The CBOE Volatility Index (VIX) is bringing a dose of Hallowe’en to springtime.

Known as Wall Street’s “fear gauge,” the VIX has suggested in recent weeks that investors are spooked, for all the obvious, presidential-sized reasons. But last week’s relative calm suggests for now the only thing to fear may be the fear gauge itself.

Policy Options

The VIX measures expected stock market volatility over the next 30 days by using the prices of S&P 500 options — contracts that let investors bet on future stock movements. When the demand for options goes up, so does the VIX, suggesting more volatility in markets. When demand goes down, so does the VIX, suggesting smooth(er) sailing.

Investors thus use the VIX to assess market risk and hedge against potential losses. Since late February, the index has risen above its long-run average of 19.5, with markets whiplashed by President Trump’s herky-jerky rollout of tariffs. In midday trading during a selloff last Tuesday, it even briefly rose above 29, perilously close to the 30 threshold that is considered a sign of high uncertainty or, in layman’s terms, the trading floor freaking out.

While the VIX is still up 33% in the past month, it has relaxed in the last week and closed at 20.5 on Monday. Even with markets somewhat concerned about recession risks and taken off guard by Trump’s tariff policies, the relatively sedate week has given some comfort:

• Analysts at Morgan Stanley said Monday that they viewed the S&P 500’s drop to 5,500 on Thursday as indicative of its floor, suggesting they think the worst of the selloff is over. They also affirmed their year-end base target of 6,500 for the index, writing: “We ultimately think the market will focus on the positive aspects of the Trump policy agenda.”
• Morgan Stanley’s target suggests a 15% upside for the S&P 500. Koen Hoorelbeke, an options strategist at Saxo, noted Monday that policy-driven uncertainty was unique because it is a “man-made” risk, which “unlike structural financial crises… are seen as temporary and reversible.”

The other important thing to note about the VIX is that research has repeatedly shown it tends to overestimate the actual volatility of the next 30 days, meaning its flashes should be taken with a grain of salt.

A Bull and Bear Case: The volatility index reached its 2025 low point on January 24, four days after the start of Trump’s second administration. Things were calm then because many investors presumed the president would focus on promised tax cuts and deregulation, as opposed to trade-war threats that were seen primarily as a negotiating tactic. Well, so far that view has been way off the mark — just ask your Canadian, Mexican and European friends. But, a bull case remains: first of all, because Trump is likely to still pursue corporate-friendly tax cuts and deregulation that would fuel earnings, and because — as Hoorelbeke pointed out — he could simply back off from his tariff war (while nevertheless declaring a very, very big victory).

Pepsi cracked open an ice cold deal, announcing yesterday that it’ll purchase prebiotic soda startup Poppi for almost $2 billion. The deal also has built-in performance milestones that will require Pepsi to pay more if and when Poppi hits them.

Some backstory: Poppi’s a “Shark Tank” success story that was first made in a home kitchen and sold at farmer’s markets before being discovered and rebranded by Shark investor Rohan Oza. The low-calorie beverage is made with prebiotics, fruit juice, and apple cider vinegar and touts itself as a healthier alternative to traditional sodas. (Fun fact: Prebiotics are what probiotics eat, like whole grains and fruits.) PepsiCo said that as of last month, Poppi holds a 1% share of the bubbly soft drinks market.

Meanwhile, PepsiCo missed revenue expectations last quarter as North American shoppers skipped out on snacks and drinks. Beverage volume in the region fell 3%. Soda consumption’s been going flat for two decades, but new brands that claim to be healthier could fizz up the category.

Filling Up the Cooler

Prebiotic pop is on the upswing, and Olipop could be Poppi’s biggest rival. The prebiotic soda brand was founded in the same year as Poppi (2018) and was valued at $1.85 billion in its latest funding round last month. The functional beverage’s CEO said last year that PepsiCo and Coca-Cola were sliding into Olipop’s (figurative) DMs.

That was before Coca-Cola launched its own prebiotic soda last month: Simply Pop.

• Simply Pop is the next part of Coca-Cola’s plan to become a “total beverage company;” the fancy milk brand it bought in 2020, Fairlife, has been a hit.
• Celsius Holdings and Keurig Dr Pepper have also been padding their portfolios with promising new energy and wellness drinks.

But the so-called “functional” beverage sector could have a hitch: Customers aren’t sold on some of its health claims. A federal judge in California has been asked to sign off on a settlement worth up to $8.9 million in a class-action suit claiming the soda doesn’t contain enough prebiotics to meaningfully improve drinkers’ gut health.

Shake it Up: Functional beverages are poaching market share from other non-alcoholic options. The new-ish category now accounts for 10% of the wider industry, and its sales growth is speeding up. With traditional soda losing fridge space, it makes sense that major players like PepsiCo want to pop open new brands that appeal to shoppers seeking drinks that may be healthier than classic sodas.

It seems Affirm’s partnership with Walmart wasn’t on quite such firm ground, after all.

On Monday, the buy-now-pay-later (BNPL) firm saw its exclusive partnership with the retail giant fall by the wayside, after Walmart opted to team up with Affirm’s chief competitor, Klarna. The Swiss BNPL firm will now be facilitating installment loans for customers using the retailer’s consumer finance platform, OnePay. The coup comes just after Klarna filed for its US initial public offering.

The Bank of Walmart

Walmart’s on a clear mission: Make it as easy as possible for customers to spend, spend, spend. To that end, it has fully integrated itself with fintech startup OnePay (which was simply known as just “One” as recently as a month ago); Walmart is the majority owner of One and has invested hundreds of millions of dollars in it. Within the OnePay ecosystem, customers can earn cash back and other rewards on Walmart purchases, pay at checkout directly from their bank accounts, and take advantage of BNPL and loan installment payment plans.

Klarna’s takeover of that last one ends a roughly six-year partnership between Affirm and Walmart, which had been pretty lucrative for Affirm:

• Integrated payments services with Walmart accounted for a full 5% of Affirm’s gross merchandise volume in the second-half of 2024, an Affirm spokesperson told The Wall Street Journal on Monday.
• The service also accounted for about 2% of its roughly $229 million in adjusted operating income in the second half of 2024. OnePay says it is generating annual run-rate revenue of $200 million.

Share of Success: OnePay, fittingly, is getting some additional perks in the partnership. According to sources who spoke to CNBC, OnePay scored a deal sweetener that allows it to buy up to 15 million shares of Klarna at $34 a pop ahead of its expected IPO. According to a recent Bloomberg report, Klarna is targeting a $15 billion valuation when it debuts on the public market — way down from the nearly $46 billion valuation it carried back in 2021, but a healthy tick up from the just $6.7 billion valuation it had plummeted to by 2022. In its IPO filing on Friday, the company said it scored $21 million in net income off of $2.8 billion in revenue in 2024, up from a loss of $244 million on revenue of roughly $2.3 billion the year before.