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Tuesday, August 22, 2006

Our journey begins, as I think all journeys should in the comfortable confines of Redeyes dock bar on a Wednesday night. I had rushed home from the office, got my bag packed and loaded to catch my early thirty am flight to the annual rendezvous of specs and friends for the Great Chicago air show and barbecue. The intent was of course to have a quick bite to eat, a drink or two and get to bed early. I am not the best of sleepers and am the worst of waking uppers. Each and every morning the alarm clock and I do fierce battle with the snooze button getting beat like Joe Frazier in the late rounds of the manila fight. As the flight schedule and new security regulations made it necessary to arise at the ungodly and seldom seen hour of 4, this seemed to be the prudent plan. Despite its reputation derived from summer weekends as a full bore, all out bacchanalian carnival, on weekdays red eyes is just a local joint with great water views and a pretty good bar menu. Good intentions of course are the paving material of choice for another well-known hot spot. My arrival was greeted by a group of friends including my coworker, running buddy and all around boon companion and an assorted group of other local acquaintances. As I settled in and got some food, the coworker urges me to try his newest drink discovery from his previous weeks adventures at the beach. So I did. A delightful, carefully concocted libation of the first class with the summertimeish name of Orange Crush. Stoli-o,triple sec, orange juice and a splash of sprite. This is seriously good summertime imbibing material. It was one of those perfect mid Atlantic summer evenings with a gentle salt laced breeze flowing along with the swift current of the narrows and the sunset painted the sky with a multi hued display that made one think of a gleeful three year old with a tube of finger-paints discovering grandma s freshly painted kitchen. The talk and the distilled spirits flowed on ward into the night. Football..Will Steve mcnair return the ravens to the holy land (the orioles are 19 games out and playing a lot like my unfortunate fantasy baseball team so we here in Maryland are forward looking when it comes to sports) Boats..fixing your drives is costing HOW much?..girls..who is dating who, divorcing who, hoping to date or divorce who and so on and so forth. A rambling conversation of pleasant topics on a splendid evening. As the night progresses, a single thought slams into my brain with alarming force. HOLY SHIT, it is ten thirty and I have to be up in a little over 5 hours to catch my plane.goodbye, go home and good night.

I of course made the plane with time to spare. That is to say as they closed the doors. I was saved only by being able to find a spot in the garage instead of the shuttle lot. Good thing I had the coupon for 5 dollars a day off the regular. Fifteen bucks a day and the ability to run like hell instead of waiting on the molasses shuttle seemed like a pretty good price all things considered. As we leveled out at 30 thousand and whatever feet, I cut a much-needed cup of coffee from the hostess and settled back in with a bizarre novel suggested by a friend who until now I thought was fairly normal. The Nymphos of Rocky Flats. A nymphomania-inducing virus (gotta get some of that). Nuclear Power. A couple of vampires and a plot even more twisted that that may sound. It was one of the funnier books I ve read in a long time. The flight was uneventful except perhaps for fellow passengers who wondered why the sleepy looking guy in the aisle ten window seat kept cracking up. I finished the book as we landed so I left in the seat pocket for the next person along. Given it garish title and lurid cover I am sorry I didn’t get to see the look on the face of the finder.

Grabbed the train into town and then a cab up to Fred “Dr. Doom” Crossmans happy be back in Chicago again. It has become my favorite city in the US by a wide and comfortable margin. I am sure there are nasty parts of the city but as I spend almost all of my time there in the gold coast or downtown I am impressed by its cleanliness and friendly tone. It has art, culture great restaurants, bars and all the amenities of a great city. The skyline and the lake are spectacular views and it has a deeply imbedded traders culture. And oh yeah. Lots of beautiful women. Fred was busy trading his positions the day before expiration and mumbling about default rates, inflation and pumped puts as I arrived. I checked my positions, we chatted about the market and stocks we liked or disliked and then headed down to the pancake house (www.originalpancakehouse.com/) off rush for a bite to eat. We were joined by Ed ‘the poker pro” gross who had recently relocated to the windy city from LA to take up full time trading again. We had a nice breakfast and talk about options trading, markets in general and what the hell is wrong with women anyway. At the conclusion we made plans to meet later for drinks and went our separate ways for the afternoon. Fred is the perfect host for these weekends because he just goes on about his daily routine and doesn’t feel the need to play host. He took off for the gym and I went walking around the city. Went down to Navy Pier and took in the sights and sounds and watched the two lead planes of the Blue Angels flight team do their acclimation flight around the lake. I walked around the lakefront, up Michigan Avenue hit a few bookstores and just generally played tourist for a few hours. The back to the condo, checked in on the market close, phoned a few orders into my assistant and settled down to read for a bit. Naturally this led to a short nap to prepare for the evening. I made the round of calls and made sure Jason “I ll trade anything” Thompson, Ryan “ nope just Eurodollars for me” Carlson and the poker Star had the where and when of the evenings plans.

At six we set out for the evening, heading as always to Melvin B’s (www.meetandpotatoes.com/melvin_bs_homepage.) Fred’s favorite spot in all of Chicago I suspect. Melvins has a great patio for people watching and enjoying a few beers and snacks..best mini burgers in Chicago as well. It ended up being a great evening with a fantastic group of specs joining us at the table In addition to Fred, Jason Ryan, the poker star and myself we were joined By Omid malekan, James the Listmaster Goldcamp, one of his associates, Ryans wonderful new girlfriend Shauna, Tom the sugarman marx and his associate the weird Biotech guy. Fred’s sister Nancy and his brother in law who was in town to attend the Democratic national Committee meeting. As pretty much everyone was short stocks perhaps the booze flowed a little faster. One of the night’s highlights was the discussion between a slightly intoxicated and very animated Poker Star and the high level communis, I mean democrat on the electability and wisdom therein of Hillary Clinton. The beers flowed intermixed with discussion on markets, politics and with Ryan there naturally travel,. He regaled the table with stories of his adventure in places such as WerethehellamIastan and Theveryairisfatalapol.After Melvin’s Fred, the communist and his sister decided to call it a night as did Jason,Ryan and Omid. Tom ,WB , the poker star and myself repaired to Dublin’s for a nightcap. I immediately spotted two pretty girls and struck up a conversation. Ed came over and joined us and at some point tom And WB slipped off into the night with WB muttering about some bar he knew full of Russian mail order brides. We sat and chatted with the two girls for an hour or so. Amy I think it was and Michel, two sisters down from Detroit for a weekend of shopping and drinking. One married, one not. I was talking to the not while poker star worked on the married. If nothing else we gave them some good laughs at our expense and a few free drinks before I had to call it a night. I was up early the next day and didn’t want to stretch it out too bad my first night in town.

The next morning Jason and Ryan had arranged tours of the two big Chicago exchanges, The cbot and the CME. Out first sop was the CBOT to watch the opening of the grain markets. We were limited to the gallery but even that was a treat as it has been closed to the public for the most part since 9-11. The floor is not the floor anymore and this was obvious from the start. The pits are far from packed. Grains recently went electronic and the pit already lost 20 percent of order flow to the electronic traders, Jason predicts it will be 80% electronic within the year. The grain traders seem to average about sixty and appeared to be guys who had always traded and never took up golf. With the alternative being retiring and moving to Florida with the wife to play shuffleboard and watch jerry Springer, they opted to trek down to the pit and sell a trade a few contracts a day. Again the very knowledgeable Jason pointed out that most of the pit trading was spread related as you could get it done there with one trade and had no leg in/out risk. It was when we walked over to the financial gallery that the impact of electronic trading has had on the open outcry pits was most obvious. The state of the art high tech bond floor was EMPTY. A few clerks and exchange employees and maybe a total of 10 trading jackets looking for the odd pick off trade were visible. The thirty-year bond pit, once the wild and wooly foreground of trading was empty. Completely empty. We saw no trades and most of the monitors were on espn instead of cnbc. It looks like an empty warehouse of high tech equipment.

Off now to the Merc were we are able to go down on the floor. Here to we saw the impact of electronic trading. There was some action in the milk and the now infamous cheese pit and the eurodollar back months and options pits were busy, again mostly in the form of spread trades it appeared to me. The SP 500 pit had less than a hundred people left and looked nothing like the shots we saw on TV back in the 90s. The SP options pit was busy as it was expiration but even that was a controlled crowd, the Nazz and Nazz option pits were empty and the TV actually WAS turned to Jerry Springer. It gave an eye opening view at the future of trading. Back to jasons office for Pizza and conversation while Ryan checked on euro dollars,sugarman checked sugar, omid looked over the spooz and I ll trade anything Thompson looked over stocks, oil, grains bonds and the level of his Jan marshmallow/June Smores spread trade. After again checking my positions and calling the office Tom Marks and I walked up Wacker Drive towards the river, him back to his hotel and me back to chez crossman. It was the first chance I had ever had to spend any time with tom and I found him to be a great guy, very knowledgeable on commodities particularly sugar of course and a damn good guy to know, he has great stories of his old pit trading days and a real delight to talk with.

After my requisite nap, Friday night shaped up as a repeat of Thursday with the same cast heading out for the evening. Melvin b’s, Jillys (www.jillyschicago.com), the Frog bar (www.hugosfrogbar.com) Pj’s (www.pjclarkeschicago.com) and tavern on Rush (www.tavernonrush.com) . We hit tem all as the night progressed. By this time Tom had been joined by the lovely Magdalena and they bailed early in search of food. It was in the tavern that the pivotal point of the evening was reached. The poker star met a gorgeous young woman who was in her second year of residency at an area hospital and they hit it off. She rejoined her friends and PS told her we would be in PJ’s. 10 minutes after we walked in PJs she and her friends appeared. She invited us to join them at an upstairs table. Fred and I went up to say hi but had no intention of joining the younger crowd. After we said our helloes and left a happy poker star in their company, DR Doom pulled a Fred classic. Spotting two attractive blondes at the next table closer to our age, Fred, motioning me to follow, went over sat down next to them and said “ Hey I’m Fred, Are you going to eat that last mini burger?” The fair Jennifer and Pegeen sat with we two intrepid invaders and talked for the next several hours. Pegeen turned out to be a very nice Irish American lass(like the name didn’t make that obvious) who worked in advertising for a leading business publication . We talked about books, poetry, our shared love of yeats, how come we could no longer recite poems we used to know like our own names, a little business, the usual where do you live where are you from etc, etc. During the course f time, we joined by Omid and a slew of Jewish Iranian cousins, the list master, Mr. Marks and the weird Biotech guy came back and the two ladies quiet little dinner before they went to a party over on Michigan had become a full out roaring spec list after dark gathering. I think they liked us and enjoyed the show but they didn’t return our call the next day so perhaps I was mistaken. By this time the Poker Star. had dumped the doctor because she couldn’t name any tracks of his favorite rap album. A typical Chicago Friday.Again as the group broke up late that night, PS and I hit a final club for a nightcap and ended up.of course talking to girls at the bar and staying later than we meant to. At the conclusion of the evening, I ended up sitting high above State Street looking off towards the lake sipping the last of freds good single malt and talking business and women with Fred until the wee hours.

Saturdays the air show. It was somewhat limited because of cloud cover and the blue angels couldn’t do their high level activities. Still a good time and we were at last joined by mark” the voodoo prof” mcnabb and the ever lovely Elana.. The cloudy skies kept out the crowds so we had a good spot right by the giant corona bottle to watch the show,. As virtually all the spec listers know what a corona bottle is, it made a nice beacon for the group to gather. Jason’s beautiful bride Wendy joined us and it was a great way to send a Saturday watching the f18s of the angels, an f15, a kc135, a air of f16s and a wide array of bi planes and stunt craft sweep along the shores of lake Michigan In my mind the location alone, along with the divers group of aircraft make it one of the premier air shows in the country and worth a trip.

At this point we went back cleaned dup and gathered for the train ride north to join the Pam “the book lady” van Giessisen for night of ribs and talk. The ranks of the group swelled with th3e addition of Dr Brett and his delightful wife Margie, as well as for the first time in years, David” how in the hell did I end up in Wisconsin” Hillman and his bride Paula. Mark told great stories of life in Deltaville VA complete with the epic battle of the spotlight, the roving trick or treating boatyard dogs that come by on a regular schedule and the local cast of characters in the little bayside town. I got a chance to talk with Dr Brett about his new book and trading activities and spend some time with Hillman. Although we talk often on the phone there is no substitute for just hanging out over a cold beer talking. Subjects ran from interest rates to tock markets to fantasy football and baseball. (Paula of course blames me for his addiction to fantasy games but all I did was introduce him to the concept). Pam provided as always a great spread with ribs, fire-roasted corn on the cob and even ice cream flown in from Cincinnati. Her husband Johan somehow found a six-pack of Mickey Big Mouth malt liquor and joyfully announced to the ensemble that he finally had the appropriate beer for Melvin. Funny, very funny. Pam’s ex roommate and current neighbor was on hand as well. He is over the top outrageously gay and his stories and antics were a source of constant laughter. We ate, talked with Pam’s off beat country music playing in the background. The weather was a little chilly, perfect for backyard gathering in pams great little garden in the city All in all another wonderful night with a great group of specs and friends.

Sunday was just dr. Doom the voodoo prof , √©lana and I . A great breakfast at the peninsula, a short trip to the air show on a much better day for it and then..a nap of course. I met up with my old assistant from Annapolis who recently relocated to Chicago and spent some time with her and her new beau. She is making twice what we could have ever paid her, has a new boyfriend a great new apartment and has blossomed in the move to the Midwest. She’s a fantastic young woman and I’m very pleased with her happiness and success.

Then off to the final dinner. Our foursome was joined by the pretty eye doctor lady and the very attractive real estate woman. Again lots of market talk, stories and adventures past and present, some cocktails, lots of laughter and the all too soon the weekend was over. All that was left was to arise on Monday and fly back to the real world.

Some Chicago land Observations;

I could write a book on what I observed when riding the El. Unlike the NYC subway I’m not talking about the passengers. As the el winds through Chicago, in many places apartments and stores are literally just feet away. I took three trips on the el this weekend, to midway and back and out to pams. I saw signs in apartment windows for the white sox, the cubs and the bears, almost every brand of beer known to man (except Mickey’s Bigmouth. I haven’t seen that stuff since Jr high) and three signs with peoples myspace address on them.I saw couples arguing, couples who most decidedly were NOT arguing. I saw three little old ladies on a balcony, oblivious to the train roaring past, having what looked to be high tea. As the street passed by you got a sense of each neighborhood. There were brothers hanging on the corner, avaricious yuppies on the prowl, college kids on the party, cub’s fans on the sauce and blue-collar guys just on the way the hell home after a long hot day. If you want to experience Chicago, ride the el. I’m telling you I could write a book.

The idea of the curve steepening trade makes more and more sense to me. You might need some good-sized pockets and balls to hold it until it works but being long the five and short the 30 makes a lot of sense to me here.

Chicago is way overbuilt. There are half finished buildings and apartment for rent. Condo for sale signs all over the skyline of the city. Banks and lenders with a lot of new and conversion conversion loans on the books are going to have a hard time ahead. Would love to hear any observations from other cities on this.

Selling puts on value stocks that have fallen in value and therefore have a little volatility pump to them just seems smart to me after talking the option side with some option guys this weekend.

The value of the Spec list goes way beyond the content. It’s the friends that have come to mean much more that even the valuable lessons I have learned here. The 4 or five gatherings each year are the highlight of the calendar.