Billions Season 7 Episode 4 ‘Hurricane Rosie’
by Lady Trader | Fan Fun with Damian Lewis | September 8, 2023
Ooh, a storm is threatening
My very life today
If I don’t get some shelter
Ooh yeah I’m gonna fade away
Gimme Shelter – The Rolling Stones
We’ve made it to Friday so that means this is your weekly dose of “From the Trader’s Deskâ€.
This was a stormy (see what I did there?) episode, so to change it up I used lyrics from The Rolling Stones, since while the storm Rosie was threatening the lives in it’s path, it seems the storm named Wendy (with some help from Dr. Mayer) will be threatening the life of Prince’s White House ambitions. And extra points if you can name the band that sang the song I used as today’s post title!
I’ve chosen to not do a usual recap since Damianista does the best one in the business and who can compete with that? This week, I’ll just give you my two cents on a few things that I noticed in “Hurricane Rosieâ€.
But first a little housekeeping….
I’ve updated our Billions: Glossary to include NFTs and catastrophe bonds, which both played a role in this episode. I regularly update the Glossary with terms used in the current episodes. If there is ever something you want added, please reach out!
I wish I could tell you a lot about NFTs, but I can’t. It is not something I trade in, and to be honest, I think is a scam. If someone tells me a digital picture of a banana is worth $5M, I think that’s a scam. (I just made that example up, but you get what I mean.) I want the assets I buy and sell to have a backing to them so that I can at least determine what I value it at. NFTs don’t do that so I stay as far away as possible.
The catastrophe bonds (cat bonds) that Prince buys are common assets hedge funds buy to diversify their portfolios. They are usually short term in nature (3-5 years) and provide stable interest because they are not linked to any financial market or the economy. The short-term nature of the bonds usually means there is less chance of the triggering event to happen for payout. The risk with buying these type of bonds is if the triggering event happens you will lose all your investment and if this happens during a market decline you can really be in a pickle! Buying bonds that won’t payout unless a storm is designated Category 5 would be a safe bet, as Category 5 storms are rare. The Wall Street Journal just recently published a story about how popular these bonds have become.
Observations
The Prince Cappers placing bets on the various outcomes related to the storm (name, velocity, will the weather guy take a header) might seem crass, but remember that is what they do for a living. Ben Kim stops for a moment to wonder if betting on people losing their homes is okay but comes to terms with because it is what they would have to do on the daily. If you invest in a company like Nvidia (NVDA), which is the leading chip maker for the super-computers that run AI programs, there is a good chance you are investing in a company that might cause people to lose their jobs.
Read the rest of the original article at Fan Fun with Damian Lewis