Chapter 54: Foreign Relations

April 11, 1984, Chicago, Illinois

"Jonathan," Violet said over the intercom late on Wednesday morning, "I have Thomas Hart for you."

"Put him through, please."

She did so.

"Good morning, Tom," I said.

"Good morning, Jonathan. I'm calling about business this morning. The investors would like to move ahead. You'll be receiving all of the application information by courier tomorrow, but I wanted to give you a heads-up."

"Thank you very much," I replied. "Both for the new business and for the assistance yesterday."

"I haven't heard from Mr. Switzer; when I do, I'll be in touch."

"Thanks again."

We ended the call, and I went to see Murray Matheson.

"Congratulations on the birth of your daughter," he said.

"Thanks. I just heard from Thomas Hart. $40 mil will move, and we'll have the application paperwork tomorrow."

"You're kicking ass and taking names, Kane! I saw your huge additional short on Continental Illinois. Steinem said you're paying 32 bips. That's a heck of a bet. You're that sure?"

"I am not uncertain. Something has to give, and it has to give in the next sixty days."

"The price was up yesterday, creating a short squeeze."

"I have the resources to ride that out. When the Fed moves on them, you'll see the share price drop to around $10, down from yesterday's $24½. If they allow it to fail, I won't have to buy the shares at all. Pete doesn't expect that to happen, and I agree. I'll make between $10 and $12 a share on four hundred thousand shares; a little more on the ones I shorted earlier in the year."

"And if the price runs up?"

"I'll stick it out as long as it takes. My original short was covered with married calls, so it's protected. That bank is a house of cards, and there is no way it survives. Pete has a few other banks and S&Ls in his sights. You'll start seeing the loan portfolio analyses in a new section of the analyst report starting next week."

"Short the entire sector?"

"Not yet, but that appears to be the play. It might take a few years for this to play out, but we believe Continental Illinois is the tip of the iceberg. They were just first because of Penn Square."

"Back to the new capital; that puts your AUM around $150 mil, right?"

"Just north of that."

"From the mailroom to $300,000 a year in less than three years. When you first approached me, I thought you were full of shit. It looks like you're the real deal. Go find more ways to make us some money!"

"On it!" I declared.

I left his office and returned to mine. The base number he'd given was a bit high, but with bonuses, I'd easily exceed $300,000 in income for the year. That number was still mind-boggling, but to keep it, I had to continue to perform at a high level. Resting on my laurels would put me at risk of underperforming in comparison to others at Spurgeon, and that was the kiss of death.

The rest of the morning was routine, and as usual, Violet and I ate lunch together, then went to the gym. When I returned, I called home to check on Bianca and Sofía, then called Beth to discuss Deanna's request.

"Chinos and a pink Izod Lacoste polo sound about right!" Beth said mirthfully.

"I don't think so!" I retorted.

"Real men wear pink!"

"Not ones who want to survive working at Spurgeon Capital!"

"Actually, for you? Ivy League or British prep school. One look would be a tweed sports coat and brogue shoes with chinos and an Oxford shirt. Another look would be chinos with an L.L.Bean sweater and Top-Siders, which you might call deck shoes. Both of those looks would complement whatever trendy styles Deanna wears because casual is in and formal is out."

"Somebody forgot to tell Spurgeon Capital about that!"

Beth laughed, "Banks are always last because the last thing someone wants to see in a bank is trendy fashion! Customers want conservative, trustworthy bankers. Banks are built like Greek temples because that conveys strength and safety. Three-piece suits show the same, but those are falling out of style. If you aren't doing anything tomorrow evening, come by the shop, and I'll dress you properly."

"Now there's a first!" I chuckled. "You dressing me!"

"I'm happy to undress you any time! Come by after work tomorrow, we'll have dinner, and I'll set you up with proper Preppy clothing."

"Thanks, I think."

Beth laughed again, and I confirmed I'd come to the shop at 6:00pm the following day, Thursday, which would allow me time to return from my 1:00pm meeting at Belarus Tractors near Milwaukee. The rest of the day was routine, with research and an analysis of my portfolio positions, then dinner with Deanna and posing at the Art Institute. When I arrived home, Bianca was ready for bed, so I said 'good night' to my other housemates, and Bianca and I headed upstairs.

April 12, 1984, Brown Deer, Wisconsin

"Jonathan Kane to see Viktor Bykov," I said to the cute blonde sitting at the reception desk.

"Good morning, Mr. Kane. Mr. Bykov is expecting you. Let me take you to him."

She got up, and I followed her to a modest office. It had a large desk, a couch, a pair of chairs, and a coffee table, and the walls were adorned with agricultural photos, as well as a portrait of Konstantin Chernenko. Behind the desk chair was a photo of Lenin adorned with two Soviet flags.

"Mr. Bykov, Mr. Kane is here to see you," she said.

"Thank you, Nikki," Mr. Bykov said.

He came to me and offered his hand, which I shook.

"Please, call me Viktor Vladimirovich or simply Viktor."

"And you may call me Jonathan."

"May I know your father's name?"

"Mark," I replied, using the name he'd given my mom.

"Please sit and have tea, Jonathan Markovich."

We sat down, and he poured tea into a glass which was set in a silver holder, a way of serving tea I'd never seen.

"Would you like milk, sugar, or lemon?" he asked.

"Whatever is traditional for you," I said.

"Lemon, then."

He dropped lemon slices into each glass then handed me one.

"In Russia, there is a very old saying — «чай да сахар» (chay da sakhar), which means 'tea and sugar'," he said, offering me a plate of cookies.

I took two, and he did the same.

"So, I understand you are financial analyst in Chicago."

"Yes, I am. My area of focus is foreign exchange, and while researching, I ran across references to trade between the US and the Soviet Union and decided to learn more. Your embassy in Washington suggested I learn about the success you're having selling Soviet tractors to Midwestern farmers."

"Our tractors are reliable, simple to repair, and cost significantly less than similar models from John Deere or International Harvester. Belarus tractors are also used by farmers in Eastern Europe and in India. When we finish tea, I will show you assembly and repair area. I also have small model of tractor as gift and have marketing and sales material to share. What will you do with information?"

"Mainly, I'll write a report for my company. Belarus is owned by the Soviet State, so there is no direct investment opportunity. But I see it as a base on which further trade can be established, which would be good for both countries."

"Yes, this is true. Unfortunately, too many Americans distrust Soviet Union and forget alliance to defeat fascists in Great Patriotic War. Perhaps, someday, our nations will be friends again."

I had never heard the reference, but the context was clearly World War II.

"I certainly hope that happens," I said.

And I wanted to be in on the ground floor of any trade that occurred. I'd have the distinct advantage of having a pre-existing relationship if that happened, and I would also be able to take advantage of the general distrust of the East Bloc. That would keep other investors on the sidelines at first and create the conditions for significant profit. The risks were small, as I was only investing time, not money, but the payoff might be huge.

We finished our tea and cookies, and he gave me a tour of the plant and answered a number of questions about the tractors, the factory in the Soviet Union, and the difficulties encountered in shipping the tractors to the US. At the conclusion of the forty-minute tour, I thanked him, and he presented me with a model of a red Belarus tractor that was about nine inches tall. We shook hands, and he walked me back to reception.

"Nikki, please provide Jonathan with complete set of marketing materials, including price list."

"Right away, Mr. Bykov!"

Mr. Bykov and I shook hands one more, I thanked him again, and he returned to his office to make a phone call.

"You're from Chicago?" she asked.

"Yes."

"If you don't have to get back, we could grab a beer after work."

"Unfortunately, I have a 6:00pm meeting tonight."

"Raincheck?" she asked, hopefully.

"I can reach you here, right?"

"Yes. Do you have a card?"

I gave her one of my 'analyst' cards, as that was the role I was playing for this visit, and she gave me a folder of material. I thanked her, then headed out to my car for the drive back to Chicago.

April 12, 1984, Chicago, Illinois

When I arrived in Chicago, I was a bit early for my 6:00pm appointment with Beth, so I took the opportunity to check the condo. One advantage of the condo was a pair of 'in-and-out' twenty-four-hour garage passes, which meant I could come and go as I pleased without paying anything additional. Of course, those spots were included in the condo fees I was charged each month, but the amount was significantly less than the advertised rates and was comparable with what Spurgeon paid for the daytime parking spot I had used.

When I entered, I removed my shoes and walked through the entire condo. The dining room table and twelve chairs had been delivered, as had a large area rug, which effectively defined the dining area. In addition, two computer desks had been installed in the upstairs sitting area, throw rugs had been placed in each bedroom, and the master bedroom had a love seat, as well as a writing desk.

I checked the kitchen and saw that Deanna and Natasha had begun acquiring cooking and dining items, and some decorative containers had been set on the counters. Everything was coming together, and I could, if I wanted, move in at any time. Given the progress, there was no concern with bringing my first load of items in the morning.

Everything was proceeding apace, and on Monday, Brown Construction would start installing the blinds and performing the electrical work in the bedroom that would serve as my art gallery. Satisfied that there were no concerns, I left the condo and headed back to the parking garage so I could drive to the tailor shop.

I parked in the alley in the spot reserved for the apartment, then walked to the store and went inside, where Beth greeted me with a hug and a friendly kiss.

"How was your day?" she asked.

"Productive. While there isn't much to do at the moment, if relations between the US and the USSR thaw, the tractor company is a perfect example of how trade might work. Russia has significant natural resources and a large population. They could easily become a manufacturing powerhouse. But both of those things probably require the end of single-party rule. The challenge there is how it happens without blowing up the world."

"That would be doubleplusungood!" Beth declared.

"And to recall your jokes from when we first met, goodsex is in your future!"

Beth laughed, "That does fit what I joked about — sexual intercourse only for procreation, without any physical pleasure on the part of the woman, and strictly within marriage! After I properly dress you, we'll have dinner and discuss committing sexcrime!"

"Let me guess, you're a rebel from the waist downwards?" I asked.

"You know it! It actually fits because I have to play the proper part for my work here, similar to how Julia kept up appearances in Nineteen Eighty-Four. You do the same thing, to some extent. Come over to the casual section, and we'll see what we can find that will make Deanna happier than an eight-inch schlong!"

We spent nearly an hour with Beth showing me clothing and me trying things on. In the end, we settled on two outfits — the first, tan chinos, a blue Oxford button-down shirt, and a light-brown herringbone tweed jacket; the second, grey chinos with a black cable-knit sweater. Two pairs of deck shoes complete the outfits.

"Well, at least there are no crocodiles," I chuckled.

"You look really, really good in the tweed jacket. That's the one I'd go with unless Deanna has on a sweater outfit, in which case you opt for the sweater."

"No alterations?"

"No. That's not the look. You wear the off-the-rack jacket just fine. You could opt for one with elbow patches, but that looks too professorial, which is not what you're going for. You could also add an English cap, similar to what some golfers wear. That would give you a brim against the sun and would work in the winter or in the rain, too. Do you own a pair of sunglasses?"

"No."

"We don't sell them, but pick up a pair as an alternative to the cap, or even in combination with it.

She got a cap from the rack and had me try it on, along with the jacket.

"Perfect!" she declared. "I'll ring you up, then we can have dinner."

I paid for the clothing, which I stashed in the trunk of my car, and we headed to The Berghoff for dinner, mainly because we both wanted their private-label root beer.

"All teasing aside," Beth said after we'd ordered, "where are you?"

"Moving forward. I'm in a decent state of mind, though a bit addled by being a dad!"

"I bet!" Beth declared. "How is Bianca?"

"She's fine, though she's tired. She's really looking forward six months when Sofía will sleep through the night."

"That is the one thing I'm not looking forward to. The rest of the 'wife and mom' schtick is OK, but 2:00am feedings are not going to be fun at all."

"I'd take those in exchange for not changing dirty diapers!"

Beth smiled, "Yeah, those too, but not getting enough sleep really wears on you. Is it OK to ask about Bev?"

"Yes, and that's going downhill fast. I should be OK, but she's going to lose custody of Heather permanently if she pursues her irrational vendetta against me. I have two very good attorneys who are making life difficult for her."

"She sounds as if she needs psychiatric help."

"You aren't the first to say that."

"And the condo?"

"Fantastic. The interior design student from the School of the Art Institute is doing a great job. We'll have a housewarming party on May 13th."

"I'll be there! I really want to see it. Of course, you could give me a preview with a personal tour of the bedroom!"

"Somebody is horny," I teased.

"You know my situation."

"So, pick one of the guys, give him a preview of coming attractions, and marry him!"

"Thereby relieving you of the 'chore'?" Beth asked with an arched eyebrow.

"No, pushing you to make your decision. You've been on the fence for years, and one of them is going to find someone else if you don't choose soon."

"You're right, of course," Beth admitted.

"Which one would you choose if you had to pick right now? Doctor or attorney?"

"Probably Joshua, because I hear horror stories about Residency, and I'm not sure I want an absentee husband for three or four years. I'll make you a deal."

"What's that?"

"Fulfill my fantasy, and I'll tell Joshua I'm ready to accept the ring he's been hinting at."

"And fuck him senseless?"

"That goes without saying! I have to set the proper trap!"

I laughed, "I simply do not see you following the stereotype from your joke."

"No chance! So, how about it?"

"Next Tuesday, after work, in the apartment?"

"I'll bring the ropes, scarves, and handcuffs!" Beth declared happily.

April 13, 1984, Chicago, Illinois

On Friday morning, I brought my first trunkful of things from the house to the condo, then went to the office. I put the model tractor on my credenza, then began my workday. First, I wrote a special analyst note about my visit to Belarus Tractors. I set it aside, as I wouldn't send it out until I had updated it based on my meeting with the Soviet Trade Attaché, Ivan Voronin, on Monday. If some kind of thaw with the West occurred, there were myriad possibilities, though I suspected China would get there first, as the Chinese Communist Party was engaged in reforming the economy by de-collectivization of agriculture, opening up the country to foreign investment, and granting permission for entrepreneurs to start businesses.

Late in the morning, Leslie distributed the deposit statements for the quarterly payouts for fund managers. Given it included my portion of the fees charged to MTB Sports Management, I did a quick calculation of what I owed Jack, and then let Violet know I was going to the bank. At the bank, I withdrew $2500 in cash, all twenties, and put the thick envelope containing one hundred twenty-five twenty-dollar bills into the interior pocket of my suit coat.

When I returned to the office, I called the CBOT and left a message for Jack to come to my office when his work day ended instead of meeting me in the lobby of the Hancock Center. I had lunch with Violet, as usual, and we went to the gym. After lunch, I reviewed balance of trade numbers and used the modeling spreadsheet to project moves in exchange rates. I felt the model had improved significantly, but it still needed work.

"You wanted to see me?" Jack asked from the door of my office at 4:45pm.

"Come in and shut the door, please."

He did, then asked, "What's up?"

I took the envelope with cash from the locked desk drawer and walked over to him.

"Your idea for targeting sports management was spot on," I said, handing him the envelope. "This is your taste."

He opened the envelope, and his eyes went wide.

"How much is this?"

"$2500."

"Holy shit, Man!" he exclaimed and extended his hand.

We shook and clapped each other on the back.

"It's deserved," I said. "This is between you and me, privately, and has nothing to do with Spurgeon. You do not need to report it to the IRS."

"The gravy train is starting to roll in a serious way!"

"Keep on keeping on, and there's a lot more there. Did you work out a time to take the study course for a Series 3 license with Mark Benton?"

"Yes. I have the class scheduled for next month, and I'll take the test in early June."

"Good. Let me lock up, and we'll go meet Kristy and CeCi."

I put all my research materials into my desk drawer, then locked it. Jack and I left the office, and because he was no longer 'support staff', he could take the regular passenger elevator with me. The four of us had dinner at Bennigan's, then went to see Romancing the Stone. At home, with Bianca's agreement, I joined CeCi in her bed for the night.