Episode summary
How Low Will Mortgage Rates Go? Plus, e.l.f. Beauty | Barron's Streetwise
Barron's Streetwise
· · Hosts: Jack Bary · Guests: Tarang Amin
Summary
E.l.f. Beauty’s stock has been volatile because investors are trying to gauge how much tariff pressure and price increases will affect demand. Tarang Amin says the company is still seeing strong momentum, with a business built around inexpensive, fast-moving products sold through Target, Walmart, Ulta, Amazon, and elfcosmetics.com. He says the brand’s edge is rapid product development, social media feedback, and a model that lets it bring prestige-like items to market at a fraction of the price.
Amin says e.l.f. has about $1.3 billion in net sales today and can more than double that to past $3 billion over the coming years. He points to color cosmetics, skin care, and international expansion as the biggest growth opportunities, while Olivia Tong of Raymond James argues the stock’s selloff partly reflected elevated expectations and tariff worries. Tong says e.l.f. still looks healthy, with a low average price point, heavy advertising, and room to keep gaining share.
The mortgage discussion was more constructive on rates than many homeowners might expect. Andrew Scizarowski of Morgan Stanley says mortgage rates could be 100 basis points lower over the next 6 to 12 months because the Fed may cut more aggressively than markets expect and mortgage spreads may compress. He says agency mortgage-backed securities currently offer unusually wide spreads versus Treasuries, creating an attractive yield opportunity for investors even as home affordability remains strained.
Key takeaways
- Tarang Amin says e.l.f. Beauty can more than double sales from about $1.3 billion to past $3 billion by expanding in color cosmetics, skin care, and international markets.
- Amin says e.l.f. wins by moving quickly on product ideas from social media and selling prestige-style items at much lower prices.
- Olivia Tong says e.l.f. still looks fundamentally strong, but the stock had gotten ahead of itself as tariff fears and fast-money buying lifted expectations.
- Andrew Scizarowski says mortgage rates could fall 100 basis points in 6 to 12 months if the Fed cuts faster and agency MBS spreads tighten.
- Scizarowski says agency mortgage-backed securities look attractive now because spreads are unusually wide versus Treasuries and technical pressure has distorted pricing.
Notable quotes
“I could see a scenario over the next 6 12 months where I I think mortgage rates could easily be 100 basis points lower than they are today”
“We're the number one brand amongst Gen Z, but we're most known for is still making the best of beauty accessible to every eye, lip, and face”
“We feel in the coming years we can more than double that, get past $3 billion”
“I think you have a couple of things to think about with respect to this stock now”
How the episode opens
I could see a scenario over the next 6 12 months where I I think mortgage rates could easily be 100 basis points lower than they are today. Why? Well, because I think the Fed's going to cut a little more aggressively than the market's pricing in, but also think that mortgage spreads will compress from here as well.
Hello and welcome to the Baron Street Wise podcast. I'm Jack How and the voice you just heard is Andrew Scizarowski. He's the strategic income portfolio manager at Morgan Stanley Investment Management.
And in a moment, he'll explain what's next for mortgage rates and why for investors, mortgagebacked securities look attractive. We'll also look at the wild ride recently in shares of E.L.F. Beauty and we'll hear from that company's CEO and a top Wall Street cosmetics analyst.
Listening in is our audio producer, Alexis Moore. Hi, Alexis.
Hey, Jack.
I'm going to do my best here. I'm going to put on a brave face. I do have a mild burn on the tip of my tongue.
I got uh I got too aggressive recently with some corn on the cob. What happens is you you pull it out of boiling water and a corn on the cob will hold its heat for a long time. But, you know, corn's delicious.
So, there's always a it's always a difficult standoff where you got to wait long enough to not burn yourself, but you don't want to wait too long cuz you can't wait to get into that corn. And I didn't wait long enough. But I'm going to push through.
Please don't call me a hero. Now, I want to talk about E.L.F. Beauty.
You are familiar with this company's products, correct?
Yes. E.L.F. eyes, lips, and face.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- mortgage rates
- mortgage-backed securities
- home loans outlook
- housing market
- e.l.f. beauty stock
Companies and tickers mentioned
- MS
- ELF
- Morgan Stanley
- e.l.f. Beauty
Watch the episode
Watch “How Low Will Mortgage Rates Go? Plus, e.l.f. Beauty | Barron's Streetwise” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Barron's Streetwise
-
America’s Debt Reckoning: 5 Paths Forward | Barron's Streetwise -
AI’s Big Payoff? Apollo’s Top Economist Doesn’t See It Yet. -
Does Show Business Still Work? | Barron's Streetwise -
The Disruption Scorecard | Barron's Streetwise -
Spooky Agents, Cable’s Second Death, and Stock Picks | Barron's Streetwise -
Buybacks, Bond Doubts, DRAM, and T-Rex | Barron's Streetwise
Barron's Streetwise, this episode and its artwork belong to Barron's. Octagon is not affiliated with the show; this page is an independent summary.
