WEBVTT - Hacking the President's Phone is Straightforward, Weaver Says 0:00:00.080 --> 0:00:02.040 P and L is brought to you by proper Cloth, 0:00:02.120 --> 0:00:05.120 a leader in men's custom shirts, with proprietary smart sized 0:00:05.120 --> 0:00:08.720 technology and top rated customer service. Ordering a custom shirt 0:00:08.760 --> 0:00:11.680 has never been easier. Visit proper cloth dot com to 0:00:11.760 --> 0:00:19.920 order your first custom shirt today. Welcome to the Bloomberg 0:00:20.000 --> 0:00:22.599 P and L Podcast. I'm Pim Fox. Along with my 0:00:22.640 --> 0:00:25.759 co host Lisa Abramowitz. Each day we bring you the 0:00:25.800 --> 0:00:29.360 most important, noteworthy and useful interviews for you and your money, 0:00:29.360 --> 0:00:32.360 whether at the grocery store or the trading floor. Find 0:00:32.400 --> 0:00:35.800 the Bloomberg P and L Podcast on iTunes, SoundCloud and 0:00:36.080 --> 0:00:45.600 at Bloomberg dot com. The President's phone the point of 0:00:45.680 --> 0:00:49.760 much speculation and worry. Now we have a new worry. 0:00:50.080 --> 0:00:54.040 President Trump is fond of using his Android phone, which 0:00:54.200 --> 0:00:57.680 is not as well protected as some newer versions of 0:00:57.760 --> 0:00:59.920 other phones. I want to bring in Nicholas Weaver, who's 0:00:59.920 --> 0:01:07.120 a security researcher at the International Computer Science Center in Berkeley, California. UM. Nicholas, 0:01:07.160 --> 0:01:11.640 you wrote in a recent UH a recent column that 0:01:11.720 --> 0:01:15.640 you said that you would basically assign to your UH 0:01:16.280 --> 0:01:21.119 advanced graduate students the project of hacking into the President's phone. 0:01:21.520 --> 0:01:25.480 How how easy is it um, assuming it is a 0:01:25.520 --> 0:01:29.240 Galaxy S three or S four, It is very straightforward, 0:01:29.840 --> 0:01:32.639 and it's for two reasons. First of all, that phone 0:01:32.720 --> 0:01:37.800 has known vulnerabilities that you can just basically download and 0:01:38.560 --> 0:01:41.720 to use one of those vulnerabilities, all you need to 0:01:41.760 --> 0:01:45.199 do is convince your victim with that phone to click 0:01:45.240 --> 0:01:49.640 on a link. And given the president's temperament, it's probably 0:01:49.680 --> 0:01:52.560 pretty easy to tweet something at him that would attract 0:01:52.600 --> 0:01:56.400 his attention and cause him to click. Well, why doesn't 0:01:56.440 --> 0:01:58.520 they Why don't they just use them more secure phone, 0:01:58.520 --> 0:02:01.600 give him that function if you wants it, that outgoing function, 0:02:01.920 --> 0:02:04.560 and then pair back any of the any of the 0:02:04.600 --> 0:02:09.840 incoming data. The problem is is what is his workflow. 0:02:10.400 --> 0:02:13.079 His workflow on that phone is he wants to take 0:02:13.120 --> 0:02:16.480 phone calls off the book from his friends, and he 0:02:16.560 --> 0:02:21.280 wants to tweet and read links. And so you could 0:02:21.440 --> 0:02:26.160 build a more Trump resistant phone, but you'd still need 0:02:26.240 --> 0:02:29.680 to get him to cooperate in terms of switching over 0:02:29.800 --> 0:02:34.480 to basically separate devices for his different roles. Well, so 0:02:34.720 --> 0:02:37.000 let's talk about sort of the past precedent for this. 0:02:37.080 --> 0:02:41.240 I mean, what have previous presidents in the high tech 0:02:41.320 --> 0:02:47.680 era done? Obama, who was a notorious BlackBerry addict just 0:02:48.320 --> 0:02:53.120 broke down and used a government device, and um, he 0:02:53.240 --> 0:02:57.440 joked about the morning process of no longer having his 0:02:57.480 --> 0:03:02.400 own personal device. What's the what's the drawbacks for them? Um? 0:03:02.440 --> 0:03:04.760 In order to do a secure device, it's going to 0:03:04.800 --> 0:03:08.000 be locked down and more limited. So let's say I 0:03:08.080 --> 0:03:11.880 want a phone that Trump can tweet on. I'm going 0:03:11.960 --> 0:03:15.200 to want to remove the microphone and camera. I'm going 0:03:15.280 --> 0:03:18.680 to want to remove the cellular connectivity in GPS because 0:03:18.720 --> 0:03:20.959 I know he's going to carry it where he shouldn't 0:03:21.760 --> 0:03:25.680 and he's not going to want a device that's that crippled, 0:03:26.800 --> 0:03:30.200 all right, So if he doesn't want that device, is there, 0:03:30.320 --> 0:03:33.440 for example, another device that would do some of this? 0:03:33.960 --> 0:03:36.320 For example, I know that there's something called the black phone. 0:03:37.720 --> 0:03:41.120 What would what would that doesn't have the kind of functionality, 0:03:41.320 --> 0:03:44.640 I guess, but what would be? Uh? What what would 0:03:44.680 --> 0:03:49.000 be the advantages there? Well, the black phone and Boeing's 0:03:49.040 --> 0:03:55.040 black type things, those are more locked down Android devices. Um, 0:03:55.120 --> 0:03:58.160 but it would be a new device for him. He's 0:03:58.320 --> 0:04:02.280 very set in his ways on comfort level, and it's 0:04:02.320 --> 0:04:05.720 just a really hard problem to convince the boss to 0:04:06.000 --> 0:04:08.840 do things securely when he's used to doing things his 0:04:08.920 --> 0:04:12.800 own way. So if this is a problem CSO's face 0:04:12.840 --> 0:04:16.080 all over the planet. Well, so, so this is this 0:04:16.160 --> 0:04:20.000 is my thinking right now, is that potentially, unless he 0:04:20.120 --> 0:04:23.679 were to remove the phone from the room during any 0:04:23.760 --> 0:04:28.360 confidential conversation, this could be a pretty pretty serious national 0:04:28.600 --> 0:04:32.080 national security concern. Is there anything to sort of contradict 0:04:32.200 --> 0:04:37.239 that that impression? No, And what's right is that he's 0:04:37.279 --> 0:04:41.000 had this phone for months, and so the real question 0:04:41.120 --> 0:04:44.800 is is not what is he doing now? Because looking 0:04:44.839 --> 0:04:49.680 at his Twitter feed, the staff seemed reasonably adept at 0:04:49.760 --> 0:04:53.680 keeping the phone out of his hands during working hours, 0:04:53.680 --> 0:04:56.919 since those working hour tweets seemed to be dictated to 0:04:57.000 --> 0:05:01.840 an aid on a different device. But the problem is 0:05:01.839 --> 0:05:06.120 is he's had this phone for months, and we have 0:05:06.279 --> 0:05:10.840 to assume that that phone was compromised months ago. And 0:05:10.920 --> 0:05:13.440 so what needs to happen is people need to go 0:05:13.560 --> 0:05:18.359 back and go, Huh, what conversations did I have around 0:05:18.360 --> 0:05:22.960 the President elect at the time that I would worry 0:05:23.080 --> 0:05:27.920 if it got to Moscow, Beijing, Tel Aviv, Paris, or 0:05:28.080 --> 0:05:33.400 any place else. Well, so Nicholas zooming out, Uh, you know, 0:05:33.520 --> 0:05:35.680 there's been a lot of concern about the security of 0:05:35.720 --> 0:05:39.960 information among various government officials. We saw this with with 0:05:40.400 --> 0:05:43.200 Hillary Clinton and the and the d n C. I mean, 0:05:43.640 --> 0:05:49.960 what's your impression of how secure the overall governmental system is. Well, 0:05:50.000 --> 0:05:56.240 those systems, in many cases are private. Um, the US government, 0:05:56.520 --> 0:06:01.599 if it's classified, has really good protection. The US government 0:06:01.680 --> 0:06:05.400 uses multiple layers of protection for classified data, and so 0:06:05.520 --> 0:06:08.320 unless it's safe for all we know discussed in a 0:06:08.400 --> 0:06:12.479 marra Lago dining room, the protections are really good. The 0:06:12.560 --> 0:06:16.560 problem is with the U s government is the unclassified systems, 0:06:16.600 --> 0:06:19.440 the stuff that's connected to the Internet, and that's just 0:06:19.800 --> 0:06:25.600 often such an attractive target. The other problem is personal devices. 0:06:25.680 --> 0:06:30.040 So let's look at that famous photo at maral Lago 0:06:30.120 --> 0:06:34.600 of a AID illuminating some briefing document with the cell 0:06:34.600 --> 0:06:37.800 phone camera. This was related to the missile launch from 0:06:37.800 --> 0:06:42.160 North Korea. Yes, so we had a whole panicked gathering 0:06:42.520 --> 0:06:48.600 and we saw photos of an AID illuminating a who 0:06:48.640 --> 0:06:53.679 knows what classified or unclassified document with a cell phone. Now, 0:06:53.839 --> 0:06:57.560 if this was a government phone, I think it's no 0:06:57.680 --> 0:07:01.279 worse than having the conversation at marl Ago, where, for 0:07:01.360 --> 0:07:04.480 all we know, the Russians tip the weight staff better 0:07:04.520 --> 0:07:09.600 than Trump does. But if it was a private phone, 0:07:10.440 --> 0:07:13.640 that person is still a high value target and the 0:07:13.680 --> 0:07:17.080 private devices are nowhere near as secure. So as it 0:07:17.160 --> 0:07:19.520 was a personal phone, they might as well have just 0:07:19.720 --> 0:07:22.880 facts that document to Moscow in terms of trying to 0:07:22.920 --> 0:07:27.600 do a damage assessment. Nicholas, I just curious if let's say, 0:07:27.880 --> 0:07:31.080 one of the patrons at Mara Lago or in any 0:07:31.120 --> 0:07:33.360 public setting a meeting of any kind, not just with 0:07:33.400 --> 0:07:36.960 the president, but if there are mobile phones that are present, 0:07:37.240 --> 0:07:39.760 is it possible or is it How easy is it 0:07:39.800 --> 0:07:41.800 to hack into one and use them almost as a 0:07:41.840 --> 0:07:44.600 listening device for everything that goes on in the room. 0:07:44.600 --> 0:07:47.800 I keep thinking also of those home devices like the Alexa, 0:07:47.880 --> 0:07:50.960 the Echo and so on. It really depends on the 0:07:51.000 --> 0:07:54.560 device and the security model. So like, I use an 0:07:54.600 --> 0:07:57.360 iPhone and I'm very happy because i know I'm not 0:07:57.480 --> 0:08:00.920 worth risking a one point five million all or exploit 0:08:01.040 --> 0:08:07.400 to attack. However, if somebody's using a Galaxy Note or 0:08:07.480 --> 0:08:11.800 a Galaxy three or Galaxy four and they know they 0:08:11.800 --> 0:08:16.040 are a worthwhile target, they basically need to throw that 0:08:16.080 --> 0:08:20.800 phone in the trash because for that phone it costs 0:08:20.800 --> 0:08:25.440 basically nothing in terms of exploits. That just basically costs 0:08:25.800 --> 0:08:28.760 having to take a little time to get that victim 0:08:28.880 --> 0:08:31.840 to click on a link. Thanks very much for taking 0:08:31.840 --> 0:08:34.120 the time to explain all of this to us. Nicholas Weaver, 0:08:34.400 --> 0:08:50.160 security researcher at the International Computer Science Center, Berkeley University. 0:08:52.000 --> 0:08:54.480 Let's get a little bit more color on what exactly 0:08:54.520 --> 0:08:57.160 happened with Kraft, heins and you Leaver at Hammond is 0:08:57.200 --> 0:09:01.160 here with us UH he covers takeovers F four Bloomberg News, 0:09:01.280 --> 0:09:04.800 and I just want to start with some questions. I've 0:09:04.800 --> 0:09:06.680 got a lot of questions. My first question is, so 0:09:06.760 --> 0:09:11.319 Kraft made this one billion dollar offer for Unilever, UH, 0:09:11.360 --> 0:09:14.240 but Uni Leaver spurned that offer, and yet we're still 0:09:14.280 --> 0:09:20.160 seeing the gains persist in the shares. Can you why why? Well, 0:09:20.160 --> 0:09:21.880 it's a good question, I think for two reasons. I 0:09:21.920 --> 0:09:26.200 think one, this is not how Craftines intended this information 0:09:26.240 --> 0:09:28.360 to come out. The rumor had started to get into 0:09:28.400 --> 0:09:30.880 the market. There was some speculation this morning, so they 0:09:30.880 --> 0:09:33.520 were forced by the UK Takeover panel to make a statement. 0:09:33.800 --> 0:09:36.240 I think behind closed doors they maybe would have tried 0:09:36.280 --> 0:09:39.360 to increase the bid for Unilever and get Unilever to 0:09:39.360 --> 0:09:41.600 to come to the table and then to negotiations. Isn't 0:09:41.600 --> 0:09:44.319 it dead, Then it's not necessarily dead. I think there's 0:09:44.360 --> 0:09:47.240 opportunity for craftin's and obviously backed by three G, this 0:09:47.600 --> 0:09:52.280 very very ambitious and sort of deal loving Brazilian private 0:09:52.280 --> 0:09:54.040 ecuity firm. I think there's an opportunity for them to 0:09:54.080 --> 0:09:56.280 come back with a higher offer. It's unlikely that this 0:09:56.320 --> 0:09:58.640 would have been their best and final offers. So I 0:09:58.679 --> 0:09:59.960 think one of the things we were seeing in UNI 0:10:00.040 --> 0:10:01.679 do the stock right now is the market pricing in 0:10:01.720 --> 0:10:04.120 a very good chance that this is not end game 0:10:04.160 --> 0:10:06.240 and that three G, you know, in the form of 0:10:06.320 --> 0:10:08.200 craft himes, come back to the table and try and 0:10:08.240 --> 0:10:11.800 get this thing done well Kraft heinds, as statement specifically said, 0:10:11.800 --> 0:10:14.120 and I'm quoting here, we look forward to working to 0:10:14.240 --> 0:10:17.160 reach agreement on the terms of a transaction. So in 0:10:17.160 --> 0:10:20.480 other words, they're still interested. This is just the opening 0:10:20.520 --> 0:10:22.920 salvo and we see where it goes from here. I mean, 0:10:22.920 --> 0:10:25.560 you're know leaver her talking about the you know, the 0:10:25.559 --> 0:10:28.439 the deal undervaluing the company. I mean that's sort of 0:10:28.600 --> 0:10:32.280 classic takeover speak for give us more money and maybe 0:10:32.280 --> 0:10:34.280 we'll come around. Well, but it's interesting to me that 0:10:34.360 --> 0:10:36.360 craft shares are up to so in other words, the 0:10:36.400 --> 0:10:39.600 market thinks that even if Craft were to offer a 0:10:39.720 --> 0:10:43.240 higher amount, that that's still it would be worthwhile to 0:10:43.400 --> 0:10:45.240 be a creative right. And and look, this is this 0:10:45.320 --> 0:10:47.240 is a very good point that speaks exactly to the 0:10:47.240 --> 0:10:50.240 three G business model, which is they acquire companies to 0:10:50.320 --> 0:10:53.760 go out, they get scaled, and they essentially make money 0:10:53.800 --> 0:10:56.320 off of them by cutting costs in an extremely aggressive, 0:10:56.360 --> 0:10:58.280 almost a sort of barbaric way where they'll go in 0:10:58.320 --> 0:11:00.600 and they will fire a ton of people, the scale 0:11:00.640 --> 0:11:03.120 back on every single small item they can to make 0:11:03.320 --> 0:11:05.560 you know, cost savings, so that the market is looking 0:11:05.600 --> 0:11:07.280 at this and saying, well, look, you're going to put 0:11:07.320 --> 0:11:09.959 together a company that is worth a hundred fourteen billion 0:11:09.960 --> 0:11:11.760 dollars with a company that they're going to pay upwards 0:11:11.800 --> 0:11:13.960 of a hundred forty billion dollars four and you're going 0:11:14.000 --> 0:11:18.560 to have this monster, monster sort of consumer products food business, 0:11:18.920 --> 0:11:21.120 and they're going to extract some huge cost savings from it, 0:11:21.200 --> 0:11:22.880 just because that is what their model is. You saw 0:11:22.920 --> 0:11:24.960 them do it with Burger King and Tim Horton's. They 0:11:25.000 --> 0:11:27.000 obviously did it when they put Craft and Hinds together. 0:11:27.000 --> 0:11:28.839 They're doing it at the moment when they're in this 0:11:29.000 --> 0:11:34.480 merger with ant Busch in Bev and s A P. Mayonnaise. 0:11:35.240 --> 0:11:37.040 That's what I was going to tell you about mayonnaise, 0:11:37.080 --> 0:11:39.520 because if this deal does go through, you'll have Hellman's 0:11:39.559 --> 0:11:44.079 mayonnaise along with Heinz Ketchup and Mama. Yeah. Well that 0:11:44.200 --> 0:11:47.959 was I know right. It's all on the go ahead, Dave. 0:11:48.760 --> 0:11:50.480 A big deal for the Brits, not so much for 0:11:50.480 --> 0:11:53.520 the Americans. Well, now, the name that hasn't come up 0:11:53.640 --> 0:11:57.760 yet is Warren Buffett. Berkshire has behind three absolutely, and 0:11:57.760 --> 0:11:59.559 you've got to bear in mind I was just looking 0:11:59.559 --> 0:12:02.360 for the nos Berkshire under the third quarter of about 0:12:02.400 --> 0:12:05.640 eighty five billion dollars of cash. So what it means 0:12:06.080 --> 0:12:09.880 is that three G, through their support from Berkshire, has 0:12:09.920 --> 0:12:13.400 a lot of firepower to go after a company as 0:12:13.480 --> 0:12:16.760 big as Uni Leaver and bear in mind, this offer 0:12:16.920 --> 0:12:21.120 as it stands is the fourth largest ever made for 0:12:21.200 --> 0:12:25.640 any company worldwide, only a O L Time Warner Votus 0:12:25.679 --> 0:12:29.280 Phone MONISMN and Fightser's failed bid for Alegant or bigger. 0:12:29.679 --> 0:12:31.480 Those of the kind of stakes we're talking about, Ed, 0:12:31.520 --> 0:12:33.520 real quick, How big could this get? What are you 0:12:33.520 --> 0:12:36.520 hearing it could obviously go up a little bit from here. 0:12:36.559 --> 0:12:38.480 But I think one thing to note on this this 0:12:38.640 --> 0:12:40.680 buy union of three g war in Buffer is that 0:12:40.720 --> 0:12:43.600 they do not overpay for stuff. They're quite rigid on 0:12:43.679 --> 0:12:45.439 price and and they obviously are not gonna want to 0:12:45.480 --> 0:12:46.719 go in with a huge number and then have to 0:12:46.760 --> 0:12:48.440 extract a much cost. I think the real issue here 0:12:48.480 --> 0:12:50.080 is what it would mean for Union Leaver in terms 0:12:50.080 --> 0:12:53.280 of employment. This company has some of the hundred seventy 0:12:53.280 --> 0:12:55.560 thousand employees worldwide, and you can bet that if this 0:12:55.720 --> 0:12:57.880 merger was to be consummated, a lot of those people 0:12:57.920 --> 0:13:00.640 would would see their jobs go. We're to follow this 0:13:00.720 --> 0:13:02.360 and we want to thank you for keeping us up 0:13:02.360 --> 0:13:05.280 to date. Ed Hammond on you know, Leaver turning down 0:13:05.320 --> 0:13:08.400 a craft Hens takeover approach. Thank you very much, Thanks 0:13:08.440 --> 0:13:21.360 to Dave Wilson, Bloomberg Stocks, calmnesst, P and L. Is 0:13:21.400 --> 0:13:23.640 brought to you by proper Cloth, the leader in men's 0:13:23.679 --> 0:13:27.160 custom shirts. At proper cloth dot com, ordering custom shirts 0:13:27.200 --> 0:13:30.199 has never been easier. Create your custom shirt size by 0:13:30.200 --> 0:13:34.080 answering ten easy questions, select from over five fabrics to 0:13:34.120 --> 0:13:37.600 suit your personal taste. Shirts start from eighty five dollars 0:13:37.600 --> 0:13:40.520 and are delivered in just two weeks with Proper Cloths 0:13:40.520 --> 0:13:44.480 perfect Fit Guarantee. Remakes are completely free and expert staff 0:13:44.520 --> 0:13:48.520 are standing by to help. For premium quality, perfect fitting shirts, 0:13:48.679 --> 0:14:00.200 visit proper cloth dot com custom shirts made Smarter. The 0:14:00.280 --> 0:14:04.200 US Leading Economic Index increased again in January, pointing to 0:14:04.280 --> 0:14:07.600 a positive economic outlook in the first half of this year. 0:14:07.720 --> 0:14:10.959 Here to tell us more is I can Goldstein can 0:14:11.000 --> 0:14:14.640 of course economist with the conference board. Here to tell 0:14:14.720 --> 0:14:17.560 us more can thanks for being where This has always 0:14:17.760 --> 0:14:21.200 an increase, a jump, and it is described perhaps as 0:14:21.280 --> 0:14:25.680 being a sharp increase zero point six percent higher. Tell 0:14:25.800 --> 0:14:28.880 us about the details. Sharp increase for a second straight month. 0:14:29.360 --> 0:14:32.120 The Coincident Index, that's the one that tells us where 0:14:32.120 --> 0:14:35.080 we are right now, that continues to sort of move along, 0:14:35.200 --> 0:14:39.160 creep along, um, you know, not not very strongly. But 0:14:39.280 --> 0:14:40.960 this is the second straight month that we've got a 0:14:40.960 --> 0:14:44.040 real strong push and turns the lead index, which is 0:14:44.040 --> 0:14:46.520 a signal about where we might be going. So we 0:14:46.560 --> 0:14:50.560 already start with a strong consumer market, strong housing. Maybe 0:14:50.600 --> 0:14:54.120 this is suggesting either trade and or investment might begin 0:14:54.200 --> 0:14:57.080 to start to kick in this ring. Maybe you know, 0:14:57.440 --> 0:15:01.280 earlier this morning, Jeff Rosenberg fixing come strategists at black 0:15:01.360 --> 0:15:04.040 Rock was on Bloomberg Television and he was talking about 0:15:04.160 --> 0:15:08.080 how the bond markets right now are wrong in his opinion, 0:15:08.240 --> 0:15:11.680 and that they are not adequately pricing in the upsurge 0:15:11.760 --> 0:15:16.000 that we are seeing in inflation prospects. Do you agree, Oh, 0:15:16.200 --> 0:15:19.520 the bond market has been under pricing for a couple 0:15:19.560 --> 0:15:21.640 of years, so this is not anything new. But but 0:15:22.440 --> 0:15:26.680 what indicator in here in this report might point to 0:15:28.280 --> 0:15:30.680 Jeff's point, which is that that that that it's going 0:15:30.720 --> 0:15:33.200 to be caught off guards. In other words, it's been wrong. Uh, 0:15:33.200 --> 0:15:34.840 and yet it's been wrong for a long time, so 0:15:34.880 --> 0:15:37.720 people could say, well, it's actually been right. The flip 0:15:37.760 --> 0:15:39.920 side is at what point does this hit the hit 0:15:39.960 --> 0:15:42.320 the wall? See, this is exactly the question because it 0:15:42.360 --> 0:15:45.720 isn't just this sector. This isn't just manufacturing or just 0:15:45.840 --> 0:15:49.280 consumer or just labor. It really is the different you know, 0:15:49.720 --> 0:15:53.240 pulse beats in the different pieces of the overall economy, 0:15:53.600 --> 0:15:57.080 either by industry or by region, are all suggesting that 0:15:57.160 --> 0:16:01.560 the pace of activity will at least steady or pick 0:16:01.640 --> 0:16:04.320 up as we move into the spring, move into the summer. 0:16:04.600 --> 0:16:07.360 The bond market is not fully picking that up. Hasn't 0:16:07.400 --> 0:16:09.680 been for a couple of years, and so the bond 0:16:09.720 --> 0:16:12.600 market in fact might be caught, you know, dragging its 0:16:12.640 --> 0:16:15.320 heels at the same time that the stock market might 0:16:15.320 --> 0:16:17.960 be peaking well. The bond market, you do have to 0:16:18.000 --> 0:16:21.880 add that it has been artificially uh, I don't even 0:16:21.880 --> 0:16:25.800 know not you know, help right influenced, I want to say, 0:16:25.840 --> 0:16:28.080 because of the balance sheet of the Federal Reserve and 0:16:28.120 --> 0:16:30.480 a variety of other things. So sometimes it's difficult to 0:16:30.480 --> 0:16:33.920 even call that, um, you know, natural market. I want 0:16:33.920 --> 0:16:35.520 to go into a little bit of detail on the 0:16:35.600 --> 0:16:38.120 report because I was looking at two items. One was 0:16:38.200 --> 0:16:43.280 average average weekly initial claims, plus I was also looking 0:16:43.280 --> 0:16:46.680 at building permits. Tell us about those two areas well. 0:16:46.760 --> 0:16:50.240 Claims you know, I have moved down lower than we've seen. 0:16:50.680 --> 0:16:52.560 I think these are lower numbers, and we've seen in 0:16:52.600 --> 0:16:57.080 two decades the housing starts and housing permits they move 0:16:57.160 --> 0:16:59.280 up and down one month, you know, or you know, 0:16:59.280 --> 0:17:04.000 they fluctuated lot, but they're moving up steadily. And even 0:17:04.040 --> 0:17:09.520 with that, building supply is below demand, so that there's 0:17:09.560 --> 0:17:13.240 more room for housing to continue. So that, as I say, 0:17:13.280 --> 0:17:16.520 both the consumer market and housing they were already doing 0:17:16.640 --> 0:17:19.600 better than good they're above average in terms of growth. 0:17:19.920 --> 0:17:22.560 Maybe that's going to finally lead some support to the 0:17:22.560 --> 0:17:26.000 rest of the economy, specifically trade or capex. So at 0:17:26.000 --> 0:17:29.680 what point will we be able to see the pickup 0:17:29.720 --> 0:17:33.320 in inflation enough to cause a disruption in markets. It's 0:17:33.359 --> 0:17:35.160 not a pickup in inflation, in the fact, we might 0:17:35.160 --> 0:17:37.680 not see that, and it's a pickup in growth, so 0:17:37.760 --> 0:17:40.800 that you want to look at manufacturing, you want to 0:17:40.840 --> 0:17:43.320 look at at signals about business investment, you want to 0:17:43.320 --> 0:17:45.119 look at trade. But so if you said it's not 0:17:45.160 --> 0:17:48.080 about inflation, so we could get sort of the steady 0:17:48.119 --> 0:17:51.640 inflation rate that we've seen for a longer period of time, 0:17:51.720 --> 0:17:54.360 even as growth picks up, Oh absolutely, I mean we're 0:17:54.440 --> 0:17:56.800 close now to about a two and a pcent rate 0:17:56.840 --> 0:17:59.600 of growth in terms of inflation. In terms of wage growth, 0:18:00.200 --> 0:18:02.199 maybe that might move up to three. It might not 0:18:02.280 --> 0:18:04.280 even move up that much. It certainly isn't gonna move 0:18:04.359 --> 0:18:07.240 up more than that. So that inflation isn't and hasn't 0:18:07.240 --> 0:18:09.720 been the problem. The problem really has been how do 0:18:09.800 --> 0:18:12.960 we goose up growth specifically, how do we get more 0:18:13.000 --> 0:18:14.760 out of manufacturing, how do we get more out of 0:18:14.800 --> 0:18:17.280 business investment, how do we get more at a trade 0:18:17.600 --> 0:18:21.520 and it there's at least a chance that there's enough 0:18:21.520 --> 0:18:24.560 growth going on, there's enough demand going on to finally 0:18:24.600 --> 0:18:27.600 force business to move in those kinds of directions. Maybe 0:18:28.040 --> 0:18:30.280 I can as an economist, I'm gonna pull you out 0:18:30.280 --> 0:18:32.239 of your your your comforts on just a little bit. 0:18:32.240 --> 0:18:33.760 I want to get your thoughts on interest rates. You 0:18:33.760 --> 0:18:36.080 think the Fed is going to raise two three four 0:18:36.119 --> 0:18:39.080 times this year? Yes, to three or four? I knew 0:18:39.119 --> 0:18:41.080 that was that was the economist joke. What do you 0:18:41.080 --> 0:18:43.960 think not only two or three or maybe even four 0:18:44.040 --> 0:18:46.280 this year, but another two or three next year. We 0:18:46.359 --> 0:18:48.520 know that they want to get to about a three 0:18:48.560 --> 0:18:50.600 percent rate for the short end of the Yeld curve, 0:18:51.040 --> 0:18:53.320 about four and a half five at the long end, 0:18:53.640 --> 0:18:55.399 and they're finally going to start to move that. The 0:18:55.480 --> 0:18:58.919 biggest anchor is not what does or does not happen 0:18:58.960 --> 0:19:02.320 in the States. The biggest anchor is how low, even 0:19:02.359 --> 0:19:05.240 how negative interest rates are elsewhere. So there's a little 0:19:05.280 --> 0:19:07.760 bit of balance here between what we're doing and what's 0:19:07.800 --> 0:19:10.280 going on elsewhere in the globe. Do you think that 0:19:10.320 --> 0:19:13.120 the U. S economy is strong enough to withstand three 0:19:13.240 --> 0:19:18.280 four rad hikes this year? Oh, easily, easily, and and 0:19:18.320 --> 0:19:21.080 what tells us that is there is this momentum that 0:19:21.200 --> 0:19:24.280 is building in terms of either this is a two 0:19:24.320 --> 0:19:27.480 month plateau in terms of the YELI turns the leading index, 0:19:27.800 --> 0:19:31.120 or there's momentum that has been it has been building 0:19:31.119 --> 0:19:33.720 for some time. It's starting to finally show up. And 0:19:33.760 --> 0:19:36.280 the surprise is that it took this long to show up, 0:19:36.320 --> 0:19:38.159 not that it's showing up. Thank you so much for 0:19:38.240 --> 0:19:42.679 joining us, Ken Goldstein, really interesting discussion economist with the 0:19:42.760 --> 0:19:59.000 conference board talking about the leading indicators. Matt Miller, who 0:19:59.160 --> 0:20:02.680 is our Bloomberg Tell Levision uh and Bloomberg News correspondent, 0:20:02.920 --> 0:20:06.199 is at the Munich Security Conference. Matt was wearing a 0:20:06.280 --> 0:20:10.160 hat that in the rain earlier today reporting on what 0:20:10.200 --> 0:20:13.560 he was hearing. Matt, thank you so much for joining us. Now, so, 0:20:13.600 --> 0:20:17.199 what what's been the biggest headline that you've experienced at 0:20:17.200 --> 0:20:22.359 the Munich Security Conference? Well, um, so far, it's interesting 0:20:22.440 --> 0:20:25.040 to ask all the world leaders who walk past whether 0:20:25.119 --> 0:20:27.560 or not they think the White House has lost credibility 0:20:27.640 --> 0:20:30.800 and what their expectations are as far as um the 0:20:30.880 --> 0:20:35.280 US supporting NATO, especially in regards to any kind of 0:20:35.359 --> 0:20:38.880 Russian conflict. Most of the people that I've asked and said, Look, 0:20:38.920 --> 0:20:41.520 we're here to find out the answer to those questions, 0:20:41.560 --> 0:20:43.720 so we can't give you our answer just yet. It's 0:20:43.720 --> 0:20:46.639 really a wait and see kind of thing. UM. So 0:20:46.720 --> 0:20:49.879 it's been very interesting to see that everyone from the 0:20:49.920 --> 0:20:53.119 most important leaders I speak to, to UM to the 0:20:53.440 --> 0:20:56.960 soldiers walking around this conference really just want to hear 0:20:57.040 --> 0:20:59.919 what the U. S position is on Russia, especially as 0:21:00.040 --> 0:21:03.800 relates to Ukraine. Well, you've got the secred is the 0:21:03.840 --> 0:21:06.520 Secretary of State? Is he at this meeting, Rex Tillerson? 0:21:06.560 --> 0:21:10.360 Because I know Maddis, James Maddis and John Kelly they 0:21:10.440 --> 0:21:14.679 are attending, as well as Vice President uh, Mike Pence. 0:21:14.720 --> 0:21:17.000 But I thought that maybe it was Rex Tillerson. Is 0:21:17.040 --> 0:21:22.080 he he's there as well. I I have seen General 0:21:22.119 --> 0:21:24.960 Maddie walking around, although I was corrected and told he 0:21:25.119 --> 0:21:28.520 is now to be addressed as Secretary of Maddis. Um. 0:21:28.560 --> 0:21:32.320 I'm not sure which one is is better, but um, no, 0:21:32.480 --> 0:21:36.240 Rex Tillerson is not here. UM, But we do obviously 0:21:36.240 --> 0:21:40.160 expect Mike Pence tonight, so and and Rex Tillerson. Tim, 0:21:40.200 --> 0:21:42.040 I'm sure you're referring to the comments that he made 0:21:42.119 --> 0:21:45.719 in Bonn yesterday has said he expects Russia to uphold 0:21:45.800 --> 0:21:49.399 its commitments to the mint Minsk Agreement. Um, it'll just 0:21:49.440 --> 0:21:52.359 be interesting to see it. Pence is um supportive of 0:21:52.359 --> 0:21:55.280 that as well when he gets here tonight. And I'm 0:21:55.280 --> 0:21:57.719 actually just about to speak to the President of Lithuania. 0:21:57.840 --> 0:22:00.760 So that'll be an interesting interview because Donald Trump wrote 0:22:00.760 --> 0:22:04.640 a letter to her last week saying that he does 0:22:04.720 --> 0:22:07.399 support Um, well, he supports let's put it this way, 0:22:07.440 --> 0:22:10.359 it's gonna sound strange, he supports her support of the 0:22:10.440 --> 0:22:13.560 Ukraine as an independent and sovereign nation. Well, um, and 0:22:13.640 --> 0:22:15.600 just sort of to your point of that, people are 0:22:15.600 --> 0:22:18.240 waiting to hear from the US and get there get 0:22:18.240 --> 0:22:22.679 its position on national security issues. Is there anything else 0:22:22.720 --> 0:22:24.560 that sort of come out that's a little bit more 0:22:24.560 --> 0:22:27.919 definitive than just waiting for Vice President Pence to speak 0:22:28.000 --> 0:22:31.760 or get more color around our policies here. So, so 0:22:32.119 --> 0:22:34.920 I was asking a lot of people this morning whether 0:22:35.000 --> 0:22:37.399 or not they think the White House has lost credibility 0:22:37.480 --> 0:22:42.360 because of this Mike Flynn resignation. And I spoke with 0:22:42.960 --> 0:22:47.960 John McCain, Senator John McCain UM as well as UM 0:22:48.160 --> 0:22:50.280 a couple of the other senators who are walking in 0:22:50.720 --> 0:22:52.879 and asked them, hey, do you think that Mike Pence 0:22:52.880 --> 0:22:57.760 has lost credibility because um he you know, gave misinformation 0:22:57.840 --> 0:23:01.360 as far as the contact with with our Russian allies. 0:23:01.720 --> 0:23:05.439 And Senator McCain said, he didn't, you know, give misinformation, 0:23:05.560 --> 0:23:09.119 He was given misinformation. He didn't miss lead, he was misled. 0:23:09.640 --> 0:23:12.800 Uh so appearing to support and the Vice President tent 0:23:12.960 --> 0:23:15.560