Morning Brew Daily - Boeing’s Big Bounce Back & Ozempic Maker Loses its Lead

Episode Date: July 30, 2025

Episode 637: Neal and Toby chat about Boeing’s strongest quarter yet as it seems to have successfully turned the tides of its performance. Then, Novo Nordisk, the maker of Ozempic and Wegovy, are losing the lead to other competitors and copycat drugs. Also, the AI surge is also causing a surge in electricity bills for the locals who live around these massive data centers. Plus, Uggs are becoming popular footwear for men as celebrities help boost sales.  Build your Range Rover Sport at RangeRover.com/US/Sport  Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Listen to Morning Brew Daily Here:⁠ ⁠⁠https://www.swap.fm/l/mbd-note⁠⁠⁠  Watch Morning Brew Daily Here:⁠ ⁠⁠https://www.youtube.com/@MorningBrewDailyShow⁠ 00:00 - Tsunami warning 2:40 - Boeing bounces back 8:20 - Novo Nordisk loses its edge 11:50 - AI is making electric bills higher 17:50 - Uggs, they’re for men too! 21:00 - Sprint Finish! Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.com slash US slash brew AI. That's pwc.com slash us slash brewAI. Good morning, Brew Daily show. I'm Neil Fryman. And I'm Toby Howell. Today, Boeing and Starbucks are so back, with their turnarounds going better than expected. Then Ugs are making inroads with a surprising demographic dudes. It's Wednesday, July 30th.

Let's ride. Evacuations have been ordered in Hawaii, Alaska, California, and Japan after an 8.8 magnitude earthquake struck in the Pacific off of Eastern Russia early this morning. The quake, which is an absolute monster, tied for the sixth largest ever recorded, sent tsunami waves rippling across the Pacific, reaching Hawaii around 7.30 p.m. local time and the west coast of the U.S. just before 1 a.m. local time. tsunamis can travel over 500 miles per hour in deep water, allowing them to cross entire oceans in less than a day.

So far, Hawaii seems to have been spared major damage, with the tsunami warning downgraded to an advisory earlier this morning. But officials there and across the western U.S. are warning people to stay out of the water until the coast is clear. Yeah, this was a nervy night for a lot of people. In Hawaii, roads to higher ground were full of traffic. In Japan, workers were leaving the area around the Fukushima power plant, which was the one hit by a tsunami back in 2011.

And then up and down the west coast of North America from Canada, Alaska, Oregon, California. They were all keeping an eye on the waves as well. State officials in Hawaii did say that no major damage had occurred. California is still seeing some waves in the three foot range coming in right now. So hope everyone affected stays safe. And now a word from our sponsor, Range Rover. Neil, would you say you lead by example? I would definitely say that I'm an exemplary podcast host,

but if I'm looking for someone who really leads by example, I'm looking at the Range Rover sport. You know what, Neil? That is pretty wise of you. Each Range Rover sport model offers a dynamic, sophisticated take on sporting luxury. With dynamic air suspension, you can achieve agility control and composure. Take it off-road with adaptive off-road cruise control that monitors ground conditions and acclimates to the present terrain. The adaptive dynamics reduces unwanted body movements to deliver smooth and composed

handling. So, follow the leaders and build your Rangerover Sport at range rover.com slash us slash sport. That's Rangerover.com slash US slash sport. Lukah Donchich isn't the only one hitting the gym. yesterday, Boeing showed off a new physique with a strong earnings report that shows its turnaround is coming along even better than planned. Here's a short list of what's going well. The crisis-ridden plane maker delivered 280 aircraft in the first half of the year, the most since 2018. Its sales of nearly $23 billion was Boeing's biggest quarterly revenue in six years, and perhaps most importantly, it stopped bleeding cash. Boeing burned through $200 million last quarter, which was much less than expected and down from over $4.3 billion out the door in the same period in

2024. This hasn't happened by chance. Last year, Boeing hired aerospace industry veteran Kelly Orpurg out of retirement to be its new CEO. And while he hasn't earned the title Miracle Worker just yet, Orberg has provided a steady hand at the tiller. And a rah-rah message to employees, he said, we are just over halfway through 2025 and I'm pleased with our progress. Change takes time, but we're starting to see a difference in our performance across the business. Investors are noticing it too, sending Boeing shares up nearly 34% this year after their 32% plunge in 2024. The stock dipped slightly yesterday, though, despite the good news, possibly because Boeing is nowhere near out of the woods yet. Its production continues to be capped by regulators,

another strike looms, and its new jets are facing certification delays. Still, so far, Orkberg's earning an A plus. An A plus, I don't. know if an a plus yeah i'll give them a solid a though but if you look at what boing does which is make planes it's doing better at that they've increased their production to of their boeing 737 max planes to 38 planes a month that is the maximum amount that they're allowed to produce they're pushing the fAA to allow them to increase that up to 42 jets a month and then they've also increased production of their bigger 787 dreamliner as well and on the other side of things orders are coming in thick and fast. 420 more commercial jets ordered were reported in the second quarter. That was its best

quarterly sales since 2023. So if you're looking at both the supply and the demand side of things, Boeing is humming along quite nicely right now, which is not something we could have said even a few quarters ago. And you know how it's doing well is that for many quarters, it had been the punching bag of airline CEOs who were saying, give us the planes. We ordered these planes and you can't give it to us. You have all these mechanical issues there, safety defects going on at your factories. So they lined up one by one in the past few years to just lambast Boeing and its management. Now they're singing a different tune. Just look at Ryan Air CEO Michael O'Leary. You know, he is very bombastic. In May 2022, he told investors that Boeing management needed a reboot or a boot up the arse.

But last week, this is what he said, I continued to believe that Kelly Orrberg and Stephanie Pope, who is another executive, are doing a great job. I mean, there's no doubt that the quality of what is being produced, the holes in Wichita, the aircraft in Seattle, has dramatically improved. Southwest Airlines CEO, Bob Jordan, said something similar in an interview last month. They're working the right problems. The consistency of deliveries is much better. So airline CEOs are noticing their change,

and they're heaping praise on the new management at Boeing. And then Boeing's gotten pretty lucky, too, that it's been a major winner of the trade war. So far, the EU trade deal that was just an. big win for Boeing because they it spared planes in their parts from tariffs. And then if you go back to some of the other trade announcements that Trump has rolled out, ones with the United Kingdom, ones with Indonesia, that actually came alongside orders of Boeing plays. Remember the big Middle East trip earlier this year where Trump went over there

and pledged a lot, drummed up a lot of business for the United States. A lot of those were orders coming from Middle East Airlines. So even though there is a trade war going to on. Boeing seems to be skirting through and actually coming out stronger on the other side of it. Now, there are challenges ahead. One of them is the fact that workers in Missouri and Illinois, more than 3,200 of them, did vote to authorize a strike at certain plants that started a one week countdown to the start. There is a cooling off period where there will be no negotiations. So perhaps some more labor unrest at Boeing. Remember, there was a major strike last year. And you mentioned that they are currently capped at how many maxes they can produce. They can only make

38 a month. That is not what they want to get to. They want to get up to 42. So they need to work with the FAA get its blessing to up those production numbers because that'll bring in more money. And then finally, they have these two new variants of the 737 max, the max 7 and the max 7.10. Those are the smallest and largest variants. Those can't fly yet. They are, they need to be certified by regulators that is expected to slip into next year. So the timeline is being delayed Southwest Airlines CEO, Bob Jordan, after I mentioned that he said he heaped a lot of praise on Boeing. He also said, but also the fact that we're not getting these planes that we want is concerning

and it's going to slip into next year. So overall, I gave him an A plus. You gave him an A. Boeing is certainly on the mend. Let's move on. Oh, no, Novo Nordisk. The Danish drug maker had a rough one yesterday. At one point, shares were down 30 percent as the case.

company revealed it had fumbled its lead in the weight loss drug market. After being a trailblazer in the GLP1 space with drugs like OZempic and Wagovi, the company no longer feels confident it can keep its nose ahead of its rivals. And now expects sales growth of 8 to 14 percent down from the 13 to the 13 to 21 percent it had previously forecasted, leading to the stock wipeout. It's fighting off competitors from all angles leading to weaker sales of its medications in the U.S. The first thorn in its side is major drug companies like Eli Lilly, who quickly developed their own weight loss drugs that equal or exceed Wagovi in a Zembek. But the other Thorn is pharmacies making copycat versions of its products. Execs say that it is pulling out all the stops to crack down on knockoffs,

but despite U.S. regulators ordering an end to compounded versions of semi-glutide, the fakes are still hurting demand in the U.S. toss in a disappointing trial for its next generation of obesity drugs, and you get a recipe for its share price slimming down as well. Once Europe's biggest company, Novo Nordist stock, has shed over 42% this year. Neil Novo tried to paint a more optimistic picture saying that demand will rebound as copycat drugs get phased out, but investors are having none of it. Here's a list you don't want to be on. Friendster, Yahoo, MySpace, and Hydrox cookies.

What are all of those companies? They blew their first mover advantage, and that's exactly what, could be happening to Novo Nordisk. I mean, at one point, this company was the largest in Europe by market cap topping LVMH. Its market cap was higher than the entire GDP of Denmark, which is where it is based. Denmark's central bank had to keep rates low because of how big Novo Nordisk was and how much it was contributing to economic growth. It's seen Eli Lilly from Indianapolis blow right past in true race car fashion over there. And it's looking for answers. It hired a new CEO yesterday, Mazier, Mike Dowsdar, which investors did not like this pick. As you mentioned,

the stock went down 20 percent. And that is because this guy has spent more than three decades at the company. And if you look at what just what happened with Boeing, they hired an outsider. They took a guy who had been working in the aerospace industry out of retirement to come in and fix their culture and manufacturing process. Novo Nordisk is looking inside to a company and culture that is perhaps not producing innovation at the level of their rivals. and investors just hated it. They're still struggling from a key mistake they made when OZemPEC started to take over the world,

which was underestimating the demand when this drug hit the market four years ago. They didn't have enough manufacturing capacity to actually make it. And so the FDA went in and added Wagovi to its official shortage list, which opened the floodgates to all these copycats, flooding in and making knockoff versions of the drug brands

like Hems and Hers is one that is kind of made a boatloader. of money off of those knockoffs. Then also, one of their issues was that they had a previous weight loss drug that just didn't really do anything previously. Doctors were skeptical of it. Health insurance plans in the U.S. didn't cover it. So when Wagovi and Ozempic hit the market, Novenoris was like, I don't know, we've seen this before.

I don't think it's going to be a blockbuster drug. But then that obviously wasn't the case. It took only five weeks for Wagovi to reach a prescription rate that their previous drug had taken five years. So they were just completely caught off guard here. And the start of their troubles was the very fact that they underestimated the popularity of this golden goose that they didn't know they were sitting on. Americans' electricity bills are going up this summer. And big tech companies are saying, we're all trying to find the guy who did this.

Insatiable demand for data centers powering AI systems has caused utilities to raise prices for millions of people in recent months, sparking anger from residents who are asking, wait, why am I subsidizing the AI ambitions of a multi-trillion dollar corporation? Across the stretch of the eastern United States, monthly home electric bills have risen this summer, $26 higher in Trenton, New Jersey, $10 in Pittsburgh, and $27 in Columbus, Ohio. Utilities say a primary cause is companies like Google, Meta, Microsoft, and Amazon, requiring more electricity for the power-hungry data centers they're building all over the country. How much more electricity? Well, take a micro example. Generating a high-deaf image using an AI model requires as much energy as charging a smartphone to 50%. That's according to Hugging Face in Carnegie Mellon University.

And in a macro sense, electricity demand in the U.S. is projected to increase 2.5% each year through 2035, mostly because of data centers, according to the Bank of America Institute. That may not seem like a ton, but it is a paradigm shift in electricity consumption for decades, power demand has stayed completely flat in the United States. Now that it's rising consistently, utilities are being forced to boost their grids and expand capacity, costs that are now being passed onto regular households. Bottom line, the next time your mom yells at you for leaving the light on in the basement and juicing the energy bill, shift the blame by saying big tech is making it 10 times worse. So markets for electricity are usually pretty complex. There's a lot of factors

that are involved, like stuff from a weather to demand. But right now, everyone in the electricity market and saying, no, this is actually really simple. It is data centers. That is causing home bills to rise. There's this big auction that takes place from an power provider each year that basically auctions off capacity to utility providers. And last year, capacity prices at this auction were up 833%. This year, they're up 22% again.

So if you're looking at the culprit, it is these data centers. And it's a very delicate issue, though, because a lot of the states are kind of welcoming these data centers with open arms because politicians are looking at them as a source of a job. They are extending tax breaks to these facilities. Meanwhile, they're very people they're representing are saying, dude, you're bumping up my electricity prices here. So inherent tension between wanting to spur economic development, but also not jack up electricity prices. Really fascinating battle happening across state houses across the country. And you're right. Virginia is known as Data Center Alley in Northern Virginia, and they serve 70% of the world's internet traffic. There's as many data centers as there are McDonald's, it seems like there.

And Loudoun County, which is in Northern Virginia, the home of Data Center Alley, is seeing an economic boom from these data centers. For every $1 invested into data centers, it receives $26 in tax revenue. They're projected last fiscal year to bring in $895 million in tax revenue to its coffers. That's enough to cover most of its entire operating budget of $940 million. But at the same time, we're seeing these data centers. All the growth in them is leading to price increases for residents, and they're making their displeasure known. Now you're seeing a battle between utilities and tech companies at the state level, where utilities are going to Zuckerberg, not Bezos anymore.

Jassy and Pichai and they're saying, you guys need a foot more of the bill. We have to spend hundreds of billions of dollars upgrading our grid because of you guys. They're expecting, they're expecting to invest nearly $200 billion each year in 2025 and 2026 on grid upgrades. And they want the tech companies to share more of the pie. They're passing laws that are requiring this and big tech companies are pushing back, but they just don't have, they don't really have a say in what goes on in these lawmakers' rooms. So there's a really interesting battle playing out between economic development, AI, technology, real estate

happening all across the country right now, and it's leading to higher electricity bills at the bottom line. Up next, let's talk about clogs. Timothy Shalameh has been on such a generational run recently that everything in his orbit is on the come-up to case in point, Uggs.

The classic comfy, cozy boots that Shalemay Donned to multiple NBA playoff games have made inroads with a surprising demographic, the fellas. Last week, when U.S. parent company Decker's reported earnings, Ugs dominated with sales of the brand rising 19%, propelled by increased sales of men's products with not nearly double the growth rate. Uggs still sells the majority of its products to women, but has been making progress on breaking

into dude culture thanks to targeted collabs with celebs like Post Malone, as well as new styles built to catch men's eye. Case in point, the peak mod, an ugly on-purpose clog that looks like a cross between a crock and a grizzly bear that has been especially popular with the gents. The CEO of Decker said on an earnings call last week that men's specific clog was selling well across the world and that male consumers represented tremendous potential for the brand. Neil, things have been a little ugly for Decker's this year with its stock down 40% due to some tentative sales forecast, but it's found a furry bright spot in doodugs.

I am old enough to remember when Tom Brady tried to sell me ugs, and now they're moving on to Salome and Post Malone. looks like they're keeping up with the times. Yeah, Decker's is a very interesting company in the footwear space. They have Uggs, which counts for 51% of annual sales. And as you mentioned, they rose 19% sales from a year ago. They also have Hoka, which is possibly doing even better than UG. It accounts for 45% of this company's revenue.

And Hoka sales increased about 20%. So that's even growing faster than Ugs. So they have this two-headed beast right here with Ugg and Hoka. Both are some among the fastest growing brands in the entire. fire footwear sector. And both are kind of leaning into the current fashion trend DeJore, which is kind of ugly on purpose stuff. This peak mod is not, it leans into ugly core, like, on purpose. It is this cross between the in the house stuff that you would wear that you bring into the streetwear culture. And then if you look at Hoka as well, they kind of have that same

gorp core vibe, the ugly core vibe. They are these very chunky shoes, kind of pioneered that chunky look. So it's very bizarre, but ugliness is actually. powering both of these brands because it's clearly what's in it right now. And Decker's has not, has had a roller coaster of a year. It's not been straight up and to the right. I mean, in Q1, they were the worst performer in the S&P 500. They had until this really buoyant earnings report, their stock was down 48%. They issued far lower than expected guidance because of tariffs and tariffs were hugely impacting the footwear sector. But now they have seemed two got their mojo back. They're releasing these new ugs for men, and they're trying to create

ugs as a sort of full year thing that you wear. For many years, it's been associated with just winter and fall, those boots that keep your feet warm, but now they're leaning into sandals and other things that want to get, want to drive sales in the spring and summer. Do you have a pair? No. No pair. I have a pair of the Tasmans, which are kind of, they're clogs with a little bit of fur in there. You wear them around the house. My fiance got them for me for Christmas. And They're quite nice. I'm fully in on the Ugg bandwagon. You love saying Fiancé. Okay, let's sprint to the finish with some final headlines.

People get ready. There's a train merger a common. Following weeks of rumors, Union Pacific announced it would acquire Norfolk Southern in a mega railroad deal that would create the first transcontinental rail in the U.S. That means you could ship something from Los Angeles to Miami via train and never have it switch hands, something that's not possible now. The deal is worth $85 billion and the two companies will have a combined. bind market value of $200 billion, making it the largest rail merger in history and the largest

merger so far this year. But it's far from a done deal. Regulators still need to approve it, and they've historically taken a tough stance on railroad consolidation. Union Pacific CEO Jim Vena didn't seem concerned. Waxing poetic about his historic coast-to-coast rail line, he said, quote, it builds upon President Abraham Lincoln's vision of a transcontinental railroad from nearly 165 years ago and will usher in a new era of American innovation. Yeah, but not everyone is super pumped about this. Just look at the largest rail union in the country. They intend to oppose the merger, citing safety concerns as well.

And then also the fear here is that it could lead to price hikes for customers because if this were allowed to happen, two fists of rail shipping would go through a single company. That's going back to, you know, the monopoly days, the robber baron day. So that is the fear here is that we could end up with a, you know, too big of a company that could jack up prices for consumers. Starbucks missed sales in profit expectations again, but new CEO Brian Nicol is unfazed. During the earnings call yesterday, Nichols said that turnaround efforts at Starbucks are ahead of schedule with plans to unleash a wave of innovation coming in 2026. So far, those turnaround efforts have not manifested in the data. Sales dropped 2% in the third quarter.

the sixth consecutive quarter with negative sales growth. Still, bright spots exist if you look closely. The company has managed to cut the cost of building new stores by 30%. It's also is trying to make those existing stores better, adding more staff in a bid to improve customer service. And it saw its first sales gain in China since the end of 2023. Neil, there is some cautious optimism coming out of Starbucks, but turnaround sales is ways to go. Just like Boeing, Nickel, the CEO of Starbucks, said in proportion, remark that his turnaround efforts are ahead of schedule. Now, one thing I want to point out is you'll notice that Starbucks's profit plunged 47% in the last quarter, and you might be wondering

what the heck happened. Well, here's what happened. They brought in 14,000 store managers to Las Vegas for a two-day meeting, which is insanely expensive, and they try to do a big pep rally, and we'll see if that pays off, but it's certainly weighed on their profits. Yeah, they have a cold foam, protein drink, coconut water-based beverages, and better baked goods coming in 2026. Investors seem to be pretty thrilled with how this turnaround is going. As you mentioned, it is still a slog, but Starbucks looks to be getting back on the right track. ChatGPT is widely considered the best cheating tool humankind has ever created. Now it wants to help you with your homework instead of just providing you the answers.

Yesterday, OpenAI released ChatGPT study mode, a new feature that will teach you how to fish rather than giving you the fish. Using the Socratic method, study mode asks you questions, nudges you along with hints, and prompts self-reflection so that the material actually sticks. Think of it like flashcards on steroids. Sure, you can ask it to give you the answer, but it will refuse and push back several times, reminding you that working out a problem on your own will benefit your learning in the long run. Toby, the personal AI tutors are here.

Yeah, some media companies attended a demo of this product yesterday, and they watched the study mode get asked a question. teach me about game theory. And first the bot responded with, what's your overall familiarity with the subject? Then it introduced an overview. And then it paused to ask, hey, are you following me right now?

Like, are you getting these real word examples? And then another example involved the classic, like, train traveling out of speed math question. And the person who was doing the demo repeatedly asked it, just give me the answer, just give me the answer. And the study mode wouldn't do that. They instead were coaxing it to think it through themselves.

So right now it does, like there appears to be a sizable difference between the normal model, which will just basically turn out any answer you want and study mode, which wants you to help learn. So I wonder if teachers are breathing a sigh of relief saying, oh, my kids will actually do my homework or if they're really scared because now they are fully replaceable at the highest level. Well, if you can toggle it off pretty easily, I can imagine people are frustrated with this coaxing might just say, give me the answer already.

But I do think this is an existential threat to the human tutoring profession. I can imagine that down the line, two, three, four, five years that AI tutors will be a huge thing. Khan Academy has an AI powered tutor. It has 700,000 users across 380 school districts in the U.S. with ChatGBT, BT also launching at AI tutor. This is absolutely going to become a thing. Yeah, you're totally right. Actually, Open AI brought some students along, and one was saying how I feel so embarrassed and

vulnerable when I go to a TA for help. I much prefer to have this 24-7 always available tutor right in my pocket. Finally, a pioneer of hip swiveling has died. Joan Anderson, who coined the name for the Hula Hoop, pass away at the age of 101. Anderson was a former model who was visiting her home in Australia when she came across kids spinning circular wooden hoops around their waist. She loved it so much, she had a hoop ship to her home in the U.S.,

and soon after, dubbed it the Hula Hoop, named after the similar-looking Hawaiian dance. Anderson and her husband brought it to a toy exec, sealed a deal with a gentleman's handshake, and was promised, if this toy makes money for us, it will make money for you. But after Hulu Hoops began selling like hotcakes, none of that money materialized.

Anderson never got formal recognition for her role in the toy's popularity. It really wasn't until a 2018 documentary called Hula Girl that premiered at the Tribeca Film Festival that Anderson's story became more widely known. So, Neil, I guess what goes around does eventually come around. We would never have known about her in the inventor of the Hula Hoop if not for a chance meeting in a, restaurant in California. In 2016, her daughter was telling her co-workers about the story of how the Huluoop, of how her mom brought the Hulu Hoop from Australia obscurity to the four in the United

States and sold it to this toy company. Sitting right next to their table was Amy Hill, who was a filmmaker. And Amy Hill was like, wow, that is a really, really interesting story. So she made the documentary. It premiered at the Tribeca Film Festival, got shown in theaters around the world and you know people started to glom onto this story with so amazing that someone who invented this iconic toy we just don't know anything about her and her story hasn't been told and she got chipped out of potentially millions and millions and millions of dollars so pretty remarkable happenstance that we know anything about her meanwhile the company that she quote unquote sold the hula hoop to whammo kind of a kind of an epic run here they invented the super ball

the slip inside, silly string, and the frisbee, but you just don't know how many people they just stole it from. How do you invent the slip and slide? That is just a watery tarp, but I mean, all the power to simmer. I'm so bad at hula hooping, too. I just never... I beat you in the pre-show contest Monday.

There we go. I get it going, and then it's down by the ankles. Next thing I know. I think you go too fast. I'm too fast. All right, that is all the time we have. Thanks so much for starting your morning with us. Have a wonderful Wednesday. If you have any thoughts on today's show,

send a note to Morning Brew Daily at Morningbrew.com. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lute is our producer. Our associate producers are Olivia Graham and Olivia Lake. Yuchenoa Ogu is our technical director. Hair and makeup will not be sharing their toy idea until there's a patent. Devin Emery is our president and our show is a production of Morning Brew.

Great show today, Neil. Let's run it back tomorrow.