1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:32,920 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. The 7 00:00:32,960 --> 00:00:38,199 Speaker 1: Brexit negotiations are ongoing and painful. The latest and uh, 8 00:00:38,400 --> 00:00:41,800 Speaker 1: probably one of the most difficult stumbling blocks is the 9 00:00:41,960 --> 00:00:45,640 Speaker 1: issue of the Irish border. And here to talk about 10 00:00:45,680 --> 00:00:49,400 Speaker 1: this with us ahead of St. Patrick's day tomorrow in 11 00:00:49,479 --> 00:00:54,600 Speaker 1: the US Marian Harkin, European Union parliament member representing Ireland. Uh. 12 00:00:55,440 --> 00:00:57,240 Speaker 1: But she is here with us here in our eleven 13 00:00:57,280 --> 00:00:58,880 Speaker 1: three studios in New York. Thank you so much for 14 00:00:58,960 --> 00:01:01,200 Speaker 1: joining us, Marion, I want to just talk about this. 15 00:01:01,280 --> 00:01:05,520 Speaker 1: According to several diplomats in a Bloomberg News story, UH, 16 00:01:05,600 --> 00:01:08,840 Speaker 1: there hasn't been a lot of progress made on this 17 00:01:09,040 --> 00:01:11,959 Speaker 1: Irish border issue. Can you just describe the issue from 18 00:01:12,080 --> 00:01:15,080 Speaker 1: your perspective and what needs to happen for a deal 19 00:01:15,120 --> 00:01:18,520 Speaker 1: to be reached. Well, good morning to you, sent to 20 00:01:18,840 --> 00:01:23,920 Speaker 1: all your listeners. Unfortunately, today, just before I arrived here, 21 00:01:24,319 --> 00:01:26,839 Speaker 1: I had a very quick look at a report which 22 00:01:26,840 --> 00:01:30,119 Speaker 1: has just come out from the House of Commons Northern 23 00:01:30,160 --> 00:01:34,800 Speaker 1: Ireland Committee, and they say that they have failed to 24 00:01:34,880 --> 00:01:40,800 Speaker 1: find a technical solution for this frictionless soft border that 25 00:01:40,840 --> 00:01:44,440 Speaker 1: we're supposed to have. And not only do they say that, 26 00:01:44,840 --> 00:01:48,800 Speaker 1: they say there is no evidence that such a type 27 00:01:48,800 --> 00:01:52,760 Speaker 1: of order can be found anywhere in the work. So 28 00:01:53,000 --> 00:01:56,040 Speaker 1: what is the soft border. It's basically a way for 29 00:01:56,160 --> 00:02:01,360 Speaker 1: Ireland to maintain access direct access to the Union. Correct, Well, 30 00:02:01,440 --> 00:02:05,880 Speaker 1: a soft border would be between the Republic and Northern 31 00:02:06,000 --> 00:02:12,839 Speaker 1: Ireland as of now free floor goods, people's services, animals, etcetera. 32 00:02:13,280 --> 00:02:17,600 Speaker 1: But after breakfit, we will have a different regulatory regime, 33 00:02:18,000 --> 00:02:21,600 Speaker 1: we will have different rules, etcetera. And we have to 34 00:02:21,720 --> 00:02:25,600 Speaker 1: find a solution because we do not want a border 35 00:02:26,080 --> 00:02:29,640 Speaker 1: on the island of Ireland. Now, I understand that there 36 00:02:29,720 --> 00:02:32,920 Speaker 1: is going to be a European Commission in Irish government 37 00:02:32,960 --> 00:02:37,480 Speaker 1: and UK government meeting that will take place March that 38 00:02:37,560 --> 00:02:40,799 Speaker 1: will last until April the eighteen and the idea is 39 00:02:40,840 --> 00:02:44,960 Speaker 1: to resolve these issues about policing the Irish border when 40 00:02:45,000 --> 00:02:49,959 Speaker 1: the UK leaves the European Union. If this Committee does 41 00:02:50,080 --> 00:02:53,840 Speaker 1: not reach some kind of consensus. What's your worst case 42 00:02:53,880 --> 00:02:56,760 Speaker 1: scenario for what the border looks like after the United 43 00:02:56,840 --> 00:03:00,639 Speaker 1: Kingdom leaves the European Union. Well, I hate even say 44 00:03:00,720 --> 00:03:05,440 Speaker 1: what the worst kiss scenario. It's because nobody, absolutely nobody 45 00:03:05,880 --> 00:03:08,960 Speaker 1: north or south of the border wants to see that. 46 00:03:09,360 --> 00:03:12,280 Speaker 1: We do not want to go back to the bad 47 00:03:12,280 --> 00:03:17,480 Speaker 1: old dates when there were customs points, police soldiers, et 48 00:03:17,520 --> 00:03:20,880 Speaker 1: cetera on the border. And the issue is him that. 49 00:03:21,360 --> 00:03:26,320 Speaker 1: Just before Christmas, the British Government signed an agreement which 50 00:03:26,360 --> 00:03:30,959 Speaker 1: gave three options. Number one, the trade deal, the comprehensive 51 00:03:31,000 --> 00:03:34,560 Speaker 1: trade deal it would do with the EU would solve 52 00:03:34,639 --> 00:03:38,360 Speaker 1: the issue of the border. Number two, if that didn't work, 53 00:03:38,560 --> 00:03:42,440 Speaker 1: they would set up some kind of a specific arrangement 54 00:03:42,560 --> 00:03:46,880 Speaker 1: for the Republic and Northern Ireland. And number three the 55 00:03:46,920 --> 00:03:51,520 Speaker 1: backstop option, which was that there would be full regulatory 56 00:03:51,560 --> 00:03:57,560 Speaker 1: alignment between the Republic and then Earth. And if either 57 00:03:57,680 --> 00:04:01,120 Speaker 1: one or two are not possible, then three still remains. 58 00:04:01,360 --> 00:04:04,520 Speaker 1: But the problem is that that would mean a border 59 00:04:04,720 --> 00:04:07,440 Speaker 1: in the Irish Sea and the d up which the 60 00:04:07,440 --> 00:04:11,880 Speaker 1: Democratic Union this Party in Northern Ireland have said that's 61 00:04:11,920 --> 00:04:17,479 Speaker 1: not acceptable. So the main obstacle at this point is who. Well, 62 00:04:17,520 --> 00:04:22,200 Speaker 1: the main obstacle is that the British government have signed 63 00:04:22,520 --> 00:04:26,080 Speaker 1: an agreement to say they will either do one, two 64 00:04:26,240 --> 00:04:30,440 Speaker 1: or three, and they are not coming up with technical 65 00:04:30,720 --> 00:04:35,200 Speaker 1: feasible solutions to deliver any of those three. I suppose 66 00:04:35,360 --> 00:04:39,600 Speaker 1: number one the trade deal. That's for further down that. Okay, 67 00:04:39,680 --> 00:04:43,760 Speaker 1: So the fact that the British leadership hasn't come up 68 00:04:43,800 --> 00:04:48,240 Speaker 1: with technical solutions, how much does that reflect a broader 69 00:04:48,320 --> 00:04:52,960 Speaker 1: issue that you see of this entire Brexit negotiation, of 70 00:04:53,000 --> 00:04:56,640 Speaker 1: a lack of details and a lack of cohesion. Look, 71 00:04:56,760 --> 00:04:59,720 Speaker 1: my personal opinion, and I know it's shared by many, 72 00:05:00,360 --> 00:05:03,080 Speaker 1: is nobody thought this would happen, and when it did, 73 00:05:03,720 --> 00:05:08,080 Speaker 1: everybody was taken by surprise. And I mean we had 74 00:05:08,120 --> 00:05:11,880 Speaker 1: the likes of Boris Johnson just recently saying that the 75 00:05:11,920 --> 00:05:15,080 Speaker 1: border between the Republican the North was the very same 76 00:05:15,120 --> 00:05:19,159 Speaker 1: as the border between two boroughs in London. I mean, 77 00:05:19,520 --> 00:05:23,359 Speaker 1: such an incredible level of ignorance in the sense of 78 00:05:23,400 --> 00:05:28,720 Speaker 1: not knowing about an international order is just unbelievable. So 79 00:05:29,040 --> 00:05:32,159 Speaker 1: that is part of the if you like, the background 80 00:05:32,360 --> 00:05:35,719 Speaker 1: to all of this, that nobody was prepared for this, 81 00:05:36,120 --> 00:05:40,760 Speaker 1: nobody thought true. What the main outcomes of a Brexit 82 00:05:40,839 --> 00:05:44,600 Speaker 1: would be on the island of Ireland, so you know 83 00:05:44,839 --> 00:05:49,039 Speaker 1: the British government are as as Jean clad Yunker said, 84 00:05:49,440 --> 00:05:51,799 Speaker 1: I listened to him in the Parliament. I was sitting 85 00:05:51,839 --> 00:05:54,920 Speaker 1: there listening to him this week and he said it's 86 00:05:54,960 --> 00:05:59,360 Speaker 1: time to turn at fine words into treaties. In other words, 87 00:05:59,680 --> 00:06:02,600 Speaker 1: we need the detail, we need to sort this and 88 00:06:02,640 --> 00:06:06,160 Speaker 1: we're not getting it from the British is the European 89 00:06:06,480 --> 00:06:09,680 Speaker 1: Union and leaders in the European Union. Are they trying 90 00:06:09,720 --> 00:06:13,200 Speaker 1: to push or have they pushed UK Prime Minister Theresa 91 00:06:13,240 --> 00:06:17,040 Speaker 1: May into a corner from which it is more difficult 92 00:06:17,120 --> 00:06:21,120 Speaker 1: for her to extricate herself. And this is in the 93 00:06:21,240 --> 00:06:24,760 Speaker 1: context that, as you mentioned, the d u P has 94 00:06:24,839 --> 00:06:28,160 Speaker 1: ten members of Parliament which are part of her governing 95 00:06:28,200 --> 00:06:34,320 Speaker 1: coalition in Westminster, and she has not only two assuage 96 00:06:34,360 --> 00:06:38,599 Speaker 1: their demands, but also she needs to be I guess 97 00:06:38,640 --> 00:06:42,599 Speaker 1: remained firm in this in gaining taking the support of 98 00:06:42,640 --> 00:06:47,640 Speaker 1: her UH fellow Conservative members of Parliament. Well, again, my 99 00:06:47,800 --> 00:06:51,360 Speaker 1: perspective on this since pim that Brexit day one was 100 00:06:51,400 --> 00:06:55,840 Speaker 1: about a split and the Conservatives and the question is 101 00:06:56,200 --> 00:07:00,800 Speaker 1: what's changed, what's new. Look at what's happening. So to 102 00:07:00,920 --> 00:07:03,880 Speaker 1: some extent, you're right, she is in a corner. But 103 00:07:03,960 --> 00:07:06,800 Speaker 1: the question is who put her there? How much of 104 00:07:06,839 --> 00:07:10,360 Speaker 1: this is her own making or Cameron's a making? And 105 00:07:10,800 --> 00:07:14,000 Speaker 1: you know, what can the EU do to try to 106 00:07:14,200 --> 00:07:17,920 Speaker 1: ensure that we can reach some kind of agreement. This 107 00:07:17,960 --> 00:07:22,000 Speaker 1: whole phrase of cake and eat it is still there, 108 00:07:22,080 --> 00:07:25,600 Speaker 1: It's still part of the negotiations. As I said, I 109 00:07:25,640 --> 00:07:29,960 Speaker 1: don't think anybody actually ever thought this would happen, and 110 00:07:30,000 --> 00:07:33,679 Speaker 1: therefore no plans in place to deal with it. Marian 111 00:07:33,880 --> 00:07:38,360 Speaker 1: real quickly. Do you think that the mersiness is discourage 112 00:07:38,560 --> 00:07:41,480 Speaker 1: discouraging some of the populism that we had seen previously 113 00:07:42,280 --> 00:07:46,000 Speaker 1: in the UK? Yes, well, I think I saw a 114 00:07:46,120 --> 00:07:50,600 Speaker 1: program the other night where a very well known British 115 00:07:51,000 --> 00:07:54,080 Speaker 1: chef for cook Poulte, she'd be seen as sort of 116 00:07:54,120 --> 00:07:58,400 Speaker 1: a very sensible sort of woman, and she actually just said, 117 00:07:58,760 --> 00:08:02,240 Speaker 1: look it time just to get on with us, and 118 00:08:02,280 --> 00:08:05,560 Speaker 1: there was everybody in the audience capped, even though there 119 00:08:05,560 --> 00:08:08,520 Speaker 1: were people in that audience who are remain and people 120 00:08:08,560 --> 00:08:11,880 Speaker 1: who are breakfast. So that the I think the feeling 121 00:08:12,080 --> 00:08:15,360 Speaker 1: may be coming to the point that we just have 122 00:08:15,480 --> 00:08:18,320 Speaker 1: to deal with this. What it is a days and 123 00:08:18,400 --> 00:08:21,640 Speaker 1: it's all over. So I think maybe that's the way 124 00:08:21,720 --> 00:08:25,000 Speaker 1: British people are beginning to think, not maybe they can 125 00:08:25,040 --> 00:08:28,320 Speaker 1: influence the negotiators. Marian Harkin, thank you very much, European 126 00:08:28,400 --> 00:08:48,720 Speaker 1: Union parliament member representing Ireland. Shares of Walmart dropped yesterday 127 00:08:48,760 --> 00:08:52,440 Speaker 1: after a Bloomberg News exclusive story that talked about a 128 00:08:52,480 --> 00:08:58,640 Speaker 1: whistleblower suit against the company charging that they encouraged manipulation 129 00:08:59,080 --> 00:09:02,280 Speaker 1: of some of their on line sales numbers. Here to 130 00:09:02,320 --> 00:09:04,840 Speaker 1: talk about that and other issues that Walmart is currently 131 00:09:04,880 --> 00:09:09,040 Speaker 1: facing is Jennifer Batasha's senior US food retail mass merchant 132 00:09:09,080 --> 00:09:13,600 Speaker 1: wholesale restaurants analyst for Bloomberg Intelligence, and Alan berga agricultural 133 00:09:13,640 --> 00:09:17,120 Speaker 1: reporter for Bloomberg News. Jennifer, I want to start with 134 00:09:17,360 --> 00:09:20,640 Speaker 1: you to talk about this whistleblowers suit. What was your 135 00:09:20,640 --> 00:09:23,320 Speaker 1: reaction to it? Does it seem feasible? Does it pass 136 00:09:23,360 --> 00:09:26,160 Speaker 1: the smell test? Um? You know, when when you look 137 00:09:26,160 --> 00:09:28,520 Speaker 1: at how the market reacted, there was an initial initial 138 00:09:28,559 --> 00:09:31,280 Speaker 1: reaction and this the stock really regained a lot of 139 00:09:31,320 --> 00:09:35,400 Speaker 1: what it lost fairly quickly following the news. Um when 140 00:09:35,400 --> 00:09:37,079 Speaker 1: you when you look at it, it's hard to believe 141 00:09:37,120 --> 00:09:39,440 Speaker 1: that Walmart would really open itself up to this sort 142 00:09:39,480 --> 00:09:42,600 Speaker 1: of risk, especially when you think of all the measures 143 00:09:42,600 --> 00:09:45,240 Speaker 1: that put into place following the bribery probe that that 144 00:09:45,360 --> 00:09:48,080 Speaker 1: it was involved with UM that started back in two 145 00:09:48,120 --> 00:09:51,680 Speaker 1: thousand and twelve when Walmart was accused of being engaged 146 00:09:51,720 --> 00:09:54,439 Speaker 1: in a multi year bribery campaign in Mexico. So that 147 00:09:54,559 --> 00:09:57,920 Speaker 1: the company is very sensitive about its ethics and compliance 148 00:09:57,960 --> 00:10:00,560 Speaker 1: at this point. So it's hard to believe that, um, 149 00:10:00,640 --> 00:10:04,439 Speaker 1: that something of this scale UM would be taking place. Well, 150 00:10:04,520 --> 00:10:06,800 Speaker 1: Jennifer just tells who is actually the whistle blower, give 151 00:10:06,840 --> 00:10:10,280 Speaker 1: us a little background. UM. Well, so the whistleblowers is 152 00:10:10,360 --> 00:10:13,880 Speaker 1: an ex employee, UM, you know, someone who has been 153 00:10:13,920 --> 00:10:17,400 Speaker 1: involved in the e commerce side of the business ummerly 154 00:10:17,440 --> 00:10:21,920 Speaker 1: at Amazon, formerly at Amazon. UM. And and really you know, 155 00:10:21,960 --> 00:10:26,400 Speaker 1: the calms center around the idea that that UM, there's 156 00:10:26,400 --> 00:10:30,040 Speaker 1: some artificial manipulation in the numbers that were actually published UM, 157 00:10:30,120 --> 00:10:33,800 Speaker 1: whether it's by under reporting returns or not processing returns 158 00:10:33,880 --> 00:10:36,600 Speaker 1: or things of that nature. UM. And so you know, 159 00:10:36,720 --> 00:10:39,720 Speaker 1: it's it's it's difficult with a retail business the size 160 00:10:39,720 --> 00:10:43,320 Speaker 1: of Walmart to to you know, assume that everything happens 161 00:10:43,360 --> 00:10:46,800 Speaker 1: exactly when it's supposed to. Um. But the fact that 162 00:10:47,040 --> 00:10:51,120 Speaker 1: you know the employee, UM, you know it just it 163 00:10:51,200 --> 00:10:54,319 Speaker 1: seems that it seems that if something happened, it maybe 164 00:10:54,400 --> 00:10:57,240 Speaker 1: more of an isolated incident than the pattern of abuse. 165 00:10:57,280 --> 00:11:00,880 Speaker 1: That is, you know that it's alleged in this although 166 00:11:00,960 --> 00:11:04,280 Speaker 1: the fact that the stocks responded at all highlights this 167 00:11:04,480 --> 00:11:08,679 Speaker 1: increasing challenge that Walmart faces to keep up with Amazon 168 00:11:09,040 --> 00:11:12,360 Speaker 1: and to lower costs going forward. Alan, I want you 169 00:11:12,360 --> 00:11:14,080 Speaker 1: to come on in here. There was a story that 170 00:11:14,120 --> 00:11:18,360 Speaker 1: caught our attention about how Walmart might consider using drones 171 00:11:18,600 --> 00:11:22,679 Speaker 1: to help reduce agricultural costs, in other words, planting and 172 00:11:23,200 --> 00:11:25,480 Speaker 1: weeding and doing other things like that. Can you explain 173 00:11:25,559 --> 00:11:27,520 Speaker 1: what is this? Well, this sounds like nothing that has 174 00:11:27,559 --> 00:11:30,040 Speaker 1: anything to do with a whistleblower suit, but there actually 175 00:11:30,120 --> 00:11:33,079 Speaker 1: is a connection here. UM. Walmart gets more than half 176 00:11:33,080 --> 00:11:35,000 Speaker 1: of its revenues from groceries at this point, and of 177 00:11:35,040 --> 00:11:38,160 Speaker 1: course Amazon is becoming a big entrant into the grocery market, 178 00:11:38,480 --> 00:11:40,920 Speaker 1: and Walmart is looking at ways to make itself ever 179 00:11:41,000 --> 00:11:43,200 Speaker 1: more efficient, um, and part of that is looking at 180 00:11:43,240 --> 00:11:47,240 Speaker 1: agricultural drones. Walmart is known for very tight control of 181 00:11:47,240 --> 00:11:50,000 Speaker 1: its supply chains, and ultimately one of the things it 182 00:11:50,080 --> 00:11:53,000 Speaker 1: could do is fine technology that allows it to even 183 00:11:53,040 --> 00:11:56,360 Speaker 1: have more control by requiring farmers, for example, to use 184 00:11:56,400 --> 00:11:59,800 Speaker 1: these specific drones to cut down on pesticide applications, be 185 00:12:00,040 --> 00:12:02,760 Speaker 1: as of the efficiency of using something mechanized rather than 186 00:12:02,840 --> 00:12:05,840 Speaker 1: human beings who tend to be more wasteful. Alan, you know, 187 00:12:06,280 --> 00:12:08,120 Speaker 1: I have to confess that you and I share a 188 00:12:08,160 --> 00:12:11,559 Speaker 1: love of videos looking at the variety of planters, automatic 189 00:12:11,600 --> 00:12:14,280 Speaker 1: planters that a variety of agriculture companies have come up 190 00:12:14,280 --> 00:12:18,680 Speaker 1: with in order to sow the seeds literally of farms. Well, 191 00:12:18,720 --> 00:12:21,280 Speaker 1: I mean, and I think you here the out one 192 00:12:21,280 --> 00:12:24,280 Speaker 1: out here, Lisa, Yeah. Well, and the reason I bring 193 00:12:24,320 --> 00:12:25,800 Speaker 1: this up is because I wonder if you could just 194 00:12:25,840 --> 00:12:28,800 Speaker 1: discust that pack and describe for people that you know, 195 00:12:28,840 --> 00:12:32,120 Speaker 1: they may not understand exactly the mechanization and the automation 196 00:12:32,160 --> 00:12:34,480 Speaker 1: that is taking place on the farm. Sure, I mean, 197 00:12:34,520 --> 00:12:37,280 Speaker 1: the story of agriculture is the story of mechanization. I mean, 198 00:12:37,320 --> 00:12:40,840 Speaker 1: people stop being hunter gatherers because they learned to domesticate crops. 199 00:12:40,920 --> 00:12:42,880 Speaker 1: You know, the tractor was a big innovation of the 200 00:12:42,960 --> 00:12:45,840 Speaker 1: nineteenth and twentieth centuries, and things like the reaper, and 201 00:12:45,840 --> 00:12:48,920 Speaker 1: now we have precision agriculture that you know, gives you 202 00:12:49,080 --> 00:12:52,120 Speaker 1: opportunities to put your seeds exactly where they're most fertile 203 00:12:52,120 --> 00:12:53,880 Speaker 1: in the soil. A lot of people are seeing the 204 00:12:53,920 --> 00:12:56,640 Speaker 1: sort of drone technology as the next frontier Right now. 205 00:12:56,720 --> 00:12:58,920 Speaker 1: Drones are very much used to sort of map fields, 206 00:12:58,960 --> 00:13:01,720 Speaker 1: fly around, serves oil soil tops, see how the harvest 207 00:13:01,760 --> 00:13:03,559 Speaker 1: is going. But this would be where you could be 208 00:13:03,679 --> 00:13:06,840 Speaker 1: using big data and a drone basically to come up 209 00:13:06,880 --> 00:13:10,520 Speaker 1: with a most efficient application of inputs to your field possible. 210 00:13:10,880 --> 00:13:13,320 Speaker 1: One of the patents for that Walmart has it's gotten 211 00:13:13,320 --> 00:13:15,520 Speaker 1: a lot of attention, actually deals with bees, the idea 212 00:13:15,559 --> 00:13:19,719 Speaker 1: that you can start mechanically pollinating things rather than using insects. So, 213 00:13:19,840 --> 00:13:22,360 Speaker 1: Jennifer coming in here, I love your take on whether 214 00:13:22,400 --> 00:13:26,280 Speaker 1: Walmart is doing enough or spending too much on sort 215 00:13:26,320 --> 00:13:30,080 Speaker 1: of nascent technologies that could eventually reduce costs. Yeah, so 216 00:13:30,080 --> 00:13:32,760 Speaker 1: so you know, to me, this story um is less 217 00:13:32,800 --> 00:13:36,680 Speaker 1: about bees, um, but more about the the idea that 218 00:13:36,800 --> 00:13:40,240 Speaker 1: Walmart is taking a broad approach to technology UM. And 219 00:13:40,240 --> 00:13:42,680 Speaker 1: then it's really a reflection of all of the investments 220 00:13:42,679 --> 00:13:45,440 Speaker 1: that they have been making since two thousand and eleven. UM. 221 00:13:45,440 --> 00:13:47,720 Speaker 1: I think that right now in a world where technology 222 00:13:47,800 --> 00:13:51,200 Speaker 1: is progressing at such an unprecedented rate. Um, Walmart can't 223 00:13:51,200 --> 00:13:54,160 Speaker 1: afford to not be participating in all of these iterations 224 00:13:54,240 --> 00:13:58,240 Speaker 1: of potential technologies. Um. Whether you know, it seems that 225 00:13:58,280 --> 00:14:01,080 Speaker 1: they've done fairly well in terms of bell thing the 226 00:14:01,080 --> 00:14:05,360 Speaker 1: the the cost of participating in the technology evolution versus 227 00:14:05,760 --> 00:14:09,240 Speaker 1: running their day to day business. Um. You know. However, 228 00:14:09,520 --> 00:14:12,400 Speaker 1: investors are expecting that there is a payoff with regards 229 00:14:12,440 --> 00:14:15,800 Speaker 1: to seeing actual growth in sales, and not only in 230 00:14:15,840 --> 00:14:17,800 Speaker 1: their stores, but on the in line, on the in 231 00:14:17,880 --> 00:14:22,280 Speaker 1: the online e commerce world as well. Alan, just a 232 00:14:22,640 --> 00:14:25,880 Speaker 1: thought for you, is this not just limited to the 233 00:14:25,960 --> 00:14:30,760 Speaker 1: planting and cultivation of crops, This is also about harvesting 234 00:14:30,760 --> 00:14:33,680 Speaker 1: as well. Yes, I mean you're looking for patents off. 235 00:14:33,680 --> 00:14:36,680 Speaker 1: Walmart has filed forty six patents dealing with everything from 236 00:14:36,720 --> 00:14:38,840 Speaker 1: the planting to the logistics of it. And I would 237 00:14:38,840 --> 00:14:41,720 Speaker 1: respectfully disagree with my co guests. I actually think this 238 00:14:41,800 --> 00:14:44,680 Speaker 1: is all about bees in the sense that bees are 239 00:14:44,680 --> 00:14:48,080 Speaker 1: a variable cost. Pollination becomes more and less expensive, and 240 00:14:48,080 --> 00:14:50,680 Speaker 1: what Walmart's trying to do as they get their costs down, 241 00:14:50,680 --> 00:14:53,520 Speaker 1: as they try to make things more reliable down the road, 242 00:14:53,720 --> 00:14:57,160 Speaker 1: find the technology that allows them to compete with Amazon 243 00:14:57,200 --> 00:14:59,560 Speaker 1: and beat them at their own low price game. So, 244 00:15:00,280 --> 00:15:03,400 Speaker 1: you know, metaphorically, some of the stuff seems very very 245 00:15:03,440 --> 00:15:05,840 Speaker 1: you know, space age and in several years away, and 246 00:15:06,080 --> 00:15:08,560 Speaker 1: maybe it's just gaining some intellectual property so you can 247 00:15:08,600 --> 00:15:11,040 Speaker 1: sue Amazon down the road. We don't know. But the 248 00:15:11,080 --> 00:15:14,080 Speaker 1: point is, you know, as we've been saying, Walmart is 249 00:15:14,120 --> 00:15:16,640 Speaker 1: trying to get the technology that gets them ahead so 250 00:15:16,680 --> 00:15:19,040 Speaker 1: that they can win not in just today's marketplace, but 251 00:15:19,040 --> 00:15:21,440 Speaker 1: tomorrow's as well. I want to thank you both very much. 252 00:15:21,640 --> 00:15:25,920 Speaker 1: Alan burga joining US our agriculture reporter for Bloomberg News, 253 00:15:26,120 --> 00:15:30,040 Speaker 1: and Jennifer A. Bartash, senior US food and retail analyst 254 00:15:30,080 --> 00:15:33,000 Speaker 1: for Bloomberg Intelligence. Him you're going to have to share 255 00:15:33,080 --> 00:15:35,720 Speaker 1: some of those scintillating videos with me. You just haven't 256 00:15:35,760 --> 00:15:39,600 Speaker 1: shared the I just got an email all about the bees. 257 00:15:39,760 --> 00:15:42,280 Speaker 1: It's all about the bees and these and these videos. 258 00:15:42,600 --> 00:15:46,280 Speaker 1: Well check it out. It's an amazing story, the automation 259 00:15:46,320 --> 00:15:48,440 Speaker 1: of the U S farm, and none better than Alan 260 00:15:48,480 --> 00:16:05,080 Speaker 1: burg gonna tell us about it. A ruling from the 261 00:16:05,200 --> 00:16:10,000 Speaker 1: Federal Energy Regulatory Commission touched off a sell off in 262 00:16:10,200 --> 00:16:13,840 Speaker 1: Master Limited Partnerships yesterday, at one point the Larian MLP 263 00:16:14,080 --> 00:16:17,880 Speaker 1: index was off by about ten percent. It ended up 264 00:16:17,920 --> 00:16:21,160 Speaker 1: closing lower by about four and a half percent. The 265 00:16:21,800 --> 00:16:25,480 Speaker 1: issue has to do with master limited partnerships operating interstate 266 00:16:25,560 --> 00:16:30,480 Speaker 1: pipelines and they charge customers a price under a cost 267 00:16:30,520 --> 00:16:33,320 Speaker 1: of service model. Now they also have to collect a 268 00:16:33,440 --> 00:16:37,880 Speaker 1: portion to cover corporate tax charges, but because they're massed 269 00:16:37,960 --> 00:16:42,040 Speaker 1: limited partnerships, they don't actually pay these taxes. Here to 270 00:16:42,080 --> 00:16:44,720 Speaker 1: help us understand this more is Chuck Lieberman. He is 271 00:16:44,760 --> 00:16:47,920 Speaker 1: a Bloomberg profit and also chief investment officer and managing 272 00:16:47,960 --> 00:16:52,760 Speaker 1: partner for Advisors Capital Management. Chuck, maybe you could just 273 00:16:52,840 --> 00:16:56,120 Speaker 1: expand on my attempt to explain what is going on here. Well, 274 00:16:56,160 --> 00:16:59,160 Speaker 1: you did a pretty good job him. So there are 275 00:16:59,520 --> 00:17:03,520 Speaker 1: count acts for pipelines that are done as cost plus, 276 00:17:04,320 --> 00:17:07,520 Speaker 1: and the question then is what is included in costs? 277 00:17:07,520 --> 00:17:11,680 Speaker 1: And there's an allowance for corporate tax rates, although, as 278 00:17:11,720 --> 00:17:16,199 Speaker 1: you point out, the pipelines structured as partnerships do not 279 00:17:16,320 --> 00:17:20,760 Speaker 1: in fact pay taxes. And that's why, uh, it was disallowed. Now, 280 00:17:20,840 --> 00:17:25,399 Speaker 1: it's a long term issue. It's been debated for twenty years. 281 00:17:26,080 --> 00:17:29,119 Speaker 1: The courts weighed in and that finally pushed for to 282 00:17:29,359 --> 00:17:33,119 Speaker 1: kick that stuff out. Now, keep in mind that most 283 00:17:33,240 --> 00:17:37,400 Speaker 1: contracts are not cost plus, they're negotiated between the pipeline 284 00:17:38,000 --> 00:17:42,200 Speaker 1: and the shipper. UM. And now, of course, one way 285 00:17:42,200 --> 00:17:46,200 Speaker 1: to get around this ruling is to renegotiate those contracts, 286 00:17:46,440 --> 00:17:51,560 Speaker 1: the cost plus kite contracts on a negotiated basis directly 287 00:17:51,600 --> 00:17:55,480 Speaker 1: with the shipper and restructure them. Uh. There's also another 288 00:17:55,960 --> 00:17:59,240 Speaker 1: aspect of it, which is it only affects companies that 289 00:17:59,240 --> 00:18:03,159 Speaker 1: are structured as partnerships. A lot of these pipeline companies 290 00:18:03,480 --> 00:18:08,359 Speaker 1: are structured as C corporation standard corporations. They do pay tax. 291 00:18:08,680 --> 00:18:13,040 Speaker 1: Those companies can, in fact, uh in a cost plus 292 00:18:13,119 --> 00:18:17,040 Speaker 1: contract add in the cost of the tax. Uh. And 293 00:18:17,160 --> 00:18:22,119 Speaker 1: it is likely that uh, this ruling will accelerate the 294 00:18:22,280 --> 00:18:28,120 Speaker 1: consolidation of partnerships with their C corporation parents. Uh. That's 295 00:18:28,160 --> 00:18:31,280 Speaker 1: another trend that's been going on in the industry, and 296 00:18:31,440 --> 00:18:35,360 Speaker 1: probably more companies will do it sooner than expected because 297 00:18:35,400 --> 00:18:38,280 Speaker 1: of this ruling. Yeah, you know, just broadening out so 298 00:18:38,359 --> 00:18:40,680 Speaker 1: so clearly there are people on both sides here who 299 00:18:40,720 --> 00:18:42,919 Speaker 1: think that this is going to her MLPs and other 300 00:18:42,960 --> 00:18:45,480 Speaker 1: people who think that the move has been overdone. I 301 00:18:45,520 --> 00:18:48,560 Speaker 1: thought It was interesting though, because the biggest exchange traded 302 00:18:48,600 --> 00:18:54,320 Speaker 1: fund that tracks America's energy pipelines, hillaryon e t F, 303 00:18:54,800 --> 00:18:58,639 Speaker 1: saw one hundred and eighteen million dollar outflow yesterday, which 304 00:18:58,800 --> 00:19:01,639 Speaker 1: is the biggest one day with all since July of 305 00:19:01,840 --> 00:19:05,600 Speaker 1: last year. What this indicates to me is that the 306 00:19:05,640 --> 00:19:09,119 Speaker 1: retail investors are sort of the peripheral investors will be 307 00:19:09,200 --> 00:19:12,199 Speaker 1: quick to leave should there be any threat to the 308 00:19:12,240 --> 00:19:15,800 Speaker 1: tax benefit that these funds enjoy. How much of a 309 00:19:15,840 --> 00:19:19,800 Speaker 1: concern is that to you just the perception of these funds. Uh, 310 00:19:19,840 --> 00:19:23,280 Speaker 1: it's a youth concern, and that's actually the primary driver 311 00:19:23,440 --> 00:19:25,760 Speaker 1: in the entire sector. So if you go back to 312 00:19:25,800 --> 00:19:30,399 Speaker 1: two thousand fourteen, oil prices fell that actually boosted demand 313 00:19:30,440 --> 00:19:35,640 Speaker 1: for products like gaslene. So some pipeline saw an immediate 314 00:19:35,720 --> 00:19:41,240 Speaker 1: boost to shipments. Some of the downstream pipeline businesses saw 315 00:19:41,280 --> 00:19:44,560 Speaker 1: an increase in business and an increase in profitability. Don't 316 00:19:44,560 --> 00:19:48,400 Speaker 1: confuse me with facts. They sold off too because there's 317 00:19:48,400 --> 00:19:52,040 Speaker 1: a general lack of understanding on the part of retail investors. 318 00:19:52,119 --> 00:19:54,760 Speaker 1: So they have been getting out of the space. They've 319 00:19:54,800 --> 00:19:58,160 Speaker 1: lost money in the space. Therefore they've been getting out 320 00:19:58,160 --> 00:20:00,800 Speaker 1: of the space, and all of this has driven all 321 00:20:00,880 --> 00:20:04,760 Speaker 1: of these stocks literally across the board, including companies that 322 00:20:04,880 --> 00:20:08,680 Speaker 1: really have not been affected by the decline in oil prices, 323 00:20:08,720 --> 00:20:12,320 Speaker 1: that have seen an increase in business volumes anyway, they 324 00:20:12,359 --> 00:20:15,480 Speaker 1: have still decline in value. And most of these things 325 00:20:15,520 --> 00:20:19,480 Speaker 1: are trading at low low levels, meaning very very attractive valuations. 326 00:20:19,800 --> 00:20:22,760 Speaker 1: And now this is just one more kick in the 327 00:20:22,800 --> 00:20:25,440 Speaker 1: rear end at a time when the stocks are already down. 328 00:20:25,760 --> 00:20:28,240 Speaker 1: And I'm sure there are a lot of unsophisticated investors 329 00:20:28,280 --> 00:20:31,240 Speaker 1: who were saying, I've been I've lost too much money. 330 00:20:31,280 --> 00:20:33,800 Speaker 1: This doesn't seem to be turning around. I don't understand 331 00:20:33,840 --> 00:20:36,560 Speaker 1: what's going on. I want out. So I'm sure that 332 00:20:36,600 --> 00:20:40,560 Speaker 1: it's a negative, okay, But as a sophisticated investor, and 333 00:20:40,680 --> 00:20:42,399 Speaker 1: of course that's one of the reasons we speak to you, 334 00:20:42,480 --> 00:20:47,679 Speaker 1: Chuck this and what maybe presents an opportunity because number one, uh, 335 00:20:48,119 --> 00:20:51,879 Speaker 1: it may have been an exaggerated response to this ruling. 336 00:20:52,080 --> 00:20:56,119 Speaker 1: But also if these master limited partnerships decide, you know what, 337 00:20:56,520 --> 00:20:59,280 Speaker 1: we can't spend all this time, money and effort educating 338 00:20:59,280 --> 00:21:01,200 Speaker 1: people about what we really are. We're just going to 339 00:21:01,280 --> 00:21:04,440 Speaker 1: turn ourselves into a regular CE corps that's going to 340 00:21:04,560 --> 00:21:07,919 Speaker 1: make it more attractive for institutional investors to buy them. Right, 341 00:21:08,600 --> 00:21:11,600 Speaker 1: That's exactly right, and I expect all of that to happen. 342 00:21:12,320 --> 00:21:16,480 Speaker 1: I do think that a lot of these unsophisticated investors 343 00:21:16,720 --> 00:21:20,359 Speaker 1: are going to methodically continue to pull out because they 344 00:21:20,400 --> 00:21:25,000 Speaker 1: don't understand the institutional investors will want to get in, 345 00:21:25,119 --> 00:21:27,080 Speaker 1: and in fact, some of them have been getting in. 346 00:21:27,600 --> 00:21:30,240 Speaker 1: But I think what will really turn it around is 347 00:21:30,280 --> 00:21:33,440 Speaker 1: if more of the companies turn themselves into C corporations 348 00:21:33,760 --> 00:21:37,120 Speaker 1: and then become part of indexes, because then they can 349 00:21:37,160 --> 00:21:40,879 Speaker 1: be all of that will bring in new buyers and 350 00:21:41,600 --> 00:21:44,120 Speaker 1: they'll take advantage of the fact that pricing is very, 351 00:21:44,200 --> 00:21:46,800 Speaker 1: very attractive. Thank you so much for being with us. 352 00:21:47,080 --> 00:21:51,960 Speaker 1: Charles Lieberman, Chuck Lieberman, Bloomberg Profit and chief investment Officer 353 00:21:52,000 --> 00:21:56,600 Speaker 1: and managing partner at Advisors Capital Management talking about the 354 00:21:56,880 --> 00:22:00,760 Speaker 1: MLP ker fluffle yesterday, and you know, it's funny, PIM. 355 00:22:00,800 --> 00:22:04,040 Speaker 1: In the past few years, there have been record amounts 356 00:22:04,119 --> 00:22:07,480 Speaker 1: of MLPs that have I p oed, So it's very 357 00:22:07,560 --> 00:22:10,919 Speaker 1: interesting to see the turmoil now and wonder whether retail 358 00:22:10,920 --> 00:22:14,160 Speaker 1: investors are going to exit until the opportunity is lost. 359 00:22:27,160 --> 00:22:31,960 Speaker 1: Cyber attacks are literally happening hundreds of thousands of times 360 00:22:31,960 --> 00:22:35,119 Speaker 1: a day. This according to Energy Secretary Rick Perry in 361 00:22:35,160 --> 00:22:38,920 Speaker 1: a speech to lawmakers during a hearing yesterday. Here to 362 00:22:39,040 --> 00:22:42,760 Speaker 1: speak about these attacks which are ongoing UH and are 363 00:22:42,800 --> 00:22:46,600 Speaker 1: targeting the US electric grid is Dr Eric Cole, chief 364 00:22:46,640 --> 00:22:50,840 Speaker 1: executive officer of Secure Anchor Consulting in Ashbourne, Virginia. He 365 00:22:50,880 --> 00:22:53,640 Speaker 1: comes to us from Los Angeles today. Dr Cole, thanks 366 00:22:53,640 --> 00:22:55,480 Speaker 1: so much for being here. I just would love to 367 00:22:55,480 --> 00:22:59,040 Speaker 1: get your perspective on where these attacks are mostly coming 368 00:22:59,119 --> 00:23:04,480 Speaker 1: from and infrastructure they are targeting. They're coming from the 369 00:23:04,600 --> 00:23:10,760 Speaker 1: usual players Russia, China, North Korea, but what we've seen 370 00:23:10,840 --> 00:23:14,680 Speaker 1: in the last six months is that cyber attacks level 371 00:23:14,760 --> 00:23:18,919 Speaker 1: the playing field. There are some small countries that can't 372 00:23:18,960 --> 00:23:22,400 Speaker 1: play in the nuclear weapons space. It's either too expensive 373 00:23:22,480 --> 00:23:25,840 Speaker 1: or they're regulated. But when it comes to cyber weapons, 374 00:23:26,320 --> 00:23:29,159 Speaker 1: anybody can build them. So we're even seeing some of 375 00:23:29,160 --> 00:23:33,840 Speaker 1: these smaller countries, Pakistan and others starting to target the 376 00:23:33,960 --> 00:23:37,240 Speaker 1: US infrastructure. And what they're really trying to do is 377 00:23:37,359 --> 00:23:43,200 Speaker 1: have command to control capability, so they're targeting water, electrical, nuclear, 378 00:23:44,240 --> 00:23:47,439 Speaker 1: air traffic control. And most people think if they break 379 00:23:47,480 --> 00:23:50,080 Speaker 1: in that they're gonna want to go in and take 380 00:23:50,080 --> 00:23:52,359 Speaker 1: it down to destroy, but it's really more of a threat. 381 00:23:52,840 --> 00:23:56,480 Speaker 1: If they have control of our nuclear power plans, they 382 00:23:56,520 --> 00:23:59,040 Speaker 1: now can influence the United States in a lot of 383 00:23:59,040 --> 00:24:02,679 Speaker 1: different areas. Dr Cole, And what if you could just 384 00:24:02,680 --> 00:24:05,240 Speaker 1: step back, and perhaps this is not your purview, but 385 00:24:05,280 --> 00:24:07,679 Speaker 1: I want to give you an opportunity. Do we have 386 00:24:07,760 --> 00:24:11,280 Speaker 1: a clear definition of who, quote, the enemy of the 387 00:24:11,320 --> 00:24:16,480 Speaker 1: United States is or who are our enemies? The way 388 00:24:16,520 --> 00:24:20,240 Speaker 1: I always say in the real world we have allies. 389 00:24:20,880 --> 00:24:25,399 Speaker 1: In cyberspace there is no allies, So in cyberspace I 390 00:24:25,440 --> 00:24:29,560 Speaker 1: would say every other country other than the US is 391 00:24:29,600 --> 00:24:33,440 Speaker 1: our enemy. And even surprisingly a lot of cyber attacks 392 00:24:33,480 --> 00:24:36,840 Speaker 1: against the US are coming from Canada. Okay. The reason 393 00:24:36,920 --> 00:24:40,320 Speaker 1: I asked this is because Article three, Section three of 394 00:24:40,359 --> 00:24:44,200 Speaker 1: the U. S Constitution seems pretty clear. If a subversive 395 00:24:44,359 --> 00:24:47,399 Speaker 1: act has any tendency to weaken the power of the 396 00:24:47,440 --> 00:24:51,119 Speaker 1: United States to attack or resist its enemies, aid and 397 00:24:51,280 --> 00:24:56,480 Speaker 1: comfort has been given, that's a definition of treason. Why 398 00:24:56,600 --> 00:25:03,280 Speaker 1: is this so difficult for both the prosecutors, it seems, 399 00:25:03,280 --> 00:25:06,880 Speaker 1: of these acts and those that are defending this as 400 00:25:06,880 --> 00:25:10,680 Speaker 1: a freedom of speech notion? Why are they so Why 401 00:25:10,720 --> 00:25:13,920 Speaker 1: is the Constitution not able to be used in order 402 00:25:13,920 --> 00:25:20,399 Speaker 1: to prosecute this. The biggest problem in cyberspace is attribution, 403 00:25:21,520 --> 00:25:25,840 Speaker 1: knowing who's actually doing the attack. So, for example, we 404 00:25:25,920 --> 00:25:30,000 Speaker 1: know that attacks are coming from Russia, but finding the 405 00:25:30,040 --> 00:25:35,320 Speaker 1: exact location, the physical location is very hard. Also, we 406 00:25:35,400 --> 00:25:38,760 Speaker 1: have seen cases where we had attacks that we thought 407 00:25:38,800 --> 00:25:42,480 Speaker 1: were coming from China and it was actually the Russians 408 00:25:42,600 --> 00:25:46,200 Speaker 1: breaking into Chinese systems and then attacking us from there, 409 00:25:46,240 --> 00:25:48,840 Speaker 1: so it looked like the Chinese, but it was actually 410 00:25:48,880 --> 00:25:52,600 Speaker 1: the Russians. So the attribution is our big challenge, and 411 00:25:52,640 --> 00:25:55,359 Speaker 1: that's why this takes a lot of work and a 412 00:25:55,359 --> 00:25:57,720 Speaker 1: lot of time and energy to figure out who's really 413 00:25:57,720 --> 00:26:01,320 Speaker 1: behind the attacks. All right, So Eric, one thing that's 414 00:26:01,359 --> 00:26:04,960 Speaker 1: notable is there is this report by the US government 415 00:26:04,960 --> 00:26:08,600 Speaker 1: talking about how Russian in particular has launched many attacks 416 00:26:08,680 --> 00:26:11,919 Speaker 1: on a variety of different infrastructure systems, whether it was 417 00:26:11,920 --> 00:26:15,960 Speaker 1: the electric grid, water processing plans, air transportation facilities, etcetera. 418 00:26:16,359 --> 00:26:19,199 Speaker 1: Why haven't we heard more about this? Why haven't they 419 00:26:19,240 --> 00:26:25,679 Speaker 1: been successful? The reason why they've been successful is we 420 00:26:25,760 --> 00:26:29,680 Speaker 1: aren't making it easier for them. Typically in the past, 421 00:26:29,880 --> 00:26:33,879 Speaker 1: when you designed and built nuclear reactors in the computers 422 00:26:33,880 --> 00:26:37,320 Speaker 1: that supported them, known as c D as critical digital assets. 423 00:26:37,640 --> 00:26:41,960 Speaker 1: They were always disconnected from the Internet. They never had 424 00:26:42,000 --> 00:26:44,639 Speaker 1: any connectivity, so there was no way for somebody to 425 00:26:44,680 --> 00:26:49,479 Speaker 1: attack remotely. In the last year, we are starting to 426 00:26:49,600 --> 00:26:53,119 Speaker 1: interconnect these systems to make it easier to monitor and 427 00:26:53,280 --> 00:26:56,840 Speaker 1: more functionality. And that's really the big problem. We're taking 428 00:26:56,960 --> 00:27:00,240 Speaker 1: systems that were never designed to be accessible on the 429 00:27:00,280 --> 00:27:04,200 Speaker 1: Internet and making them accessible. And the reason why it's 430 00:27:04,240 --> 00:27:07,800 Speaker 1: taking so long, and this is a scary part, we're 431 00:27:07,840 --> 00:27:12,360 Speaker 1: not detecting these attacks. It's taking us fifteen to twenty 432 00:27:12,440 --> 00:27:15,240 Speaker 1: months to catch and find the fact that they've broke 433 00:27:15,280 --> 00:27:17,840 Speaker 1: into our systems. Well, but Eric, I mean, just to 434 00:27:17,920 --> 00:27:21,520 Speaker 1: play devil's advocate, Okay, perhaps they've broken in, but we 435 00:27:21,640 --> 00:27:26,040 Speaker 1: haven't heard about incredible disruptions in the power grid or 436 00:27:26,200 --> 00:27:29,000 Speaker 1: the water system. Are they being hidden? Are they are 437 00:27:29,000 --> 00:27:33,359 Speaker 1: they affecting uh, people's access to clean water? Or is 438 00:27:33,400 --> 00:27:36,520 Speaker 1: this uh? Is this just sort of more subtle type 439 00:27:36,520 --> 00:27:41,200 Speaker 1: of attack. It's more subtle, and right now it's more 440 00:27:41,320 --> 00:27:45,359 Speaker 1: the fear of the threat and the analogies. It's like 441 00:27:45,440 --> 00:27:49,480 Speaker 1: nuclear weapons. The Russians have a ton of nuclear weapons, 442 00:27:49,520 --> 00:27:52,040 Speaker 1: but they haven't used them. But just the fact that 443 00:27:52,160 --> 00:27:55,040 Speaker 1: they have them put them in the power SORR a 444 00:27:55,080 --> 00:27:58,600 Speaker 1: position of power, and it's similar here. They've breaking into 445 00:27:58,600 --> 00:28:01,760 Speaker 1: our systems, they've taken can troll. They haven't done any 446 00:28:01,800 --> 00:28:04,920 Speaker 1: massive attacks, but that gives them a position of power 447 00:28:05,240 --> 00:28:07,840 Speaker 1: to be able to negotiate differently with the United States. 448 00:28:08,840 --> 00:28:13,680 Speaker 1: Dr Cole, if you were to advise the chief executives 449 00:28:13,720 --> 00:28:19,199 Speaker 1: of corporations that control these essential utilities, what would you 450 00:28:19,280 --> 00:28:25,080 Speaker 1: be advising them today March six to do? The first 451 00:28:25,119 --> 00:28:29,560 Speaker 1: thing I would recommend is to any critical systems, any 452 00:28:29,560 --> 00:28:33,080 Speaker 1: critical infrastructure, disconnect from the Internet. I work in a 453 00:28:33,080 --> 00:28:35,240 Speaker 1: lot of these areas. I travel around the world with 454 00:28:35,280 --> 00:28:40,160 Speaker 1: critical infrastructure. It's not worth the benefit. Second, do a 455 00:28:40,400 --> 00:28:44,200 Speaker 1: discovery exercise to know where your critical data is. In 456 00:28:44,280 --> 00:28:47,200 Speaker 1: so many cases organizations don't even know where the data 457 00:28:47,240 --> 00:28:52,720 Speaker 1: is located. And then third, assume you're compromised. And now 458 00:28:52,800 --> 00:28:55,320 Speaker 1: go in and say, okay, if we are compromised, how 459 00:28:55,320 --> 00:28:58,240 Speaker 1: do we find and get them out of our networks? 460 00:28:58,480 --> 00:29:01,240 Speaker 1: As opposed to just accepting it and not dealing with 461 00:29:01,280 --> 00:29:05,080 Speaker 1: the problem. Is it also something as prosaic as preventing 462 00:29:05,120 --> 00:29:08,320 Speaker 1: people from using their own personal communication devices within the 463 00:29:08,360 --> 00:29:14,280 Speaker 1: actual physical plants of these institutions. That's absolutely a component 464 00:29:14,360 --> 00:29:17,640 Speaker 1: of it is not allowing people to bring personal devices. 465 00:29:18,360 --> 00:29:21,080 Speaker 1: We have seen many cases where people bring cell phones 466 00:29:21,600 --> 00:29:25,120 Speaker 1: that inadvertently are infected with malware. They plug it in 467 00:29:25,160 --> 00:29:28,880 Speaker 1: to a control system to charge the USB and it 468 00:29:28,920 --> 00:29:31,239 Speaker 1: affects the system. So you really want to have what 469 00:29:31,280 --> 00:29:34,560 Speaker 1: we call air gap where there's no connectivity with any 470 00:29:34,560 --> 00:29:38,840 Speaker 1: other device from the outside world. And just finally, a 471 00:29:38,880 --> 00:29:41,360 Speaker 1: doctor called do we know? I mean, you mentioned that 472 00:29:41,400 --> 00:29:44,360 Speaker 1: we don't know a lot about what's going on as 473 00:29:44,440 --> 00:29:48,400 Speaker 1: far as the attacks. Do you believe that these organizations, 474 00:29:48,440 --> 00:29:50,960 Speaker 1: these companies in the United States, that they know their 475 00:29:51,000 --> 00:29:57,640 Speaker 1: own vulnerabilities. I believe they know some, but they don't 476 00:29:57,680 --> 00:30:00,400 Speaker 1: know all. And we have a lot of situations like 477 00:30:00,600 --> 00:30:04,080 Speaker 1: with the Equifax and others, where there's one or two 478 00:30:04,160 --> 00:30:08,360 Speaker 1: systems that they didn't know about that led to the compromise. 479 00:30:08,440 --> 00:30:13,800 Speaker 1: And that's the problem. Security means two percent exposure and 480 00:30:13,840 --> 00:30:16,479 Speaker 1: it's always the part you don't know about that causes 481 00:30:16,520 --> 00:30:19,000 Speaker 1: the problems. Our thanks to Dr Eric Cole. He is 482 00:30:19,040 --> 00:30:22,720 Speaker 1: the chief executive of Secure Anchor Consulting. They are based 483 00:30:22,720 --> 00:30:26,400 Speaker 1: in Ashburn, Virginia. You can follow him on Twitter at 484 00:30:26,640 --> 00:30:34,040 Speaker 1: d r. Eric Cole. Thanks for listening to the Bloomberg 485 00:30:34,080 --> 00:30:36,720 Speaker 1: p m L podcast. You can subscribe and listen to 486 00:30:36,760 --> 00:30:41,280 Speaker 1: interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. 487 00:30:41,720 --> 00:30:45,280 Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm 488 00:30:45,280 --> 00:30:48,600 Speaker 1: on Twitter at Lisa Abramo. It's one before the podcast. 489 00:30:48,640 --> 00:30:51,240 Speaker 1: You can always catch us worldwide on Bloomberg Radio