The Case of the Missing Record

It was mid-morning on a mild December's day in the year 20-- that I received a wire from Mr. Sherlock Holmes requesting the pleasure of my company for lunch at Sweetings restaurant on Queen Victoria Street.  It had been some months since I had seen my old friend, though I had followed his adventures in the singular case of the missing Greek revenue with avid interest.  Finding and plugging the hole in the Greek budget had made Holmes the toast of all Europe, and he had spent several weeks as a guest of the German government consulting on matters too sensitive for the public domain.

Earlier in the year I had sadly departed the rooms on Baker Street for less salubrious digs in Southwark.  Although our old landlord, the Widow O'Dea, had not put the flat up for sale, out of the blue she received a stunning offer financed by cheap bank credit and a grant from the government.   Having little choice but to accept such a magnificent sum, Mrs. O'Dea had sold up and with the proceeds purchased a small county in the west of Ireland.  County Mayo I think it was....or perhaps it was Sligo.

The new owners, anonymous behind an offshore company called Big Kahuna LLP, had increased the rent five-fold overnight.   This was too much for the meager income from my practice, and though Holmes offered to pay my share, I could not in good conscience accept such charity from my friend.   He, of course, was amply endowed with funds thanks to the stunning success of his well-known monograph on the criminal aspects of high-frequency trading.  So it was to Southwark that I embarked, and what I saved in pecuniary terms I lost in companionship from my old friend.

It was with great pleasure, therefore, that I exited the Underground at Mansion House and made the short walk to the restaurant.   I noticed that a number of the shops had long queues extending out onto the street, but thought little of it as I was eager to see my friend.  Holmes was waiting for me at a table, and rose to shake my hand warmly.  "Capital, Watson!   So glad you could make it.  I wouldn't count on that oil investment financing your way back to Baker Street, however."

I had already sat down before Holmes' remark struck me like a thunderbolt.   It was true that after agonizing over the decision in front of the Financial Times, I had purchased some energy exploration shares earlier that morning after being convinced to "just buy the dip."

"Come now, Holmes!" I exclaimed.   "How the deuce could you have known that?"

"Let us order before I explain such a trivial deduction," he replied.  Turning to the aproned waiter that had appeared at his elbow, he asked for two Dover soles and a bottle of Pouilly-Fuisse.  "Now then," he resumed, "I have spent enough time in your company, my dear fellow, to observe that you twist the left side of your moustache when contemplating an investment, and I see it bunched up this very moment, suggesting that you were recently thinking of taking a plunge into the market.   Your hair is slightly elevated into a quiff, which could only happen if you leant your forehead upon the palm of your hand; I have only seen you do this when thinking of an investment you believe to be inherently dangerous.  Moreover, your right elbow is slightly discoloured with what looks to be newsprint.   I know that the FT had a feature on beaten-up oil stocks in this morning's edition which you no doubt read- what could be more logical than that you were convinced to have a flutter?"

"Brilliant, Holmes!  I can see why the Germans kept you on!"

"Ah yes, the Germans," he said.   "But before I recount a few of my adventures with them, there's one thing you should know about oil."

"What's that?"

"There's too much supply," he said flatly, before livening up to regale me with tales of his remarkable activities in Germany.  After an hour, the wine bottle was empty but our fish had still not arrived.   Holmes signaled the waiter in irritation.

"I say, fellow, this is taking an awfully long time.   Where's our sole?"

The waiter grabbed his forelock.  "Begging your pardon, Mr. 'olmes, sir, it's these new regulations.   Ever since the FX fixing scandal, no shop in the City is allowed to pre-position inventory in anticipation of customer demand.   As soon as we got your order though, sir, we wired down to the coast.   With any luck them soles 'as been caught and are on the fast train to Cannon Street.   Won't be more than another hour or two, sir."

"That's preposterous!" I burst out.

"I know, sir," said the waiter, "but them's the rules, begging your pardon.  It's more than my job's worth to buy fish too early.   'arry 'awkins at the chemists down the road bought a carton of Vick's Vap-o-Rub that 'e thought was cheap, but the Old Bill said 'e bought it too early and told 'is mate in Leadenhall what 'e was doing.   Got the sack right quick, 'e did."

"Come Watson," said Holmes, rising and handing a couple of notes to the waiter to pay for the wine, "let's repair back to Baker Street if the rules prevent us from dining upon fresh fish in a timely manner.   I'm sure we can find a kebab somewhere that will cleanse the palate after this excellent wine."

An hour later we were ensconced back at Baker Street.   My favourite chair, and indeed all the old furniture, was gone, replaced by the type of ultra-modern designer appointments that look dated a fortnight after they're installed.  I raised an eyebrow and gestured towards the egg-shaped chair that had taken the place of the old lounger.

"The new landlords replaced all the furniture when  I was in Germany," said Holmes sourly, "then bumped to rent up another two hundred quid a week to pay for it."

I was about to reply when I heard the tell-tale sound of feet on the stairs, followed by the familiar ringing of the bell.   Holmes rubbed his hands.   "Well, well, Watson!  It's been a while since we've tackled a case together but with any luck that's about to change."

He opened the door and ushered in a pair of gentlemen, one in his late 20's and the other middle-aged.   Both wore sport jackets and open collared shirts, dark pressed jeans, and expensive-looking shoes.  While my powers of observation came a poor second to Holmes', even I could plainly see that these two were fund managers.

The younger one handed his card to Holmes, who glanced at it and passed it to me.  On a heavy cream background, the name "William H. Beta, Esq." was emblazoned in elegantly embossed letters. Before my friend could speak, this fellow interjected, "All right, Mr. Holmes?  Nice gaff you got here....lovely furnishings."

"Thank you," said Holmes, and started to turn toward the older man before Mr. Beta burst out, "I'm Billy Beta, Mr. Holmes, perhaps you've heard of me?  Named Fund Manager of the Year in 2012, 2013, and 2014?  No?  Hmmm.   Anyhow, you've got to help us Mr. Holmes, you've just got to!"

"Calm down, Mr. Beta, and have a seat!  Now, sir," said Holmes, turning to the elder of the two, "who might you be when you're not investing in credit?"

The older man blanched, then smiled ruefully at Holmes.   "I'd heard you were brilliant, sir, and now I can see for myself that your reputation is well-deserved!   I am Thomas Ulysses Richard Deville, managing partner of Credit Recovery Asset Partners.   That's a nice picture, by the way," he added, gesturing to an amorphous blob of paint splattered over the canvas hanging on the wall.  "How in the world did you know that I am a credit investor?"

"Nothing could be simpler," replied Holmes silkily.   "I observe that you have a stain on your lower left leg that matches the shape of your right toe.   Having seen market pricing this morning, it was obvious to me that the sort of man who is kicking himself must be a credit investor."

"Ah, too right Mr. Holmes, and that's the nub of why we're here."

"Very good, said Holmes, "and I trust there are no objections to my associate Dr. Watson sitting in as well?  No?  Splendid.  Now why don't you gentlemen tell what the problem is."

"It's the bid, Mr. Holmes!" burst out Billy Beta.   "It's vanished! Gone!  Poof!  That and me new Wu-Tang Clan album that I paid good, heard-earned brass for."

"What my associate means," said Mr. Thomas Deville, "is that the bid for our particular brand of investments has vanished without a trace.  Here," he added, handing over a sheet of paper to Holmes, "is the performance of Billy's global asset strategy.   As you can see, over the past few years he made excellent returns..."

"Fund manager of the year three years in a row!" exclaimed Billy.

"Yes, I believe you already mentioned that," said the other.  "Well, as you can see, Mr. Holmes,  Billy's strategy was the business and made big money for three years with little drawdown.  Things started to get a little more volatile last year, but then over the last six months the performance has really tailed off."

"That's because the bid has vanished!  Anyways, I'm still doing better'n you.   Show him your stuff!"

"Ah yes," said Thomas Deville uncomfortably, "I've been facing rather a sticky wicket, I'm afraid.   I formed Credit Recovery Asset Partners several years ago to profit from what I perceived to be attractive valuations in so-called risky credits.   Thanks to my investing acumen.."

"Harrumph!" coughed Billy.

"...I was able to make substantial returns for my investors and, of course, myself.   When I noticed a deterioration in market conditions last year I was excited, as dips have proven to be excellent opportunities to double down by buying more.  However, this dip has continued and continued.....I am afraid that like my colleague Mr. Beta here, the bid for my stuff has just vanished.  What we want to know, Mr. Holmes, is where has our bid gone?"

"An interesting conundrum, gentlemen, and one which I look forward to entangling.   I beg of you a couple of days to investigate the matter, after which either Watson or I will be in touch.  Good day!"  Holmes opened the door and, gesturing with his arm, saw the pair of beleaguered fund managers out.  After closing the portal behind them, he turned to me and, rubbing his hands with a glint in his eye, said, "Excellent, Watson, excellent!  Something tells me that this will be an fine example to add to your case-book.  Now, if you'll excuse me, I have some research to do.   You can kip in the spare room if you like.  Grab some of your things...I might need you if it gets a bit hairy later on."

I returned to my lodgings in Southwark to fetch a few days' clothes and my old service revolver.   By this point in the day the share market had closed; upon checking the settlement prices, I discovered that Holmes' intuition had been correct.  The price of crude oil had plunged another seven percent, and my shares a further ten.  After placing a call to my broker to stop out at the following day's open, I hailed an Uber hackney carriage and made my way back to Baker Street. 

Number 221B was empty when I returned, so I let myself in with the spare key that Holmes had generously allowed me to keep.  After unpacking my things in the spare bedroom, I returned to the sitting room, where I found a note on the coffee table:

Pocketing the note, I headed east to the City Business Library.  After a few minutes' search, I found the directory that Holmes has asked for, checked it out, and was back on my way to Baker Street.   My friend had still not arrived by the time I got back, so I placed the book on his desk and turned on the gramophone, which played some kind of music that I'd not heard before.   Trying vainly to get comfortable on the post-modern settee, I settled down to read some medical journals that I'd brought with me from Southwark.  Before I knew it, my head was nodding and I fell asleep.

I awoke to the sound and smell of bacon sizzling in a pan.  Sitting up, I found that I could barely turn my head, so sore was my neck from lying on the uncomfortable designer sofa all night.   Stretching painfully,  I stood and rotated my torso to see Holmes cheerfully overseeing two portions of a classic English fry-up.  "Ah, Watson, you're awake!   Fell asleep over your journals again, I see....not the wisest choice, I'm afraid."

"You're right there, Holmes," I replied, rubbing my neck ruefully.   "Your interior decorator should be prosecuted for violating the Geneva convention."

"Blame the landlord, Watson.   It's lucky for them that I am a creature of habit and like Baker Street.   The exorbitance of the rent and the paucity of comfort offered by the furnishings would have me looking elsewhere if I weren't.

"And now, to business.  I found the directory that you procured for the library, and this case is proving to be interesting, very interesting indeed. It's a tangled web, Watson, but I mean to unravel it once and for all!"

"What's the next step, Holmes?"

"I have more digging to do, and I'm afraid that your talents will not be particularly helpful, Watson.  What you could do is find out everything about this Wu-Tang Clan that Mr. Billy Beta referred to when he called upon us yesterday.  I am headed back to the City.   Don't wait up; I might be late."

After swiftly devouring his breakfast, Holmes strode into his bedchamber.   A few minutes later, a sour-faced, bespectacled jobsworth in a cheap suit slunk out.  If I hadn't known better, I would never have recognized my friend, a master of disguise.  "Who are you supposed to be, a regulator?" I jested.

"I say, Watson, there's hope for you yet!" he cried.   "Who is the most potent force in financial markets, with the power to prise open even the most closely-guarded institutions and secrets?  The modern regulator!  I have set up meetings with a few City banks and asset managers to see if I can get to the bottom of what happened to the missing bid."  With that, he picked up a battered briefcase from his desk and tottered out the door.

I spent the better part of the day in Camden, trawling the local record shops, reading the musical press, and talking with various persons who professed to know something of this mysterious Wu-Tang Clan.   Holmes hadn't returned by the time I got back to Baker Street in the early evening, so I headed to the local bistro for a quick bite.   After returning to Holmes' lodgings, I found a wire instructing me to invite our old friend Inspector Lestrade, along with Messrs. Beta and Deville,  round at 10 am the next day.   After doing so, I listened to the gramophone again while reading more of my journals, though this time taking care to retire to bed in good time, lest my neck be permanently damaged from another night on the settee.

I rose early the next morning to find Holmes already awake.   "Good morning, Watson!" he cried, rubbing his hands.   "I have freshly-baked bread to break our fast, but first, what news of this Wu-Tang Clan?"

"Well, Holmes, it appears to be some sort of musical collective that's been around for the last two decades or so.   It seems as if they secretly recorded a new album, supposedly called Merry Christmas from Shaolin, of which they made only one copy.  This record was then auctioned to the highest bidder, who was none other than..."

"...our own Billy Beta!" finished Holmes.   "Excellent work, Watson!  The last piece of the puzzle has just fallen into place."

"What have you found, Holmes?   Do you know what's happened to the bid in the clients' assets?"

"Yes, and much more than that.  But come now, Watson, you know me better than to expect me to divulge the secret to the mystery before it's time.   Here, let's listen to some of this relaxing holiday music."  He turned on the gramophone and sat dreamily in the egg chair, eyes closed, until he rose to flip the record, after which he returned to his meditation.   Shrugging, I opened the newspaper to the financial section, in search of the next big investment opportunity.

Our collective reverie was only interrupted by the ringing of the doorbell.  Glancing at my pocket watch, I saw that it was one minute to 10.  As Holmes showed little inclination to rise from his chair, I clambered off of the rock-hard sofa, grunting, and opened the door to a puzzled-looking Lestrade.

"'Morning, Watson," said he, "been some time since I've seen you.   I say, where is Holmes?"   He peered over my shoulder.   "I must confess I was surprised to see an invitation from him.   Retired from the Yard a few months ago, you know."

I said that I did not, and invited him in.   He whistled when he took in the new decor.   "Bit trendy for you, isn't it, Holmes?" he inquired of my companion, who slowly rose from his seat to shake the hand of our visitor.  

"Indeed it is, my dear Lestrade, but it is a landlord's prerogative to furnish his property as he sees fit.  It is not to my taste, to be sure, but living on Baker Street is, and so I bear up as best I can.  In fact..."

Holmes was interrupted by the sound of the bell announcing the presence of the clients at the door.  As I was closest to the portal, I opened it and admitted Mr. Billy Beta and Mr. Thomas Deville into the room.  While the latter of these seemed calm and composed, the eyes of the first darted from myself to Holmes to Lestrade and back to Holmes in quick succession as his hands wrung themselves, seemingly involuntarily.

"Well now, Mr. Holmes, what have you got?  Have you found our what happened to the bid?   What about my album?"

"Yes, Mr. Beta, I know everything."

"Do you now, Mr. Holmes?" inquired Mr. Thomas Deville, with the hint of a smile on his face.   "By all means, fill us in."

"As you wish.   Point the first: it took little research to find that you both are known associates of my old opponent Professor Woodford and his nonsensical doctrines of forward guidance and central bank credibility.   I had thought his influence had perished in Switzerland last January at the Reichenbach Falls, but I must confess to have been mistaken on that score.

"Whilst in the City yesterday I observed a few punters reading from a penny dreadful.   While it was generally full of half-baked literary parodies, I did glean one interesting insight looking over someone's shoulder.    Here."  He handed sheets of paper to Beta and Deville, and then passed one to me as well.

"As you can see, a very substantial amount of the ex ante expected return of risky assets, in this case the SPX, derives exclusively from abundant liquidity conditions and the dearth of yield on offer.  However, it has been well-telegraphed for some time that the Federal Reserve was going to put rates up, as indeed I believe they did last week.  Quite why one would think that an interest rate increase would have no impact given the remarkable liquidity conditions in place over the last few years quite eludes me.  And that doesn't even speak of dealers' inability to hold inventory in anything but government securities due to regulatory pressures, thus making illiquid assets vulnerable to wild price swings."

"B-b-but what about the ECB?  The BOJ?" sputtered Billy Beta.

"They are almost, but not quite, pushing on a string" replied Holmes.  "Yes, they can effect change in local asset prices and currency values, but it is difficult to believe that they can meet arbitrary inflation targets in the face of massive global over-supply and disinflation from the downside of the commodity supercycle.

"In short, your bid has vanished in line with ZIRP, and in line with demise of Woodfordism.   It has become apparent to all but the most naive observers that central bank publication of their intent and a policy of open communication only enhances credibility if they can deliver.   Poor forecasts and policy flip-flops, on the other hand, can do more harm than good.....as you gentlemen have found to your cost...and your investors'."

"Well, well, Mr. Smarty-pants Holmes!" sneered Thomas Deville.  "You still haven't found Billy's Wu-Tang album!"

"Ah, but I have, Mr. Deville," replied Holmes airily.   "It is right where you left it.....on the turntable of my gramophone!"

"What!" I exclaimed in unison with Billy Beta.

"Yes, Watson.  My letting agent telephoned me last week to inform me that one of the landlords was going to let himself into the rooms to deliver some phonograph records to the flat.   I thought little of it, though I was a bit surprised to see that he had already place one on the gramophone.

"When these two stopped by the other day it spurred a thought in my head.   With the help of the directory that you procured for me, I was able to find the proprietors of Big Kahuna LLC, the owners of 221B.  You will now not be surprised to learn that they were listed as "Mr. Thomas U.R. Deville and associates."   It takes little deductive power to realize that Mr. Beta is one of those associates."

"So it was these two who jacked up the rent so high?"

"Indeed it was, my dear Watson, just a few weeks after Professor Woodford met his demise in Switzerland.  In the mind of the criminally stupid, this must have seemed an apt opportunity to dispense some sort of so-called justice."

"But what about the Wu-Tang record?   Why would Deville steal it from Beta, and put it here?"

"As you know, Watson, Mr. Beta paid an exorbitant sum for the record as a sort of "look at me" gesture.  No doubt he was compensating for something.  It became clear to me a few weeks ago that Woodford's agents were preparing to move against me, but I had little clue what form it would take.   It was only when you told me the back story of the Wu-Tang record that I realized that a perfect way to eliminate me would be to frame me for the robbery of the album.   There," he said, cocking in ear towards the doorway, "I believe that I hear London's finest as we speak."

Immediately afterward, there was a sharp knock on the door and a guttural voice shouted "Open up! Metropolitan police!"  Mr. Sherlock Holmes opened the door himself and invited the officers in.   After a few minutes' conference with my friend and Mr. Lestrade, who had witnessed the entire entire exchange between Holmes and his "clients", the Met officers led Mr. Thomas Deville and Mr. Billy Beta away.

"And now, Watson," said Holmes, "why don't you play that gramophone record again.  It's a bit of a departure from their usual oeuvre, but I must confess that I like it."   As I placed the needle upon the record, I glanced at the label.  Sure enough, it said Merry Christmas from Shaolin.  For the first time, I listened to the lyrics of the song:

High yield roasting on an open fire
Swiss franc shutting down your book
Central banks are now seen to be liars
Martin Shrkeli's a bloody crook

Everybody knows that Netflix and some short euro
Help to make your year alright
Tiny dots moving to, mostly fro
Will make it hard to sleep tonight

You knew that Liftoff's on its way
Despite QE that ZIRP just couldn't stay
And every credit long is going to cry
If they see another bid just wave good-bye

And so I'm offering this simple phrase
To punters both far and those quite near
Although it's been said many times, 
Many ways, good luck trading next year!