Crypto News: This Barbie is the toy industry

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Apollo Global Management is working to shed its ruthless image.
Wall Street economists expect a rate pause from the Fed in September.
Uber posted operating profits for the first time ever.

Global trade needs a Barbie boost.

For more than a year now, the shipment of goods around the world has been in decline as households spend more money on travel and leisure than buying more stuff to add to the already large pile that they bought during the pandemic.

That's led to a slump for manufacturers. Some sectors, such as toy makers, have felt the squeeze as retailers were forced to run down existing inventory before they could place new orders.

"I can't wait for 2023 to finish," said toymaker Dave Cave, who runs Hong Kong-based Dragon-I Toys, one of the world's biggest manufacturers of toy dinosaurs. "Most retailers globally have had huge carry-over stock from 2022 and along with high inflation and mortgage rates hitting the roof, spending is down big time, especially on toys," said Cave, whose other products include Chatimal the Talking Hamster.

Mattel headquarters in El Segundo, California. Photographer: Patrick T. Fallon/AFP

Yet the Barbie craze could be the tonic that toy makers are looking for.

Mattel Inc. last week reported sales and profit that beat analysts' expectations even before the impact of Barbie (the movie) started to be felt. The company offered guidance that revenue from the Barbie line of products is expected to increase in the coming months. Chief Executive Officer Ynon Kreiz told my colleagues at Bloomberg News that inventory levels in the toy industry were down by double-digits in dollar terms in the second quarter from the first quarter.

That's potentially good news for the hundreds of manufacturers, mostly based across Asia, that make toys for the world's leading brands. China's manufacturing sector, dubbed the world's factory floor, has been hit hard by the trade downturn. The country's exports fell 12.4% in dollar terms in June from a year earlier, the second straight month of declines and the biggest drop since the pandemic hit in early 2020.

It's about this time of year that factories in China and across Asia are pumping out their holiday season orders to be ready for shipping to the US and Europe.

To be sure, orders for Barbie alone won't be enough to reverse the overall downturn in trade. But demand for the fashion doll, and Ken and everybody else, is bound to be an industry talking point as the months go by.

Federal Reserve Chairman Jerome Powell was even asked by the New York Times' Jeanna Smialek during his news conference last week for his views on how Barbie was affecting the economy. In the same way that Beyoncé and Taylor Swift are featuring in the inflation debate, Barbie could soon be a feature of global trade statistics. —Enda Curran, Bloomberg Businessweek

How do you know when you're in a recession? It's more complicated than you might think, which is why economists have praised the work of Claudia Sahm, who, in 2019, created what's now known as "Sahm's Rule." As Curran writes for the magazine:

It holds that the economy is contracting when the three-month moving average of the unemployment rate rises by 0.5 percentage point relative to the low point during the previous 12 months. Sahm's single-variable formula is the closest there is to a real-time recession monitor. By comparison, the eight-person committee at the National Bureau of Economic Research that's officially in charge of determining the start and end of a downturn considers at least half a dozen indicators and typically takes about a year to make a call.

But now, Sahm would like to be wrong. She would be delighted to be wrong.

"If it was ever going to break it would be now, and I would be so happy to see it break," says Sahm, 47. "I would love it to trigger and there not to be a recession." Her point being that if unemployment was to modestly increase without a broader recession being created, Sahm would be fine with that. "I won't be sad. I would be a lot more sad if the economy goes down."

But what does her rule mean for the likelihood that the US will actually enter a recession? Well, read the story. One thing that Sahm would bet on is the chance that in the future, the events that have transpired over the past few years will be studied by economists. More rules could be on the horizon, ready to be broken.

It seems, per Bloomberg Opinion's Shuli Ren, that China's crackdown on its housing market might be over. Official statements after a late July meeting didn't include language about housing developers and seemed to signal to be that home purchases should be encouraged. What does this mean? Well, don't get too excited just yet:

First, those hoping that lower mortgage rates or down-payment requirements will prompt a surge in first-home purchases or upgrades will be disappointed. In big cities, renting an apartment is still usually cheaper than servicing monthly mortgages. The biggest motive to buy has always been the hope that property prices will rise, but surveys show that people are pessimistic about values.
Second, the Politburo readout shows that China's housing policy will be decentralized, with city officials deciding on matters such as home purchase restrictions and maximum loan-to-value ratios. This means that developers are likely to scale back geographically. China Evergrande Group and other companies expanded for decades, hoping to achieve a kind of too-big-to-fail status.

As Ren puts it—boring might be better when it comes to Chinese real estate.

$32 trillion

That's the value of global commerce today, which is being transformed by war, climate, AI and more. See what this new world is starting to look like on the ground.

"There's no question I'm paying a ridiculous amount of tax for many, many years now, but hey, that's my problem, if I don't like it I can quit."

Dominic Ng

CEO, East West Bancorp

The number of millionaires in the California has surged at a time lower-income residents are leaving. Read the full story here.

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