Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: YouTube search Bloomberg Global News. So we're gonna dig into
Speaker 1: crypto in the next thirty minutes here on Bloomberg Business Week.
Speaker 1: First up, the CEO of Colonial Pipeline, Joseph Blown. He
Speaker 1: was testifying for the Senate Homeland Security Committee today. He
Speaker 1: apologize big time for the ransomware attack that shuttered the
Speaker 1: nation's largest fuel pipeline. We know it paralyzed the East
Speaker 1: coast flow of gasoline, diesel, and jet field check it out.
Speaker 1: It was the hardest decision I've made in my thirty
Speaker 1: nine years in the energy industry, and I know how
Speaker 1: critical our pipeline is to the country, and I put
Speaker 1: the interests of the country first. I kept the information
Speaker 1: closely held because we were concerned about operational safety and security,
Speaker 1: and we wanted to stay focused on getting the pipeline
Speaker 1: back up and running. I believe with all my heart
Speaker 1: it was the right choice to make a major maya
Speaker 1: colpa there. Of course, that's the Colonial Pipeline CEO Joseph
Speaker 1: Blount testifying earlier today before the Senate Homeland Security Security Committee.
Speaker 1: Let's get right into it with card cam Rotra cybersecurity
Speaker 1: porter here at Bloomberg News joining us on the line
Speaker 1: from San Francisco, Cardike, what do we learn from the
Speaker 1: CEO of Colonial Pipeline today about the ransomware attack that
Speaker 1: we didn't know? So? One of the biggest details about
Speaker 1: this hack, something that he disclosed today but also disclosed
Speaker 1: to us UH late last week, is that the actual
Speaker 1: attack was the result of a stolen password for a
Speaker 1: an account into a VPN that had been hacked and
Speaker 1: and put on the dark web months at So it
Speaker 1: was it was not a complex campaign. There wasn't a
Speaker 1: you know, a solar wind type of vulnerability here that
Speaker 1: resulted in this UH devastating attack. It was a very simple, uh,
Speaker 1: loss of a password that resulted in this exploitation and
Speaker 1: ultimately the four point four million dollar ransom payment that
Speaker 1: we all learned yesterday, much of which was caused that. Okay,
Speaker 1: so I have to just just jump in here, Carter K.
Speaker 1: Because I know you're a cybersecurity reporter. I assume that
Speaker 1: you know how to keep your accounts secure at least
Speaker 1: as as we can as consumers. Two factor authentication, Can
Speaker 1: we talk about that for a second. Yeah, I mean
Speaker 1: there was no multi factor authentication on that particular VPN,
Speaker 1: that virtual private network, So that is that is sort
Speaker 1: of ground zero for security right now. Enterprise networks, corporate networks,
Speaker 1: your personal accounts, you should turn on multi factor authentication.
Speaker 1: It means that a single password is not enough for
Speaker 1: you to log into your device. You need a one
Speaker 1: time password or a second form of verification to ensure
Speaker 1: that you are who you are when you're logging in.
Speaker 1: It'll keep everyone a lot safer, all right. But now
Speaker 1: we've got blockchain explorers. We're talking about this a lot, right,
Speaker 1: A crypto search engine essentially to quite literally follow the
Speaker 1: money of these things. Does this mean we now have
Speaker 1: the tools to kind of investigate any future cyber attacks
Speaker 1: here that require ransomware sort of. Uh, it sort of
Speaker 1: means that, so, yes, the technology has existed to track
Speaker 1: some currencies in uh blockchain. Bitcoin for sure can be tracked,
Speaker 1: especially by law enforcement and in some private company that
Speaker 1: specialized in this UM. So if you know exactly how
Speaker 1: much was paid, be it a criminal transaction or you
Speaker 1: sending money to your family member, you can go and
Speaker 1: follow the money, literally follow the money. Uh. And that's
Speaker 1: what law enforcement did after UM Colonial Pipeline paid dark Side,
Speaker 1: a ransomware group four point four million dollars or seventy
Speaker 1: five bit coin UM about a month ago. They followed
Speaker 1: the money and we're able to see exactly where it
Speaker 1: was parked in a digital crypto wallet and take some
Speaker 1: of it back UM. And that's a big deal, and
Speaker 1: that's something that law enforcement has done in the past.
Speaker 1: But what unique here is that is that the actual
Speaker 1: victim Colonial Pipeline disclosed the fact that they had been hacked,
Speaker 1: and that does not happen very often. Victims of ransomware
Speaker 1: don't want the public to know they've been compromised because
Speaker 1: of a variety of security issues. Board issues, DOT price issues,
Speaker 1: and so they keep it quiet. In this case, Colonial
Speaker 1: came out and said it. They got the help of
Speaker 1: the FBI, they got some of their money back. So
Speaker 1: does this undermine the crypt a world as we've come
Speaker 1: to know it, at least the kind of illegitimate or
Speaker 1: you know where there might be UM cyber attacks and
Speaker 1: ransomware incidents. I don't know undermine might be strong, But
Speaker 1: I think there's definitely an issue about the economic backbone
Speaker 1: of cybercrime, and that is cryptocurrency. For sure, there are regulation,
Speaker 1: not just in the US, but but in Europe. Know
Speaker 1: your Consumer regulations that would require or do require UM
Speaker 1: people on exchanges to share some details about who you are.
Speaker 1: They're just really administered. If one knows who is investing
Speaker 1: or buying cryptocurrency at a certain period of time, that
Speaker 1: would make it easier for law enforcement to follow criminals
Speaker 1: who are using it to commit cybercrime. I think the
Speaker 1: fundamental issue here isn't the use of cryptocurrency to promote cybercrime,
Speaker 1: and the fact that cybercriminals have been able to target
Speaker 1: poorly protected networks for years and have made off like
Speaker 1: gangbusters for quite some time and are getting more brazen
Speaker 1: in their campaign. Well, Cardig, just in the last thirty seconds,
Speaker 1: what are you hearing in your reporting, seeing your reporting
Speaker 1: hearing from sources about the way that cybersecurity companies and
Speaker 1: CSOs are are reacting to this in the last month
Speaker 1: and how they're preparing for the next one. Well, I
Speaker 1: think the reality is that what we're seeing now is
Speaker 1: what these security companies have been dealing with four years.
Speaker 1: What's changed is that the Colonial Pipeline had allowed the
Speaker 1: general public to understand what the state when gas supplies
Speaker 1: for the for the Northeast were cut off for a
Speaker 1: period of time, finally resonated with the public and now
Speaker 1: we know what's happening. Hopefully utilities, the government companies are
Speaker 1: going to prioritize it's going for and if you've got crypto,
Speaker 1: a bit of put it in a cold wallet. That's
Speaker 1: all we're gonna say. Cardig Marotra, thank you so much.
Speaker 1: Cybersecurity reporter at Bloomberg News on the phone in San Francisco,
Speaker 1: mikel Cologne, Commodity Strategies at Bloomberg Intelligence. He's been on
Speaker 1: the road. He's back home here in our interactive broker studio.
Speaker 1: Hello there, Hello, Carol, you guys are the dream team. Okay,
Speaker 1: we're not gonna argue with that crypto though kind of
Speaker 1: not the dream currencies. It feels like today they're down
Speaker 1: a lot of them. You were at this big event
Speaker 1: in Miami set the stage of what was going on, well,
Speaker 1: I like to describe it was like a woodstock because
Speaker 1: this kind of conference will never be repeated. It was
Speaker 1: the first big conference on the planet where there was
Speaker 1: no no masks. Everybody was there and the subject was
Speaker 1: quite unique Bitcoin. So it was that sense. There was
Speaker 1: packed wall the wall the main ex main presentation room.
Speaker 1: They were pushing people away standing room only. And then
Speaker 1: when you walk into the ex you know the exhibit
Speaker 1: room where you have all the desks and everything you
Speaker 1: can right away you walk and you feel that heat
Speaker 1: of people and it's hard to get through, and then
Speaker 1: the lines of the man's room or forever. But there
Speaker 1: was that sentiment all about there's so many people doing
Speaker 1: good and so I get the thought, Okay, is this
Speaker 1: the peak or is this mainstream? In my sense, it's
Speaker 1: more mainstream now we see it down today. But there
Speaker 1: were so many cool things that really came of it
Speaker 1: that we can touch on yeah, Well, what was it
Speaker 1: specifically about the conference that made you think it was
Speaker 1: more mainstream than peak? The people I met and with.
Speaker 1: So I walked by one of my friends and you're
Speaker 1: standing next to a guy who from a major accounting firm.
Speaker 1: And then I met, you know, someone I knew who
Speaker 1: used to be in eats, and another one and another
Speaker 1: group I met were was a trust bank, so trust bank,
Speaker 1: a t F and account and then a lot of miners.
Speaker 1: I met with a lot of miners, and some of
Speaker 1: them are some of the most respectable people I've ever met.
Speaker 1: One of them was a minor our Palli and then
Speaker 1: this he got into bitcoin only because he needed his
Speaker 1: his his position was providing power and energy and he
Speaker 1: needed the manager at flow and when it access power,
Speaker 1: he said, okay, I'll just use bitcoin to offset that.
Speaker 1: Mining Bitcoin offs as that excess power. So what what
Speaker 1: where does it go? In your view? We've had the
Speaker 1: conversations about it being a collectible, right, We've talked about that.
Speaker 1: So where does it go? Is it that we have
Speaker 1: multiple cryptocurrencies, is it again about blockchain? Where do you
Speaker 1: see it all going? To me, that's the key thing
Speaker 1: in the conference. Bitcoin is a collectible and then there's
Speaker 1: ten thousand wantabes um there is oncoin market cap docount
Speaker 1: actually ten thousand three three at the moment um U last.
Speaker 1: So there you go, massive excess of supplyees of entry.
Speaker 1: Rules of economics does not favorite higher prices. But it's
Speaker 1: the number two that I liked, bringing up a lot
Speaker 1: of THEORYM. You know, that's that lesson from Frederick Douglas.
Speaker 1: You say, just agitate, So I tried to agitate, and
Speaker 1: behind the scenes everybody mentioned the THEORYUM, so it was
Speaker 1: all positive about it. But on the stage it wasn't
Speaker 1: a good idea that mentioned because it was all about bitcoin.
Speaker 1: So that's the cool thing about bitcoin. It's you know,
Speaker 1: it's banking, the un bank, the key quota of the conferences.
Speaker 1: You know, two thirds of the people on the planet
Speaker 1: don't have bank accounts. Of them have cell phones or
Speaker 1: smartphones and they can get bitcoin cryptos on their phones.
Speaker 1: And what's happening lately with this you know what you
Speaker 1: saw with this UM finding these funds from the colonial Like,
Speaker 1: that's nothing new, and I can dig into that. Like
Speaker 1: the MC of the conference he got into initially got
Speaker 1: into bitcoin from buying drugs, on Silk Road, which was
Speaker 1: busted by the FEDS because they just tracked the transactions.
Speaker 1: But this is what got all the attention when it
Speaker 1: came to the cryptocurrency. Mike you you in your report
Speaker 1: outlining this event, summarizing this event, you asked the question
Speaker 1: what problem does bitcoin solve? What was the answer that
Speaker 1: you found in potentially how it changed at the conference?
Speaker 1: That was a question I have answered distinctly um with
Speaker 1: answer at first with I go straight to the British Museum.
Speaker 1: I think of the hack SNeW Hord's one of my
Speaker 1: favorite things that visit there. It's the largest horde of
Speaker 1: precious metals I ever found on the planet. It was
Speaker 1: from the Roman times. It fixtured yourself and you're a
Speaker 1: Roman leader. It's collapsing. The locals don't like you need
Speaker 1: to get out and hide your wealth. They never came
Speaker 1: back to find it, and you figure, I figured he
Speaker 1: probably didn't moon that light at night, and he probably
Speaker 1: he had to do it himself. Because if you have
Speaker 1: a servant to it, a servant only to find it
Speaker 1: come back and tell someone else or kill you know
Speaker 1: you kept it. But the point is it's set wealth
Speaker 1: to be able to transmit, transport and transact in wealth
Speaker 1: a certain amount of and put it stored someplace. Seven
Speaker 1: be able to do it on a cell phone or
Speaker 1: on a phone or in your head. It's never been
Speaker 1: possible in time. So that's the problem solves. It's banking
Speaker 1: the end bank. So here's the latest to leave you with.
Speaker 1: L Salvador has already said they might adopted as a currency.
Speaker 1: Know what's happening in al Savador in the last thirty
Speaker 1: wars currency collapses. Yeah, if you have something to confce against,
Speaker 1: like bitcoin is like a goal, not like a dollar,
Speaker 1: then it can help solve that problem ten seconds. So
Speaker 1: at some point in our life, will we all have
Speaker 1: some bitcoin in our portfolio or what have your access
Speaker 1: to it? I think so? I think so because if
Speaker 1: we don't, it's kind of it's kind of like a
Speaker 1: digital version of gold and the world's going digital and
Speaker 1: bitcoin is the first in that space. Oh my god,
Speaker 1: can you just stay for like another sixty minutes tomorrow
Speaker 1: to be continued. Mike mclowan commodity strategies of Bloomberg Intelligence
Speaker 1: in our Interactor Broker studio. So, as Tim and I
Speaker 1: mentioned at the top, it feels like our digital world
Speaker 1: continues to get poked at me, get reminded of the
Speaker 1: potential holes in that world. Doesn't it feel that way?
Speaker 1: And it's certainly felt that way at about six am
Speaker 1: this morning. Well let's talk about that. Yeah, so, I
Speaker 1: as as anyone who is online earlier today trying to
Speaker 1: go to any common website might have found that they
Speaker 1: were unable to reach that website in New York tites
Speaker 1: like New York Times, our own Bloomberg dot com was
Speaker 1: affected by this. In fact, British government websites affected by
Speaker 1: it as well. Yeah, so let's get into this because vastly,
Speaker 1: which helps push data quickly around the Internet, so that
Speaker 1: it had fixed the issue that caused that global outage.
Speaker 1: And I just think we're learning more about we just
Speaker 1: take so many things for granted. So let's bring in
Speaker 1: why we maybe shouldn't. Uh, Bloomberg Intelligence senior technology Analysmandie saying, uh,
Speaker 1: let's see what he has to say about He's back
Speaker 1: in our interactive broker's studio, So nice to have you
Speaker 1: in studio. So I just take it for granted. I
Speaker 1: go online if there's not a problem. I think there's
Speaker 1: something wrong with my phone or my service. This was different.
Speaker 1: What happened, well, in this case, it was an outage.
Speaker 1: An outage could be caused by a number of reasons.
Speaker 1: It could be you know, them making a code change
Speaker 1: which they moved to production and that cause an outage,
Speaker 1: or it could be a breach, or you know, any
Speaker 1: sort of a cyber attack. I mean, we've seen so
Speaker 1: many different types of attacks that at this point it's
Speaker 1: hard to say that, you know, one company has a
Speaker 1: software that can protect you against all kinds of attacks,
Speaker 1: and that is what we're seeing. Well, who is fastly?
Speaker 1: What is fastly? Do so fastly is like uh an
Speaker 1: interphase that lives between the website you're trying to access,
Speaker 1: Let's say a Pinterest or an Amazon dot com. So
Speaker 1: this is a cashing service that sits between the user
Speaker 1: when they requested you are and they basically authenticate the
Speaker 1: user to say this is not a box, this is
Speaker 1: a real user. This is somebody who's trying to access Amazon,
Speaker 1: and it's a legitimate user based on the IP address.
Speaker 1: Now what they do is they have these data centers
Speaker 1: across the bold, so no matter where you are accessing
Speaker 1: website from, they will make sure you will have a
Speaker 1: good experience. Even if you are somewhere in Africa or
Speaker 1: you know, Brazil or any other country, you will have
Speaker 1: the same kind of experience because they have data centers
Speaker 1: across the globe, which is why these popular platforms use
Speaker 1: this cd AND service because of the cashing mechanism, the
Speaker 1: security it keeps it secured well. I think one thing
Speaker 1: that was particularly striking about this morning's outage was the
Speaker 1: fact that it was so widespread. Why did it affect
Speaker 1: websites that range that don't normally go down, but range
Speaker 1: from government websites to to media property. So the websites
Speaker 1: didn't go down, it's just that when you were trying
Speaker 1: to access the website, those websites weren't accessible because Fastly,
Speaker 1: like I said, sits between the time when you try
Speaker 1: to access a U r L to the time it
Speaker 1: hits the server off that end website beat an Amazon
Speaker 1: or a pinterest, So really the cashing field which is
Speaker 1: why you couldn't access that website. But they were those
Speaker 1: those websites became inaccessible because they used Fastly as a
Speaker 1: client or they are clients of fastlies, right, they are
Speaker 1: clients so fastly, so an easy way for us to
Speaker 1: figure out who pays what cd N was to figure
Speaker 1: out who was down this morning. Yes, that's one way
Speaker 1: because these were the common thread was these all these
Speaker 1: websites for using Fastly as a cd N, which is
Speaker 1: why these websites became inaccessible. I do wonder about redundancy here,
Speaker 1: and it's a question that I asked you earlier on picktape,
Speaker 1: because you do wonder if something like this can take
Speaker 1: down such a I shouldn't say takedown, make in unavailable
Speaker 1: such a large number of websites, why isn't there redundancy
Speaker 1: in place? So the redundancy can be Amazon or Pinterest
Speaker 1: can say we want to use Fastly cd in as
Speaker 1: well as cloud Flare or any other CD AND provider
Speaker 1: because Fastly it is just one of the cd and providers.
Speaker 1: Having redundancy within Fastly isn't going to solve the problem
Speaker 1: Like Fastly obviously made a code change that affected their
Speaker 1: entire city and service. Having I think something that was
Speaker 1: redundant wouldn't have helped in this case. Yes, as a
Speaker 1: large company you can use multiple cd and providers, but
Speaker 1: then at the end of the day you have to
Speaker 1: judge like them based on the up time. So in
Speaker 1: this particular case, if you are using one CD and
Speaker 1: which is fastly, you can't use an alternative seed and
Speaker 1: you can flip the switch, but it's gonna take time.
Speaker 1: You can't have to going at the same time, basically
Speaker 1: what you're saying, So it's like a backup battery. You
Speaker 1: still have to make the switch will take time, so
Speaker 1: you will have a thirty second or one minute outage
Speaker 1: at least, you know, or if not half an hour,
Speaker 1: which was the case here. It doesn't feel like that
Speaker 1: this kind of incident an outage happens often, is that fair?
Speaker 1: So cloud Flare, which is a competitor or fastly, also
Speaker 1: had a similar outage last year and that was just
Speaker 1: a one off. So after that, no one cared about
Speaker 1: hit a button wrong. Somebody was drinking coffee and like
Speaker 1: spilled it on a button. What these companies make changes
Speaker 1: through their code literally every week. Now, you don't know,
Speaker 1: because we're in an environment where you know, things are
Speaker 1: so interconnected that developers don't always realize what they're changing.
Speaker 1: And you know, in this case, I'm sure there will
Speaker 1: be a post mortem as to why that code was moved.
Speaker 1: It just seems like a major like I mean, these
Speaker 1: are major sites. Yeah. I mean I'm not just saying
Speaker 1: because it's Bloomberg major site though too. But I mean
Speaker 1: we're talking about the UK government, We're talking about the like,
Speaker 1: these are things that people just expect to be well.
Speaker 1: I was watching the equity market reaction as this was
Speaker 1: playing out, and in pre market trading, Fastly was taken
Speaker 1: a serious tumble. I mean it was down four or
Speaker 1: five at a certain point. You look right now it's
Speaker 1: higher by nine percent. What gives well in this case,
Speaker 1: I think there's an acknowledgement from the investors that, look,
Speaker 1: there are only three or four companies that provide the
Speaker 1: CD AND service, and today didn't we they're running critical infrastructure.
Speaker 1: So suddenly everyone knows about Fastly. Previously Fastly was in
Speaker 1: the background. It was a background service that no one
Speaker 1: really it wasn't a household name. Suddenly it is, and
Speaker 1: it's providing a very important service. It reminds me of
Speaker 1: I remember the Bloomberg story years ago where people were like,
Speaker 1: if you were streaming I want to say, I don't know, Sopranos,
Speaker 1: what it was you were streaming such and such last
Speaker 1: night watching it? You were doing it through an Amazon server, like,
Speaker 1: all of a sudden, we learned about Amazon Web services
Speaker 1: in just the streaming world, and I feel like that's
Speaker 1: what's happening with fast because you said there's only three
Speaker 1: or four companies that do this. Yes, yes, and look,
Speaker 1: at the end of the day, an outage can happen
Speaker 1: to any company. It happened to Netflix, it happened to Amazon.
Speaker 1: I think in this case they fixed it quickly. I'm
Speaker 1: sure they will have to give a reason as to
Speaker 1: what happened, but most likely it will be a co
Speaker 1: change and investors will move on and they say they'll
Speaker 1: be like, yeah, this is important in deep We talked
Speaker 1: about the Colonial pipeline hacker earlier today on on this show,
Speaker 1: and I think a lot of people's brains went right
Speaker 1: to a hack. What does that say about the environment
Speaker 1: that we're in right now. There's a lot of state
Speaker 1: sponsored activity going on, given you know what's going on
Speaker 1: with China, Russia, and these hackers are very sophisticated. They've
Speaker 1: got deep pockets, so they are trying to find every
Speaker 1: possible vulnerability point and we should know if there's no
Speaker 1: indication at this point that this was any sort of
Speaker 1: nefarious activity. This one, this one. Yeah, we don't know.
Speaker 1: I think the company will come out if there was
Speaker 1: a hack, they will come out. Otherwise, you know, you
Speaker 1: will see a big tumble off this for the stock.
Speaker 1: Yeah right, I was just gonna say, we still don't
Speaker 1: know exactly what happened, or if again somebody's build a
Speaker 1: cup of coffee or you know, um fascinating world we're
Speaker 1: living in. Like I said, it just feels like our
Speaker 1: digital world. It's like poking holes or maybe we're getting
Speaker 1: a clearer picture of how it all works. Mandy, Thank
Speaker 1: you explain it all so well. Mandyep saying, we senior
Speaker 1: tech industry analysta Bloomberg Intelligence in our interactive broker studio.
Speaker 1: Wild world. Huh, wild world. All right, it is time
Speaker 1: for the Bloomberg Big Take. It's on our radar Biogen's
Speaker 1: news tim of the FDA granting approval of the company's
Speaker 1: Alzheimer's drug, and it looks like, man, there's some longer
Speaker 1: term repercussions out of this. Yeah, there certainly are joining
Speaker 1: us now is Bob Langred, healthcare reporter for Bloomberg News.
Speaker 1: He joins us on the phone from New Jersey. So, Bob,
Speaker 1: for people who haven't been following this space as closely
Speaker 1: as you have. Take us back a couple of years
Speaker 1: about the at that Biogen made on the drug that
Speaker 1: was approved by regulators yesterday. Yeah, so all you know,
Speaker 1: researchers have been trying to design a drug to a
Speaker 1: target the pathology behind Alzheimer's disease UH for decades, and
Speaker 1: drug after drug after drug has failed. Uh. And Biogen's
Speaker 1: drug just two years ago it looked like just the
Speaker 1: latest in a long line of failure as they stopped
Speaker 1: their trials earlier they said they didn't look like they
Speaker 1: were going to work. And then eight months later they
Speaker 1: shocked everyone. Uh, they said they reanalyzed the data and
Speaker 1: looked like one of the trials that might have worked,
Speaker 1: and we're gonna apply for approval. Change our mind, We're
Speaker 1: gonna apply for approval, and we think we get this
Speaker 1: drug approved. And then it's been super controversial since then,
Speaker 1: and uh, there's a lot of debate whether this drug works.
Speaker 1: But yesterday you have after they approved it, and then
Speaker 1: the Biogen priced at at a very high price. Uh,
Speaker 1: and now there's gonna be a lot of controversy going forward.
Speaker 1: Who should get this drug? And you know, whether it
Speaker 1: works at all. Well, and you've been covering this what
Speaker 1: Biogen has been up to with Alzheimer's. You also, for
Speaker 1: those who are listeners and watchers of Bloomberg, you, Bob,
Speaker 1: have been keeping us up to speed when it has
Speaker 1: to do with COVID treatments and COVID vaccines. There's been
Speaker 1: many cover stories by Bob Langreth at Business Week magazine.
Speaker 1: What's interesting though about Biogen, Bob, is that it seems
Speaker 1: to be as you, guys, and you specifically report that
Speaker 1: the approval, the FDA approval appears to signal a fundamental
Speaker 1: shift in the way the agency thinks about Alzheimer's disease
Speaker 1: and this could have lasting ramifications, as you report for
Speaker 1: other drugs, whether it's over at Eli, Lily Roche, and elsewhere. Yeah,
Speaker 1: so uh. For for years, drug companies, including Biogen, have
Speaker 1: been trying to prove that a drug for all the
Speaker 1: timers would actually slow cognitive decline, and it's been really
Speaker 1: really hard to do. No one's really gotten clear evidence,
Speaker 1: and Biogen's drugs stare. Two trials didn't really prove it
Speaker 1: either because one essentially failed to prove it. The other
Speaker 1: was still controversial because it was stopped earlier that it
Speaker 1: showed a very potentially very small effect and sing PD
Speaker 1: in his decline, and no one could agree, you know,
Speaker 1: what to make out of it. And so what happened
Speaker 1: is the FDA has faked a lot of pressure from
Speaker 1: patient groups, the Altimate Association to approve this drug. They're saying,
Speaker 1: there's nothing out there, we need something, We're willing to
Speaker 1: take someone uncertainty, accepts some uncertainty. What they decided to
Speaker 1: do is they they essentially in a surprise, they did
Speaker 1: not rule on a make a verdict on whether this
Speaker 1: drug STOW causes decline or not. Basically that they said,
Speaker 1: we're going to prove it because it removes these amyloid
Speaker 1: plaques in the brain, change some of this changes some
Speaker 1: of the fund fundamental pathology, and we think that that
Speaker 1: is likely to have a reasonable expectation that will do
Speaker 1: something good in terms of patient outcomes in the future,
Speaker 1: but we're gonna have to wait for future trials to
Speaker 1: prove that it does. So that was a big surprise.
Speaker 1: That's a big change. It is a big change, and
Speaker 1: a reasonable expectation that it will actually have a positive
Speaker 1: result is not necessarily proof in a clinical trial that
Speaker 1: it does. And I wonder how this changes the way
Speaker 1: that the FDA approves therapies moving forward, especially at a
Speaker 1: time where there's so much skepticism around federal agencies and
Speaker 1: the wake of what happened with COVID. Yeah, so this, this, uh, this,
Speaker 1: this approval is going to be very controversial. Uh. You know,
Speaker 1: some people are already saying that that was a mistake.
Speaker 1: Uh and uh, this could you know, I could set
Speaker 1: a precedent for other kind of neurological disease, other neurological
Speaker 1: drugs and other drugs are Alzheimers, because now they've said
Speaker 1: for Alzheimers, you don't have to prove that the drugs
Speaker 1: corgan's declined to get to get on the market. You
Speaker 1: just have to show some evidence that does something to
Speaker 1: brain fatholity, even though there's a great controversy whether that
Speaker 1: brain pathology, how well it correlates with Corton has decline. Right,
Speaker 1: that's it's a big deal. Right, So you know, not
Speaker 1: a cure, we get that, right, But maybe in some ways,
Speaker 1: like and you do wonder if the f d A
Speaker 1: is kind of allowing a little bit of wiggle room
Speaker 1: with some of these things because maybe there's a little
Speaker 1: bit improvement or maybe there's a lot of improvement, you know,
Speaker 1: or at least stemming the degradation, right, Bob, you know
Speaker 1: in some patients. Yeah, So the way of think about this,
Speaker 1: this is not a drug. Even in the absolute best
Speaker 1: case under the you know, the optimistic projection, it will
Speaker 1: not stop the decline. People are still declining steadily, but
Speaker 1: maybe maybe maybe it slows a little bit. Uh. And
Speaker 1: that's what they're saying that that's what the Alzheimer's patients
Speaker 1: that I talked to one they saying, you know, there's
Speaker 1: nothing out there. We want something of this, you know,
Speaker 1: may slow the decline a little bit, and this is
Speaker 1: good enough. We're willing to take someone uncertainty to improve
Speaker 1: it now. And that's what happened. It's very controversial and
Speaker 1: very interesting. But it's funny because there's I'm going to
Speaker 1: talk about a stock gain or later um cass of
Speaker 1: A Sciences and they've had no products in the market
Speaker 1: for twenty years, but apparently they're working on an early
Speaker 1: stage Alzheimer's drug and I think are getting a bit
Speaker 1: of a pop because of what happened, specifically with Biogen's drugs.
Speaker 1: So it is making everybody look specially when it comes
Speaker 1: to Alzheimer's, Bob, a little bit differently at the space
Speaker 1: and in terms of treatments. Yeah, other stocks starting up
Speaker 1: Ellally went up yesterday because they have a similar Alzheimer's
Speaker 1: drug and just going into phase three trials. As they
Speaker 1: went up on the prospects they might be able to
Speaker 1: get an approval sooner. So so no, no question there is, uh,
Speaker 1: you know our potential lentifications you know across the industry, Bob,
Speaker 1: fifty dollars for a course of this. It's just a
Speaker 1: massive amount of money. Uh, what typically happens with the
Speaker 1: drug price? Does it go down after a few years?
Speaker 1: Just got about thirty seconds here. Now the drive prices
Speaker 1: I mean as far as as far as as far
Speaker 1: as we can tell, basically never go down. They promised
Speaker 1: not to raise it. But what I can say is
Speaker 1: at least a million people in the US it could
Speaker 1: theoretically qualifier the drug costs fifty dollars a year. Do
Speaker 1: that math if everyone in that that theoretical group gets it. Wow,
Speaker 1: and you talk about expensive brain scans and then to
Speaker 1: administer the infusions, it's not an inexpensive process. Hey Bob, though, um,
Speaker 1: thanks for just digging deeper into this to explain why.
Speaker 1: Though it has been so significant, we've certainly seen the
Speaker 1: stock pop yesterday, a little bit of a pullback in
Speaker 1: today's trade when it comes to Biogen, but definitely watching it.
Speaker 1: Bob Lane Grew healthcare reporter up Bloomberg News on the
Speaker 1: phone in New Jersey, roam a journal. Yeah, but you
Speaker 1: let me drive? Oh no, no, no, he's home, honey, Please,
Speaker 1: I'll do the riding drivel. I want to drive, just drive, baby,
Speaker 1: the questions trying. This is the drive to the Globe commune. Thanks,
Speaker 1: we'll drying us the dawn on Bloomberg Radio. Alright, TikTok everyone, thirteen, no,
Speaker 1: not thirteen. Ten and a half minutes left. I was
Speaker 1: adding a few minutes onto the trading day. Ten and
Speaker 1: a half minutes left in today's trading day. It's kind
Speaker 1: of a kind of day, not really going anywhere. So
Speaker 1: let's see what Eric Jackson has to say. He's founder
Speaker 1: and president of E m J Capital, to Toronto based
Speaker 1: hedge fund, and he joins us on the phone in Toronto.
Speaker 1: So good to have you back. How are you doing well?
Speaker 1: How are you Carol doing well? Tim and I are
Speaker 1: hanging in there. The world's reopening. We're trying to make
Speaker 1: sense of here we are. We've got us stocks near
Speaker 1: record You've got if you look at the global market industries,
Speaker 1: we're hovering near records. How do you see this market
Speaker 1: environment right now? Well, you guys are just talking about inflation,
Speaker 1: and obviously everyone's waiting for a few you know, more
Speaker 1: shoes to drop and to kind of better get a
Speaker 1: sense of where things are going. But if you look
Speaker 1: in the tech world specifically, we've had such a reduction
Speaker 1: in a lot of the multiples across the tech universe
Speaker 1: that you're really being um, you know, you're able to
Speaker 1: get into a lot of names in tech at you know,
Speaker 1: oftentimes pre pandemic multiples, so you're getting some protection no
Speaker 1: matter kind of what happens through the through the rest
Speaker 1: of the year, with with all the inflation data that comes.
Speaker 1: So that's not that's not across the board. I think
Speaker 1: a lot of the staff stocks are still expensive, but
Speaker 1: a lot of things are attractive, like like um, well
Speaker 1: in general, you know, I think the fang names are
Speaker 1: are definitely uh, they've sort of been in a one
Speaker 1: year trade trading range UH, and there are multiples are
Speaker 1: extremely low. I think I think they are all attractive.
Speaker 1: I think UM for me, there are a few names
Speaker 1: that I like. In particular, there's one stock which I
Speaker 1: which I recently got into called Magnite. UH tooker as
Speaker 1: m g n I and basically they serve up the
Speaker 1: ads that go into connected TVs, which people are increasingly
Speaker 1: turning to. UM. It's not just a Facebook in Google
Speaker 1: world in terms of serving ads when you turn on
Speaker 1: Roku or your Samsung TV or whatever. And so a
Speaker 1: lot of people are familiar with a company called the
Speaker 1: Trade Desk which does serves the same kind of ads
Speaker 1: from the demand side, meaning they work with the agencies.
Speaker 1: But Magnite is a sort of an amalgam of three
Speaker 1: different companies that have been has been put put together
Speaker 1: over the last year that works on the supply side,
Speaker 1: and it trades that half the multiple UM. Eric you've
Speaker 1: mentioned shoe dropping, other shoes dropping when it comes to inflation,
Speaker 1: what would those be? Well, you know, obviously you know
Speaker 1: we're speaking on a day when the ten years dropped. UM.
Speaker 1: That's been you know, met, been met with a side
Speaker 1: of relief. I think by a lot of tech investors. Um.
Speaker 1: You know, we got ourselves all you know, wound up
Speaker 1: over the last month or so um for you know,
Speaker 1: with fears that you know that the tenure was just
Speaker 1: going to bust through. Uh, you know, two new highs
Speaker 1: and above two percent, all this kind of stuff because
Speaker 1: of some of the hot inflation numbers that we're seeing.
Speaker 1: So you know, in the in the meantime, you know,
Speaker 1: lumbers cooled off, some of the commodities are cooled off.
Speaker 1: You know, that's good for tech obviously in these growth
Speaker 1: stocks where you know you're you're you're looking out multiple
Speaker 1: years and so forth. UM. And so we we just
Speaker 1: need to continue to monitor, you know, where things go
Speaker 1: from here. Is it really transitory inflation data? Um? Or
Speaker 1: is it something more permanent? Hey, listen, One thing I
Speaker 1: want to ask you is, let's cap on McCormick and
Speaker 1: rich Or have a story on the Bloomberg and we're
Speaker 1: gonna talk about it with our TV team and just
Speaker 1: a moment on beyond the Bell. The economists who helped
Speaker 1: change the way the FED assesses long run inflation expectations
Speaker 1: says their current level means the central Bank needs to
Speaker 1: start laying the groundwork for shrinking its massive bond buying program.
Speaker 1: And this is specifically we're talking about Brian Sack. He
Speaker 1: was at the FED Board of Governors almost two decades ago,
Speaker 1: and he was head of Monetary and Financial Market Analysis.
Speaker 1: He championed the use of a forward measure of inflation
Speaker 1: expectations to help guide policy. He's now over at d SHAW.
Speaker 1: He says, the so called five year, five year forward
Speaker 1: break even inflation rate has climbed to a level where
Speaker 1: further increases would be problematic for this central bank. So
Speaker 1: when you have someone like that who really understands this,
Speaker 1: you know, and and you know, created a tool used
Speaker 1: by the FED to predict inflation or at least get
Speaker 1: an idea of where it's going. And when he says
Speaker 1: maybe it's time that the FED changes policy, how do
Speaker 1: you factor something like that in. Here's a smart guy
Speaker 1: who understands it, understands what's going on. Do you say, wait,
Speaker 1: this is a different market environment or what? Well? I mean,
Speaker 1: I think one of the interesting things, you go back
Speaker 1: a couple of weeks ago, when people were really worried
Speaker 1: about inflation across the equity universe. I think, uh, you know,
Speaker 1: you know, you could say that, you know, they feed
Speaker 1: had given this language that they were going to stay
Speaker 1: low for so long, and um, I think the concern
Speaker 1: was that, you know, are are they really out of
Speaker 1: step with other central banks around the world who are
Speaker 1: starting to taper, And I you know, what's what's been
Speaker 1: interesting is that, um, you know that that hasn't really changed,
Speaker 1: but there's been a couple of statements that have come
Speaker 1: out that have sort of talked about their openness to tapering.
Speaker 1: And I think just the fact that that has gone
Speaker 1: out there, along with you know, softer commodity inflation and
Speaker 1: numbers and so forth, I think that's given people a
Speaker 1: lot of comfort that, you know, the Fed's not out
Speaker 1: of touch. They sort of see what's going on. They're
Speaker 1: going to taper if they need to later this year,
Speaker 1: and I think part of the reasons behind them the
Speaker 1: tenure dropping has just been a comfort with that, with
Speaker 1: the fact that they're not you know, that they don't
Speaker 1: have their head in the stands. So, so, what happens
Speaker 1: if we do start to see signs of inflation that
Speaker 1: you think isn't necessarily transitory, what do you do specifically
Speaker 1: to get defensive? Well, I mean inflation is not good
Speaker 1: for for all any any stock really. I mean people
Speaker 1: like to say, you know, get defensive, do this, do that,
Speaker 1: and go into value. I mean all stocks will go
Speaker 1: down if we're truly you know, back into this you know,
Speaker 1: um permanent inflation era. So you know, I don't think
Speaker 1: any of us want to see that, um you know.
Speaker 1: And and there's obviously a big, you know, a big
Speaker 1: spectrum between where we are now and something like that. Uh.
Speaker 1: So I try to look for, um, you know, when
Speaker 1: I'm specifically looking at in the tech universe, tech stocks
Speaker 1: are are most variable with inflation news and most prone
Speaker 1: to as like big dramatic pullbacks. Uh And and really
Speaker 1: that's that's why even though we're at market highs in
Speaker 1: the one corner of the universe and in in stocks
Speaker 1: that has really been hurt in the first half of
Speaker 1: this year has been the growth tech area so much
Speaker 1: so I think, you know, there are still a lot
Speaker 1: of interesting um you know tech tech names that are
Speaker 1: are more valueish plays and so um you know, I'm
Speaker 1: looking looking at names like that. Uh And um you know,
Speaker 1: cash is always a great position in those kinds of environments.
Speaker 1: To heay one more minute left here. Um, we always
Speaker 1: loved talking names with you. Hello Fresh, which is a
Speaker 1: delivery service based over in Berlin. Uh you like them?
Speaker 1: How come everyone says, you know, it's time to get
Speaker 1: out of the pandemic stocks get into the value you know,
Speaker 1: oriented stocks, Like that's sort of like a a cliche
Speaker 1: these days. Um, you know. And if there ever was
Speaker 1: a poster child for a pandemic stock, it was probably
Speaker 1: Hello Fresh last year. As people stay at home and
Speaker 1: they order these meal kids. But what's interesting is if
Speaker 1: you is, if you go beneath the surface, Uh, this
Speaker 1: is still a very uh you know, small, you know,
Speaker 1: ptential market that's been penetrated in terms of US households
Speaker 1: and global households who use these meal kits. And um,
Speaker 1: they didn't have to do any marketing last year because
Speaker 1: there was such high demand. Now you've probably you're probably
Speaker 1: seeing their TV ads all over the place. Some people say, well,
Speaker 1: it's not a sticky customer A lot turned out, that's true,
Speaker 1: but a big chunk of those new customers that come
Speaker 1: on board, um, you know about stick around for the
Speaker 1: long haul. And this is a profitable business. It's just
Speaker 1: getting started. They could move into adjacent meals and grocery
Speaker 1: delivery areas as well. Very smart management team, Eric, very briefly,
Speaker 1: even past pandemic, when we go out and we go
Speaker 1: to the stores again and we go to restaurants, well,
Speaker 1: you know they're, you know, right now, their competition is
Speaker 1: are you going to pick up your meal at the
Speaker 1: grocery store on the way home and cook, you know,
Speaker 1: and heat up for yourself, or are you gonna go
Speaker 1: out to dinner tonight or whatever. And you know a
Speaker 1: lot of people are still going to have to you know,
Speaker 1: get something for dinner on their way home. That's who
Speaker 1: they really are going after all, right? Could I leave
Speaker 1: it on that note? He always good to get some
Speaker 1: time if you really appreciate it. Eric Jackson's founding president
Speaker 1: of the E M J Capital, joining us on the
Speaker 1: phone from Toronto. Thanks for listening to Bloomberg Business Week.
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