Markets, Earnings, and Oil

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1:25This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m. Eastern on Apple CarPlay or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. So the basic act here, folks, is I control the show. No, Mrs. Keene controls the show. She hears Yardini's going to be on, and I get a text message. Ed, with your dogs, do you get their teeth cleaned for$1 ,300 each time? Well, no, we brush them ourselves. You brush them yourself? Yeah, we love our dogs. That Bill and Kenilfee won't let me do that. Like, they're going to take my hand off.

2:06$1 ,800 is too much. Do you medicate them? No, no, no. No, okay. No, they're good dogs, and they get groomed, and the groomer brushes their teeth. I get a call from Mdani's office when I get the dogs groomed. It's so damn expensive. It's outrageous what we're paying for that. Affordability crisis in dog grooming. That secures us right into the equity markets. Thank you. The show can continue now. Mrs. Keen is happy to have that. Ed Yardeni with us with all of his iconic work linking economics to the markets as well. Do you reaffirm a Roaring Twenties scenario? Seven years in, we're so far so good.

2:45real GDP, all-time record high, stock market, all-time record high. So far, so good. Just three more years. I mean, there are issues ahead, but it's amazing how well the economy has performed despite all the shocks that it's had to absorb since the beginning of the decade. So far, so good, as I said. Edwin, you are the quintessential card counter when it comes to looking at fixed income markets and your work on debt levels in the US and France and abroad. But you're referring to bond yields back to their quote-unquote old normal here in your latest show. Talk to us about the old normal. I love it.

3:21Well, you know, there's an expression that people use to explain where interest rates are right now, and that is higher for longer. Right. And I don't know, that just doesn't, it rubs me the wrong way, quite honestly. I don't think it's higher for longer. I think it's normal for longer. We're back to normal rates. The abnormal rate environment was between the great financial crisis and the great virus crisis. Right before the great financial crisis, we were running between four to five percent, and occasionally spiked above five percent, deja vu all over again. And you rightly point out that, you know, it's basically, if you look at household ownings of treasuries or any or corporate ownings, it's minuscule compared to where it has been in years past yet.

4:08You know, now we look at the size of the U.S. Treasury market and people are actually equating the fundamentals of the U.S. economy to the level of yields. Is that something that we can kind of wrap our arms around and get used to and see in other countries? Well, when it comes to the U.S., one of my guideposts for trying to figure out where bond yields should be is to look at the growth rate of nominal GDP. And the growth rate of nominal GDP right now is 6.3%. We're below that at, well, last I looked at, we're 5.19%. I would say that if we got anywhere close to that, I'd worry. But right now, it looks like normal for longer.

4:45Ed Yardini with the Shodini Research again. The research I can't say enough about his daily essay. Look for that at Yardini Research. We predict the copyright of all of our guests. So I finished last night the Wigglesworth, a fabulous debt. And like Sidney Homer shows up on page 29. Seema Shaw's in there at the end of the book. Love Seema. As well. Mary Child shows up on page 372. Yardeni is in the prologue. He shows up on Roman numeral XII. And Robin put you in early and often because of this great phrase, Bon Vigilantes. I would suggest there's a ginormous consensus now that the vigilantes are out there.

5:28What is the level of our vigilantiness right now? Well, right now they're sightseeing in France. That's where the bond vigilantes are. But even France has come in a little bit off the Le Pen speech. And you haven't really seen the contagion into Italy. Exactly. Look, the bond vigilantes are not the only players in the bond market. There's central banks. There's ministries of finance, foreign investors. There's a whole bunch of players. And I think what we're seeing here is that there's a lot of cash out there that is finding that these bond yield doubles are very, very attractive. And, Damian, the way I would link in your work with Dr.

6:09Yardini's work is this bond vigilante fear. Oh, no, Japan's bringing all their money back to Tokyo. Discuss. Well, I'm so happy you brought up Japan because, you know, I missed Ed Yardeni's Monday live webcast, and he was talking about the parallels between Japan and, of course, China. So, Ed, for our audience, please, if you could just enlighten us, tell us a little bit about the similarities and what makes this time, I guess, a little bit more worth watching. Well, everybody is kind of focused on the bond markets around the world. They should also focus on what's going on in the bond market in China.

6:43Their yield is actually historically low. You know, extremely low. They've got deflation over there. And there is a sense of the Japanese model kind of creeping into China. China just recently restructured its banks. It took all of its rural banks and folded them into large banks. That doesn't mean that that solves the problem. No, not at all. There's still all those bad loans. They just can't get their act together and just restructuring their credit system. That's really what they need to do. But they just haven't done it. Ed, do you believe the loan data that you're getting out of China, or even for that matter, M2 and monetary supply data?

7:25Because, you know, I have been crunching some numbers lately with some friends at AidData. And some of the things that we're coming up with are just incredible about the bilateral lending to emerging market countries. I think it's way, way underreported. Are you writing your morning note for this interview with Dr. Yardeni? I'm just teasing. It's not writing. I'm learning. I'm teasing. But talk to us a little bit about how you look at that data coming out of China. I mean, is it to be trusted? Well, you know, any data that supports my story is good data. And I think it supports the story that consumers aren't spending.

7:59Retail sales growth is absolutely zero in both nominal and real terms. There's a lot of signs of deflation. Home prices are still falling. I mean, it looks pretty bad, which is consistent with the view I have. So I have no problems with the data. I mean, not only that, but the bank loan data is like, what,$40 trillion? Yes, I know. And ours is about, what,$12,$13 trillion. So their credit system is basically out of control. And you're Denny with us, folks, for a lovely conversation this morning. You're Denny at Research. We welcome all of you the way you choose to listen to us. Major shout out on Bloomberg Podcasts.

8:36Thank you so much for your support there growing each and every day. And I want you to discuss what we started the show with this morning. My research essay of the year is Rob Arnott, Cam Harvey down at Duke in their team, saying get back to Yardini fundamentals where you look at the income statement and stop looking at price ratios. For example, gross profit underneath revenue is a top line profit. The banks have never been this gross profit rich now. With nominal GDP, if it comes down, do we risk diminishing gross profit? Well, the assumption, the question is really in the assumption of nominal GDP.

9:24I could see inflation moderating over the next few years. I think we are in the roaring 2020s with a technology led productivity boom, if that's the case. And if inflation moderates, we should actually have more real growth. And so nominal growth would still stay quite good. But there's no doubt that we're in a earnings boom. And that's partly because revenues have been very strong. As a matter of fact, the global economy has been remarkably resilient to all the shocks it's faced, as we see in S &P 500 revenues. So if Jamie Dimon's lucky and gets a cup of coffee with you, I mean, I can see Yardini at daily provisions.

10:08I got a tour of his new building. It's awesome. Did you see the Jalen Brunson jersey? Yeah. It's unbelievable. It's unbelievable. Right in the line. Anyway, he's an intern over there before the next season. Ed, I'm looking at the great fear of everyone is we don't know the X axis. Have you changed your study of how far out there is out there in these tumultuous times? Well, right now I'm working on the 2020s. I may conclude that we're going to have the roaring 2030s if this works out. However, the problem with the 2030s is they rhyme with the 1930s. And that was a period of horrible geopolitical crisis that led to World War II.

10:54And the geopolitics environment doesn't look very healthy out there. That's for sure. So there are definitely things to worry about. There always are. A stock market always seems to climb a wall of worry, as they say. David Sassar with Ed Jardin. Ed, we're spending a lot of time talking about the level of growth and how the markets are really just growing. It's gangbusters out there. But at Central Bank Week globally, we're getting inflation prints each and every day. Germany, Italy, Spain, the U.S. tomorrow. Talk to us about break-evens. Talk to us about the role of inflation in this market. I mean, we know about affordability issues here in the U.S.

11:27Do you see that being a risk to your forecast for equities here? Yeah, I mean, inflation is always an issue for forecasters. If you get it right, then you're going to get your portfolio working for you. If you get it wrong, you're going to lose money. I kind of have to stick my base case, of course, is that productivity, which is right now growing around 2%, is going to go to 3 % to 4%, which sounds somewhat delusional. But if you look at previous productivity booms, that's par for the course. And this productivity boom probably has more going for it than previous ones. Wow. Wow. I mean, the exponential impact of 3 % to 4 % productivity growth, if you just do your little nominal GDP calc, Tom, that's not nothing, as they like to say.

12:15No, it's not nothing as well. What's the biggest misconception you see in what I'm going to call the Barron's crowd? I love to read Barron's and the spirit of it and this, this, this. What's the biggest misconception of the short-termism out there right now? Well, I think a lot of people, with all due respect to what you do, read the headlines in the media. The headlines always seem to be in the financial press about Washington. It's always about monetary and fiscal policies. We're totally obsessed with the Fed and now Scott Besson to the Treasuries. I call it the parlor game. Yeah, well, I guess what I've learned over the years that I've been doing this for a while is that it's amazing how well the U.S.

13:00economy and stock market do despite Washington. That's kind of my mantra. I keep repeating it to myself when I read these very depressing headlines of how Washington is getting all of our policies all screwed up. Now, I mean, you know, Dirk Willer of Citigroup would agree with you. I mean, he says that forget about the noise of geopolitics. The only real factor that has had any sort of durability on growth is oil. So I ask you, you know, we're in an environment and people are equating what's going on to geopolitics, to Ukraine, to Iran, etc. But really, it's about the price of oil. So is this sort of is this an oil crisis?

13:34Or I mean, has the market just looked through that, been able to exhibit enough resilience to not even worry about it? I mean, are you concerned at all? Well, I would generalize my mantra to say it's amazing how well the US economy, global economy and stock markets have done despite the latest spike in oil prices. We had a spike in 2022 and everybody worried that that would create a recession along with Fed tightening. We had a bear market and then everybody realizes like, wait a second, this is an amazing opportunity to buy stocks because there is no recession. We had the most widely anticipated recession of all times that wasn't happening.

14:10And that was my call back then. Over the arc of Robin Wigglesworth's book, the fancy guy's changes. You know, he has a whole chapter on Louis Ranieri and Michael Milken and others and high yield and LBOs and that. And then we get to the derivative business. And I would suggest with respect to the street today, everybody's focused on hedge funds, CTAs, leveraging that. Are there leverage out there that could upset the Apple cards? Is there a shadow leverage you're concerned with? I mean, that's where all the trouble usually starts. It starts in the credit markets, not so much in the stock market, or at least we have to recognize that the credit markets is sort of the area where you get your speculative excesses.

14:55And certainly in the AI field, there's speculative excesses going on with all the financing that's happening there. Look, the difference between the great financial crisis and the current environment is I don't think that the banks are as involved in all the excesses as they were back then. So we had systematic risk back then and we saw it big time in the great financial crisis. This time around, let's say something blows up in the AI field. I think you'll see the AI community rushing to shore the problem up. And by the way, Washington is basically, you know, tight at the hip to the AI industry.

15:38And I think you see a lot of moves to support any excesses that blow up. I got to get one more in here. We celebrate Michael Woodward at Princeton and, of course, always at Columbia in his Nobel Prize. He would make real clear that certitude doesn't work. the hallmark of what he and John Taylor did within Taylor's rule in Woodward's respect for uncertainty. Should the dots maintain or should we get rid of the dots and have a more uncertain dialogue? Are we talking about the dot plot? Oh, please, don't take it away. I mean, I need it. I need it. This is I'm a content provider. I need I need something to write.

16:22Listen to him. I'm biased. I like the dot plot. I love the dot plot. Is it of use in gaining out interest rate strategy? Look, any way you look at it, Kevin Warsh can't muzzle his colleagues. They're going to give speeches. They're going to, you know, I mean, if we don't have the dot plot exactly on a chart, we're going to be able to figure out the dot plot just by listening to the speeches. Ed Giardini, thank you so much, particularly there on dental work on various and sundry dogs as well. And your Denny, your Denny Research. Stay with us. More from Bloomberg Surveillance coming up after this.

17:05If you invest or lead a business, one-sided views aren't enough. Join me, Brad Rogoff, and my team at Barclays Research as we debate what's driving markets on the Flipside podcast. Find the Flipside wherever you get your podcasts. With ChatGPT, you can do more than get answers. You can get things done. When you're running a business and looking to expand, you need a clear view of the landscape before making any decisions. ChatGPT can help you prepare. Connect your Google Drive, point to relevant files and reports, and ask Chat to research competitors, industry forecasts, and market signals. It can turn the findings into a strategic deck in your team's template that you can review before presenting to your leadership team.

17:50Growing a business is ambitious, and ChatGPT can help you do it with confidence. Get started at ChatGPT.com.

18:01You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10 a.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Laurie Calvacina in awe over the brilliance and she joins us right now across America, across her Canada as well with RBC Capital Markets. Lori, I know you're not on speaking terms with Amy Wu Silverman, but when you take the derivative brilliance of Amy Wu Silverman, how do you fold the quiet and then beneath it the storm of dynamics right now over to conventional investment? So, well, first of all, we are on speaking terms.

18:48Second of all, on the$5 pumpkins, I would gladly pay up if someone would carve it for me, the go-go services economy. me. But look, I would say on your question on the derivative side, when Amy and I go into meetings together, and we do like to do this, you know, on a regular basis, she's really more, you know, sort of the shorter term, the tactics, you know, she talks a lot about potholes. I'm sort of, you know, kind of maybe a little bit longer term, a little bit bigger picture perspective, work a little more closely with the long onlys. But the one thing that we talk about a lot when we go into meetings together is this one table where we call it our four tiers of fear that identifies how bad those potholes that Amy's trying to help her clients navigate could potentially get.

19:31And so if you think about my own market call right now, we've been looking for a five to 10 percent drawdown, what we call a tier one, you know, sort of pullback in the S &P 500 that could take you to kind of 7 ,000, 7 ,400. We get these all the time. They don't feel good while they happen. For tier two, you would really worry more about recession risk rising, something new on the scene, fears of spiraling out of control. Tier three is a recession. And I'll tell you, you know, right now, I don't sort of see the seeds for that tier two kind of pullback. So but that's really where we intersect when we go out together is, you know, trying to sort of, you know, kind of look at what those potholes, how bad they could potentially get if they show up.

20:09Well, Tom, you know, Laurie refers to that tier one, five to 10 pullback as a garden variety pullback. I don't know what garden you're You know, anyway, so this is what I have to ask you, Lori. I read your notes all the time. Unbelievable that you just pointed out. We are just coming off two quarters of huge beats on S &P earnings, right? So as we enter this third quarter, to me, it seems like sentiment's a little bit weak. You know, people are kind of sitting on their hands a bit here. Yet, I mean, the last two quarters have just been blowouts. I mean, can we expect more of the same? You know, it's a great question.

20:37And, you know, I sort of put the weekly together this week. I come off the heels of some marketing in Canada last week. And I found when we were talking to people about market risks, the ones they really want to home in on is that, you know, potential, you know, kind of mini pothole that we might get if we need to pull 2027 EPS forecast down. In my own modeling, I've been baking on a 10 percent haircut. And, you know, I sort of my real issue, right, has been we've gone through the Iran war. Companies didn't say much about it in this last reporting season two quarters ago in the 1Q reporting season.

21:07They're like, oh, we think this could be over by the summer. We've got inventories, hedges. You know, we think we can work through this for a couple of quarters. And you know what, guys, it's time. Like they kind of got off. I think the sell side analyst community, frankly, didn't do a great job of pushing companies on war impacts in the last reporting season. I hope they do more this time around. But I think that whether you get it this reporting season or next reporting season, you're going to have to start soon to see companies baking in the idea of a longer conflict. Now, does that mean they can't manage through it decently?

21:37No, but it does mean that hedges have to be reset at different levels, that inventories have to be replenished at higher prices. And so you do need to start to factor those things into your outlook at some point in time. And if you go back to 2018, 2019 and 2022, 2023, first tariff episode, Russia, Ukraine war, the 2018 and 2022 estimates came in pretty much where consensus thought they would before the conflict started. but 2019-2023 estimates were worked down pretty steadily since the summer prior to when those years started. So we think the idea is companies can manage through anything for a while.

22:11At some point, they have to take reality into account and start adjusting numbers. Laurie, I know you and the team are still bullish on the technology sector, but we're getting to a point here. I mean, you saw the correction overnight out of Asia. I mean, I know one of your investors recently asked, what are you looking for in order to tell me to rotate from the S &P into the S &P equal weight, what are you looking for? What sort of signals do you and the team expect to see before you kind of pare back your equity exposure or at least diversify it across multiple different sectors? Well, I'll say I don't really look at the S &P equal weight on a regular basis, to be honest.

22:42But what we do look at is, you know, the Russell 2000 is sort of that, you know, kind of proxy for the broadening trade, kind of that bellwether. And what we're seeing on that side of the equation is valuations have kind of gotten down to the Iran war lows, but they haven't really gotten washed out, so they're a little bit cheap. They're not deeply compelling. We do think positioning is much more out of favor. If you look at Nasdaq futures positioning, still very crowded. But I think the real problem for the Russell, and I would say for those more cyclical parts of the stock market and economy, are the rate hikes.

23:13And until we sort of become convinced that we aren't going to be pricing in additional hikes, small caps and kind of that broadening trade, I think, could potentially have a problem. Now, that being said, the U.S. is looking pricey versus non-US. And that's another big component of the broadening trade. Not super pricey, but we kind of moved up a teeny tiny little bit above the five-year average. You can see the dial turning on some of these things. Off your 48-page deck, which is brilliant, folks, get it at RBC Capital Markets. What portion of the Russell 2000 is profitable? Yeah, I haven't run those profitability stats in a little while, but I have pushed back a little bit, Tom, on people who say the Russell has become just a harbinger of low quality.

23:55If you actually dig into the percent of companies that have negative earnings, and last I checked, you know, it was extremely high. We had moved up, you know, much higher than what we had seen in the past. A lot of those are biotech companies. A lot of those are technology companies. So yes, they may technically have negative earnings, but at the same time, you know, there might be a reason as well, right? These may just be very, very early stage companies. So I think we have to be a little bit careful of kind of painting the whole Russell with a broad brush. You've got some early stage growthy stuff.

24:24You've got some beaten up, downtrodden stuff. Consumer discretionary stocks, I think, are maybe a little bit, you know, kind of lower quality and small cap. Thank you for the time. Laurie Calvacina, working with Amy Wiss-Silverman on speaking terms at RBC Capital Markets. Stay with us. More from Bloomberg Surveillance coming up after this.

24:51You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10 a.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Ellen Frazier, she is really quite an expert on the oil dynamics at Boringa Partners. We're thrilled she could join this morning. Ellen, how do you translate a people on the southern end of the Arabian Peninsula able to hit rockets and take out airplanes, people cause death and injury at the Riyadh airport? How does a pro like you translate that? Yeah, I see it. I mean, clearly there is a massive impact on the personnel that are in Saudi Arabia.

25:39I've actually got friends in Saudi Arabia and we've been in contact with them. And it's quite a scary time for everybody on the ground there. Clearly, with my professional hat on, I move straight to the energy markets and look at what's happening there. And Saudi Arabia actually geographically has an advantage because it can ship things through the Strait of Hormuz or it can actually go through the Red Sea. But fundamentally, it's under attack and actually its refineries are damaged and some of its energy infrastructure is damaged. the biggest producer in the Middle East is under a huge amount of threat.

26:14And that's obviously a major, major problem for global energy markets. I look, Ellen, at our lack of knowledge. How long does it take to rebuild a refinery, whether you're Russia dealing with the drones of Ukraine or you're Saudi Arabia dealing with, I guess, the drones and missiles of the Houthis? How long does it take to fix a refinery? Yeah, it's a great question. And clearly the answer is it depends because it depends on how much damage has been done. But if you look at we've got a refinery in the UK, an ExoMobil refinery down in Fawley. And that's on a 10 week turnaround where they're doing quite a significant refurb that's been planned for many, many, many months, if not years.

26:59They're flying in all sorts of resources, specialist resources. They're flying in all sorts of specialist parts. and that is a meticulously planned operation to do that piece of work. Where you've got a damaged refinery, you've got to assess the damage clearly. You've got to get hold of some quite specialist parts and most refineries are actually quite unique. They've been custom built effectively really to work with that market. You've got to get those parts manufactured. You've got to get those parts in place. You've got to get the skilled workforce in place. So it's really not a quick thing to turn around a refinery where, you know, actually you might have damage.

27:35And even when you look to fix the first bit of damage, as you take to pieces that refinery, you may find additional damage as well. So not quickly in summary, it's not an easy task. Ellen, I heard a lot of shipping companies have had their ships turn around, they were heading toward the Gulf of Eman, you know, where the ship-to-ship transfers are taking place, right, obviously, and they've just turned them around. I mean, talk to me about what your expectations are. I mean, better yet, how do you even measure, you know, with these ships that are turning their transponders off, how do you even measure transit through the Strait of Hormuz, or for that matter, the Babam and Demstrait?

28:09I mean, it's very, very difficult to do, is it not? It really is difficult to do. And you can absolutely see it from the eyes of the captains there, where they are clearly concerned by the safety of all of their crew members, the safety of the ship itself, and the safety of the cargo. And let's be clear, you know, if you're carrying crude oil products around the Gulf, Gulf, you're effectively, you know, sitting on a very, very flammable piece of equipment, and that is very dangerous. You know, absolutely, there are firms like Kepler, for example, who are tracking this really closely, not just through all the various different transponders, but through satellite imageries and on the ground observations as well.

28:50So the data that we're getting is reasonable. But you're absolutely right. It's a bit of guesswork versus actually all of those ships moving backwards and forwards with their transponders on. Alan, last question for me. I mean, what are your thoughts on diesel here now with this, you know, Trump sort of scaling things back with Russia and deals with production coming out of, you know, coming out of Asia? Talk to us a little bit about what your expectations are. Is it going to move the needle? Is it going to help, you know, some of these countries who are really, you know, capacity constrained there?

29:15Yeah, I mean, diesel consumption globally is absolutely enormous. You know, it is the working horse fuel of transport, agriculture, you know, even all of the ships that we're just talking about. Marine diesel obviously moves them around. So it's the backbone of the global economy. Producing diesel, obviously, you know, it's massively impacted by what's going on in Russia at the moment. And a lot of the diesel refineries, unfortunately, stuck on the wrong side of the Strait of Hormuz. So we are enormously constrained. Much as the volumes that we're talking about in terms of coming through from Russia and actually the IEA release that was agreed with the G7, they sound like significant volumes.

29:53But when you put that into context, you know, actually consumption in the US and globally is so enormous, you've really got to question how much of a difference it's going to make. And certainly with the Russian oil, how quickly can that get into US markets? And is it going to make a difference to US markets before the midterms? You know, the reality is pretty limited. Ellen, thank you. Thank you so much. Got to run to breaking news. Ellen Fraser with us with the Bring on a hugely busy day. Stay with us. More from Bloomberg Surveillance coming up after this. With ChatGPT, you can do more than get answers.

30:32You can get things done. When you're running a business and looking to expand, you need a clear view of the landscape before making any decisions. ChatGPT can help you prepare. Connect your Google Drive, point to relevant files and reports, and ask chat to research competitors, industry forecasts, and market signals. It can turn the findings into a strategic deck in your team's template that you can review before presenting to your leadership team. Growing a business is ambitious, and ChatGPT can help you do it with confidence. Get started at chatgpt.com. The world of business is constantly evolving.

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32:03you're listening to the bloomberg surveillance podcast catch us live weekday afternoons from 7 to 10 a.m eastern listen on apple carplay and android auto with the bloomberg business app or watch us live on youtube uh today we're going to take a hard turn here with fam bot F-A-M-B-O-T on AI. Tell me what Fambot is, please. Hey, thank you for having me. So Fambot is an AI chief of staff for parents and families. Parenting today has just become out of control, difficult for parents to keep up with. It's amazing that everything's gone digital, but as a result of that, there's too much for any parent to keep up with.

32:43For me with three kids, I have 40 emails a week coming in, 12-page newsletters. I'm in 10 different WhatsApp groups. I have an app for soccer, app for martial arts, and on and on and on. And so FanBot is a proactive AI assistant that consumes all that information for you and just just takes it down to here's what you need to know, here's what you need to do. The distinction I see is Claude and Muse want to get into our computers and into our data life, our financial life, our detailed life, does Fambot not do that? So Fambot just reads family related emails and communications, and then it'll go line by line to memorize every important bit of family related information only, and then distill it down to a text message that it sends parents every night so that they're prepped and ready for the day ahead.

33:32So my biggest problem, and I have three kids, is that, you know, I have multiple different emails. I mean, my kids have different emails. They have different social addresses. They don't want me seeing them. I have firewalls up at Bloomberg. They're not going to let me access that. How does your app, how does your solution cross over all those boundaries and take that all away? So we've really gone deep on email, WhatsApp, and calendars to start. And then we're adding progressively more of those sports app and extracurricular apps that kids use every day. Right. And then it just brings that information in.

34:02You also can bring in two parents information, connect that. It doesn't matter if you're on gmail if you're on outlook if you're on hotmail um so it really has access to all of that and then you could talk to it you could chat with it through text just like you would a real assistant get those last minute answers that you need what field is the soccer game on put that on my calendar and i'll go ahead and take these tasks down for you can i tell fam bot to unsubscribe from emails will it do that for me does it know how to do that because i mean that alone i mean it's worth the price of admission i not quite yet at this point we've been really careful to invest in trust in privacy and integrity.

34:38And we want to make sure it's more additive than subtracting anything and ensuring that the parents have complete control over everything. David Reich with us. This is Fanbot. We're going to continue this discussion. We are waiting in Washington for a press conference with the rest of America curious about a new White House press secretary, Katie Zakaria. We'll go to that when she steps up to the lectern. A real curiosity across america of a newly minted press secretary as well my joke is fanbot won't slice the oranges uh for the soccer match i mean that used to be always a great chore particularly at 4 a.m or whatever but fanbot might tell the other parents that you will be slicing the oranges even if you don't want to be that's the concern right i mean all of a sudden fanbot is registering I'll give you a reminder, though, the day before.

35:28Oh, good. That's good to know. Where are you on barriers to entry? Can't the major players do what you're doing? So we've really gone deep on parents specifically and families in that use case. So it's not single player. It's about having both parents involved. It's about having complicated families that are working together and making sure that we understand every little nuance of what parents are going to face. we kind of like to think of it as like having a friend that has had kids who are a year or two older so they could tell you what to expect and what's going to happen in a year or two ahead or a week ahead so that it could be proactive and set you up for success so we really understand the nuance much more deeply than any of these general ais are going to go so it's so it's machine learning right so it's a general so it's basically so if you train it properly you really it's going to answer you know your kids questions for you without even consulting or it has the potential to i guess is it would it would almost predict what your response would be is that sound about right or you have data to do that yeah so the the beautiful thing about it is that connecting just takes a couple minutes and then it will learn your family it'll understand your idiosyncrasies it'll understand your rhythm and then it can be two steps ahead to make sure that you're prepped and ready for every day that is awesome that is awesome i don't even have to be a parent anymore tom are you listening to this this is crazy well i mean just to add one thing on that the point of this is to give parents time back so you could actually be present with your kids.

36:50We're rebuilding an app that's really meant to let you take the time. Not to worry, not to, you know, yeah, no, of course, every free moment I'd love to spend with my kids. David, thank you so much. David Reich with us today with Fambot. Greatly appreciate it. Turning schools, emails, newsletters, calendar updates, and orange slicing into a daily and weekly plan. This is the Bloomberg Surveillance Podcast available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, 7 to 10 a.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app.

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