WEBVTT - Mixed Reactions to Powell Pivot Plan 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Week Inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.440 gloom O Business Finance and tech news. The Bloomberg Business 0:00:13.440 --> 0:00:27.600 Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:24.560 --> 0:00:35.520 W As I mentioned stocks just keep going up, continuing 0:00:35.520 --> 0:00:37.400 the week on a positive note, or kicking the week 0:00:37.440 --> 0:00:39.360 off on a positive note, I should say booyed by 0:00:39.360 --> 0:00:42.800 a burst of deals, even as Fed officials are kind 0:00:42.800 --> 0:00:44.840 of it's been in a last few days, a little 0:00:44.840 --> 0:00:47.879 bit over the weekend, sowing doubts that aggressive interest rate 0:00:47.920 --> 0:00:50.760 cuts are going to materialize next year. Here are a few 0:00:50.760 --> 0:00:54.560 of them, Chicago Fed President Austin Goolsby, Cleveland Fed President Lorettamester. 0:00:54.640 --> 0:00:56.960 They were the latest to join a growing course of 0:00:57.000 --> 0:01:00.800 central make officials tempering market optimism after their New York counterpart, 0:01:00.880 --> 0:01:03.320 John Williams last week said bets on a March reduction 0:01:03.960 --> 0:01:07.959 were premature. The equity market and the bond market are 0:01:08.040 --> 0:01:10.280 kind of ignoring them. Hey, we got a great roundtable 0:01:10.280 --> 0:01:12.760 to kick off our program this afternoon. John Authors is 0:01:12.760 --> 0:01:16.000 a senior editor for Markets and a Bloomberg Opinion columnist. 0:01:16.200 --> 0:01:19.360 Elena Popina is equity markets reporter for Bloomberg News. Both 0:01:19.400 --> 0:01:22.480 of them are here in the Bloomberg Interactive Brokers studio. John, 0:01:22.520 --> 0:01:24.760 I want to start with you because your latest column 0:01:24.760 --> 0:01:27.319 talks about the really quick rally that we've seen and 0:01:27.360 --> 0:01:29.640 how you know, I don't want to use this throw 0:01:29.680 --> 0:01:32.120 out this term, but essentially the easy money has been 0:01:32.120 --> 0:01:33.839 made at this point and if you're if you're looking 0:01:33.840 --> 0:01:35.640 to buy right now, your big question is what's going 0:01:35.720 --> 0:01:37.360 to happen over the next decade. 0:01:38.920 --> 0:01:42.840 Arguably yes, I mean at the moment, the Fed, if 0:01:42.880 --> 0:01:44.640 we believe the dot plot, thinks there's going to be 0:01:44.640 --> 0:01:47.920 three cuts next year, which is more than they were 0:01:47.920 --> 0:01:51.640 saying before, and the Fed funds futures markets thinks they're 0:01:51.680 --> 0:01:57.480 going to be six. So it's hard to see how 0:01:57.600 --> 0:02:02.880 you get lower rates than are currently being priced in 0:02:03.640 --> 0:02:07.480 unless something happens to shock the Fed into cutting farm 0:02:07.480 --> 0:02:10.400 more than it currently wants to. I if there's a recession, 0:02:10.400 --> 0:02:11.600 which messes up equities. 0:02:11.639 --> 0:02:14.119 So what happens if there is a recession the Fed 0:02:14.160 --> 0:02:16.359 has to cut more aggressively. What do we see from equities? 0:02:17.280 --> 0:02:23.840 One would imagine past experience has been that pivots tend 0:02:23.919 --> 0:02:27.040 not to be great for equities because they are pivoting 0:02:27.120 --> 0:02:31.120 for a reason, surprise, which is that now that the 0:02:31.200 --> 0:02:36.400 economy is in trouble, if you have a pivot, as 0:02:36.440 --> 0:02:41.280 in twenty eighteen after the Christmas Eve massacre when j. 0:02:41.480 --> 0:02:46.280 Powell stepped back from I remember that, and that was 0:02:46.280 --> 0:02:48.960 an unusual pivot in that that was at a time 0:02:49.000 --> 0:02:53.240 when the economy wasn't any particular trouble and it just 0:02:53.320 --> 0:02:55.919 loosed the dogs of war that you have this fantastic 0:02:57.280 --> 0:03:01.520 rarey the following year. That's obvious roughly what we've had 0:03:01.560 --> 0:03:06.040 again this time because the Fed is very unusually getting 0:03:06.080 --> 0:03:09.040 worried about whether it should be cutting rates soon with 0:03:09.320 --> 0:03:13.200 unemployed with sorry, with growth at over five percent and 0:03:13.280 --> 0:03:17.200 unemployment at less than four percent, which is, you know, unusual. 0:03:19.280 --> 0:03:25.480 I don't see myself how the current rate forecast is. Oh, 0:03:25.520 --> 0:03:31.079 the current implicit rate forecast is is fulfilled, turns out 0:03:31.120 --> 0:03:33.640 to be accurate unless the economy turns out to be 0:03:33.720 --> 0:03:37.600 much worse than is currently being predicted. 0:03:37.880 --> 0:03:41.560 Elena Popina, come on in here. You are Equen Markets 0:03:41.560 --> 0:03:43.160 report of fort Plomberg News. You joined us at the 0:03:43.240 --> 0:03:44.760 end of last week to give us an idea of 0:03:44.800 --> 0:03:47.400 what we saw when it came to week seven of 0:03:47.560 --> 0:03:49.840 gains for the S and P five hundred. Since then, 0:03:49.880 --> 0:03:52.960 you've spoken to quite a few cellside analysts. What have 0:03:53.040 --> 0:03:55.600 they told you about how they're thinking about not just 0:03:55.640 --> 0:03:57.160 the next few days and the remainder of the year, 0:03:57.160 --> 0:03:58.440 but also what happens next year. 0:03:59.440 --> 0:04:01.600 Yeah, thank you guy, it's the pleasure to be here. 0:04:01.920 --> 0:04:05.880 We are seeing quite a number of sales side analysts 0:04:05.960 --> 0:04:10.240 boosting their target prices for twelve months from now. The 0:04:10.360 --> 0:04:14.080 ratio of upgrades to target prices to downgrades is now 0:04:14.240 --> 0:04:15.560 at the highest level. 0:04:15.360 --> 0:04:17.920 Since at least January twenty twenty two. 0:04:17.960 --> 0:04:20.760 That's the previous time the S and P five hundred 0:04:20.760 --> 0:04:24.680 reached is all time high. Now, whether or not, you know, 0:04:25.080 --> 0:04:28.640 analysts are just reacting to the stock market that's gone 0:04:28.720 --> 0:04:31.479 up quite a bit in November and has gone quite 0:04:31.520 --> 0:04:34.520 a bit in December so far, is yet. 0:04:34.320 --> 0:04:35.240 An open question. 0:04:35.320 --> 0:04:38.000 To John's point, there is quite a bit of a 0:04:38.080 --> 0:04:40.719 concern that there is a mismatch between what the dot 0:04:40.800 --> 0:04:44.160 plot shows and what markets are expecting in terms of 0:04:44.480 --> 0:04:48.000 the pace of rate cuts next year. But the positive 0:04:48.080 --> 0:04:51.280 sign is that the rally seems to be broaden out for. 0:04:51.240 --> 0:04:53.279 Example, the equal weighted S. 0:04:53.320 --> 0:04:56.320 And P five hundred index inven paced for its best 0:04:56.400 --> 0:04:59.640 year since April twenty twenty two relative to the CALCU 0:04:59.640 --> 0:05:02.120 weighted S and P five hints. So it's not just 0:05:02.480 --> 0:05:08.599 maybe seven anymore. The laggards, the relative laggards like value stocks, 0:05:08.640 --> 0:05:12.719 are trying to outperform, so we gives more momentum and 0:05:12.760 --> 0:05:15.960 more breadth to the rally. But then yes, again they 0:05:16.080 --> 0:05:19.520 can be argumently that the rally has become quite a 0:05:19.520 --> 0:05:22.839 bit of an overextended. So we could with you for 0:05:22.960 --> 0:05:25.520 some kind of pullback after New years? 0:05:25.920 --> 0:05:28.760 What does history tell us about these types of pullbacks? John? 0:05:28.800 --> 0:05:30.560 I mean, I know you're not a technical analyst here, 0:05:30.640 --> 0:05:32.920 but in your experience and I'm sure though, you're also 0:05:32.960 --> 0:05:35.919 a chief investment officer of Hindsight Capital, so you have 0:05:36.000 --> 0:05:36.760 an idea. 0:05:36.680 --> 0:05:38.160 With whom I've been in contact Ques. 0:05:38.480 --> 0:05:41.000 Okay, so we'll wait to hear about Hindsight Capital later 0:05:41.040 --> 0:05:44.359 this year. But yeah, but what has history told us 0:05:44.360 --> 0:05:45.080 about moves like this? 0:05:46.600 --> 0:05:52.680 Generally speaking, when you get moves this dramatic, there is 0:05:52.720 --> 0:05:58.479 a risk actually of a melt up. I mean, in 0:05:58.560 --> 0:06:02.240 terms of what Elena was saying. The positive way to 0:06:02.240 --> 0:06:05.200 put it is that breadths widened, which is good. The 0:06:05.279 --> 0:06:07.240 negative way to put it is that there's a dash 0:06:07.240 --> 0:06:10.960 for trash. So the Meme Stock Index the last time 0:06:11.000 --> 0:06:15.119 I checked, was up forty in a month. Something silly 0:06:15.200 --> 0:06:15.560 like that. 0:06:15.680 --> 0:06:17.520 Lots of Crystal has been high. 0:06:17.640 --> 0:06:21.280 Yes, lot Kathy Woods, our innovation et office had a great. 0:06:21.520 --> 0:06:26.039 And lots of small caps that really don't look in 0:06:26.080 --> 0:06:30.200 good financial shape in terms of their credit have rallied. 0:06:30.440 --> 0:06:33.240 Now that's that isn't a sign of breadth, but it's 0:06:33.320 --> 0:06:37.200 also a sign of Okay, let's just buy the really 0:06:37.279 --> 0:06:42.600 cheap stuff now because everything's going to rip. The scenario 0:06:42.720 --> 0:06:49.120 that worries me because again I might be over over 0:06:49.160 --> 0:06:54.719 applying what's happened in my in my experience my career 0:06:54.880 --> 0:07:01.800 is LTCM in ninety eight, yes, which was I think 0:07:02.760 --> 0:07:09.080 the significant the great era of monetary policy in you 0:07:09.640 --> 0:07:14.040 since Volka And for those who don't know, LTCN was 0:07:14.080 --> 0:07:16.680 this huge hedge fund that began to melt down and 0:07:16.680 --> 0:07:18.360 got caught on the wrong side of all its trades. 0:07:18.360 --> 0:07:22.280 After Russia defaulted in August of ninety eight, the Fed 0:07:22.880 --> 0:07:26.360 organized you know, more or less forced all its banks 0:07:26.360 --> 0:07:31.320 its creditors to agree a bailout which didn't actually involve 0:07:31.360 --> 0:07:34.480 public money, which matters a lot. At the time, the 0:07:34.480 --> 0:07:40.880 credit market stayed becalmed, and so Greenspan cut rates. And 0:07:40.920 --> 0:07:45.680 the most palpable turn in sentiments in a day I've 0:07:45.720 --> 0:07:51.239 ever witnessed was the day that green Span cut rates 0:07:51.400 --> 0:07:56.760 between meetings without warning on a Thursday afternoon, and I 0:07:56.800 --> 0:07:59.080 think you know, bank stocks were up more than ten 0:07:59.080 --> 0:08:03.800 percent in the subse hour and the Globe dot com 0:08:03.840 --> 0:08:08.840 went public. About two weeks later, the NASDAK more than 0:08:08.920 --> 0:08:11.680 doubled over the last year. At that point, it looked 0:08:11.760 --> 0:08:14.520 as though the great bullmarket connected to the dot COM's 0:08:14.880 --> 0:08:17.800 had just reached a natural peak and was beginning to 0:08:17.840 --> 0:08:23.360 slide down. And that faithful decision to pivots, which wasn't stupid, 0:08:23.360 --> 0:08:25.600 there were reasons to do it. That the faithful decisions 0:08:25.600 --> 0:08:28.480 pivot led to, you know, the greatest melt up of 0:08:28.520 --> 0:08:32.640 all time, whose consequences you could argue, we are still 0:08:32.640 --> 0:08:36.840 dealing with. That strikes me. Eric balcun has had this 0:08:36.920 --> 0:08:42.160 fascinating chart. Apparently Friday saw the biggest flows into spy. 0:08:42.640 --> 0:08:43.000 Oh wow. 0:08:43.240 --> 0:08:48.719 Ever, I've tried checking it in percentage terms, and there 0:08:48.720 --> 0:08:51.720 were a few bigger days during the real hurly burly 0:08:51.760 --> 0:08:55.560 of the GFC. But in terms of actual money, more 0:08:55.559 --> 0:08:57.960 people put money into or more money was put into 0:08:58.000 --> 0:09:00.760 spy on Friday than on any other day ever before. 0:09:00.880 --> 0:09:07.200 That's that has the signs as somebody who has arguably 0:09:07.240 --> 0:09:10.640 been too bearish and too conservative over the years. That 0:09:11.960 --> 0:09:15.599 instinctively bothers me. Okay, I mean, it might mean you 0:09:15.600 --> 0:09:21.000 should buy now on a short time period, because wouldn't 0:09:21.000 --> 0:09:23.320 it have been fantastic to own stocks through the whole 0:09:23.360 --> 0:09:26.160 of nineteen ninety nine and get outside And lots of 0:09:26.160 --> 0:09:30.439 people will make that calculation. But in terms of what 0:09:30.480 --> 0:09:33.360 that means for the economy and the health of the 0:09:33.360 --> 0:09:36.160 financial system over the next decade, that's concerning to me. 0:09:36.320 --> 0:09:36.680 Helene. 0:09:36.679 --> 0:09:38.640 I want to give you the last word here and 0:09:38.679 --> 0:09:41.240 talk a little bit about what the analysts and you 0:09:41.600 --> 0:09:44.600 speak to tell you in terms of their bearishness, because 0:09:44.600 --> 0:09:46.920 it's kind of hard to find the bearers out there 0:09:47.000 --> 0:09:48.880 right now, isn't it. 0:09:48.280 --> 0:09:49.959 Is It is kind of hard to find you. 0:09:50.120 --> 0:09:53.720 We are looking at an hour of south Side analysts 0:09:53.720 --> 0:09:57.800 being quite bolish on the next half a year, with 0:09:58.040 --> 0:10:03.880 a few exceptions like Mike Wilson, like a few other analysts. 0:10:03.920 --> 0:10:06.680 But what I wanted to mention is that the election 0:10:06.960 --> 0:10:11.880 year historically this century has so far seen some weakness 0:10:11.920 --> 0:10:13.960 in the middle of the year, in the second and 0:10:14.080 --> 0:10:16.040 third quarters of the year. 0:10:16.080 --> 0:10:18.080 We saw that. In two thousand, we saw that. 0:10:18.240 --> 0:10:21.079 Obviously in two thousand and eight, we saw quite a 0:10:21.160 --> 0:10:21.760 bit of that. 0:10:21.880 --> 0:10:22.800 In twenty twenty. 0:10:22.840 --> 0:10:26.559 Now sum our goodness were new, exceptional, new periods of time, 0:10:26.640 --> 0:10:29.440 And yes, I agree with that. But you know, if 0:10:29.559 --> 0:10:32.320 history is any indication at this point, and I don't 0:10:32.320 --> 0:10:34.520 know whether that's going to be the key, we could 0:10:34.600 --> 0:10:38.720 see some fullback and you know, with stops me a record, 0:10:38.800 --> 0:10:41.280 we would be live for fullback sometime. 0:10:40.920 --> 0:10:42.000 In the second and fourth quarter. 0:10:42.280 --> 0:10:46.120 Lena Popina equity market reporter for Bloomberg News, John Author, 0:10:46.240 --> 0:10:49.400 Senior editor for Markets and a Bloomberg Opinion columnist. Here 0:10:49.640 --> 0:10:52.840 in our Bloomberg Interactive Broker studio, we're just getting started 0:10:52.960 --> 0:10:54.120 on this Monday afternoon. 0:10:54.160 --> 0:10:55.720 This is Bloomberg Business Week. 0:10:56.880 --> 0:11:00.440 You're listening to the Bloomberg Business Week podcast. Catch us 0:11:00.480 --> 0:11:03.840 live weekday afternoons from three to six Eastern Listen on 0:11:03.880 --> 0:11:07.920 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, 0:11:08.200 --> 0:11:09.920 or watch us live on YouTube. 0:11:11.080 --> 0:11:13.440 Well, some public companies are still trying to figure out 0:11:13.679 --> 0:11:16.280 exactly how to comply with new rules from the US 0:11:16.440 --> 0:11:22.080 Securities and Exchange Commission requiring speedy disclosure of significant cyber attacks. 0:11:22.480 --> 0:11:25.560 Those rules, which kicked in Monday, require companies to report 0:11:25.600 --> 0:11:28.720 cyber incidents within four business days of determining that they 0:11:28.720 --> 0:11:33.000 are quote material to shareholders. The sec previously required firms 0:11:33.000 --> 0:11:36.120 to disclose major events that would be of shareholder interest, 0:11:36.160 --> 0:11:40.000 but didn't specify cyber events. We did speak earlier on 0:11:40.040 --> 0:11:43.720 our program about cyber attack herding orders for Vans, north Face, 0:11:44.480 --> 0:11:49.240 Dicky's Supreme Gen Sport, Timberland owner VF Corp. And the 0:11:49.240 --> 0:11:52.560 way that those can really bring a company offline, especially 0:11:52.600 --> 0:11:55.200 at a crucial time like during the holiday season. Well, 0:11:55.280 --> 0:11:57.679 next guest knows a thing or two about cybersecurity. Wendy 0:11:57.679 --> 0:12:01.839 Thomas is president and CEO of Cure Works, the cybersecurity company. 0:12:01.920 --> 0:12:04.680 She's back with us once again, joining us on Zoom 0:12:04.679 --> 0:12:07.040 from Atlanta, Georgia. Wendy, good to have you with us 0:12:07.120 --> 0:12:09.600 this afternoon. How are you well. 0:12:09.640 --> 0:12:10.199 I'm doing well. 0:12:10.240 --> 0:12:12.040 Thanks for having me Tim, Well, thanks for joining us 0:12:12.120 --> 0:12:15.079 once again on this It's a little different environment than 0:12:15.120 --> 0:12:18.400 when we last spoke to you just a few months ago. Specifically, 0:12:18.440 --> 0:12:23.640 when it comes to this new SEC requiring ruling that 0:12:23.679 --> 0:12:26.960 requires speedy disclosure of significant cyber attacks, it seems like 0:12:27.000 --> 0:12:31.040 there's a lot of confusion with what exactly companies now 0:12:31.080 --> 0:12:34.680 have to disclose to their shareholders when it comes to 0:12:34.679 --> 0:12:35.400 cyber attacks. 0:12:35.440 --> 0:12:36.480 What can you tell us about it? 0:12:38.080 --> 0:12:42.719 Sure, glad to share the emerging insights into the new regulations. 0:12:43.160 --> 0:12:44.640 I think about it in sort of the front end 0:12:44.640 --> 0:12:47.640 and the back end. On the back end, as you mentioned, 0:12:48.280 --> 0:12:51.880 public companies now have to report cyber incidents that are 0:12:51.920 --> 0:12:54.920 determined by the company themselves to be material, which is 0:12:55.080 --> 0:13:00.000 a discussion in and of itself within four business days 0:13:00.160 --> 0:13:03.600 the primary back end requirement. But on the front end, 0:13:03.880 --> 0:13:09.760 the disclosures around everything from policies governing cybersecurity risks, the 0:13:09.800 --> 0:13:15.520 companies risk management processes, processes whereby management is informed about 0:13:15.640 --> 0:13:19.200 cyber incidents, and the board's oversight of that. All of 0:13:19.240 --> 0:13:22.640 those are now required to be disclosed in annual ten 0:13:22.720 --> 0:13:26.320 K filings by public companies, and so the scrutiny of 0:13:26.400 --> 0:13:29.839 whether we are pre pairing sufficiently for cyber incidents as 0:13:29.880 --> 0:13:31.960 well as disclosure about them on the back end is 0:13:32.360 --> 0:13:33.520 significantly ramped up. 0:13:33.640 --> 0:13:35.920 I want to talk about this just because this one's 0:13:35.960 --> 0:13:38.160 in the news, but I mean, you could just replace 0:13:38.559 --> 0:13:41.720 VF Corp. With any given company at any given time. 0:13:43.120 --> 0:13:43.760 VF Corp. 0:13:44.880 --> 0:13:48.280 Suffered this cyber attack at pretty much the worst possible 0:13:48.280 --> 0:13:51.720 time and the most important quarter of the company, and 0:13:52.040 --> 0:13:55.559 it has hurt orders for Vans, north Face and other 0:13:55.640 --> 0:14:02.240 brands that the company has. I'm wondering, you know, how 0:14:02.280 --> 0:14:04.680 this stuff continues to happen when we understand that the 0:14:04.720 --> 0:14:07.760 threats are out there and so many companies are spending 0:14:07.800 --> 0:14:10.640 so much money on keeping their network safe. 0:14:13.760 --> 0:14:17.480 They are spending significant amounts of money. But as you 0:14:17.520 --> 0:14:20.720 can see, the cyber criminal only has to be right once, 0:14:21.680 --> 0:14:23.760 and we have to be right in and out every day. 0:14:23.960 --> 0:14:27.240 And that's why it's so important for companies to have 0:14:27.520 --> 0:14:30.960 a security expert partner to help them prepare for and 0:14:31.080 --> 0:14:35.080 navigate situations like this to minimize the damage. There's nothing 0:14:35.840 --> 0:14:38.680 worse for a company than their high season to be 0:14:38.720 --> 0:14:41.800 impacted by this type of a cyber attack. And to 0:14:41.800 --> 0:14:44.120 be frank, the reason these regulations are in place is 0:14:44.160 --> 0:14:48.320 that when things like this hit the headlines, regulators feel 0:14:48.760 --> 0:14:54.920 impelled to incent companies to protect themselves proactively and then 0:14:54.960 --> 0:14:58.560 to be straightforward with shareholders or investors around what may 0:14:58.600 --> 0:15:01.560 be impacting their business in terms of its operations or 0:15:01.640 --> 0:15:04.800 financial performance. And this is a case in point of 0:15:04.800 --> 0:15:06.920 why we see new regulations coming out around this. 0:15:07.240 --> 0:15:09.760 In your opinion, do the regulations go far enough? 0:15:12.360 --> 0:15:15.840 The regulations, I think are a good first step in 0:15:16.240 --> 0:15:18.760 many ways, and I have no doubt we'll continue to 0:15:18.800 --> 0:15:22.600 see them evolve like many other new forms of rulemaking 0:15:22.640 --> 0:15:25.000 over the years. But what I will tell you is 0:15:25.040 --> 0:15:28.800 these regulations are not intended to punish. They are really 0:15:28.840 --> 0:15:33.720 intended to create the right incentives. Look twenty twenty three, 0:15:33.840 --> 0:15:36.240 I think it's on track to be the most prolific 0:15:36.320 --> 0:15:38.920 year for ransomware ever and to have one of the 0:15:39.000 --> 0:15:43.160 highest economic costs of security breaches to day. This cybercrime 0:15:43.280 --> 0:15:47.960 is an ongoing, continual transfer of wealth to criminal enterprises, 0:15:48.480 --> 0:15:51.560 and so I think that the SEC feels compelled to 0:15:51.600 --> 0:15:55.840 provide guidance around how to better prepare for these types 0:15:55.880 --> 0:15:59.920 of situations going forward. And frankly, they've raised the bar 0:16:00.200 --> 0:16:05.960 for CEOs, CSOs and boards of directors around preparing for 0:16:06.000 --> 0:16:07.920 these types of incidents. 0:16:08.200 --> 0:16:10.600 What, in your opinion, is the right amount of money 0:16:10.640 --> 0:16:14.080 for a company to actually spend on keeping their company 0:16:14.120 --> 0:16:20.080 secure from cyber attacks. 0:16:17.800 --> 0:16:18.680 Not a. 0:16:20.360 --> 0:16:22.400 Single figure, not a single figure, but a certain like 0:16:22.480 --> 0:16:25.600 a portion of revenues for example, or portion of expenses. 0:16:28.080 --> 0:16:30.960 That does vary a bit, and I'm glad to provide 0:16:31.000 --> 0:16:33.400 some ranges there. It does vary a bit depending on 0:16:33.480 --> 0:16:38.000 whether the organization is in a highly attacked and frankly 0:16:38.040 --> 0:16:41.160 highly regulated industry eating like. 0:16:41.160 --> 0:16:45.560 A healthcare or financial services for example, Exactly. 0:16:45.240 --> 0:16:47.360 They have a much higher standard. Now what we see 0:16:47.440 --> 0:16:50.760 is damages to companies that are more in the manufacturing 0:16:50.800 --> 0:16:53.880 in the retail space. So it does matter from a 0:16:53.920 --> 0:16:57.920 business up time and financial performance perspective, But generally we 0:16:58.000 --> 0:17:03.000 expect to see companies spending somewhere in the four to 0:17:03.080 --> 0:17:07.720 five percent range. It can sort of merge into other 0:17:07.800 --> 0:17:10.960 technology spend a little bit, because you can have secure 0:17:11.000 --> 0:17:16.240 by design technology deployments, But somewhere between that and twelve 0:17:16.240 --> 0:17:20.800 to fifteen percent of your total technology spend is what 0:17:20.840 --> 0:17:24.440 we see typically in place. Again, for businesses that aren't 0:17:24.480 --> 0:17:27.360 necessarily in a highly regulated industry. 0:17:26.960 --> 0:17:28.720 Do you see that portion moving up? 0:17:33.000 --> 0:17:34.879 I do see that portion moving up, but I also 0:17:35.040 --> 0:17:39.080 see it moving in terms of mix. So while you 0:17:39.160 --> 0:17:42.720 want to invest in preventing as much as you possibly can, 0:17:43.280 --> 0:17:45.679 what these regulations are showing is that you have to 0:17:45.800 --> 0:17:50.280 invest in you aren't able to prevent everything. So you 0:17:50.520 --> 0:17:53.840 absolutely have to be able to detect quickly because with 0:17:53.880 --> 0:17:58.040 these regulations, the ability to assess the impact of an 0:17:58.080 --> 0:18:00.879 incident in terms of what it's going to do to 0:18:00.960 --> 0:18:05.919 your business operations and the financial outcomes of that. You 0:18:05.960 --> 0:18:10.240 absolutely cannot do that with humans alone. It requires technology 0:18:10.320 --> 0:18:14.840 investments and investments in awareness and preparation of your team. 0:18:15.000 --> 0:18:17.439 So I do think that the mix is going to 0:18:17.480 --> 0:18:22.520 shift quite a bit towards the detection and preparation aspect 0:18:22.560 --> 0:18:22.800 of this. 0:18:23.160 --> 0:18:25.960 Wendy, we've talked a lot about AI and in the 0:18:26.000 --> 0:18:30.680 context of, you know, making companies more productive and being 0:18:30.760 --> 0:18:33.920 able to be more efficient. We've talked about it too 0:18:33.960 --> 0:18:37.760 in the concept of people being worried about AI, sort 0:18:37.800 --> 0:18:41.200 of like the way that Elon Musk gets concerned about AGI. 0:18:42.480 --> 0:18:46.040 I'm wondering how you've seen or how you could see 0:18:46.040 --> 0:18:50.639 threat actors use AI to pose as humans to actually 0:18:50.720 --> 0:18:53.879 gain access to networks. What's worst case scenario here that 0:18:53.960 --> 0:19:01.360 you guys are thinking about over at secure works. 0:19:00.119 --> 0:19:02.720 Or as we've talked about before, the power in the 0:19:02.760 --> 0:19:06.679 peril of AI is very real for cybersecurity, and so 0:19:06.760 --> 0:19:08.960 while the power of it to be able to detect 0:19:09.440 --> 0:19:13.680 certain behavioral techniques of the adversary are are incredibly important 0:19:13.680 --> 0:19:17.040 for how we operate as secure works, we also see 0:19:17.080 --> 0:19:21.080 the adversary taking advantage of these tools and techniques as well. 0:19:21.600 --> 0:19:24.080 And I think the most near term one that we 0:19:24.160 --> 0:19:27.200 have seen and increasingly concerns us in terms of its 0:19:27.720 --> 0:19:32.399 accelerated use, is around deep fakes, with the ability to 0:19:32.640 --> 0:19:36.280 impersonate a CEO not just in an email, but in 0:19:36.320 --> 0:19:40.280 a video, and to do that at scale with large 0:19:40.320 --> 0:19:44.800 language models like chat, GPT, it just has put a 0:19:44.920 --> 0:19:50.520 pace of deployment and a fidelity of believability in what 0:19:50.600 --> 0:19:55.080 they're using to deceive, just taking it to another level, 0:19:55.119 --> 0:19:58.280 and that's the primary area where we're focused on the 0:19:58.280 --> 0:19:59.200 ability to detect. 0:19:59.440 --> 0:20:01.560 Yeah, thing is you mean you have to remain sovid 0:20:01.680 --> 0:20:04.880 vigilant regardless of who's you know in your organization, from 0:20:05.200 --> 0:20:08.600 person with access to certain systems versus the person whose 0:20:08.680 --> 0:20:12.760 password or log in credentials could be compromised. Wendy, we 0:20:12.800 --> 0:20:14.840 love it when you join us. Wendy Thomas is President 0:20:14.880 --> 0:20:17.680 and chief executive officer of Secure Works. Back with us 0:20:18.000 --> 0:20:21.399 on Zoom from Atlanta, Georgia. You're listening to Bloomberg Business Week. 0:20:22.000 --> 0:20:25.560 You're listening to the Bloomberg Business Week podcast. Catch us 0:20:25.600 --> 0:20:29.639 live weekday afternoons from three to six Easter on Bloomberg Radio, 0:20:29.840 --> 0:20:33.119 the Bloomberg Business app, and YouTube. You can also listen 0:20:33.200 --> 0:20:36.320 live on Amazon Alexa from our flagship New York station, 0:20:36.760 --> 0:20:39.560 Just say Alexa play Bloomberg eleven thirty. 0:20:40.920 --> 0:20:43.399 Well the next guest has made his living connecting people. 0:20:43.680 --> 0:20:46.639 Sam Darwish is the co founder, chairman, and CEO of 0:20:46.640 --> 0:20:50.080 one of the world's largest independent owners, operators and developers 0:20:50.080 --> 0:20:54.439 of towers, providing communication infrastructure in eleven markets, serving about 0:20:54.600 --> 0:20:57.040 seven hundred and seventy million people. He joins us on 0:20:57.200 --> 0:21:01.360 Zoom this afternoon. He's the CEO of IHS Towers. It's 0:21:01.359 --> 0:21:05.880 got nearly forty thousand towers across Africa, Latin America and 0:21:06.080 --> 0:21:09.879 the Middle East. Also the co founder and chairman of 0:21:09.920 --> 0:21:12.560 the company. Good to have you with us this afternoon. Sam, 0:21:12.600 --> 0:21:14.480 How are you good? 0:21:14.560 --> 0:21:14.800 Good? 0:21:14.840 --> 0:21:16.240 Thank you? How are you hey? 0:21:16.560 --> 0:21:19.400 I'm doing really well. Hey, this is perfect timing for 0:21:19.760 --> 0:21:22.000 you to come on our program because we are our 0:21:22.000 --> 0:21:25.800 own tech Bloomberg Technology team that day and mad Day 0:21:25.840 --> 0:21:29.600 and team wrote a piece about Project Kuiper earlier today, 0:21:29.600 --> 0:21:34.520 about Amazon's for a into providing high speed internet, and 0:21:34.560 --> 0:21:38.760 he said, you know, Amazon's not just competing against the 0:21:38.800 --> 0:21:42.520 SpaceX and the SpaceX is Starlinks of the world. He's 0:21:42.520 --> 0:21:47.000 competing with anyone out there right now providing connectivity. And 0:21:47.040 --> 0:21:51.440 that's a company like yours that provides the infrastructure for connectivity. 0:21:52.359 --> 0:21:54.520 How are you seeing the landscape right now in the 0:21:54.520 --> 0:21:55.640 markets that you operate. 0:21:58.480 --> 0:22:02.679 Look, we allperate, as you said, we own forty thousand 0:22:02.760 --> 0:22:06.960 towers roughly across and fiber in the tens of thousands 0:22:07.000 --> 0:22:11.440 of kilometers, covering eight or nine million homes across our markets. 0:22:11.520 --> 0:22:15.240 Our markets are we operate in eleven countries across the world, 0:22:16.760 --> 0:22:19.879 covering roughly eight hundred million people, as you said, So 0:22:19.920 --> 0:22:23.320 we kind of like see the trends, understand what's happening. 0:22:25.000 --> 0:22:27.399 The likes of Amazon and the likes of Google, the 0:22:27.520 --> 0:22:31.119 likes of Facebook do from time to time come to 0:22:31.200 --> 0:22:35.840 our markets trying to simulate basically demand for their own services. 0:22:35.880 --> 0:22:38.280 But we haven't come we haven't seen them come into 0:22:38.320 --> 0:22:41.359 our markets, kind of like with big statements or with 0:22:41.480 --> 0:22:45.520 big projects that could move the need. Now, having said that, 0:22:45.840 --> 0:22:48.720 at the end of the day, I get startling. 0:22:49.080 --> 0:22:50.560 I get all the. 0:22:54.280 --> 0:22:57.680 Projects or the ideas of trying to create connectivity using 0:22:57.760 --> 0:23:03.359 satellites or non terrestrial systems. But when it comes to 0:23:03.920 --> 0:23:08.000 basic propagation, basic wireless, there is no alternative to a 0:23:08.080 --> 0:23:09.080 tower on the ground. 0:23:09.280 --> 0:23:10.840 Really, why is that? 0:23:10.920 --> 0:23:13.159 Because you know, here I am thinking to myself, this 0:23:13.200 --> 0:23:15.879 could be a prime moment for you know what you 0:23:15.880 --> 0:23:18.880 guys in the industry called leap frogging. Here the technology, 0:23:19.000 --> 0:23:21.240 you know, this infrastructure technology is so expensive. I don't 0:23:21.240 --> 0:23:23.119 have to tell you. You guys own and operate forty thousand 0:23:23.160 --> 0:23:26.760 of these towers. These are very expensive things to build 0:23:27.119 --> 0:23:29.720 and to operate. And then you have this other technology 0:23:29.720 --> 0:23:32.320