Coffee (3 page)

Knut
stayed on the mouth. Her lips were so close, he wanted to kiss
them. He caressed with his eyes as he slowly passed each area - the
two little peaks in the center of the upper lip, the tiny crevasses
crisscrossing the swollen pink skin, and the precious creases in
each corner. Through the slight opening of her smile, he saw bright
white teeth. Not perfectly aligned, but strong and clean. And
deeper still, the tip of her wet tongue.

“Knut,
the tour is almost over. I want another drink.”

Knut
moved to her chin, not broad but protruding and forceful. He
followed along her jaw line to her attached ear lobe, common in
northwest European descendants.

Etty
finally sat down. “Hot. Pheu.” She wiped the dampness
from her forehead, and picked up the vodka for another shot.

Knut
sat down, not smiling but peaceful, his arms hanging down at his
side.

He
finally spoke. “Thank you, Etty.” He paused again
before continuing. “You know, and I mean this in the
sincerest sense, you are the most beautiful woman I have ever seen.”

“You
don’t get out much, do you Knut.”

Knut
stopped talking, and Etty started feeling a little uneasy. She
looked at her watch. “2:30am! Knut, I have classes tomorrow
morning. And it’s Monday. I have to drive all the way home.”

“You
can stay here!”

“What,
and sleep under the desk? No thank you.”

“No,
I have a cot in the back. I sleep here all the time, really. It’s
pretty comfortable.”

Etty
stood up and straightened her crumpled blouse and skirt, not feeling
self-conscious about quietly realigning her undergarments in front
of him. She collected a few papers that were on the desk and packed
them into her leather satchel. “No, Knut, it’s been
great, but I have to go. I get cranky unless I have at least twenty
minutes in a real bed.”

Knut
pushed his chair back and stood up so she could slip by him. Her
whole front brushed across him. He sensed every point where they
touched. Once out from the tangle of equipment, she headed for the
door.

Etty
easily returned to business. “Don’t forget I need those
statistics tomorrow. I’ll come by around noon.”

“Etty?”

Etty
stopped with her hand on the door handle. “Yea?”

“Will
you go out with me?”

Etty
heaved an audible sigh. “Knut? Listen. I like you, really.
I just don’t date, okay? Let’s leave this on a
friendship level.”

“I
mean out to dinner. I don’t expect anything more, I promise.
We both have to eat, let’s just do it at the same time in the
same place.”

Etty
sighed again and drooped her head to think. Looking up she said,
“Dinner. That would be fine. Maybe next week.” She
started pulling open the door.

“Next
week? Why next week? What about, tonight? What are you doing
after classes today?”

Etty
pulled open the door fully, somewhat impatiently, and started
walking through. “How about Friday night. This Friday,”
she called back.

“Sure!”
he said, not effectively showing his disappointment. “Friday’s
fine.”

The
door began to close, and her footsteps started on the top of the
stairs.

“Etty!”
Knut yelled. More steps. The door opened a few inches. Etty
yelled back annoyed, “What!”

“You
don’t have an ugly nose.”

“Oh
God!” She huffed and trotted off.

- Chapter Three -

Etty
lurched awake with the ringing phone. She switched on the light,
squinted, and clumsily pulled the receiver to her face. She checked
her watch while listening. “Etty, it’s Knut.”

“This
better be good, it’s 6:30, I’ve had 3 hours of sleep.”

“I
did some analysis. I wanted you to know that we have to move on
this.”

“What
did you find?” Etty pulled herself up with her back against
the bed board. She found a half empty cup of cold coffee on the
bedside table from the prior morning and drank it down, followed by
a gagging expression. She found a note pad and pencil.

Feeling
more awake, she asked, “Did you find statistical
significance?” If true, this would mean that Knut had found
that the price changes were unlikely caused by random fluctuations.
If the spikes could not be traced to a legitimate source - it would
give her the key to an exciting dissertation.

“That’s
nothing. I have names. Listen to this.” Knut was obviously
excited, and probably buzzing from his mixture of no sleep and
vodka.

“Both
buyer and seller are the same each time there’s a bump. A guy
representing the Clorice Coffee Company has a seat on the CSCE...”

“Slow
down,” she said while writing.

“That’s
the Coffee, Sugar and Cocoa Exchange in New York City where Clorice
Coffee must have a representative.”

“I
know what CSCE is. I was getting the company name, I’m still
half asleep, remember.”

Knut
continued. “Clorice Coffee is a grower in eastern Brazil, and
based on how much he has sold over the last twenty years, he is a
major world player. Maybe the largest.

“You
have an address?”

“Yea,
Recife, a port town, north eastern coast. The buyer is Global
Growers, a major distributor for the big coffee manufacturers in the
U.S. - Maxwell House, Chase and Sandborn, Folgers, people like
that.”

“Interesting.
I thought you said you couldn’t get names?”

“I
forgot I set up a special link to the Chicago Mercantile Exchange
database for Warren Sherman. Chicago does most of the commodities
in the world, and they keep statistics on all the exchanges, even
CSCE.”

“Who’s
Warren Sherman?”

“You
don’t know? A woman in Finance at Dartmouth doesn’t
know our big honcho bond trader Warren Sherman?”

“No.
He must not teach anything.”

“No
teaching. He manages, among other things, the College endowment and
pension funds, and an alumni investment fund, something like 700
million dollars.” Knut was privately pleased she did not know
him, as Warren’s good looks were legendary.

“I
didn’t know we had that much money! And all that hassle they
put me through for my scholarship,” she grumbled.

“Actually,
700 million for Warren Sherman is rabbit food. He came from Goldman
Sachs where he managed a 52 billion dollar Money Market fund.”

“Why
would someone move to a private college from that?”

“He
hated the rat race, and he loves to ski. He’s a tremendous
athlete, and they say he’s built like a race horse. But
anyway, Global Growers and Clorice Coffee are the two players in
your little price game. Every time, Global buys and Clorice sells.”

“Not
bad for a drunken blind guy,” Etty joked.

Knut
smiled on the other end. He liked to be kidded about his handicap,
because only people who were really comfortable with him could
manage it.

“The
part I don’t get,” Knut mused, “is how Global gets
anything out of it. Here this Clorice guy walks into a world
exchange and sells his spring harvest at a huge premium over market,
while Global takes it in the shorts. Seems to me Global could have
just bought like everyone else at the normal price.”

“Good
point,” Etty said, still having trouble organizing her
thoughts. “There must be something else going on between
them.”

Knut
rattled on, referencing statistical figures, ratios, confidence
limits, trends, but Etty phased out to think. How would Global get
compensated for spending too much money? Clorice Coffee is the
obvious gainer, but he can’t force Global’s price up. A
seller can’t push up prices up by selling - it defies market
logic. No, Global must be doing it on purpose, but how do they get
paid?

“Etty?”

“Oh,
yes, Knut, that’s great,” she said, rejoining the call.
“Just give me the print out tomorrow, I mean today.”

“Wait,
Etty, there’s something more. Do you think I’d wake
you up for just that?” Etty shrugged her shoulders, thinking
she’d already learned plenty. “It’s going to
happen tomorrow.”

“Tomorrow!”

“It
always happens on Tuesdays, on the first Tuesday of the month. And
it happens in the month after Brazil’s harvest. Two years
ago, it was delayed until January, but I checked and that year had
some serious rain problems in November and December. But this
year’s on course - Brazil’s storage facilities are
brimming. That’s tomorrow!”

“Today’s Monday. December 2nd. Right, first Tuesday.
Way to go! But let me think, what should we do...?”

“I
figure we have two options, we watch one go by to confirm your
theory, or we call the heat now, the Securities and Exchange
Commission, and blow the whistle.”

“That’s
it!” An idea struck Etty. “Options!”

“Wha?”

Etty
sprang into action. “Listen, Knut. This is important. Go to
your database and print off all you can on Coffee Options for the
last three years, right around each one of the price spikes. Bring
the print out to Warren Sherman’s office by 8am this morning.
Bring the other print outs too. I’ll go in right away and
leave a note for him so he’s expecting us.”

“Whoa
nelly! Coffee Options?”

“Yes,
trust me. They’re a special kind of investment that relate to
stocks or commodities. I’ll tell you about them when we meet.
I think I just found how Global Growers is getting paid for their
services to Clorice Coffee.”

“I
know what they are, but I don’t get how they relate. And what
are you going to do with Warren?”

“You
said we can do one of two things, watch or tell. I’ve got a
third ... we buy Options.”



Etty
quickly showered, and bundled up for the arctic ride into Hanover.
November had been particularly harsh, with temps in the 10’s,
and December looked bad already. Snow started falling at dawn,
leaving a slippery first layer. Etty lived on Trescott Ridge Road,
a thin winding route appropriately named for occasional steep slopes
on one side. She lived in a room above the garage of an elderly
couple. Their house sat nearly alone on a small plateau facing
north, with a view of the Connecticut River valley and peaks of the
White Mountains.

Her
old rear wheel drive Ford sedan did poorly in slippery weather.
From years of abuse, the doors and windows left large cracks for
wind to whip through, making for an ugly drive in falling snow.

Warren
Sherman had already removed his jacket and loosened his tie by 8am
when Etty returned to his office for their meeting. He wore a fine
charcoal black suit, leather suspenders, and an arty silk tie.
Despite his thinning hair, he had all the attributes of a male model
- broad shoulders, “V” chest leading to a tight waist,
powerful thighs, gorgeous blue eyes with a seductive twinkle, and an
adorable dimple on his left cheek. Etty boldly walked in, hand
outstretched. “Hi, Harriet Bishop. I left you a note earlier
this morning.” Warren’s grip almost hurt.

“Hi
Etty, great to meet you finally.”

“Oh,
so you’ve heard of me?”

“Knut’s
a good friend - told me all about you. He also called this morning
to warn me.”

“Warn
you?”

“He
said you are a powerhouse, best in the PhD program in Finance, not
to be taken lightly. He also told me to watch my step and not get
too friendly.”

Etty
subdued a blush. “I’m afraid he’s a little ... “

“And
here is comes now.”

Knut’s
tapping cane entered the room. He carried a stack of uneven
computer printouts under one arm. Shirt tails stuck out of one
side of his pants. Tangled hair and bloodshot eyes confirmed his
lack of sleep.

“Morning
Knut! You look terrible as usual. Etty beat you here. Have a seat
just to your right.” Knut folded up his cane in a fluid
motion and sat down.

“Hi
Knut. You slept yet?” Etty asked.

“Nope.
I have to see what you’ve got brewing. Believe me, after a
string of population demographic studies for the Anthropology
Department, this is so exciting it’s almost criminal.”

“Let’s
hope not,” cautioned Warren. Knut had told him enough to make
him wonder. “Etty, you don’t look so wide awake either,
your left eye is red as cayenne.”

“I
had a few hours sleep. The red eye’s an allergy. There used
to be a cat in my apartment - still gets me sometimes.”

Warren
sat back with his hands behind his head. “So, what’s
this big idea you’ve dreamed up.”

“Thanks
for seeing us so suddenly, Warren. Knut tells me you are quite the
Investment expert, and we need some advice,” Etty began.

“Sure.”

“We’re
interested in purchasing some options on one of the commodity
exchanges - Coffee. And...”

“Now
there’s something you don’t get into unless you know
what you’re doing,” Warren interjected.

Etty
was well aware of the risks in all the publicly traded investment
instruments, especially options. She took every course possible in
option theory, and knew the mathematical models inside and out. She
didn’t come to receive advice on risk - she wanted to know
whether Warren had any buying power.

Ignoring
his interruption, she continued. “First of all, tell me
Warren, do you have complete say in the investments in the school’s
portfolio?”

“Not
even close. We have strict guidelines, right down to the types of
investments. I can make proposals to the Trustees, and sometimes
they accept, but not after an incredibly convincing story. They
never go for the odd stuff, especially derivatives like options.”

“Oh,
I see,” she said lightly, showing disappointment.

Warren
wasn’t accustomed to students waltzing into his office with
investment ideas, or if they did, the suggestions were often too
academic to have merit in the real world. There was something
intriguing about Etty though. “Well, I do have a speculation
fund.”