly, and you get completely disparate results."

"They've been back tested and are reasonably accurate," I countered.

"Sure, but that's true of every economic model ever developed in history. They're great at predicting the past, but they're no better than throwing darts at a board for the future. They're like gambling systems that appear to work but are statistically unsound."

"The fundamentals actually support a fairly significant drop," Steve countered. "The odds of a rate hike are fairly high, which means a move out of equities and into fixed-income products, especially Treasury instruments. I'm sure you've seen Jerry's prediction on fixed income rates for the next twelve months. Gold is rising now, but nothing, and I mean nothing, supports that except Reagan jawboning the Fed."

"That's going no place," Tony said firmly. "In fact, everyone here agrees Volcker is going to tighten, not loosen. Fundamentally, the only way to fight inflation is to choke off borrowing and reduce the amount of money being put into circulation.

"The idea that inflation results from rising prices is mass delusion on an epic scale. We all know that rising prices are a result of inflation, with too many dollars chasing too few goods. That's a result of an expansion of the money supply through fractional reserve banking.

"Treasury doesn't need to print money to expand the money supply; they just need to cut interest rates to encourage borrowing and ensure the banks have money to lend. For every dollar Treasury prints or the Fed lends, the banks can lend $9 and stay within the reserve requirements. The average person thinks that if a bank had $10,000 in deposits and a 10% reserve, they could lend $9,000, but we all know they can lend $90,000, creating $80,000 out of thin air."

"Listen to the gold bug!" Scott said with a grin.

"You know better than that!" Tony countered. "None of us here supports a gold standard, but that doesn't change the facts about fiat currencies and fractional reserve banking."

"Does anyone think the fundamentals support the current gold price?" I asked.

"No," they all said.

"And everyone agrees Volcker is going to tighten?"

"Yes," they all agreed.

"Target price for December?"

"$950," Tony said.

"$910," Scott said.

"$890," Steve said.

"I'd say Scott's middle number is a good target price for tomorrow's analyst report. And I'll point out that it's right in the middle of the $900-$920 projection from Steve Smith's most recent model."

"Even a blind squirrel finds a nut now and again!" Scott said with a smile.

"Scott," I said, "I know you don't trust the models but don't totally discount them. They are simply one tool in our toolbox. And so far, they've been right more than they've been wrong. Thanks guys. Let's get that revised price target into the morning report."

"You're going to trade now, right?"

"Tomorrow morning, after we publish the report," I said. "I'll sell December gold and silver and cover with December call options. The slide will start once Volcker announces the next set of rate hikes. Thanks, guys."

They left, and I made notes about the moves I'd make on Tuesday morning. Just after the markets closed, Noel Spurgeon came to see the additional paintings.

"Margolis is beside himself," he said. "I told him we hung those paintings in our Research Department."

I laughed, "I can see how that would annoy him! Does he know I work for you?"

"I didn't mention it to him, so if you didn't, I doubt it. Our two firms have a different focus — they're M&A and IPO advisors, and we're active traders. Our paths cross occasionally, but I know him socially, and, as I said, the competition goes back to Wharton."

"Mind if I ask how the competition started?"

"Over a girl. I won, of course, and he's never forgotten that an underclassman beat him."

"What do you want me to do?"

"Let me know when your friend is going to show him the artwork. I'll decide by then. She'll do what you ask, right?"

"So long as it's not detrimental to her, yes. And you know I won't ask her to do anything like that."

"I'll let you know. Any progress on finding opportunities?"

"You'll see it in tomorrow's analyst report, but we're predicting gold to fall about 20% by the end of the year. I'll make my moves after the report is published in the morning."

"Thanks. That'll keep the natives from getting too restless. How sure are you?"

"The models and the analysts all agree within a $60 range — $890 to $950; current price is about $1155."

"What's your number?"

"I agree with the model's low end — $900; we're going with a consensus of $910 for the report."

"You're that confident that Volcker will tighten despite Reagan pressuring him to loosen?"

"I am not uncertain."

"I agree. Interest rates have come down by a third, and housing starts have taken off, which is a sign of an overheating economy and too much money sloshing around."

"That's our analysis as well."

"Keep up the good work, Kane. These two new pieces are very good."

"Unfortunately, her productivity is limited by the mandatory work she has to do for her classes, which isn't in her usual style."

"Dad?" Samantha said, coming into the office. "Cheryl said you were looking at paintings. Can I see?"

"Those two there," he said, pointing to the new paintings. "There are four more in the analyst bullpen. I need to go upstairs. Come back when you're done."

"OK."

He left, and Samantha stood with her hands on her hips, looking at the paintings.

"It's just a bunch of colors," she observed.

"Yes, but the six paintings tell two stories. These two are about my wife, who was Japanese-American. The one on the left is 'Rising Sun', and you can see how the reds, yellows, and oranges radiate from the center, with shades of blue representing the sky and sea. The other one is 'Cherry Blossom' and is meant to evoke memories of Japan."

"Your wife died?"

"Yes."

"Oh. What about the other paintings?"

"They're about the stock market and the precious metals market. Let's go see them."

I explained the paintings to an increasingly bored eight-year-old, but given she was Noel Spurgeon's daughter, I was going to do my best to keep her happy.

"When's your birthday?" I asked.

"April 14th. I'll be eight."

"Do you know what you want to do when you grow up?"

"Run Spurgeon Capital! Girls can do anything boys can do!"

I couldn't imagine a more earth-shattering event than a woman taking over at Spurgeon. I also couldn't envision Noel Spurgeon ever allowing that.

"I agree with you," I said.

"Dad says you're the hottest new trader here. I agree!"

"Thank you," I said, trying hard not to laugh at the blatant flirting from a not-quite-eight-year-old girl.

"Thanks for showing me the paintings."

"You're welcome."

She left, and I returned to my office to finish out my day. After work, I joined Deanna for dinner at Sixty-Five Chinese.

"I'm taking Natasha to the condo tomorrow afternoon," Deanna said after we sat down with our food, which we'd ordered at the counter.

"Sounds good."

"Can I ask you a hypothetical question?" Deanna inquired.

"I'd say after yesterday, you absolutely don't need to ask if you can ask."

"Do you think Natasha is attractive?"

"Ask the real question!"

Deanna laughed, "Would you fuck her?"

"She's attractive in a nerdy librarian sort of way."

"She doesn't need the glasses — they have clear lenses. She started wearing them in High School on the theory that 'men seldom make passes at girls who wear glasses'."

"I missed that one."

"It's attributed to Dorothy Parker, a writer and poet from the 1920s through the 1960s. Natasha was sick of guys assuming an artist would have sex at the drop of a hat, and she was being hit on by anyone and everyone who saw her art — mostly drawings with colored pencils. The glasses were self-defense."

"Does that actually work?"

"In part by making her look more intelligent, which for a whole class of guys is a turn-off. Think about all those clowns you work with. Do they hire secretaries for their intelligence?"

"No, but every once in a while, they make a mistake and hire someone like Anna. Usually, they're more like Mia – girls with the most exciting mammalian protuberances."

"Nice Zappa quote!" Deanna declared. "I didn't know you were a Zappa fan."

"Jack is. We listened to tapes of Joe's Garage in the car on the way to work back when he first moved in. That album was pretty outrageous!"

"That was the point, really. The theme is about censorship and a totalitarian state. Think about the things we hear from politicians about music needing ratings to 'protect' us. Those same idiots would censor the painting of you and Bianca. Back to my question..."

"I'm curious why you're asking."

"You are not that dense!" Deanna declared.

"She mentioned it again," I replied with a smile, "which indicated to you that she not only offered but wants to."

"I knew you were intelligent!"

"Yeah, yeah," I chuckled. "But if she's concerned about guys assuming she'll have sex and hitting on her for sex, it doesn't make sen ... wait! She is asking, not me, which makes all the difference in the world."

"Well, well, well," Deanna teased. "He has a clue!"

"And she's not saying it directly to me because she knows about Keiko, so she doesn't want to come off as insensitive or as offering a sympathy fuck."

"Now, all kidding aside, I'm actually impressed."

"I think the answer is that I still need to work through everything we discussed on Saturday, and at least for the short term, just be with you when we can find the time."

"That makes sense."

We finished our meal then walked to the Art Institute. Claire saw us and asked me to step into her office.

"I decided to change things up slightly," she said. "Will your slacks stay up without the suspenders on your shoulders?"

"If I'm not moving around, they should. Why?"

"I was thinking tonight we'd have you bare-chested and Alexa wearing just her panties standing behind you and slightly to the side with one hand on your chest and one on your stomach. Let's try it with the suspenders hanging down and see if it works."

"OK," I agreed.

"I'll step out; you can hang your suit jacket, shirt, and tie in the closet there. Take off your undershirt if you wear one. You can wear the robe to walk next door if you want, but nobody will file a complaint for a topless man walking down the hall."

"That sounds sexist and discriminatory," I said with a silly smile.

Claire laughed, "It is, but we live in a nation ruled by prudes and nags who have no sense of humor. Have you heard about the parody of Jerry Falwell printed in Hustler?"

"The one that implied Falwell had sex with his mom?" I asked. "If so, only from the news report."

"That's the one. Parody is protected by the First Amendment, no matter what the Puritans in government think. Hopefully, Flynt will win, though I expect it'll go to the Supreme Court. I also suspect you know about George Carlin being arrested and the decision that allowed his skits to be played on the radio."

"Vaguely," I replied. "I've heard the skit on cassette."

"Anyway, I'll leave you to change."

She left, closing the door behind her, but about five seconds later, there was a knock, and a few seconds after that, Alexa came in.

"You don't mind, right?" she asked.

"It's not like we're not going to see each other in the studio!"

"True, but some people are reluctant to undress with other people around if it's not about sex."

I shrugged, "It doesn't bother me if it doesn't bother you."

She stripped down to her black bikini panties, and I removed my suit coat, pushed my suspenders from my shoulders, and removed my shirt and T-shirt. I put on my robe while Alexa put on her robe and a pair of slippers, and we left the office. We walked the short distance down the hall and into the studio.

We removed our robes, and Claire directed us into position. Alexa moved close behind me, and I felt her breast push into my back as she put one hand on my chest and the other very low on my stomach.

"Nice muscle tone," she said quietly.

"Thanks."

She tightened her embrace just a bit and slid her left hand down so that her pinky was just barely inside the waist of my slacks. I was surprised that it didn't cause a reaction, but for some reason, it didn't feel like a sexual advance, even though it was meant to imply one.

Two hours later, when the session ended, Alexa and I returned to Claire's office to dress, and then Deanna and I left the building.

"I have a key to Sophie's and Ivy's dorm room," Deanna said. "They'll be out until 11:00pm. Interested?"

"Yes."

February 28, 1984, Chicago, Illinois

"Jonathan Kane to see Thomas Hart," I said to the gorgeous blonde receptionist at Hart-Lincoln when I arrived for lunch on Tuesday.

"He's expecting you, Mr. Kane. Chloé will be here in a moment to escort you in."

"Thank you."

"My condolences for your loss."

"Thank you."

She placed a call, and less than a minute later, Chloé, a gorgeous brunette, came to escort me to Mr. Hart's office. It seemed to me that Spurgeon and Hart-Lincoln had similar hiring criteria, as every secretary was drop-dead gorgeous, though Nelson had made the point that there were no shenanigans similar to the ones at Spurgeon.

"Good afternoon, Jonathan," Thomas Hart said when I was shown into his lavish office.

"Good afternoon, Mr. Hart."

"Tom, please."

We shook hands.

"Come sit at the table," he offered. "I have roast beef sandwiches from Jason's Deli."

We moved to a beautiful cherry wood table and sat down. I opened the wrapping of the huge roast beef sandwich, opened the bag of chips, and finally, the bottle of San Pellegrino.

"First," Tom said, "I need to offer my condolences."

"Thank you. I received notice of your generous gift to the Leukemia Society in Keiko's name. I'm very grateful."

"You're welcome. I want to congratulate you on the returns you earned for us last year. The partners are extremely happy."

"Thank you again."

"My main reason for inviting you here is to discuss some high-net-worth individuals we represent and how we'd go about ensuring absolute privacy."

"Spurgeon Capital does not disclose any information, except as required by law, to anyone without written permission from the client. That's why your firm is not listed in my marketing material. To my knowledge, we've never had a leak. Obviously, a trust could be used to shield individual names, though Legal and Compliance would need to see the trust documents. I suspect there are other legal structures you could use, but I don't know enough to comment on that."