From the Trader’s Desk: Billions S3 Ep1: “Tie Goes To the Runner” – The King without a Crown?

“Uneasy lies the head that wears the crown…”

Greetings from the Trader’s Desk!

Before I dive into the episode, I would like to thank the writers of this episode, Brian Koppelman and David Levien. As a New Yorker, kid of the 80’s and a trader, I can tell you they bring the realness of all three of those things of which I am and hold dear. From the mid-town Manhattan office of Axe Capital, to the setting of my favorite place for pierogies, (Veselka) to having real hedge fund managers (Marc Lasry of Avenue Capital and Michael Platt of BlueCrest Capital Management) at the idea dinner, a line from the movie that changed my life (“Wall Street”), to a beautiful view of the Freedom Tower, they continue to not just make this one of my favorite shows, but bring it home so authentically. By Season 3 some writers would be phoning it in, but they certainly don’t.

I started my post with a quote from Shakespeare’s Henry IV. In this scene, Henry is distraught and contemplating the weight of leadership and responsibility of being King. We see Axe similarly isolated, alone and distraught. However, is he still King? (I write more about this here) Yes, it still says Axe Capital on the door, but does Axe still wear the Crown? His assets are frozen, so neither he nor his firm can trade. If the King can’t reign, is he still the King?

The CIO of Axe Capital, Taylor, is entering the new headquarters in mid-town Manhattan. If Axe is leaving CT so is everyone else! The music playing in the background is “The Next Big Thing”. Is that Taylor or a new big idea for the firm? Both!

PMs and analysts are gathered in the conference room for the first meeting since the firm’s assets have been frozen, due to Axe’s indictment. This is a group of ravenous wolves. No trading means not being able to produce and make their numbers (most analysts and PMs have a benchmark they need to beat; how you do against that benchmark determines your bonus). The leader of the pack, Dollar Bill is chomping at the bit; he wants, no, needs to trade. Taylor’s first order of business is for someone from the group to produce an amazing idea that Axe can pitch at an idea dinner being held in two days. These dinners are real; I’ve never been to one, but it’s a chance for managers to show off a bit, and size each other up. Axe needs an idea that will prove to the Street he still runs the sharpest shop out there.

Dollar Bill is not having it, and either is anyone else. The only meeting he wants is a go-time one! Oh, and one more thing: where is the true leader of the firm?  Where the fuck is Axe?

Axe is alone in a huge, gorgeous bachelor pad: floor to ceiling windows with breathtaking views of the city; priceless art on the walls; sleek, expensive furniture. When I see it, I think: cold. Not temperature cold, but no feeling, a lack of warmth, sterile. Speaking of cold, in walks Wendy to check in on her patient. (I give her a lot of grief, but this is the first episode ever that she didn’t annoy me. I actually liked her. Pull up the fainting couch.) She is the first adult to see the place. Axe has really secluded himself. Is it shame? Who would be embarrassed by that apartment? No, he can’t face the world. Axe has put all of his self-image into being Bobby Fucking Axelrod (Hello! It’s Axe Capital for a reason!). He believes he’s a shell of who he thinks he should be, and will lock himself away until then. Not the way a true leader should act, if you ask me.

Taylor is at the office, guarantying bonuses as long as someone comes up with an idea. Rudy is brutally honest (love Rudy!!) and says, since they are “the most toxic shop on the Street”, how did they get an invite? Dollar Bill speaks for me, and knows that Axe would never go to this “hog show” and give away choice ideas. Wags is telling the troops how Axe was begged to be at the dinner, meanwhile….

Axe is telling Wendy how he had to beg to get invited to this dinner. I believe that she is the only breathing person he would every admit that to. He has no choice since he has been indicted by her husband. Wendy reminds him it was he who “gave into the worst of your instincts” that got him to this place. Axe does something I didn’t see coming: he owns it! “Yeah, maybe that too.” A true narcissist wouldn’t admit that, and would continue to play the victim. Axe needs to get out there and tell his story. As Don Draper would say “change the conversation.” Axe doesn’t want the story to be that he and his shop is crooked, it needs to be about the next big thing that Axe Capital is working on. He needs to dominate this dinner, but it’s not fear that is holding him back, its rage. In the past, it has been Chuck’s rage that has blocked him from success. I truly believe these men are two sides of the same coin, although they would never admit that!

Wendy wants to find out when that rage served him. Axe picks a point in his childhood when he needed money so he scammed some older kids with a faked signed jersey and hockey stick signed by legendary NHLer’s Mike Bossy and Brian Trottier. Nice shout out to the Islander dynasty that ruled the NHL in the early 80’s. (I’m a Rangers fan, so to the writers: Potvin Sucks!) When he was caught they beat him “like Dave “the Hammer” Shultz”, an “enforcer” who played for the Philadelphia Flyers, or as they were known, the Broad Street Bullies. His rage at them, his parents (a piece for you Damianista: we know Axe’s Dad left the family, but was still around when he was in 5th grade, about 11-12 years old) and at himself for getting caught, turned to jet fuel to propel him to never be in that situation again in regards to money. I think it’s interesting that he is angry at getting caught, but has no remorse for committing the actual scam! Axe at 11 is the Axe of today: not sorry for the crime, he’s sorry he got caught.

Wendy reminds him “could it be your brain, your instincts, your feel for the markets” that have made you successful? (Things he had BEFORE he met her, just saying…) Perhaps his rage just made him focus more on the “prize” and those natural abilities became more useful. Now she wants to focus on when his rage has worked against him.

Axe wants to once again blame Chuck, but Wendy brings it back to the man who actually made the choices – Axe. His need for revenge clouds his judgment and dulls the true skills that got him to the top of the hill. His need for retribution on the Rhoades family is what got him into trouble with ICEJ. There was no reason to make that play and take unnecessary risks, except to crush an enemy. Did that need for vengeance make him predictable? He fell right into Chuck’s trap. Rage and anger take up a lot of energy; can Axe continue like this for 5 years? 10? Does he want to become what most Kings are at the end: distrustful of even their most loyal subjects, deceitful in order to keep everyone off balance, paranoid, isolated, and alone? When things get too deep for Axe, he bolts. He needs to get back to the here and now, fight for his reputation and his company. In order to do that, he needs to get out of the mausoleum that is his apartment, and get back to Axe Capital.

The world is a crazy place at the office: Todd Krakow is Secretary of the Treasury (yes, Alexander Hamilton is turning in his grave), Ari Spyros, fresh from the SEC, is the new head of compliance (people who have worked for the government at some point usually go to the private sector; the money is much better, and between the contacts and knowing how the systems work, they are worth their weight in gold) and Lara is bringing Steven Birch with her to go over the books and her assets. What the hell? It’s like the Bizarro World at this office!

Since the government has Axe Capital assets locked up while Axe is under investigation, everything is at a standstill. It could take 4-6 months before the money can be available, and that is a lifetime in the market. There is a way to get some of that money freed up, but the price is extraordinary – Axe’s license to trade. Asking him not to trade is like him giving up his “license to breathe.” I knew exactly what he meant.

I was diagnosed with Hodgkin Lymphoma in May of last year. My treatments for the last 6 months of 2017 prevented me from trading. When I was finally able to get back to work in February, it felt amazing. Not only was I healthy enough to work again, but doing what I love to do made me feel whole and normal for the first time in a very long time. Trading for Axe isn’t just his job; it’s who he is, and I can relate to that 100%.

Axe has more pressing things to do than think about the wild idea of him giving up trading – he has to break-up an argument between Lara, Birch and Wags (poor Ben Kim stuck in the middle!). Wags, being the loyal lieutenant, is refusing to let a competitor see the trades. Axe is shocked that Lara might be contemplating giving her money to a “stock jockey” like Birch to manage. Does she know how he selects stocks? What’s his position sizing? Market timing and risk management? No, because as Axe tells her, he doesn’t have any of those things. “His decision process is “Google, Exxon and Proctor & Gamble”. Those are basic names that won’t necessarily hurt your portfolio, but do not take much knowledge or imagination to pick. Birch will still charge you 2 & 20 (a fee of 2% of your assets, and 20% of any profits). Axe gives in and let’s Lara and Birch have access. Axe is not worried: “Lots of guys watch Bruce Lee movies; doesn’t mean you can do karate.” Axe knows that it’s his unique skills set that are valuable. No one can mimic him, so have at it!

source: Showtime

Axe Capital is in chaos. Everyone is focused on pitching their idea to the CIO, who just happens to be in their office smashing electronics. Taylor is not smashing phones out of frustration (Spock-like Taylor would find that illogical), but in search of the idea for the dinner. Wags needs some alone time with the CIO so it’s off to the Turkish Baths they go!

This is the perfect place for Wags to ask Taylor if they are jumping ship. Flashback to the new Treasury Secretary offering Taylor his firm to run. Axe knows people, so if he believes in Taylor, so can Krakow. Taylor declines. They are happy running Axe Capital. Something they say to Wags makes me pause: they know Axe’s belief in them is what gives them legitimacy until they have their own track record, “so I am loyal to him. Until and unless it becomes necessary, I will not leave.” Is Taylor already planning for that scenario? Since we all know Axe expects and demands unconditional loyalty, I see a reckoning coming.

Axe finally shows up at the office and calls Dollar Bill into his office. He wants Bill to give him the temperature of the troops. Bill doesn’t want to rat, but he does, given assurances any info won’t be known to come from him: Taylor failed at handling the meeting. Taylor, Wags and Wendy to the principal’s office! Axe is pissed that Taylor and Wags held the meeting without Wendy, and tells them “Bill says it was a shit show.” (Yes, Bill, Axe just threw you under the bus.) Wendy was with Axe, so Taylor did what was needed: get ideas for the dinner. It really wouldn’t have mattered who was in that room; unless it was a meeting to give the go ahead to trade again, it was always going to be unmanageable. When Axe dismisses Taylor, Wags and Bill, Wendy makes him focus on fighting the case and leaving the emotions out of it. “You taught me an average trader makes a trade and feels good; a great trader makes a trade and feels nothing.” That was the Axe of Season 1, and we see the trouble it has gotten him in when he veered from that philosophy. Axe needs to make the tough decision: he must give up trading to save his firm, even as he is worried that the face of Axe Capital will be Taylor and not him. Wendy convinces him this is the right play. I do think he will regret it and could have a scapegoat in Wendy when/if he does.

Taylor finally has the idea for the dinner. Everything seems to be connected to the internet – phones, refrigerators, home thermostats: the Internet of Things (IoT). These products all have microchips in them, and the product makers make the chip companies sign non-disclosures so they don’t tell other manufacturers how the products are made. Find the common component in all the different products, find the gold! In the early 2000’s my business partner (and smartest man I know) had a similar idea regarding the internet. He didn’t know which .com would succeed, but he did know they would all have to run on the routers and “pipes” of Cisco Systems.

All that smashing pays off: the play is Quartes chips.

Axe (for now) believes it’s a good thing his CIO can deliver when he can’t. This will be the last time they can speak about individual stocks or it will violate his non-trading agreement. But is it really? Can Axe stay away? I doubt it. Kind of like Chuck was off the Axe case, but wasn’t!

By sacrificing something so dear to Axe, he may have just saved his firm. For now, it’s all on Taylor.

At the swanky Del Posto, all the top managers from all different strategies (equities, bonds, quants, currency, etc.) will gather for a dinner that will have the Street talking for the near future. And the word on their lips has to be Axe Capital.

A “who’s who” of the hedge fund world is sitting around waiting for Robert Axelrod. Smartphones start blowing up; the news of Axe being barred from trading is hitting the wires. Debate at the table: was Axe bested or did he best “those fuckers” as the BI (Business Insider) headline suggests? They believe they’ll be able to read Axe when he arrives as to which argument is true.

As the door opens, Taylor Mason, CIO of Axe Capital introduces themselves to the group, and not only announces a “silver-backed fucking gorilla” of an idea, but the new face of Axe Capital.

On the night Axe Capital telegraphs to the Street they are once again players, the King is alone in his big, cold mausoleum viewing the brand new Freedom Tower. Will Axe rise again like that Tower from the rubble?

Author: Lady Trader

"Lady Trader" is a Brooklyn girl, and a Wall Street lifer! Recently fought cancer, and won! I love heavy metal, history, sci-fi, oh, and blogging about Billions and it's great lead actor, Damian Lewis!

17 thoughts on “From the Trader’s Desk: Billions S3 Ep1: “Tie Goes To the Runner” – The King without a Crown?”

  1. Hey Lady Trader, as always I enjoyed your post, just as I do everyone’s, whether I agree with them or not. But this time I am much more impressed with your mention of your health and recovery. I know this is about that Ginger fella, but real life is honestly more important than Billions. My oldest daughter was diagnosed with a lymphoma (a different kind than yours) in the fall of 2013, and received several months of chemo. We hold our breaths for each checkup, but 2 weeks ago she was pronounced 4 years absolutely clear….so, you Hang Tough!

    1. Thank you for your kind words Connie! I am am thrilled to hear your daughter is healthy! I know what you mean about holding your breath before a check-up or scan.

      I wouldn’t normal talk about my health,but in this case, Axe not being able to trade became personal, since I had gone through something similar. I didn’t really have a choice of to not trade, and in a way neither does Axe. This show is always making you connect with the characters in one way or another, and I think that is why we love it!

  2. Another great read Lady Trader!
    I always await your blog to fill in my blanks for me. I am not at all familiar with the wall street world and your blogs explain a lot of the show that I don’t understand!! Look forward to reading every week!!

    1. Thank you so much for your kind words! I know the jargon can get confusing, so I try to explain it in simpler terms and use examples. In this post, I’ve linked a bunch of “fin speak” to our Glossary for more detailed descriptions. And, and always, if there is something you have a further question on, just ask me here or on Twitter: @lisaglick926

  3. LT – do you think it was the right play for Axe Capital that Bobby gave up his right to trade? I understand that it is in his DNA to trade and it is not great for him, but in the long term, is this not the right move? Why do you think he will regret that decision?

    1. Hi Paul. I do think it’s the right move for the firm and for Axe. Without trading, there is no way his employees would stick around. That’s the right decision in the real world, and that would be my decision.

      I think Axe will regret it because of who he is. He’s a control freak, and I think he will second guess Taylor if anything goes slightly wrong. He doesn’t just see this as his firm, but his baby. I do believe we’ll see him hedging his bet on Taylor in some way, because Axe does not trust anyone 100%. The events that have happened in S2 have made him paranoid and suspicious. He is taking this indictment personal, and made the decision not to trade by being backed in a corner, and having to convinced by Wendy. It wasn’t his natural instinct, so that is why I think he’ll regret it.

      1. If I had more self restraint I’d not watch Billions till I’d read you, D’ista and JJ. Very helpful. However – probably not going to happen. I’ll continue to watch with my iPad and pause button by my side %-}

        1. Thank you Notlinda! I know what you mean, but think of it this way, after you read our posts, you can re-watch the episode with a new perspective and it will almost be like watching it for the first time again!! 🙂

  4. Your insights from a world that you have been breathing for more than two decades and a world that I cannot be further away from are priceless! And you make me laugh, too! I am still giggling about Alexander Hamilton turning in his grave now that Todd Krakow is the new secretary of the Treasury!

    Axe is a trade addict. What he does defines him. And he’s an outlaw, too, as Dollar Bill appreciated him last season! He cannot not trade just because he put a signature on some deal with the government. I read other comments on the post before leaving a comment myself. Your response to Paul makes me ask if Lady Trader is sure that she has not been to the screening in NY and seen Episode 2? 😀 Right, Paul? I love the Shakespearean king analogy you start the post with and sincerely hope there does not come a point where we have a “my kingdom for a horse” moment from the king? Yikes!

    By the way, Axe has said in Season 2 Episode 8 the Kingmaker that his dad left when he was 12. It should be a year or so after the “Islanders incident”!

    I understand why Axe’s not trading resonates with you. You don’t know how happy I am that you have left that episode behind you, and you are back to your old happy and healthy self!

    1. As always, thank you for your kind words!!

      You and I both love this show because it is about things that are personal to us, even if it they are different for the both of us.

      I promise you I have not seen Ep2 yet, but after all this time, and being in the world, I think I can kind of predict what Axe is thinking, or may do.

      I love Shakespeare (the tragedies and histories more so for some reason), and see so much of it in Billions. I too hope we never get Axe to be in a Richard III moment!!

      I didn’t expect that scene to affect me as much as it did. But it’s all part of the healing process, just as being able to be back writing here is as well!!

  5. Great post LT!!

    “In the past, it has been Chuck’s rage that has blocked him from success. I truly believe these men are two sides of the same coin, although they would never admit that!”

    Word. So true!

    “Axe’s Dad left the family, but was still around when he was in 5th grade, about 11-12 years old”

    Good point and good to keep in mind should he ever delve into the ghost of Christmas past again (which probably won’t happen, given the writers’ general glossing over of back story, but I can hope!)

    “Wendy reminds him “could it be your brain, your instincts, your feel for the markets” that have made you successful? (Things he had BEFORE he met her, just saying…) ”

    I don’t know, didn’t his shooting up the ladder happen after he met her? Or at least concurrently. Back in that tub, she asserted she was as integral in starting the company as he was, and he said “that’s bold” (or something), but the fact wasn’t outright dismissed, so I think it may be true on some level. Given that, I don’t think anyone would ever argue that Axe relied solely on her for his financial success so far. He’s got the brain, instincts and feel without her. But he does seem to need her for other stuff, and maybe to keep it all going now.

    “Axe is shocked that Lara might be contemplating giving her money to a “stock jockey” like Birch to manage. Does she know how he selects stocks? What’s his position sizing? Market timing and risk management? No, because as Axe tells her, he doesn’t have any of those things. “His decision process is “Google, Exxon and Proctor & Gamble”. Those are basic names that won’t necessarily hurt your portfolio, but do not take much knowledge or imagination to pick. Birch will still charge you 2 & 20 (a fee of 2% of your assets, and 20% of any profits).”

    I was hoping you’d sift thru this for us and you did: yay! I’m the old lady selling Amazon at $65 and betting the bank on natural gas right before a spill in the Gulf, thanks to what I heard on daytime cable TV. You and Axe know better. Exactly how he knows better is a thing of beauty, worth diving deep into.

    “so I am loyal to him. Until and unless it becomes necessary, I will not leave.”

    Self-preservation takes the wheel for all of them. I somehow don’t think Axe will fault Taylor for this trait, but, I’m totally prepared to be wrong!

    “Will Axe rise again like that Tower from the rubble?”

    Beautifully said!

    1. Thank you Jania!! 🙂

      I get what you say regarding Wendy. I am starting to come around to believe that she helps ground Axe more than anything else. His skill set (his days at Yonkers Raceway were way before he met Wendy) prove that those are his natural abilities. As for being integral in starting Axe Capital, she probably helped him focus on starting the business, and not get bogged down in the emotions of just losing many of his co-wokers on 9/11 and not to feel guilt associated with shorting the markets that day and making the money he needed to start his own shop.

      How Axe knows the markets (aside from help from $Bill and Vincent!!) is probably just plain instinct and looking at things in a way others don’t. I can only equate it with how I trade: 50% is just your gut, 30% is looking at facts and coming to a conclusion that’s not the group-think, and believe it or not, 20% luck. Maybe at the end of the season I’ll do a post on something about that.

      I agree with Taylor being pragmatic about their situation; I just don’t know if Wags is the guy to tell that to. He in 100% loyal, and I wouldn’t be surprised if he related that nugget back to Axe. And yes, Axe wouldn’t fault Taylor for that trait at all, but he’ll definitely put it in the back of his mind!

      And, the rise from the rubble line? Would you believe I just thought of it at the end of the post when I looked at the photo of Axe and the Tower?

  6. I never know where to pose a question, so will try here. Is it my imagination, are my aging eyes completely failing, did the young actor playing Dean Axelrod age a great deal since season two, or is it a different young man in that role? The brief glimpse we got of the two boys leaving Axe’s apartment was not enough for me to be sure.

    1. Thank you for your kind words. I try to give the point of view from someone who’s been in the business since 1988. Did I get chomping wrong? I looked it up to make sure: “The idiom is usually written chomping at the bit. But chomp can also mean to bite or chew noisily (though chomped things are often eaten, while champed things are not), so chomp at the bit means roughly the same as champ at the bit.”

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