Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you,
Speaker 1: along with my co host Lisa Brahma wits. Each day
Speaker 1: we bring you the most noteworthy and useful interviews for
Speaker 1: you and your money, whether at the grocery store or
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
Speaker 1: podcast or wherever you listen to podcasts, as well as
Speaker 1: at Bloomberg dot com. One big question heading into since
Speaker 1: we are now there has been how much has the
Speaker 1: FED bolstered stock prices and how much will they continue
Speaker 1: to do? So we're so lucky to have tourist in
Speaker 1: stock with US chief economists and managing director at totter
Speaker 1: Bag Securities here in our interactive broker studios, Touristen puts
Speaker 1: out some of the most interesting and provocative charts that
Speaker 1: I get in my inbox. I'm very excited to have
Speaker 1: you on. Let's just first talk about how much you've
Speaker 1: found that the FED stimulus last year actually bolstered stock valuations.
Speaker 1: So what we try to do was to ask the question,
Speaker 1: when the fit basically expands that balance sheet, there various
Speaker 1: reasons why banishing could go up, and we can discuss
Speaker 1: for a long time, whether it's called qui or not.
Speaker 1: But the bottom line is when the Fed expanses balance sheet,
Speaker 1: then you can measure that on a weekly basis when
Speaker 1: the balance sheet data comes out, and then you can
Speaker 1: try to ask the question, let's try to go back
Speaker 1: since October when they started expanding the balance sheet and
Speaker 1: say for every one percent that the balance sheet expanded,
Speaker 1: how much did the stock market go up or down?
Speaker 1: And what we found in our very simple scatter diagram
Speaker 1: is that for every one percent increase in the fifth
Speaker 1: balance sheet, this in p. Five hundred has actually gone
Speaker 1: up by roughly one percent. Also, so in that sense,
Speaker 1: fit banasheat expansion has at least been correlated with the
Speaker 1: increase in the stock marget that we have seen since October.
Speaker 1: Now you can ask, looking ahead, of course, if this
Speaker 1: will continue, if the fIF balant sheat expansion is continuing,
Speaker 1: but at least for now, that has been a very
Speaker 1: tight relationship for the last several months. Has the FEDS
Speaker 1: activity as it relates to the balance sheet and growing
Speaker 1: its balance sheet? How unusual is that? You know? Kind
Speaker 1: of activity? Is it something that we should consider for
Speaker 1: so a very important part of that question is that Traditionally,
Speaker 1: when the fit has done que or quantity V saying
Speaker 1: they've been buying the long end of the yield curve
Speaker 1: with the whole intention of trying to lower long term
Speaker 1: interst rates. What's really unusual about what they're doing today
Speaker 1: is that they're buying T bills, meaning the short end
Speaker 1: of the yeld curve, And therefore we're getting a lot
Speaker 1: of questions from clients about, well, why should that be
Speaker 1: helping the stock market. It makes sense that when you
Speaker 1: shift long bunds that you could begin to buy long
Speaker 1: duration assets. But if you buy a T bill, why
Speaker 1: would that be substituted with the S and P. That's
Speaker 1: probably not many who on their own just substitute directly
Speaker 1: a four week th bill with a long term asses
Speaker 1: by S and P five. But remember money is much fungible,
Speaker 1: so in that sense, if there is a portfolio induced
Speaker 1: re balancing, you could easily to see that someone at
Speaker 1: the end of a long process would end up allocating
Speaker 1: more money to risky assets. Therefore, this in the long
Speaker 1: answer to a question Paul, is that I still think
Speaker 1: that as we look into this year, the more the
Speaker 1: fat penalty is going to expand, it will be still
Speaker 1: something that provides support to the stock market. So that's
Speaker 1: fantastic perspective as to what potentially could drive stock gains
Speaker 1: further in te thing that I love about your research
Speaker 1: is you take a more holistic approach, not just stock valuations,
Speaker 1: diving deeper into the economy. And one thing that you've
Speaker 1: highlighted increasingly is that there is a whole swath of
Speaker 1: Americans that have been left behind in the rally, whether
Speaker 1: it comes whether whether it comes to income gains, whether
Speaker 1: it comes to spending more than their bringing in every month,
Speaker 1: whether it comes to healthcare costs. Can you give us
Speaker 1: a sense of just your overarching thesis when it comes
Speaker 1: to the widening gap and what that could potentially do
Speaker 1: economically and frankly as as surprise wise, absolutely, we think
Speaker 1: a very important issue going into two thousand twenty, and
Speaker 1: of course, particularly with the election in November, continues to
Speaker 1: be inequality in all dimensions. The way we look at
Speaker 1: it is that there are four different dimensions to an equality.
Speaker 1: There's income inequality, there's wealth inequality, but there also two
Speaker 1: other very important dimensions that are often ignored, namely health inequality.
Speaker 1: Different people have different access to healthcare and finally education
Speaker 1: in equality, that education has become very expensive, which also
Speaker 1: means that different people have different access And if look
Speaker 1: at these different dimensions, it is basically things that are
Speaker 1: dominating the political conversations. So we're trying to think about
Speaker 1: and trying to figure out, as hard as it is,
Speaker 1: should we just ignore this and say, hey, I just
Speaker 1: look at the stock market, this is what I do.
Speaker 1: Or should we say, well, these are actually now indicators
Speaker 1: and data points that have become so important in the
Speaker 1: conversation politically that maybe we need to take into account.
Speaker 1: How should I think about as an investor? Should I
Speaker 1: take it into account and see this could apply something
Speaker 1: in terms of policy changes on education, healthcare, student loans, taxes.
Speaker 1: There's a lot of time mentions that become very important
Speaker 1: for the overall business environment and therefore also for the
Speaker 1: out there, for the stock market, and ultimately also for
Speaker 1: the fit and rates. So in short, this agenda is
Speaker 1: very confusing and fluffy in the sense of there's a
Speaker 1: lot of arm waving around a lot of these data points,
Speaker 1: but it still turns out in almost all our conversations
Speaker 1: to be at the end of the day, a very
Speaker 1: very critical input to how will markets actually do as
Speaker 1: we sit here on the first days of two thousand twenty,
Speaker 1: do you think some of those inequalities that you identified
Speaker 1: have had an economic impact in the US? Has it
Speaker 1: impacted g d P? There's a lot of folks, a
Speaker 1: lot of economists are saying we're gonna be slower growth
Speaker 1: for a longer, you know, kind of two percent GDP.
Speaker 1: Do you think one of the contributors of that could
Speaker 1: be some of these inequalities were seeing. Absolutely, we do
Speaker 1: think that a very important reason why this expansion was
Speaker 1: so weak for the last ten years was probably that
Speaker 1: the main boost from policy makers. Remember policy in two
Speaker 1: thousand nine and ten basically responded less with fiscal policy
Speaker 1: and mold with monetary policy. And what did mind story
Speaker 1: opposed to do. It lifted stock prices and home prices.
Speaker 1: Who benefits on that people who own stocks, people who
Speaker 1: own homes. And because there were fewer people who own homes,
Speaker 1: the home ownership rate was going down. Fewer people owning stocks.
Speaker 1: That meant that the benefits in this expansion were concentrated
Speaker 1: on a fewer hands. So in that sense, the benefits
Speaker 1: of highest stock price and high home prices were basically
Speaker 1: more concentrated in a smaller group of the population. That
Speaker 1: meant that the impact on consumer spending, the wealth effect,
Speaker 1: the impact overall on the economy turned out to be
Speaker 1: driven a lot by asset prices going up in some
Speaker 1: sexes and some people benefiting, but a significant part of
Speaker 1: the population not efiting. So we do believe that one
Speaker 1: critical reason why these expanion has been so weak is
Speaker 1: because of inequality that has continued to widen Torsen's law.
Speaker 1: Thank you so much for joining us. We really appreciate
Speaker 1: you coming into our Bloomberg Interactive Broker studio. Torsen's and
Speaker 1: chief economist at Deutsche Bank Securities hockey stick growth. That
Speaker 1: is what people are expecting for the first quarter of
Speaker 1: the first half of joining us here in our interactive
Speaker 1: broker studios. Nick Cholis, co founder of Data Track Research,
Speaker 1: and I want to talk about the consensus idea that
Speaker 1: we have here, which is that the first half of
Speaker 1: the year will be frontloaded in terms of gains in
Speaker 1: the SMP and beyond as companies report earnings that are
Speaker 1: solid and show study growth in the U S economy.
Speaker 1: Do you agree with that consensus call. I think it's
Speaker 1: a bit tough and I'll tell you why. If you
Speaker 1: look at the first half of last year, you saw
Speaker 1: that SMP five companies registered revenue growth of five percent
Speaker 1: in Q one and four percent in Q two, and
Speaker 1: that's trailed off to three and then two percent what
Speaker 1: we're expecting for the fourth quarter. And those are tough
Speaker 1: comps because the U. S economy and global economy is
Speaker 1: still growing only fairly slowly. And even though the effect
Speaker 1: of FED rate cuts and perhaps the trade US UM
Speaker 1: trade war settlements will spur business spending, it'll be in
Speaker 1: the back half of the year. So I'm not as
Speaker 1: optimistic that we'll see those really healthy comps in Q
Speaker 1: one and Q two. So Nick, I'm looking at your research,
Speaker 1: and I love your your theme here, six word market narratives.
Speaker 1: Give us your six word market narratives for nineteen and
Speaker 1: maybe how we should think about You know, the six
Speaker 1: word narrative is an exercise to try to just to
Speaker 1: steal down what happened in twenty nineteen, then what could
Speaker 1: happen this year. The summary of it was that eighteen
Speaker 1: was a year of a huge policy mistake. The FED
Speaker 1: thought that neutral rates were much higher than they were.
Speaker 1: You know, if J don't touch that. Dial's kind of
Speaker 1: the six word market narrative in we had a reversal
Speaker 1: of that. Basically, the FED came out on January four,
Speaker 1: apologize for getting it wrong, and spent the rest of
Speaker 1: the year cutting So it was okay, we know, you're sorry,
Speaker 1: it's okay. Is going to be this issue of look,
Speaker 1: there's a hundred different ways to cut this market and
Speaker 1: say you shouldn't be involved. Valuations are very high. Corporate
Speaker 1: that's very high. We talked about the earnings cops, all
Speaker 1: very real issues. But at the same time, we still
Speaker 1: have the flow through of these policy makers, both at
Speaker 1: the FED now saying they're not going to raise rates
Speaker 1: and in the White House saying, you know what, the
Speaker 1: trade war probably should be over because President Trump wants
Speaker 1: to get reelected. And it's a flow through of those
Speaker 1: two narratives that says this year might be okay. All right,
Speaker 1: let's talk about where it's going to be most okay.
Speaker 1: I was looking at the City Economic Surprise Index for
Speaker 1: both the US and Europe this morning. In the US
Speaker 1: it's going down and it is negative. In Europe, it's
Speaker 1: the highest level UH since February, basically meaning that the
Speaker 1: economic data coming out was beating expectations by the most
Speaker 1: since then, do you agree that this sort of supports
Speaker 1: the narrative that Europe will perform the US at an
Speaker 1: economic basis on a relative basis, meaning they're going to
Speaker 1: grow a little faster on a quarter of a quarters
Speaker 1: quantial basis. Absolutely. The issue with Europe as a stock
Speaker 1: market is it's so little exposed to technology. The IFA
Speaker 1: index is only seven percent technology, and that includes Japan obviously,
Speaker 1: but developed non US US. Here we're tech between tech, Amazon, Google,
Speaker 1: and Facebook. So you really have to make a very
Speaker 1: big bet on financials, which is fine. European financial has
Speaker 1: done really well in the fourth quarter and should continue
Speaker 1: to do well as bodon rates continue to rise. So
Speaker 1: it's a good story. It's just not the same kind
Speaker 1: of story as the US market. I still like the
Speaker 1: US market better, but it's for that tech exposure. So
Speaker 1: typically after a very strong year like we had in
Speaker 1: in the SMP, what is your research show to what
Speaker 1: the markets tend to do in the year after. Well,
Speaker 1: here's the good news, let's star. The good news is.
Speaker 1: The good news is you don't see markets puke the
Speaker 1: next year. The market is pretty efficient and it tends
Speaker 1: to see through. The only time we had a really
Speaker 1: bad sequential year after a bat after a great year
Speaker 1: was thirty seven. Uh yeah, nineteen thirty seven market was
Speaker 1: down thirty eight percent thirty eight um and then but
Speaker 1: on average you do about ten percent. Is a short
Speaker 1: answer to your question. You know do as well as
Speaker 1: average because there is a little bit of pull forward,
Speaker 1: but you tend to have another good year. The problem
Speaker 1: is the wind rates not as good on average S
Speaker 1: ANDP win rate since night against these years, it's more
Speaker 1: like sixt so a little bit closer to a coin toss.
Speaker 1: We had tour sence lock On earlier from Deutsche Bank
Speaker 1: and he was talking about something that you mentioned, the
Speaker 1: FED support of markets, and talking about the correlation between
Speaker 1: the increase in the Fed's balance sheet and increases in
Speaker 1: the SMP five hundred. Granted it's not a long time
Speaker 1: time set. Do you, though, believe that the expansion of
Speaker 1: the balance sheet, call it whatever you will, perhaps don't
Speaker 1: use quantitivities because it is controversial. Do you think that
Speaker 1: that is supporting a rally much more than some people
Speaker 1: are allowing. I think it is absolutely helpful. It does
Speaker 1: show that the FED put and we all hate that phrase,
Speaker 1: but it's real. The FED put applies to a whole
Speaker 1: range of things, including things like the repo market, and
Speaker 1: they want to make sure that the system can use
Speaker 1: to work as it should. So I think it's a
Speaker 1: comforting notion. I don't know how much it directly affects
Speaker 1: stock prices, but let's put it this way. It helps
Speaker 1: more than it hurts. So again, are you in the
Speaker 1: camp that like I? This is where at least And
Speaker 1: I had a little bit bund of contention before the holidays.
Speaker 1: I said, if the data was to come in, you know,
Speaker 1: strong economic data, that is there a scenario where the
Speaker 1: FED could hike raise And she quote unquote rejected that.
Speaker 1: She rejected that assertion. Is there any scenario where in
Speaker 1: an election year the FED would even consider if the
Speaker 1: data lead them there to be raised rates? Absolutely? No.
Speaker 1: It doesn't feel like if I'll tell you why, we do.
Speaker 1: Every time we see a new set of dot plots
Speaker 1: from the FED would do a standard deviation of all
Speaker 1: them participants and look at how certain they are about
Speaker 1: their future expectations. The FED is more certain now, right
Speaker 1: now about than it has ever been since the dot
Speaker 1: plots started for a future year. They are signaling very
Speaker 1: strongly that they are not going to raise rates. It's
Speaker 1: really unusual. Standard deviation is like a third of what
Speaker 1: it usually is from an end of year forward year. Look,
Speaker 1: that sounds like a rejection. He didn't reject lightly helitely
Speaker 1: rejected your assertion. I I very impolitely rejected your just
Speaker 1: we just follow the numbers. Yeah, right, I just reject
Speaker 1: things out right. I do think when you say, Jay,
Speaker 1: don't touch that dial, the idea that they will be
Speaker 1: on hold at best, uh, you know, at worst, if
Speaker 1: things do deteriorate, they will cut rates and support the
Speaker 1: economic and asset price expansion. One thing I noticed is
Speaker 1: that you came in with a prop today. Yes, the
Speaker 1: prop has to do with the fact that a hundred
Speaker 1: years ago today was the liftoff point for radio as
Speaker 1: a medium. The first broadcast news was Warren Harding winning
Speaker 1: the nineteen twenty election, and it was really what spurred
Speaker 1: radio into popular use. You know, the at the being
Speaker 1: in eighteen twenties, one percent of the population I had
Speaker 1: a radio. By nineteen thirty, it was closer. He has this, uh,
Speaker 1: the wireless age issue from April nineteen twenty two, Uh,
Speaker 1: it's got wow. It was Amazon eBay five five bucks
Speaker 1: on eBay. Wireless Age was the hobbyist magazine of the
Speaker 1: radio age in the nineteen twenties. Uh, and it looks
Speaker 1: exactly like a computer nerd magazine from the nineteen eighties
Speaker 1: and nineties. It was really you know, the industry was
Speaker 1: built by enthusiasts and only slowly commercialized. It's funny. We're
Speaker 1: just talking to Justin Fox of Bloomer talking about the
Speaker 1: evolution of media, and primarily from a news perspective, about
Speaker 1: the obviously the decline in the local newspaper and local
Speaker 1: media and how that may be contributing to the polarization
Speaker 1: of the US and you know the left and the right,
Speaker 1: and how cable television and you know, talk shows and
Speaker 1: so on and so forth may have contributed to that.
Speaker 1: So it kind of brings into context the one hundred
Speaker 1: years of it and it all started with radio, and
Speaker 1: it all started with radio. And yes, and here we are,
Speaker 1: and here we are continuing to beat that drum exactly.
Speaker 1: Thank you so much for going with us. Nick Nichole's
Speaker 1: co founder Data Track Research, joining us here on our
Speaker 1: Bloomberg Interactive Broker Studio giving us lots of perspective on
Speaker 1: the markets coming from the disappointment extraordinary performance. The question
Speaker 1: is what does what do the markets hold in store
Speaker 1: for us? With a launch of Disney Plus in November
Speaker 1: of last year, many expect to be the year that
Speaker 1: the streaming wars really heat up. To get a sense
Speaker 1: kind of where we are here in the early days,
Speaker 1: we welcome Roman Crossing, He's said, of data analytics at
Speaker 1: Eagle Alpha, joins us on the phone from Dublin, Ireland. Ronan,
Speaker 1: thanks so much for joining us. It seems like, you know,
Speaker 1: as we entered twenty nineteen, it was all pretty much
Speaker 1: a Netflix story. But it's getting pretty competitive out there,
Speaker 1: isn't it. It is absolutely yeah, no, it is getting
Speaker 1: more competitive. But what we're actually seeing is that with
Speaker 1: the launch of Disney Plus, what we've actually seen is
Speaker 1: Disney Plus have grown the market um like we around
Speaker 1: the time of the Netflix they're disappointing Q two earnings
Speaker 1: last year, we started tracking Netflix using social media data,
Speaker 1: particularly from Twitter, and what we noticed was that Netflix
Speaker 1: was continuing to gain momentum and was continuing to get
Speaker 1: stronger and stronger. Then around the time of the Disney
Speaker 1: Plus launch, in November, we saw that actually that grew
Speaker 1: the market, and Netflix continued to grow as Disney Plus did,
Speaker 1: and so we're seeing, actually, it's it's not necessarily a
Speaker 1: zero sum game. The market continues to grow overall. All Right,
Speaker 1: This is a really interesting take because I think Netflix
Speaker 1: x is one of the most compelling companies to watch
Speaker 1: in because of Disney Plus, because of this consensus that
Speaker 1: there can only be so many streaming services. What do
Speaker 1: you think will drive their profitability the fact that they
Speaker 1: might not just burn through cash. Is it going to
Speaker 1: be uh, charging subscribers more, Is it going to be
Speaker 1: expanding their subscriber base, or is it going to be
Speaker 1: monetizing things like advertising or data streams? Well, I think
Speaker 1: it always comes back to the content, right, and the
Speaker 1: Netflix has consistently invested in their content, and we actually
Speaker 1: saw that as we track the conversation online, it's the
Speaker 1: top shows that are continuing to gain momentum. And actually,
Speaker 1: what we saw in twenty eighteen was that there was
Speaker 1: somewhat of a depth of news shows coming on that
Speaker 1: we weren't seeing the same appetite and enthusiasm on one
Speaker 1: on on online for those those shows at Netflix. But
Speaker 1: actually nineteen. It feels like they got it right, particularly
Speaker 1: towards the second half of the year, and so we
Speaker 1: think they did take the higher subscription um Earlier last year,
Speaker 1: they increased their subscription prices, and we think that that,
Speaker 1: combined with the weaker content of teen was probably what
Speaker 1: led to those leaker, weaker numbers in Q two. But
Speaker 1: actually the content has got much stronger and we think
Speaker 1: we can can absorb that pricing, and we we were
Speaker 1: seeing that in terms of the momentum coming out of
Speaker 1: the year. So running as you monitor and analyze social media,
Speaker 1: you know, commentary as it relates to some of these
Speaker 1: streaming companies, are you hearing anything about some of the
Speaker 1: others out there? What are you hearing about some of
Speaker 1: the others, whether it's a an existing streaming thing, a
Speaker 1: brand like Hulu or something new like the you know,
Speaker 1: HBO max is coming out, and then I think Comcast
Speaker 1: has uh coming out with Peacock. Are you are they
Speaker 1: registering at all on social media right now? Yeah, so
Speaker 1: so no, it's a it's a great question, Paul. So
Speaker 1: what we're seeing is not with Disney Plus was definitely
Speaker 1: a breakthrough compared to see Apple TV Plus and what
Speaker 1: we've seen is that, yes, Netflix has continued to perform well,
Speaker 1: but Disney Plus is really showing strong momentum and has
Speaker 1: gone straight in there at number two if you like,
Speaker 1: within the streaming streaming universe, whereas we see someone like
Speaker 1: Hulu and Roku are continuing continuing to to to tread
Speaker 1: at a similar level, whereas Apple TV plus come out
Speaker 1: and come in at a much lower level. So we
Speaker 1: see certainly we see Disney or Netflix at number one,
Speaker 1: but Disney Plus is doing really well and that continued
Speaker 1: into the holiday season. We're seeing the Mandalorian in particular
Speaker 1: has has proven to be particular, particularly popular. All the
Speaker 1: people say that the real game changer will be live
Speaker 1: sports and whether the cable networks will lose live sports
Speaker 1: streaming to some of these services. Do you foresee that
Speaker 1: being a significant game changer that potentially creates losers and
Speaker 1: winners the results in either insolvencies or mergers. Yes, So
Speaker 1: so as a firm, Eagle also we look right across
Speaker 1: the alternative data spectrum. So we've talked a lot about
Speaker 1: the Twitter social media analysis, but as a firm, we're
Speaker 1: looking at many more data sets out there, and I
Speaker 1: think they will be really crivotal in analyzing this trend,
Speaker 1: because you're absolutely right, this is a very fluid market
Speaker 1: and I think we're going to have to you know,
Speaker 1: we're gonna have to monitor that date over time. Live
Speaker 1: sports is absolutely a hot topic. We're seeing it in
Speaker 1: terms of online conversation and there's definitely the appetite for
Speaker 1: more live live sports via the streaming platforms, and I
Speaker 1: think that it's something we're gonna have to monitor very closely,
Speaker 1: and we will be monitoring very closely. Ronan, thank you
Speaker 1: so much for being with us. Ronan Crossing, the head
Speaker 1: of data analytics with Eagle Alpha, joining us on the
Speaker 1: phone from Dublin, Ireland, talking about what I think will
Speaker 1: be one of the most fascinating fields in which is
Speaker 1: the streaming Paul. I love it when we talk about
Speaker 1: cybersecurity because it's always some iteration of why we should
Speaker 1: all be really scared and we're about to deal with
Speaker 1: something really tragic and and regret regretful based on the
Speaker 1: excess of our data out there in the mainstream. Joining
Speaker 1: us now to talk about that. Steve Grogman, he's chief
Speaker 1: technology officer at McAfee, joining us on the phone from Dallas.
Speaker 1: I want to get your son, Steve. So when we
Speaker 1: talk about why we should get scared with respect to
Speaker 1: all of the cybersecurity threats, what are the main reasons
Speaker 1: that we should be nervous right now? Sure you bet.
Speaker 1: First off, Happy New year, Lisa and Paul, and you know,
Speaker 1: cybersecurity is really one of these areas that impacts consumers,
Speaker 1: It impacts business, it could even impact the upcoming election cycle,
Speaker 1: and maybe just to kick us off, if we look
Speaker 1: at it from a consumer standpoint, the thing that consumers
Speaker 1: really need to worry about is having their accounts and
Speaker 1: account data stolen. One of the things that we seen
Speaker 1: is over two billion dollars of consumer account information with
Speaker 1: up for sale on the black market. That's eventually going
Speaker 1: to be sold to individuals that will use it for
Speaker 1: identity theft or fraudulent purposes. What's really interesting for folks
Speaker 1: to be on the lookout now is how they can
Speaker 1: be targeted because it's not just through fitting emails. We
Speaker 1: now see things like phishing texts or even robo calls,
Speaker 1: and really having consumers understand that these are all things
Speaker 1: they need to be aware of. His key, So, Steve,
Speaker 1: give us a sense of where the regulatory environment is.
Speaker 1: It just seems like they're the regulations cannot whether it's
Speaker 1: you know, robo calls or whatever, cannot stay ahead of
Speaker 1: the technology. What do you think is the best way,
Speaker 1: assuming that you know, government regulation is not there to
Speaker 1: protect us per se, what do you suggest for your
Speaker 1: corporate clients that they do sure so, so, first off,
Speaker 1: there's actually been a lot of great progress s against
Speaker 1: robocalls in both on the regulatory and technology side. On
Speaker 1: the regulatory side, the carriers have now received higher levels
Speaker 1: of empowerment to go after and block some of these robocalls,
Speaker 1: so monitor them. When they detect patterns that look like
Speaker 1: it's not legitimate, they are now authorized to block them.
Speaker 1: There's also some new technology. It has kind of an
Speaker 1: interesting name. It's called Shaken and stir uh so either
Speaker 1: Martini or James Bond reference. But a Stir is for
Speaker 1: those business systems the void systems, and Shaken is for
Speaker 1: cell and landline. And what these technologies will do is
Speaker 1: it will make it so that when you get caller
Speaker 1: I D information, it will be authenticated such that it's
Speaker 1: going to be much harder to spoof. The challenges is
Speaker 1: that it's gonna take some time to implement these new
Speaker 1: technologies across the board and in the um consumers M
Speaker 1: businesses really need to have a very heightened state of
Speaker 1: alert anytime they get a text or a or a
Speaker 1: phone call because it's very likely not coming from the
Speaker 1: source that the caller I D says that it is.
Speaker 1: So how is McAfee seeing the business spending when it
Speaker 1: comes to cybersecurity? I mean, has it been steadily accelerating
Speaker 1: at an exponential speed or they bring it back and
Speaker 1: being more selective about how they invest. So what we've
Speaker 1: seen is businesses now recognize that they need to protect
Speaker 1: all of the technologies that they're using to run their
Speaker 1: business in and we'll see the trend continue in there's
Speaker 1: a significant movement and embracing of cloud technologies, and with
Speaker 1: that move of business to the cloud, we see cyber
Speaker 1: threats now starting to target the cloud environment. So one
Speaker 1: of the things that McAfee has done is we've extended
Speaker 1: our enterprise portfolio to include both traditional environments and cloud
Speaker 1: and where we see a lot of the business investment
Speaker 1: is making sure that as they moved to the cloud
Speaker 1: to run their business, that they can protect those environments
Speaker 1: as well as their traditional environments. Steve, give us a
Speaker 1: sense of how much of the cybercrime or cymber, you know,
Speaker 1: the issues that people are dealing with, the threats, are
Speaker 1: how much of that a state sponsored versus maybe individual
Speaker 1: or criminal. Do we have a sense of kind of
Speaker 1: that breakdown these days, So we don't have very specific
Speaker 1: quantitative breakdowns, but we do see some interesting patterns. For example,
Speaker 1: last year we saw a major ransomware campaign. It was
Speaker 1: called the Sodan the Kibi campaign, and what was interesting
Speaker 1: about this was it very specifically targeted North America and
Speaker 1: Western Europe. The way that it did that is part
Speaker 1: of the code looked at what was the local language
Speaker 1: that was installed on the computer it or that got infected,
Speaker 1: and if it was one of those languages from the
Speaker 1: former Soviet Union, it would basically not run. What that
Speaker 1: essentially did is even if individuals or businesses in certain
Speaker 1: parts of the world got targeted or or were exposed
Speaker 1: to this ransomware, it was essentially benign on their environment
Speaker 1: and only selectively impacted certain parts of the world. So
Speaker 1: whether that was a cyber crime organization that was focusing
Speaker 1: on areas that they won't be prosecuted or other reasons.
Speaker 1: You know, those are typically some of the reasons we
Speaker 1: see that that sort of behavior. Hey, Steve, thanks so
Speaker 1: much for joining us. We appreciate your thoughts. Steve Groban,
Speaker 1: chief technology officer for McAfee, joining us on the phone
Speaker 1: from Dallas, Texas. Thanks for listening to the Bloomberg P
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Speaker 1: I'm on Twitter at Lisa Abramo. It's one before the podcast.
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