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    ‘Peak’ uncertainty: Evercore ISI predicts market turning point around Trump tariffs

    Market uncertainty should “peak” around the Wednesday tariff deadline, according to Evercore ISI.
    In a note this week, Julian Emanuel wrote investors should resist tariff angst and accumulate stocks.

    “All you need is a little less uncertainty,” the firm’s senior managing director said Monday on CNBC’s “Fast Money.”
    Emanuel compares the market pessimism to the March 2023 regional bank failures.
    “The mood this morning and over the weekend talking with clients and talking with colleagues is as negative as I can remember going back to when Silicon Valley Bank blew up,” he said. “We didn’t know the Fed was going to ‘take care of business.'”
    Emanuel’s bullish forecast comes as Wall Street wrapped up a negative quarter for the major indexes. The S&P 500 and tech-heavy Nasdaq just saw their worst quarterly performances since 2022.
    The Nasdaq is now 14% below its record high hit in December. Yet, Emanuel is finding opportunity.

    “We think you go back to the prior bull market winners in general: technology, communication services and [consumer] discretionary,” he said.
    They were the S&P 500’s worst performing sectors of the month and quarter. But at these levels, according to Emanuel, companies will want to do stock buybacks which would help boost prices.
    Meanwhile, he would avoid the recent leaders.
    “What’s interesting about today is that everyone basically moved their sectors in the direction of how the entire quarter was going,” Emanuel said. “You saw consumer staples outperform. You saw health care very strong. In our view, those are probably the places where defense has been hiding.”
    Health care gained 6% in the first quarter while consumer staples gained about 5%.
    Emanuel thinks the market will regain its footing. His S&P 500 year-end price target is 6,800, which implies a 21% gain from Monday’s close.
    “We don’t think you need a material clarity,” he said. “You need… the very, very extreme scenarios [tied to tariffs] becoming less possible.”
    CNBC’s Christopher Hayes contributed to this report.

    Join us for the ultimate, exclusive, in-person, interactive event with Melissa Lee and the traders for “Fast Money” Live at the Nasdaq MarketSite in Times Square on Thursday, June 5th.

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    Vaccine stocks fall after key FDA official resigns in protest of RFK Jr.

    Shares of vaccine makers Moderna and Novavax, along with a range of other biotech companies, fell after the resignation of key FDA official Peter Marks.
    Marks stepped down in protest of Health and Human Services Secretary Robert F. Kennedy’s skepticism of vaccines.
    Wall Street analysts raised concerns about what the move could mean for the approval of safe and effective medicines, but noted new FDA Commissioner Marty Makary has supported proven treatments.

    Rafael Henrique | Lightrocket | Getty Images

    Shares of major vaccine makers dropped on Monday after a key U.S. health official resigned in protest of Health and Human Services Secretary Robert F. Kennedy Jr.’s views on immunization.
    The departure of Peter Marks, the Food and Drug Administration’s top vaccine regulator, has raised fresh fears about whether the Trump administration will quickly approve and promote critical shots. In his position, Marks oversaw the introduction of Covid-19 vaccines and rules for the use of emerging treatments like cell and gene therapies.

    Shares of Moderna and Novavax both closed more than 8% lower Monday. Meanwhile, the SPDR S&P Biotech ETF slid nearly 4%.
    Some Wall Street analysts said Marks’ departure could undermine the FDA’s mission of ensuring safe and effective treatments reach patients in the U.S. That could put even more pressure on a struggling biotech sector.
    “Taking a step back, we view this departure as a significant negative for the BioPharma and Biotech sectors, as FDA’s independence rooted in sound scientific rigor is critical for their efficient functioning,” analysts at BMO Capital Markets wrote in a note Monday.

    Peter Marks, director of the center for biologics evaluation and research at the U.S. Food and Drug Administration (FDA), speaks during a Senate Health, Education, Labor, and Pensions Committee hearing in Washington, D.C., U.S., on Tuesday, May 11, 2021. 
    Greg Nash | Bloomberg | Getty Images

    In his resignation letter obtained by CNBC on Friday, Marks criticized Kennedy’s “misinformation and lies” about immunization. He said a growing measles outbreak that started in Texas came as a consequence of “undermining confidence in well-established vaccines.”
    “As you are aware, I was willing to work to address the Secretary’s concerns regarding vaccine safety and transparency by hearing from the public and implementing a variety of different public meetings and engagements with the National Academy of Sciences, Engineering, and Medicine,” Marks wrote. “However, it has become clear that truth and transparency are not desired by the Secretary, but rather he wishes subservient confirmation of his misinformation and lies.”

    The Department of Health and Human Services did not immediately respond to a request for comment.
    Kennedy, a prominent vaccine skeptic, has already taken steps that public health experts say could deter routine immunizations in the U.S. He has downplayed the importance of the measles, mumps and rubella vaccine and promoted unproven treatments to counter the measles outbreak. The Centers for Disease Control and Prevention is also carrying out a study into long debunked links between vaccines and autism, led by a researcher with a history of spreading misinformation about shots.
    Analysts at Leerink Partners wrote in a Monday note that the effect of Marks’ resignation on biotech and pharmaceutical stocks will depend in part on who replaces him at the FDA and whether Republicans in the White House and Congress start to lose patience with his approach. Other analysts also stressed that Marks is only one official at the agency and noted that new FDA Commissioner Marty Makary has a track record of supporting proven treatments.
    “Though many believe the Marks resignation is a very bad omen for the Healthcare industry and innovation at large, it may be a bit premature to cast too dark of a shadow on the entirety of Pharma and Biotech,” wrote Mizuho Securities analyst Jared Holz.
    — CNBC’s Angelica Peebles and Annika Kim Constantino contributed to this report More

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    Conservative cable channel Newsmax spikes more than 700% in first trading day on NYSE

    Cable channel Newsmax began trading on the New York Stock Exchange on Monday, and shares spiked more than 700%.
    The conservative TV news outlet has seen its ratings rise with the election of President Donald Trump and other prominent Republicans — although it still falls behind the dominant Fox News.
    Newsmax raised $75 million through the sale of 7.5 million class B common shares at a price of $10 a share.

    Fox News and Newsmax television studios are seen in the Fiserv Forum on the day before the Republican National Convention begins, in Milwaukee, Wisconsin, July 14, 2024.
    Joe Raedle | Getty Images News | Getty Images

    Newsmax went public on the New York Stock Exchange on Monday, as the conservative cable news network audience has grown after the election of President Donald Trump and other right-wing politicians.
    The network began trading under the symbol “NMAX” late Monday morning, opening at $14 a share after pricing at $10 a share. It soared more than 700% in volatile trading on Monday.

    Newsmax’s stock closed at $83.51 for the day.
    In September, Newsmax announced its plans for an initial public offering in early 2025. On Friday, the company said it raised $75 million through the sale of 7.5 million shares of Class B common stock at a price of $10 per share.
    A pure-play TV network IPO in the U.S. is a rarity, with Dealogic data showing there hasn’t been one comparable to Newsmax in recent decades. Newsmax’s IPO comes at a time when traditional cable TV has suffered as consumers flee the bundle in favor of streaming. Now, news and live sports nab the biggest audiences and most advertising revenue dollars.
    The debut also comes as the audience for right-wing prime-time content has grown with the rise of Trump and other right-leaning politicians in recent elections.
    Christopher Ruddy, the company’s founder and CEO, said Monday on CNBC’s “Squawk Box” that he saw an opportunity to join the mix since Fox Corp.’s Fox News didn’t have a competitor in the “center right market.”

    “I think there was a demand for more competition against Fox,” Ruddy said Monday. Ruddy founded Newsmax in 1998 as a digital offering before it became a cable TV network in 2014.
    While the cable news landscape is dominated by Fox News, CNN and MSNBC, Newsmax has grown its audience in recent years and is offered through most major pay-TV providers.
    Ruddy on Monday said that Newsmax is the “No. 4 cable news channel in the United States, right behind CNN.” Nielsen confirmed Monday that Newsmax ratings have “consistently” been in the fourth spot behind Fox News, MSNBC and CNN.
    Still, Newsmax’s audience has yet to reach the breadth of Fox News, according to Nielsen data. Between Dec. 30 and March 20, Newsmax had an average of 309,000 primetime viewers and 211,000 daytime viewers. Fox News attracted an average of nearly 3.1 million primetime viewers and roughly 2 million daytime viewers during the same period.
    Overall, Newsmax ranks in the top 20 among cable network average viewership in both prime time and daytime, Nielsen said Monday.
    “I think it’s a pretty big achievement for a 10-year-old, new cable company,” Ruddy said Monday on “Squawk Box.”
    As its popularity has risen, Newsmax has negotiated receiving licensing fees from cable TV providers. In its early days, Newsmax relied on advertising revenue. In 2023, it resolved a dispute with DirecTV — which led to it being dropped from the pay TV provider for a short period — after pushing to receive fees.
    As the company went public, Ruddy downplayed the pro-Trump leanings of Newsmax — which reached a $40 million settlement last year with Smartmatic over the network’s false claims that the voting machine company helped to rig the 2020 presidential election in favor of former President Joe Biden.
    “We believe we’re conservative with an independent news mission, and ask tough questions of the Trump administration,” Ruddy said Monday on “Squawk Box.”
    In a post on social media platform X on Tuesday, Ruddy said he received a call from Trump and that the conversation touched on various topics, including the company’s upcoming IPO. “I shared with Potus my new saying: ‘A rising Trump lifts all boats!'” Ruddy wrote. More

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    AMC bets on premium screens as Hollywood slate boasts big blockbuster titles

    AMC, the world’s largest cinema chain, is adding 40 Dolby Cinema theaters to is U.S.-based AMC locations through the end of 2027.
    The announcement comes just days after AMC revealed a partnership with CJ 4DPLEX to add 65 Screen X auditoriums and 40 4DX theaters to its theaters around the globe.
    The premium push comes ahead of a packed slate of blockbuster films due out in 2025 and 2026 from major franchises like Avatar, Star Wars, Jurassic Park, the Marvel Cinematic Universe, DC comics and Mission Impossible.

    People walk past an AMC theatre in Manhattan in New York City, U.S., February 25, 2025. 
    Jeenah Moon | Reuters

    Hollywood’s blockbuster slate is heating up, and AMC Entertainment is increasing the number of its premium screens to meet demand.
    The world’s largest cinema chain is adding 40 Dolby Cinema theaters to its U.S.-based AMC locations through the end of 2027. It marks a 25% increase in the number of the branded premium screens, bringing the company’s total number to more than 200.

    “Premium moviegoing is defining the modern box office,” said Kevin Yeaman, president and CEO of Dolby Laboratories. “In expanding our longstanding partnership with AMC, we look forward to providing even more audiences with access to the most immersive film experiences that you can only get at Dolby Cinema.”
    The announcement comes just days after AMC revealed a partnership with CJ 4DPLEX to add 65 Screen X auditoriums and 40 4DX theaters to its theaters around the globe.
    Premium large format screens, often referred to as PLFs, are elevated viewing experiences that come with a higher ticket price. The physical screens are often bigger than traditional movie screens or have auditoriums that feature higher-quality sound systems or seating options.
    Dolby Cinemas are specially designed auditoriums with plush, reclining seats and a combination of Dolby Vision and Dolby Atmos, which deliver crisp visuals and immersive sound. Screen X theaters feature a 270-degree panoramic screen that extends the movie image onto the side walls using multi-projection technology, and 4DX is a premium experience that features gyroscopic seats and practical effects like fog, water and wind that play in time with the movie.
    The films that benefit the most from PLF ticket sales have been Hollywood’s biggest blockbusters, as audiences want to see explosive action movies and dazzling spectacles in the most state-of-the-art locations. It’s why films like Universal’s “Oppenheimer,” Disney’s “Avatar: The Way of Water” and Warner Bros.′ “Dune” and “Dune: Part Two” captured a significant portion of the PLF box office during their runs.

    The 2025 and 2026 box offices are packed with blockbuster features from major franchises like Avatar, Star Wars, Jurassic Park, the Marvel Cinematic Universe, DC comics and Mission Impossible.
    “The expansion of this partnership is a powerful demonstration of AMC’s ongoing commitment to deliver this premium experience — sought out by filmmakers, studio partners, and our guests — to even more of our theaters and AMC moviegoers around the United States,” Adam Aron, AMC’s CEO, said in a statement Monday about the Dolby expansion.
    As of 2024, there were more than 950 theaters in North America that had PLF screens, a 33.7% jump from just five years ago, according to data from Comscore. These screens accounted for 9.1% of the domestic box office, around $600 million in 2024.
    Premium ticket prices average just under $17 apiece, according to movie data firm EntTelligence, an 8% increase since 2021, when the company first started reporting these figures.
    PLF receipts still represent a small portion of the overall box office, with most audiences seeing films on traditional digital screens. However, the PLF box office has grown 33% in just five years.
    Disclosure: Comcast is the parent company of NBCUniversal and CNBC. More

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    ‘Game over’ for ESG investing due to Trump backlash? Analysts say no

    ESG funds have suffered outflows for two consecutive years, partly due to political blowback.
    Investment analysts say “environmental, social and governance” funds are here to stay despite headwinds.
    Critics say ESG investing is akin to “woke” capitalism. Advocates say it delivers better long-term returns for investors.

    A mobile billboard rolls past the U.S. Capitol on May 10, 2023.
    Jemal Countess | Getty Images Entertainment | Getty Images

    Investors have pulled money from so-called ESG funds in recent years, amid political backlash, high interest rates and other headwinds.
    But analysts say the outlook and long-term investment thesis for the fund category, which stands for “environmental, social and governance,” are favorable.

    President Donald Trump’s agenda “isn’t ‘game over’ for ESG investing,” Diana Iovanel, a senior markets economist at Capital Economics, wrote in a research note on Tuesday.
    Demand for ESG investments “is here to stay” even in the face of political pressure, Iovanel wrote.

    ESG outflows amid ‘anti-ESG backlash’

    ESG investing is known by many names, such as socially responsible, sustainable, impact or values-based investing. Such funds allow people to invest according to certain values, like climate change or corporate diversity.
    Investors yanked almost $20 billion from U.S. ESG mutual and exchange-traded funds in 2024, after withdrawing about $13 billion in 2023, according to Morningstar.
    By contrast, investors poured $740 billion into the overall universe of mutual funds and ETFs in 2024, Morningstar found.

    “I don’t think we really expected something different, because of the anti-ESG backlash in the U.S. and the political environment there,” said Hortense Bioy, head of sustainable investing research at Morningstar.
    Critics call ESG a form of “woke capitalism” that sacrifices returns for the sake of liberal goals.
    Advocates argue that ESG investing positions investors for higher long-term returns because companies that adopt such practices are poised to be more resilient, and therefore more successful, than peers.

    Outflows follow years of steady growth

    Two years of consecutive outflows — in 2023 and 2024 — followed years of steady ESG growth.
    Investors have funneled a total $130 billion into U.S. ESG funds over the past decade, according to Morningstar. For example, investors pumped more than $50 billion into ESG funds in 2020 and almost $70 billion in 2021, a record high, according to Morningstar.
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    Despite outflows, overall ESG fund assets grew slightly in 2024, to $344 billion, due to market appreciation, Morningstar found.
    Investor demand also appears relatively high, especially among younger investors, analysts said.
    About 84% of individual investors in the U.S. are interested in sustainable investing, according to a 2024 Morgan Stanley survey. Roughly two thirds, 65%, of respondents said their interest had increased in the prior two years.

    Politics poses headwinds for ESG

    But the political backlash against initiatives underlying ESG funds has intensified “very quickly” since President Trump was elected, Bioy said.
    Within the first few days of his inauguration, Trump pulled the U.S. out of the Paris agreement, blocked subsidies for electric vehicles, pushed for more fossil-fuel production and started a “huge pushback” against diversity, equity and inclusion policies, Iovanel of Capital Economics wrote.
    The Republican-led Securities and Exchange Commission on Thursday said it would stop defending a climate-change disclosure rule in court. The regulation required a baseline transparency around climate risks and greenhouse gas emissions from certain U.S. publicly listed companies.

    There’s also uncertainty about the fate of the Inflation Reduction Act, a historic climate change mitigation law signed by President Joe Biden.
    Even before President Trump’s second term, at least 18 Republican-led states had adopted “anti-ESG legislation,” prompting some large asset managers to “pare back” their ESG efforts, Iovanel wrote.
    The number of ESG funds contracted for the first time ever in 2024 — to 587 from 646 in 2023, a 9% decline, according to Morningstar. That means asset managers made fewer options available for investors.
    “It’s very tricky for any asset manager now to be selling ESG products,” Bioy said. “They don’t want to draw attention.”

    Non-political headwinds

    ESG funds have suffered from non-political headwinds, too, analysts said.
    In fact, high interest rates have likely been more of a hindrance than politics, analysts said. High borrowing costs negatively impact sectors like clean energy more than others because they’re more capital-intensive, analysts said.
    Performance has also lagged in recent years. For example, less than half — 42% — of sustainable funds ranked in the top half of their respective investment categories, according to a Morningstar analysis of investment returns.

    It’s very tricky for any asset manager now to be selling ESG products. They don’t want to draw attention.

    Hortense Bioy
    head of sustainable investing research at Morningstar

    Underperformance in recent years is partly due to high interest rates, analysts said.
    Additionally, oil and gas prices boomed after Russia invaded Ukraine in 2022. The top 10 stocks in the S&P 500 that year were from the energy sector, for example. ESG portfolios that minimize fossil-fuel exposure looked like relative laggards as a result, analysts said.
    However, performance was “very good” prior to 2022, Bioy said.
    For example, the typical U.S. ESG stock fund beat returns of its peers by about 4 percentage points in 2020, according to a Morgan Stanley analysis. ESG bond funds outperformed by about 1 point that year, it found.
    “Any investment and any ESG investment are no different — they go through lows and highs,” Bioy said.

    ESG is investing, ‘not philanthropy’

    But it’s the long term, not the short term, where ESG investing is poised for clear outperformance, analysts say.
    McKinsey research found that companies with C-suite leaders “who chase growth without considering how their strategies could impact people, the planet, and their firm’s long-term sustainability” are less likely to “lead their companies to full growth potential,” the consultancy said in a 2023 analysis of the 10,000 largest global companies from 2016 to 2022.
    The goal of ESG investing is to reduce a portfolio’s long-term risk, said Jennifer Coombs, the head of content and development at the U.S. Sustainable Investment Forum, known as US SIF.
    Money managers who oversee ESG portfolios also don’t aim to sacrifice investment returns for the sake of pursuing an environmental or social agenda, Coombs said. Instead, they generally believe that investing according to ESG principles ultimately boosts risk-adjusted returns for long-term investors, she said.
    “This is investing,” Coombs said. “It’s not philanthropy.”
    “Sustainability takes a long time,” she said. “It’s long term. And that’s the whole idea.” More

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    After 20 years at the helm, Klarna CEO Sebastian Siemiatkowski faces his biggest test yet: A U.S. IPO

    Sebastian Siemiatkowski has been CEO of Klarna for 20 years. He now faces his biggest test yet with a U.S. IPO fast approaching.
    Siemiatkowski has grown Klarna into a fintech powerhouse and a brand that’s virtually synonymous with the “buy now, pay later” payment method.
    However, his entrepreneurial journey hasn’t been without challenges — and investors are likely scrutinize his track record in the leadup to Klarna’s IPO.

    Sebastian Siemiatkowski, CEO of Klarna, speaking at a fintech event in London on Monday, April 4, 2022.
    Chris Ratcliffe | Bloomberg via Getty Images

    LONDON — After 20 years in the role as Klarna’s CEO, Sebastian Siemiatkowski is about to face his toughest test yet as the financial technology firm prepares for its blockbuster debut in New York.
    Siemiatkowski, 43, co-founded Klarna in 2005 with fellow Swedish entrepreneurs Niklas Adalberth and Victor Jacobsson with the aim of taking on traditional banks and credit card firms with a more user-friendly online payments experience.

    Today, Klarna is synonymous with “buy now, pay later” — a method of payment that allows people to buy things and either defer payment until the end of the month or pay off their purchases over a series of equal, interest-free monthly installments.
    But while Siemiatkowski has grown Klarna into a fintech powerhouse, his entrepreneurial journey hasn’t been without its challenges — from facing rising competition from rivals such as PayPal, Affirm and Block’s Afterpay, to an 85% valuation plunge.
    Nevertheless, Siemiatkowski hasn’t taken those challenges lying down and the outspoken co-founder isn’t shy to challenge criticisms in the run up to an IPO that could value it at $15 billion.

    ‘Crazy enough’

    In October 2024, CNBC met with Siamiatkowski during a visit the Swedish entrepreneur made to London. For a businessman who’s faced a rollercoaster ride of ups and downs over his two-year CEO tenure, Klarna’s chief has a calm air to him.

    “Independently of all the cycles and everything we’ve gone through with the company, at any point in time I ask myself, do I still think that Klarna can become the next Google in size, that we can become a hundreds of billions dollar market company, or a trillion dollars,” Siemiatkowski told CNBC. “I still am crazy enough to think that’s achievable.”

    Once a pandemic-era darling valued at $46 billion in a SoftBank-led funding round, Klarna saw its valuation plummet 85% in 2022 to $6.7 billion as rising inflation and interest rates dented investor sentiment on high-growth technology firms.
    But the firm has attempted to rebuild that eroded value in the years that have followed.
    Klarna makes money predominantly from fees it charges merchants for providing its payment services, in addition to income from interest-bearing financing plans and advertising revenue.
    Financials disclosed in its IPO filing show that Klarna reported revenue of $2.8 billion last year, up 24% year-over-year, and a net profit of $21 million — up from a net loss of $244 million in 2023.

    Bullish on AI

    After the launch of OpenAI’s generative AI ChatGPT in November 2022, Siemiatkowski quickly pivoted Klarna’s focus to embracing the technology, and especially in a way that could slash costs and enhance the firm’s profitability.
    However, Siemiatkowski’s strategy and his comments on AI have also attracted controversy.
    Klarna imposed a freeze on hiring in 2023 as it looked to tighten costs. The following year, the company said that its AI chatbot was doing the work of 700 full-time customer service jobs.
    Klarna’s CEO then said in August that his company was able to reduce its overall workforce to 3,800 from 5,000 thanks in part to its application of AI in areas such as marketing and customer service.
    “By simply not hiring … the company is kind of becoming smaller and smaller,” he told Reuters news agency, adding that jobs were disappearing due to attrition rather than layoffs.

    Asked by CNBC about his views on AI and the upset they have caused, Siemiatkowski suggested he was “done apologizing,” echoing comments from Mark Zuckerberg about the Meta CEO’s “20-year mistake” of taking responsibility for issues for which he believed his company wasn’t to blame.
    Doubling down, Siemiatkowski added that AI “already today can do a lot of the jobs that people do — but I don’t want to be one of the tech leaders that stands on a stage and says, ‘Don’t worry about it, there’s going to be new jobs,’ because I don’t know what those new jobs are.”
    “I just want to be transparent and honest with what I think is happening, and I’d rather be open about that, because I know what these people, the tech leaders are saying when they’re not on public stages, and they’re not saying the exact same things,” he told CNBC in October.

    An outspoken CEO

    Siemiatkowski is no stranger to defending his company in response to criticisms, especially when challenged over Klarna’s business model of offering short-term financing for all kinds of things from clothing to online takeout.
    Last week, Klarna announced a tie-up with DoorDash to offer its flexible payment options on the U.S. food delivery app. However, the move was met with backlash from internet users, who said it risks saddling struggling consumers with more debt.
    One X user posted a meme showing personal finance pundit Dave Ramsey with the caption, “what do you mean you have $11k in ‘doordash debt’.”
    Siemiatkowski took to X to defend the move, saying that Klarna “offers many payment methods” including the ability to pay in full instantly or defer payment until the end of the month in addition to monthly installments.
    “DoorDash offers many products beyond food!” Klarna’s boss said on X in response to the criticisms. “I know we are most famous for pay in 4. But you can use a credit card at DoorDash as well.”

    In 2022, the outspoken entrepreneur stressed his company was “superior” to credit cards and “extremely recession-proof” after the firm laid off 10% of its workforce.
    As Klarna approaches its stock market debut, investors will likely be scrutinizing his track record and whether he’s still the right person to lead the company longer term.
    Lena Hackelöer, CEO of Stockholm-based fintech startup Brite Payments, is someone who’s worked under Siemiatkowski’s leadership, having worked for the company for seven years between 2010 and 2017 in various marketing functions.
    She expressed admiration for the Klarna co-founder — and pushed back on suggestions that leadership mismanaged the business during the pandemic era.
    “I never thought that they had mismanaged, which is somehow how it was reported,” Hackelöer told CNBC in a November interview. “I think that they were just very much focusing on growth — because that was the direction that investors were giving.”

    Rollercoaster ride

    Siemiatkowski admits the journey of building Klarna hasn’t always been rosy.
    Asked about the biggest challenge he’s ever faced as CEO, Siemiatkowski said that, for him, laying off 10% of Klarna’s workforce in 2022 was the toughest thing he’s ever had to do.
    “That was very difficult because I didn’t predict that investor sentiment would shift that fast and people would go from valuing companies like ours so high and then to something so low,” he said.
    “That’s obviously very difficult because, then you realize like, ‘OK, s—, I’m going to have to make a change. It’s not going to be sustainable to continue, and I need to protect the consumers, who are stakeholders in the company, the employees, the investors — I need to [do] what’s right for all of my constituents,” Siemiatkowski continued.

    Klarna is synonymous with the “buy now, pay later” trend of making a purchase and deferring payment until the end of the month or paying over interest-free monthly installments.
    Nikolas Kokovlis | Nurphoto | Getty Images

    “But unfortunately, it’s going to affect the smaller group, which happened to be about 10% of our employees.”
    Like other tech firms, Klarna grew significantly over the Covid-19 pandemic. In 2020, the firm grew its gross merchandise volume or the total value of all sales processed through its platform, by 46% year-over-year, to $53 billion.

    I think anyone who is a little bit sane, that’s not something you take light hearted, right? It’s a tough decision. It makes you cry. I’ve cried.

    Sebastian Siemiatkowski
    CEO, Klarna

    The company also onboarded hundreds of new employees to capitalize and expand on the opportunity it saw from government lockdowns’ impact on consumer behavior and the broader acceleration of e-commerce adoption at that time.
    “I think anyone who is a little bit sane, that’s not something you take lighthearted, right?” Klarna’s CEO said, referring to the layoffs. “It’s a tough decision. It makes you cry. I’ve cried.”
    However, Siemiatkowski stood by his decision to lay off workers: “I felt like I had an obligation to my constituents, everyone, all of these stakeholders, the company, and I think it was a necessary decision at that point in time.”

    The road to IPO

    Now, Klarna’s CEO faces his biggest test yet — taking the business he co-founded two decades ago public.
    “IPOs are risky for companies as share prices can fluctuate quickly,” Nalin Patel, director of EMEA private capital research at PitchBook, told CNBC via email. “They can be costly and lengthy to arrange with investment banks too.”

    Klarna earlier this month filed its prospectus to list on the New York Stock Exchange. The company hasn’t yet set a date for when it will go public, nor has it priced shares.
    If it succeeds, the outcome could catapult the net worth of Siemiatkowski and other shareholders including Sequoia Capital, Silver Lake, Mubadala Investment Company, and the Canada Pension Plan Investment Board.
    Sequoia is Klarna’s single-largest shareholder with a 22% stake. Siemiatkowski is the second-largest, owning 7% of the business.
    A positive IPO outcome would also lift the value of Klarna employees’ stakes, and potentially boost morale after a turbulent few years for the company.
    “It’s a balance between finding a fair value for existing investors looking to cash out and new investors seeking a stake in Klarna at a fair price. Overvaluing the company could lead to its valuation falling in the future. While undervaluing it may mean money has been left on the table for those exiting,” Patel said. More

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    Why JPMorgan, BlackRock want to ‘privatize’ more of your stock and bond money in volatile market

    Major banks and fund managers from JPMorgan Chase to BlackRock are creating more ETF products that tap into areas of the market typically associated with private banking and reserved for high-net-worth clients, such as private credit.
    Main Street investors are seeking new ways to insulate their money and grow it at the same time, which has led to more asset flows into premium income and buffered equity trading strategies in an ETF wrapper.

    From America’s largest bank to its biggest asset manager, Wall Street investment strategies once reserved for private banking clients are increasingly being offered to Main Street investors.
    In the midst of a market correction and ongoing uncertainty about the outlook for U.S. stocks and the global economy, JPMorgan Chase and BlackRock are among major players in the ETF space making bets that private strategies will continue to see greater adoption. That includes private credit as a mainstream bond portfolio holding, as well as equity income strategies that involved more complicated trading than traditional dividend equity funds.

    “Across our business we are looking at an incredible amount of demand from ETF investors who are looking for access to alternative investment funds, and we find managers are looking to push more into that wealth space to tap into growth to meet investors where they are,” Ben Slavin, managing director and global head of BNY Mellon ETF business, told CNBC’s Bob Pisani on last week’s “ETF Edge” from the Exchange ETF Conference in Las Vegas.
    “While mutual funds still make a ton of sense for retirement accounts, interval funds have been really successful in allowing for access to private credit,” Jay Jacobs, head of BlackRock’s US Thematic and Active ETF business, told Pisani from the conference. He was referring to a form of closed-end fund that has existed for a long time, and in which investors can access private credit, albeit with less liquidity than in an ETF.
    BlackRock, the world’s largest asset manager and biggest issuer of ETFs, acquired a provider of alternative investments research last year, Preqin, and Jacobs said the firm plans “more indexing of private investments.”
    The SEC recently approved the first private credit ETF, though not without some controversy.
    Lack of liquidity in private markets is a key issue for ETFs to solve as they attempt to grow the alternative investment side of the business. These kinds of funds, like Van Eck’s BDC Income ETF — which invests in business development companies that make private loans to small and mid-sized companies — have traditionally been illiquid but because of innovation in the ETF industry, more people are gaining access. 

    Another trend that is catching on within the ETF market amid the current volatility in stocks is active ETFs designed to offer downside protection while capitalizing on income gained from selling call options. ETFs including the JPMorgan Equity Premium Income ETF (JEPI) and JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) use this approach.
    Goldman Sachs Asset Management’s Bryon Lake said on a recent “ETF Edge” — he was among the leaders of the JPMorgan ETF business when JEPI was created and now runs a similar strategy at Goldman — “You sell that call, you get the premium for that, and then you can pay that out as income. As we look at this space, that’s one category that’s been evergreen for investors. A lot of investors are looking for income on a consistent basis.”

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    Funds like JEPI give investors exposure to sell call strategies.

    “There’s multiple ways to win with a strategy like this, as you can remain invested in the equity side and get the return, and capture that premium income which adds to a growing need and growing desire for income across all asset classes, and that’s a really effective way to stay in the market,” Travis Spence, head of JPMorgan Asset Management’s global ETFs business, said on last week’s “ETF Edge.”
    The expense ratio on the JPMorgan Equity Premium Income ETF is 0.35 percent, with a 7.2 percent dividend. The firm also offers the JPMorgan Nasdaq Equity Premium Income ETF with the same expense ratio, but with a dividend yield right now of 10.6 percent. “Its an effective trade off in a choppy market,” Spence said.
    Thirty years ago, an investor would have had to be a high-end client of a Wall Street private bank that would customize a portfolio in order to participate in the options fund strategy, said Ben Johnson, Morningstar’s head of client solutions and asset management. But now, “ETFs make it easier and cheaper to implement these strategies,” he said.
    Buffer ETFs run by Goldman and others, which cap both market upside and downside as a way to mitigate volatility in returns, are also gaining in popularity.
    “Clearly, when you look at the flows, there is demand for these products,” Slavin said. “Until recently, it was not really well known,” he added.
    The premium income and buffer ETFs can offer investors a way to stay in the market rather than run from it. But in a market that has seen steep declines of late, Jacobs says these strategies also offer a way for investors to get into the market with less fear of quickly losing money. That’s an important point, he said, with trillions of dollars sitting in money market accounts. “A lot of investors are using buffered products to step out of cash and into the market,” he said. “No one wants to be the one who held cash for five years and just put their money into the market and watched it sell off 10%.”
    After watching the S&P 500 already lose more than 10% of its value in a three-week period this month, ETF strategies designed to offer protection are getting more attention from advisors and their clients. But Johnson says investors should remember that there is nothing “new” about these investment strategies that have been used on Wall Street for decades, and investors need to weigh both the pros and cons of wrapping them in an ETF structure.
    Private credit ETFs are a good example, he said, since interval funds that trade under ticker symbols are already available, albeit in a less liquid trading format. ETFs have structural advantages to offer — an inexpensive way to gain access to what have long been “really expensive, super illiquid investments,” he said. But on the other side, to be approved by the SEC, the ETFs need to “water down a lot of what investors want,” he added.
    Nevertheless, Johnson thinks it may just be a matter of time before private credit ETFs are standard. “I think back to bank loans, circa 2011,” he said, when many “balked at ever wrapping it in an ETF. But now that seems fairly common place.” More

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    Trump’s “Liberation Day” is set to whack America’s economy

    EVEN HIS most ardent detractors would grant that Donald Trump is a masterful marketer. So it goes for the barrage of tariffs that he is set to unveil on April 2nd. The president has promised they will mark “Liberation Day” for America—a turning point when the country starts to claw back the respect and money that, he thinks, it has lost over the decades. More