From The Trader’s Desk: “All The Wilburys” – May 18, 2018

Is Axe Going to the “End of the Line?”

by Lady Trader | Fan Fun with Damian Lewis | May 18, 2018

Every day I sit and wonder
How my life it use to be
Now I feel I’m going under
Now my life is hard to see
So tell me people, am I going insane, insane?
Am I Going Insane – Black Sabbath

Greetings from the Headbanger’s Ball, oops, I mean the Trader’s Desk! It will never get old for me, but once again I’m starting my post with lyrics from Black Sabbath. This episode had me yelling at my television, and asking if Axe is going insane. He is making all the emotional decisions that have brought him to the brink of disaster.

A triumphant Axe parades into Axe Cap to the tune of “Never Say Die” by Black Sabbath! What else would a victorious kid from Yonkers wear but a Black Sabbath “Master of Reality” t-shirt to confirm his bad-ass self is back! Of course Axe is a Sabbath fan; in Season 1, he showed his love for Metallica and in Season 2 his appreciation for Megadeth. He’s now going old-school, as Sabbath is considered by many the fathers of heavy metal (don’t come at me with the Led Zeppelin or Deep Purple argument!) Axe has lived to fight another day. It’s nothing but high-fives and cheers for the returning King.

There is one slight problem this homecoming causes: interrupting Taylor’s meeting with the PMs and analysts to discuss the good performance of the main fund. Taylor seems to be surprised by Axe’s jubilant return. Ari spoils the joyous mood by jumping on the conference table and switching from Ozzy Osbourne to Walt Whitman to greet his Captain. Nobody, least of all Axe, is impressed!

Axe takes over the meeting, as if Taylor no longer exists. His CIO, who has held Axe Cap together while Axe was under the cloud of indictment, gets an obligatory nod for beating the benchmark, then brushed aside. Now that Axe is back, he is going to be in complete control. From the moment he gave up trading (and let’s face it, he never really did), Axe has been itching to get back to this: unwinding all current positions and building new ones that will all be run through El Jefe. This is such a slap in the face to Taylor!

To top off the sundae, Taylor needs to kill their pet project, the quants. Mafee tries to stick up for his CIO and friend (a good man, that Mafee!): some of their bets have been good and are about to pay off. Axe doesn’t want to hear it. He isAxe Capital, and wants a “fresh” start. I think he needs to prove to himself and to his employees he still has the “Axe Touch”. This is not a good sign for Taylor.

As Axe is getting his Bloomberg Terminal set up in his office, he is meeting with his Big Three: Wags, Wendy and Taylor. Axe wants to be like the Beatles when they finished their first American tour: instead of sitting on their laurels, they went straight back to doing what they did best – make music! (If you haven’t seen the documentary, “The Beatles: Eight Days a Week – The Touring Years”, I’d highly recommend it, it’s what Axe is referring to.) They pressed their advantage of a successful tour, and he wants to press his, by going on a capital raise. $20 Billion in 6 months! That is massive by any standards. And, he wants the clients lining up, begging him to take their money! How does his ego fit into that room?

Wendy tries to put a pin in his balloon – things are different now, and Taylor agrees. Axe wants to bring Taylor along on this raise so they can see “the other side of the job”, i.e. the schmoozing part! Wendy and Taylor know this isn’t going to be as easy as 2015. Yes, the legal issues are in the past, but investors will have tough questions and reservations. If I were at a pitch meeting, I’d be asking these questions: Could something like Axe getting indicted happen again? If your CIO did such a great job, why are you clearing all their positions? If they are staying with the firm, how do they feel about these whole-sale changes? I get that Axe wants his own stamp back on Axe Capital (he is a total control freak!), but why not wait a few months? Clients and investors hate uncertainty and upheaval. Axe is again, making decisions with his emotions. Those never work out well.

Axe gets a text message from someone called Muresan, who was one of the tallest players ever in the NBA. Who could that be? Well, none other than one of the shortest Treasury Secretaries in the history of the United States, (I’m not 100% sure about this, but I’m probably close) Todd Krakow.

In a basement vault filled with precious art, Todd has an offer for Axe. Todd’s role in the government gives him access to the goings on at the FERC(the Federal Energy Regulatory Commission), and would like to have someone who could trade on this access, and give him a taste of the returns. Axe, doing his best Captain Renault impression, is shocked Todd would come to him with this! Axe would never trade on non-public information (said no one ever)! Todd gives Axe his Cayman Island off-shore bank account card, and this tender nugget: the EPA is about to rescind a regulation that will be very beneficial to the natural gas industry. If Axe decides to trade on this info, Todd will take his cut in crypto (what is it with everyone wanting to get paid that way? Dollar Bill’s bags of cash are going the way of the dinosaur!). Axe keeps his cards close to his vest; he hands the bank card back to Todd without saying a word. Axe just got out of the government’s “fucking web”; why would he do anything to jeopardize that? It’s pure lunacy! But Axe can’t walk away from a win.

Buying expensive gifts as a sign of his gratitude is what Axe does with most of the people in his life; why would Taylor be any different? Axe takes Taylor to a Range Rover showroom to buy them a truck to show his “love” and appreciation for their hard work under tough conditions.

Taylor isn’t easily bought. Spock, I mean Taylor, is rational and logical, and knows the changes Axe is making at the firm are emotionally driven. He is asking investors to trust him with their money while making drastic changes in the portfolio. It will look erratic to the outside world. Axe wants to do things his way (shocker!) and tells Taylor they shouldn’t worry – they are getting paid. Axe just doesn’t understand people whose motivation is not money or material based.

Taylor wants something other than a truck; they want their own book of business: $1 Billion to manage with no interference from Axe. Axe agrees (a bit too quickly if you ask me). Oh, and on second thought, Taylor will take the truck as well!

Axe is in a very musical state of mind this episode. Along with his heavy metal t-shirt, and his wanting to follow in the footsteps of the Beatles, now he has the Traveling Wilburys on his mind. And not just any Wilbury, one who was also a Beatle, George Harrison. (Another documentary suggestion: to see how the Traveling Wilburys formed, watch “Tom Petty and the Heartbreakers: Runnin’ Down a Dream”. It’s a wonderful film about the life and career of one of my favorite musicians, Tom Petty.) Wags says it best: only legends become Wilburys. Bob Dylan and Tom Petty would make a game of it – throw out a name and decide if that person was worthy of “Wilbury Status” Factors for reaching that status: wit, cool and credibility. Jack Nicholson – Wilbury! Richard Dryfuss – not a Wilbury.

This wonderful story is being told to Ari by Axe and Wags because (and I think we all knew this) Ari is not a Wilbury. And just like that, compliance no longer needs to be complied with. Ari, you’re fired. (Insert sad, but not surprised emoji here). Again, I understand the why of firing Ari, but the timing is too soon. Drastic changes are not what you do or need before a cap raise!

Ari is not going to go into the night quietly. He is desperate to be to part of the “cool kids” at Axe Capital; he’ll figure something out.

I would expect nothing less from Dollar Bill than the gloat session he has in Ari’s office. But Ari is not bitter – he offers up some prime intel to Bill, the type of intel that is right up Bill’s alley. Bill’s not interested in Ari’s play, or is he? Just as the elevator doors are closing on the Axe Capital career of Ari Spyros, Bill jumps in. He’s a cheap mofo, but a greedy one too! Ari still has access to the list of SEC investigations into publicly traded companies that have not been disclosed to shareholders yet. Dollar Bill can use this info: he can short the companies he thinks the investigations will hurt, and long the companies he believes will come out clear after the initial bad press. Bill detest Ari, but he loves money. And there you have it folks, it’s the new Odd Couple!

Lara is in the city to take Gordie to the dentist, but needs to handle her finances at Axe Capital first. She wants to know why she is being charged the standard 2 and 20 on her account. As far as Axe is concerned, Lara is just another client and will not get special treatment. (Harsh, even for Axe!) Lara has the choice of moving her money, but if she wants the “Axe Touch” and the type of returns that generates, 2 and 20 is the price.

Oh, and it’s not just business, it’s personal. Lara crossed a red line with Axe that there is no coming back from: the threat of taking his kids away from him. The thought of Axe not seeing his boys while in prison cut him to the quick. Stop complaining about the fees and focus on the money you are making and move on Axe tells her. Well, ladies, Axe just might be on the market after all!

Read the rest of the original article at Fan Fun with Damian Lewis