RETAIL

Big Swedish Fish Gets Bigger

Klarna, the Swedish fintech giant that offers consumers buy-now-pay-later (BNPL) shopping options, announced yesterday it had raised another $1 billion at a $31 billion valuation. 

One of the earliest companies to the BNPL game, Klarna offers consumers the option to pay for an item online in installments rather than all at once. Klarna's closest American equivalent is Affirm, which went public in January and is currently worth ~$24 billion.

Why the BNPL hype? 

Klarna's style of financing is especially popular with younger consumers who don't have a credit card and appreciate the opportunity to spread out their spending. Roughly 20% of millennials used a BNPL service in 2020, nearly double the rate of Gen X, according to the WSJ. 

Department stores are taking notice. Last October, Macy's agreed to take a stake in Klarna in exchange for offering its BNPL service as an option at checkout. 

• But BNPL has put retail giants in a pickle. Companies like Macy's and Neiman Marcus still rely heavily on store- and co-branded credit card fees to pad their bottom lines, offerings that compete with BNPL options.
• The Macy's deal shows that old-school retailers are willing to sacrifice some of those dollars if BNPL gets more young people through the door.

To regulators, BNPL is kinda like tequila

It's fine in moderation. In Britain, where BNPL usage almost quadrupled last year, regulators are scrambling to draft rules to cover this unique form of credit lending. The target of their angst? Late fees. 

• If someone misses two payments, Klarna charges a penalty fee of up to $7, capped at 25% of the total purchase price. 
• That concerns regulators, since more than than 10% of customers at one bank that had used BNPL were already behind on their payments, according to the UK's Financial Conduct Authority.

Bottom line: Klarna's BNPL business is already active in 17 countries and has over 250,000 retail partners, but the company is looking to evolve into an all-in-one banking app. The startup offers a range of licensed banking services and recently rolled out consumer bank accounts in Germany.

GOVERNMENT

This Time, the Bill Is Doing the Splitting

A $15 federal minimum wage continues to divide lawmakers like mayo on fries. This past weekend, the House passed President Biden's $1.9 trillion stimulus package, which included a minimum wage hike. 

As soon as Wednesday, the Senate will vote on its version. It also includes $1,400 direct payments, $400/week in unemployment benefits, $350 billion for state and local governments, and funding for vaccine distribution and schools...but the $15/hour will be missing. 

It's a win for centrists

Like their House colleagues, Senate Republicans will likely unanimously oppose the bill. With the chamber split 50–50, Democrats can't lose a single vote.

Now that the wage increase is out, a handful of moderate Democrats who were skeptical of it are more likely to support the bill. If it passes, the House will need to vote again on a matching version.

Big picture: Pandemic containment and relief are Biden's top priority. This bill is a "test of his ability to unite Democrats in the Senate...and risks lasting damage to his influence should he fail," the AP writes.  

DEALS

Newsletter Writers Seeing Another SPAC Announcement

SPACs, or special purpose acquisition companies, did a record $109 billion in transactions globally in February, according to the FT. And through two months this year, SPAC activity (in terms of count) is already at 75% of last year's total, says Capital Markets Gateway. 

• Quick refresher: A SPAC is a shell company that goes public, raises money, then uses those funds to acquire a private company and, in doing so, take them public.
• Everyone from Paul Ryan to Shaquille O'Neal to Serena Williams is involved in one. 

The latest SPAC deal is Rocket Lab, a leader in launching small satellites into space. Tired of only being known for small rockets, the company said yesterday it's merging with a SPAC to raise funds and develop a rocket for heavier payloads, called Neutron. 

Zoom out: SPACs have been around for decades, but only in the last few months have they exploded in popularity as an alternative means to go public.

+ Further reading: Anyone who's anyone has a SPAC right now. (NYT)

SPONSORED BY H&R BLOCK

It’s Really, Really Time to Do Your Taxes

As proprietors of a daily e-newsletter, we’ve become masters at meeting deadlines. But if you aren’t (no judgment), we think it’s semi-urgent to remind you that tax season is well underway. 

Luckily, H&R Block’s team of seasoned tax pros are here to help—so allow us to drop their immense wealth of knowledge on you guys. (Seriously, Block guarantees your max refund—or your money back.)

With Block, you can do your taxes on your own terms. 

• Visit an office: Walk in, make an appointment, or just drop off your docs and go.
• Keep it remote: Send ’em a pic of your docs, and they’ll do the work. Just sign and approve online.
• Do it yourself: Block has tax pros ready to help, if you need it.

So if you’ve been really, really putting off your taxes, rest assured Block has some really, really good resources for you.

Learn how Block has your back this tax season.

WEALTH

It's a Great Day to Be Worth $49,999,999.99

One penny more and you would be facing an extra 2% tax under a new proposal from Dems including Sen. Elizabeth Warren. Billionaires would be hit with 3%.  

Warren's wealth tax proposal, a carryover from her run for president, would affect ~100,000 households and raise an estimated $2.8 trillion over 10 years, money its sponsors say could support child care, early education, and infrastructure. 

Wealth taxes are distinct from the income taxes you're probably filing right now. They apply to net worth, i.e., your physical assets (houses, cars, grandma's sapphire collection) plus intangible assets (stocks, grandma's new SPAC collection) minus debts (loans, mortgages, etc.). 

While many politicians agree the ultra-wealthy should pay more, some disagree about whether wealth taxes are the way to go. 

• Last week, Treasury Sec. Janet Yellen said a wealth tax has been discussed, but given "very difficult implementation problems," the Biden administration would rather look into increased corporate or capital gains taxes. 

Bottom line: The bill isn't expected to pass, even with Democratic control of Congress and the White House. But don't expect the party's progressive wing to stop trying. 

GRAB BAG

Key Performance Indicators

Quote: "We're sending a clear message to the entire industry that you either play by the rules or we will shut you down."—New York Attorney General Letitia James blasted the crypto sector, arguing it was ripe for "con artists and cheats." 

Stat: Yesterday, Apple said all 270 of its US stores were open simultaneously for the first time since the start of the pandemic. 

Read: If aliens exist, here's how we'll find them. (Nautilus)

WHAT ELSE IS BREWING

• Zoom stock shot up about 10% after hours following better-than-expected Q4 earnings. It posted 369% year-over-year revenue growth last quarter.
• Texas energy update: The state attorney general is suing Griddy, the electricity provider whose customers reported extravagant bills. And the state's oldest and largest power cooperative, Brazos, filed for bankruptcy. 
• California lawmakers reached a deal to fund school reopening for students up to the second grade.
• US manufacturing activity hit a 3-year high in February.
• Starbucks is adding Oatly's oat milk to its menu nationwide.

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GAMES

Oh, the Trivias You Can Trivia!

March 2 is the day Dr. Seuss was born.

So what to do for trivia? On this, we were torn.

After talking and arguing we finally said, oh! 

Can you name the Seuss characters depicted below?

ANSWER

A. Yertle the Turtle
B. The Lorax
C. Sam-I-Am
D. Fox in Socks 
E. Sally
F. Wocket in my Pocket