WEBVTT - Get Ready For Pay Cuts, As Work-From-Home Endures 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.200 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Find the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple podcast or wherever you listen to podcasts, 0:00:17.000 --> 0:00:19.840 and on Bloomberg dot com. Well, it's been a head 0:00:19.840 --> 0:00:22.960 scratcher from the start. Firstly, imperative was to get workers 0:00:22.960 --> 0:00:26.960 to work from safe places, their homes preferably. Then it 0:00:27.080 --> 0:00:29.360 was clear this wouldn't be a short term phenomenon, so 0:00:29.440 --> 0:00:32.479 some workers wanted to swap out those homes for other homes, 0:00:32.520 --> 0:00:36.159 maybe even other states. But what do the companies do 0:00:36.240 --> 0:00:38.519 those that are still paying rent for those employees at 0:00:38.560 --> 0:00:41.840 work spaces. Well, Noah bu Hire is real estate reporter 0:00:41.880 --> 0:00:43.680 for Bloomberg News. He has the cover story of the 0:00:43.720 --> 0:00:47.400 new issue of Bloomberg Business Week magazine and it's called 0:00:47.640 --> 0:00:50.080 the Work from Home Boom is here to stay. Get 0:00:50.080 --> 0:00:53.199 ready for pay cuts. No, it's a great story. Talk 0:00:53.280 --> 0:00:55.720 to us about the decisions that companies are having to 0:00:55.840 --> 0:00:58.680 make now nine months into this pandemic, with no end 0:00:58.680 --> 0:01:05.520 in sight and the possibility of a very changing geographic workforce. Yeah, 0:01:05.560 --> 0:01:07.360 thanks for having me on. I I think it's a 0:01:07.440 --> 0:01:10.200 it's a really interesting question and and a lot of 0:01:10.240 --> 0:01:12.199 this has been evolving over the course of this year's 0:01:12.200 --> 0:01:18.120 Companies have have realized that UM workers, their employees can 0:01:18.160 --> 0:01:21.800 be quite productive at home. They're they're certainly drawbacks and 0:01:21.840 --> 0:01:24.280 I think we're starting to see that. So what companies 0:01:24.280 --> 0:01:26.160 are are are starting to do is come up with 0:01:26.280 --> 0:01:30.399 policies UM that imagine, you know, what the rules of 0:01:30.400 --> 0:01:33.120 the road are going to be when UM, when offices 0:01:33.200 --> 0:01:36.880 can be reopened safely? You know, do you have everyone 0:01:37.000 --> 0:01:40.319 come back UM every day of the week. Are they 0:01:40.520 --> 0:01:43.800 doing more hybrid schedules coming in a few days a week? UM? 0:01:43.840 --> 0:01:46.920 And to what extent do you allow workers who want 0:01:47.000 --> 0:01:51.240 to UM just to move somewhere in in entirely different UM. 0:01:51.240 --> 0:01:53.680 Maybe it's a small town, maybe it's closer to family, 0:01:54.280 --> 0:01:57.440 but somewhere that's not so close to the office. Well, 0:01:57.560 --> 0:02:00.520 there's this new little phrase that's coming in and something 0:02:00.560 --> 0:02:02.000 tells me that we're all going to be using it 0:02:02.120 --> 0:02:07.360 very soon, called localized compensation. What is that? Well, it's 0:02:07.440 --> 0:02:09.840 it's just it's an idea that's been around and been 0:02:09.840 --> 0:02:12.720 in practice for for a long time. I mean, companies, 0:02:12.760 --> 0:02:16.440 even the federal government paid different wages for the same 0:02:16.480 --> 0:02:19.119 work in different places. And and it's just a reality 0:02:19.200 --> 0:02:21.239 that the cost of labor and the cost of living 0:02:21.919 --> 0:02:26.680 very um widely across the US. And as a result, 0:02:26.960 --> 0:02:31.359 UM companies try and pay in accordance with local labor 0:02:31.400 --> 0:02:35.640 market conditions and with you know, something that would allow 0:02:35.680 --> 0:02:39.480 their workers, um, if they're you know, professional to live 0:02:39.520 --> 0:02:42.720 a sort of what we consider a professional lifestyle and 0:02:42.760 --> 0:02:46.800 fill in the blank city and um, you know, there's 0:02:46.880 --> 0:02:49.480 data out there, and companies use this data. But now 0:02:49.520 --> 0:02:52.840 they're having to think about, well, how do we um 0:02:53.000 --> 0:02:57.280 pay people who make these voluntary moves to places where 0:02:57.280 --> 0:02:59.280 we may not have an offer? Right, Because if some 0:02:59.400 --> 0:03:02.080 of what you're pay is based on is the city 0:03:02.160 --> 0:03:04.800 that your headquarters is in. You can imagine how companies 0:03:04.800 --> 0:03:06.800 would feel a little odd if if cuddenly you went 0:03:06.840 --> 0:03:08.320 to a place where the cost of living was half 0:03:08.320 --> 0:03:10.120 the price or what have you. There's gonna be a 0:03:10.160 --> 0:03:13.040 lot of litigation about this though, right. I mean, workers 0:03:13.040 --> 0:03:16.120 are going to make the case that there is them, 0:03:16.160 --> 0:03:18.640 whether they're in New York City or San Francisco or 0:03:18.680 --> 0:03:23.320 Montana you know, I think there are a lot of 0:03:23.320 --> 0:03:25.680 strong feelings about this. I don't know if there's going 0:03:25.720 --> 0:03:28.320 to be litigation per se. I mean, this is something 0:03:28.360 --> 0:03:30.040 that's been around for a while, and I think a 0:03:30.040 --> 0:03:32.320 lot of people who have made these moves, including some 0:03:32.400 --> 0:03:35.240 of the employees I interviewed from my story, get that 0:03:35.480 --> 0:03:37.520 if you're living in a place that's cheaper to live, 0:03:37.960 --> 0:03:42.400 it's there, um in a way to be paid less, 0:03:42.520 --> 0:03:47.520 and that in many cases um companies are still paying you, 0:03:47.840 --> 0:03:52.160 uh so that you can afford a similar lifestyle or 0:03:52.200 --> 0:03:54.880 even a better lifestyle in the place you've chosen to relocate. 0:03:55.720 --> 0:03:58.640 I mean, how much is a company entitled to know 0:03:58.800 --> 0:04:00.600 if you if you move back in to your parents, 0:04:00.680 --> 0:04:02.920 for example, and you're not paying any rent, you're not 0:04:02.960 --> 0:04:05.800 paying any utilities, or you're just giving your parents. I mean, 0:04:06.000 --> 0:04:09.560 is that something a company is entitled to take into account? 0:04:10.240 --> 0:04:13.920 Imagine say those parents who are in a city. Yeah. Yeah, 0:04:14.040 --> 0:04:15.680 I mean, look, I don't I don't think there's any 0:04:15.720 --> 0:04:17.920 evidence that that's how these policies are being rolled out 0:04:17.920 --> 0:04:20.039 in In fact, I mean that sounds like more of 0:04:20.040 --> 0:04:23.000 a temporary arrangement. And the company I've profiled, Red Finn 0:04:23.400 --> 0:04:25.960 you know, explicitly says that these temporary moves that are 0:04:26.000 --> 0:04:29.120 happening during the pandemic, those they're not adjusting pay for 0:04:29.120 --> 0:04:31.760 those people. They're They're talking about folks who are making 0:04:32.279 --> 0:04:36.360 a life decision to say, leave New York and moved 0:04:36.400 --> 0:04:38.960 to Rochester closer to where they have family, and they're 0:04:39.000 --> 0:04:41.640 settling down there. It's these are these are these are 0:04:41.680 --> 0:04:45.279 permanent moves. These are not um, you know, I'm trying 0:04:45.320 --> 0:04:48.560 to keep myself and my family safe during the pandemic. 0:04:49.360 --> 0:04:51.400 I'm going to leave this town. These are These are 0:04:51.440 --> 0:04:54.280 people who are making long term decisions. Yeah, it's going 0:04:54.320 --> 0:04:57.120 to be so interesting to see what human resource departments 0:04:57.320 --> 0:05:01.320 do after people are vaccinated. I mean, will they hold 0:05:02.560 --> 0:05:05.200 you know, recruitment events in all sorts of places and 0:05:05.240 --> 0:05:08.000 be quite happy to to take somebody on staff from 0:05:08.120 --> 0:05:10.839 a state that is nowhere near a headquarters or even 0:05:10.839 --> 0:05:14.240 an outpost. It will be interesting to see, Yeah, and 0:05:14.279 --> 0:05:17.080 I think that's what we're seeing. So yeah, yeah, it's 0:05:17.080 --> 0:05:19.640 it's fascinating. It gives the American labor force so much 0:05:19.680 --> 0:05:24.040 more choice and also makes makes the possibility for it 0:05:24.200 --> 0:05:26.560 to be more mobile, right, And that's been one of 0:05:26.600 --> 0:05:28.760 the problems for the American labor force. It's it's not 0:05:28.920 --> 0:05:33.039 as mobile as other labor forces, and you know, going 0:05:33.080 --> 0:05:35.919 across state lines and so on entails all sorts of 0:05:35.960 --> 0:05:38.200 other sort of tax rules and so on. So see 0:05:38.200 --> 0:05:40.040 how that all plays out. But no, I do want 0:05:40.040 --> 0:05:43.440 to ask you though, um banks. For example, you know, 0:05:43.839 --> 0:05:46.720 there are certain banks that are talking about increasing bonuses 0:05:46.800 --> 0:05:49.200 for some of their star staff this year. And it's 0:05:49.200 --> 0:05:51.280 not just the banks. So on the one hand, we're 0:05:51.279 --> 0:05:54.960 seeing them try to cut costs, maybe close headquarters, close 0:05:55.360 --> 0:05:57.719 some of their office buildings and so on. But they're 0:05:57.800 --> 0:06:02.960 not docking pay or reducing pay for their such star stuff, 0:06:03.000 --> 0:06:07.000 are they. No? I mean, look that that that seems 0:06:07.040 --> 0:06:09.880 to be the evidence that that our colleagues here Bloomberger 0:06:10.480 --> 0:06:15.000 are reporting um. But look what what my story is 0:06:15.000 --> 0:06:17.599 really about or is a long term shift and how 0:06:17.600 --> 0:06:19.760 companies are thinking about this and for all those star 0:06:19.839 --> 0:06:23.000 traders who maybe getting bigger bonuses. I think we're seeing 0:06:23.000 --> 0:06:26.720 some early indications that Wall Street firms are looking at 0:06:26.760 --> 0:06:29.000 what positions don't have to be in New York and 0:06:29.320 --> 0:06:32.120 what they can move to lower cost places, and and 0:06:32.120 --> 0:06:35.000 and frankly, some of some of their back office staff. 0:06:35.160 --> 0:06:37.080 Some of their staff might find that they can lead 0:06:37.120 --> 0:06:39.440 better lives if if they can live in you know, 0:06:39.480 --> 0:06:42.200 say Nashville or Dallas, than than having to live in 0:06:42.240 --> 0:06:45.680 the New York City metro area where costs are significantly higher. Right, 0:06:45.880 --> 0:06:47.720 and sometimes it takes almost as long to get into 0:06:47.760 --> 0:06:51.040 the city from the likes of Brooklyn. Just getting Noah, 0:06:51.200 --> 0:06:53.680 thank you. There is room for just a little levity 0:06:53.760 --> 0:06:56.280 here as well. Noah bue Hire, real estate reporter with 0:06:56.279 --> 0:06:59.479 Bloomberg News, has been doing a lot of research on 0:06:59.520 --> 0:07:01.680 this on the work from home boom and what it 0:07:01.720 --> 0:07:03.680 really means for the workforce of the future here in 0:07:03.720 --> 0:07:06.160 the United States, So do check out his story. It 0:07:06.279 --> 0:07:08.640 is the cover of the new issue of Bloomberg Business 0:07:08.680 --> 0:07:12.640 Week magazine, available now on newsstands and at Bloomberg dot com. 0:07:12.680 --> 0:07:15.800 And they're always great reads, great graphics, and a great 0:07:15.840 --> 0:07:19.000 pictorials associated with these cover stories, so this one is 0:07:19.320 --> 0:07:21.640 no different. I really are due to check it out. 0:07:22.640 --> 0:07:26.080 So that does it for this week for Bloomberg Markets 0:07:26.520 --> 0:07:29.320 ten to twelve show. Do stay tuned. Balance of Power 0:07:29.440 --> 0:07:31.080 is next and we'll bring you up to date on 0:07:31.240 --> 0:07:34.320 stimulus talks and what's going on in Washington. D c 0:07:34.720 --> 0:07:38.480 and as four markets. Right now, the SME five hundred 0:07:38.520 --> 0:07:40.560 is down more than half percent, so is the Dow 0:07:40.640 --> 0:07:44.040 Jones Industrial Average NAZAC is down, but not by as much, 0:07:44.160 --> 0:07:46.560 done by a quarter of a percent or so. We 0:07:46.600 --> 0:07:49.040 have the VIX at twenty three, the Dollar index just 0:07:49.240 --> 0:07:52.800 inching above ninety once again. And for those of your 0:07:52.880 --> 0:07:55.040 keeping track of Brexit, there's still a couple of days 0:07:55.120 --> 0:07:58.120 left for a potential deal Sunday night is it's if 0:07:58.160 --> 0:07:59.840 it wants to get ratified by all the twenty seven 0:08:00.000 --> 0:08:03.400 countries before the end of the year. Right now, the 0:08:03.480 --> 0:08:05.400 British pound has come off about three tenths of a 0:08:05.480 --> 0:08:11.600 percent versus the euro training at one ten. The Conference 0:08:11.640 --> 0:08:14.880 Board leading Index of Economic Indicators came in better than 0:08:14.920 --> 0:08:19.040 forecast in November at point six. Economists, we're looking forward 0:08:19.080 --> 0:08:21.240 to show a point five reading. Not only that, but 0:08:21.280 --> 0:08:25.680 the October data was revised better as well, the overall 0:08:25.800 --> 0:08:29.520 index coming in at positive point eight in October when 0:08:29.600 --> 0:08:32.280 the original reading was positive points seven. Let's bring in 0:08:32.320 --> 0:08:34.160 somebody who knows a lot about what's going on underneath 0:08:34.160 --> 0:08:36.640 the surface here, and that is Dana Peterson, chief economist 0:08:36.720 --> 0:08:40.800 for the Conference Board. Dana, what is actually leading the 0:08:40.880 --> 0:08:46.640 leading index. Sure absolutely when we look at the details here, 0:08:46.760 --> 0:08:50.880 there's been a surprisingly a lot of very positive contribution 0:08:51.080 --> 0:08:55.280 from jobless claims, which added two tenths of a percentage 0:08:55.280 --> 0:08:59.040 point to the overall six tenths increase UM. Also, I 0:08:59.240 --> 0:09:02.160 S M. New words continue to be strong, as well 0:09:02.200 --> 0:09:06.520 as contributions from building permits and stock prices. So some 0:09:06.600 --> 0:09:09.520 of these areas are not at all surprising. Uh. Certainly, 0:09:09.960 --> 0:09:14.360 we know that manufacturing uh uh new orders have been 0:09:14.400 --> 0:09:19.439 improving with improving trade globally, and also as many businesses, 0:09:19.640 --> 0:09:23.520 factories can affect social distancing. We also know that construction, 0:09:23.600 --> 0:09:26.319 residential construction has just been booming. It's on fire in 0:09:26.360 --> 0:09:29.240 the US, and so it makes absolute sense that permits 0:09:29.240 --> 0:09:32.920 have been um very positive contributors. And finally, when we 0:09:32.920 --> 0:09:36.760 look at stock prices, indeed, the text sector healthcare stocks 0:09:37.280 --> 0:09:40.080 UM also to a certain degree, financial stocks UM have 0:09:40.200 --> 0:09:42.880 been driving gained and so all those things are being 0:09:42.920 --> 0:09:47.840 reflected in the overall measure. So the leading index, you know, 0:09:47.880 --> 0:09:52.520 rebounded quite quickly and was extraordinarily positive. At one point 0:09:52.600 --> 0:09:55.280 it was you know, above two, as close to three, 0:09:55.480 --> 0:09:57.520 and now we're sort of coming back down to earth 0:09:58.120 --> 0:10:01.240 at what point will it start to concern you in 0:10:01.320 --> 0:10:04.600 terms of the reading for the leading in next I mean, 0:10:04.640 --> 0:10:07.520 we're already a little bit concerned by the fact that 0:10:07.640 --> 0:10:10.720 you know, with each even though each month shown a 0:10:10.800 --> 0:10:14.960 positive reading, it's smaller. And so that suggests that we did, 0:10:15.520 --> 0:10:18.880 uh see a deceleration and growth heading into the last 0:10:18.920 --> 0:10:22.240 quarter of this year, and that potentially the first quarter 0:10:22.240 --> 0:10:24.800 of next year we might see a soft patch. Um. 0:10:24.920 --> 0:10:28.440 Certainly we've also seen uh this behavior reflected you know, 0:10:28.480 --> 0:10:32.440 more retroactively, of course, but in the jobs data, as 0:10:32.920 --> 0:10:35.760 payroll gains have been smaller and smaller and the unemployment 0:10:35.840 --> 0:10:39.800 rate is falling at a more glacial paste. Um. So 0:10:39.840 --> 0:10:42.720 we are keeping watching this and you know, seeing whether 0:10:42.760 --> 0:10:45.360 or not there's going to be a second dip in 0:10:45.480 --> 0:10:49.480 our leading index and also our concurrent uh leading in 0:10:50.000 --> 0:10:55.120 concurrent measures of activity. Dana, what is the conference forwards 0:10:55.280 --> 0:11:00.679 current outlook for inflation next year? Yes, well, we have 0:11:00.720 --> 0:11:06.280 inflation rising a little bit, um but staying beneath you persent, uh, 0:11:06.280 --> 0:11:09.960 and really that's going to be a reflection of you know, 0:11:10.000 --> 0:11:15.320 basis effects from very weak inflation this year twenty but 0:11:15.400 --> 0:11:20.080 also a rotation of consumption. You know, a little less 0:11:20.080 --> 0:11:23.320 spending on goods, more spending on services, um, where you 0:11:23.320 --> 0:11:26.360 could see a little bit of inflation there um, But 0:11:26.559 --> 0:11:30.560 all on all pretty modest inflation outlook, so not too 0:11:30.640 --> 0:11:34.320 much concern there. There are some economist, I suppose, trying 0:11:34.360 --> 0:11:37.240 to sound an alarm on that. Dana, you also did 0:11:37.280 --> 0:11:42.199 a really phenomenal study into the impact of the pandemic 0:11:42.600 --> 0:11:45.920 on race and also the impact of the pandemic on women, 0:11:46.480 --> 0:11:48.920 and you found something very disconcerting when it comes to 0:11:48.920 --> 0:11:53.120 studying the female labor force. You're actually calling it a 0:11:53.120 --> 0:11:55.120 she session. Can you explain to us some of the 0:11:55.160 --> 0:11:59.040 key findings of that report. Sure. Absolutely. What we've seen 0:11:59.160 --> 0:12:01.640 is that, especially in the US, where we have the 0:12:01.679 --> 0:12:05.360 most complete data, very early on in the pandemic, women 0:12:05.440 --> 0:12:09.040 suffered much deeper job cuts than did men. I mean, 0:12:09.080 --> 0:12:11.520 it was horrific across the board, but it was much 0:12:11.559 --> 0:12:13.800 more cute for women. And a lot has a lot 0:12:13.840 --> 0:12:15.920 of that to do with the fact that women are 0:12:15.960 --> 0:12:18.079 working in many of those sectors that have been very 0:12:18.120 --> 0:12:22.560 negatively impacted by covid UM. But as we saw job 0:12:22.600 --> 0:12:25.880 gains pick up, um, we saw more women exiting the 0:12:25.960 --> 0:12:28.439 labor market, and we believe that's a function number a 0:12:28.480 --> 0:12:31.320 few things. Number one, the fact that you know, there's 0:12:31.320 --> 0:12:35.040 still this childcare crisis in the US that was there 0:12:35.080 --> 0:12:38.080 before the pandemic but has only gotten worse. Um. Many 0:12:38.120 --> 0:12:41.000 times women find themselves that they are tasked with caring 0:12:41.040 --> 0:12:43.760 for older adults. But also many kids are in and 0:12:43.760 --> 0:12:49.280 out of school physically, and so oftentimes the responsibility of 0:12:49.559 --> 0:12:52.720 educating children from home falls on mothers. And so we've 0:12:52.720 --> 0:12:56.080 seen a lot of women exiting the labor market. That's 0:12:56.160 --> 0:13:00.400 very apparent in the payrolls data. Um. Sorry, uh yeah, 0:13:00.679 --> 0:13:05.079 pyroll report, Friday Employment report that comes out where labor 0:13:05.120 --> 0:13:09.600 market participation among women has been falling. Yeah. And as 0:13:09.600 --> 0:13:12.120 you say, even if the job exists, in some cases, 0:13:12.200 --> 0:13:14.959 women have to leave it because they just have responsibilities 0:13:14.960 --> 0:13:18.640 that they can fulfill at home unless they're They're right, Dana, 0:13:18.679 --> 0:13:20.760 how much of this will turn out to be structural 0:13:20.800 --> 0:13:24.200 unemployment for women? Will the female libor force bounce back 0:13:24.320 --> 0:13:29.680 as quickly as as the male labor force. Well, our 0:13:29.720 --> 0:13:31.640 hope is that this will be a blip and that 0:13:32.000 --> 0:13:34.719 female labor force participation as well as male labor force 0:13:34.760 --> 0:13:38.880 participation will bounce back and return to pre coronavirus levels. 0:13:38.920 --> 0:13:42.000 But you know, certainly the longer people are out of 0:13:42.080 --> 0:13:44.680 the labor market, the more difficult it is for them 0:13:44.679 --> 0:13:47.640 to rejoin because of perceptions that you know, either their 0:13:47.679 --> 0:13:50.840 skills of actro feed or they're credit going to be behind. 0:13:50.880 --> 0:13:53.439 So it's going to be very important for employers to 0:13:53.640 --> 0:13:58.160 find ways to encourage flexibility in labor force, in labor 0:13:58.160 --> 0:14:01.520 market activity UM in terms of allowing people to work 0:14:01.559 --> 0:14:06.720 from home, potentially providing on site or near site childcare UM, 0:14:06.760 --> 0:14:10.000 and also reskilling their workers and training to make sure 0:14:10.080 --> 0:14:12.880 workers get back on track UM such that we don't 0:14:12.920 --> 0:14:15.679 have this these permanent losses in the labor market among 0:14:15.720 --> 0:14:18.760 women as well as among men. Dana, we're pretty out 0:14:18.760 --> 0:14:21.520 of time. But what's the GDP forecast from the conference board? 0:14:21.560 --> 0:14:26.600 For one, Yes, we're expecting growth at three point six 0:14:26.600 --> 0:14:30.760 percent next year. Okay, three point six percent not not 0:14:30.880 --> 0:14:33.120 negative girls at least, but we'll need a little bit 0:14:33.120 --> 0:14:36.280 more than that. De bounced back probably from where we're from. Dana, 0:14:36.400 --> 0:14:38.600 thank you so much for joining. That is Dana beats In, 0:14:38.640 --> 0:14:42.320 chief economist with the Conference for there this as the 0:14:42.400 --> 0:14:44.640 leading index comes in a little better than forecast, but 0:14:44.720 --> 0:14:50.280 as Dana said, slowing all the while. This is one 0:14:50.280 --> 0:14:55.920 of the stories that's extremely disconcerting and also filters out slowly, 0:14:56.040 --> 0:14:58.480 such that you don't really know exactly how big or 0:14:58.520 --> 0:15:02.240 important to story it is for a little bit after 0:15:02.400 --> 0:15:06.560 the original announcements. I'm talking about the hacks, the hacks 0:15:06.560 --> 0:15:10.040 that have been filtering out news wise in the middle 0:15:10.040 --> 0:15:13.040 of this week and even more yesterday. Let's bring in 0:15:13.120 --> 0:15:15.560 somebody who's up to date on what it all is 0:15:15.720 --> 0:15:18.160 and how concerned we should be. Car Tike me Rota 0:15:18.840 --> 0:15:23.480 covers security and particularly computer security, cybersecurity and the like 0:15:23.600 --> 0:15:26.560 for Bloomberg News. Cartike bring us up to date on 0:15:26.640 --> 0:15:30.880 exactly who was attacked and how many at hacks there were. Yeah, 0:15:31.080 --> 0:15:34.840 we are still figuring this out. It's been almost a 0:15:35.000 --> 0:15:38.760 week since. Um no, it's been ten days. And excuse me. 0:15:38.840 --> 0:15:42.800 The fire Eye breach was first prepared publicly, and since 0:15:42.880 --> 0:15:45.640 then it's just been a lot of questions and very 0:15:45.680 --> 0:15:48.440 few answers. What we do know is that a handful 0:15:48.480 --> 0:15:53.920 of federal agencies were targeted, including Commerce, Treasury, parts of 0:15:54.000 --> 0:15:57.640 d h um AND, as well as the Department of 0:15:57.720 --> 0:16:02.840 Energy and the Nuclear Administration. UH. These very sophisticated Russian 0:16:02.920 --> 0:16:08.680 attackers have been targeting UM critical infrastructure and entities that 0:16:08.800 --> 0:16:13.120 are of government interest. But exactly who has been targeted 0:16:13.520 --> 0:16:16.120 and the scope of the attack is still up in 0:16:16.120 --> 0:16:20.080 the air. There are, uh, you know, federal investigators, private 0:16:20.120 --> 0:16:24.120 investigators at Microsoft and other incident response companies that are 0:16:24.440 --> 0:16:28.200 you know, pulling apart pieces of this. The scope is massive. 0:16:28.600 --> 0:16:34.640 The company that was breached Older Winds. They provide I 0:16:34.800 --> 0:16:38.760 T solutions largely for the federal government, but also they're 0:16:38.800 --> 0:16:41.480 they're all over the place. They work with UM, but 0:16:41.720 --> 0:16:47.240 financial institutions, telecommunications companies, defense contractors. They're a third party 0:16:47.360 --> 0:16:51.720 that's part of the security supply chain. UM that was 0:16:51.760 --> 0:16:56.640 targeted and using a software update, UM malware was was 0:16:56.800 --> 0:17:02.040 inflicted upon up to eighteen thousand of their clients. Now 0:17:02.080 --> 0:17:05.920 that doesn't mean the eighteen thousand victims exist. These Russian 0:17:05.920 --> 0:17:10.080 attackers are very sophisticated, very meticulous and detailed in the 0:17:10.119 --> 0:17:13.240 way in which they're targeting their victims. So as of 0:17:13.359 --> 0:17:18.080 now we're hearing and there are potentially dozens, maybe up 0:17:18.119 --> 0:17:21.800 to hundreds of victims. So of those seventeen thousand, there 0:17:21.840 --> 0:17:25.879 are about UM forty two two maybe over a hundred 0:17:25.960 --> 0:17:29.000 victims so far, but UM, that number is going to 0:17:29.040 --> 0:17:33.360 go up as time passes. UM. It's it is a 0:17:33.400 --> 0:17:36.640 tedious task trying to figure out if you have been targeted. 0:17:36.640 --> 0:17:40.400 And that's what most companies, most agencies are doing right now. Amazing. 0:17:40.480 --> 0:17:45.040 And it's suspected Russian hackers. Now we don't know what 0:17:45.080 --> 0:17:48.000 they've got, how much of it they have, But assuming 0:17:48.040 --> 0:17:50.840 they have something, will they be able to interpret data, 0:17:50.920 --> 0:17:53.879 will they be able to extract useful information? Or is 0:17:53.920 --> 0:17:57.159 this just data that will be coming in, you know, 0:17:57.200 --> 0:18:00.520 in in megabytes to the Russians and they they'll find 0:18:00.520 --> 0:18:03.320 it difficult to actually do anything with this. Yeah, no, 0:18:04.640 --> 0:18:08.560 they know what they're doing. UM. We don't have evidence 0:18:08.560 --> 0:18:14.520 of acciltration yet, but it's it's obviously a cause for concern. UM. 0:18:14.760 --> 0:18:18.159 You know, when when any adversary has this level of 0:18:18.480 --> 0:18:23.080 unmitigated long term access, which goes back at least to March, 0:18:23.200 --> 0:18:26.560 if not further. UM, surely they will have gotten their 0:18:26.600 --> 0:18:31.080 hands on UM files and data that companies and governments 0:18:31.080 --> 0:18:33.320 of the United States would have preferred they not have 0:18:33.400 --> 0:18:36.280 their hands on. Now, exactly what they have and how 0:18:36.320 --> 0:18:40.560 it will be weaponized is uh still a question that 0:18:40.600 --> 0:18:43.520 we're all trying to answer. But you know, the presumption 0:18:43.640 --> 0:18:46.359 is that they knew what they were looking for, they 0:18:46.560 --> 0:18:48.800 likely got access to at least portions of it. And 0:18:48.840 --> 0:18:53.600 this is intelligence that will feed their UM operations, right. Uh. 0:18:53.760 --> 0:18:57.520 They're geopolitical status, you know, trying to assert Russia as 0:18:57.520 --> 0:19:01.239 a UM, you know, a power on par with with 0:19:01.359 --> 0:19:06.760 other UM economic superpowers, even as that country's economic prowess 0:19:06.840 --> 0:19:10.240 sort of dissipates. This is a tool and a mechanism 0:19:10.280 --> 0:19:13.320 to to show the world that they're still on the 0:19:13.119 --> 0:19:16.639 on the platform. And uh, you know, depending on what 0:19:16.680 --> 0:19:19.840 the intelligence tells them, they could use it for um 0:19:20.640 --> 0:19:24.000 uh for political purposes or otherwise cardigate in a sense, 0:19:24.040 --> 0:19:27.280 the damage has already done. What kind of authorities do 0:19:27.560 --> 0:19:30.679 to try to mitigate the damage or prevent weaponization, as 0:19:30.720 --> 0:19:35.520 you say, including President Trump. Yeah, so you know, companies 0:19:35.560 --> 0:19:38.720 that have been exposed have been directed by the Cybersecurity 0:19:38.720 --> 0:19:43.960 Infrastructure Security Agency to cut off UM any portion of 0:19:44.000 --> 0:19:48.040 their network that has UM the Solar Winds malware and 0:19:48.040 --> 0:19:54.000 and if they can uninstall it altogether. UM at this point, UM, 0:19:54.040 --> 0:19:56.960 so what happened is that when when the malware was 0:19:57.040 --> 0:20:02.679 installed in uh in devices, these uh, these victims had 0:20:02.720 --> 0:20:06.080 to figure out if they were actually then targeted UM 0:20:06.119 --> 0:20:10.120 with an attack, was that malware activated to spread through 0:20:10.160 --> 0:20:12.479 that network and infect it. And so that is what 0:20:12.560 --> 0:20:15.680 investigators are doing right now, and it's a tedious task 0:20:15.800 --> 0:20:18.840 because these attackers have cleaned up their footprints as best 0:20:18.880 --> 0:20:22.520 they can and are are. So it's a manual operation. 0:20:22.600 --> 0:20:25.720 In some cases, they're going through thousands of lines of 0:20:25.760 --> 0:20:29.080 code to see if anything's wrong. UM. The National Security 0:20:29.080 --> 0:20:32.320 Advisor Robert O'Brien cut short and overseas trip earlier this 0:20:32.359 --> 0:20:34.840 week to come back to Washington help manage the crisis. 0:20:35.119 --> 0:20:38.320 That's what the administration is doing right now is sort 0:20:38.320 --> 0:20:40.480 of an all hands on deck situation to figure out 0:20:40.480 --> 0:20:42.800 exactly the scope of the operator. Cartigue, it might be 0:20:42.880 --> 0:20:44.920 up to you to keep us all informed. So thank 0:20:44.960 --> 0:20:46.960 you for all of your work so far. Cartigue. Me 0:20:47.160 --> 0:20:50.879 Rota on the Russian linked solar winds hack do follow 0:20:50.960 --> 0:20:55.800 him all right? Well, we know that Maderna vaccine is 0:20:55.840 --> 0:20:59.480 one backing from FDA advisors that puts it on track 0:20:59.560 --> 0:21:01.679 to be the s con cleared in the US, perhaps 0:21:01.720 --> 0:21:04.359 even as soon as today. For more on this and 0:21:04.400 --> 0:21:06.800 as well the little hiccups that we've been seeing with 0:21:06.880 --> 0:21:09.640 the rollout of the vaccine small though they maybe let's 0:21:09.640 --> 0:21:12.760 bring in Laurences our Associate Professor of Emergency Mendicine, JOHNS 0:21:12.760 --> 0:21:17.280 Hopkins School of Medicine. So, doctor Saur, is there anything 0:21:17.320 --> 0:21:19.760 that you've seen in terms of the little hiccups that 0:21:19.800 --> 0:21:24.159 we that we've heard about, from discarding doses at modern 0:21:24.280 --> 0:21:27.480 after a filtration issue to the idea that you know 0:21:27.520 --> 0:21:30.880 fis are actually had more doses in its vials than 0:21:30.920 --> 0:21:36.359 previously known. Anything that gives you cause for concern. I 0:21:36.400 --> 0:21:38.480 think concern might not be the right word, but I 0:21:38.480 --> 0:21:42.199 think it just demonstrates that the these other elements of 0:21:42.440 --> 0:21:45.640 vaccine distribution are so critically important. Right. It's not just 0:21:46.160 --> 0:21:49.280 UM getting the science behind making the vaccine and testing 0:21:49.320 --> 0:21:53.640 the vaccine, evaluating the vaccines efpacy, but UM the supply chain, 0:21:53.760 --> 0:21:57.800 so ramping up dose production, making sure that the process 0:21:57.840 --> 0:22:00.240 to get it into the hands of vaccinators and before 0:22:00.280 --> 0:22:03.760 getting vaccinated works m making sure that people believe in 0:22:03.800 --> 0:22:06.760 the process and and trust the process enough to get 0:22:06.800 --> 0:22:09.920 the vaccine. All those things are showing how critically important 0:22:09.920 --> 0:22:13.879 they are, and these hiccups are um par for the course. 0:22:13.920 --> 0:22:17.119 In this very short ramp up of production. But I 0:22:17.119 --> 0:22:19.480 think it just demonstrates how careful we have to be 0:22:19.520 --> 0:22:21.919 in this process to make sure that we're using every precous, 0:22:22.000 --> 0:22:25.440 precious dose that crosses our hands. Do you have confidence 0:22:25.480 --> 0:22:30.080 in the distribution system as it is now? Yeah? I 0:22:30.080 --> 0:22:32.600 mean I think that we're seeing that the distribution system 0:22:32.680 --> 0:22:35.359 is working as well as could possibly be expected given 0:22:35.359 --> 0:22:38.320 the short turnaround. I think some of the feedback that 0:22:38.359 --> 0:22:41.359 we're hearing from FISER and the administration and the possibility 0:22:41.400 --> 0:22:44.640 that pure dirsors will go out shows that it's far 0:22:44.720 --> 0:22:49.639 from perfect, and UM, communication becomes critically important in these um, 0:22:50.160 --> 0:22:55.200