WEBVTT - Cybersecurity, Fed Cut Outlook, Sectors to Watch 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.720 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:14.400 and Bloomberg experts, along with essential market moving news. Find 0:00:14.400 --> 0:00:17.439 the Bloomberg Markets podcast called Apple Podcasts or wherever you 0:00:17.520 --> 0:00:20.520 listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.160 --> 0:00:26.200 What's the cybersecurity outlook? Let's see. Wendy Whitmore is head 0:00:26.239 --> 0:00:30.319 of Unit forty two at Palo Alto Networks. Our next 0:00:30.360 --> 0:00:33.320 guest in studio with us. Thanks for starting. Why would 0:00:33.360 --> 0:00:35.760 you leave Palo Alto to come to New York. It's 0:00:35.800 --> 0:00:36.880 like twenty below here. 0:00:37.159 --> 0:00:39.159 It is cold here, There's no doubt about that. 0:00:39.520 --> 0:00:42.760 Annie, tell us what is what is the unit? Unit? 0:00:42.880 --> 0:00:44.279 Do I have that right? Unit forty two. 0:00:44.560 --> 0:00:47.919 Yeah, Unit forty two is really Paloouto Network special forces 0:00:47.960 --> 0:00:50.440 on the ground if you will, so we consult. We 0:00:50.479 --> 0:00:54.240 solve our clients crises, so incident response and breach investigations, 0:00:54.280 --> 0:00:56.760 threat intelligence and threat hunting throughout the world. 0:00:57.000 --> 0:00:58.800 And tell us a little bit about your clients. Who 0:00:58.800 --> 0:00:59.960 are they, what kind of work do they do? 0:01:00.800 --> 0:01:03.120 Our clients really do a bit of everything, right, they 0:01:03.200 --> 0:01:07.320 are global two thousand companies or smaller organizations or governments 0:01:07.360 --> 0:01:09.920 throughout the world. We partner with a tremendous amount of 0:01:09.920 --> 0:01:13.240 intelligence organizations to share information throughout the world as well 0:01:13.440 --> 0:01:15.200 related to cyber threats and attacks. 0:01:15.319 --> 0:01:18.840 Okay, what's the landscape right now in terms of cyber security? 0:01:19.000 --> 0:01:22.600 I mean it's just like I also get at least 0:01:22.640 --> 0:01:26.520 once a month, it seems now, a letter from whatever organization. 0:01:26.920 --> 0:01:30.520 Last month it was from Robert Wood Johnson University Hospital 0:01:30.520 --> 0:01:35.279 system saying they had a breach of their security, their 0:01:35.319 --> 0:01:40.000 their computer systems and some data patient data was leaked out. 0:01:40.280 --> 0:01:43.520 And oh you know, here's a consolation prize. We're going 0:01:43.600 --> 0:01:48.200 to give you a year free of cyber security threat 0:01:48.200 --> 0:01:53.000 detection or credit monitoring, whatever it is, credit monitoring. What's 0:01:53.040 --> 0:01:55.760 the landscape right now? Things seem to have gotten a 0:01:55.960 --> 0:01:56.680 lot worse. 0:01:57.200 --> 0:02:00.720 The landscape is a bit chaotic, especially going into twenty 0:02:00.760 --> 0:02:04.040 twenty four. We're going to have over sixty major elections 0:02:04.080 --> 0:02:06.560 throughout the world happening in this year alone. Right, this 0:02:06.600 --> 0:02:09.600 will be the largest voting that's ever occurred. So I 0:02:09.639 --> 0:02:12.200 think an easy way to remember it is the three 0:02:12.400 --> 0:02:16.880 s's speed scale and sophistication. We're seeing attacks happen faster 0:02:17.040 --> 0:02:19.519 than they have been before. So when an attacker gets 0:02:19.520 --> 0:02:22.280 in an environment, they are stealing data within a matter 0:02:22.320 --> 0:02:26.200 of hours in some cases. From a scale perspective, you mentioned, 0:02:26.240 --> 0:02:28.280 you know, maybe on a weekly basis that you're getting 0:02:28.280 --> 0:02:31.519 a letter write about another breach that's occurred. This scale 0:02:31.600 --> 0:02:34.359 attackers for the first time in history, they're no longer 0:02:34.639 --> 0:02:37.320 doing only spear phishing, which is sending an email to 0:02:37.360 --> 0:02:39.120 an employee right and they click on a link and 0:02:39.120 --> 0:02:43.360 they get infected that way. They're actually exploiting vulnerabilities at scale, 0:02:43.520 --> 0:02:47.240 So within hours there could be hundreds of thousands of 0:02:47.280 --> 0:02:51.919 systems affected by a three CX and Microsoft Exchange for example. 0:02:52.240 --> 0:02:56.080 And then sophistication. It's long been certainly that nation state 0:02:56.120 --> 0:02:59.160 actors are highly sophisticated, but now we're looking at cyber 0:02:59.200 --> 0:03:02.360 criminals who have a deeper understanding of business to business 0:03:02.400 --> 0:03:06.000 interactions and processes than we've ever seen before, and they're 0:03:06.080 --> 0:03:07.280 using that to their advantage. 0:03:07.680 --> 0:03:11.840 Wow, So a few things I'm scared. A few things 0:03:11.840 --> 0:03:14.359 you just mentioned there that definitely made me scared. You're 0:03:14.400 --> 0:03:19.760 mentioning cybersecurity elections and nation states of course makes me 0:03:19.800 --> 0:03:23.200 think twenty sixteen, you know, we are heading toward another 0:03:23.240 --> 0:03:26.120 election here in the US, very likely could have Trump 0:03:26.200 --> 0:03:29.000 on the ballot again. I don't know, do we start 0:03:29.040 --> 0:03:32.200 thinking again about potential Russian interference in the US election? 0:03:32.320 --> 0:03:34.360 I mean, where is your mind at right now in 0:03:34.440 --> 0:03:37.000 terms of threats with this election coming up? 0:03:37.680 --> 0:03:39.560 I think that's a great question. But I think the 0:03:39.600 --> 0:03:41.839 reality is we have to be thinking about nation state 0:03:41.880 --> 0:03:45.720 interference from countries throughout the world. Right, we have now 0:03:45.760 --> 0:03:48.640 with the onset and advent of generative AI, we have 0:03:48.720 --> 0:03:53.480 the ability to speed up written and verbal communications and 0:03:53.520 --> 0:03:56.640 make them sound more polished and genuine than we've ever 0:03:56.680 --> 0:03:59.960 seen before. So I would imagine from a disinformation campaig, 0:04:00.480 --> 0:04:02.920 we're going to see more of those emanating from throughout 0:04:02.920 --> 0:04:06.240 the world, and we really need to be concerned about 0:04:06.280 --> 0:04:07.760 where information is coming from. 0:04:08.240 --> 0:04:11.360 From a business perspective, and particularly one of the areas 0:04:11.400 --> 0:04:14.760 that uncovered with the small businesses, and they are especially 0:04:14.840 --> 0:04:17.479 vulnerable because they just don't have the resources I would 0:04:17.520 --> 0:04:21.240 imagine to combat this on a regular basis. They're liable 0:04:21.520 --> 0:04:25.440 when that information when a client's information is stolen, right, 0:04:25.720 --> 0:04:28.040 I mean from a legal perspective, they have to keep 0:04:28.080 --> 0:04:29.440 that in mind certainly. 0:04:30.720 --> 0:04:33.359 You know, cybersecurity is really a team sport at this point. 0:04:33.400 --> 0:04:35.400 And you hit on a key factor of that, which 0:04:35.480 --> 0:04:38.560 is small businesses are not only responsible for their own information, 0:04:38.960 --> 0:04:40.960 but for those of their clients, and they may have 0:04:41.560 --> 0:04:43.800 a chain where they're part of a big supply chain 0:04:44.080 --> 0:04:47.160 for a large organization that does have more resources. So 0:04:47.240 --> 0:04:50.560 that is a huge challenge for executives throughout the world 0:04:50.600 --> 0:04:52.839 today is to make sure that not only they're securing 0:04:52.880 --> 0:04:56.400 their own communications, but their clients are consumers and everyone 0:04:56.400 --> 0:04:57.320 they're doing business with. 0:04:57.800 --> 0:04:59.560 Yeah, you know, this was actually even like a really 0:04:59.560 --> 0:05:03.400 big top heading into Davos this week that the survey 0:05:04.160 --> 0:05:08.320 that some of these diplomats were conducted on were heading 0:05:08.320 --> 0:05:12.360 into the World Economic Forum, that they ranked misinformation and 0:05:12.400 --> 0:05:15.720 disinformation as the one as the top risk out of 0:05:15.720 --> 0:05:19.320 ten for the short term and the long term. So 0:05:19.400 --> 0:05:21.840 I thought that or sorry, the short term risk being 0:05:23.120 --> 0:05:26.320 being this misinformation. So it is really interesting, I mean, 0:05:26.360 --> 0:05:29.039 how does that then affect like the work that you do. 0:05:29.040 --> 0:05:30.880 Do you feel like this is even more like under 0:05:30.920 --> 0:05:33.040 a microscope and being scrutinized right now? 0:05:33.640 --> 0:05:36.800 Well, I think the challenge with disinformation for example, is 0:05:36.880 --> 0:05:39.760 it's not like a traditional cyber attack where you're necessarily 0:05:39.800 --> 0:05:42.279 stealing data from an organization and there's some piece of 0:05:42.320 --> 0:05:45.880 evidence to prove right. It really relies on the reader, 0:05:45.960 --> 0:05:49.040 the viewer, the consumer of that information to be discerning 0:05:49.120 --> 0:05:52.159 and to understand and do their fact checking to really, 0:05:52.400 --> 0:05:54.360 you know, get to the degree of is this information 0:05:54.520 --> 0:05:57.120 legitimate or not to the degree that it has impact 0:05:57.200 --> 0:05:59.599 on a business and the economy. I think that's a 0:05:59.760 --> 0:06:02.760 you know, true factor. So twenty twenty four we're likely 0:06:02.800 --> 0:06:04.480 to see more of that than we've seen before. 0:06:05.320 --> 0:06:10.080 So with computing capacity you know, growing exponentially, et cetera, 0:06:10.279 --> 0:06:13.919 so forth, I would imagine it's not a question of when, 0:06:14.080 --> 0:06:18.479 but if, not a question of if, but when you're 0:06:18.480 --> 0:06:21.480 going to suffer a cyber attack, a devastating cyber attack, 0:06:22.040 --> 0:06:23.200 how do you protect yourself? 0:06:23.480 --> 0:06:26.400 And no doubt organizations are aware this is happening at 0:06:26.440 --> 0:06:28.960 a faster pace, right than we've ever seen before. So 0:06:29.000 --> 0:06:31.080 I think the keys there are really being able to 0:06:31.200 --> 0:06:34.960 understand what visibility into your environment, so understanding what are 0:06:35.040 --> 0:06:38.800 legitimate communications and interactions what are not, And then what 0:06:38.960 --> 0:06:41.920 something that everyone can do is practice in advance, right 0:06:42.000 --> 0:06:44.240 practice these plans make sure you know how to get 0:06:44.240 --> 0:06:46.720 a hold of your employees and your team members, and 0:06:47.680 --> 0:06:49.440 in the event that you don't have access to your 0:06:49.480 --> 0:06:52.360 primary email and other types of communications, that you can 0:06:52.400 --> 0:06:56.480 really respond quickly. On a personal note, I cannot stress 0:06:56.600 --> 0:06:59.600 enough do not reuse the same passwords for every single account, 0:06:59.680 --> 0:07:03.040 for every application, and for every application you can make 0:07:03.040 --> 0:07:05.960 sure you have multi factor authentication enabled so that you 0:07:06.040 --> 0:07:07.920 make yourself less of a target. 0:07:07.640 --> 0:07:10.840 And don't click those emails. John say alert, Oh. 0:07:10.720 --> 0:07:14.640 Wendy, do you have like just anecdotally, like, what's give 0:07:14.760 --> 0:07:16.560 us some horror stories that you've dealt with. 0:07:17.320 --> 0:07:20.040 Well, So, for example, just last week, we're working for 0:07:20.120 --> 0:07:23.840 an incident response, meaning a breach investigation for a healthcare organization, 0:07:24.280 --> 0:07:26.720 and in this case it's a ransomware actor. Not only 0:07:26.760 --> 0:07:29.680 do they reach out to try to extort the healthcare organization, 0:07:30.000 --> 0:07:32.800 they're reaching out individually to patients and in this case 0:07:32.800 --> 0:07:35.800 it's cancer patients, and they're saying, hey, for three dollars, 0:07:35.840 --> 0:07:38.840 you can preview the information that we've stolen about you, 0:07:39.160 --> 0:07:41.400 and for fifty dollars you can pay us to make 0:07:41.440 --> 0:07:43.680 sure that we don't expose this further on the internet. 0:07:44.400 --> 0:07:47.240 This is horrific behavior. We're likely to see more of 0:07:47.280 --> 0:07:50.760 this as these ransomware actors continue to monetize their attacks. 0:07:51.080 --> 0:07:55.880 They ever caught the ransomware actors or they rush or 0:07:55.920 --> 0:07:59.640 some far off place where you're never going to you 0:07:59.760 --> 0:08:00.640 just reach them. 0:08:00.920 --> 0:08:02.680 Well, the great news I think is there's a lot 0:08:02.720 --> 0:08:05.440 more information now, So multiple governments throughout the world are 0:08:05.440 --> 0:08:08.840 collaborating on these attacks. We have law enforcement actually going 0:08:08.840 --> 0:08:13.400 after disrupting these ransomware actors their infrastructure, so the tools 0:08:13.400 --> 0:08:16.000 that they're using to host and wage these attacks. And 0:08:16.040 --> 0:08:18.160 then certainly we're moving to the point where we're now 0:08:18.200 --> 0:08:22.679 disrupting from an actual arrest standpoint too. So good news, 0:08:22.720 --> 0:08:24.480 but still slow going in that aspect. 0:08:24.680 --> 0:08:26.440 So one more here for you, Wendy. We had some 0:08:26.480 --> 0:08:28.880 news out of JP Morgan this morning. They're saying that 0:08:28.880 --> 0:08:31.080 they've seen an increase in hackers that are trying to 0:08:31.120 --> 0:08:35.480 infiltrate their systems and JP Morgan spends about fifteen billion 0:08:35.520 --> 0:08:38.800 dollars a year on technology as part of its attempts 0:08:38.800 --> 0:08:42.680 to bolster its cyber defenses. Obviously we're not all JP Morgan, 0:08:42.720 --> 0:08:44.760 but this could get very expensive. 0:08:45.080 --> 0:08:47.839 Oh, no doubt. I mean, this has a true economic impact, right. 0:08:47.840 --> 0:08:49.760 But I think the good news there and the silver 0:08:49.880 --> 0:08:53.319 lining is we're seeing so many more organizations really effectively 0:08:53.400 --> 0:08:56.440 prepare to detect these attacks. So in JP Morgan's case, 0:08:56.640 --> 0:08:59.560 they're detecting them, they're preventing them, they're gathering data that 0:08:59.559 --> 0:09:02.240 they're sharing with the community so that more and more 0:09:02.280 --> 0:09:05.280 others can also protect and defend themselves as well. So 0:09:05.440 --> 0:09:07.040 I think there's a good story there as well. 0:09:07.280 --> 0:09:11.240 Okay, I'm changing my passer from JBT one two three four. 0:09:11.520 --> 0:09:15.440 It's not password one two three Oh no, that was 0:09:15.480 --> 0:09:16.120 my old one. 0:09:16.240 --> 0:09:19.640 Okay, Wendy, thanks so much. Wendy Whitmore is senior vice president, 0:09:19.679 --> 0:09:24.120 head of Unit forty two at Pallo Outdo Networks in 0:09:24.160 --> 0:09:26.680 the studio, so she gets a goals start today. 0:09:27.640 --> 0:09:31.040 You're listening to the team, can't her live program Bloomberg 0:09:31.080 --> 0:09:34.520 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:09:34.559 --> 0:09:37.680 the iHeartRadio app and the Bloomberg Business App, or listen 0:09:37.760 --> 0:09:39.880 on demand wherever you get your podcasts. 0:09:41.760 --> 0:09:44.600 Is twenty twenty four, the year for a rebound. Our 0:09:44.679 --> 0:09:47.680 next guest has some thoughts on that. Thomas Smell is 0:09:47.760 --> 0:09:51.560 CEO of f E International. Before we get to the deals. 0:09:51.600 --> 0:09:53.680 What do you guys do? What is the company you 0:09:53.720 --> 0:09:54.280 have all about? 0:09:54.400 --> 0:09:57.559 So f International we focus on middle market tech, M 0:09:57.600 --> 0:10:00.760 and A too, work with buys and sellers of companies 0:10:00.840 --> 0:10:04.600 up to generally three hundred million in evaluation. In total, 0:10:04.640 --> 0:10:07.800 we've closed over fifteen hundred transactions. 0:10:07.880 --> 0:10:12.080 So you're in an advisory capacity exactly where an advisor. Yeah, okay, 0:10:12.880 --> 0:10:15.320 twenty twenty three is a year year. I would imagine 0:10:15.360 --> 0:10:17.520 you want to forget what's the outlook? 0:10:17.800 --> 0:10:19.960 Yeah, So I mean twenty twenty three I think finished 0:10:19.960 --> 0:10:21.959 on a reasonable high. So if we look at our 0:10:22.000 --> 0:10:25.120 deal volume second half of twenty twenty three versus second 0:10:25.160 --> 0:10:27.800 half of twenty twenty two, we're up fifty six percent. 0:10:27.880 --> 0:10:30.840 So deals are still happening, particularly in the middle market. 0:10:30.880 --> 0:10:34.040 Lower middle market, I think where a lot of people 0:10:34.080 --> 0:10:37.320 see deal volumes slow down as really those much larger transactions, 0:10:37.400 --> 0:10:41.400 So it's much less those billion dollar and above deal's happening, 0:10:41.440 --> 0:10:44.400 but the still activity lower down. 0:10:44.679 --> 0:10:47.120 Yeah, and it sounds like this year obviously, if interest 0:10:47.200 --> 0:10:49.120 rates are going to come down, that should probably help 0:10:49.160 --> 0:10:50.800 give a boost to the outlook. 0:10:50.440 --> 0:10:52.560 This year, right, Yeah, for sure, I think last year 0:10:52.559 --> 0:10:54.320 there was a lot of uncertainty about what's going to 0:10:54.320 --> 0:10:56.600 happen to interest rates, and they kept getting pushed upwards, 0:10:56.679 --> 0:10:58.160 so a lot of buyers were kind of sitting on 0:10:58.200 --> 0:11:00.800 the sidelines waiting to see what would happen. Now, I 0:11:00.840 --> 0:11:04.400 think most analysts are predicting maybe two or three interest 0:11:04.440 --> 0:11:08.080 rate cuts this year, so buyers are definitely getting more active, 0:11:08.120 --> 0:11:11.600 particularly those who are using debt. But on the flip side, 0:11:11.640 --> 0:11:15.360 there's still four trillion dollars of dry powder with private 0:11:15.360 --> 0:11:18.000 equity firms that they need to deploy, which is sitting 0:11:18.000 --> 0:11:20.680 there in cash, so there's still the ability to do 0:11:20.720 --> 0:11:22.120 deals even if they don't use debt. 0:11:22.640 --> 0:11:25.360 How does it work. Do they come to you mostly 0:11:25.559 --> 0:11:28.600 or you see the opportunity, are like, hey, this is 0:11:28.640 --> 0:11:32.240 something that might make sense in terms of M and A, 0:11:32.440 --> 0:11:34.280 and you approach those companies. 0:11:34.360 --> 0:11:36.200 So generally they will come to us. We've been in 0:11:36.240 --> 0:11:38.080 business like fourteen years now, so we get a lot 0:11:38.120 --> 0:11:40.360 of word of mouth. Founders will come directly to us 0:11:40.400 --> 0:11:42.920 wanting us to help sell their business. Maybe they're ready 0:11:43.000 --> 0:11:45.240 to move on, maybe they've had an approach and they 0:11:45.240 --> 0:11:47.800 want someone to help advise them. And then we'll work 0:11:47.840 --> 0:11:51.040 through the process of reaching out to suitable buyers and 0:11:51.120 --> 0:11:52.080 negotiating from that. 0:11:53.480 --> 0:11:56.600 How do they reach that decision? Give me a specific 0:11:56.880 --> 0:11:59.280 like when they know it's time to do something. 0:11:59.320 --> 0:12:01.000 Yeah, So for a lot of people, that's very much 0:12:01.000 --> 0:12:04.560 the personal decision. So like everyone has, I think in 0:12:04.600 --> 0:12:07.040 the entrepreneurial world has their number. The number might be 0:12:07.480 --> 0:12:10.480 ten million, fifty million, one hundred million, two hundred million. 0:12:10.559 --> 0:12:13.000 Personally they want to walk away with when they get 0:12:13.040 --> 0:12:14.600 to that level in terms of where they can sell 0:12:14.640 --> 0:12:17.280 their company, they might just decide to walk away. Then 0:12:17.640 --> 0:12:19.079 some people walk away when they have a change of 0:12:19.280 --> 0:12:22.840 personal circumstances. Maybe they've got kids going to college and 0:12:22.840 --> 0:12:24.480 they want to kind of spend more time with them, 0:12:24.600 --> 0:12:26.440 or maybe they want to spend less time with them 0:12:26.480 --> 0:12:29.319 and where they want to take time away from from work. 0:12:29.400 --> 0:12:33.160 It can work in even directions. A lot of the time, 0:12:33.160 --> 0:12:35.000 founders just get an approach, So they get an approach 0:12:35.000 --> 0:12:37.720 from a buyer that gets them excited about the idea 0:12:37.720 --> 0:12:39.600 of selling and they just want someone to help kind 0:12:39.600 --> 0:12:42.160 of work through the process with them. Other times, I think, 0:12:42.240 --> 0:12:44.640 particularly in kind of the current world of tech, it 0:12:44.720 --> 0:12:48.000 moves so quickly, founders will have new ideas that they're like, well, 0:12:48.040 --> 0:12:50.079 I've got a new business idea. How about I sell 0:12:50.160 --> 0:12:52.480 my current company. I'm going to go work on this instead, 0:12:52.600 --> 0:12:54.280 and I'll get some liquidity in the meantime. 0:12:54.880 --> 0:12:58.319 So you'd mentioned private equity. Are you working in transactions 0:12:58.320 --> 0:13:00.640 a lot that in which case that is buyer or 0:13:00.679 --> 0:13:04.200 is this mostly you know, one business acquiring another. 0:13:04.720 --> 0:13:07.280 Yeah, so privacy probably makes up about fifty percent of 0:13:07.360 --> 0:13:09.880 the deals we work on. We work with a lot 0:13:09.880 --> 0:13:12.040 of public companies as well, who are trying to make 0:13:12.080 --> 0:13:15.480 acquisitions at all levels. I think a lot of people 0:13:15.520 --> 0:13:19.280 think public companies only buy billion dollar businesses, but the 0:13:19.360 --> 0:13:22.360 reality is, if there's a strategic fit, they might look 0:13:22.360 --> 0:13:24.840 at a five million dollar business, a ten million dollar business, 0:13:25.240 --> 0:13:28.720 fifty million dollar market cap business. And then a lot 0:13:28.720 --> 0:13:31.360 of individuals are like very small funds. You might not 0:13:31.360 --> 0:13:34.559 necessarily call them private equity, but they're kind of successful 0:13:34.600 --> 0:13:37.880 individuals or partnerships have raised a small amount of money 0:13:37.880 --> 0:13:40.400 to buy a business as well. Particularly in the US, 0:13:40.400 --> 0:13:43.000 that's a very active demographic of buyer. 0:13:43.559 --> 0:13:47.000 Okay, So looking forward to twenty twenty four, are there 0:13:47.000 --> 0:13:50.760 any particular sectors that you deal with that look better 0:13:50.920 --> 0:13:54.440 than others? Where is the deal activity in terms of that. 0:13:55.000 --> 0:13:56.800 So I think that the big trend at the moment 0:13:56.920 --> 0:13:59.800 is anything related to AI. And I think the interesting 0:13:59.800 --> 0:14:04.040 thing about AI is, even if you don't necessarily understand it, 0:14:04.120 --> 0:14:06.600 every single business out there has a way they can 0:14:07.080 --> 0:14:10.920 improve with the use of AI. Lots of other kind 0:14:10.920 --> 0:14:12.960 of sub industries that have come up over the years 0:14:13.360 --> 0:14:17.160 have not necessarily had that kind of ability to be 0:14:17.160 --> 0:14:21.120 applied in literally every business. So lots of companies we're 0:14:21.160 --> 0:14:23.680 working with or acquiers that come to us and say, hey, 0:14:23.680 --> 0:14:26.720 we're looking to buy a business interest in AI, either 0:14:26.760 --> 0:14:29.120 to augment what they already have, so maybe they can 0:14:29.120 --> 0:14:30.960 add some tools or even like a team to their 0:14:30.960 --> 0:14:35.560 existing kind of business or whatever they might have, so 0:14:35.600 --> 0:14:38.960 you can augment that by adding AI, or maybe if 0:14:39.000 --> 0:14:42.680 you're building a business in the AI space, it's a 0:14:42.720 --> 0:14:45.280 great time to sell because it's such a hot market. 0:14:45.400 --> 0:14:48.360 So at the moment, we have a nine figure transaction 0:14:48.440 --> 0:14:52.280 we're representing. They've built the business in three years to 0:14:52.360 --> 0:14:57.160 over twenty million in revenue, no outside funding, currently actively 0:14:57.200 --> 0:15:01.680 looking for a buyer, and it's so far extremely interesting 0:15:01.720 --> 0:15:04.280 with buyers just because of the amount of kind of 0:15:04.360 --> 0:15:05.440 AI focus it has. 0:15:05.920 --> 0:15:07.960 Last one here a few of Thomas, And we've been 0:15:08.000 --> 0:15:10.040 talking a bit about earlier in the show about the 0:15:10.080 --> 0:15:13.360 regulatory outlook for M and A, especially with the Jeb 0:15:13.360 --> 0:15:16.440 Blue and Spirit deal that didn't come through. So tell 0:15:16.520 --> 0:15:19.040 us a little bit about that from your perspective, and 0:15:19.480 --> 0:15:21.840 especially if we're heading into an election year and maybe 0:15:21.840 --> 0:15:23.400 that administration could change. 0:15:23.680 --> 0:15:27.440 Yeah, So I think buyers are always aware of political changes, 0:15:27.480 --> 0:15:30.520 and that's not just necessarily in the US. That's geopolitically. 0:15:30.520 --> 0:15:35.600 There's things all over the world that could affect effect deals. 0:15:35.640 --> 0:15:38.800 So from that perspective, buyers will always be thinking about it. 0:15:38.880 --> 0:15:41.560 Regulatory risk is very much specific to the industry you 0:15:41.640 --> 0:15:44.640 might be working within. So recently we worked on a 0:15:44.640 --> 0:15:48.720 business in the CBD space, which we successfully sold, but 0:15:49.160 --> 0:15:53.080 there's constant regulatory changes with CBD. So if you're an 0:15:53.120 --> 0:15:56.800 acquirer looking to buy businesses in that space, either you're 0:15:56.800 --> 0:16:00.640 going to be extremely confident and knowledgeable of that industry, 0:16:01.120 --> 0:16:02.680 or you're going to do a lot of extra research 0:16:02.680 --> 0:16:06.680 into what might necessarily change or what could potentially change 0:16:06.680 --> 0:16:09.280 in future, or maybe you'll even risk adjust your offer 0:16:09.320 --> 0:16:12.080 and say, well, there's regulatory risk in this market, we're 0:16:12.120 --> 0:16:13.720 going to pay less for that business. 0:16:14.120 --> 0:16:16.800 Thomas A pleasure and thanks for stopping by in the 0:16:16.920 --> 0:16:20.640 in studio guest A gold star for Thomas Smoe, CEO 0:16:20.840 --> 0:16:23.560 of FI International Advising on. 0:16:24.080 --> 0:16:24.440 M and A. 0:16:25.400 --> 0:16:29.040 You're listening to the tape Cansur live program Bloomberg Markets 0:16:29.080 --> 0:16:32.480 weekdays at ten am Eastern on Bloomberg Radio, the tune 0:16:32.520 --> 0:16:34.280 in app, Bloomberg dot Com. 0:16:34.040 --> 0:16:35.480 And the Bloomberg Business App. 0:16:35.520 --> 0:16:38.320 You can also listen live on Amazon Alexa from our 0:16:38.360 --> 0:16:42.720 flagship New York station, Just Say Alexa play Bloomberg eleven. 0:16:42.440 --> 0:16:47.440 Thirty Joining us now Robert Stein, Managing director partner at 0:16:47.600 --> 0:16:51.760 Blankie Shine Wealth Management. How does an investor play this? 0:16:52.800 --> 0:16:57.280 Back and forth? Fed going to cut March Now it's later, 0:16:57.880 --> 0:17:01.360 fewer cuts maybe what how do you view all this? 0:17:02.800 --> 0:17:05.320 Well, good morning, John and Molly, And I think if 0:17:05.359 --> 0:17:07.040 we go back a month ago, when I was in 0:17:07.080 --> 0:17:11.080 the Bloomberg Radio studios, I did say that, you know, 0:17:11.280 --> 0:17:15.760 the markets were anticipating and asking for in twenty twenty 0:17:15.800 --> 0:17:19.480 four a rate cut. In fact, obviously you saw equity markets, 0:17:19.520 --> 0:17:23.439 risk assets price that in super aggressively. We were in 0:17:23.440 --> 0:17:25.720 the camp of as I said then, and I still 0:17:25.720 --> 0:17:28.520 believe that it's going to be higher for longer, and 0:17:28.560 --> 0:17:30.920 the federers are going to have to walk that tightrope 0:17:30.960 --> 0:17:33.760 simply because if you look at the sort of trajectory 0:17:33.760 --> 0:17:37.760 of inflation through history, you get two humps of inflation, 0:17:37.880 --> 0:17:41.040 and the FED can't pull down sort of the interest 0:17:41.119 --> 0:17:44.600 rate to re ignite some of the inflationary pressures. They 0:17:44.600 --> 0:17:48.200 have to ensure that inflation is anchored before they go ahead. 0:17:48.200 --> 0:17:50.760 I mean about seventy eight percent of the time historically speaking, 0:17:50.920 --> 0:17:53.879 inflation comes in two waves. So you know what the 0:17:53.920 --> 0:17:56.840 FED basically is done now is that for twenty twenty four, 0:17:56.960 --> 0:17:59.280 it's not a no on rate hikes. It's no for 0:17:59.359 --> 0:17:59.879 right now. 0:18:00.440 --> 0:18:04.080 How much do you think of the disinflation we've seen 0:18:04.119 --> 0:18:06.200 that the FED can really take credit for. This is 0:18:06.240 --> 0:18:08.240 something I've been wondering and I feel like so much 0:18:08.280 --> 0:18:11.320 of it has just been like the supply side normalizing, 0:18:11.400 --> 0:18:14.600 you know, since from those big COVID disruptions and a 0:18:14.600 --> 0:18:17.000 lot of those supply chains getting back in order. Do 0:18:17.040 --> 0:18:19.480 you really think, though, Rob, that these at the FED 0:18:19.520 --> 0:18:21.280 can take credit for a lot of what we've seen. 0:18:22.560 --> 0:18:25.960 Yeah, I think we've been We're in a territory including 0:18:25.960 --> 0:18:28.560 the FED, that no one has ever seen before. So 0:18:29.040 --> 0:18:31.760 you know, retail is working through that, services are working 0:18:31.800 --> 0:18:34.800 through that, Federal reserve, businesses are working through that. You know, 0:18:34.880 --> 0:18:37.840 one thing's good is this supply chain got tighter and 0:18:37.880 --> 0:18:40.480 then I got sort of a lot more efficient, if 0:18:40.480 --> 0:18:42.879 you will, And I think a lot of businesses became 0:18:42.920 --> 0:18:45.199 a lot more efficient even moving forward. So that's going 0:18:45.280 --> 0:18:47.720 to be leading to greater profitability for a lot of 0:18:47.760 --> 0:18:50.280 businesses that learn through COVID. But if you look at 0:18:50.280 --> 0:18:52.840 the shift in consumption, and two thirds of the economy 0:18:53.000 --> 0:18:57.600 is consumption, it's basically the services sector that's still seeing 0:18:57.640 --> 0:19:00.280 that spike up. Look at airline prices, look at all 0:19:00.280 --> 0:19:03.640 the inflationary prices where people are like shifting their spending. 0:19:03.880 --> 0:19:07.040 We just got retail sales goods. You know, American consumer 0:19:07.080 --> 0:19:09.160 will always find a way, whether it's the credit card 0:19:09.240 --> 0:19:11.960 or whether it's the savings that they had saved up to. 0:19:12.240 --> 0:19:15.080 You know, make certain that Christmas is still Christmas at home. 0:19:15.480 --> 0:19:17.320 But it's going to take some time to see we're 0:19:17.359 --> 0:19:19.679 going to see a lot more pressure build on the consumer. 0:19:19.920 --> 0:19:22.359 But the shift in spending is quite clear. It's still 0:19:22.400 --> 0:19:23.760 services for this year. 0:19:24.359 --> 0:19:27.720 Okay, we can definitely say there is something of a 0:19:27.800 --> 0:19:30.680 pivot the degree to which you can argue about and 0:19:30.920 --> 0:19:35.560 we're definitely headed towards that two percent, although with maybe 0:19:35.600 --> 0:19:40.280 fits and starts, so a disinflationary environment or outright deflation 0:19:40.400 --> 0:19:43.560 in some sectors. I asked this of all our equity guests, 0:19:43.800 --> 0:19:47.200 what does that mean for earnings, especially the top line 0:19:47.280 --> 0:19:48.360 sales growth. 0:19:49.840 --> 0:19:50.280 Earnings? 0:19:50.280 --> 0:19:53.000 If you look at you know again, that's going to 0:19:53.040 --> 0:19:55.080 be at the forefront. We just had the two biggest 0:19:55.080 --> 0:19:58.240 points you know, a year to date. As it relates 0:19:58.240 --> 0:20:01.920 to CPI information as well as market it's not exactly 0:20:01.960 --> 0:20:03.880 going in the right direction in terms of as much 0:20:04.000 --> 0:20:07.320 movement as the FED needs to see, but the earnings 0:20:07.359 --> 0:20:10.080 is on the forefront. And corporations. If you look at 0:20:10.119 --> 0:20:13.840 tech two years ago, tech literally started laying off in 0:20:13.880 --> 0:20:17.160