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In the season opener, Axe is betting on bitcoin. But is the risk really worth the reward? We unpack what’s at stake

“Kings? They don’t blow around, man. They stand there and they take.” Axe is back, and he’s on the road, scruffy and bearded, on an ostensibly Zen motorcycle trip with Wags, his right-hand reprobate (we’re not judging). In a tent with a shaman, they trip out on ayahuasca, a psychedelic popular in all the places you’d expect—Hollywood, Silicon Valley, Brooklyn.

There’s vomiting and visions, and Bobby Axelrod (Damian Lewis) promises the shaman they will “move your knowledge into the world.” We guarantee he’s already working out the possible returns on moving such knowledge to Wall Street.

The trip is cut short when Wags (David Costabile) gets a note that Vanity Fair wants Axe for a cover story it’s doing on “The New Decas,” as in, people who are worth $10 billion. It’s also the title of the premiere episode (written by creators Brian Koppelman and David Levien, directed by Matthew McLoota).

Hitting such a rarefied height—there are only about 155 people in the world worth that much or more, according to Forbes—leaves him feeling empty, though. Bobby’s ego won’t let him rest on his success.

That ego is going to push Axe to explore a number of alternative investments, one of this season’s recurring themes. One of the recurring themes of these recaps is to be cheerful pedants, pointing out where the writers go right and wrong in their portrayal of the world of high finance (a topic with which we are somewhat familiar).

That brings us to upstate New York. Chuck Rhoades (Paul Giamatti) is now the state’s attorney general and his deputy Kate Sacker (Condola Rashad) leads a team of Windbreakers into a warehouse filled with glowing computers. These are “mining rigs,” specialized computers built for a single purpose: to “mine” the digital currency bitcoin.

If you’re not familiar with it, bitcoin is really just a computer program that runs on a network of linked but independent computers, each running a copy of the same program. Miners operate those computers, in exchange for a reward of newly minted bitcoin. They also compete against each other for those rewards. The program has a built-in disincentive to keep any of them from trying to take over the network: It’s insanely expensive to run the program.

Mobile operator’s move could potentially delay sale already affected by coronavirus upheaval

The sale of spectrum for 5G networks could be significantly delayed after O2 warned the telecoms regulator that it intends to legally challenge the rules it has set for the auction.

A fresh sale of the airwaves was due to take place in the second half of this year, although the process has been paused because of the coronavirus pandemic and Ofcom has not set a firm auction date. However, a judicial review could potentially delay the sale of new frequencies capable of carrying 5G signals by up to 18 months, said a person with direct knowledge of the situation.

Telecoms companies wishing to bid had until last week to inform Ofcom whether they intended to disrupt the auction by sending a so-called “letter before claim” to raise concerns that not been resolved during previous consultations.

O2 has issued such a letter, according to multiple people with direct knowledge of the situation.

The complaint relates to a highly technical point about how the blocks of spectrum are to be sold. O2 wants Ofcom to harmonise the lots of spectrum so that they are contiguous, instead of frequencies being fragmented slices.

Telecoms companies are able to trade spectrum once the auction is over but it adds complexity and risk for mobile networks.

An Ofcom spokesman said: “People and businesses need fast, reliable mobile services more than ever, so we want to auction these airwaves as soon as possible. We’re really disappointed that one operator has threatened to launch a legal dispute that could slow things down for mobile users and the economy.”

O2 declined to comment.

A judicial review could yet be avoided after Ofcom issued a short consultation period related to one aspect of the 5G auction although it is unclear whether the scope of this will resolve O2’s concerns.

O2, owned by Spain’s Telefónica, is in talks with Virgin Media, owned by Liberty Global, over a potential merger to create a stronger competitor to BT.

It is the second challenge that Ofcom has faced with the sale of spectrum in the 700Mhz and 3.6-3.8Ghz range.

Objections to spectrum auctions are common. Ofcom successfully defended itself following a legal challenge fought by Three and BT in 2017.

For the upcoming action, the regulator had planned to offer discounts on spectrum licences for companies that invested in filling “not spots” in rural areas, but changed tack after the industry committed to spend £1bn alongside the government to improve rural mobile coverage as part of the ‘shared rural network’.

The government raised £22.5bn in 2000 selling spectrum in the 3G auction but the value of the airwaves has plummeted since that time as mobile phone services have proved to be less profitable than expected and the number of competitors has reduced.

Nikkei -2.84% Hang Seng -3.81% CSI Closed Shanghai Closed Shenzen Closed

Eur$ 1.0935 CNH 7.1376 CNY 7.0633 JPY 106.73 GBP 1.2446 CHF 0.9643 RUB 75.0033 TRY 7.0176

S&P -0.91% Nasdaq -0.9% EuroStoxx -3.39% (Closed Friday) FTSE -0.73% Dax -3.56%

Macro :

- Trump Says Tariffs Would Be ‘Ultimate Punishment’ on China

- Bad Start to May Is a Sign of Things to Come for Markets (2)

- More ECB Bond Buys Are Matter of Time as Debt Balloons (Correct)

- Einhorn’s Greenlight Hedge Funds Deepen Slump With April Decline

- USO Positions in Oil Futures Contracts to Roll Over 10 Days

- Senate Bill Would Require Consumer Consent for COVID Tracking

- Bill Gates Says Virus Vaccine Could Take as Little as 9 Months

- Junk-Bond ETFs Add Most Since 2015 on Fed’s Fallen-Angel Pledge

- SUVs Get Parked in the Ocean and Reveal Scope of U.S. Car Glut --> Auto Sector should continue to UnderPerf.

Keep an eye on :

- ADP FP : Paris Orly Airport to Remain Closed Until Fall: Les Echos

- AIR FP : Airbus Shuns Bailout While Plumping for State Aid to Airlines

- ALV GY : Allianz Withdraws Targets Amid Pandemic as Net Income Slumps 30%

- AAPL US : Apple’s $1.5 Billion Headwind Adds FX to Litany of Company Woes

- ARYN SW : Aryzta’s Lenders Approve Covenant Amendments Amid Virus Risk

- BIM FP : BioMerieux Wins Emergency FDA Authorization for Covid-19 Test

- BPOST BB : Bpost Misses Out on Belgian Mask Distribution Contract: De Tijd

- BAR BB : Barco AGM Approves EU2.65 Per Share Gross Dividend, Stock Split

- CSGN SW : Credit Suisse Shuts Down Computer-Run QT Fund: Business Insider

- DAI GY : Daimler Restarts 5 German Plants After Production Suspension

- DBK GY : Deutsche Bank Investors Urged by Glass Lewis to Rebuke Chairman

- DLG GY : Dialog Semiconductor Withdraws Outlook for Full-Year 2020

- ERICB SS : Ericsson Is Said to Seek Bids for $2 Billion Sale of Iconectiv

- EUCAR FP : Europcar Mobility Gets EU220m Loan Backed by French Govt (May 3)

- FCT IM : Navy to Pick Fincantieri in Potential $5.5 Billion Frigate Deal

- FINGB SS : Fingerprint Cards 1Q Revenue SEK310.0 Mln, -9.6% Y/y

- FNTN GY : Freenet First Quarter Ebitda EU109.2 Mln

- GAM SW : GAM Holding Reports Program to Buy Back Shares Over 3-Yr Period

- GRG LN : Greggs Postpones Planned Store Reopenings Next Week: Reuters

- HSX LN : FCA to Seek Legal Clarity on Business Interruption Insurance

- IAG LN : IAG Says Iberia, Vueling Sign Syndicated Financing Agreements

- IMA IM : IMA to Supply 25 Surgical-Mask Packaging Machines to Italy

- INTU LN : Intu Properties Received 40% of Rents, Agreed Facility Waiver

- KER FP : Prada April China Sales Rose Over 10%, Bertelli Tells Repubblica

- KCO GY : Kloeckner First Quarter Ebitda EU21 Mln

- LONN SW : Moderna, Lonza Pact to Manufacture Moderna’s Virus Vaccine

- LOOK LN : U.K. Car Dealer Lookers Rejects Merger Talks With Pendragon: Sky

- LHA GY : *LUFTHANSA SAYS LIQUIDITY CURRENTLY STANDS AT MORE THAN EU4B

- LHA GY : Too Much Debt Would Paralyze Lufthansa for Years, CEO Says

- LHA GY : Lufthansa’s Swiss Must Cut Nearly 20% of Costs: SonntagsZeitung

- LHA GY : Lufthansa Expects to Reach Deal on German Government Aid ‘Soon’

- MC FP : Prada April China Sales Rose Over 10%, Bertelli Tells Repubblica

- MAR PL : Martifer Unit Plans to Halt Metal Structures Plant During May

- MCP PL : Impresa Says SIC Was Most Viewed Portuguese TV Channel in April

- KN FP : Natixis Investors Told to Vote Down CEO Pay by Glass Lewis, ISS

- NAS NO : Norwegian Air Nearer to Rescue Deal as Bondholders Support Plan

- NAS NO : Norwegian Air Got Lessors Support for Equity Conversion of $730m

- NOVN SW : Novartis Gets Positive CHMP Opinion for Enerzair Breezhaler

- NOVN SW : Novartis Granted FDA Orphan Drug Status for Cipargamin

- PSH NA : Pershing Square Holdings Apr. Net Performance +13.6%

- PNL NA : PostNL First Quarter Loss EU12 Mln Vs. Profit EU6 Mln Y/y

- 1913 HK : Prada April China Sales Rose Over 10%, Bertelli Tells Repubblica --> -2.39% in HK

- RBS LN : RBS First Quarter Impairments GBP802 Mln Vs. GBP86 Mln Y/y

- RCO FP : Remy Cointreau Closes Purchase of Maison de Cognac J.R. Brillet

- RNO FP : SUVs Get Parked in the Sea and Reveal Scope of Auto Glut

- ROG SW : Roche’s Covid-19 Antibody Test Gets FDA Emergency-Use Approval

- RR/ LN : Rolls-Royce Prepares to Cut As Many as 8,000 Jobs: FT

- RYA LN ; Ryanair Job Cuts, Iberia Loan: EMEA Industrials Wrap

- SAF FP : Safran Mulls Buying Small Suppliers, CEO Tells Le Figaro

- SPM IM : Saipem Gets Order Worth About EU280m for Baltic Pipeline Project

- SAN FP : Sanofi's Cablivi Gets Use Extension Recommendation in Europe

- SRP LN : Serco in Talks for U.K. Covid-19 Tracing Contract: Times

- GLE FP : SocGen to Provision 3.5B-5B Euros This Year, Reuters Says

- STM GY : Stabilus Second Quarter Adjusted Ebit EU31.1 Mln, -13% Y/y

- TKWY NA : Just Eat Board to Be Simplified, Non-Exec Members to Step Down

- TKTT FP : Tarkett Says Cyber-Attack Has Hit Some Operations Since April 29

- TEF SM : Telefonica to Cut Earnings Forecast: El Confidencial

- TEF SM : Liberty, Telefonica Brave Pandemic to Build $30 Billion U.K. Arm

- TEF SM ; Telefonica's Debt Pressures May Limit O2 UK Proceeds: React

- TIT IM : Elliott Cut Telecom Italia Stake, Voting Rights: Consob

- TSLA US : Tesla PT Raised to $680 from $440 at Morgan Stanley

- TKA GY : Cinven, Advent Seek Help in EU17B Deal for Thyssenkrupp: FT

- FP FP : Total Seeking to Sell Electricity in Australia: Regulator

- TUI LN : TUI Cancels Trips Through June 14, Expects Later Start of Season

- TUI LN : TUI Restarts Offering Trips and Flights Within China

- UCB BB ; UCB AGM Approves EU1.24 Per Share Gross Dividend

- VOW GY : Volkswagen Mexico Hopes to Restart Activities by May 18

- VOW GY : Volkswagen Says Lamborghini Prepares to Restart Production May 4

- WDI GY : Wirecard’s AllScore Fined $16 Million by PBOC Over Violations

Price crash provokes supply cuts but ‘all bets are off’ if second wave of pandemic hits

The co-founder of Mercuria believes the oil market has “turned the corner” after one of the worst months in its history.

Marco Dunand, who has helped build Mercuria into one of the world’s biggest independent energy traders, said the crash in US crude prices into negative territory in April served as a wake-up call for the industry, which had responded by “aggressively” cutting back output.

“There is a certain inertia to closing fields and wells . . . because there is a cost to close and reopen,” Mr Dunand told the Financial Times. “But I think the scare of Monday [April 20] made some people realise they were better off leaving oil in the ground.”

That crash saw US benchmark oil delivery prices briefly drop to minus $40 a barrel, as traders struggled to find storage space for a growing glut of crude. At the same time, oil demand was down by as much as a third worldwide because of travel restrictions and other measures designed to slow the spread of coronavirus.

Since then production cuts have increased while some big economies are easing lockdowns. However, the threat of the virus still hangs over the oil market, where prices have plummeted by 70 per cent since January.

“I think we have turned the corner,” Mr Dunand said. “But if we have a second wave of pandemic then all bets are off.”

Oil prices have started to edge higher in the past week — Brent crude hit $27 on Friday, rebounding from an 18-year low of below $20 a barrel the previous week.

Planned production cuts of up to 10 per cent of global supply by Opec members and their allies took effect Friday. Other countries such as Norway have announced their own curbs.

Analysts and traders also reckon around 3m barrels a day of North American output is being curtailed because of low prices and limited pipeline capacity. ExxonMobil and Chevron each announced shut-ins of up to 400,000 barrels per day on Friday, much of it from their US shale businesses. 

Mr Dunand, who has run the company from his house in the Swiss mountains during the crisis, said the oil market could be balanced as soon as June although it would take longer to digest the inventories built up in March and April as oil demand plunged.

“Now think about June. There are the Opec cuts — and who knows how much discipline there will be. Add that to North American and bits and bobs like Norway and there could be a reasonably solid 15m b/d cut. The question is what is demand for June? But putting all that together we should have a balanced market,” said Mr Dunand.

“A lot of the shale industry still needs $45 to be profitable. Maybe they are better off as part of a major [oil company] who can bring costs down below $40.”