Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.
Speaker 1: Along with my co host Lisa Abramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether at the grocery store or
Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes,
Speaker 1: SoundCloud and at Bloomberg dot com. Cybersecurity, hacking, it's all
Speaker 1: in the news, and it's all in everybody's corporate minds.
Speaker 1: Worried about it. Gil Schwed doesn't worry. He has a solution.
Speaker 1: He's the chief executive officer of Checkpoint and they can
Speaker 1: be followed, of course on Twitter at Checkpoint sw and
Speaker 1: Gilshwed joins us here in the studio. Thanks very much
Speaker 1: for being here. You are described by many people as
Speaker 1: the creator, the inventor of the modern firewall. First, well,
Speaker 1: do you use that name, you know, in public at
Speaker 1: any time? And if you do, maybe explain what is
Speaker 1: this idea of stateful inspection? What is this? Okay, good afternoon.
Speaker 1: The first day I did invent the technology stateful inspection,
Speaker 1: and the technology which was which is quite all today,
Speaker 1: but it's actually still relevant. Basically knows how to inspect
Speaker 1: every traffic flow, analyze it at all levels and understand
Speaker 1: what's going on, and based on the organizational policy, decide
Speaker 1: whether it's something that should be accepted, which is allowed
Speaker 1: or not allowed. Now, over the years there is a
Speaker 1: twenty three years have passed since it was invented. The
Speaker 1: technology ground grown and has many more layers that can
Speaker 1: actually even today prevent and stop some of the most
Speaker 1: sophisticated attacks. So it's grown well well beyond what I
Speaker 1: could have dreamt of twenty five years ago when I
Speaker 1: started started thinking about the idea. Can you tell us
Speaker 1: about the sort of mechanics behind some of the more
Speaker 1: sophisticated hack attacks. I mean, how people or how different
Speaker 1: operatives try to break into different systems. So I think
Speaker 1: many of the first very many, many types of attacks,
Speaker 1: and they use every possible bug or issue that we
Speaker 1: have in all the software that we are surrounded with.
Speaker 1: But many of them starts today by sending you something
Speaker 1: that looks like an innocent up fred your mobile phone
Speaker 1: or an innocent file. You get a CV from a
Speaker 1: work candidate, vet up or let's c V includes something
Speaker 1: that would break into your computer from their point on.
Speaker 1: It basically owns your computer and can download off the
Speaker 1: web or of its control servers, any kind of software
Speaker 1: that can control the device. Is this a type of
Speaker 1: attack that got into, for example, the JP Morgan system
Speaker 1: when the JP Morgan was dealing with a hack, or
Speaker 1: the type of hack that could have gotten into the
Speaker 1: R and C and the deans the Democratic and then
Speaker 1: the Republican national committees during the the election in this
Speaker 1: is exactly the same kind of attacks. Again, we use
Speaker 1: different problems, different bags, different vectors, but this is always
Speaker 1: attacks sharevice in common and now we live into your
Speaker 1: computer controlled by somebody in a different country or or
Speaker 1: somebody that you don't know, and that person can use
Speaker 1: your computer to just click on some people's websites, or
Speaker 1: to destroy everything, or to get all your data, or
Speaker 1: basically to do whatever they want. In your mind, are
Speaker 1: there specific things that President elect Donald Trump can initiate
Speaker 1: that would increase the level of cybersecurity for let's say,
Speaker 1: US government offices as well as for the general public
Speaker 1: in the United States. I think what can be done
Speaker 1: is to really escalate the level of technology that the
Speaker 1: government or the public use. It's less about regulation. I
Speaker 1: think the issue of the government is something is sometimes
Speaker 1: with the bureaucracy and the complexity and the sophistication makes
Speaker 1: everything takes five years. So by now they start to
Speaker 1: draft and new RFP on a new technology, by the
Speaker 1: time it's completed, it's ten years have passed and the
Speaker 1: technology is outdated. So I think there should be a
Speaker 1: way to encourage the government agencies to deploy new technologies
Speaker 1: fast in a in a less structured manner, even because
Speaker 1: that's the only way to work fast. One big concern
Speaker 1: is that right now the safety is not very good
Speaker 1: to protect important US files from a cyber attack. UH,
Speaker 1: do you have any insight into that? I mean, is
Speaker 1: your sense that Corporate America and UH and and the
Speaker 1: US government have been taking some serious and fast steps
Speaker 1: towards cybersecurity. So I think, first America is relatively sophisticated
Speaker 1: in technology that that we all use here more than
Speaker 1: any other country in the world. But still I think
Speaker 1: that you're absolutely right, we're not safe. Corporate America is
Speaker 1: not a percent safe. And again today with lou if
Speaker 1: you look at the most advanced security technologies, less than
Speaker 1: five percent of companies use them company wide, so they
Speaker 1: actually block every every incoming threat. So we are wide
Speaker 1: open today. Let's talk about Checkpoint a company and what
Speaker 1: it's doing. I was looking, you're going at a run
Speaker 1: rate of about four hundred and twenties seven eight million
Speaker 1: a quarter. What's the biggest seller right now for Checkpoint?
Speaker 1: I think the fastest growing is what we call the
Speaker 1: sund blessed technology, which is the most advanced. Is a
Speaker 1: set of technologies that blocks the attacks of tomorrow. Whereas
Speaker 1: under that umbrella overs at least twenty seven different technologies
Speaker 1: that each one can block a different variant of attacks.
Speaker 1: And again we're talking mainly about the unknown attacks. That's
Speaker 1: the biggest challenge is how do we block something that
Speaker 1: we didn't see before. Have you seen an incredible increase
Speaker 1: in interest recently? Um, it's growing. The interest level is growing.
Speaker 1: If you look at corporate buying, which is where we are,
Speaker 1: unfortunately doesn't behave I mean, when you see a big attack,
Speaker 1: it's not tomorrow morning, you get five hundred more enterprises
Speaker 1: being interested. And that's something that can be changed because
Speaker 1: I think some of the enterprises should be foster to act.
Speaker 1: Thank you so much for being with us. Gil Schwed,
Speaker 1: chief executive officer of Checkpoint, which is based in Tel Aviv.
Speaker 1: Coming up today at Trump Tower in Midtown Manhattan, a
Speaker 1: meeting of the elite in technology. Chief executives of Amazon
Speaker 1: dot Com as well as Alphabet, parent company of Google,
Speaker 1: and IBM. They will all be speaking with President elect
Speaker 1: Donald Trump. We want to speak with Ching Kao, now,
Speaker 1: our technology reporter for Bloomberg News, to find out what
Speaker 1: this meeting is all about and how companies have perhaps
Speaker 1: positioned themselves prior to the meeting in order to perhaps
Speaker 1: make that conversation a little smoother. One of the executives
Speaker 1: who is going to be at this meeting, Jenny Roman
Speaker 1: of my BM, wrote a letter, an open letter to
Speaker 1: Donald Trump while he was running for uh president, I believe,
Speaker 1: and I'm just curious, does that have the President elect?
Speaker 1: After he won the election and he She got a
Speaker 1: lot of pushback because apparently IBM employees didn't necessarily think
Speaker 1: that she was speaking for the company's there any combination,
Speaker 1: who didn't she on the Stephen Schwartzman council that is
Speaker 1: going to advise the president elect. That's right. So she
Speaker 1: did write the letter after he was elected. It laid
Speaker 1: out some issues she thought were important, which included vocational education,
Speaker 1: it included, um, things about bringing more tech to government,
Speaker 1: her focus on healthcare of that kind of thing. Um,
Speaker 1: she is on that council, and the council is basically
Speaker 1: too bring private sector expertise to the table. She's basically
Speaker 1: the only tech CEO on the panel as well, which
Speaker 1: means I think she will focus a lot on bringing
Speaker 1: more technology to the federal government, which of course helps
Speaker 1: IBM if they get those contracts. Yeah, you can. Image
Speaker 1: and Genie Remedia actually also announced last night that you
Speaker 1: planned to hire as the CEO of IBM about people
Speaker 1: in the US and invest one billion dollars of the
Speaker 1: next four years. Was there any reason why she released
Speaker 1: this other than as sort of a bargaining chip ahead
Speaker 1: of the meeting with the tech leaders and President electro Well.
Speaker 1: The company told me that these plans have been in
Speaker 1: the works for months. Obviously the timing is pretty nice
Speaker 1: for them, right, Um, But you know this, people, the
Speaker 1: one billion dollars in education and retraining, I think have
Speaker 1: been part of IBM's plans to try to attract the
Speaker 1: workers that they need, which are folks who have the
Speaker 1: skills or who want want to learn the skills, and
Speaker 1: things like cloud computing and artificial intelligence. Thank you so much,
Speaker 1: Jing Cow Bloomberg Technology reported solve the problem. Let's solve
Speaker 1: the problem of increasing interest rates and people who hold
Speaker 1: fixed income. Marvin Low, senior global market strategist for b
Speaker 1: n Y Melon joins us. Now, Marvin, thank you very
Speaker 1: much for being with us. So what is the prevailing
Speaker 1: zeitgeist when it comes to owning bonds, holding onto what
Speaker 1: you've got, and perhaps buying or selling UM. You know,
Speaker 1: I think that we're in a period where we're all
Speaker 1: trying to guess what the new administration UM is going
Speaker 1: to pursue, what would winds up being UH their main
Speaker 1: UM focus. And depending on how you come out with that,
Speaker 1: and you know, we're all making these decisions with a
Speaker 1: limited amount of information, UM, it's going to guide how
Speaker 1: you should look at your portfolio. If you're in the
Speaker 1: inflation camp. You know, certainly UM, the curve steepening type
Speaker 1: of trend that we see that we've seen UM is
Speaker 1: going to be a concern. And with rates having been
Speaker 1: that low for that long, you see an outsized movement
Speaker 1: in yields percentagewise. So, Marvin, is the global search for
Speaker 1: yield over I mean, why is this divergence between US
Speaker 1: and German yields in particular, and the divergence is the
Speaker 1: widest on record. Why is this able to continue without
Speaker 1: European investors flooding into the US to capture the higher yields. Well,
Speaker 1: you know, I think that we have to remember that
Speaker 1: the central banks, even though there's a concern that they're
Speaker 1: stepping away from UM the heavy policy tools that they've
Speaker 1: been using, they're still actively in there. So in Europe
Speaker 1: you are still very much influenced by UM n ECB
Speaker 1: that while they're buying less per month, they're still buying,
Speaker 1: and there's still our supply issues around there, and you
Speaker 1: kind of see the changes in the shape of their curve,
Speaker 1: but they're still buying. The set isn't buying. They haven't
Speaker 1: been buying for for several years. And UM, we are
Speaker 1: going down this kind of fiscal path that people have
Speaker 1: been talking about for a while before everybody else is
Speaker 1: and you know, whether or not that revives the economy,
Speaker 1: whether or not that drives inflation. UM. Further, you know,
Speaker 1: we can make an argument that it might or might
Speaker 1: not get out of hand, but that it really is
Speaker 1: the concern. But there is still that policy divergence. Marvin,
Speaker 1: there are many institutions which have been buying bonds throughout
Speaker 1: the last decade. If you are an institution and you
Speaker 1: have bonds that are currently underwater in terms of capital appreciation,
Speaker 1: should you sell them or should you hold them? You know,
Speaker 1: every every every situation is is unique out there. I'm
Speaker 1: in the camp that yields UM do have the potential
Speaker 1: to continue to go higher UM I I do UM
Speaker 1: remain concerned about the steeping of the curve, and you
Speaker 1: know that trend continuing. So if you are a total
Speaker 1: return type of investor where you're not locking in that income,
Speaker 1: I think you have to bring that into the equation.
Speaker 1: The Bank of International Settlements had an interesting report in
Speaker 1: the past five days or so where analysts who were
Speaker 1: talking about why we haven't seen a more disorderly rotation
Speaker 1: out of bonds. I mean a lot of been a
Speaker 1: lot of concern leading up to this year has been
Speaker 1: focused on bond market liquidity and the ability for investors
Speaker 1: to move around. It seems like that hasn't been a
Speaker 1: huge problem this time around. The b i S was
Speaker 1: attributing this to the fact that so many sticky investors.
Speaker 1: The Central bankers, the pensions own these bonds and aren't
Speaker 1: going to sell them. Do you think that that's accurate
Speaker 1: or do you think that that we still are at
Speaker 1: risk of a potential disorderly unwind of the market. You
Speaker 1: know what, I'm not really concerned about disorderly unwind. I
Speaker 1: do think that those large pools of money UM are
Speaker 1: out there. I think that it takes a while to
Speaker 1: to change them. That doesn't mean that we UM I
Speaker 1: won't see and may continue to see kind of these
Speaker 1: momentary flash crash type of of events which seemed to
Speaker 1: be more common rather than you know, once a decade
Speaker 1: type of events. And I think that that's where the
Speaker 1: market is at this point. You know that those liquidity
Speaker 1: pools UM are ultimately a thin when you get that volatility,
Speaker 1: and you know, I think that we have to build
Speaker 1: that into UM into our thought process. What about how
Speaker 1: yield debt? You know what UM so so I think
Speaker 1: that's UM HI You'll still remains a decent asset class
Speaker 1: to think about. We talked about the talked about that
Speaker 1: the last time I was here. And if anything with
Speaker 1: kind of this UM UH stabilizing growth profile and potential
Speaker 1: for UH some physical stimulus around. It pushes the credit story,
Speaker 1: um a little further out. You know, you might want
Speaker 1: to be short in that type of discussion, particularly you're short,
Speaker 1: uh particularly concerned with the curve. I mean, would you
Speaker 1: take any would you take the game? I mean, I'm
Speaker 1: just looking at, for example, the exchange traded fund j
Speaker 1: n K up fifteen and a quarter percent this year,
Speaker 1: which is actually lagging behind the broader index. Yeah, yeah, yeah, absolutely.
Speaker 1: I mean, um, you'll you'll never get reprimanded for for
Speaker 1: taking some gains, particularly as we go into the beginning
Speaker 1: of the year, and if we remember how this year began,
Speaker 1: there was certainly volatility in it um as an asset class. However,
Speaker 1: with the income that you might need to be feeling,
Speaker 1: I still like that as a class. You know, Mortgages
Speaker 1: is some is an area that I'm really intrigued by
Speaker 1: right now. You have some investors saying, look, yields are rising.
Speaker 1: That could be a problem for mortgages because people, it
Speaker 1: will make credit tighter. It'll make it, uh, it'll make
Speaker 1: it harder to refinance your home or less uh less
Speaker 1: worthwhile the refinance. But I hear other people saying this
Speaker 1: is a fantastic opportunity because you will not get that refinancing,
Speaker 1: so people will actually be paying you what they say
Speaker 1: they would paying you for a longer period of time.
Speaker 1: Where do you weigh in on this? You know, I
Speaker 1: think that's true, and I think that there's so many
Speaker 1: different flavors of mortgages, with so many different types of
Speaker 1: structures out there that you know, you kind of need
Speaker 1: the expertise to to get in there. But you know, certainly, um,
Speaker 1: that refi risk goes down with with this rising yields,
Speaker 1: which is positive right for for for mortgage it yes,
Speaker 1: So is that something that you're bullish on right now? Um?
Speaker 1: You know what I think I'm I think I'm on
Speaker 1: the sidelines with that at the moment. There's, um, you know,
Speaker 1: a lot of influences that we're still trying to figure out.
Speaker 1: You know, I'm just looking at mortgage rates right now,
Speaker 1: and there are four four and a half percent four
Speaker 1: point four five percent for a thirty year fixed refi
Speaker 1: in the New York metropolitan region and that is a
Speaker 1: big increase from when you saw those rate under four percent.
Speaker 1: Uh Marvin one of the area automobile loans. We've been
Speaker 1: tracking those as well, particularly in the in light of uh, well,
Speaker 1: the link when payments have been increasing. Yeah, everyone's read
Speaker 1: about up primato bubble, are you, um yeah, But from
Speaker 1: from a global market, from a global micro perspective, um, absolutely,
Speaker 1: given how um long that that asset class and um
Speaker 1: kind of that durable discussion has driven a lot of
Speaker 1: the economic growth that we've seen. So yeah, I mean
Speaker 1: it's it's certainly flashing red. Thank you so much, Marvin
Speaker 1: low It's always great to hear what you have to say.
Speaker 1: Marvin Lowe, senior global market strategist at b n Y Melan,
Speaker 1: talking about what he sees in the year ahead of uncertainty.
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
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