Boeing’s Big Bounce Back & Ozempic Maker Loses its Lead

Summary

Morning Brew Daily – Episode Summary

Title: Boeing’s Big Bounce Back & Ozempic Maker Loses its Lead
Host/Authors: Neal Freyman and Toby Howell
Release Date: July 30, 2025

---

1. Massive Pacific Earthquake and Tsunami Alerts

The episode opens with a significant news update about an 8.8 magnitude earthquake that struck in the Pacific off eastern Russia early in the morning. This quake, one of the largest ever recorded, triggered tsunami waves that reached Hawaii by 7:30 PM local time and the U.S. West Coast by just before 1 AM. Neal Freyman provides a detailed account:

"Tsunamis can travel over 500 miles per hour in deep water, allowing them to cross entire oceans in less than a day." ([00:59])

Despite the initial chaos, Hawaii has been largely spared from major damage, with tsunami warnings downgraded to advisories. Officials across the affected regions, including Japan and the western United States, are urging caution and advising residents to stay out of the water until conditions stabilize.

Toby Howell adds:

"California is still seeing some waves in the three foot range coming in right now, so hope everyone affected stays safe." ([01:43])

2. Boeing’s Impressive Turnaround under New Leadership

Boeing has been making headlines with a strong earnings report, signaling a robust turnaround under its new CEO, Kelly Ortberg. Neal highlights several key achievements:

"Boeing 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." ([03:00])

Ortberg’s leadership has also significantly reduced cash burn, with the company burning through only $200 million last quarter compared to over $4.3 billion previously. Investors have responded positively, with Boeing shares rising nearly 34% this year after a previous decline.

Toby elaborates on operational improvements:

"They've increased their production of the Boeing 737 Max to 38 planes a month, the maximum allowed, and are pushing the FAA to raise it to 42." ([05:15])

Despite these positive trends, challenges remain, including potential labor strikes and certification delays for new 737 Max variants. Nonetheless, airline CEOs like Michael O’Leary of Ryanair and Bob Jordan of Southwest Airlines are now praising Boeing’s improved performance:

"I continue to believe that Kelly Ortberg and Stephanie Pope... are doing a great job." ([05:00])

3. Novo Nordisk's Struggles in the Weight Loss Drug Market

Contrasting Boeing’s recovery, Novo Nordisk, the Danish pharmaceutical giant, faced a tough day as its shares plummeted by 30% after the company signaled it might lose its lead in the weight loss drug market. Neal draws parallels to tech companies that lost their first-mover advantage:

"Friendster, Yahoo, MySpace... that's exactly what could be happening to Novo Nordisk." ([09:33])

The company's flagship drugs, Ozempic and Wegovy, are under pressure from competitors like Eli Lilly and counterfeit versions available through pharmacies. Additionally, a disappointing trial for a next-generation obesity drug has further dented investor confidence, leading to a 42% drop in stock value this year.

Toby discusses operational missteps:

"They underestimated the demand for Ozempic, leading to FDA-shortlisted Wegovy and a flood of copycats." ([10:47])

In response, Novo Nordisk has appointed a new CEO from within the company, but investors remain skeptical about the potential for innovation and recovery.

4. Rising Electricity Bills Driven by AI Data Centers

A pressing issue highlighted is the increase in U.S. electricity bills, attributed largely to the surge in demand from data centers powering AI technologies. Neal provides concrete figures:

"Across a stretch of the eastern United States, monthly home electric bills have risen this summer... $26 higher in Trenton, $10 in Pittsburgh, and $27 in Columbus." ([11:53])

Toby explains the complexity of market factors but emphasizes the role of tech giants:

"Capacity prices at auctions were up 833% last year and 22% this year, with data centers being the primary culprit." ([13:28])

This surge has sparked tension between utility providers and major tech companies, who are often granted tax breaks and incentives to build data centers, while residential customers bear the brunt of higher energy costs.

Neal adds context about Northern Virginia:

"Virginia is known as Data Center Alley... projected to invest nearly $200 billion each year in grid upgrades." ([14:31])

5. Uggs Expands into the Men's Market

Shifting to the consumer sector, Uggs, under its parent company Deckers, is making significant strides in the men's footwear market. Sales of men's products have nearly doubled, contributing to a 19% overall sales increase. Neal notes:

"Deckers has Uggs, which accounts for 51% of annual sales, and Hoka, contributing 45%, both experiencing rapid growth." ([18:40])

Toby delves into the marketing strategy:

"Targeted collaborations with celebrities like Post Malone and new styles like the Peak Mod—an intentionally 'ugly' clog—are resonating with male consumers." ([19:17])

Despite Deckers facing a 40% stock decline earlier in the year due to tentative sales forecasts and tariffs, the innovative push into the men's market offers a glimmer of hope.

6. Union Pacific's Historic Railroad Merger

A major development in the transportation sector is Union Pacific’s announcement to acquire Norfolk Southern in an $85 billion deal, aiming to create the first transcontinental rail system in the U.S. Neal quotes Union Pacific CEO Jim Vanna:

"It builds upon President Abraham Lincoln's vision of a transcontinental railroad... ushering in a new era of American innovation." ([21:47])

However, the merger faces opposition from major rail unions and concerns over potential monopolistic practices, with fears of price hikes for consumers due to reduced competition.

7. Starbucks’ Ongoing Turnaround Efforts

Starbucks continues its efforts to reverse a six-quarter streak of declining sales. Despite missing sales and profit expectations, CEO Brian Niccol remains optimistic:

"Turnaround efforts at Starbucks are ahead of schedule with plans to unleash a wave of innovation coming in 2026." ([22:30])

Neal points out that while sales dropped by 2% in the latest quarter, initiatives such as reducing store construction costs by 30%, enhancing existing store experiences, and increasing staff aim to improve customer service and operational efficiency. Additionally, Starbucks saw its first sales gain in China since late 2023, providing a positive sign amidst ongoing challenges.

8. OpenAI’s ChatGPT Introduces Study Mode

In the realm of technology and education, OpenAI has launched ChatGPT Study Mode, designed to assist students by fostering active learning rather than simply providing answers. Neal describes the feature:

"Study Mode asks you questions, nudges you with hints, and prompts self-reflection so that the material actually sticks." ([24:29])

Toby shares observations from a demo, noting how the AI encourages users to engage deeply with the material:

"The bot responded with, 'What's your overall familiarity with the subject?' and guided the user through concepts instead of giving direct answers." ([24:29])

This development has sparked discussions about the future of tutoring and education, with Neal contemplating the potential impact on human tutors and the broader educational landscape.

9. Remembering Joan Anderson, the Hula Hoop Pioneer

The episode also pays tribute to Joan Anderson, the creative mind who named the iconic Hula Hoop. At 101 years old, Anderson’s contributions came to light through a 2018 documentary, Hula Girl, which highlighted her role in popularizing the toy.

Neal recounts her story:

"She came across kids spinning circular wooden hoops around their waist and loved it so much she dubbed them the Hula Hoop, inspired by the Hawaiian dance." ([25:51])

Despite her pivotal role, Anderson never received formal recognition or financial rewards from Wham-O, the company that commoditized the Hula Hoop. Her legacy, however, has been preserved through documentary storytelling, shedding light on the unsung contributions of everyday innovators.

---

Conclusion

In this episode of Morning Brew Daily, hosts Neal Freyman and Toby Howell navigate a diverse array of topics, from significant global events and corporate turnarounds to technological advancements and nostalgic tributes. The discussion provides listeners with insightful analyses and noteworthy quotes, encapsulating the dynamic landscape of business, technology, and culture.

Transcript

[Sponsor Voice]

This segment is sponsored by Verizon. Whether you're streaming your favorite shows, gaming late into the night, working from home, or video chatting with family, you need an Internet connection you can count on. That's where Verizon Home Internet comes in, with a competitive price guarantee on the base rate of all their Internet plans, reliable performance, and no annual contracts. And right now, new customers can take advantage of the latest offers, making it even easier to switch. Visit verizon.com home Internet today to check availability in your area and experience the difference with Verizon Home Internet. Verizon the network you want, the home Internet you need.

[Neal Freyman]

Good morning, Brew Daily Show. I'm Neal Freyman.

[Toby Howell]

And I'm Toby Howell.

[Neal Freyman]

Today, Boeing and Starbucks are so back with their turnarounds. Going better than expected.

[Toby Howell]

Then Uggs are making inroads with a surprising demographic. Dudes, it's Wednesday, July 30th. Let's ride.

[Neal Freyman]

Evacuations have been ordered in Hawaii, Alaska, California, and JAP 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 7:30pm local time and the West coast of the U.S. just before 1am 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 US Are warning people to stay out of the water until the coast is clear.

[Toby Howell]

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. Neal, would you say you lead by example?

[Neal Freyman]

I would definitely say that I am an exemplary podcast host, but if I'm looking for someone who really leads by example, I'm looking at the Range Rover Sport.

[Toby Howell]

You know what, Neal? 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.

[Neal Freyman]

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.

[Toby Howell]

So follow the leaders and build your Range Rover Sport at range rover.com/us/sport that's range rover.com/us/south Luka Doncic isn't the only.

[Neal Freyman]

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 planemaker 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. This hasn't happened by chance. Last year Boeing hired aerospace industry veteran Kelly Ortberg out of retirement to be its new CEO. And while he hasn't earned the title miracle worker just yet, Ortberg 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 2% 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, Ortberg's earning an A plus.

[Toby Howell]

An A plus? I don't know if an A plus, yeah, I'll give him a solid A though. But if you look at what Boeing 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.

[Neal Freyman]

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 of 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 continue to believe that Kelly Ortberg 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, and 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.

[Toby Howell]

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 announced, 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 on, Boeing seems to be skirting through and actually coming out stronger on the other side of it.

[Neal Freyman]

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 negotiations. So perhaps some more labor unrest at Boeing. Remember, there is a major strike last year and you mentioned that they are currently capped at how many maxs they can produce. They can only make 38amonth. 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 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. I'm going. 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.

[Toby Howell]

Let's move on. Oh, no. Novo Nordisk, the Danish drugmaker, had a rough one yesterday. At one point, shares were down 30% as the 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 Wegovy, the company no longer feels confident it can keep its nose ahead of its rivals and now expects sales growth of 8 to 14%, down from the 13 to 21% 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 US 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 Wegovy in Ozempic. 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 US regulators ordering an end to compounded versions of Semaglutide, 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 Nordisk 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.

[Neal Freyman]

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 what? 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 LV emh. It's 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 Dastar. Which investors did not like this pick. As you mentioned, the stock went down 20%. 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.

[Toby Howell]

They're still struggling from a key mistake they made when Ozempic 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 Wegovy to its official shortage list, which opened the floodgates to all these copycats flooding in and making knockoff versions of the drug. Brands like Hims and hers is one that is kind of made a boatload 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 US didn't cover it. So when would Govi and Ozempic hit the market? Novo Nordisk 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 WeGovy to reach the 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.

[Neal Freyman]

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 multitrillion dollar corporation? Across a 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 met up 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 def image using an AI model requires as much energy as charging a smartphone to 50%. That's according to Hugging Face and Carnegie Mellon University. And in a macro sense, electricity Demand in the US 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 on to 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.

[Toby Howell]

So markets for electricity are usually pretty complex. There's a lot of factors that are involved, like stuff from weather to demand. But right now, everyone the electricity market saying, no, this is actually really simple. It is data centers that is causing home bills to rise. There is this big auction that takes place from a 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 are 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 jobs. They are extending tax breaks to these facilities. Meanwhile, they're very. People they're representing are saying, dude, you're, you're bumping up my electricity prices here. So inherent tension between wanting to spur economic development but also not jack up electricity prices.

[Neal Freyman]

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 Ali 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 were 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 bit, not Bezos anymore, Jassy and pj 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. There's 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, in these lawmakers rooms. So there's a really interesting batt development, AI technology, real estate happening all across the country right now and it's leading to higher electricity bills at the bottom line.

[Toby Howell]

Up next, let's talk about clogs.

[Neal Freyman]

Running small and medium sized businesses comes with a long to do list. And on that list is making sure your ads reach the right audience.

[Toby Howell]

Amazon streaming TV ads help put small and medium businesses on premium content like Prime Video that people are already watching.

[Neal Freyman]

With Amazon ads, you don't have to sacrifice relev relevance for reach. Trillions of browsing, shopping and streaming signals help you reach relevant audiences.

[Toby Howell]

And measurement tools help show you what's working at the hardest.

[Neal Freyman]

Gain an edge with Amazon ads visit advertising.Amazon.com/start now that's advertising.Amazon.com start now.

[Toby Howell]

This message is a paid partnership with Apple Card. I'm a person who really appreciates simplicity. And when it comes to credit card rewards, the simpler the better. That's one of the many reasons I have an Apple card. The rewards are super straightforward. I earn up to 3% daily cash back on my everyday purchases. There are no points to calculate, no limits or deadlines. Plus, it's super easy to access my card and make payments from the Wallet app of my iPhone. If that sounds like the kind of simplicity you want in a credit card, apply for Apple Card in the Wallet app on your iPhone. Subject to credit approval. Apple Card issued by Goldman Sachs, Saks Bank USA, Salt Lake City Brands terms and [e-mail] Timothy Chalamet 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 Shami donned to multiple NBA playoff games have made inroads with a surprising demographic the fellas. Last week, when Uggs parent company Deckers reported earnings, Uggs dominated, with sales of the brand rising 19%, propelled by increased sales of men's products, which notch nearly doubled 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 Croc 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 Deckers this year with the stock down 40% due to some tentative sales forecasts, but it's found a furry bright spot in Dude Uggs.

[Neal Freyman]

I am old enough to remember when Tom Brady tried to sell me Uggs and now they're moving on to Chalamet and Post Malone. Looks like they're keeping up with the times yet. Deckers is a very interesting company in the footwear space. They have Uggs, which accounts 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 Ugg. It accounts for 45% of this company's revenue and Hoka sales increased about 20%, so that's even growing faster than Ugg. So they have this two headed beast right here with Ugg and Hoka. Both are among the the fastest growing brands in the entire footwear sector and.

[Toby Howell]

Both are kind of leaning into the current fashion trend du jour, 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 right now.

[Neal Freyman]

And Deckers 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 until this really buoyant earnings report. Their stock was down 48%. They issued far lower than expected guidance because of tariffs. And tariffs were are huge, hugely impacting the footwear sector. But now they have seemed to got their mojo back. They're releasing these new Uggs for men and they're trying to create Uggs 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 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.

[Toby Howell]

Do you have a pair?

[Neal Freyman]

No.

[Toby Howell]

Nope. No pair. I have a pair of Tasmans which are kind of their clogs with a little bit of fur in there. You wear them around the house. My fiancee got them for me for, for Christmas and they're quite nice. I'm fully in on the Ugg bandwagon.

[Neal Freyman]

You love saying fiance. 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 US 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 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 Vanna 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 transcontinent Continental railroad from nearly 165 years ago and will usher in a new era of American innovation.

[Toby Howell]

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 this fear here is that it could lead to price hikes for customers because if this were allowed to happen, two fifths 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, of a company that could jack up prices for consumers. Starbucks missed sales and profit expectations again, but new CEO Brian Niccol is unfazed. During the earnings call yesterday, Nicholls 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. Neal There is some cautious optimism coming out of Starbucks, but turnaround sales?

[Neal Freyman]

Ways to go just like Boeing. Nicole, the CEO of Starbucks, said in prepared remarks that his turnaround efforts are ahead of schedule. Now one thing I want to point out is you'll notice that Starbucks 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 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.

[Toby Howell]

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 world examples? And then another example involved the classic like train traveling at a speed math question. And the person who is doing the demo repeatedly asked it, just give me the answer, just give me the answer. In the study mode wouldn't do that. They instead were coaxing it to think it through themselves. So right now it does look 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.

[Neal Freyman]

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 or five years, that AI tutors will be a huge thing. Khan Academy has an AI powered tutor that's 700,000 users across 380 school districts in the US with Chat CBT also launching AI tutor. This is absolutely going to become a thing.

[Toby Howell]

Yeah, you're totally right. Actually, OpenAI 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 247 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, passed 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 shipped to her home in the US 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 Hula Hoops began selling like hotcakes, none of that money materialized and Anderson never got formal recognition for her role in the toys 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. She would have.

[Neal Freyman]

We would never have known about her and the inventor of the Hula Hoop if not for a chance meeting in a restaurant in California in 2016. Her daughter was telling her coworkers about this story of how the Hulu, of how her mom brought the Hula Hoop from Australia obscurity to the four in the United States and sold it to. To this. 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 that's 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 jipped 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, Wham O, kind of a. Kind of an epic run here. They invented the super bowl, the slip and slide, silly string, and the frisbee, but you just don't know how many people they just stole it from.

[Toby Howell]

How do you invent the slip and slide? That is just a watery tarp. But I mean, all the power, it's all in the brand. I'm so bad at hula hooping too. I just never.

[Neal Freyman]

I beat you in the pre show.

[Toby Howell]

Yeah, there you go. I get it going and then it's down by the ankles.

[Neal Freyman]

Next thing, I think you go too fast.

[Toby Howell]

I'm too fast.

[Neal Freyman]

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 Morning Broadcom. Let's roll the credits. Emily Milligan is our executive producer. Raymond Lu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Eugenia 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.

[Toby Howell]

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

[Sponsor Voice]

Right now you can invest in vacation there's seemingly always demand for vacation. The thing is, not everyone can afford all of the vacation homes they want. That's where Picasso saw the chance for a co ownership model where families can afford fractions of move in ready vacation homes in 40 plus destinations worldwide. Pacaso seen over $110 million gross profits to date including 41% year over year growth last year alone. Join leading VC firms investing in this unlisted stock when you go to pacaso.com brew that's picasso.com brew this is a paid advertisement for Picasso's Regulation A offering. Please read the offering [e-mail] brew.