WEBVTT - Interest Rates, Energy, Housing, And Cybersecurity 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:24.000 at Bloomberg dot com slash podcast. Rates are on the rise, 0:00:24.040 --> 0:00:26.400 but just don't look at the bond market. But we've 0:00:26.440 --> 0:00:28.600 got the Bank of England it raised rates, We've got 0:00:28.640 --> 0:00:33.320 the Federal Reserve talking about raising rates in two and three. 0:00:34.120 --> 0:00:36.840 What does that mean for economic outlook in the face 0:00:36.880 --> 0:00:40.600 of a resurgent pandemic. Here, let's check in with Jennifer Lee, 0:00:40.840 --> 0:00:44.040 senior economist and managing director at Email Capital Markets. Jennifer, 0:00:44.040 --> 0:00:47.080 thanks so much for taking the time to be with 0:00:47.200 --> 0:00:51.960 us here. How are you thinking about your two economic 0:00:52.120 --> 0:00:55.000 outlook in the face of rising interest rates, in the 0:00:55.080 --> 0:00:58.720 face of inflation transitory maybe not in the face of 0:00:58.760 --> 0:01:03.320 this omicron variant? Um, good morning. Um. You know what, 0:01:03.520 --> 0:01:07.440 I'm fairly optimistic overall. Of course I have my my days, 0:01:07.560 --> 0:01:10.320 but overall I think we are still you know, we're 0:01:10.319 --> 0:01:13.080 still upbeat. I think it's a good thing in many 0:01:13.120 --> 0:01:16.800 ways that the that UM central banks are finally starting 0:01:16.800 --> 0:01:19.080 to raise race. I say finally for some some of 0:01:19.120 --> 0:01:21.679 them I've already been doing so over the past number 0:01:21.720 --> 0:01:23.960 of months, because if they weren't raising rates, it would 0:01:24.000 --> 0:01:26.640 mean that the global economy in the US in particular 0:01:26.760 --> 0:01:29.440 is still in too shape to handle it. So I 0:01:29.480 --> 0:01:32.360 think in that way, it's it's a good thing UM. 0:01:32.400 --> 0:01:34.240 Whether or not UM, you know, we can get these 0:01:34.240 --> 0:01:37.920 prices under control is another story. We look fractually for 0:01:37.920 --> 0:01:41.360 CPI to continue, UM maybe not rising at such a 0:01:41.400 --> 0:01:44.400 fast pace, but we look forward to peak around seven 0:01:44.440 --> 0:01:47.000 percent in the new year, just because of you know, 0:01:47.840 --> 0:01:51.640 food costs and housing and all that, before moderating UM 0:01:51.760 --> 0:01:54.080 in the second half of the year. So we're talking 0:01:54.080 --> 0:01:56.960 about potentially seven handle on CPI in the not so 0:01:57.120 --> 0:01:59.640 distant future and a FED rate hike that will come 0:01:59.800 --> 0:02:02.120 in maybe not so distant after that. And yet I'm 0:02:02.120 --> 0:02:04.280 looking at a ten year treasury yield that is at 0:02:04.280 --> 0:02:07.400 one thirty seven. What kind of signal do you take 0:02:07.400 --> 0:02:10.880 from the bond market right now? That is a big 0:02:10.960 --> 0:02:13.960 head scratcher. UM. In some ways, I'm you know, I'm 0:02:13.960 --> 0:02:16.200 wondering you know, maybe the bond market is is thinking 0:02:16.240 --> 0:02:18.800 that you know, transportation should not have been you know, 0:02:19.320 --> 0:02:23.160 removed from from the lexicon. UM is also a potential 0:02:23.240 --> 0:02:26.560 that you know, everyone is still very afraid or fearful 0:02:26.639 --> 0:02:29.080 of what um amicron is going to bring or what 0:02:29.120 --> 0:02:31.040 the impact is going to be, because they're you know, 0:02:31.040 --> 0:02:34.440 they're all these different um um papers or surveys coming 0:02:34.440 --> 0:02:36.800 out of what the impact will be, what the the 0:02:37.000 --> 0:02:40.040 what the the the the whether or not you know, 0:02:40.080 --> 0:02:42.359 we are able to fight it um and I think 0:02:42.360 --> 0:02:44.280 it's a bit too soon right now. But you know, 0:02:44.360 --> 0:02:47.639 obviously it's not looking that great right now, Jennifer, what 0:02:47.720 --> 0:02:50.639 has given that backdrop? What is your GDP forecast for 0:02:51.760 --> 0:02:54.000 two and what could be kind of the variables that 0:02:54.480 --> 0:02:56.320 either move that one way or the other off your 0:02:56.440 --> 0:02:58.640 kind of your your best case, your your best case. 0:02:59.400 --> 0:03:01.280 So this or we're looking at about five and a 0:03:01.280 --> 0:03:04.200 half five point six percent growth, and of course there 0:03:04.280 --> 0:03:07.200 is almost over next year we do see growth moderating 0:03:07.240 --> 0:03:10.200 two three and a half percent UM moderating, yes, but 0:03:10.240 --> 0:03:14.600 that's still almost um double um um the long run potential. 0:03:15.000 --> 0:03:16.920 And this is all assuming that you know, we're not 0:03:16.919 --> 0:03:19.480 going to see huge restrictions like we saw back in 0:03:20.680 --> 0:03:23.760 UM in that are needed to control a macron UM. 0:03:23.880 --> 0:03:27.480 We're gonna see probably still low real rates UM, but 0:03:27.560 --> 0:03:29.320 I think the main thing is that we still have 0:03:29.360 --> 0:03:32.520 massive household savings out there. So even though prices are 0:03:32.639 --> 0:03:36.600 rising and it's probably going to hamper some buying decisions, 0:03:36.640 --> 0:03:39.000 I think households in general can still handle it. So 0:03:39.040 --> 0:03:41.720 we still see, you know, UM a boost from that. 0:03:42.200 --> 0:03:44.120 And of course this is all assuming that the supply 0:03:44.280 --> 0:03:47.040 chain disruptions will ease up around the middle of the year. 0:03:47.840 --> 0:03:51.240 So we're focused a lot obviously on the fence accelerated taper, 0:03:51.360 --> 0:03:54.040 when liftoff, maybe what the hiking cycle is going to 0:03:54.080 --> 0:03:56.360 look like, When do we start having a more serious 0:03:56.400 --> 0:04:01.080 conversation about QT and rolling off that balance sheet we 0:04:01.160 --> 0:04:03.520 are probably looking at sometimes it'll be will probably be 0:04:03.800 --> 0:04:07.680 sometime this not this year, but two UM, I think 0:04:07.840 --> 0:04:09.120 what you want to do is probably just get the 0:04:09.960 --> 0:04:13.320 hikes out of the way and get everyone more comfortable 0:04:13.400 --> 0:04:15.520 with with with raising rates, and at some point they're 0:04:15.520 --> 0:04:18.200 going to have to start bringing down that that balance sheet, 0:04:18.240 --> 0:04:20.680 which the last check was like four over four or 0:04:20.680 --> 0:04:23.440 four trillion dollars, which is way way too big. So 0:04:23.480 --> 0:04:25.440 I see at some point we're probably gonna start seeing 0:04:25.640 --> 0:04:28.839 a runoff beginning probably, but I'm gonna say by the 0:04:28.920 --> 0:04:32.280 end of ye if I want to talk about the 0:04:32.360 --> 0:04:35.640 labor market, Kaylee and I were in your office today, 0:04:35.680 --> 0:04:37.440 but we're one of the few here are on a 0:04:37.480 --> 0:04:42.960 Friday lonely the four to five million folks out there 0:04:43.000 --> 0:04:45.599 that aren't in the labor force. Do I need to 0:04:45.600 --> 0:04:48.440 worry about them? Or they just kind of out of 0:04:48.440 --> 0:04:51.720 the labor force for a variety of reasons. It's a 0:04:51.800 --> 0:04:54.240 variety of reasons. And this is the one part that 0:04:54.240 --> 0:04:57.520 that does make me feel very uncomfortable. And this is 0:04:57.520 --> 0:05:00.760 where the whole virus kicks in again. It's all, it's all, 0:05:00.880 --> 0:05:03.560 it's almost like a big chain reaction. You know. If 0:05:03.600 --> 0:05:05.640 we can get this virus and new control, and if 0:05:05.640 --> 0:05:09.719 everybody gets comfortable with getting the vaccines um and getting 0:05:09.720 --> 0:05:12.600 back to work, you know, then I think I am 0:05:12.800 --> 0:05:16.440 That's why I'm optimistic for you know, for for two. 0:05:16.520 --> 0:05:19.240 But if people are still afraid to return back to 0:05:19.240 --> 0:05:22.080 work just for fear of contracting the virus, if schools 0:05:22.279 --> 0:05:24.560 return to online learning, and even if it's just for 0:05:24.600 --> 0:05:27.279 a few weeks, you know, that's very disruptive, and that 0:05:27.320 --> 0:05:30.440 means that labor shortages are going to continue. Um. And 0:05:30.480 --> 0:05:32.719 that you know, of course, means not enough hands on 0:05:32.839 --> 0:05:35.720 deck to to build the car, to create the car, 0:05:35.839 --> 0:05:38.880 to program everything. UM. So that means all these shortages 0:05:38.920 --> 0:05:41.039 are going to continue, and that means prices are going 0:05:41.080 --> 0:05:44.320 to rise. UM. Wages are gonna heat up further, and 0:05:44.320 --> 0:05:46.159 that's going to give this the green light to keep 0:05:46.560 --> 0:05:48.640 to keep tightening that. So that's what I'm afraid of, 0:05:48.800 --> 0:05:50.800 is just that people are just still afraid to come 0:05:50.800 --> 0:05:53.440 back to work. All right, Jennifer, thank you so much 0:05:53.600 --> 0:05:57.040 for joining us. Really appreciate that. Jennifer Lee, Senior economists 0:05:57.040 --> 0:06:04.440 and managing director at Demo Capital Markets. Let's turn to 0:06:04.520 --> 0:06:06.800 housing here. This has just been an amazing part of 0:06:06.800 --> 0:06:09.640 the economy to me, at least all throughout the pandemic, 0:06:09.680 --> 0:06:13.800 this housing market has just really performed well. I took 0:06:13.800 --> 0:06:17.320 advantage of it as a seller. Matt Miller was probably 0:06:17.320 --> 0:06:19.240 on the other end of that trade as a recent 0:06:19.360 --> 0:06:22.279 buyer of real estate in the metro New York area. 0:06:22.360 --> 0:06:25.480 But it's just been a constant, constant, strong part of 0:06:25.520 --> 0:06:27.520 the economy. Let's get the latest and Brad Domains, a 0:06:27.600 --> 0:06:32.200 chief economist at Courtland Brad give us kind of is 0:06:32.200 --> 0:06:34.760 there more room to grow in what I consider to 0:06:34.800 --> 0:06:40.680 be a very strong real estate market? Yeah, definitely. You know, 0:06:40.680 --> 0:06:43.080 our estimate is still that the US is underbuilt by 0:06:43.080 --> 0:06:45.640 about a million housing units. We can look at the 0:06:45.680 --> 0:06:49.039 case Shiller index with annual home price appreciation. It does 0:06:49.080 --> 0:06:51.359 look like it's hit its peak, but it's not going 0:06:51.440 --> 0:06:53.680 to go to zero overnight. So I think we're still 0:06:53.680 --> 0:06:55.720 looking at a situation where home prices are going to 0:06:55.760 --> 0:06:58.200 be going up for certainly the next year and a 0:06:58.200 --> 0:07:01.400 half at least, So we can talk about the supply side, 0:07:01.440 --> 0:07:03.240 but on the demand side and for people wanting to 0:07:03.279 --> 0:07:06.240 buy homes, how would a FED starting to lift interest 0:07:06.320 --> 0:07:09.159 rates affect that as it relates to mortgage rates and 0:07:09.160 --> 0:07:13.320 and you know how much people can afford. Yeah, you 0:07:13.360 --> 0:07:15.800 know what's been behaving. Interest rates have been behaving very 0:07:15.840 --> 0:07:18.280 interestingly over the last couple of years. We can look 0:07:18.280 --> 0:07:20.200 at the tenure treasury rate, which has been negative and 0:07:20.240 --> 0:07:22.360 real terms for about a year and a half two 0:07:22.400 --> 0:07:26.440 years now, and it's actually been unresponsive to these taper 0:07:26.520 --> 0:07:28.760 related to announcements. Uh, you know, the tenure right now, 0:07:28.800 --> 0:07:33.280 I'm looking out on my screens at precedent would have 0:07:33.280 --> 0:07:35.880 suggested that should go up. So right now it doesn't 0:07:35.880 --> 0:07:38.120 look like it's having any effect. But if these rate 0:07:38.160 --> 0:07:40.080 hikes do happen next year, and we're thinking there's going 0:07:40.120 --> 0:07:42.680 to be three now, we should see that translate into 0:07:42.720 --> 0:07:45.160 higher long term rates or we'll have to see the 0:07:45.200 --> 0:07:48.280 Fed reverse course and begin to cut rates relatively quickly, 0:07:48.320 --> 0:07:50.960 because three rate hikes implies at the high end of 0:07:51.000 --> 0:07:54.320 the FED funds rate would be in a ground and 0:07:54.360 --> 0:07:57.200 that's not a lot of spread to one point four percent, 0:07:57.280 --> 0:07:59.400 which is where the tenure is right now. That does 0:07:59.560 --> 0:08:02.800 that's not menstorate with a steep old curve associated with 0:08:02.800 --> 0:08:07.160 a continued expansion. Bready talked about the US being under 0:08:07.200 --> 0:08:10.200 built by you know, at least a million households. What 0:08:10.360 --> 0:08:14.520 I've heard in the past is where the real shortages 0:08:14.760 --> 0:08:17.080 is in the lower end of the market, the entry 0:08:17.200 --> 0:08:20.000 level house. There's lots of mcmansion's being built all over 0:08:20.040 --> 0:08:22.640 the country, but not a lot for the first time buyer. 0:08:23.280 --> 0:08:26.800 Is that changing here? Well, you know, builders are always 0:08:26.800 --> 0:08:29.160 having to build, you know, on on the margin, right, 0:08:29.240 --> 0:08:33.360 so it's very difficult to deliver housing product that's at 0:08:33.360 --> 0:08:35.640 the bottom of the market without some kind of subsidies. 0:08:35.679 --> 0:08:38.160 But when I look at what's happening and starts, um, 0:08:38.200 --> 0:08:43.120 I see a continued reversion to the pre pandemic longer 0:08:43.240 --> 0:08:45.040 term trend. If you were to draw a straight line 0:08:45.040 --> 0:08:47.480 on a lot of these metrics from the Great Recession 0:08:47.679 --> 0:08:49.559 to where we are today, over the last couple of years, 0:08:49.559 --> 0:08:51.160 we had, you know, maybe a big pullback and then 0:08:51.160 --> 0:08:53.840 a big rebound, and things are kind of right sizing. Uh. 0:08:54.160 --> 0:08:57.080 When I look at the the over or undersupply of 0:08:57.080 --> 0:08:59.079 housing in the country, and again we obviously estimate that 0:08:59.120 --> 0:09:01.560 it's underbuilt right now, it does look like the worst 0:09:01.559 --> 0:09:03.920 of that was a couple of years ago. And so 0:09:03.960 --> 0:09:06.200 in a sense, we're building more housing than we need 0:09:06.640 --> 0:09:08.240 right now, but we've got a lot we have to 0:09:08.280 --> 0:09:10.040 catch up with. It's almost like what the set has 0:09:10.080 --> 0:09:12.400 argued with inflation, right that it was so low for 0:09:12.440 --> 0:09:15.719 so long. We need to catch up. Brad, let's talk 0:09:15.720 --> 0:09:18.480 about people getting if they, you know, are being priced 0:09:18.480 --> 0:09:20.880 out of buying a home. I'm not talking about myself here, 0:09:20.920 --> 0:09:22.360 but I don't think I'd be in a position to 0:09:22.360 --> 0:09:24.200 buy a house right now. But at the same time, 0:09:24.240 --> 0:09:26.280 I'm looking at rents in New York City that are 0:09:26.440 --> 0:09:32.559 going really really astronomically higher, at least compared tod levels. 0:09:32.559 --> 0:09:34.800 What are you seeing more broadly in terms of rents 0:09:34.800 --> 0:09:36.880 and people who may not be able to buy and 0:09:36.920 --> 0:09:42.000 are looking to rent, but those are also much more expensive. Yeah, 0:09:42.000 --> 0:09:43.840 I mean, there's no question that the rental market has 0:09:43.880 --> 0:09:46.160 performed very well over the last year and a half. 0:09:46.760 --> 0:09:48.719 We're clocking rents and when I say we, I mean 0:09:48.720 --> 0:09:52.280 our market data, not Courtland specifically, but probably about fifteen 0:09:52.320 --> 0:09:54.199 and a half percent year over year across the sub 0:09:54.280 --> 0:09:57.240 markets we track for, and we think that's going to 0:09:57.320 --> 0:09:59.439 go to about six and a half percent next year, 0:09:59.679 --> 0:10:01.760 So that some big slowdown in annual rent growth, but 0:10:01.800 --> 0:10:05.080 it's still very large historical standards. So yes, if we 0:10:05.120 --> 0:10:08.000 are in a situation where, say that mortgage races truly 0:10:08.040 --> 0:10:09.880 do go up with the rate hikes, we'll see that 0:10:09.960 --> 0:10:13.480 much more demand channeled to the rental space. Hey, Brad, 0:10:13.480 --> 0:10:16.199 thanks so much for joining us. Really appreciate getting the 0:10:16.280 --> 0:10:18.319 update on real estate. And again, real estate has been 0:10:18.320 --> 0:10:22.560 one of those asset classes that's performed consistently well throughout 0:10:22.600 --> 0:10:25.319 this pandemic and the economic disruption Brad Dillman's the chief 0:10:25.360 --> 0:10:29.080 economist at Courtland. And my question, you know, on the 0:10:29.120 --> 0:10:31.120 back of your question at Kaylie in New York City 0:10:31.160 --> 0:10:34.200 at least, what are these people doing. They're not they're 0:10:34.200 --> 0:10:36.560 coming back into the city of the renting compartments, but 0:10:36.559 --> 0:10:38.280 they're not going to work. I mean, they're not coming 0:10:38.320 --> 0:10:40.600 into the office. Yeah. Well, and I wonder too if 0:10:40.640 --> 0:10:43.000 people are looking for you know, bigger places where there's 0:10:43.000 --> 0:10:44.959 a room to have a desk for work from home 0:10:45.040 --> 0:10:47.520 and uh. And it's been interesting to see to the 0:10:47.559 --> 0:10:51.199 division between luxury housing and luxury rentals here in the 0:10:51.280 --> 0:10:53.760 US versus you know, standard buildings that don't have a doorman. 0:10:53.800 --> 0:10:56.400 There's a big divide there. Yeah. Interesting. I just you know, 0:10:56.400 --> 0:11:00.000 I find it fascinating. Um, just wondering what people are 0:11:00.040 --> 0:11:02.320 are they coming back into the city if they're not 0:11:02.320 --> 0:11:04.400 going back into the office. I just don't understand that. 0:11:04.440 --> 0:11:06.959 But the restaurants are full, so I guess that's good 0:11:06.960 --> 0:11:11.520 news there. Got w T I crude a little bit 0:11:11.559 --> 0:11:15.040 lower today at seventy one cents a barrel. You know 0:11:15.120 --> 0:11:19.400 that supply demand situation out there driving this commodity. What's 0:11:19.440 --> 0:11:22.680 winning the day? Regina Mayor principal Global sector head of 0:11:22.800 --> 0:11:26.120 Energy at KPMG joins us So Regina is we look 0:11:26.120 --> 0:11:31.320 out the two boy, I'm seeing widely divergent calls on 0:11:31.600 --> 0:11:33.720 crude oil, anything from a hundred and hundred twenty dollars 0:11:33.760 --> 0:11:37.800 a barrel to forty barrel. How do you view the 0:11:37.920 --> 0:11:41.760 energy markets looking out to next year? We view them 0:11:41.760 --> 0:11:45.160 as being extremely volatible, and I think that volatility will 0:11:45.160 --> 0:11:48.760 continue to be what drives the overall sentiment, and that 0:11:48.840 --> 0:11:52.200 shows in those ranges, Paul that you just discussed. On 0:11:52.240 --> 0:11:56.319 the one hand, we know supplies constrained. We're at seasonal 0:11:56.360 --> 0:11:59.320 lows that are seven that we haven't seen an over 0:11:59.400 --> 0:12:02.520 seven years. But at the same and we had increasing demand. 0:12:02.640 --> 0:12:05.080 Now we have a macron and concerns about COVID and 0:12:05.120 --> 0:12:08.360 what the pandemic has in store for the world. We're 0:12:08.400 --> 0:12:11.320 having lockdowns and shutdowns. So while we thought demand was 0:12:11.360 --> 0:12:14.440 going to increase, the i e A has just issued 0:12:14.480 --> 0:12:18.880 a report that lowers their two thousand one average global 0:12:18.880 --> 0:12:21.599 demand by three thousand barrels per day. So with a 0:12:21.760 --> 0:12:26.000 very uncertain demand and constrained supply, that leads to these 0:12:26.120 --> 0:12:28.959 ranges and the market impacts. Because w t I is 0:12:29.000 --> 0:12:31.600 down fifteen dollars from its high just a month or 0:12:31.600 --> 0:12:35.240 so ago. How much of this what happens in the 0:12:35.280 --> 0:12:38.160 oil market is going to be predicated on whatever OPEC 0:12:38.200 --> 0:12:41.200 plus decides to do, whether they decided to continue with 0:12:41.240 --> 0:12:45.400 production cut production hikes to hold until you know there's 0:12:45.400 --> 0:12:47.360 more certainty around the variant. I mean, do they really 0:12:47.400 --> 0:12:51.320 hold all the cards here? Not really anymore, Kaylee. I 0:12:51.320 --> 0:12:55.040 I see their influence waning because they are largely at 0:12:55.040 --> 0:12:57.280 a point where a lot of their supply is in 0:12:57.320 --> 0:13:00.720 the market already, and while there is has a little 0:13:00.720 --> 0:13:03.000 bit of intremental supply that they can continue to put 0:13:03.040 --> 0:13:05.640 into the market, the word on the street is that 0:13:05.679 --> 0:13:08.959 their supply is constrained as well. So regardless of what 0:13:09.000 --> 0:13:11.960 they decide to do, I think there's a physical reality 0:13:12.000 --> 0:13:14.960 of how much they can really produce, and that's what's 0:13:15.000 --> 0:13:18.640 driving the sentiment today. Gina, Let's talk about the shale uh, 0:13:18.840 --> 0:13:21.840 folks in Texas and Houston. It just seems like in 0:13:21.840 --> 0:13:25.240 the past, whenever you know, oil kind of moved higher, 0:13:25.600 --> 0:13:28.360 our good friends in Texas and Oklahoma would start drilling holes. 0:13:28.400 --> 0:13:30.880 But I'm told this time is different, that they're gonna 0:13:30.880 --> 0:13:34.000 have some discipline how do you view it? That is 0:13:34.120 --> 0:13:37.679 the word on the street, Paul, discipline, and you know Houston. 0:13:37.760 --> 0:13:39.880 I'm here in Houston and the Permian is practically in 0:13:39.920 --> 0:13:44.520 my backyard. The public is focused on the public companies 0:13:44.559 --> 0:13:48.360 and the CEOs are focused on free cash flow and returns, 0:13:48.400 --> 0:13:51.680 and they are committed to retaining those promises that they've 0:13:51.679 --> 0:13:54.319 made to the market. So there's no willie nilly, we're 0:13:54.360 --> 0:13:56.880 all rushing out to go drill some more wells. We 0:13:56.960 --> 0:13:59.480 do see recounts up. I think they're up seven over 0:13:59.480 --> 0:14:02.360 the last week. They're seventy up year over year, but 0:14:02.400 --> 0:14:07.000 they're still down against the pre pandemic level. And let's 0:14:07.240 --> 0:14:09.800 let's be clear, even if you do drill a hole today, 0:14:09.800 --> 0:14:12.360 it doesn't mean that oil is there tomorrow. It still 0:14:12.440 --> 0:14:15.680 takes time for these assets to develop and then be produced, 0:14:16.120 --> 0:14:19.240 So we're not going to see shale running to the rescue. 0:14:19.680 --> 0:14:22.520 I do think we'll see incremental improvement, but it's not 0:14:22.520 --> 0:14:25.080 going to be anything to fill the potential gap if 0:14:25.120 --> 0:14:28.720 the man resurges post omicron. Well, let's talk about gaps 0:14:28.720 --> 0:14:32.000 in demand and look at Europe and the energy shortage 0:14:32.040 --> 0:14:34.520 there and how volatile natural gas prices have been. I 0:14:34.520 --> 0:14:37.320 mean today it was price is actually coming in because 0:14:37.360 --> 0:14:40.120 Russia said, hey, we got you. What do How long 0:14:40.120 --> 0:14:42.320 do you think that that kind of volatility will persist. 0:14:43.360 --> 0:14:45.280 I think it's a volatility we'll see for the next 0:14:45.320 --> 0:14:48.160 two to five years at least, because we're racing into 0:14:48.200 --> 0:14:52.840 the energy transition and we don't have the supply and 0:14:52.880 --> 0:14:55.720 demand balance that we need to have. So the in 0:14:55.760 --> 0:14:57.920 Houston we're talking a lot about chaos and that the 0:14:57.960 --> 0:15:01.320 fact that the chaos will intensify as we try to transition. 0:15:01.480 --> 0:15:03.840 What we need to focus on is energy security and 0:15:04.000 --> 0:15:07.240 energy affordability. I think right now the UK is burning 0:15:07.240 --> 0:15:09.720 more natural gas and cold because the wind isn't blowing, 0:15:09.920 --> 0:15:13.560 and we don't have the storage and capability of using 0:15:13.600 --> 0:15:17.000 the renewables for a much larger percentage because we need 0:15:17.000 --> 0:15:20.320 that sustainability of energy supply. So I think it's going 0:15:20.360 --> 0:15:23.360 to stay pretty chaotic for at least the near term future. 0:15:24.040 --> 0:15:26.320 And Regina, thanks so much for joining us. We really 0:15:26.360 --> 0:15:29.440 appreciate chatting with you, getting the latest on the global 0:15:29.840 --> 0:15:34.320 energy story. Supply demand, Um, you know that's kind of 0:15:34.760 --> 0:15:37.520 the key issues that you know, investors are really trying 0:15:37.560 --> 0:15:40.040 to get their handles on here Regina Mayor, Principal Global 0:15:40.080 --> 0:15:49.640 Sector head of Energy for kp MG. Let's continue our 0:15:49.800 --> 0:15:53.800 discussion of cyber security. It is a huge issue for 0:15:53.920 --> 0:15:58.360 corporate American corporations around the globe. UH Dana Simberkoff is 0:15:58.400 --> 0:16:01.920 the Chief Risk Privacy see an information security officer for 0:16:02.080 --> 0:16:04.800 app Point. At Point is a publicly traded company on 0:16:04.920 --> 0:16:08.360 Nastack symbol a vp T. It's got about a one 0:16:08.400 --> 0:16:11.480 point two billion dollar market cap. Dana, thanks so much 0:16:11.520 --> 0:16:14.080 for joining us here. I'd love to get your thoughts 0:16:14.160 --> 0:16:16.960 as to what are some of the key issues that 0:16:17.040 --> 0:16:20.920 you're hearing from your clients as they think about cybersecurity 0:16:21.000 --> 0:16:24.320 in this day and age. Sure, well, thanks for having 0:16:24.400 --> 0:16:27.520 me today. Um, there are certainly a lot of things 0:16:27.600 --> 0:16:30.000 for our clients to think about as app Point does 0:16:30.040 --> 0:16:33.760 as well, and key in that list is supply chain 0:16:33.800 --> 0:16:38.760 management and vendor management. I think and are increasingly interconnected world. 0:16:39.480 --> 0:16:43.680 Companies like app Point provide services to many of our 0:16:43.680 --> 0:16:47.880 customers to help them mitigate risks of their suppliers, to 0:16:48.080 --> 0:16:51.640 add on layers of protection to help ensure that they're 0:16:51.680 --> 0:16:54.760 making information available to people who need it and protecting 0:16:54.800 --> 0:16:58.320 it from people who should not. And is there a 0:16:58.360 --> 0:17:02.400 sense that companies are making adequate investment in those kind 0:17:02.440 --> 0:17:05.159 of productions. I was talking to the Deputy National Security 0:17:05.160 --> 0:17:08.439 Advisor in New Burger yesterday. He focuses on cyber and 0:17:08.520 --> 0:17:10.840 she was really pushing that the private sector needs to 0:17:10.880 --> 0:17:14.200 do more to kind of shore up their defenses. Does 0:17:14.240 --> 0:17:18.960 more investment need to be made? Absolutely, UM ad point, 0:17:19.119 --> 0:17:24.160 as a cloud provider to millions of customers around the world, 0:17:24.160 --> 0:17:26.600 has been working in a space for about twenty years, 0:17:26.640 --> 0:17:31.040 and particularly with the shift UM that covid has brought 0:17:31.119 --> 0:17:37.240 to companies increasingly relying on the cloud for workers that 0:17:37.320 --> 0:17:41.160 are either working from home or working in a hybrid environment. 0:17:41.160 --> 0:17:43.760 Now as people begin to come back to work, that 0:17:43.880 --> 0:17:48.080 dependency on suppliers and vendors instead of on your own 0:17:48.680 --> 0:17:52.240 um I T operations is really making it critical to 0:17:52.320 --> 0:17:55.439 invest in UM what I call trust and verify. So 0:17:55.480 --> 0:17:58.240 you obviously need to pick providers that you trust, but 0:17:58.280 --> 0:18:03.520 then verify with those third party controls that UM you're 0:18:03.600 --> 0:18:06.520 getting what you expect from those providers as well and 0:18:06.600 --> 0:18:09.679 supplementing any of the as a box security controls that 0:18:09.760 --> 0:18:13.159 they provide as part of their services to you. So 0:18:13.440 --> 0:18:16.240 data I understand that the Biden administration is looking to 0:18:16.320 --> 0:18:19.720 tighten restrictions on data security and collection with the Build 0:18:19.720 --> 0:18:22.280 Back Better Plan. What are you looking for to come 0:18:22.320 --> 0:18:26.720 out of that piece of legislation. Well, that's a really 0:18:26.760 --> 0:18:30.480 important piece of legislation and it's something that's been sort 0:18:30.520 --> 0:18:33.959 of in in discussions for some time. It's really looking 0:18:34.000 --> 0:18:39.560 at UM ensuring that companies are adequately protesting UH investing 0:18:39.640 --> 0:18:45.280 in controls that will allow for adequate protection of consumer 0:18:45.320 --> 0:18:48.720 privacy and sensitive data. And I think all of us 0:18:49.040 --> 0:18:55.000 UM are aware that the the increase in attacks and 0:18:55.200 --> 0:18:59.960 in UM identity theft and in hacking on both our 0:19:00.080 --> 0:19:02.879 sort of personal attacks as well as B two B 0:19:02.960 --> 0:19:05.439 attacks has really been on the rise and at the 0:19:05.480 --> 0:19:08.840 forefront of people's minds, something that's in the news almost 0:19:08.840 --> 0:19:14.320 every day. So UM, what the what a privacy law 0:19:14.480 --> 0:19:18.000 for the US would mean is it would mean regulatory 0:19:18.080 --> 0:19:21.440 certainty for companies and so I think companies like app 0:19:21.520 --> 0:19:26.920 points and our industry peers are really looking for clear 0:19:27.000 --> 0:19:30.359 guidelines on which to build and that allows us to 0:19:30.440 --> 0:19:36.440 build UH a network of trusted UH systems for consumers, 0:19:36.480 --> 0:19:39.359 for our business partners where everybody is rolling in the 0:19:39.400 --> 0:19:42.400 same direction. Currently in the US we have a very uh, 0:19:42.520 --> 0:19:46.240 federated privacy landscape where states have their own privacy laws, 0:19:46.400 --> 0:19:50.280 industries have their own privacy laws, and a common framework 0:19:50.400 --> 0:19:53.280 like the EU GDPR in the US is something that 0:19:53.320 --> 0:19:57.000 I think would be very beneficial in helping all industries 0:19:57.119 --> 0:20:00.200 to consolidate on a common approach. So it made ring 0:20:00.240 --> 0:20:02.080 more clarity. But what kind of impact would that have 0:20:02.160 --> 0:20:06.240 on the global supply chain? Well, I think, um, you know, 0:20:06.280 --> 0:20:08.680 it may impact the supply chain, but frankly I think 0:20:08.720 --> 0:20:13.520 in in positive ways, UM for the most part, Because uh, 0:20:13.600 --> 0:20:16.480 the US is a country because we don't have that 0:20:16.600 --> 0:20:20.200 common privacy framework like Europe does, or even like many 0:20:20.240 --> 0:20:24.000 of our counterparts around the world do. UM, that causes 0:20:24.000 --> 0:20:26.720 friction in moving data around the world, which is really 0:20:26.920 --> 0:20:29.320 critical to the supply chain. I think if we were 0:20:29.480 --> 0:20:35.320 to um build toward that model of globalization and standards 0:20:35.359 --> 0:20:39.440 based privacy and security controls, that would actually ease friction 0:20:39.800 --> 0:20:44.080 in the supply chain. So is this it just feels 0:20:44.119 --> 0:20:47.520 like this is a public private partnership kind of thing. 0:20:47.520 --> 0:20:50.359 I mean, you know, the the governments, they're doing what 0:20:50.480 --> 0:20:53.920 it can for the backbone, the internet backbone and infrastructure, 0:20:53.920 --> 0:20:57.240 but it's also really up to the companies to step 0:20:57.320 --> 0:20:58.800 up their game. Is Is that the best way to 0:20:58.800 --> 0:21:03.920 think about just cypers security in general. Oh? Absolutely absolutely, 0:21:03.960 --> 0:21:06.000 And again you know, from an a point in perspective, 0:21:06.080 --> 0:21:08.239 we've been doing this for over twenty years as a 0:21:08.240 --> 0:21:13.440 provider of cloud UM data protection for Microsoft and for Google, 0:21:13.560 --> 0:21:19.080 and for Salesforce and for business UM. Business users of 0:21:19.119 --> 0:21:24.280 these technologies, they need to know that, uh, they have 0:21:24.920 --> 0:21:28.520