Existing home sales, a day with Fed's Susan Collins: Catalysts

It's Friday, so the market (^DJI, ^IXIC, ^GSPC) is working extra hard for the weekend. Catalysts Hosts Madison Mills and Brad Smith crunch the numbers on the latest economic data — June's Purchasing Managers' Index (PMI) and May's US existing home sales — and explore the biggest themes driving equities.

National Association of Realtors (NAR) Chief Economist Lawrence Yun drops in to weigh in on the existing home sales print and the relationship between mortgage rates and the Federal Reserve's monetary policy.

JPMorgan Asset Management Global Market Strategist Jack Manley also explores market trends tied back to the market's interest rate sentiments.

Lastly, Yahoo Finance's own Jennifer Schonberger spent a day with Federal Reserve Bank of Boston President and CEO Susan Collins, shadowing the Fed officials as she met with business owners and community leaders. Catch the full exclusive interview with Collins here.

This post was written by Luke Carberry Mogan.

Video Transcript

It's 10 a.m. here in New York City.

Happy Friday, everyone.

I'm Madi Mills alongside Brad Smith to kick off.

Our show was dive into the catalyst moving markets.

Today we got a fresh read on the housing sector.

The latest data on existing home sales signaling continued pressure for the housing market is higher mortgage rates way on buyers.

And we're getting a fresh read on the economy and the Global Flash Us services and manufacturing the M I beating expectations showing the economy is gaining momentum will explore what this could mean for the F and in video is looking to call back its losses after pushing stocks to new heights this week with tech rally is still showing signs of fatigue.

We're going to break down.

Why that can't be the only catalyst to move markets to newer and higher highs.

But first some breaking news, the S and P Global US PM I composite this morning, we are getting in for June looking like it came in at 54.6 versus the 53.5 estimate here.

And that is a kind of a solid set of PM I figures the headline component of every aggregate is beating expectations here.

The services and composite readings hitting their highest level since April of 2022.

We see that yields are just being stocks fading a little bit off of those numbers moving further to the downside of.

We had seen a little bit of flatness negativity heading into the morning here but seen stocks pushing even further down.

Your S and P is down about 2/10 of a percent.

The NASDAQ is down 3/10 of a percent off of that data again coming in hotter than expected.

And it's really not surprising given kind of the activity components that we see in this print, we're seeing 10 year yield sort of coming back even further off of that 4.2% mark given some of that data that we got in this PM print under the hood.

Brad.

Yes, some context to this report as well, the improved business confidence for the year ahead notably in the service sector as well as renewed pressure on operating capacity from rising demand.

Meanwhile encouraging firms to boost payroll numbers for the first time in three months.

That is part of the overview in this release.

But to your point matty us, business activity growth accelerated to get this its fastest in 26 months in June.

According to this provisional PM I survey data from S and P global Signaling, a strong end to the second quarter.

Uh the service sector leading that upturn with additional support from manufacturing.

And they mentioned, albeit with the latter's recent revival, losing some momentum here.

So that's some of the context around this US services PM I data that we're getting out this morning a little bit than expected as you mentioned.

Yeah, that's exactly right.

Right.

Brad, we also got a fresh read on the housing sector.

Existing home sales slightly declining in May as the median sales price did climb to a record high.

That is according to the National Association of Realtors.

Now in the four major US region sales did slide month over month in the South but were unchanged in the northeast, the Midwest and the West as well.

You're looking at 4.11 million existing home sales for the month of May and again, that is a retreat of about 7/10 of a percent from April when it comes to those existing home sales numbers here.

So it's interesting, particularly given some of the data we've got earlier this week to kind of take a step back and look at particularly the inventory inventory rising to 1.28 million homes from a month ago.

And interestingly, first time buyers like this out of wealth, but 31% of total sales made up of first time buyers, all 28% investors 16%.

So that is interesting that we're seeing some more first time buyers heading into the space but still seeing a lot of all cash purchases, which indicates what type of individuals are able to purchase homes in this hire for longer environment.

Yeah, properties they're saying typically remained on the market for about 24 days in May.

That's actually down from just 26 days in April, but up from 18 days in May 2023.

So that's your year over year compared.

And then additionally, here looking at and this is potentially interesting to keep tabs on this all cash sales figure, accounting for about 28% of transactions in May.

That's unchanged from maple up from 25% 1 year ago.

And why do I bring that up because you've got even more of the higher end or high net worth individuals or households that are still looking at where those buying opportunities may be right now before you see a flood of people enter back into the housing market and the home buying market, especially with the prospect of potential cuts.

And so that is something that a lot of people still sitting on the sidelines for potentially here that continues to come up in many of our housing market conversations.

But again, here, I mean, the the key thing to take away here, the total existing home sales completed transactions including single family homes, town homes, condominiums, ultimately retreating by about 7/10 of a percent from a here in this most recent reading.

All right, we are going to get to a conversation about this data with Lawrence Young, the National Association of Realtors, chief economist and senior vice president of Research.

Lawrence.

Thanks so much for being with us just as we are getting this data in, as Brad was mentioning that headline down 7/10 of a percent from the prior month.

What sticks out to you about this data that we're getting in that you think kind of defines what we are seeing and what you're seeing in the broader housing market right now.

Uh Good morning.

Uh So the home sales decline of less than 1%.

I mean, that's essentially unchanged.

In fact, home sales have been stuck at that 4 million, little above little below that level for the past 12 months.

So nothing except related to home sales.

I mean, I'm a little frustrated that we are not seeing a recovery that's partly due to the delay in the rate cut decision by the Federal Reserve.

But what's striking is all time high in the median existing home price.

So we are now seeing some acceleration in prices, multiple offers are still happening in the marketplace, maybe one welcoming news, potentially a poor leading indicator in the future is we are getting more inventory.

So as more inventory begin to show up, maybe more consumers, recognizing there are more choices will consider reaching into the market.

Yes, it's really interesting Lawrence, especially when you are talking about the number of bids and, and multiple bids that are being made for properties here and especially how that cascades through to or at least translates through to the amount of days that properties remain on the market.

That edging just slightly lower, at least sequentially here.

But still up from what we had seen last year, what's your estimation or, or evaluation of how if we were to see rate cuts, we would see even more bidders hop into this market.

You know, the mortgage rates.

That is a highly influential factor for home buying.

We always see when the interest rate decline, there are more buyers coming into the market now.

Good thing that we have more inventory.

But I also believe when the interest rates are cut or steadily decline, we will actually have more sellers coming onto the market.

We know about the Golden Handcuffs people loving their 3% 4% mortgage rate, not willing to give that up.

But there are life changing circumstances where maybe perhaps people have reached the retirement age and they want to trade down maybe some young uh households where they have a starter home, but they need a larger size home now.

So they will put their starter home onto the market and all this job changes that's happening across the country.

People have different jobs, different location, but the same house which means that commuting patterns have changed.

So I think it's just inevitable inevitable that the strength of the Golden handcuffs was steadily weaken over time, but it will weaken even more when the interest rate declined.

So expect more buyers when interest rate decline, but also expect more sellers to come out to the market as interest rate decline.

Well, it's interesting that you point that out because there's this question out there about what interest rates are going to do to home prices.

And I'm curious from your perspective when we do at some point, get that initial cut from the Federal Reserve, what is that due to demand in the month after that?

And what is that due to prices just in that immediate reaction after that cut, you know, the mortgage market which is not directly controlled by the Federal reserve.

So the mortgage market will be moving ahead of the fed decision based on how they communicate when it is likely to be a rate cut.

So the movement of the mortgage rate will not happen on the day of the Federal Reserve decision, but rather maybe even a couple of months prior to that.

So for as a consumer, they should always be on the lookout as to what's happening on wait say this week, next week.

Uh And if the right property comes onto the market at their, within their budget, uh maybe just, you know, give it a try and to see whether or not they can get a little discount.

Uh Now we are, we have more inventory and certainly a good news for consumer.

Choices.

All right, Lawrence, we're gonna have to leave it there.

Thank you so much for joining us.

That was Lawrence Yun, National Association of Realtors, chief economist and senior vice president of research.

We are still keeping our eyes on video shares this morning, the chip maker feeling some pressure but on track for weekly gains depending on how the day goes for this stock.

It's hard not to find and video b shrugging off these recent losses.

Take a listen to what Patrick more, had more insights.

And strategy founder, Ceo and chief analyst had to say about it earlier this morning.

But I don't see any reason uh why this couldn't get to four trillion if we continue to see those positive signs uh down in the uh uh uh in the channel.

And we see keep seeing positive news coming out from NVIDIA with its partners.

And of course, he mentioning the partnerships with H PE Xa I from earlier this week, Brad, but one day to point that I haven't pointed out this morning yet, 58% of stocks gained yesterday, but the overall index fell.

That is just one example to put in a context, the degree to which in video has a choke hold on this overall market.

But to Patrick's point about kind of the partnerships and the other companies that are leaning into the A I space.

I wanted to point something out from it works this morning.

They have a note saying that the proportion of global companies planning to increase spending on A I over the next 12 months has slipped to 63% from 93% a year earlier.

If we do continue to get companies sort of decreasing their cap back on A I.

What is that due to an in video moving forward?

That might be why you have a Scott R saying, hey, it might be time to trim your exposure to tech and comp services a little bit given, you know what we might be and anticipating and the amount of concentration that we're seeing with NVIDIA.

Look, I mean, when you think about NVIDIA and what it has been to the markets thus far, I mean, it no doubt has been this market's Jason Tatum, if you will, if you're looking for an NBA reference out there, because why not?

We're just off of the NBA finals concluding.

But one of the huge things to think about it is it is both current returns and also future anticipated returns as well that we're talking about.

And that's where I think about some of the analogous kind of um uh energy from what the Boston Celtics have seen most recently.

But anything all these things considered now, it's the broadening, where do other players start to benefit?

Where do they see their stock rising as a result of it?

Jalen Brown saw that you saw that throughout the rest of the entire Boston Celtics team Drew Holiday, who of course, who has seen success, both with the Milwaukee Bucks and here with the Celtics, all these things considered.

I mean, it's the whole that NVIDIA is bringing with it and that's where it kind of gives me back into the sports realm.

I'm not even a Celtics fan.

I'm just excited to talk about that.

Plus the analogous nature of what NVIDIA has been able to do as of right now.

Abs I love, I love that.

You've always found a way to bring, you gotta paint a picture sometimes bring that NBA reference in Brad.

We love it.

All right, we are gonna have all of your markets action ahead right here on catalyst.

You're looking at a mixed picture but the move to the downside in the S and P and the NASDAQ, we cover all the market action.

After this shares of Denmark, the farm are moving to the upside here by over 17.5%.

After an early stage study of its weight loss drug.

Challenger produced positive results.

Yahoo Finance as I can.

He has more on what do we need to know about this?

Well, first, I need to emphasize it's not a G LP one drug.

So that's good news, I guess you could say.

But the announcing the phase one B results looking at 48 adults in this trial, they lost 8.6 percent of their body weight on average after 16 weeks.

And that is positive news.

That means that it is another option outside of what we know is the GOP wants a different type of product than what we know similar to an astrazeneca drug that is currently out on the market that is used for insulin production.

It's for diabetes users, but that is a shorter term, sort of like a short acting insulin in the sense that it, it works more quickly.

This is a longer term, one weekly injectable.

So it does prove to be a possible contender on the market for those G LP one injectables that we have now.

So good news again, early stages, we'll have to see if the results hold in bigger trials well, and it paints this broader picture leads to this question about kind of the competition that we are starting to see in the space you and I have spoken about some of the competitors that are kind of offering the compounded versions of the drugs.

You'll explain it better than I can.

How much of a head though is that for the companies that are offering the FDA approved version of the?

So the good news is that demand is still more than supply.

So right now, it's actually helping the market to get more people on to at some level, these drugs.

Now, I would say that of course, the FDA would tell you and these companies will tell you that they prefer you stick with the branded approved versions because some of these compounds are being approved or being allowed, rather not approved, allowed because of the shortages.

So the FDA has allowed these companies to make these compounds, but that doesn't necessarily uh confirm their safety or their efficacy.

I know some people have used them and said that they're, they're ok.

But I would just say that uh broadly speaking, demand is still outstripping supply right now.

So you are going to see some of these continue.

You're gonna see these online offerings.

I know Lily has been pretty strong and kind of going after some of these compounded products and some of these Medi Spas that are offering things that are not FDA approved.

So certainly stay stick with the brands, I would say.

Right.

Right.

And of great distinction.

The FDA proved and not FDA approved could be could be different formulas, all those kinds of things.

And thank you as always for bringing us your great reporting.

We appreciate it.

We're gonna have all of your markets action ahead right here on catalyst, the downside movement not looking as downy as it was previously, you're looking at about flat on the S and P 500 the NASDAQ just tipping over to the downside.

The dow is up so far in the trade.

Stay t you're watching Catalysts the latest manufacturing data out this morning showing signs of the economy, gaining momentum for more on what that could mean for future fed decisions in the broader market we have Jack Manly on said he is JP Morgan's Asset management, Global Market strategist, Jack.

Thank you so much for coming in studio with us.

Talk to me about this PM I data coming in above expectations.

How much of a driver is that going to be of the market?

I think markets seem to not be really thrilled with the PM I data, but I, I'm so frustrated Madison with this idea that good news is bad news.

Like I think that story is so played out at this point.

And I think the problem is that we have totally lost the plot on what interest rates are all about and we have convinced ourselves that the Fed wants a recession.

It does not, that is not in its mandate.

The Fed does not want to crush the economy if it does not have to.

We're not supposed to be rooting against the economy accelerating.

That is a good story.

And as long as the inflation data remain relatively uh in the right place, moving down to that 2% target at some point.

As long as the labor market stays reasonably hot, I think that the Fed is going to be able to do what it wants to do this year, which is ultimately cut interest rates.

So I'm not paying too much attention to the PM.

I si don't care that they beat.

I don't think it's a big story but that's what markets are all focused in on.

But let's talk about the kind of tenor of your tone on the Federal Reserve right now because it's, it's a fascinating point and I think it points to this question about the fed, losing the plot and not really having a driving thesis behind just, oh, we're data dependent.

But what does that actually mean?

Yeah.

II, I wonder if the FED is actually data dependent frankly.

I mean, I have II I don't think the FED has done a particularly good job of managing monetary monetary policy at all throughout this entire cycle.

And I think you have to rewind the clock a little bit right back to 2022 when they first started doing stuff.

But it blows my mind that quantitative easing lasted as long as it did.

That rate stayed at zero for as long as they did.

The US economy was fully out of the COVID slump by the fourth quarter of 2020.

Why were we remaining so accommodated for so long?

If the FED were truly data dependent, those rate hikes would have happened a year earlier.

The end of QE would have happened a year earlier.

The fed is not always data dependent.

They rely a ton on forward guidance, which is why they put out the sum of economic projections like the one that we we got last week.

So I'd rather than uh rather than trying to, like, game out exactly what the fed is gonna do.

I think it's really, really hard to get inside their heads and of course, we don't know what the data are going to look like over the next several months.

I'd rather focus in on some things that I think are a little bit more tangible.

A little bit more predictable as investors fed's probably not gonna hike this year.

Right.

So we can kind of put that off the table.

They seem more likely than not wanting to cut at least once.

I don't know if it would be more than that, but at least once this year, once they start the cut, they're not going to stop cutting immediately, they're going to continue to cut and wherever they land is going to be a whole lot lower from where we are right now and a whole lot higher than zero, which is where we were for basically the last 15 years that allows you to sort of put aside a lot of the short term uncertainty.

I don't know what's gonna happen to rates over the next six months.

I don't know what's gonna happen to the data over the next six months, but I do have confidence that rate rates will move lower over that longer term time period.

And that I think gives me a little bit more confidence in the outlook for stocks or bonds do cuts matter for the market specifically.

I think if the fed were to surprise and not cut, that's bad news for the market.

But at this point, things are all priced and especially after last week's meeting the fed kind of affirming what the market was already looking for.

25 basis points of cuts.

I think if the, if, if, if the fed does cut, let's call it September, October, November sometime, you know, end of third quarter, start of 1/4 quarter, maybe.

Um, the market's expecting that it's not going to be a party, right?

So then for us to continue to get new all time highs, all time highs, I know you expect earnings to broaden out.

But we're also seeing some signs of a growing economy.

How do you find that earnings growth amid the potential struggling consumer environment?

It is admittedly challenging.

I think we have to remember though that the consumer is in general, still pretty resilient and a lot of the problems that we see in this consumer right now are disproportionately focused on the lowest income individuals in this country, which is a shame, right?

I mean, you have to put that out right up front.

That is really too bad.

There are a lot of people out there that are getting completely left behind and that growing divergence between the the haves and have nots is I think one of the reasons why you've seen populism become so popular in Washington, right?

It's this idea of kind of bread and circuses because there, there are so many people getting, getting left behind.

But from an economic perspective, the US economy counts the dollars that are getting spent and not the heads that are spending them.

And I love anecdotal evidence.

I always share anecdotal evidence because II I get to see a lot in, in, in my travel for, for, for work.

And I'll tell you like the first class cabins on all the airplanes, they're sold out, the hotels are all sold out.

The restaurant reservations are impossible to get to, to get uh concert tickets are impossible to get.

Right.

NBA finals wrapped up last week.

Like can you imagine how much a ticket to one of those would have standing room only?

Right?

I mean, people are still spending, the consumer is still doing well enough and I think that helps to support this broadening out of the earnings story.

It's not gonna be everybody right.

There's still going to be winners and losers.

I think you got to be really, really careful.

This is not necessarily a beta trade.

I do think you need a little bit of security selection, a little bit of active management.

But to me, the biggest story as we look for that, that broadening out of earnings in the back half of this year is an emphasis on quality in your allocation.

This is not a style box story, it's not a sector story.

You are fishing in too big of a pond quality is what matters because that rate outlook that we just discussed, money is not free anymore.

And even once the fed starts to cut rates, it won't be free again that I think informs the decision and it's stock picking.

We're going back to that environment where you really to look at the fundamentals for each investment opportunity.

Jack, thank you so much for coming in.

Really appreciate it, great insights as always.

Thank you so much.

Well, the market is keenly focused on Fed moves and Fed speak.

We rarely get a look at the day in the life of individual fed members.

For more, we bring in our own, Jennifer Sha Burger who had a chance to sit down with Boston fed President Susan Collins earlier this week, Jennifer, thank you, Maddie, the Boston Federal Reserve invited me to spend the day with President Susan Collins earlier this week in her district in Lawrence Massachusetts, where she talked to local bankers, community developers and businesses gaining information first hand on the ground about the economy, information that she uses to gain an overall picture of the economy for decisions on setting interest rates.

Susan Collins is one of the most powerful people in America, the president of the Federal Reserve Bank of Boston, the first woman of color to hold that position belongs to a select committee in Washington DC that decides whether interest rates should go up down or stay the same.

We had an exclusive peek into how she makes decisions that influence what you pay to borrow money for a home car or what a bank pays you to open a savings account.

The FED has held rates at a 23 year high in the range of five and a quarter to 5.5% for nearly a year as it tries to tame inflation.

And right now, Collins and her colleagues at the Fed are wrestling with a vexing question.

Has inflation cooled enough from its pandemic highs to start cutting rates.

We're going to have to let the data really tell us when it's clear that we're sustainably on a path.

And that means looking at a wide range of data in June, the Federal Reserve opted to hold interest rates steady in the battle to bring down inflation.

It signaled just one interest rate cut this year.

Part of the decision for setting interest rates from information gleaned by regional fed bank presidents on the ground in towns and cities across their districts like this one in the first district which spans six states from Maine to Connecticut.

Collins monitors key data from the personal consumption expenditures index to the monthly jobs report for clues on the direction of inflation and the economy.

But it's also important for her to talk to local businesses, banks and consumers to see if the official data line up with what she's hearing on the ground a lot of the data is telling us what happened last month or last quarter.

And when we talk to people, they're telling us what they're seeing right now, they're telling us about their plans and how they see things evolving.

And so that's one thing that's important.

It also helps to kind of flush out what the data are telling.

We were invited to follow Collins around for the day in Lawrence, Massachusetts, a former textile town 28 miles north of Boston.

Seeing a renaissance Collins started her day hearing from a local group of bankers and real estate developers who discussed how investments made in refurbishing low income neighborhoods have fueled the local economy's redevelopment over the past 10 years.

Why don't we start with introductions?

Let's go around the table.

She went on to hear about the impact inflation is having on local businesses and the desire for lower rates.

The cost of living is getting out of control and the rent is something.

Let me tell you extremely out of control.

Extremely out of.

One of my key takeaways was really understanding some of the challenges that the higher inflation that we had endured is creating, especially for smaller businesses and the fact that labor markets are actually uh coming uh improving.

Um it's getting easier for people to hire and there's much less turnover.

Despite the fed's dual mandate of promoting maximum employment and stable prices, inflation has been the greater focus for the fed as it's opted to hold interest rates steady while other central banks have started cutting rates after a scare earlier this year, that inflation may be stalling or re accelerating in the first quarter.

The latest readings confirm prices aren't accelerating but may be moving down slower than thought it's inflation.

We're, we're all consumers at the end of the day, we all buy food at the end of the day.

And our biggest challenge over the past three years has been.

How do we provide a high quality product at a price that people are willing to pay?

The data suggests an economy with demand and supply coming into better balance, which is what's required in order to restore price stability.

But this process may just take more time than previously thought.

It's too soon to tell whether inflation is durably on a path back to 2%.

What Collins and her colleagues watch closely is the fed's preferred inflation gauge the so called core personal consumption expenditures index.

It showed inflation grew at 2.8% year over year as of April.

A level unchanged from March.

Another measure of inflation, the more popularly cited consumer price index on a core basis rose 3.4% in May cooling from the 3.6% increase seen in April and 3.8% in March.

Both are still above the fed's 2% target.

Jonathan Isaacson is CEO of GEM line, a business based in Lawrence which prints custom logos for companies on a variety of swag from bags to hats and even coolers.

Gem is one of the largest employers in the city.

And Isaacson says he hasn't been able to push through price increases to customers.

The time of being able to just hand off price changes is now over from our perspective during COVID, we did pass through a number of price changes and everybody understood it today, things seem to have normalized and people just aren't accepting it anymore for economists.

That's one of the first indicators that inflation is likely to gradually come down.

I think that data that we have seen recently in terms of CP I, in terms of the producer prices, it is consistent with an economy that in an orderly way is becoming better aligned.

But we also first quarter saw news that was more disappointing and the inflation numbers in particular, but other data as well, those monthly numbers are really volatile.

The volatility is still quite elevated.

And so I do think we have to be patient, Collins and her fed colleagues don't expect to lower rates until they gain greater confidence that inflation is moving sustainably toward their 2% target.

Is September too premature to think about cutting rates.

Are we looking at something later in the year?

More like November, December?

I think we're going to have to let the data tell us.

So it seems to me that there are very plausible scenarios.

Um where we um you know, later in the year it would be appropriate if we see strong continued good news on inflation and an economy that is aligning.

Are you looking at one or two rate cuts at this point?

Given where things are?

I could imagine scenarios that would be consistent with both.

I mean, I, I think that as I look forward, um my view of how much easing might be appropriate this year has uh been reduced.

As I looked at the data, Collins is also watching for any signs of a slowing economy which would help the argument for lower rates.

The official data indicate the economy may be cooling growth in the first quarter slowed to 1.3% from three 0.4%.

But on the ground in Lawrence, Julie Thurlow, Ceo of reading Cooper Bank and chair of the American Bankers Association says the economy looks resilient based on demand for loans outside of housing.

I'm optimistic that we, that a soft landing is in our future.

We still see demand, consumers are still spending.

Um interest rates are high, but I think it's more of a structural problem that we have as far as housing is concerned.

Collins says she sees a solid economy overall that's showing healthy signs of cooling.

What I see in the statistical data is certainly evidence that the economy is coming into better balance.

There's been some slowing in demand, but an economy that's still solid, but it's still quite mixed.

There are differences across sectors, there are differences across regions and what I heard today, it's very consistent with that in the sense of um some firms that are still seeing quite strong demand and others where they are seeing consumers being um you know, a bit more cautious in terms of their spending.

What's the risk that in the quest to gain confidence that inflation is dropping, sustainably back to 2% that you hold rates at current levels so long that you sow the seeds of a recession.

So the risks are absolutely two sided and both sides of our mandate are top of mind for me.

So I do think that there is a risk that if we held too long, we would see more slow down than we need.

And that's something that I watch carefully, you know, II I think that labor markets are still strong.

I think they are not overheated the way that I would have described them earlier, but continuing to watch what's happened across a range of indicators in that space is also important in terms of the timing that will be appropriate to change the stance.

So the soft landing still in place.

Well, I continue to be that realistic optimist, optimistic that gonna bring that inflation down, but we're going to do it amid a labor market that stays quite healthy.

And um you know, lots of uncertainty around that.

But I still see that possibility as being very much the path that I believe and hope we're on.

My big thanks to Susan Collins in the Boston Federal Reserve for the opportunity to learn firsthand and share with the public what fed officials do to make decisions that really affect each and every one of us.

Maddie Jennifer.

Thank you so much for bringing us the fantastic conversation and for also getting access to uh Susan Collins, Boston fed president for the full day.

It was really wonderful to see uh your reporting work at hand there.

Appreciate it.

We're gonna be right back.

We're gonna be right back with more right here on Yahoo Finance.

Stay tuned.

Do you know what the highest grossing film of 2023 was?

It is actually Barbie, which grossed almost $1.5 billion at the box office.

I contributed a couple dollars to that our very own Brian.

So he went to the Can Lion Festival in France this week and sat down with Mattel CEO, you know, cries to discuss how the company plans to continue expanding its IP beyond the toy aisle.

Take a listen on, first off.

Thanks for joining us and then secondarily congrats on your award, the entertainment person of the year here at Can Lyons.

Uh You must be incredibly proud.

Well, thank you, Brian.

Great to be here with you.

And yes, I'm very honored and humbled and happy to receive this award, on behalf of everyone at Mattel who had so much to do with our incredible journey over the last few years.

This isn't your first rodeo here at Cannes Lions at this point in Mattel's life.

What brings you here and then what are you hoping to achieve?

We came here as a team of people from Mattel to interact and engage with partners in the creative community.

Mattel at the core is a creative company driven by innovation and we very much look forward to continue to evolve our brand messages and continue to transform the company as we really embrace creativity and celebrate the appeal of our brands around the world.

I just want to acknowledge the obvious.

We we're on a beach uh at the pier can lions, the Yahoo beach house, we have an umbrella here, it started to rain, so bear with us as we have this conversation.

It's just the reality of the French Ri area.

Um How should investors think about your company?

Now, at this point, I see you at this event.

A lot of creators here.

A lot of media folks is Mattel, a media forward company.

Mattel is a leading global toy and family entertainment company.

As the owner of one of the most prolific portfolio of Children and family entertainment franchises in the world.

We have a unique opportunity to both continue to grow within the toy aisle and our core toy business that is performing well gaining share.

And last year we had the highest share gain ever in the history of the company in the US and continue to capture value outside of the toy aisle through entertainment.

And this is not just movies but also television, live events, consumer product and merchandise, digital experiences, music, and other verticals that are all driven by big franchises, big brands.

And this is very much what we bring to the table in a world where everybody is looking for big franchises that really elevate and pierce through the clutter market with unlimited content, unlimited ubiquitous distribution.

Everybody is looking for big I big brands and you have it.

So what does that portfolio look like as you try to capitalize on the major success of Barbie.

How many films and TV shows do you have in development?

We've announced 16 movies in development with some of the most creative partners in Hollywood.

And we are very excited about some of these projects.

All of these projects have a unique opportunity.

We recently announced Masses of the Universe that will be released in June of 2026 from my time.

So that's an exciting project.

This will have a theatrical distribution.

It's with Amazon as a partner, but it will also have a theatrical distribution.

We recently announced Monster High, another one of our big franchises in partnership with Oscar winning Akiva Goldsman as well as universal as a distributor.

We have American Girl in development with Temple Hill, which is a great producer and Paramount Studios and Temple Hill produced the Twilight series of very prolific creators.

And the partnerships are really exciting in terms of the opportunity to take our brands and reimagine them for in theatrical distribution and uh and big, big movies.

I'm just going to hold this umbrella here momentarily.

It is what it is.

Should investors think that every piece of content that you put out there is going to be a home run and how do you manage expectations?

Yes, we are not saying that every movie will be the next Barbie, but we absolutely intend to apply the same approach, the same methodology of collaborating with leading talent, amplifying their creative vision and infusing brand purpose and cultural relevance into all of our projects.

And this is very much what defined the Barbie movie, the success of the movie of course was about a creative collaboration, the ultimate creative collaboration, but it was really driven by the strength of the Barbie brand and the purpose and the cultural relevance that Greta Gerwig brought into this into the picture, of course, with incredible cast and a great story.

But the foundation is a very strong brand that has a large built in fan base and the same approach, the same methodology will be applied to all of our projects.

Our brands have a built in fan base.

And while not every movie would be the next Barbie, the opportunity can come from anywhere.

It doesn't need to be a big brand that will drive success.

So we and of course, by taking multiple shots on goal with different partners, different creative executions, different distributors, each movie has its own path to be successful.

And for Mattel, a movie doesn't have to reach the same level of box office success for that to have a commercial impact.

And so we are very excited by this slate.

It's a portfolio approach, a portfolio strategy and you will see how it unfolds in the coming years.

Is it hard to compete for eyeballs?

And I bring this up because I was talking to Kevin Mayer over at candle media and he has a whole bunch of content coming out too and he's focused on taking his company to a whole other level content led, but there's only so much content that could be out there.

We just at some poor some point of of saturation.

I think what Mattel brings to the table is a very strong portfolio of heritage beloved brands that are societal that have cultural impact, that already have a large built in fan base that go back two and even three generations.

And that is very unique.

And if you look around very few companies, if any have the quality and strength of the brand portfolio that Mattel can play with and we have a lot to play with and a lot to play for.

And Barbie was an obvious example, but it's not just about Barbie and not just about movies because brands resonate in culture in a way that very few franchises do.

And what is unique about brands is that the fans that follow these brands, they have an emotional connection with our franchises and that elevates your starting point.

So when we take a project to the market, we don't have to build it from scratch and create awareness and build this relationship.

It's already there.

And once you have that in place with strong creative collaboration and of course, great experiences, great stories, great movies, great television series, great narratives, you can create things that stand out in a crowded market.

And the point is that in a world of so much competition for share of mind, unlimited offering of content and ubiquitous distribution, the importance of big brands is higher than ever.

And this is exactly the opportunity that we have and what is unique about where our journey is that we also have a toy business that is profitable.

We expect it to grow and continue to grow and gain share.

And this is foundational because once you have that established, you can of course continue to grow and expand outside of the toy aisle with that strong foundation.

No other host is holding an umbrella.

I just want to make, I just, I just want to make that point only for you.

No, no, no, it's OK. No, you are a distinguished guest.

You're the entertainment person of the year I can line, you cannot hold this umbrella.

What is, how concerned are you about?

We've talked about this in the past, but it's something that I've been thinking a lot more here on the ground the past week.

How concerned are you about the end game for linear networks?

Of course, I'm sure you've seen the difficulties of Paramount ABC is dealing with challenges at its linear networks because of streaming.

What's that end point?

Is there a breaking point?

The world is evolving and technology is clearly having an impact, not just on distribution platform, but also in the way people consume content and how to engage with it.

And of course, screen time is higher than ever except that it comes in different forms and the importance of entertainment is higher than ever.

And as the owner of the underlying rights of your intellectual properties, we have the opportunity to capture attention and, and engage with fans wherever they spend time.

And our job is to find and engage with consumers and fans wherever they are.

So the fact that you own the underlying rights as opposed to having to license rights for a particular medium, gives us the opportunity to continue to engage and commercialize our properties outside of the tow aisle in exciting ways in new and exciting ways.

Lastly, uh you don't win an award like you're winning here.

Um If you're not working your butt off uh over the course of decades for those uh on Yahoo finance that may not be familiar with your career path and trajectory.

How did you get this job?

Well, I, I was on the board of the company and was offered an opportunity to come in and lead it initially as chairman and then as, as CEO at the time when the company was going through a transformation, and we've been very focused on continuing to grow growing our, our toy business and you follow the story.

So you've seen the turn of our toy business, our category structure, the strength of our brands, how we continue to win share and lead with innovation, continued innovation of our product and the journey for Mattel as an IP company, a company that is based, the strategy is based on the strength of our portfolio of IP, how that continues to evolve and how we start participating in other verticals.

And we've been at it for years.

We are now at the inflection point where our entertainment offering is starting to come into its own fruition.

And you will see more and more projects, movies, television, series, parks, digital experiences and games.

You're not beyond the inflection point.

You still see yourself as is Mattel still a turnaround or you're beyond that, we are not in turnaround, but we are at the point where our entertainment strategy is coming to fruition.

We're still early in the strategy even though we had some very strong success and and clear showcases for the potential of our IP the potential of Mattel films, television, digital parks and the other opportunities we have digital, we have a very successful digital partnership with Neti for mobile games.

And there are multiple examples whether it's Parks or the new television series that we recently launched on Netflix for Hot Wheels, that has been a top 10 series on Netflix in 69 countries in its first week.

So we are executing very, very successfully in each of the verticals where we participate.

Now, it's about scale.

The question used to be, can your brands translate to opportunities outside of toys?

Then the question was, can you do that?

Do you have the experience and the capabilities now is can you do more of it?

Not whether your brands do it or you can do it, but whether can you do more of it?

And of course, we can and of course we are now it's about scaling it and this is exactly the stage we're we're at and very excited by the opportunities ahead.

Well, good luck on your journey.

Let's get you out of here because I actually think it's gonna start to lightning soon.

Uh Michel chairman uh and our cries, thanks for always making time for yow finance.

Uh We'll see you soon.

Canada is reportedly repairing tariffs on Chinese s to get more in line with us and eu policies.

That's according to exclusive reporting from Bloomberg News, Yahoo finance is Rick Newman has the details for us.

What do we know?

Right.

China looks set to do what the United States and the European Union have done, which is impose a set of tariffs on Chinese electric vehicles imported into the country, effectively raising the price of those imports.

Uh so that they don't undercut domestic models dramatically.

So uh the United States President Biden recently did this uh and those tariffs basically are around 100%.

So it doubles the price of the import in c sorry, in Canada, they're talking about uh an a tariff of around 48%.

So that would be about half of what it is in the United States.

And um you know, countries and um and blocks such as the eu they can raise or lower, lower these tariffs based on what happens.

I think if, if you have a 48% tariff on Chinese electric vehicles, as Canada is considering it's still possible China could import those vehicles, the importers would pay the tariff and those vehicles are so cheap to start with.

They might still be competitive in the in the domestic market.

Some analysts here in the United States have said it's possible that even with 100% tariff coming into the United States, Chinese electric vehicles still might might be comparably priced to other models or even a little bit cheaper.

And there's, there's a real debate here because from a green energy perspective and, and, and for addressing climate change, you want the most rapid adoption of green energy technology, you can get such as electric vehicles and the cheaper the products are, the faster the uptake rate will be.

So there's a trade off here.

We're going to adapt over to TV, slower if we keep the cheapest vehicles out of the market.

But look, I mean, domestic politics is powerful in all of these countries and when it comes to protecting something as important as the domestic auto industry, whether it's in Detroit, in Germany, in France or in Ontario, Canada, the pressure is on the politicians to do it.

The pressure is certainly on Rick.

Thank you so much for joining us.

Happy Friday.

Have a great weekend.

See you coming up.

We've got wealth and dedicated to all of your personal finance needs are very young.

Brad Smith is gonna have you for the next hour.

So stay tuned.

Have a great weekend.