Despite President Donald Trump's rash of tariffs spooking the markets, consumer and investor activity seems to be trending in the right direction. With companies like Klarna, Google and Bakkt dominating the headlines, here's what investors should know.
Data published in March by Capital One, Discover and Synchrony found that 30-day-delinquencies in credit card payments have dropped month-over-month from 4.39% in January to 4.33% in February — fueling analyst predictions that the trend will continue when compared with year-ago figures.
Bank stocks have performed less admirably following Trump's tariff policies, however, unnerving executives worried about the transitive cost burden placed on consumers that could fuel inflation.
"The uncertainty surrounding these tariffs and potential retaliations … remains the biggest economic risk moving forward," Larry Adam, Raymond James' chief investment officer, told American Banker.
The KBW Bank Index, which according to Nasdaq tracks the performance of 24 top institutions, was pegged at $140.59 on Feb. 6, prior to President Trump's announcements regarding tariffs on imports from China, Mexico, Canada and the European Union. The index has trended downward following the policy announcements and was marked at $123.35 on March 21, according to MarketWatch.
Some bankers are more optimistic than others. In speaking at the RBC Capital Markets Financial Institutions Conference this month, Brian Willman, head of corporate banking at the $157 billion-asset Regions Financial in Birmingham, Alabama, said some of the bank's commercial clients have expanded product lines to weather rising import costs.
Investors are keeping a close eye on Swedish payments firm Klarna and its much-anticipated initial public offering, which is expected to hit the market in the next few weeks.
That hasn't stopped the company from entering a collaboration this month with the Walmart-backed consumer finance app OnePay, which would situate Klarna as the sole provider of buy now/pay later loans for Walmart customers. Klarna reported a net profit of $21 million in 2024.
Other noteworthy market moves include how subprime credit card debt fits in the Capital One-Discover merger equation, Citi's $14 billion question of what to do with greenhouse gas-focused funding, Google's cybersecurity play and more.
The duel between Affirm and Klarna over Walmart BNPL business
Capitalizing on its plans for an initial public offering, the Sweden-based Klarna wrested control of Walmart's buy now/pay later business from competitor Affirm this month — a move that Affirm Chief Operating Officer Michael Linford called "an attempt [by Klarna] to gain some IPO marketing."
Klarna announced the partnership with the consumer finance app OnePay on March 17, positioning the firm as the exclusive provider of BNPL loans for Walmart shoppers. OnePay is linked to the mega-retailer's financial technology division.
"It's significant that a non-U.S. company could get the largest retailer in the world to switch from a U.S.-based company," Ross Carmel, partner and securities attorney at Sichenzia Ross Ference Carmel, told American Banker.
Is subprime credit card debt a silver bullet for Capital One megadeal?
A key deadline for Capital One Financial's $35 billion play for Discover is fast approaching, but the companies' positions in the subprime credit card debt market have created new hurdles.
Members of the Department of Justice highlighted both Discover's and Capital One's outsize presence in the subprime card markets as potentially damaging for other players in the space, and leaves both banks with a possible downsizing on the horizon, according to a recent Capitol Forum report.
"The core challenge [subprime credit card sellers] face is, at the first level, finding a buyer," Brian Riley, who leads payments and credit research at Javelin, told American Banker. "The second is: How deeply would it get discounted, and will it be a material loss to do that? And the economy … really suggests you'd have to discount that headwind."
Citi ordered to retain $14 billion in climate grants
U.S. District Judge Tanya Chutkan ruled on March 18 that Citi cannot return roughly $14 billion in funding for greenhouse gas reduction projects back to the federal government.
The bank is in the middle of a lawsuit filed by the Climate United Fund, the Coalition for Green Capital and Power Forward Communities, three nonprofit organizations that got specialized funding from Citi, which allege that the attempted termination of the Greenhouse Gas Reduction Fund was illegal. The Environmental Protection Agency and its administrator Lee Zeldin are also named as defendants.
Chutkan sided with the nonprofits in her decision to grant a temporary restraining order against Citi, mandating that the bank provide the plaintiffs with allegedly-owed funding and preventing it from moving the money out of the nonprofits' accounts. Her justification was that the grant recipients have "carried their burden of showing that they will suffer imminent, irreparable harm" unless the bank is prohibited from returning the money.
Google doubles down on cybersecurity in $32B purchase of Wiz
Google's parent company Alphabet said on March 18 that it plans to acquire cybersecurity startup Wiz in a $32 billion all-cash deal.
The agreement, which would see Wiz become a part of Google Cloud, is slated to be the largest acquisition by the company since the 2012 purchase of Motorola Mobility for $12.5 billion. Wiz would help Google bolster the security of cloud products and meet the needs of clients with multiple cloud service providers.
"Enabling more companies to prevent cyber attacks, including in very complex business software environments, will help organizations minimize the cost, disruption and hassle caused by cybersecurity incidents," Thomas Kurian, CEO of Google Cloud, said in a statement.
Bakkt stock falls after Bank of America, Webull Pay cancel contracts
Following the news that executives at Bank of America and Webull Pay decided not to renew their commercial agreements with Bakkt, the digital asset and payment fintech's share prices fell by more than 27% on March 18.
BKKT stock closed out the day's trading on March 17 at roughly $13, according to Yahoo Finance, but opened at roughly $8.80 the following morning. Stock prices ended the day at $9.30 but have since rebounded.
BofA's agreement with Bakkt is slated to end on April 22, while Webull's will terminate on June 14.
Bakkt's 8K filing with the SEC stated that the bank accounted for about 16% of the company's loyalty services revenue in the year ended Dec. 31, 2023, and about 17% in the nine months ended Sept. 30, 2024.
