Stocks Have Their Best Quarter Since 2020 & ‘Supergirl’ is a Super Flop

0:00When demand slowed for HydroJug, Amazon Ads rising star Hayden Wadsworth pivoted. When our bank account hit near zero, my brother Jake and I had one last shot to save HydroJug. So we engineered the Traveler, a leak-proof, cup-holder-friendly Tumblr. Amazon Ads enables a business to be able to expand their product shelf because of the visibility and the reach you can get. Each week, our new-to-brand customers make up about 95 % of all of our sales. Watch HydroJug's story at advertising.amazon.com slash rising-stars. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, Supergirl flopped hard.

0:38Time for DC to panic. Then the first half of the year is over. Let's go through what happened in the stock market. It's Wednesday, July 1st. Let's ride.

0:57Good morning and welcome to July. Some bittersweet news. This is our last standard news show of the week. The Brew is closing down tomorrow ahead of July 4th, but fear not, we have recorded two fantastic special episodes coming your way Thursday and Friday, so you can still get your MBD fix while traveling to a body of water or doing all the physically demanding chores your parents say for you when you come home. Neil, I gotta say, the greatest summer of all time continues. We got USA World Cup game today that goes straight into a long holiday weekend, at least for the morning brew. Now, the fact that 73 million Americans could experience 100 degree heat thanks to this big old heat dome, that could put a damper on things.

1:38But whenever you feel like complaining about the heat, just remember what it was like when it was cold out and how that stunk. Give me triple digits any day of the week. Tell me you grew up in Florida without telling me you grew up in Florida. I'm pining for the fall right now. It's way too hot. That's why you head to a body of water, though. It's still hot. You go in the body of water. you come out, you dry off five minutes later. You're like, I need to go back in. I'm sweltering, but yes, it's going to be actually dangerously hot for a widespread part of the United States. So please stay cool.

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2:45Use promo code MORNINGBREW10 for 10 % off your first pair of Ultra Running Shoes at ultrarunning.com slash morningbrew. That's A-L-T-R-A running.com slash morningbrew. The stock market is finishing up its ninth hole and making the turn to take on the back nine. So let's take a pit stop at the snack shack for some hot dogs and a recap of how the first half of the year has gone. It's been mostly birdies so far. The Nasdaq finished up 21 % this past quarter, its best quarter since the second quarter of 2020. The S &P 500 and Dow were hot on its heels up 15 and 13 % respectively, good for their strongest quarter since 2020 as well.

3:26But look a little closer and you'll see that AI has split the market in half. For the past few years, it was the magnificent seven tech stocks like Microsoft, Google, Apple, and Amazon, which powered the market to record highs. But investors have narrowed their focus. Instead of rewarding the companies spending hundreds of billions on AI, Wall Street has taken a liking to the companies selling the picks and shovels to the big spenders. A key semiconductor index is up 81 % this quarter, lapping the wider market, while memory-focused names like Micron and Sandisk have risen over 300 and 760 % respectively.

4:02That has come at the expense of the Mag 7, which are looking like Lightning McQueen and Cars 3. Microsoft has fallen 20%, NVIDIA 13%, and Apple and Amazon down 8 % all in the last month. Neil, a fantastic quarter overall, but mainly if you own semiconductor or memory stocks. Yeah, let's hand out some halftime game balls, go through the top performing stocks so far in 2026. You'll notice there's a theme. So the best performing stock was SanDisk of 857%. They do memory. Second, Micron up 303%. They do memory. Then it's Intel 278 chips, Western Digital 271 storage, Seagate 250 storage, Marvel 250 chips, Dell 250, 243 servers.

4:51So if you are in the supplying data center business, this has been a historic run-up so far in 2026. And let's take away some game balls for people. What do you do for the worst performance? I know, what happened with you when you were in soccer, when someone would get mad at you, your coach? I would just get benched. All right, let's bench some players. The biggest reversal came in the energy market, actually, because Q1 energy stocks were ripping because higher oil prices were kind of dominating geopolitical issues. So energy stocks soared 37%. As those fears in the war in Iran have kind of mellowed a little bit, energy stocks fell 13 % in Q2.

5:30So that was the worst performing sector in the S &P because of hope that the U.S. and Iran conflict will settle down. But the worst performing stock in the S &P 500 is actually not an energy stock at all. It's the software maker Intuit, which is down 55%. Remember, a lot of fears around anthropic models rolling out that were replacing legacy software companies. That is still lingering at the bottom half of the market. So Intuit, you are benched right now, as are all of the energy stocks. And when you're going beyond stocks, the big theme of the first half of 2026 was the unwinding of the debasement trade.

6:09So the debasement trade dominated conversation ever since Liberation Day in 2025. And this was that inflation was going to go out of control because of tariffs. So was government debt. And in effect, you'd have gold and other commodities surging, other precious metals, and you'd have the dollar falling. And so that's what we saw. We saw gold surging last year and we saw the dollar falling. Well, the first half of 2026 has brought about a reversal of that. Gold just had its worst quarter in 13 years, and it was up 175 % in the past two years. But this past quarter has been bad. It's down 11 % just in the past month.

6:47Meanwhile, the dollar has been surging. And so you're seeing that investors have faith in the new Fed chair, Kevin Warsh, to not let inflation run rampant. He really hammered that home in his first press conference as the Fed chair, saying, like, I will get inflation under control. And that eased investors' worries that the debasement trade would spiral out of control. One caveat for the back half of the year is that it's a midterm election year, and that tends to bring a lot more volatility to the stock market. If you go back since World War II, midterm years average a 17.5 peak to trough correction.

7:22So that is a very large swing. Usually there's a big run up, but there's also a big correction somewhere in there. They are adding the fact that in the fourth year of a bull market, which we are in right now, that averages a 13 % gain, but typically experiences larger drawdowns as well. So basically expect some volatility on the horizon because the bull case going forward is the market that already survived the worst shock that it might receive, which was a war and a spike in oil prices. AI spending is going to continue to remain strong. And history has shown that if you start the year off well, then you finish the year well.

7:57The bear case is that AI valuations are ahead of their skis. It's already become too crowded in this big rally that we've experienced and that all the money going into the AI spending will ultimately not produce any profit. So those are kind of the bull and bear case looking ahead to what should be a pretty volatile second half of the year. Moving on, this next story is going to be more surprising than learning that there were still woolly mammoths around when the Great Pyramids were being built. Yeah, that is true. Look it up. Anyway, on to the other surprising fact. A new study found that corporations spending the most on artificial intelligence hired humans faster than their peers.

8:36Yesterday, tech startups Ramp and Reveglio Labs released the findings of their research of 22 ,000 US firms from January 2021 to February 2026. And they discovered that the most intense AI adopters, companies that spend around$34 per employee a month on AI, increased their headcount by about 10.2 % in the two years since they rolled out the tech internally. Companies that spent less on AI had no statistically significant change in headcount. Your jaw might drop even more when learning about what happens to entry-level jobs, those junior roles that were supposedly most vulnerable to AI disruption.

9:12Among the top AI adopters, entry-level hiring grew even faster than the baseline, 12 % to 10.2%. The authors use this data to push back on the apocalyptic narrative pushed by many in the AI industry that this tech revolution could wipe out up to 50 % of white-collar jobs. Still, they're asking people not to draw too broad of a conclusion. They write, this paper does not show that AI universally creates jobs, but it does counter claims that AI will lead to broad job losses. I think the caveat here is that the companies that are spending the most on AI tend to already be growing. So you have to separate those two facts because if you're looking at a cohort of large VC backed companies that are in hyper growth mode and then saying, look at all these companies that are adopting AI because they're newer companies that are on the forefront of technology are also growing the fastest.

10:02that might be more of a correlation thing rather than a causation thing, which is why they did say like, this is not proved that AI creates jobs. That being said, there are some economic theories here that could suggest that AI is creating more work, not less. There is Jayvon's paradox, which we've talked about before, which is when something becomes cheaper or more efficient, people consume more of it. So apply that to AI. Maybe that means if you go to the legal industry, for instance, you have cheaper legal research that's going to lead to more legal research, not less legal research, which means there's more employees that are needed to be brought into the organization.

10:38That's one of them. And then the other one is the lump of labor fallacy, which says there's actually not a fixed amount of work in the economy at any given moment. Making workers more productive actually creates new demand. So that's like the other aspect of this is that it's not a net zero game, the job market, when it comes to AI. Injecting it into it can create more jobs, not less. What I appreciated most about the studies at the end, they had this advice section. They were like, okay, so we did this study. We found these results. What are you going to do about it? How can you take this data and apply it to your real life?

11:09So they had a few pieces of advice. I would say the most important one is they're talking about young people entering the labor market. And they said, so if you're this kind of person, you're just looking for your first job and you're choosing between two similar firms, choose the one that's using AI. It's more likely to grow faster. And even if you're an engineer, who's worried that AI is going to take your engineering job. We've seen this be one of the biggest use cases of AI. They say their evidence says AI adopters are hiring engineers faster, not slower. Then they talk to business owners who maybe have tried AI, who've dabbled in spending some enterprise money on AI, and they don't see the gains.

11:48They say keep at it because you have to reach a minimum threshold of spending to see the gains. And then finally, I thought this was kind of funny. They said, if you're reading headlines where CEOs blame layoffs on AI, be skeptical. And we've already seen 75 ,000 jobs be cut with references to AI. There were murmurs at the time of skeptics, people saying like, I don't actually think this is a result of AI. I think you're just blaming and scapegoating AI. And this research supports that. Still, I could lob you back many papers that argue the exact opposite thing. As we've covered on this show before, Goldman Sachs estimates that AI has contributed to roughly 16 ,000 net job losses per month over the past year.

12:29We are staring down the worst entry-level job market in many years. Entry-level professional jobs are down 29 % since January 2024. Workers ages 22 to 25 in highly AI-exposed occupations have seen their employment fall 13 % since 2022, according to Stanford. So it really is read a wide swath of research, honestly, and maybe the reality is somewhere in the middle of those two camps. Moving on, Supergirl saves a lot of people in her comic book appearances, but she's costing her studio a lot of money in her big screen debut. DC's studios Supergirl came out last week, but I won't fault you if you missed it.

13:08It debuted to just$37 million domestically. For a film that costs somewhere in the range of$170 million to make and another$120 million to market, that tepid opening means it's staring down a$100 million loss depending on how things shake out. What went wrong? Well, Supergirl isn't Superman, and analysts say that having a lesser-known central character caps the movie's blockbuster potential. Also, superhero movies in general just ain't as super as they used to be. The performance of Thunderbolts, the latest Captain America movie, and now Supergirl show audiences are a lot more discerning when it comes to the genre than previously.

13:43It's also a big stumble for James Gunn, the director who helmed multiple successful Marvel movies before DC wrestled him away and gave him the keys to reboot their own extended universe. this flop puts the dcu even further behind the eight ball neil it's not over for dc but supergirl has been really bad so far remember morbius the awful jared leto spider-man spinoff movie even that brought in more money in its first weekend than this movie every superhero has an origin story and every superhero studio also has an origin story that's worth exploring so if you're not caught up on all this comic book movie drama going on.

14:21So this is what happened with the current iteration of DC Studios. Basically, it was not doing well while Marvel was doing very well, its rival. So in 2023, they brought in two big guns, Peter Safran and James Gunn to lead DC Studios. James Gunn is best known for directing Guardian of the Galaxy. And they said, we're going to shake things up. We're going to take a script first approach that would give priority to quality over volume. And so under this remix, DC Studios, the first movie that they released last year was Superman. And it did really well. $618 million worldwide, the highest grossing superhero film of 2025.

15:01And the first time since 2008 that a DC film outgrossed every single Marvel release that particular year. So all things were going well, but also the follow-up to Superman was Supergirl. And that was sort of a wake up call that maybe this new direction of DC isn't going as well as Superman would have made them believe. Here's why it's tough. Supergirl flopped. Warner Bros. put a lot into the promotion of this film. They had 80 promotional partners ranging from Kentucky Fried Chicken to American Airlines. So they really want to show that, hey, we are entering this era of sustained success for DC Studios.

15:39They were not able to do that. It seems like they missed the mark on the target audience despite that massive promotional push. Supergirl was meant to appeal to Gen Z women. 59 % of the audience was male. 65 % was 26 or older. So for whatever reason, it just didn't resonate with the core market that they were trying to target. So DC Studios, is it time to panic? Well, some say no. This is just one movie. And they have other TV shows and other movies coming out under this new leadership. One that I'm excited about is Lanterns, which is an HBO series starring Kyle Chandler and Aaron Pierre that's been described as true detective like take on the Green Lantern mythology that premieres in August.

16:20And that sounds very cool. And then also they have a horror movie, Clayface, coming out with as a much lower budget than Supergirl, 40 million dollars. So if they can produce cheaper movies that really hit the zeitgeist right now, because what's making movies at the box office is horror, then they might get back on the right track. But Supergirl was a huge miss in the early innings of this new regime. I'm so confused, though, because they just said movies with lesser known main characters do not do well. Their next movie up is Clayface. Who the heck is Clayface? I mean, if you're a comic book fan, you know who Clayface is, but they're doing the exact thing that they've said hasn't worked in the past.

16:59they are taking a little bit of a smaller shot on goal with that smaller budget. But still, it's just so ironic to me that this is the diagnosis after Supergirl in the next movie up, a no-namer named Clayface. We're going to take a quick break and come back with a surprise Neal's numbers right after this. Neal, check out my card. This just says thank you. Yes, that's for the dinner you paid for last week. But you should also check out the Verizon Visa card. It helps eligible Verizon customers get more from everyday spending. You can earn 4 % rewards on gas, groceries, and dining. Redeem rewards toward Verizon bills or devices with no annual fee and unlimited rewards with no expiration.

17:40For a limited time, new cardholders can get up to$150 cash back. Just head to verizon.com slash morningbrew to learn more. That's verizon.com slash morningbrew. Did you take notes at our last team meeting? Notes? Are you insane? I'm not going to ask you to elaborate, but the Even G2 productivity smart glasses could have come handy for that. They're designed to keep real-time support right in view with teleprompting conversations support, real-time translation, AI assistance, and more. Obviously, we are podcast hosts, and the built-in teleprompter feature makes it easy to deliver information without looking at a phone or laptop.

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18:55Prices may vary by store. Exclusions apply. See homekeeper.com slash price match for details. Welcome to Neil's Numbers, the segment that's typically on Thursday, but we don't have a live show tomorrow, so we're going to roll with it today. For my first number, what's the deal with the hot girls and the old Jeeps? In a fascinating read by The Wall Street Journal, it appears that the latest status symbol, if you're a young, wealthy, good-looking woman, is to rumble around town in a vintage off-road SUV. The numbers tell the story. At the classic car insurance company Hagerty, the number of women under 50 who bought Broncos from the 60s and 70s spiked 82 % in the last three years.

19:32Renting older SUVs is also popular, especially in beach communities. One couple who rents out vintage Defenders on Nantucket told the Journal that 80 % of their clients are women between 20 and 40. On Long Island, an event-focused rental car owner said similarly, 80 % of his bookings are women, mostly booking cars for photo shoots. Celebrity culture is no doubt a factor. Sydney Sweeney drives around LA in a 1969 Bronco. She restored herself. Kendall Jenner owns an 89 Land Cruiser. And Alex Earl is also a fan of older trucks, as evidenced by all the pictures she posts with them. And like in fashion, which SUV you go for also says something about you.

20:11One owner of a restored 1987 mint green Defender told the journal, a G-Wagon is for a rich girl who does Pilates, and a vintage Defender is for a girl who has edge. Toby, women will literally buy an old Bronco instead of going to therapy. The appeal is the fact that these are imperfect cars, because what have modern cars done over the past few years? They've eliminated all the headaches of old cars, and yet cars with no air conditioning, with loud tires, with crank windows with no turning radius or backup cameras. That's what's in the zeitgeist right now. Now, it is a bit of a misnomer to say that these are old cars inside because a lot of them are resto mods.

20:50They have modern drive trains. They've been updated for modern safety regulations as well. And part of the status symbol as well is not just the fact that they're edgy is the fact that they cost a lot of money to restore. I mean, if you want a custom 1977 Bronco, that'll probably cost you$300 ,000 to restore. So yes, you can talk about the edginess factor. Yes, you can talk about the fact that you'd rather be seen in one of these than a G-Wagon. But these cost almost as much as a G-Wagon when it comes to restoring them soup to nuts. My next number is that a cookie brand you all know but rarely think about is absolutely crushing it.

21:27Belgian food company Lotus Bakery stock is up 49 % so far this year and 600 % over the last decade, thanks to surging sales of its Biscoff cookies. Famously offered as an underwhelming snack on airplanes, Biscoff is taking the world and social media by storm, Bloomberg reports. Between 2014 and 2024, sales have risen an average of 17 % each year, and the pace seems to be picking up. Sales grew 30 % last year, thanks in part to a viral Japanese cheesecake trend on social media, where you pair a Biscoff cookie with yogurt. That Asian influence is no coincidence. Lotus opened up a new factory in Thailand to win over the continent's vast consumer base and expand its global reach.

22:08To put this hockey stick trajectory in context, Bloomberg Intelligence analyst Ignacio Canaz Polo said, you can compare it to Oreo when that was growing drastically. People seem to like it everywhere they go. That's the most important part to understand about Lotus bakeries. Toby Biscoff is now in the world's top five for cookie sales. the little biscuit that cut oh i don't like i know you don't like them i like whenever it comes my way on a plane i just it just does not that's not what i want on a plane like it's so dry and makes my mouth hot you dip it in some yogurt i know it's just fascinating though to see how big this company is there's no way that i thought lotus bakery would trade at 46 times forward earnings that is more than double the valuation the broader global food sector gets so clearly investors are psyched about its growth trajectory.

22:55That being said, there's definitely headwinds on the horizon. Anytime we talk about snacks, you have to mention GLP-1 drugs as well. That could reduce snack consumption. That being said, Lotus has hedged their bets a little bit. They're not just Biscoff. They have tried to jump on the health train as well. They've bought brands like Trek and Naked Bars. The natural food division of its company now accounts for 25 % of its company revenue. So they do have this moneymaker in Biscoff cookies, but they also are saying, hey, we're going to spread our bets around a little bit and try to survive this kind of GLP one era that we are in right now.

23:31For my final number, think about the last time you opened up a streaming app, say HBO Max. Did you begin your rewatch of Sex and the City or fire up the latest episode of House of the Dragon? For the vast majority of you, it's the rewatch. According to Luminate's retro revival report, across nearly all streaming platforms, older classics from the catalog trounce new original content as a share of viewing hours. And by trounce, I mean on Disney Plus, it's 95 % to 5 % in favor of the catalog. On Peacock, 94 to 6. Hulu, 94 to 6. HBO Max, 93 to 7. The only exception is Netflix, where the library is still more popular than the originals, but only by a 60 to 40 margin.

24:15A similar back to the future trend is playing out in music. Among U.S. consumers aged 13 to 24, those who listen most to music from the 90s or earlier jumped to 44 % in 2025 from just 18 % in 2021. Thought the music industry executive Lawrence Puryear had an interesting take on the retro revival study in his blog. Quote, this is not a report about nostalgia, despite being framed that way. It is evidence that cultural products have become non-perishable and the entire entertainment industry is still priced as if they spoil. He added, every legacy assumption in music and video rests on a decay curve.

24:48A song or show is most valuable at release and depreciates from there. Today, however, we have a market for culture where the product no longer ages. I think that it is this arena where each piece of content battles against their previous piece of content. And it is really hard to beat things like Friends or Suits or The Office. Those are comfort shows that are great shows. So for a net new one to take their place, they have to be at least a certain percentage points better, which is why I think you are seeing them kind of last so long in the cultural zeitgeist. Netflix is a very interesting case study here because they're the only ones that are bucking the trend.