WEBVTT - Trump Talks US-China Trade, Crypto Billions Vanish 0:00:02.520 --> 0:00:13.520 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive 0:00:13.560 --> 0:00:17.360 from coast to coast with Carolline Hide in New York 0:00:17.640 --> 0:00:20.759 and EVA though in San Francisco. 0:00:21.880 --> 0:00:23.319 This is Bloomberg Tech coming up. 0:00:23.360 --> 0:00:25.760 President Trump says they're threatened one hundred and forty five 0:00:25.760 --> 0:00:29.040 percent taris with China are not viable. Will this soothes 0:00:29.120 --> 0:00:33.640 trade relations between the two world's biggest economies. Plus billions 0:00:33.680 --> 0:00:36.680 of dollars in crypto market value banished as old cooin's plunged. 0:00:36.720 --> 0:00:38.680 We'll dive deeper into some of the riskier parts of 0:00:38.720 --> 0:00:42.720 the tech markets, and Apple plans a revamped MacBook Pro 0:00:42.960 --> 0:00:46.080 with a touch display in late twenty twenty six or early. 0:00:45.880 --> 0:00:48.520 Twenty twenty seven. But first we check in on these 0:00:48.520 --> 0:00:49.479 markets then. 0:00:49.320 --> 0:00:51.559 Have been whipsawed this week, and we shine like what's 0:00:51.560 --> 0:00:54.000 happened with the NaSTA one hundred that throughout some of 0:00:54.000 --> 0:00:57.480 those trade tensions. Despite the anxiety around credit in the 0:00:57.480 --> 0:01:00.400 banking sector, we remain higher at one point six percent. 0:01:00.440 --> 0:01:02.640 We really have earnings on top for some of the 0:01:02.680 --> 0:01:06.679 key players take TSMC, take ASML. But let's return now, 0:01:06.720 --> 0:01:08.120 of course, to what's been happening in the world of 0:01:08.160 --> 0:01:10.560 crypto as well, we have seen some pressure on that 0:01:10.600 --> 0:01:13.240 particular part of the market, the riskier edges, look at 0:01:13.240 --> 0:01:14.720 some of the contum stocks, look at some of the 0:01:14.720 --> 0:01:17.320 more risky leverage ETFs more of fine more than eight 0:01:17.319 --> 0:01:20.120 percent when it comes to bitcoin. So has not managed 0:01:20.160 --> 0:01:22.800 to revive from that tummult that we experienced over the 0:01:22.800 --> 0:01:25.360 course of the weekend and leverage getting flushed out returned 0:01:25.400 --> 0:01:26.920 to all of these parts of the market. But so 0:01:27.000 --> 0:01:30.560 as we talk the macro context here, because President Trump 0:01:30.680 --> 0:01:34.880 says indeed that the threatened high tariffs with China are 0:01:34.920 --> 0:01:38.000 not viable, as tensions between the world's two largest economies 0:01:38.120 --> 0:01:40.840 intensify ahead of an expected face to face meeting with 0:01:40.959 --> 0:01:44.240 Chinese counterpart Shaging Ping. Here's what he said on Fox Business. 0:01:45.720 --> 0:01:51.120 It's not sustainable, but that's what the number is. It's 0:01:51.160 --> 0:01:56.360 probably naty and I could stand, but they forced me 0:01:56.480 --> 0:01:56.840 to do that. 0:01:57.440 --> 0:01:58.200 I think we're going. 0:01:58.120 --> 0:02:00.360 To be fine with China, but we have to have 0:02:00.400 --> 0:02:01.800 a fair deal. It's got to be fair. 0:02:03.240 --> 0:02:06.400 It's southing markets also long term impact. Bloom Vaccina Tech 0:02:06.520 --> 0:02:08.560 editor Mike Sheppard joins us now. 0:02:08.600 --> 0:02:09.440 To break it down. 0:02:09.600 --> 0:02:12.680 Look, we'd worried that that meeting between she and Trump 0:02:12.760 --> 0:02:16.240 wouldn't be on It looks as though, tantalizingly, it might be. 0:02:17.880 --> 0:02:18.120 Yes. 0:02:18.200 --> 0:02:21.920 He is indicating Caro that this meeting will take place. 0:02:22.080 --> 0:02:25.360 Of course, we still don't have the details on when 0:02:25.480 --> 0:02:28.359 or exactly where, although it is expected to take place 0:02:28.440 --> 0:02:31.400 during the APEX summit that both leaders are scheduled to 0:02:31.480 --> 0:02:33.920 attend at the end of the month, which is really 0:02:33.960 --> 0:02:36.280 about ten or twelve days away, so they don't have 0:02:36.280 --> 0:02:38.440 a lot of time to lock that in and then 0:02:38.560 --> 0:02:41.240 also do some of the key legwork ahead of time, 0:02:41.440 --> 0:02:44.200 and that's grown only more complex with all of the 0:02:44.320 --> 0:02:47.680 back and forth over some really sticky trade issues that 0:02:47.720 --> 0:02:51.079 we've seen more recently, and this all was thrown into 0:02:51.200 --> 0:02:54.680 doubt by last week's move by China to impose curbs 0:02:54.720 --> 0:02:58.120 on exports of rare earth elements, which are critical across 0:02:58.160 --> 0:03:01.840 the economy and everything from autos to consumer electronics to 0:03:01.960 --> 0:03:05.360 defense equipment, and that was something that really set off 0:03:05.520 --> 0:03:10.160 US officials. We saw Treasury Secretary Scott Besson's really visceral 0:03:10.240 --> 0:03:13.680 reaction earlier this week, and the US has since moved 0:03:13.680 --> 0:03:18.880 to rally allies against China's move, recognizing that this would 0:03:18.919 --> 0:03:22.280 have global implications and that it would affect far more 0:03:22.320 --> 0:03:24.880 than just the US economy. So it'll be interesting to 0:03:24.919 --> 0:03:28.480 see how this all plays out in those lower level negotiations. 0:03:28.680 --> 0:03:31.000 But for now, the President is saying the quiet part 0:03:31.000 --> 0:03:34.280 out loud, acknowledging Caro that there will be some severe 0:03:34.320 --> 0:03:37.880 economic follow if those very high tariffs actually take effect. 0:03:38.000 --> 0:03:40.240 I'm looking at certain tech names that are exposed to 0:03:40.320 --> 0:03:42.880 China and they have been rallying, whether or not it's 0:03:42.920 --> 0:03:44.800 just a risk one attitude into the weekend, or whether 0:03:44.840 --> 0:03:46.880 it is on the back of these comments. But what 0:03:46.920 --> 0:03:49.120 are you watching for in the tech sector more broadly 0:03:49.160 --> 0:03:53.800 mic as to how they weather this ongoing instability uncertainty. 0:03:55.040 --> 0:03:57.640 Well, part of the question really is going to be 0:03:57.920 --> 0:04:01.280 the degree of investment that will flow to China and 0:04:01.320 --> 0:04:04.440 whether there is any sort of chill elsewhere as well. 0:04:04.480 --> 0:04:06.560 As a result, one of the key questions in the 0:04:06.640 --> 0:04:10.840 US China relationship has been not only the Chinese export 0:04:10.880 --> 0:04:14.480 curves on rare earths, but the US export restrictions on 0:04:14.560 --> 0:04:18.080 events technology. That includes the AI chips from Nvidia and 0:04:18.160 --> 0:04:20.520 AMD that you and I've talked about so much in 0:04:20.560 --> 0:04:25.000 this space, but also the semiconductor manufacturing equipment from the 0:04:25.160 --> 0:04:28.480 likes of ASML and Tokyo Electron that is so critical 0:04:28.560 --> 0:04:31.440 to making those chips that are powering the AI revolution. 0:04:32.040 --> 0:04:35.200 That gear has been restricted by US measures over the 0:04:35.240 --> 0:04:37.679 past couple of years, and one of the reasons Beijing 0:04:37.760 --> 0:04:40.719 is trying to use this leverage right now at this 0:04:40.920 --> 0:04:44.360 moment on rare earths, a market and a sector that 0:04:44.480 --> 0:04:48.160 it really dominates. It has this control over that supply chain. 0:04:48.480 --> 0:04:50.719 It wants the US to relent a little bit in 0:04:50.800 --> 0:04:53.800 this area so that it can gain back some access 0:04:53.839 --> 0:04:57.320 to those critical materials itself, the AI chips and the 0:04:57.360 --> 0:05:01.240 semiconductor equipment, manufacturing equipment needed to make them. 0:05:01.920 --> 0:05:04.880 Cto Palenter telling us that exact thing this time last 0:05:04.880 --> 0:05:07.880 week on our Defense Tech special Mike Shephard, It's great 0:05:07.880 --> 0:05:09.360 to have you on the show. Thanks for the context. 0:05:09.480 --> 0:05:11.760 Let's go out to Mike Dixon now for the market 0:05:11.800 --> 0:05:14.760 impact of US Chine and trade tensions. Here's the head 0:05:14.800 --> 0:05:17.599 of Research and Qunitive Strategies over Horizon Investments. You've got 0:05:17.640 --> 0:05:19.880 ten billion dollars in assets under management, all told, Mike, 0:05:20.200 --> 0:05:23.680 and I'm interested as to how you weather the ongoing 0:05:23.720 --> 0:05:25.880 headline risk that we see about US and China. 0:05:27.680 --> 0:05:30.440 Well, it's certainly there and we have seen that, you know, 0:05:30.480 --> 0:05:33.239 impact certain areas of the market, you know, but overall, 0:05:33.279 --> 0:05:35.480 as we're heading into you know, the bulk of the 0:05:35.720 --> 0:05:37.920 tech earning season here in just a couple of weeks, 0:05:38.080 --> 0:05:39.480 you know, I think it's helpful just to kind of 0:05:39.560 --> 0:05:42.160 zoom out a little bit and see where the fundamentals are. 0:05:42.400 --> 0:05:44.200 And we've got to early read on that this week, 0:05:44.200 --> 0:05:47.600 of course, with ASML and TSM showing there's very strong demand, 0:05:48.400 --> 0:05:52.120 you know, Oracles Investor Day as well, supported as much, 0:05:52.600 --> 0:05:54.400 you know, and when we look at the returns thus 0:05:54.440 --> 0:05:55.919 far for the top of the market, I think one 0:05:55.920 --> 0:05:58.039 of the most interesting things to me is that we 0:05:58.080 --> 0:06:01.520 actually have not seen returns driven by valuations increasing this year. So, 0:06:01.920 --> 0:06:03.480 you know, as we head into earning season, I think 0:06:03.480 --> 0:06:06.520 it's a really good, really good point to remember and 0:06:06.600 --> 0:06:07.920 kind of zoom out for a little bit of the 0:06:07.960 --> 0:06:10.360 bigger picture and we'll see how this, you know, trying 0:06:10.400 --> 0:06:12.440 to kind of trade tention stuff works out. But the 0:06:12.480 --> 0:06:14.080 underwine fundamentals are very much strong. 0:06:14.240 --> 0:06:16.080 Okay, what have the returns been driven by? 0:06:16.080 --> 0:06:20.279 Then It's been driven by this you know, increased demand 0:06:20.800 --> 0:06:25.280 and you know, overall, just the expected expected earnings continuing 0:06:25.320 --> 0:06:28.159 to grow and clip clip along at very high rates, 0:06:28.560 --> 0:06:30.960 and you know we're seeing that through uh, you know, 0:06:31.000 --> 0:06:33.760 through the continued you know, AI demand, and I think 0:06:34.080 --> 0:06:37.520 strong fundamentals supporting the returns is a much better place 0:06:37.560 --> 0:06:40.920 to be than having that be driven by just the 0:06:41.000 --> 0:06:44.919 increase in investor optimism through evaluations going up. And I 0:06:44.960 --> 0:06:46.800 really do think it's a very strong place to be 0:06:46.960 --> 0:06:50.120 as we head into earning season to actually see valuations 0:06:50.160 --> 0:06:52.159 be at or below for a lot of these bigger names, 0:06:52.200 --> 0:06:54.000 and they really were even to come into the year, 0:06:54.360 --> 0:06:56.200 and I think investors really need to be aware of 0:06:56.200 --> 0:06:59.520 that that, you know, especially those that that are bearish on, 0:07:00.440 --> 0:07:03.240 you know, some of this continuation of the trend, because 0:07:03.240 --> 0:07:06.200 the fundamentals are very strong and it is supporting the 0:07:06.200 --> 0:07:07.200 price trends that we've seen. 0:07:07.839 --> 0:07:10.280 Okay, so it feels as though you're not thinking there 0:07:10.320 --> 0:07:12.560 is some sort of bubble, but that's in parts of 0:07:12.560 --> 0:07:16.440 the market which have seen the AI well optimism really 0:07:16.600 --> 0:07:19.560 like fire. We've seen it, particularly as you say TSMCSML. 0:07:19.680 --> 0:07:21.120 I just want to go back to some companies that 0:07:21.120 --> 0:07:23.320 they are rallying today that have exposure to China in particular, 0:07:23.360 --> 0:07:25.200 I'm looking at Tesla, I'm looking at Apple, I am 0:07:25.200 --> 0:07:27.880 looking at ASML, which managed to calm our anxieties that 0:07:28.120 --> 0:07:30.880 they can continue to see the mega trend continue even 0:07:30.920 --> 0:07:33.440 if China falls away in terms of demand. But what 0:07:33.520 --> 0:07:35.840 about those companies that have high exposure to China? Is 0:07:35.880 --> 0:07:37.800 that something that you need to be anxious about? 0:07:39.360 --> 0:07:42.040 Well, I think we need to go back to just 0:07:42.080 --> 0:07:44.160 what we've seen over the last six months with all 0:07:44.200 --> 0:07:47.520 of the tariff stuff. Of course, we're you know, you know, 0:07:47.760 --> 0:07:49.480 in this period where we're not exactly sure how this 0:07:49.600 --> 0:07:51.560 is going to work out. But when we look at 0:07:51.600 --> 0:07:53.640 the last six months, there has been a lot of 0:07:53.680 --> 0:07:56.560 fits and starts of teriff situation is going to be 0:07:56.680 --> 0:07:59.640 terrible and then we ultimately get a deal. And look, 0:07:59.680 --> 0:08:02.520 I think overall the market has become a little desensitized 0:08:02.520 --> 0:08:04.880 to a lot of this back and forth, you know, 0:08:04.920 --> 0:08:08.720 tariff situation. For one, think that you know, ultimately, and 0:08:08.760 --> 0:08:11.559 Trump alloted as much in his interview, I think wants 0:08:11.560 --> 0:08:14.360 to make a deal. Uh, And so I think that 0:08:14.360 --> 0:08:16.440 that that that should be kind of our our base 0:08:16.520 --> 0:08:20.480 case here and this headline volatility that we've seen, you know, 0:08:20.680 --> 0:08:24.320 is U is just necessary for you know that risk 0:08:24.360 --> 0:08:25.440 premium to be realized. 0:08:25.880 --> 0:08:30.000 Mike, going back therefore to the idea of valuations, Yes 0:08:30.000 --> 0:08:33.320 they're high, but it's because earnings have grown into them. 0:08:33.360 --> 0:08:36.000 Where are you seeing the earnings likely to catch fire 0:08:36.080 --> 0:08:39.400 in this set of earnings for the companies that you follow, 0:08:39.480 --> 0:08:41.600 because you are in all the major players when it 0:08:41.600 --> 0:08:42.400 comes to AI. 0:08:43.760 --> 0:08:44.400 Yeah, that's right. 0:08:44.480 --> 0:08:47.120 I mean when you look at just the top of 0:08:47.160 --> 0:08:49.480 the market, you know, Max seven obviously comes up a 0:08:49.520 --> 0:08:52.960 lot there. There's pretty big, uh, you know, divergence amongst 0:08:52.960 --> 0:08:55.640 that group this year, and so you know some of 0:08:55.679 --> 0:08:58.439 the names that have been laggers amongst that group, that 0:08:58.559 --> 0:09:02.760 the Teslas, the Apples, the Amazons, you know, I think 0:09:02.840 --> 0:09:07.040 where that sits as you know, what's attractive with the 0:09:07.040 --> 0:09:09.080 top of the market, I think that's probably still going 0:09:09.120 --> 0:09:10.760 to be the case that in the medium term those 0:09:10.800 --> 0:09:13.600 are probably still going to be the laggards and the winners, 0:09:13.600 --> 0:09:16.079 and that you know, AI group at the top of 0:09:16.080 --> 0:09:18.400 the market are still going to be the winners. And 0:09:18.440 --> 0:09:19.920 a lot of that I think has to do with 0:09:20.240 --> 0:09:22.160 you know, a lot of the smaller software and services 0:09:22.160 --> 0:09:24.440 type names have had a difficult time really kind of 0:09:24.480 --> 0:09:28.840 separating themselves and really showing unique value propositions for their products, 0:09:28.840 --> 0:09:31.120 and therefore the market is kind of defaulting to what 0:09:31.200 --> 0:09:34.400 they know, and that is those AI winners. So I think, 0:09:34.840 --> 0:09:36.760 you know, even amongst that top of the market in 0:09:36.800 --> 0:09:39.320 the Max seven names, the ones that have been doing well, 0:09:39.360 --> 0:09:41.040 I think are poised to continue to do well, and 0:09:41.080 --> 0:09:43.640 the laggards are, at least in the medium term, probably 0:09:43.679 --> 0:09:45.960 still going to be the laggards. 0:09:45.800 --> 0:09:48.360 Follow the trend might extent and horizon. We appreciate you 0:09:48.360 --> 0:09:49.120 have a good weekend. 0:09:49.880 --> 0:09:52.320 Now coming up will break down the latest F five 0:09:52.360 --> 0:09:55.360 cybersecurity hacks, how it's affecting the Defense Department, and wider 0:09:55.360 --> 0:09:57.520 implications for the cybersecurity industry. 0:09:57.720 --> 0:10:00.800 Do I have blues with us? From il meg Tech. 0:10:20.280 --> 0:10:23.880 Shares, a cybersecurity provider. F five Networks look. They tumbled 0:10:23.880 --> 0:10:26.640 this week following revelations that it was hit by a 0:10:26.720 --> 0:10:30.680 prolonged hack that could lead to potentially catastrophic compromises. Now, 0:10:30.720 --> 0:10:32.960 according to sources, the breach has been blamed on state 0:10:33.000 --> 0:10:36.480 backed hackers from China. China Foreign Ministry spokesman Ninjian said 0:10:36.480 --> 0:10:38.959 that China always opposes and fights hacking activities in. 0:10:38.920 --> 0:10:39.880 Accordance with the law. 0:10:40.360 --> 0:10:44.760 For more it's Bloomberg Cybersecurity editor Jeff Stone. But why 0:10:44.920 --> 0:10:46.760 is this so potentially catastrophic. 0:10:47.440 --> 0:10:48.920 One of the things we have to remember, Caroline, is 0:10:48.920 --> 0:10:51.520 that cybersecurity companies like F five, like a lot of 0:10:51.559 --> 0:10:55.319 technology companies, but cyber companies in particular, have really deep 0:10:55.480 --> 0:10:59.280 access to their clients' systems, their networks. They control firewalls, 0:10:59.320 --> 0:11:02.440 they control who has access to what they control, which 0:11:02.480 --> 0:11:06.920 ips can access other computers, certainly passwords and user names 0:11:06.920 --> 0:11:09.200 and that kind of thing. So when the people who 0:11:09.240 --> 0:11:12.400 are trying to stop hackers from getting in ultimately are 0:11:12.440 --> 0:11:18.199 compromise that gives outsiders, spies from places like China really 0:11:18.360 --> 0:11:20.880 really deep, valuable insight. 0:11:20.760 --> 0:11:23.680 For a long time, for a long time twelve months, 0:11:23.720 --> 0:11:27.800 and what sort of companies and institutions are being implicated here. 0:11:27.880 --> 0:11:29.280 We're still trying to get a sense of that. 0:11:29.320 --> 0:11:32.840 We're really trying to understand how Chinese hackers also access 0:11:33.000 --> 0:11:35.400 F five in the first place. But we know F 0:11:35.400 --> 0:11:38.600 five works with government agencies. We know they work with 0:11:38.640 --> 0:11:40.760 a huge number of the Fortune five hundred, it's a big, 0:11:40.800 --> 0:11:45.120 successful publicly trade company. You mentioned the shares fell. I 0:11:45.120 --> 0:11:48.360 mean that's a reflection of the severity the issue obviously. 0:11:48.160 --> 0:11:49.040 Severity the issue. 0:11:49.040 --> 0:11:51.400 That means the UK and the US have both together 0:11:51.400 --> 0:11:54.559 put out these warnings. But as companies try to tackle this, 0:11:54.679 --> 0:11:57.240 how else are they analyzing their defense systems and how 0:11:57.240 --> 0:11:59.920 else are they also thinking about other companies that are 0:12:00.000 --> 0:12:02.040 at the very backbone of their own infrastructure. 0:12:02.080 --> 0:12:02.480 That's right. 0:12:02.480 --> 0:12:04.920 One of the things that we've seen, certainly out of China, 0:12:05.040 --> 0:12:09.320 for instance, is this evolution from typical email phishing attacks 0:12:09.360 --> 0:12:12.960 and they're now resorting to companies with deeper access. Instead 0:12:12.960 --> 0:12:15.560 of trying to hack your email, they are hacking the 0:12:15.600 --> 0:12:18.400 company that you rely on to protect your email. So 0:12:18.720 --> 0:12:21.200 for companies that are potentially affected by that, they need 0:12:21.240 --> 0:12:23.080 to take a closer look, and they are taking a 0:12:23.120 --> 0:12:25.720 closer look at who they rely on to do what. 0:12:26.040 --> 0:12:28.800 They're looking at their vetting procedures, and they're really looking 0:12:28.840 --> 0:12:31.280 at who they trust with their own kind of crown jewels. 0:12:31.280 --> 0:12:33.240 But it's hard, it's a really difficult process. 0:12:33.280 --> 0:12:35.720 We understand according to people familiar that the CEO of 0:12:35.840 --> 0:12:38.520 F five themselves is out there calling up clients trying 0:12:38.520 --> 0:12:42.200 to discuss how Chinese hackers, in particular, we're able to access. 0:12:42.240 --> 0:12:44.480 But what are the next steps for a company in 0:12:44.520 --> 0:12:45.199 this situation. 0:12:45.440 --> 0:12:47.840 They f five is going through this process where they're 0:12:47.840 --> 0:12:49.880 going to try to generate as much trust as they 0:12:49.920 --> 0:12:52.120 possibly can. Part of that is going to mean being 0:12:52.200 --> 0:12:54.520 transparent about what they do know, what they don't know, 0:12:54.600 --> 0:12:56.240 and some of the things that they're trying to fix. 0:12:57.400 --> 0:12:59.439 I know that the CEO, for instance, you mentioned, is 0:12:59.720 --> 0:13:01.840 talking about China. One of the reasons that we see 0:13:01.840 --> 0:13:06.840 executives do that a lot is because it's a serious 0:13:06.960 --> 0:13:09.679 argument for a CEO to make to say, hey, we're 0:13:09.720 --> 0:13:12.560 a private company, we are being attacked by some of 0:13:12.559 --> 0:13:18.000 the world's most advanced, thoughtful, sophisticated spies. Really and this 0:13:18.040 --> 0:13:19.360 is how they got in and here's what we're going 0:13:19.400 --> 0:13:20.200 to try to do about it. 0:13:20.679 --> 0:13:22.920 Jeff Stone, we thank you from Bloomberg. 0:13:24.240 --> 0:13:26.440 Sorry, excuse me now, and let's bring in Giant Blue 0:13:26.480 --> 0:13:28.880 into the conversation. She is co founder, CEO and chief 0:13:28.880 --> 0:13:32.480 information security officer and Ale it's a new AI native 0:13:32.520 --> 0:13:36.000 cyber reasoning system for vulnerability management, which just came out 0:13:36.040 --> 0:13:39.480 of Stealth yesterday. Perfect timing for us and our audience. Jia, 0:13:39.840 --> 0:13:42.520 and I'm interested as to what your read is on 0:13:42.520 --> 0:13:47.120 this situation. How fierce is the threat coming from State 0:13:47.240 --> 0:13:49.360 related activists and hackers. 0:13:50.280 --> 0:13:53.199 It's actually incredibly fierce, and it's because there's a very 0:13:53.200 --> 0:13:56.400 strong motivation to do these kinds of attacks. And what 0:13:56.440 --> 0:14:00.120 you'll see is that this particular group, who is you know, 0:14:00.559 --> 0:14:03.040 part of we think Silk Typhoon or maybe a separate group. 0:14:03.280 --> 0:14:05.760 We've been seeing this type of activity classified under something 0:14:05.800 --> 0:14:09.560 called brickstorm. And it sounds terrifying because it is terrifying, 0:14:09.600 --> 0:14:13.200 and that's why the Cybersecurity Agency in the United States 0:14:13.240 --> 0:14:17.880 put out an emergency directive just this Wednesday. Because forty 0:14:17.920 --> 0:14:21.680 eight out of the Fortune fifty are using F five, 0:14:21.880 --> 0:14:24.840 A vast number of the federal government they're using FI. 0:14:24.880 --> 0:14:29.080 We suspect that there's thousands of devices being deployed. And 0:14:29.400 --> 0:14:32.480 you know, really, because the source code is now out 0:14:32.520 --> 0:14:35.560 there and in the hands of the Chinese, that means 0:14:35.600 --> 0:14:39.760 that a nation state attacker is now looking for vulnerabilities 0:14:39.920 --> 0:14:43.480 in this source code and has information they never should 0:14:43.480 --> 0:14:48.120 have had about undisclosed vulnerabilities that F five was already investigating. 0:14:48.280 --> 0:14:51.200 And because the attacker was there for more than a 0:14:51.440 --> 0:14:56.080 year studying F five, it's actually quite terrifying. All the 0:14:56.120 --> 0:14:57.080 capability they could have. 0:14:57.640 --> 0:14:59.520 How have they gone unnoticed? 0:15:00.160 --> 0:15:00.440 Solo. 0:15:01.720 --> 0:15:04.000 Well, one of the biggest reasons is because if the 0:15:04.040 --> 0:15:08.920 attacker comes in over remote management devices and protocols using 0:15:09.040 --> 0:15:11.960 zero days, it's very hard to find the initial vector 0:15:12.040 --> 0:15:15.840 of how they originally got into that network. And you know, 0:15:15.960 --> 0:15:19.400 simply if they got in more than a year ago, 0:15:19.520 --> 0:15:22.640 the chances are high that there's not even logs that 0:15:22.760 --> 0:15:25.880 hold that type of log retention for over a year. 0:15:26.080 --> 0:15:27.800 That's let's start there. That's how we. 0:15:27.720 --> 0:15:30.920 Don't know when they actually got in in the first place. 0:15:31.240 --> 0:15:34.400 The second part of that problem is most of these 0:15:34.440 --> 0:15:37.920 network devices don't have like a sort of you know, 0:15:38.920 --> 0:15:41.640 detection and response that we can actually see. There's no 0:15:42.000 --> 0:15:45.680 EDR in these network devices, so we can't actually see 0:15:45.720 --> 0:15:50.000 this malicious activity. We don't necessarily see this telemetry as 0:15:50.040 --> 0:15:53.560 they're conducting this ladder movement. I mean, theoretically we should, 0:15:53.600 --> 0:15:55.800 and at some point F five did, but that was 0:15:55.840 --> 0:15:58.840 as late as August of this year, and they were 0:15:58.880 --> 0:16:03.080 directed for national security concerns to keep it quiet until 0:16:03.120 --> 0:16:06.680 they could release this information in their SEC filing. 0:16:08.280 --> 0:16:11.720 You are making it clear to our audience how critical 0:16:11.760 --> 0:16:13.960 this is. But when we all go home and sit 0:16:13.960 --> 0:16:15.920 around our dinner tables, I don't feel like this is 0:16:15.960 --> 0:16:18.040 becoming the top of conversation that perhaps it should be 0:16:18.040 --> 0:16:20.720 given the strength of the concerns and anxieties. You make 0:16:20.760 --> 0:16:23.840 clear what is it that ends up affecting the consumer 0:16:24.000 --> 0:16:25.880 or more written large in this circumstance. 0:16:27.160 --> 0:16:29.880 The fact of the matter is, especially from a consumer perspective, 0:16:30.040 --> 0:16:33.520 we don't always feel like paying for cybersecurity. We think 0:16:33.560 --> 0:16:35.640 it should be built in rather than bolted on. From 0:16:35.680 --> 0:16:39.360 a consumer perspective, enterprises are more used to this notion 0:16:39.600 --> 0:16:41.840 that you know, it's like a never done thing that 0:16:41.880 --> 0:16:44.240 we continuously need to improve, that it's a rint and 0:16:44.280 --> 0:16:48.960 repeat like action. But we still expect more and better 0:16:49.240 --> 0:16:52.560 from cybersecurity vendors, from people who are comfortable in this space. 0:16:52.840 --> 0:16:56.320 But frankly, if you are really successful with your software 0:16:56.360 --> 0:17:00.240 and hardware, you should expect that Nation States it will 0:17:00.320 --> 0:17:04.200 target you for some type of supply chain compromise. It's 0:17:04.200 --> 0:17:07.760 almost inevitable. It's because of that very success that your 0:17:07.800 --> 0:17:11.520 reputation and your network and information systems are critically at risk. 0:17:11.520 --> 0:17:13.960 And particularly in the world of AI, where ever more 0:17:14.000 --> 0:17:17.920 sophisticated attacks are happening and written large at such pace, John, 0:17:17.960 --> 0:17:19.760 this is where your company comes in and I'm so 0:17:19.840 --> 0:17:22.440 interested in ILE and what you're currently building because you're 0:17:22.440 --> 0:17:26.080 saying it's the first AI native cyber reasoning system. Can 0:17:26.119 --> 0:17:28.520 you talk us through exactly how it works differently from others. 0:17:29.440 --> 0:17:29.680 Yes. 0:17:30.080 --> 0:17:32.399 So we are in ED, which means that everything we 0:17:32.480 --> 0:17:35.480 do starts from an AI first principle. And one of 0:17:35.480 --> 0:17:39.520 the most tenacious problems we have in cybersecurity is this 0:17:39.640 --> 0:17:43.280 ability to both find the right set of vulnerabilities and 0:17:43.320 --> 0:17:46.600 then remediate them quickly. So what we do at ILE 0:17:46.720 --> 0:17:50.160 is exactly that we have an analyzer that actually looks 0:17:50.200 --> 0:17:53.480 to find those vulnerabilities that truly matter, not just small, 0:17:53.520 --> 0:17:57.560 low level bugs. And we've proven that with several very 0:17:57.600 --> 0:18:01.919 famous programs that you have online, open source programs. We 0:18:02.080 --> 0:18:07.119 found incredibly critical zero days, We've reported them responsibly to 0:18:07.240 --> 0:18:10.720 the maintainers of these open source projects, and they have 0:18:10.880 --> 0:18:13.800 fixed them. And what we've really been trying to do 0:18:14.160 --> 0:18:17.280 is make sure that we are not just showing, hey, 0:18:17.320 --> 0:18:21.119 this stuff is broken, but allowing customers to actually be 0:18:21.160 --> 0:18:24.840 able to remediate those incredibly quickly, at superhuman speed. And 0:18:24.920 --> 0:18:27.239 that has to be how we work because you can 0:18:27.280 --> 0:18:29.800 bet your botom dollar that the attackers are using AI 0:18:30.800 --> 0:18:33.400 now we need to make sure that the defenders are too. 0:18:33.880 --> 0:18:35.879 And this is something that really we haven't been doing 0:18:35.960 --> 0:18:38.359 in this way for so long, and this kind of 0:18:38.720 --> 0:18:42.480 static basis that we've had is no longer suitable for 0:18:42.560 --> 0:18:44.040 the types of threats that we face. 0:18:44.840 --> 0:18:47.600 Just going to Aisle and who its core customer is 0:18:47.760 --> 0:18:50.760 feels that it's everyone. But all these cyber companies are 0:18:50.760 --> 0:18:51.480 becoming ever. 0:18:51.400 --> 0:18:54.280 More platforms and want to own your. 0:18:54.320 --> 0:18:58.280 Entire ecosystem of cybers So where do you fittinger. 0:18:58.840 --> 0:19:01.520 Well, we start where everything is being built. So if 0:19:01.560 --> 0:19:04.640 you're right now, I feel like every customer that we 0:19:04.680 --> 0:19:07.760 look at is really I mean, it's remarkable, but we 0:19:07.880 --> 0:19:12.199 have changed into a planet that operates on software. So 0:19:12.640 --> 0:19:14.760 everything that we actually look at is a company that's 0:19:14.800 --> 0:19:16.920 using software. So if they build software, if they're having 0:19:16.960 --> 0:19:20.120 someone else build software for them, for their manufacturing process, 0:19:20.119 --> 0:19:23.200 for their supply chain, you know, for those kinds of 0:19:23.680 --> 0:19:27.520 potential customers and design partners, that's where we come in 0:19:27.640 --> 0:19:30.480 and we try to make sure that those supply chain 0:19:30.560 --> 0:19:33.760 vulnerabilities that could impact others downstream as well as their 0:19:33.800 --> 0:19:37.840 own vulnerabilities, that we give them critical knowledge to know 0:19:38.000 --> 0:19:40.280 what is that that's really broken? That you need to 0:19:40.320 --> 0:19:42.520 focus on and how can we get you to a 0:19:42.560 --> 0:19:45.800 place where you have zero vulnerabilities coming in. Most of 0:19:45.840 --> 0:19:51.240 these companies also have rather terrifying backlogs of vulnerabilities that 0:19:51.280 --> 0:19:54.840 they have not fixed, millions in the backlog. And I'm 0:19:54.840 --> 0:19:58.280 telling you, as a CZO of three different publicly listed companies, 0:19:58.359 --> 0:20:01.720 I've had these experiences myself of these tenacious, hard to 0:20:01.760 --> 0:20:04.679 fix vulnerabilities, and I wished for this solution, which is 0:20:04.720 --> 0:20:05.960 why we now built it. 0:20:06.720 --> 0:20:09.760 Well, you've got some phenomenal backers and some phenomenal co 0:20:09.880 --> 0:20:13.560 founders Javalu Coo and Ciso at Aisle. It's great to 0:20:13.600 --> 0:20:15.480 have you back on the show. Have a good weekend 0:20:16.119 --> 0:20:19.800 having out. Apple is finally getting in on the touch 0:20:19.880 --> 0:20:23.359 display game with a revamped MacBook Pro details. 0:20:23.400 --> 0:20:24.600 Next to is the BLUEBG tech. 0:20:31.320 --> 0:20:34.240