Anthropic's Q3 Results Are In — The Costs Are Exploding

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0:52to Verizon.com or your nearest Verizon store today. If you're looking to hire, you need Indeed. With Indeed sponsored jobs, you can spend less time searching and more time actually interviewing candidates who check all your boxes. Less stress, less time, more results. And listeners of this show will get a $75 sponsored job credit to help your job get the premium status it deserves at indeed.com slash podcast. Just go to indeed.com slash podcast right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash podcast. Terms and conditions apply. Need to hire? This is a job for Indeed-sponsored jobs. Money markets matter. Welcome to Profit Markets. I'm Ed Elson. It is November 3rd. Let's check in on yesterday's market vitals. The Nasdaq declined as the tech

2:06sell-off deepened. More on that in a moment. Meanwhile, the S&P 500 was flat and the Dow rose on hopes for peace talks with Iran. Brent crude tumbled more than 7%. The yield on 10-year treasuries declined. And finally, Apple shares climbed after posting earnings that beat revenue expectations in John Ternus's first earnings call as CEO. Okay, what else is happening? Anthropic's third quarter numbers just came out, and they have complicated the company's IPO story. Revenue was $17 billion, a 12-fold increase year over year. But quarter-over-quarter growth slows to 47%, down from 144% in the second quarter. And for the first time, Anthropic put a total on its spending commitments, $895 billion for computing power and data centers, and nearly $70 billion is due in the next 12

3:00months. That is more than Anthropic's current annualized revenue. This comes after Blackstone told investors that they expect Anthropic to receive a high junk rating after its IPO. Until recently, Blackstone had expected the company to receive an investment grade rating, the tier that lenders consider safe. So a lot to get into here. Here to discuss Anthropic and everything we've learned in the past few days, we're speaking with John Foley, head of the Lex column at the Financial Times. John, good to see you. I'd like to start with the amendment to the S-1, because that really seems like the big news. We had a revenue number which looks good year over year, but also we know that the growth slowed. We

3:45had kind of expected that. I think probably the bigger number that really warrants our attention is $895 billion over the next several years. That's the amount they're going to spend on compute. So we now know exactly what the bill is going to look like. What were some of your big takeaways from the new filing? We do know that the compute bill over the next few years is going to be very big. We already knew it was going to be quite big. Being able to put this new number on it, $900 billion, I mean, sounds enormous. That may also change as we go forward. It may get bigger. But the revenue is also growing really quickly. As you said, it slowed this quarter to about, you know, 1100% growth year

4:26on year, which slowed from like 1400%. I mean, these numbers are completely unhelpful, basically, because these growth rates are so high. And extrapolating how exactly how much growth we're going to see next year is really, I mean, I think it's a fool's errand. What we're looking at, though, broadly is that Anthropic has been guiding, we've heard, to revenue of about $200 billion in the year 2028. So even if it's spending, you know, like $100 billion a year on compute, the revenue still exceeds that. The question, of course, is whether you believe it can hit any of these numbers or whether these numbers will start to look small the closer we get to those deadlines. If it does hit $200 billion, it seems like this might be a business that is feasible.

5:09The trouble is, it seems like a seriously big if. I mean, we had revenue of $17 billion. We also know that growth is obviously slowing, but also that prices appear to be coming down. And they said this, they had these price reductions from Q2 to Q3. They're now coming out with these discounts, largely due to the open weight models that we've been seeing that have been kind of flooding the market coming from China. I mean, is $200 billion, is that reasonable? Should we take that seriously? What do you think? I mean, as you say, there are plenty of risks weighing on this and the price war is a big one. The discounts that they put on their products it seems were quite small according to this new amendment maybe like three percent of revenue in discounts but really and

5:54if they do make 200 billion by the way then a valuation of something like 1.4 trillion which is kind of roughly in the ballpark of what we're talking about wouldn't be ridiculous compared with companies like spacex if you believe this spacex's is, same too. But my issue with this IPO from the beginning has been that it is almost impossible to predict with any certainty where these revenue numbers are going to go. And we also have in this latest amendment, some new tweaks to the risk sector, the risk factors section of the prospectus, not huge ones, but things that remind you that there are some sort of, you know, unpricable factors that may weigh on this. The one that they've talked about in the

6:29latest edition is this idea that they may be getting very close to or have passed what they describe as the moment of dramatically accelerated progress attributable to AI, which is like when AI starts basically improving itself more broadly. And when that happens, then they are supposed to step on the brakes in certain ways to make sure that AI is being developed safely. What does that do to the revenue? It's like, it really is impossible to say at this point. One of the more interesting developments in AI over the past week was something that came from Elon Musk. He tweeted, someone had pointed out how Grokbot, which is basically SpaceX's AI chatbot, their agent, that it wasn't working. And someone tweeted about this. And then Elon responded to that tweet.

7:12I'm just quoting Elon Musk here, quote, the cost of serving Grokbot was unsustainably high relative to revenue, which basically encapsulates the entire concern about all of this. I mean, about OpenAI, about SpaceX, XAI, and also about Anthropic. I mean, if Elon Musk is telling us that that is what's happening, that basically the cost of training these things and then running these things is larger than the revenue, and as a result, he's having to shut parts of it down or dramatically pull back, at least on spending, it seems. I mean, it makes me think that Anthropics headed for the same scenario. And now that we've seen the $900 billion, and we don't have exact clarity on how that's going to play out,

8:04but we can assume, based on what we do know, that it's going to be something like $100 billion at least per year over the next several years. That's, by the way, very conservative, because we know that there is, you know, more than $400 billion in commitments that they're going to need to pay over the next four years. So it just makes me think that's probably where things are headed, but maybe Anthropic can turn it around. I mean, what did you make of Elon's comments and to what extent does it say something about Anthropic's future? Yeah, I think money is finite, right? So we're focused a lot on the spending, but someone has to pay for all of this stuff in order for it to work out. Anthropic has has in its going in its favor,

8:47rapid growth in what it calls enterprise business, what everyone calls enterprise business. So selling services to companies who tend to be able to pay more than consumers, who tend to be stickier, to use the jargon, than consumers. Of course, the money there is limited too. But Anthropic does have a head start. Grok is very much at this point a consumer product if you're trying to sell consumer products how do you fund them you can either charge a subscription a bit or you start looking at things like advertising which is of course how google pays for search but there again like the money is finite you know even companies like google and meta are now starting to spend beyond their means to fund this AI. So if they can at least fall back on enormous advertising businesses,

9:28which Anthropic and OpenAI cannot. So at some point, yeah, the question is, do you have to reduce the level of service because you just can't afford to pay for all those tokens? We'll have to wait and see. But Anthropic is leaning hard into the enterprise space, the idea that companies will pay for its products because they deliver some kind of measurable advantage that isn't otherwise available. Just looking at their compute costs in the current quarter. So, you know, in the first quarter of 2026, it was $3.3 or almost $3.4 billion. The next quarter, it was $5.6 billion. This quarter, it was five point six billion dollars this quarter it was nine point nine billion dollars so it's getting progressively larger but also the revenue

10:12is expanding dramatically as well which makes you think oh it's okay but i mean it seems as though these compute commitments that are coming down the line are going to absolutely balloon the compute costs the quarter on quarter growth rate for revenue has fallen to something like 47%, 48% in these latest Q3 numbers. But the quarter-on-quarter growth in compute costs went up almost 80%. So at the moment, that's increasing more quickly than their revenue. It seemed as though when the IPO came, when the original filing came out, you know, there was a lot of, I would say, size of relief at the fact that their operating losses had come down so dramatically from last year. You know, it came down to something like $700 million negative operating loss.

11:01And the previous year, it was more than $2 billion in that same period. It seems as though it's going to continue to go up. I guess the question becomes, do we actually think that this company is going to become profitable in the near future? Is it actually going to be profitable in 2027? Which I think was something that a lot of people seemed to believe coming out of that first filing. I wasn't sure of it myself. But what do you think? In the second quarter, they, on an operating level, had achieved a positive profit, I think, and that's now swung back to a loss. And then on an accounting basis, their loss is obviously huge because they have this sort of bizarre non-cash paper loss based on the value of securities and

11:43derivatives that they've issued. So like predicting when it gets to profit is also again, really hard. Like I sort of feel like I'm abdicating my responsibility as a financial journalist and someone who analyzes stocks by saying that it's just who knows. But I really do feel with this company is you are being asked to predict things that are impossible to predict. You could argue that this company doesn't really belong in the sort of sausage casing of a traditional public company because these things are so variable. But here we are. I think ultimately Anthropic will tell us what it thinks it's worth and we will pay it or we will not, depending on whether we think that Anthropic is going to be one of the winners. But in terms of are they going to

12:21achieve an operating profit? Well, you'd hope so. If they're cash burning, then they have to find the cash somewhere else. They have to plug that gap elsewhere. One option is by doing it through debt. But as we've heard, they may not have an investment grade credit raising, which will make that more expensive and more difficult. The other is to just keep raising more equity, maybe a bit of both. So there is going to be a lot of pressure on them to show that they can be self-sustaining from a cash flow perspective. And at the moment, they are not. Yeah, it seems as though, I mean, they're going to go out and raise close to $100 billion in this IPO. That's not going to cut it. I don't think. I think they're going to need to raise a lot more unless their revenue can just

13:01absolutely skyrocket over the next year and be so much larger than the amount they're spending. I just, I don't see a way in which that's going to be enough to get them to get them by over the next several years. So it seems as though they're going to have to raise more money, presumably debt. And as you point out here, we now know, according to the Financial Times, that Blackstone told investors that Anthropic is not going to get that investment grid rating that we all thought that they were going to get. It's going to be a high junk rating. How much, in your view, does that matter? To what extent should investors really be paying attention to that? I mean, being able to raise funds cheaply and rapidly is really important. Everyone

13:41is doing it. Meta Platforms was one that we found out last week is doing a big equity raising because this is a race. Everyone wants to beat their rivals and you do that by throwing money into the furnace at this point. So not having an investment-grade credit rating just makes that process more expensive. This is all stuff that should be reflected. This is not to say that Anthropic will fail. It's not to say that it won't be one of the winners in the ARAs. But it should all factor into the amount you're prepared to pay for the shares when it tells us what the price range is. And my fear is that people will just look past that and see this as a kind of scarcity play. There's only one Anthropic I have to get in.

14:21And that would be potentially very risky for them. John Foley is head of the Lex column at the Financial Times. John, always appreciate your time. Thank you. After the break, a brutal sell-off in tech. And for even more markets insights, you can subscribe to my weekly newsletter, Simply Put, at edwardelson.substack.com. a range of FDA-approved GLP-1 medications, including the Wegovy pill and the Wegovy pen. People lost an average of 14% of their body weight at 64 weeks in a clinical trial of Wegovy alongside diet and exercise. To get started with Wegovy, just go to HIMSS.com and complete an online consultation with a licensed provider who will determine if a prescription is appropriate. Ready to reach your goals? Visit HIMSS.com slash markets to get personalized, affordable care for Thank you. by HIMSS is not available in all 50 states. Wigovi is the registered trademark of Novo Nordisk AS.

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17:01As soon as autumn rolls around and you swap your iced lattes for pumpkin spice, that's your signal to start thinking about the holidays, the decor, the gifts, the shopping lists, but more importantly, the holiday treats. Cheesecakes, cookies, is there anything better? And when the recipe calls for cream cheese, there's only one option. Philadelphia, the original cream cheese, made with fresh milk and real cream. This holiday season, whether you're going all out or keeping it simple, make it really Philly good. Find your favorite holiday recipe at creamcheese.com. Despite a pop after reporting, Microsoft ended the week down 2%, and Amazon and Alphabet closed down 4% and 11%, respectively. The sell-off spread to the rest of tech as well.

18:11The Nasdaq 100 is now off more than 10% from its peak early last month, putting it in correction territory. All in all, the biggest AI and chip stocks have lost about $5 trillion in market value over the past month. So why are tech investors selling? Here to break it down, we're speaking with Deirdre Bosa, founder and host of Deirdre Bosa Live. Deirdre, good to see you. So AI and chip stocks have lost about $5 trillion in market value since the beginning of October. This has been a pretty dreadful month and certainly week for practically every name in tech right now, even the companies that seem to report decent-ish earnings. I guess let's just start with your overall reaction. What is going on right now? It isn't like we haven't been here before.

19:06Earlier on in the generative AI cycle, markets have become anxious. They've started to think, OK, we are spending all of this money, hundreds of billions of dollars, trillions even on this AI buildout. But where is the return on investment, right? Like, when is this AI spending going to pay off? And I think we're in another one of these moments. But at the same time, what's different this time than maybe what we saw a year ago or in the past is that the balance sheets of some of the healthiest, safest companies in the world are changing. So something that, you know, I look at and pay really close attention to is how much debt is being issued now, right? And this was sort of a neocloud thing that's been happening over the last few years. Neoclouds are, you know,

19:51the companies that are serving GPUs and AI infrastructure to other companies. But of course, you have the hyperscalers as well, right, which is Amazon, Google, and Microsoft. They have typically had essentially fortresses as balance sheets, right? They have a huge amount of free cash flow, and they've been able to fund their build-out. But something has changed this year. They've actually been tapping debt markets more. So just to put this in perspective, this is total AI-linked debt issuance. Numbers come from Bank of America. In 2025, it was nearly $400 billion. This year, it's going to be about $655 billion. And next year's forecast is going to be $1 trillion. So this is just a huge change

20:34in how we're actually financing the build-out. It means that companies, not just the Neal Clouds, but some of our healthiest, biggest, safest companies are relying more on borrowing. So the timing matters more. This question of the payoff for all of the spending becomes all the more pressing because those debt payments, they are due whether or not the AI investments are paying off. So it leaves less room for mistakes, Ed, and it makes any kind of slowdown more painful. And something that you hear a ton of people in the industry say is that demand is enormous. We can't even satisfy the amount of demand we have and we're supply constrained. But I think what that misses is the whole timing of this. And when you involve borrowing and the

21:13debt markets, that becomes a lot trickier, riskier, and timing matters all the more. And it seems as though, I mean, just looking at some of these news and Google, negative free cash flow, Amazon, negative free cash flow, and Google, negative free cash flow, Amazon, negative free cash flow, Meta, negative free cash flow. I mean, the only hyperscaler that isn't negative on a free cash flow basis right now is Microsoft. But even for Microsoft, the number is going down. I mean, who knows where we'll be next year. It seems as though the only way this works is if everyone goes out and raises a shit ton of money, essentially. That's the way it's going to work. And so if you have, you said a trillion

21:53dollars in debt issuance, you've already got rates rising, you've got yields rising seemingly across the board, you've got the S&P lowering its credit rating outlook for Meta, which just happened this month. I mean, can they even raise that much? Is that becoming sort of the question at this point? I mean, it's an interesting question, right? Because you look at the bottlenecks in AI, and you think about power, right? That is a constraint. Chips are a constraint. But capital is increasingly a constraint when you're trying to fund this enormous buildup. And you're right that only Microsoft has said that it can self-fund next year. At the same time, last week it priced in $25 billion of bonds. So even sort of the companies that have been holding out and saying that we're going to fund all of this ourselves are tapping debt markets. And you're right, when you bring in rising interest rates, this makes this all the more trickier. And I want to bring up something that people here talk about. It's this cone of

22:49uncertainty, right? It's very relevant when you think about the build-out and when it's going to pay off. So you have to commit the money now, even though the further out you look, the less certain you are about demand, costs, and those returns. Borrowing really adds fixed payments to that uncertain future. And at the same time, Ed, when you talk about the companies that reported last week, their core businesses are slowing. So I don't want to say that this is just a debt and borrowing story that makes everything more urgent, but the core businesses you saw from Alphabet, right? A few years ago, we were talking about Alphabet cannibalizing itself, but it had AI overviews. It was going to figure out this advertising piece.

23:30That actually hasn't happened yet. When you take a look at Amazon, it wants to be seen as sort of this AI company. But again, its core business isn't as healthy as investors would like it to look to say, okay, you can spend all of this money on the AI build out. So I think that that is also playing out and that's what the market is looking at. That's why you're seeing these huge declines because investors are focused on the core businesses. But I will also give you the counterpoint. Do you want me to do that now? Please. The counterpoint is just as interesting. There's this chart that I posted from the Financial Times, and it pulls on other data sources. But it shows that this free cash flow squeeze shows that it's actually supposed to be temporary.

24:17So you can see that the hyperscalers, we'll talk about them for a moment, Amazon, Microsoft, and Google, the hyperscalers that are spending the most on this build-out are eating into their free cash flow. As you mentioned, Ed, some of them is going to go negative. But by 2030, that is all supposed to come back. This is Wall Street consensus estimate. This is not my estimate. Wall Street actually expects that Google, Amazon, Meta, and Microsoft are going to be generating more than $600 billion in combined free cash flow by 2030. So if you believe those numbers, this is like an insane buying opportunity. Yeah, and this seems to be part of the crazy thing about this moment in time is that everything, the entire market is, and your expectations around this market are based

25:04on projections that are way out in the future that actually no one can say with any real certainty, which means massive upside risk and also massive downside risk. And the two are kind of pushing and pulling against each other. I guess, you know, the thing that's so interesting, usually I don't actually care that much about market sentiment, because usually the way we try to think about on this show is like, what are the fundamentals? How is the business actually looking? And then everything else is noise. They have to depend on the capital markets, and they have to go out and raise this money, which means that actually they're now dependent on sentiment in a lot of ways. They need investors to feel good about the AI story.

25:54Otherwise, they're not going to be able to go out and raise the amount of money that they actually need to raise over the next few years. So just as we start to wrap up here, you cover a lot of this. You're actually in San Francisco. You're like interacting with a lot of these people. You just spoke with Jensen Huang the other week. What is the sentiment like right now? I mean, we've had the euphoria stage. I can't tell if we're in Duma stage or if people are still feeling optimistic. Like, what is the sentiment in your view? It is not Domer here in San Francisco. I mean, it remains sort of as bullish as ever. And what Jensen Huang focused on, what Gavin Baker focused on in that interview is demand. And that is undeniably still, you know, just at the earliest

26:37stages. What I would say, though, is I mean, that is a very that is a bit of a disconnect, right, from Wall Street. And I think that some will be able to withstand that better. NVIDIA is going to be okay, right? They're at the center of the entire trade. We can talk about, as well, GPU futures, a way of insurance. And the lifetime of these GPUs is lasting a long time. So there's a cohort of companies that are going to be okay. We talked about a lot of them. The Mag 7, SpaceX, as well, is able to tap markets and raise more money. Companies will be able to be okay. We talked about a lot of them. The Mag7, you know, SpaceX as well is able to tap markets and raise more money. Companies will be able to do that. I think the fear maybe are

27:11some of the neoclubs, right? And is that the thing that sort of breaks the AI trade? So that may be something to look at a lot more closely because, Ed, I love that you look at the fundamentals. Me too. When you look at the big tech fundamentals, which I think these are the numbers that people here in tech focus on, like these cloud numbers were insane. AWS up nearly 40%, Azure nearly 50%, Google Cloud over 100%. That is sort of indication that the demand is there and it's paying off. But Wall Street is really focused on some of those other core businesses that have paid for the build-out. Deirdre Bosa is founder and host of Deirdre Bosa Live, which I understand is officially launching next week.

27:51Could you tell us a little bit about it, Deirdre? What's the launch going to look like? What's the timing? Yeah, so we actually launch our daily show on Monday, November 9th. We're going to be live at 1 p.m. Pacific, 4 p.m. Eastern, right after the markets close. Every day I'm sitting actually in the office space, not the studio. It's still under construction. Final touches are being put on just across from me. So really excited. And Ed, hope to have you on to chat with me there as well. I would love to, and I'll be tuning in. Thank you so much, Deidre. Thanks for having me. It is election day in America and voters are casting their votes in what could be a blockbuster election for the Democrats. But before we are able to break down the results of the midterms,

28:39let's take a moment to check in on what will probably be the most important topic on many voters' minds, and that topic is the economy. How is it doing? Joining us to discuss this, where the American economy stands ahead of the midterms, we're speaking with Mark Zandi, Chief Economist at Moody's Analytics. Mark, thanks for joining us on Prof G Markets. So half of registered voters tell Gallup, they did a poll, that the economy is extremely important to their vote. I'm not surprised by this. This seems to me to be the most important thing heading into these midterms. So I just wanted to get your update. How is the economy doing halfway through Trump 2.0? Well, Ed, I'll tell you, I'm surprised.

29:25Only half? I would have thought it must be much more than that. Me too. Because I think that's top of mind for sure for many people when they go going to the polls. Well, the economy, it depends on which economy you're talking about. I mean, if you're talking about the AI economy and you're in that ecosystem, benefiting from all the investment that's going on, or more likely, if you own stocks and AI companies, the economy feels pretty good. You're a lot wealthier than you were not too long ago. In fact, the total value of publicly traded stocks in the U.S. has doubled in just the past four years since Chad GPT was put on the planet. So the wealthy, the folks that own the stocks, they're doing fine,

30:10no problem. Life is good and they're outspending. For the rest of Americans, not so much. You know, many Americans don't own stock. Most Americans don't own any stock of any consequence. And of course, many Americans, about a third, don't even own their own home. They're struggling. Their after-inflation income is at best holding its own, maybe even declining, and their purchasing power is evaporating. And this goes to the higher inflation. This goes to higher interest rates as a result of things like the Iran war. So their economy is not so good. When you add it all up, you know, it looks okay. The economy is growing, but, you know, it's a very fragile growth. And again, it depends on whose economy you're talking about.

30:52Yeah, I mean, we've seen income, inflation adjusted, falling over the past six months. Prices obviously continuing to rise. You said in May, you said, quote, in my 36 years as a professional economist, the stock market has never been more disjointed from the economy, which gets at what you've just explained there, this difference between the AI economy, the stock market economy, and I guess we could call it the real economy, the workers' economy. To what extent do you think that disconnect is going to play a role? Do you think that any Americans say, okay, well, my wages are down, my grocery prices are up, gas prices are up, but I have a more valuable stock portfolio, and I'm happy about that.

31:43Is that something that you think that voters are actually going to think heading into these elections? Well, I think, you know, three-fourths of Americans don't own stocks of any consequence, and many don't own their own homes. So what's going on with regard to AI stocks means nothing. So the stock market can go up, it can go down, it can go around. It doesn't matter. What matters for them is what they're feeling, and that is, are my wages, you know, what I'm getting paid, keeping pace with the higher prices for the things that I'm buying? And that's real income, so-called real wages, after-inflation wages. And there, you know, the picture is pretty bleak. I mean, real wages are going down.

32:26Inflation is faster than the rate of growth in wages. So people's purchasing power, their ability to buy things is declining. And they feel that. They know that. They sense it. They can—and that's what makes them upset. And that's why consumer sentiment surveys are as weak as they are. That's why, you know, the polling numbers are the way they are. That's why the Republicans are getting blamed for, you know, what's going on. For that, for that three quarters of Americans, you know, the financial situation is pretty tenuous. And then you throw into the mix, more recently, the hot run up in interest rates. I mean, interest rates had been pretty low until the war. And now the fixed mortgage rate, which is kind of the benchmark

33:04rate that most people think about when they think about rates, what they have to pay to get a mortgage, it was below 6% before the war started. It's now well above 7%. And of course, that just makes housing, home ownership completely unaffordable. And that's just part of it. It's higher credit card interest rates, higher interest rates on home equity lines of credit, consumer finance loans. So for, again, for most Americans who don't own AI stocks, it's a pretty vexed time. They got a job, you know, OK, but, you know, their wages are just not keeping up with the pace of inflation. Their real standard of living is on the decline. I'm just going to read you a few quotes by President Trump that CNN collected.

33:49So this was in 2024. Trump said, quote, energy is going to bring us back. That means we're going to get gasoline below $2 a gallon. Gas was $3.33 at the time. It's now $4.22 nationally. He also said that we will, quote, slash electricity prices by half within 12 months at a maximum 18 months. Electric prices have risen around 14% since he began in office. He said, as you point out, he said, we're going to, quote, get mortgage rates back down to, we think, 3%, maybe even lower than that. He said that in September 2024, mortgage rates have risen to more than 7.2%. I mean, I could go on. We could talk about manufacturing jobs. We could talk about balancing the budget and the deficit exploding. There are so many promises that were not kept.

34:41I guess that happens a lot in politics, but what seems striking to me is the extent to which all of these problems seem to be almost principally his fault. Like, you look at gas prices. It's hard to say that that is a result of anything other than his geopolitical decisions in launching a war on Iran. Same with consumer prices. I mean, that's largely due to the gas prices, but also because of the tariffs. I mean, do you think that there is anything else out there on which we can place the blame when it comes to economic problems in America? Or is it genuinely the president's fault this time? Well, it's policy writ large. I mean, the Iran war is the most obvious, most immediate. I mean, inflation and interest rates have risen pretty much since the day the war started back on February 28th.

35:38But there's other policies. I mean, there's the tariffs. We're not talking about the tariffs, but the tariffs, same kind of damage to the economy. It raises inflation. It attacks on American consumers, raises inflation through higher prices, which weakens economic growth. So same kind of dynamic is playing as a result of that. And, of course, the very heavy-handed immigration policy, same result, you know, weakens economic growth because many companies that rely on immigrant workers just can't get them, can't find those workers. And, you know, they raise their prices for the things that they produce because they need to bring demand back down consistent with the amount they can supply with reduced labor force. So, again, you know,

36:22another policy that's causing the same kind of dynamic to play out, weaker economic growth in higher inflation. I mean, I think the whole narrative about the economy would be very different today if not for AI. I mean, if not for the boom in AI investment that we're observing that's come on very quickly and the boom surge in AI stock prices, the narrative around the economy would be really pretty bleak. It'd be pretty dark. We'd be talking about recession. So, and it does go back largely to economic policy. Now, there's all kinds of other things going on, you know, other dynamics. But at the end of the day, I totally am sympathetic to what you're saying. It's policy that's at the root of what's going on. Before we end, your economic scorecard,

37:07or if you had to give a grade to this economy heading into the midterms, what would it be? And then to close out, I'd love to hear if you have any predictions for this election. You know, that's my profession is predictions. And I do sympathize with the president. He got his forecast wrong, but, you know, forecasting is a pretty intrepid affair. You know, I give the economy a B because, you know, it's A plus plus when it comes to the AI economy. For the non-AI economy, it's probably a D. So you take the average of the two, B minus, let's say, somewhere in there. But that doesn't do justice to the reality of what people are feeling. They're either in the A++ world or they're in the D world. And there's many more Americans in the D world than the A++ world,

38:01if that makes any sense at all. You know, I am an economist, and I, you know, look at things like election results through the prism of the economy. And, you know, it's the economy stupid going all the way back to James Carville and the Clinton election. And I think that still holds. And the economy for most Americans, not for all, but for most, the majority of Americans, it's pretty tough and it hasn't gotten any better. It's getting worse. And people are connecting the dots back to things like the Iran war and the tariffs. They know that that's behind a lot of what we're observing. So that would strongly argue that, you know, we'll see a change in government here on the other side of the election.

38:44Certainly the House and very possibly the Senate. Mark Zandi is chief economist at Moody's Analytics. Mark, we will see and we will check back in. Appreciate your time. Stay tuned. Okay, that's it for today. Tune in tomorrow to hear our coverage of Apple's earnings with Patrick McGee. Later on this week, we will also be unpacking the midterm results with Catherine Rampel and also Matt Iglesias. So don't miss it. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Brad Williams. Our research team is Dan Chalon, Kristen O'Donoghue and Mia Silverio. And our social producer is Jake McPherson. Thank you for listening to Prof G Markets from Prof G Media. If you liked what you heard,

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