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Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox.

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Speaker 1: Along with my co host Lisa A. Bramowitz. Each day

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Speaker 1: we bring you the most important, noteworthy, and useful interviews

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Speaker 1: for you and your money, whether you're at the grocery

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Speaker 1: store or the trading floor. Find the Bloomberg P M

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Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com.

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Speaker 1: Time to turn our attention to the world of credit.

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Speaker 1: Henry Peabody is the portfolio manager for Eaton Vans, helping

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Speaker 1: to manage more than four hundred and fifty billion dollars

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Speaker 1: of customer assets. Based in Boston, and he co manages

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Speaker 1: the Eaton Vans Multisector Income Fund. Henry, thank you very

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Speaker 1: much for being with us, and happy New Year to you.

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Speaker 1: Maybe you could tell us start off by speaking about

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Speaker 1: this whole idea of investors holding on to cash because

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Speaker 1: now they can earn something if they keep cash at hand.

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Speaker 1: Is that true? It is, And that's a theme that

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Speaker 1: we've been talking about for the multisector and core plus

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Speaker 1: funds here to Advanced for a while. And um that

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Speaker 1: is this year you've seen a sort of an alternative

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Speaker 1: asset to risk ussets come into play in the form

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Speaker 1: of a two year note north at two percent, So

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Speaker 1: that that that concept of holding ash holding cash is

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Speaker 1: an attractive one, and most assets have actually underperformed cash,

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Speaker 1: whether you're talking commodity, equity, credit, you you pick your

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Speaker 1: you name it, and it's underperformed cash this year. So um,

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Speaker 1: it's probably offers an opportunity to go the other way

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Speaker 1: going into two thousand nineteen at least a little bit. Um.

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Speaker 1: Investment grade and hig yield spreads is selling off fairly

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Speaker 1: dramatically here in the month, and it's a testament to

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Speaker 1: the market tending to you know, under price but overreact

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Speaker 1: to news, certainly when there's a lack of liquidity. So

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Speaker 1: it's these markets that actually get us a little bit excited.

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Speaker 1: So in other words, you're seeing buying opportunities in both

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Speaker 1: high yield and investment grade right now. I think we're

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Speaker 1: star too. And I'm not saying you need to go

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Speaker 1: all in on anything, but this month you just take it.

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Speaker 1: Just eyeball the market in the month of December and

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Speaker 1: you see several high yield names down five, ten, fifteen

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Speaker 1: points um. Liquidity is being pulled from the market. There's

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Speaker 1: a year end um process UM and and the market

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Speaker 1: tends to overreact. Now, I don't think the market is

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Speaker 1: priced for recession. That is not part of our forecast.

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Speaker 1: But you're starting to see some attractive opportunities arise. And

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Speaker 1: I think that having a shopping list in spite of

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Speaker 1: how the holiday season being behind us, but having a

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Speaker 1: shopping list in two thousand nineteen early on at least

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Speaker 1: to start to nibble at this market makes a little

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Speaker 1: bit of sense. Okay, But I have to wonder, have

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Speaker 1: you been really active in the past few weeks during

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Speaker 1: the lack of liquidity and some of the tumult and

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Speaker 1: if so, is there more of an opportunity in high

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Speaker 1: yield or investment grade UM. We have not been fairly active. UM.

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Speaker 1: We think it's a it's a fool's errand to get

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Speaker 1: too caught up with price signals that may not be

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Speaker 1: fully act right given the sort of year end lack

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Speaker 1: of liquidity UM for us, I think that right now

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Speaker 1: investment grade is starting to look reasonably attractive given the

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Speaker 1: rate rise UM there UM since uh since really the

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Speaker 1: beginning of last year UM, with rates moving higher with

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Speaker 1: spreads moving wider rather aggressively. All that said, UM, I

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Speaker 1: do think that the opportunity in high yield is starting

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Speaker 1: to present itself as well. UM. Several markets are looking

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Speaker 1: attractive to us. We've talked all year really about the

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Speaker 1: non dollar space and emerging markets, and that's been one

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Speaker 1: that's it's hurt our position this year, but we feel

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Speaker 1: very optimistic about it next year. Now you have domestic

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Speaker 1: credit UM also filling in that gap. So it's it's

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Speaker 1: really a market that gives multisector managers like us opportunity

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Speaker 1: to take a bite at several markets at the same

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Speaker 1: time and have a value approach as opposed to focusing

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Speaker 1: on beta. So we're pretty excited and Rean wondering if

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Speaker 1: you could expand on that very thought about non dollar

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Speaker 1: non US investments, particularly in Mexico, Brazilian, Canada. Yeah, so

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Speaker 1: we think that the non dollars space UM is a

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Speaker 1: fairly attractive one one. We we feel that we're getting

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Speaker 1: closer to the end of a FED cycle, and whether

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Speaker 1: it's one hike or three, the fact of the matter

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Speaker 1: is we're closer to the end than the beginning. And

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Speaker 1: really Pale has talked for a long time about his

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Speaker 1: desire to unwind the balance sheet, so I don't think

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Speaker 1: it's one and done here. Um. This is something that

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Speaker 1: the president has been aware of. All that said, we're

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Speaker 1: getting closer to the end than the beginning, so that

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Speaker 1: dollar positioning for us, or the non dollar positioning is

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Speaker 1: an attractive space to be in. The dollars stretched from

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Speaker 1: evaluation standpoint, we're getting to the end of the cycle.

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Speaker 1: A strong dollar is not in Trump's nor frankly Powell's

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Speaker 1: interest here at the moment um, so we do think

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Speaker 1: that that dollar likely comes off in two thousand nine.

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Speaker 1: Mexico is an interesting place to talk about because we

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Speaker 1: think that sentiment is an important indicator. Sentiment got very

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Speaker 1: negative after Amma was elected. Um, it pushed the pace

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Speaker 1: out to some fairly weak levels. We had the airport

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Speaker 1: cancelation and step. You know, the markets reasonably concerned about

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Speaker 1: a more nationalist, um, more more populist president and his

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Speaker 1: fiscal policies, but he came through with a budget that

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Speaker 1: was relatively in line and the market reacted positively. Now,

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Speaker 1: reform there is probably stalled, so you don't think that

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Speaker 1: We don't think you're gonna see a major reversal in

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Speaker 1: the pay so, but sentiment was weak and you can

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Speaker 1: get an attractive carry and an improvement in that pay.

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Speaker 1: So by having exposure there Canada for US as an

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Speaker 1: inflation hedge UM, we do think that inflation is most

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Speaker 1: likely um uh, the most likely outcome of fiscal expansion

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Speaker 1: and policy going out the next year. So for US

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Speaker 1: that negative dollar, stronger Canada and frankly Australia dollar block

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Speaker 1: currencies are a good place to be to have an

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Speaker 1: inflation hedge. Um. That's a good place to be while

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Speaker 1: US credit it starts to become more volatile and opportunities

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Speaker 1: to present themselves there, which we're starting to see. So

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Speaker 1: he could actually, you know, hopefully see the Portfoli fire

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Speaker 1: in several cylinders next year, Henry, just about thirty seconds here.

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Speaker 1: I'm just wondering, could you see any scenario in which

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Speaker 1: tenure treasury yields rise above three and a half percent? Yes, yes,

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Speaker 1: I I do. UM. I think it's possible if we

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Speaker 1: see a couple more hikes out of the Fed, perhaps

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Speaker 1: three um, we should see the two year not moving

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Speaker 1: lockstep with that at this point, and that can push

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Speaker 1: long rates higher. Also, oil is likely to start rising higher.

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Speaker 1: It's reached a technical support level. You're gonna see those

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Speaker 1: cuts filter through and UH concerns about a weak economy

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Speaker 1: coming out of the market, so you should see oil

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Speaker 1: move higher towards the end of the year and that

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Speaker 1: could push inflation up a little bit as well. There's

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Speaker 1: a great deal of wage pressure building as we see

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Speaker 1: the really the inequality that theme in the market, labor

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Speaker 1: versus capital, which is going to be so important, start

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Speaker 1: to come out and rate wages rise, so that could

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Speaker 1: push rates higher. Henry Peabody, thank you so much for

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Speaker 1: being with us, love speaking with you. Happy New Year.

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Speaker 1: I hope you enjoy it with family and friends. Henry

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Speaker 1: Peabody by President and portfolio manager for Eaton Vance talking

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Speaker 1: about their outlook for twenty nineteen should be interesting given

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Speaker 1: how much there has been a sell off, particularly in

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Speaker 1: investment grade credit, which has underperformed in the United States,

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Speaker 1: worst year since the credit crisis. Next year should be

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Speaker 1: interesting China. Joining US an expert on China Michael Herison.

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Speaker 1: He is a Director Asia for the Eurasia Group. He

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Speaker 1: is in charge of their coverage of China. He previously

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Speaker 1: served three years as the U. S. Treasury's Chief representative

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Speaker 1: in Beijing. Michael Harrison, thank you very much. For being

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Speaker 1: with us Happy New Year. If we were to go

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Speaker 1: to China right now, what kind of reaction do you

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Speaker 1: believe is being expressed in government hallways and offices about

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Speaker 1: the conversations that take place and then are publicized on

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Speaker 1: Twitter between the United States in the form of President

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Speaker 1: Donald Trump and President of China Jijing Ping Well. I

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Speaker 1: think it's very cautious optimism. There is a sense on

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Speaker 1: the Chinese side that clearly the situation is better than

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Speaker 1: it was before President's Trump and she met in Argentina

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Speaker 1: on December one, But they've seen reversals from the Trump

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Speaker 1: administration on trade tensions repeatedly over the last year. So

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Speaker 1: I don't think the leadership in Beijing or the government

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Speaker 1: is is banking on this truce lasting. But they're picking

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Speaker 1: up signs from President Trump that he is eager to

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Speaker 1: make some kind of deal work, and so I think

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Speaker 1: they're feeling a little bit better than they were several

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Speaker 1: months ago. Michael, I'm trying to understand how the negative

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Speaker 1: economic data out of China affects this whole discussion of trade,

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Speaker 1: because we did get the first decline or the weakest

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Speaker 1: reading of manufacturing in China since two thousand sixteen overnight,

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Speaker 1: and I'm just wondering, is this basically calling China's bluff,

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Speaker 1: basically pushing them into a trade deal. That is certainly

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Speaker 1: a big part of the Trump administration's approach, and to

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Speaker 1: some extent they may be misinterpreting the signals in the

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Speaker 1: sense that most of China's slowdown this year is really

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Speaker 1: because of domestic policies, its efforts to reign in debt

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Speaker 1: that have been under way for several years now. The

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Speaker 1: trade war is starting to really affect activity, and we've

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Speaker 1: seen that this month and last month, but the trade

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Speaker 1: war is not the main culprit of China's slowdown to date.

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Speaker 1: So I think there's no question that the soft economy

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Speaker 1: in China is leading Beijing to be more willing to

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Speaker 1: make a deal. But when it comes to the very,

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Speaker 1: very tough issues that really involved technology and that both

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Speaker 1: governments regard as important for economic competitiveness, but to some

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Speaker 1: extent also for the geopolitical rivalry, I think that's going

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Speaker 1: to be quite difficult, and really no amount of weaker

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Speaker 1: growth in China short of a crisis, is going to

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Speaker 1: lead Beijing to just, you know, completely surrender to the US.

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Speaker 1: So to speak, Michael hereson, based on your experience, do

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Speaker 1: you believe that the Chinese government supports intellectual property theft? Uh.

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Speaker 1: That's a complex issue, and it depends on what we

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Speaker 1: mean by i P theft in terms of the everyday

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Speaker 1: concerns trademark infringement and and that kind of commercial i

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Speaker 1: P theft. I think it's fair to say that China

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Speaker 1: is far from perfect, but has been making progress in

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Speaker 1: recent years, and that's partly because of demands coming from

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Speaker 1: their domestic industry. If if China is looking to become

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Speaker 1: an innovative economy, it needs to be able to protect

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Speaker 1: i P, both for domestic firms and foreign firms. Where

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Speaker 1: it becomes quite a bit more complicated is strategic industries,

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Speaker 1: where the Trump administration has said that China is in

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Speaker 1: violation of agreement between President's Obama and she basically pledging

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Speaker 1: not to undertake cyber espionage for a commercial gain. So

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Speaker 1: that's a more sophisticated, more targeted um form of IP

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Speaker 1: theft where you know, I think it's it's fair to

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Speaker 1: say the US administration thinks China has not been holding

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Speaker 1: up its end of the bargain, you know, Michael, I

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Speaker 1: want to. I want to just head back to the

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Speaker 1: economy in China for a second here, because I guess

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Speaker 1: it's sort of interesting that the markets did not respond

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Speaker 1: both in Asia and the US did not respond really

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Speaker 1: negatively to the the economic data that was weaker than

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Speaker 1: expected out of China, and there seems to be this

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Speaker 1: belief that if the market, if economic data does decline

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Speaker 1: in China, that just means that the Chinese economy, that

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Speaker 1: Chinese leaders will unleash more stimulus on the economy, and

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Speaker 1: it might actually be a net benefit for the entire

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Speaker 1: Asian region that it depends on China's explosive growth because

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Speaker 1: it will juice growth. How much more ammunition does China

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Speaker 1: have to stimulate its economy. I think they have considerably

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Speaker 1: more ammunition. What the leadership in Beijing is looking to

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Speaker 1: do right now is to stabilize the economy, stabilize expectations,

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Speaker 1: but to only stimulate as much as they need to

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Speaker 1: the government. The leadership is really still committed to trying

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Speaker 1: to rein in financial risks because they recognize if they

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Speaker 1: just allowed debt risks to continue to grow, then this

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Speaker 1: could compromise economic and political stability. Maybe not right now,

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Speaker 1: but certainly not into the far future. So there's an

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Speaker 1: effort to um incrementally stimulate the economy, but really not

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Speaker 1: to unleash the kind of eve of infrastructure stimulus that

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Speaker 1: we might have seen, say five years ago, from a

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Speaker 1: different leadership in Beijing. So I think all that is

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Speaker 1: to say, on the one hand, I do think they

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Speaker 1: have ammunition. But on the other hand, the market shouldn't

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Speaker 1: assume that Beijing is going to go past going to

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Speaker 1: go back to this previous playbook of just flooding China's

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Speaker 1: economy with lose money. I think we're past that point,

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Speaker 1: and so anyone who's expecting a V shaped rebound in

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Speaker 1: China's economy I think is being over optimistic. You have

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Speaker 1: experience dealing with and meeting with a variety of actors

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Speaker 1: and players in China. Do do the Chinese see the

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Speaker 1: map of their country surrounded by threats or by opportunities? Well?

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Speaker 1: I think it's a very interesting point. I mean, you

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Speaker 1: look at Beijing's geographic and geopolitical situation and they see,

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Speaker 1: if not immediate threats, certainly a neighborhood that's not nearly

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Speaker 1: as favorable as you know in the US, where we're

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Speaker 1: surrounded by Mexico and Canada. UM, and so much of

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Speaker 1: China's foreign policy has really been focused for the most

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Speaker 1: part on its immediate region and trying to UM trying

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Speaker 1: to focus on issues near at home, like Taiwan, or

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Speaker 1: like regional stability. Where Beijing has been moving in recent

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Speaker 1: years under Shijin paying is looking to project force, and

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Speaker 1: some of that is about challenging the United States for

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Speaker 1: military supremacy in Asia, but it's also a reflection of

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Speaker 1: the fact that China's economic interests now are increasingly far flung.

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Speaker 1: Through the Belt and Road initiative, China has been building

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Speaker 1: ports and infrastructure and industrial parks and factories really all

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Speaker 1: over Asia. So China can no longer afford to just

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Speaker 1: be looking in its immediate neighborhood and is really looking

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Speaker 1: to become the kind of military power that can protect

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Speaker 1: China's assets overseas. Yeah, Michael Herson, thank you so much

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Speaker 1: for being with us. Definitely going to be a continued

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Speaker 1: theme for us in Michael Herson is the director for

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Speaker 1: the Eurasia Group focused on the Asian region. Also uh

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Speaker 1: he did serve as the U. S Treasuries Cheap representative

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Speaker 1: in Beijing, so really coming to this with authority. Perhaps

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Speaker 1: one of the most hotly debated issues of eighteen will

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Speaker 1: be in retrospect, how much of the positive performance in

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Speaker 1: the first half of the year was due to a

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Speaker 1: sugar high from the tax cuts, and how much did

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Speaker 1: the tax cuts provide lasting, longer term growth in the

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Speaker 1: United States. Joining us to weigh in, Chris Mackie, founder

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Speaker 1: of solution Omics. He is also a contributor to the

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Speaker 1: FED beij book, has advised the FED and also a

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Speaker 1: number of the biggest US companies. Chris, thank you so

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Speaker 1: much for being with us. I would love to get

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Speaker 1: your take one year after the tax cuts were implemented

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Speaker 1: as of December twenty second, what have the biggest effects

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Speaker 1: have been from it? Well, it's great to be with you.

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Speaker 1: It's a great way to finish the year. So you know,

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Speaker 1: the biggest effects were in the first half of the year.

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Speaker 1: There were more psychological than anything. Markets were very excited.

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Speaker 1: They expected uh, significant and sustained stimulus. Unfortunately, the reality

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Speaker 1: was that it was a sugar high. It was mostly

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Speaker 1: a psychological sugar high more than an economic sugar high.

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Speaker 1: Because you know, eleven months into this, what we're seeing

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Speaker 1: is that you know, wage growth has grown a whamping

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Speaker 1: twelve cents an hour or about two forty dollars a

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Speaker 1: year more relative to the rate of wage growth prior

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Speaker 1: to the passage, So nowhere near the four to nine

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Speaker 1: thousand was promised. The job growth is about one quarter

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Speaker 1: of what was promised, and maybe most surprisingly given the

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Speaker 1: media deductibile and expensing of equipment, equipment investment growth actually

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Speaker 1: is down nearly thirty billion versus the same period the

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Speaker 1: prior year. So it hasn't been as advertised, but there

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Speaker 1: are things we can do to improve it and make

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Speaker 1: it better. Chris, maybe just talk about the concept of

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Speaker 1: conditionality and how that affects the overall tax bill. Certainly.

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Speaker 1: So the bill was passed with the concept of unconditionality

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Speaker 1: and universality. So basically what the bill said was any

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Speaker 1: company in every company, including companies that are firing Americans

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Speaker 1: and companies that are not increasing wages, we'll get the

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Speaker 1: same tax cut as a company increasing jobs in America

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Speaker 1: and increasing wages. So what happened was you actually created

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Speaker 1: a disincentive. You basically said, look, you can do whatever

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Speaker 1: you want, and whatever that is, we're still going to

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Speaker 1: give you the same tax cut. Now, the opportunity to

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Speaker 1: day is to have an incentive based or conditions tax

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Speaker 1: policy where you say, look, if the objective is to

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Speaker 1: create more jobs and to increase wages, then let's have

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Speaker 1: the companies that actually who are doing that or thinking

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Speaker 1: about that, let's provide them the incentive to go ahead

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Speaker 1: and do that. And here's the great thing about it, Pim.

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Speaker 1: If you limit it to the companies that actually increase

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Speaker 1: hiring in increased wages, you actually have a bigger pile

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Speaker 1: of money of tax cuts to give to those companies,

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Speaker 1: creating an even greater incentive because you're not giving it

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Speaker 1: to the companies that are firing and not increasing wages. So, Chris,

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Speaker 1: it sounds like you have a lot of criticisms about

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Speaker 1: how this tax cut was unrolled and sort of how

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Speaker 1: effective it was in stimulating the U. S economy. Is

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Speaker 1: there anything good you can say about this tax cut

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Speaker 1: and its effects. Well, the thing that I can say

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Speaker 1: that is good about it and its effects is that

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Speaker 1: it got people focused on corporate tax policy because core

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Speaker 1: tax policy for years has been a hope based corporate

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Speaker 1: tax policy. You cut corporate tax rates and you hope

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Speaker 1: that jobs are creating wages or increased So we've got

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Speaker 1: people focused on the right subject, which is corporate tax policy,

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Speaker 1: and now we need to take it to the next

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Speaker 1: up in te and make it a tax policy that

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Speaker 1: has r OI based or return on investment. We really

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Speaker 1: need to bring more of the approach of the UH,

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Speaker 1: you know, the corporate world, of business world and r

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Speaker 1: o I into our corporate tax policy. Chris, are you

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Speaker 1: surprised at the debate or the attention that has not

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Speaker 1: been given and not been had over the increase in

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Speaker 1: deficits as a result of this tax move? Well, you

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Speaker 1: know there it's interesting, Um, when you use the word debate,

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Speaker 1: I'm surprised there hasn't been more discussion. Um. The debate

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Speaker 1: is pretty much an open and closed case. I mean,

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Speaker 1: you know, the latest estimates UH from the Congressional Budget

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Speaker 1: Office AER for a one point nine trillion dollar increase

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Speaker 1: UM in death sits over the next ten years. Um.

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Speaker 1: You know, that's a that's a staggering number. And what's

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Speaker 1: unfortunate is that, you know, in business, if you invest effectively,

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Speaker 1: if you're investing one point nine trillion, you would expect

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Speaker 1: to get a very good return on investment. The problem

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Speaker 1: is not only the debt that we're taking on, but

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Speaker 1: what we're not getting for it. And that's why I'm

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Speaker 1: focusing on the concept of return on investment, because we

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Speaker 1: really need to bring that discipline from the private sector,

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Speaker 1: from the corporate world to our corporate tax policy, because

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Speaker 1: it's not just the debt, it's also the fact that

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Speaker 1: we're not getting what we were promised for that debt.

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Speaker 1: So how hopeful are you that this could be sort

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Speaker 1: of transformed into a tax policy that does have a

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Speaker 1: net beneficial effect on the US economy versus one that

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Speaker 1: will simply increase the deficit without a commensurate boost to

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Speaker 1: the economy. Sure. Well, you know, we're finishing up, we

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Speaker 1: start to look at our resolutions for nineteen and I

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Speaker 1: hope that one of the resolutions is that Congress and

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Speaker 1: the President can work together and as opposed to sniping

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Speaker 1: at each other and trying to angle for political positioning. Uh,

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Speaker 1: they can look at and say, look, how do we

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Speaker 1: really get a better r O I Because you know,

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Speaker 1: I can tell you on the other side of the

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Speaker 1: spectrum just looking at corporate tax policy and saying, wow,

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Speaker 1: this didn't work. So let's just go ahead and you know,

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Speaker 1: universally and unconditionally raised tax rates to where they were

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Speaker 1: before we cut them. That's not an answer either, because

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Speaker 1: that still doesn't get to the concept of our oy.

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Speaker 1: So you know, I guess i'd say, is we look

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Speaker 1: to a new year. Um, you have to maintain hope,

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Speaker 1: and I think over time, as members of Congress get

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Speaker 1: familiar with the concept of r O I and their

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Speaker 1: constituents hopefully start getting more involved and saying, look, this

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Speaker 1: is something that we demand, we demand a better turn

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Speaker 1: of investment, then we can start to see things change

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Speaker 1: in a different approach to this. Yeah, but Chris, I mean,

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Speaker 1: you've got demands for the government to open. When over

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Speaker 1: eight hundred thousand federal workers are not being paid because

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Speaker 1: of this federal government shutdown. They can't get the government open.

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Speaker 1: What is your prognosis for them having a serious conversation

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Speaker 1: about dealing with the implications of this tax cut. Sure, well,

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Speaker 1: when the polling data and when the election results start

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Speaker 1: to affect those who are involved in this and those

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Speaker 1: are making the decisions, Um, then you'll start to get

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Speaker 1: to see some change. Um. It's it's an uphill battle.

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Speaker 1: But look, we're the country that sent a man to

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Speaker 1: the Moon, were the We're the country that has cured

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Speaker 1: multiple diseases. What I do know is that Congress saying, oh,

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Speaker 1: we're not going to do it differently or it can't

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Speaker 1: be done, is not acceptable. And if it's not, then

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Speaker 1: it's time to vote him out. And we saw in

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Speaker 1: the last midterm election. We saw a significant increase in

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Speaker 1: voter turnout, we saw a significant change in the composition

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Speaker 1: of the House of Representatives. So it is very possible.

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Speaker 1: All right, well, we'll have to leave it on that

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Speaker 1: hopeful note. Chris Mackie, the founder of solution Omics, talking

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Speaker 1: about the results, the ramifications, and the potential for the

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Speaker 1: US government and its economy and tax cuts. If you

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Speaker 1: ask the chief executive officer of a major US corporation

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Speaker 1: what is your biggest fear, A lot of them will

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Speaker 1: say a cyber attack and so to go into their

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Speaker 1: worst nightmares. Let's bring in Michael Bremer, vice president of

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Speaker 1: Data Breach Resolution for Experience, who's joining us with some

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Speaker 1: of his predictions for the biggest cyber risks heading into

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Speaker 1: en So, Michael, let's look into our doom globes and

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Speaker 1: find out, you know, what can we expect next year? Well,

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Speaker 1: we made five predictions and this is our sixth year

404
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Speaker 1: doing these predictions. UM. It really starts with the opportunity

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Speaker 1: for biometric hacking. UM. Biometrics are in our airports, time

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Speaker 1: and attendance to log in law enforcement device access because

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Speaker 1: we you know, we have facial recognition or fingerprint recognition

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Speaker 1: to get in your phones as well as banking, and

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Speaker 1: it just takes and a bit of a misconfiguration or

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Speaker 1: adulteration of the biometrics to be able to get in

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Speaker 1: and pass at least one layer of authentication. Now, now, Michael,

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Speaker 1: this can happen because what you can manipulate the sensors. UM. Absolutely,

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Speaker 1: it's as simple as putting a piece of uh sell

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Speaker 1: tape UM over your fingerprint and using that actually as

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Speaker 1: someone else's fingerprint, or they now have three D printed

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Speaker 1: facial mass that that mimic your face facial recognition features

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Speaker 1: to be able to get into an uh A cell phone.

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Speaker 1: So it's as simple as that. So, Michael, moving on

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Speaker 1: to the next nightmare scenario. I love this. It's sort

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Speaker 1: of you sitting down, what's the worst thing that we

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Speaker 1: could think of someone hacking into your bank account and

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Speaker 1: taking all your money is that a realistic possibility. Well, um,

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Speaker 1: given the fact that not all banking institutions have uh

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Speaker 1: multiple factors of authentication, it just takes in some cases

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Speaker 1: someone getting your password, let alone using your phone and

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Speaker 1: and being able to spoof and a text message over there.

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Speaker 1: So yes, And the worst case scenario is if you

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Speaker 1: have a debit card that may be connected to your

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Speaker 1: banking account and or your line of credit and you

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Speaker 1: use that in an online transaction, somebody gets ahold of

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Speaker 1: that and they can drain your bank account that way

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Speaker 1: as well. One of the big growth areas in is

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00:25:55,560 --> 00:26:01,200
Speaker 1: going to be online gaming and betting, specifically the expansion

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00:26:01,280 --> 00:26:04,600
Speaker 1: of online sports betting. To believe that that's going to

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00:26:04,680 --> 00:26:09,960
Speaker 1: be a target, Well, the gamers, um, they like to

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00:26:10,000 --> 00:26:14,439
Speaker 1: be anonymous, they have great computer skills, and the fact

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00:26:14,520 --> 00:26:19,080
Speaker 1: that you have about two point two billion gamers worldwide

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00:26:19,119 --> 00:26:23,240
Speaker 1: that operate in many cases very comfortably on the dark web,

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00:26:23,640 --> 00:26:26,120
Speaker 1: and that's where the information is bought and sold. So

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00:26:26,480 --> 00:26:29,879
Speaker 1: particularly with on online betting, which is one of the

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00:26:29,960 --> 00:26:35,240
Speaker 1: fastest forms of of online activity. Um, and there's money there.

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00:26:35,680 --> 00:26:38,320
Speaker 1: The old adage follow the money is going to be there,

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00:26:38,320 --> 00:26:40,600
Speaker 1: So I think online betting is going to be a

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00:26:40,640 --> 00:26:43,679
Speaker 1: real target in and then of course you have the

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00:26:43,720 --> 00:26:46,760
Speaker 1: cloud and the possibility that somebody breaks in and gets

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00:26:46,800 --> 00:26:48,920
Speaker 1: all of the information that a lot of big companies

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00:26:48,920 --> 00:26:54,280
Speaker 1: have believed has been stored away securely. Is that realistic? Well,

448
00:26:54,440 --> 00:26:58,000
Speaker 1: we we've had three breaches this year um Uber, Time

449
00:26:58,040 --> 00:27:01,760
Speaker 1: Warner and accenture that in fact the root cause was

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00:27:01,800 --> 00:27:05,679
Speaker 1: a miss configuration of the servers in the cloud. And

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00:27:05,800 --> 00:27:09,080
Speaker 1: given the amount of data that's out there about a

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00:27:09,119 --> 00:27:13,280
Speaker 1: billion gigabytes at last count, due to um or from

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00:27:13,280 --> 00:27:16,840
Speaker 1: the sources, UM, it makes sense that there's going to

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00:27:16,960 --> 00:27:20,840
Speaker 1: be an opportunity for with one miss configuration someone to

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00:27:20,880 --> 00:27:24,600
Speaker 1: access a ton of data all at once. Michael, when

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00:27:24,640 --> 00:27:29,280
Speaker 1: you use the facilities at an airport, does that include

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00:27:29,280 --> 00:27:33,679
Speaker 1: the public WiFi system? One of one of the things

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00:27:33,720 --> 00:27:36,399
Speaker 1: that I always recommend when people ask me what are

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00:27:36,400 --> 00:27:41,320
Speaker 1: the consumer tips that are most important? Never use public WiFi.

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00:27:41,760 --> 00:27:44,760
Speaker 1: Doesn't matter if it's offered free in the hotel or

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00:27:44,800 --> 00:27:48,399
Speaker 1: in an airport or a public park. Um, it really

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00:27:48,720 --> 00:27:53,480
Speaker 1: can because there aren't the security protocols in place. UM.

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00:27:53,520 --> 00:27:58,000
Speaker 1: Even sometimes with your own VPN or having encrypted data,

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00:27:58,400 --> 00:28:01,359
Speaker 1: it's still just knew not a good idea. So spend

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00:28:01,359 --> 00:28:05,120
Speaker 1: the extra few pennies, use your cellular data, and avoid

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00:28:05,119 --> 00:28:09,240
Speaker 1: any public WiFi. So, Michael, do you use all of

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00:28:09,320 --> 00:28:12,920
Speaker 1: do you like avoid common electronic devices? At this point?

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00:28:13,000 --> 00:28:14,720
Speaker 1: Do you just sort of hole in your home and

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00:28:14,800 --> 00:28:20,760
Speaker 1: use cash? I wish it was that easy. Um, Unfortunately

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00:28:20,800 --> 00:28:24,040
Speaker 1: I haven't gotten to that point. UM. I'm I'm still

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00:28:24,160 --> 00:28:27,000
Speaker 1: a tech junkie. I use a phone and a computer

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00:28:27,160 --> 00:28:31,399
Speaker 1: and and operate UM that way. UM, I do stay away.

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00:28:31,440 --> 00:28:34,480
Speaker 1: I haven't gone to one of the voice recognition whether

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00:28:34,600 --> 00:28:38,440
Speaker 1: and Selexa or an echo because I love the story yesterday.

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00:28:38,480 --> 00:28:42,200
Speaker 1: I think it was the fifth grader who was using

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00:28:42,360 --> 00:28:45,160
Speaker 1: Alexa to get his homework done if his mom caught

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00:28:45,200 --> 00:28:47,120
Speaker 1: him out, and I thought that was pretty funny. Yeah.

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00:28:47,120 --> 00:28:49,600
Speaker 1: If that's the worst that happens, though, it's not that bad,

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00:28:50,360 --> 00:28:53,440
Speaker 1: Michael exactly. Michael Bremer, thank you so much for being

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00:28:53,480 --> 00:28:55,720
Speaker 1: with us. Mike. Michael Bremer as vice president of Data

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00:28:55,760 --> 00:29:00,280
Speaker 1: Breach Resolution at Experience. Thanks for listening to the Bomberg

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00:29:00,400 --> 00:29:03,040
Speaker 1: P and L podcast. You can subscribe and listen to

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00:29:03,040 --> 00:29:07,600
Speaker 1: interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer.

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00:29:08,000 --> 00:29:11,600
Speaker 1: I'm PIM Fox. I'm on Twitter at pim Fox. I'm

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00:29:11,600 --> 00:29:15,000
Speaker 1: on Twitter at Lisa abramoits one before the podcast. You

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00:29:15,000 --> 00:29:17,560
Speaker 1: can always catch us worldwide on Bloomberg Radio