WEBVTT - Wall Street Tempers Bonus Expectations In Pandemic Year 0:00:01.360 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.200 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Find the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple podcast or wherever you listen to podcasts, 0:00:17.000 --> 0:00:20.720 and on Bloomberg dot com. Our Carol Master in for 0:00:20.840 --> 0:00:22.759 Paul and Bonnie and our most read story on the 0:00:22.760 --> 0:00:25.959 Bloomberg in the past eight hours. It's about Wall Street 0:00:26.000 --> 0:00:29.080 bonuses and how once again, those big Wall Street firms 0:00:29.080 --> 0:00:33.680 are kind of reminding their employer employees, I should say, 0:00:33.720 --> 0:00:36.840 really specifically traders to kind of temper back their expectations 0:00:36.840 --> 0:00:38.639 when it comes to those bonus checks. So let's get 0:00:38.640 --> 0:00:41.400 into it with her own Lenan new And she is 0:00:41.520 --> 0:00:43.640 FINANCEI reporter at Bloomberg News. She's with us on the 0:00:43.680 --> 0:00:46.560 phone in New York City. Uh Nan, no surprise that 0:00:46.680 --> 0:00:49.559 this is your most read story on the Bloomberg. You know, 0:00:49.600 --> 0:00:52.720 but I feel like these bonus stories and a tempering 0:00:52.720 --> 0:00:55.920 of expectations have been trickling out over the last month 0:00:56.040 --> 0:00:58.960 or so. What's up with it? Especially in a year 0:00:59.080 --> 0:01:04.800 where Trader did really well for these firms, Thanks Carol. Yeah, 0:01:04.800 --> 0:01:07.720 the traders really crushed it this year, and obviously that's 0:01:07.760 --> 0:01:10.400 maybe a function also of the markets being so wild 0:01:10.480 --> 0:01:13.400 and volatile as well. So um, you know, there's a 0:01:13.480 --> 0:01:16.240 little bit of credit to the traders for doing well, 0:01:16.280 --> 0:01:18.840 but also you know, the environment was just better for them. 0:01:18.959 --> 0:01:22.880 So um. Even though some of the banks really recorded 0:01:22.920 --> 0:01:26.400 sort of huge, huge jumps in trading revenue, it seems 0:01:26.480 --> 0:01:28.440 like this year, you know, the banks are going to 0:01:28.480 --> 0:01:30.880 be a little bit more prudent, a little bit more cautious, 0:01:30.920 --> 0:01:34.120 and not not make those big payouts. We're hearing, you 0:01:34.120 --> 0:01:37.040 know from messaging from across the street that looks some 0:01:37.280 --> 0:01:41.160 big performers will get compensated, but others, um will not 0:01:41.480 --> 0:01:43.760 or you know, will be disappointed. All right, I just 0:01:43.800 --> 0:01:46.120 want to know what those discussions are, like, Lennan, Like, 0:01:46.240 --> 0:01:48.559 is it like the big bosses like send a little 0:01:48.600 --> 0:01:51.240 email around or the big boss tells the boss right 0:01:51.320 --> 0:01:52.920 under it just to like tell your team it's not 0:01:52.960 --> 0:01:54.320 going to be as rosy as you thought. Like, how 0:01:54.320 --> 0:01:57.240 does it play out on Wall Street? Um? Well, I 0:01:57.520 --> 0:02:00.320 don't think much of it happens by email, but probably 0:02:00.320 --> 0:02:02.800 not a kind of it's a telegraphing, right, it's a 0:02:02.880 --> 0:02:06.560 signaling effect. You know. We we heard about a manager 0:02:06.600 --> 0:02:08.840 at Bank of America who had a kind of Sunday 0:02:09.000 --> 0:02:12.120 Sunday afternoon call with his teams kind of trying to 0:02:12.160 --> 0:02:15.600 manage expectations. And that's really important here because you don't 0:02:15.720 --> 0:02:18.240 want people going into you know, Jan said, thinking they're 0:02:18.240 --> 0:02:20.799 going to get at race in their bonus and then 0:02:20.880 --> 0:02:24.200 get zero. Right. Yeah, you know, it's a it's a 0:02:24.280 --> 0:02:28.240 really kind of important signaling mechanism that happens that towards 0:02:28.320 --> 0:02:30.880 your end. And also there are a few test balloons 0:02:30.919 --> 0:02:33.200 as well. You know, if they send out some messages 0:02:33.200 --> 0:02:36.000 and um, you know people are up in arms, then 0:02:36.360 --> 0:02:38.760 managers can go back to say the board or the 0:02:38.800 --> 0:02:40.960 executive committee and say, look, you know I need more 0:02:41.280 --> 0:02:44.000 and it's a bigger pot for my for my guys. So, um, 0:02:44.320 --> 0:02:46.400 it is a negotiation process. So we want to make 0:02:46.440 --> 0:02:49.200 that clear there there are still negotiations taking places, not 0:02:49.280 --> 0:02:53.160 all completely baked yet they're always is wiggle room right? Hey? 0:02:53.240 --> 0:02:56.440 Is it different though for fixed income versus equities versus 0:02:56.440 --> 0:02:58.359 you know, different asset classes when it comes to those 0:02:58.400 --> 0:03:01.120 bonuses this year, I'm assuming it usually is but I'm 0:03:01.120 --> 0:03:03.839 wondering if this year is any different. Yeah, I think 0:03:04.000 --> 0:03:06.280 most what we're hearing is that fixed income is going 0:03:06.320 --> 0:03:08.720 to do better UM. And again this is varies depending 0:03:08.760 --> 0:03:11.359 on the strength of the bank UM and where their 0:03:11.400 --> 0:03:13.440 skill sets are. But it sounds to me like the 0:03:13.480 --> 0:03:17.400 fixed income groups are going to um get more than 0:03:17.440 --> 0:03:21.960 their equities trading counterparts. UM. So that's the general tone. 0:03:22.000 --> 0:03:24.119 But again that is going to very bank to bank 0:03:24.160 --> 0:03:25.880 and death to death. This is going to be an 0:03:25.960 --> 0:03:29.280 unusual year in which the performance and the comp is 0:03:29.280 --> 0:03:31.720 going to be very very um you know, kind of 0:03:32.639 --> 0:03:35.960 varied among the banks because of just the strange the 0:03:36.000 --> 0:03:39.040 strangeness is pandemic and the performance. Listen, I love in 0:03:39.120 --> 0:03:42.440 your story. There's a quote from City Group CEO Mike 0:03:42.480 --> 0:03:45.960 Corbett UM who's on his way out. UM. But he says, 0:03:46.000 --> 0:03:48.480 we've got to be mindful of our returns and our shareholders. 0:03:48.520 --> 0:03:50.800 We've got to be mindful of our environment that we're 0:03:50.840 --> 0:03:53.000 in and the many challenges that are out there for 0:03:53.040 --> 0:03:55.520 people in certain businesses. At the same time, he said, 0:03:55.600 --> 0:03:59.040 you know, we've got to be competitive in our industry. Uh. 0:03:59.080 --> 0:04:01.000 So it is interesting thing. I feel like it was 0:04:01.040 --> 0:04:03.640 this way Lennon. After the financial crisis, there was a 0:04:03.680 --> 0:04:07.960 real sensitivity out there, um about what was going on 0:04:08.000 --> 0:04:10.800 across the nation, and it was a tempering back of 0:04:11.360 --> 0:04:14.680 holiday parties, it was a tempering back of you know, 0:04:14.840 --> 0:04:18.880 big time spending by executives at you know, financial front, 0:04:18.960 --> 0:04:21.479 Like there was just a mood reset. And I do 0:04:21.640 --> 0:04:24.760 feel like that is also going on here on Wall Street. 0:04:24.800 --> 0:04:26.599 Is that fair to say? Is that also at play here? 0:04:27.360 --> 0:04:30.400 I definitely think so, particularly for the banks that have 0:04:30.800 --> 0:04:33.280 large consumer divisions, like City Group or a Bank of 0:04:33.279 --> 0:04:36.479 America JP Morgan. It's not a good look when so 0:04:36.600 --> 0:04:39.960 much of the country is suffering from pandemic and from 0:04:39.960 --> 0:04:43.400 economic strains to then start paying you know, huge huge 0:04:43.480 --> 0:04:46.680 bonuses to traders um. Obviously, some of these will be 0:04:46.920 --> 0:04:50.520 publicly reported by the New York government as well in 0:04:50.520 --> 0:04:53.480 New York City, so you know, we will have aggregate numbers. 0:04:53.480 --> 0:04:55.560 And so I think the banks are very sensitive to 0:04:55.600 --> 0:04:58.480 the fact that if they make huge trader payouts, um, 0:04:58.480 --> 0:05:02.880 eventually they may face the scorn of republic during such 0:05:02.920 --> 0:05:05.960 a difficult time. So I think, uh, you know, there's 0:05:05.960 --> 0:05:08.560 also an excuse to be cindy as well. Right at 0:05:08.560 --> 0:05:11.000 the same time, if I'm a trader, and I brought 0:05:11.000 --> 0:05:13.720 in a ton of money. Five biggest US investment banks 0:05:13.720 --> 0:05:15.800 on pace for their first a hundred billion dollar year 0:05:15.839 --> 0:05:18.400 for trading revenue in more than decade. I gotta say 0:05:18.440 --> 0:05:21.160 I might be like, are you kidding me? I'm just 0:05:21.200 --> 0:05:23.279 gonna say, yeah. I mean, I think I think that's 0:05:23.279 --> 0:05:25.839 a general trader mortality. You have a huge year, you 0:05:26.040 --> 0:05:28.640 always want more. Um. And I think the rock stars, 0:05:28.720 --> 0:05:32.599 to be frank, will be compensated this year. UM. But again, 0:05:32.800 --> 0:05:34.880 maybe not all of the rock stars, and maybe they're 0:05:34.880 --> 0:05:37.320 not going to set as much as they expect. Yeah. 0:05:37.320 --> 0:05:40.560 That tempering of expectations. Interesting stuff and as we said, 0:05:40.560 --> 0:05:42.880 the most read story on the Bloomberg in the past 0:05:42.920 --> 0:05:45.880 eight hours, So Lennon good stuff. Lenan new In, uh 0:05:45.960 --> 0:05:48.560 financi reporter at Bloomberg News on the phone from New 0:05:48.640 --> 0:05:50.159 York City. You can check her out on Twitter at 0:05:50.200 --> 0:05:54.240 Lennon T. New In. That's l A N A n 0:05:54.400 --> 0:05:57.640 h t N g U y e N. Always good 0:05:57.640 --> 0:06:02.480 stuff from her. This column among the Bloomberg opinion pieces, 0:06:02.480 --> 0:06:06.560 definitely uh standing out. It's called the Shes Session. How 0:06:06.560 --> 0:06:09.640 it's very real in particular for minority women and It's 0:06:09.680 --> 0:06:12.760 written by Louisa Blanco. She is professor of public policy 0:06:12.760 --> 0:06:17.800 at Pepperdine University. She specializes in economic development, international economics, 0:06:17.839 --> 0:06:21.080 and the financial well being of minorities in the United States. 0:06:21.080 --> 0:06:23.320 So my guess is she has had a busy year 0:06:23.320 --> 0:06:25.880 and a lot to write about. Luisa joining us on 0:06:25.960 --> 0:06:29.919 the phone from Malibu, California. Professor Blanco, nice to have 0:06:30.040 --> 0:06:33.240 you here on Bloomberg. You know, I've had this conversation 0:06:33.360 --> 0:06:38.920 with uh, some different CEOs, including Verizon Business CEO Tammy Irwin, 0:06:39.040 --> 0:06:44.200 about how this pandemic is disproportionately impacting women. But as 0:06:44.240 --> 0:06:47.039 you say, and so smartly and rightfully, so you drill 0:06:47.120 --> 0:06:51.280 down even further, we are seeing again a distinction between 0:06:51.279 --> 0:06:53.960 white women and minority women in terms of the impact. 0:06:54.000 --> 0:06:57.080 Talked to us about that. If you would, thank you 0:06:57.160 --> 0:07:01.520 so much for bloom Show today, some of my insights 0:07:01.600 --> 0:07:05.279 and work and this very appreciate invitations. Um so yes. 0:07:05.440 --> 0:07:07.839 So I think you know, when I hear people talking 0:07:07.839 --> 0:07:11.800 about the sheet session, I realized that, well, you know, well, 0:07:11.880 --> 0:07:15.320 it is true. It aggregates all women, right and at 0:07:15.320 --> 0:07:18.440 the end of the day, you know, women, uh, minority 0:07:18.520 --> 0:07:21.800 women have a different experience right, and especially when it 0:07:21.800 --> 0:07:25.720 comes to the to the labor market and um to here. 0:07:25.800 --> 0:07:28.200 You know, when we look at minority women, um, there 0:07:28.240 --> 0:07:31.400 are several reasons why you know, they are doing worse 0:07:31.480 --> 0:07:34.800 when it comes to employment and and being part of 0:07:34.800 --> 0:07:39.200 the labor force. And it is because, um, we we 0:07:39.320 --> 0:07:41.920 see that minority women are more likely to work on 0:07:42.000 --> 0:07:45.480 sectors that have been directly affected by lockdowns and stay 0:07:45.480 --> 0:07:48.480 out ward orders so and and less likely to tell 0:07:48.520 --> 0:07:50.840 a work. So that's one of the first reasons. And 0:07:50.960 --> 0:07:54.720 the other reason is that minority women are more exposed 0:07:54.760 --> 0:07:58.400 to COVID nineteen and more likely to get thick. And 0:07:58.400 --> 0:08:04.480 then another very important reason is that even different family circumstances, 0:08:04.520 --> 0:08:07.720 actually being part of the labor force has been more 0:08:07.720 --> 0:08:11.640 difficult for minority women because they need to take care 0:08:11.680 --> 0:08:16.360 of children. With the closure of childcare and childcare censors 0:08:16.400 --> 0:08:20.080 and the schools, right, um, taking care of children has 0:08:20.120 --> 0:08:24.000 become very important. Yeah, you know, this is where in 0:08:24.040 --> 0:08:27.480 a world where we have so many data points, right, 0:08:27.480 --> 0:08:30.320 But if you look at data on the macro level, 0:08:30.360 --> 0:08:33.240 maybe it doesn't it tells you a broad theme or 0:08:33.280 --> 0:08:35.760 broad story. But as you start to drill down, then 0:08:35.760 --> 0:08:38.320 you really understand what's going on, and I think drilling 0:08:38.360 --> 0:08:41.120 down into the data of is going to be so important, 0:08:41.240 --> 0:08:44.880 especially as we try to address some of the inequalities, 0:08:44.880 --> 0:08:48.080 the inequities that are out there in society. So you 0:08:48.160 --> 0:08:52.120 talk about you know, family arrangements, taking care of the family, 0:08:52.280 --> 0:08:54.800 being you know, exposed to certain jobs where you can't 0:08:54.800 --> 0:08:56.800 do them from home, and having to make a choice 0:08:56.800 --> 0:09:00.000 between taking care of your family or you know, continue 0:09:00.000 --> 0:09:03.040 doing work. So I think, here we embark on a 0:09:03.120 --> 0:09:06.920 new year, a new administration. Um, we have a vice 0:09:06.960 --> 0:09:11.000 presidental act who is a minority, and you know, hopefully 0:09:11.040 --> 0:09:13.920 we'll fold in all of her experiences as well when 0:09:13.960 --> 0:09:16.440 it comes to policy, at least it will be you know, 0:09:16.520 --> 0:09:18.160 she'll have a seat at the table. So what do 0:09:18.200 --> 0:09:20.680 we need to do as policymakers to address some of 0:09:20.679 --> 0:09:23.520 these issues so that they're not forgotten once we get 0:09:23.520 --> 0:09:27.120 on the other side of COVID. Yeah, thank you for 0:09:27.240 --> 0:09:29.520 bringing that right up. I feel like, you know, we 0:09:29.800 --> 0:09:32.080 hear all the time about the problem, and that's where 0:09:32.200 --> 0:09:34.559 I'm getting tired. You know, we hear about all these 0:09:34.640 --> 0:09:39.800 data showing these these parties, and it's overwhelming, and it's stuff. 0:09:39.840 --> 0:09:42.760 It is painful, right, and I'm glad that you jump 0:09:42.880 --> 0:09:45.640 right away into the solutions. I really appreciate that because 0:09:45.679 --> 0:09:47.240 when I wrote the off it, I say, you know, 0:09:47.280 --> 0:09:48.839 I want to talk about the problem, but i really 0:09:48.880 --> 0:09:51.680 want to spend time on the solutions because I'm tired 0:09:51.720 --> 0:09:56.120 of just hearing people talking about the problem, right right. So, um, 0:09:56.200 --> 0:09:58.920 so yeah, I think you know, as the new administration comescened, 0:09:59.040 --> 0:10:03.480 you know, what it is important is that we addressed uh, 0:10:03.640 --> 0:10:06.960 these labor market disparities, and and we need to be 0:10:07.080 --> 0:10:11.239 very strategic because the longer we weighed, the more problematic 0:10:11.280 --> 0:10:14.880 it will be. So we economists always worry about long 0:10:15.000 --> 0:10:18.840 term unemployment because we know that the longer people stay 0:10:18.880 --> 0:10:22.000 out out of the labor market, uh, the more their 0:10:22.120 --> 0:10:26.160 skills at trophy right, and then also self confidence. Right. So, 0:10:26.160 --> 0:10:28.640 so I think, you know, for the new administration, it 0:10:28.800 --> 0:10:33.160 is very important that we addressed, especially um, the child 0:10:33.200 --> 0:10:38.800 care challenges that minority women are facing these days. UM. 0:10:38.960 --> 0:10:40.839 So to do these, you know, we really need to 0:10:40.880 --> 0:10:44.600 be focusing on the safe reopening of the schools and 0:10:44.760 --> 0:10:47.640 access to child care. And to do these, you know, 0:10:47.760 --> 0:10:52.440 first we need to establish testing and safety measures for 0:10:53.160 --> 0:10:55.440 schools and child care centers so that they you know, 0:10:55.520 --> 0:10:58.840 kids can go back to school safely, and and and 0:10:58.840 --> 0:11:03.000 and parents and go back to work, especially models, and 0:11:03.760 --> 0:11:06.560 we need Uh. I think what's very important as we're 0:11:06.600 --> 0:11:09.920 talking about you know, vaccines and and you know, thankfully 0:11:09.960 --> 0:11:13.320 we we have that as a hope, right, we need 0:11:13.360 --> 0:11:17.480 to set priority for vaccines for teachers and support staff 0:11:17.559 --> 0:11:21.199 and chald care workers. I think that's that's crucial as 0:11:21.200 --> 0:11:23.720 we're trying to decide you know, who who gets the 0:11:23.840 --> 0:11:27.480 vaccines as they come in UM. And then I think, 0:11:27.520 --> 0:11:30.080 you know, another important area that we really need to 0:11:30.120 --> 0:11:35.319 be spending resources is to invest in outreach to encourage 0:11:35.800 --> 0:11:40.080 vaccine of septance. And how problematic is that? We said, like, 0:11:40.120 --> 0:11:43.560 I do think about it's really remarkable. And I even 0:11:43.640 --> 0:11:47.920 was talking with UM members, the head of a medical network, 0:11:47.960 --> 0:11:51.400 with all of doctors. Basically you know that the skepticism 0:11:51.480 --> 0:11:54.120 going into this that there needed to be some convincing 0:11:54.200 --> 0:11:57.600 So UM, I do wonder how problematic this could ultimately 0:11:57.640 --> 0:12:00.840 be for minority women and they are ability to bounce 0:12:00.880 --> 0:12:05.640 back faster. Yes, I think, you know, the issue of 0:12:05.960 --> 0:12:10.160 vaccine hesitancy is very important and that's something we need 0:12:10.200 --> 0:12:13.800 to get our hands right on right now. Because otherwise 0:12:13.800 --> 0:12:17.040 if we wait, it is just we're gonna miss the opportunity. Right. 0:12:17.120 --> 0:12:20.439 So a thing with minorities, there is a there is 0:12:20.520 --> 0:12:25.480 a lack of tactics of reliable information, right especially you know, 0:12:25.559 --> 0:12:31.360 information that can be language and cultural appropriate. Um. Then 0:12:31.400 --> 0:12:35.880 there itself so dis mistrust right so on the government, 0:12:36.559 --> 0:12:40.440 especially in the last couple of years. Right. Um, So 0:12:40.520 --> 0:12:43.439 we have big barriers when it comes to vaccine acceptance. 0:12:43.520 --> 0:12:46.320 And I think that, um, you know, we and I 0:12:46.400 --> 0:12:48.120 was going to mention, you know, all these efforts that 0:12:48.160 --> 0:12:52.600 I'm talking about, you know, establishing testing measures, vaccines for 0:12:52.720 --> 0:12:55.920 teachers and then also vaccine acceptance. I mean, um, what 0:12:56.240 --> 0:13:00.000 we need to make sure right that our efforts are 0:13:00.040 --> 0:13:05.760 focusing places proportions of lower income minority students. Right. Um. 0:13:05.840 --> 0:13:08.320 So I've seen you know, working on and I already 0:13:08.360 --> 0:13:12.320 be touching to some people because I worry about these issues. Yeah, listen, 0:13:12.360 --> 0:13:15.120 it's it's it's important as we you know, really dig 0:13:15.160 --> 0:13:17.880 into how do we come back here and come back 0:13:17.920 --> 0:13:20.400 stronger and make sure nobody has left out. So these 0:13:20.480 --> 0:13:24.640 these propositions and proposals that you're really putting out there, um, 0:13:24.679 --> 0:13:27.040 make a lot of sense. And for things certainly for 0:13:27.080 --> 0:13:29.560 the for the administration to consider. Hey, Louisa, thank you 0:13:29.559 --> 0:13:33.240 so much. Professor Louisa Blanco, Professor of public policy at 0:13:33.240 --> 0:13:37.520 Pepperdine University, joining us on the phone from Malibu, California. 0:13:39.679 --> 0:13:42.880 You know, it's funny how headline shifts so dramatically because 0:13:42.920 --> 0:13:44.680 it's just a few weeks ago that we were talking 0:13:44.720 --> 0:13:49.200 about what will become known as the largest cybersecurity attack 0:13:49.360 --> 0:13:51.719 in the United States. And recent memory has to do 0:13:51.760 --> 0:13:55.120 with those suspected Russian hackers breaching the internal networks of 0:13:55.160 --> 0:13:58.680 at least two customers, including the US government, UH, several 0:13:58.720 --> 0:14:02.720 agencies within the US government, also private companies and a 0:14:02.760 --> 0:14:07.720 cybersecurity firm. And we continue to find out more about this. Heck, 0:14:07.800 --> 0:14:10.200 let's get into it though with Steve Groman. He is 0:14:10.240 --> 0:14:13.320 senior vice president, chief Technology officer of at McAfee. He 0:14:13.400 --> 0:14:15.840 joins us on the phone from Plano, Texas. Steve, nice 0:14:15.880 --> 0:14:19.280 to have you here on Bloomberg Radio. It's interesting go 0:14:19.400 --> 0:14:21.520 back even a few years, and I feel like we 0:14:21.600 --> 0:14:24.720 had a conversation on air several times a day that 0:14:24.880 --> 0:14:28.560 dealt with cybersecurity issues and it kind of got pushed back. Uh, 0:14:28.640 --> 0:14:30.760 certainly in a year like when we had so many 0:14:30.760 --> 0:14:33.960 other things on our mind and then solar winds happens 0:14:34.040 --> 0:14:37.160 and then we're all reminded that man, we have huge 0:14:37.320 --> 0:14:42.480 still cyber risks out there. Hey, hey, Carol, thanks for 0:14:42.640 --> 0:14:45.400 having me. This really was a wake up call that 0:14:45.480 --> 0:14:49.560 hit us right at the end of and it is 0:14:49.800 --> 0:14:53.560 unlike anything we've ever seen before, you know, as as 0:14:53.600 --> 0:14:58.240 you know, we've seen major cyber incidents throughout the last 0:14:58.240 --> 0:15:01.320 few years, whether you go back to the Sony hack 0:15:02.120 --> 0:15:06.560 by North Korea or we saw major worms such as 0:15:06.600 --> 0:15:11.720 back in want to cry, impacted businesses across the globe. 0:15:12.680 --> 0:15:16.680 But what makes this so unique, and in many ways 0:15:17.360 --> 0:15:20.640 I almost think of this as a cyber pearl harbor, 0:15:21.080 --> 0:15:26.600 is it gives the Russian or the suspected Russian actors 0:15:27.440 --> 0:15:32.480 what we call hands on keyboard access to a large 0:15:32.560 --> 0:15:37.280 number of very important US government as well as private 0:15:37.480 --> 0:15:42.280 private sector UH organizations, really all at the same time. 0:15:42.800 --> 0:15:46.680 And that's something that we haven't yet seen. Well, so 0:15:46.760 --> 0:15:49.360 explain that for us a little bit more, Steve. When 0:15:49.360 --> 0:15:53.600 you say a keyboard um attack, what does that mean? 0:15:53.640 --> 0:15:57.360 It sounds to me like it gives them access like 0:15:57.400 --> 0:16:00.440 if I was sitting down to any of those systems 0:16:00.480 --> 0:16:02.560 in front of the keyboard and had the access. But 0:16:02.760 --> 0:16:04.840 explain it and this isn't my world, that your world, 0:16:04.840 --> 0:16:08.960 so explain what the significance of that is. That's exactly right. 0:16:09.080 --> 0:16:14.040 So think of it as it creates a virtual connection 0:16:14.760 --> 0:16:21.000 between a human cyber attacker sitting somewhere around the world 0:16:21.280 --> 0:16:25.680 into one of these very sensitive U S organizations where 0:16:25.840 --> 0:16:31.120 they can look for assets of opportunity to steal or 0:16:31.200 --> 0:16:36.360 look for systems of opportunity to implant malware. And because 0:16:36.760 --> 0:16:41.440 it's being executed by a human as opposed to a 0:16:41.920 --> 0:16:48.359 preprogrammed UH playbook, it can make on the fly decisions 0:16:48.840 --> 0:16:52.560 to ratchet up the lethality of the attack or to 0:16:52.720 --> 0:16:57.800 identify assets that are much more valuable from an espionage 0:16:57.920 --> 0:17:01.840 perspective UH than And something like want to Cry that 0:17:01.880 --> 0:17:05.840 we saw in which was more analogous to it's like 0:17:05.880 --> 0:17:10.080 a dumb bomb where it ran the same code everywhere 0:17:10.119 --> 0:17:13.560 that it landed and we knew exactly the damage it did. 0:17:14.000 --> 0:17:17.520 In this case Department of State. You might have a 0:17:17.640 --> 0:17:22.560 Russian actor feeling very different information from Department of Energy, 0:17:22.640 --> 0:17:25.640 and every organization that's going to be a little bit different. Well, 0:17:25.680 --> 0:17:27.760 what's interesting too, is do you think this was a 0:17:27.800 --> 0:17:32.000 Solar Winds problem, Because let's remind everybody, it was, you know, 0:17:32.440 --> 0:17:35.320 a supply chain attack or a third party attack. That's 0:17:35.320 --> 0:17:38.080 how it's been described. The initial target, right, wasn't the 0:17:38.160 --> 0:17:41.520 US government or some of those other institutions, but one 0:17:41.560 --> 0:17:47.359 of its software suppliers. So shame on UM Solar Winds, 0:17:47.359 --> 0:17:49.280 shame on the U S Government for maybe not being 0:17:49.280 --> 0:17:52.359 more careful with its supply chain. What is the lesson 0:17:52.440 --> 0:17:54.720 to be learned here? And just got about a minute 0:17:54.800 --> 0:17:58.480 or so, so, so the main lesson is that there's 0:17:58.560 --> 0:18:01.200 no single thing that we can count on in order 0:18:01.240 --> 0:18:05.879 to defend our environments. We need good defensive technology. We 0:18:05.920 --> 0:18:10.000 need to scrutinize our suppliers, We need to have well 0:18:10.080 --> 0:18:14.879 trained people operating our cybersecurity defense. It's it's a little 0:18:14.880 --> 0:18:18.040 bit like driving a car safely. You want to have 0:18:18.080 --> 0:18:22.040 the right technology seatbelt, air bags, any lock breaks, but 0:18:22.040 --> 0:18:24.880 but you also have to pay attention to what you're 0:18:24.880 --> 0:18:27.400 doing or else you can still get into an accident 0:18:27.600 --> 0:18:31.160 and making sure that you have all of those components. 0:18:31.560 --> 0:18:33.880 It's something that will have to look at more broadly 0:18:34.240 --> 0:18:37.240 across the industry. Yeah, I do wonder just quickly too. 0:18:37.280 --> 0:18:40.280 I mean, just what happened here? Right? I mean we 0:18:40.320 --> 0:18:42.240 all know that these problems are out there. We've got 0:18:42.240 --> 0:18:46.080 to be careful. I just is it just somebody a 0:18:46.160 --> 0:18:48.720 major screw up or something more significant, because I know 0:18:48.760 --> 0:18:50.840 Solar Winds, you know, has come out and said listen, 0:18:50.840 --> 0:18:53.399 we were warning people of some lack of security. And 0:18:53.440 --> 0:18:57.800 again sorry just about thirty seconds. Yeah, it comes down 0:18:57.840 --> 0:19:00.760 to we all need to up our game. Aim. So 0:19:00.760 --> 0:19:06.320 software suppliers need to scrutinize their development process, the way 0:19:06.359 --> 0:19:10.879 that they're operating UH their own environments so they don't 0:19:10.920 --> 0:19:14.879 become the avenue for UH Nation States or or other 0:19:14.960 --> 0:19:21.240 cybercriminals even to get into environments through legitimate software. Every 0:19:21.320 --> 0:19:24.639 legitimate software maker needs to up their game. All right, 0:19:24.680 --> 0:19:27.119 good stuff, Hey, Steve, thank you so much. Steve Groban, 0:19:27.240 --> 0:19:30.280 he's a senior vice president chief Technology officer at McAfee. 0:19:30.359 --> 0:19:32.560 He is joining us on the phone from Plano, Texas. 0:19:34.840 --> 0:19:37.000 I want to talk a little bit more about the 0:19:37.040 --> 0:19:39.280 trade today with a guest who's got some specific thoughts 0:19:39.280 --> 0:19:42.439 when it comes to the global airline industry. Frank Holmes 0:19:42.520 --> 0:19:44.960 is with US CEO and Chief Investment Officer at US 0:19:45.000 --> 0:19:49.840 Global Advisors investors excuse me, US Global Investors with some 0:19:49.920 --> 0:19:54.800 five thirty four million dollars in assets under management, and 0:19:54.840 --> 0:19:57.800 he joins us on the phone from San Antonio, Texas. Frank, 0:19:57.920 --> 0:20:01.920 nice to have you back here on Bloomberg Video. So, um, 0:20:02.000 --> 0:20:05.240 let's talk about the airline industry. I think they are 0:20:05.280 --> 0:20:07.680 just counting down the days. So there are a lot 0:20:07.720 --> 0:20:11.640 more flyers and passengers and consumers ready to get on planes, 0:20:11.680 --> 0:20:13.640 but it's going to be at least a few more 0:20:13.680 --> 0:20:18.159 months before we get to even something close uh to normal. 0:20:18.320 --> 0:20:21.040 How do you see it? And where our investors kind 0:20:21.040 --> 0:20:22.800 of positioning money right now? What are you seeing in 0:20:22.920 --> 0:20:25.720 terms of trends. Well, one of the first things that 0:20:25.840 --> 0:20:28.480 just to add to the data points you gave JETS 0:20:28.600 --> 0:20:31.320 E t F is a three big in dollar E 0:20:31.440 --> 0:20:35.560 t F now, um, and you mentioned five million. That 0:20:35.640 --> 0:20:38.080 was just the mutual funds. The E t s are 0:20:38.160 --> 0:20:40.680 are bigger today and that's been a phenomena for the 0:20:40.840 --> 0:20:43.840 mutual fund industry as a shift has gone to ETS 0:20:44.200 --> 0:20:46.560 just has been a phenomena since March when it hit 0:20:46.600 --> 0:20:49.520 thirty five million dollars and growing to three billion dollars 0:20:50.880 --> 0:20:54.000 in this forward looking everyone's forward looking on this of 0:20:54.080 --> 0:20:57.720 anticipating in twelve months. So what happened after every other 0:20:57.800 --> 0:21:01.159 crisis that we've had in the past thirty years, and 0:21:01.720 --> 0:21:06.399 the airline's industry seems to bounce back within twelve months. 0:21:06.440 --> 0:21:09.280 So we've seen a lot of money come into the 0:21:09.359 --> 0:21:12.680 airlines through the jets as a product, which I think 0:21:12.760 --> 0:21:16.000 is most fascinating betting. And then on this weekend we 0:21:16.080 --> 0:21:19.080 had one point three million tourists one point three million, 0:21:19.119 --> 0:21:23.800 even with record uh COVID negative numbers. So people are moving. 0:21:23.960 --> 0:21:27.800 Business is not moving like, it's not booming yet. It's 0:21:27.800 --> 0:21:29.680 going to take a while. Everyone's zooming when it comes 0:21:29.680 --> 0:21:33.720 to business transactions, but tourism is up substantially. The major 0:21:33.760 --> 0:21:36.360 airlines are rerouting their rather than going through a hub, 0:21:36.359 --> 0:21:40.400 They're going NonStop from Pennsylvania, New York to smaller cities 0:21:40.680 --> 0:21:44.080 rapdown to Florida. Uh same thing we're seeing Southwest go 0:21:44.280 --> 0:21:48.240 from Phoenix rapdown to Cobble St. Lucas. So help me 0:21:48.280 --> 0:21:51.240 out kind of where I mean. Listen, this is you 0:21:51.280 --> 0:21:53.600 can't market time, but it is about timing the market 0:21:53.640 --> 0:21:56.800 here when it comes to when you think you know 0:21:56.880 --> 0:21:59.560 truly air travel gets back to normal. It's the same 0:21:59.560 --> 0:22:03.040 thing for the hospitality industry. I mentioned Carnival before we 0:22:03.080 --> 0:22:05.439 got going. It's you know, everybody's trying to kind of 0:22:05.440 --> 0:22:09.200 make their best guess. We know things will as dark 0:22:09.240 --> 0:22:10.880 as they may feel now and make it a little 0:22:10.880 --> 0:22:14.560 bit darker as we get into January. Um that because 0:22:14.600 --> 0:22:17.560 of the vaccine, we have started to kind of map 0:22:17.600 --> 0:22:20.720 at our playbook for getting back to normal. But again 0:22:20.760 --> 0:22:23.920 it's a timing issue. So at this point you don't 0:22:23.960 --> 0:22:26.440 think it's too early to put money to play here. 0:22:26.480 --> 0:22:28.239 When it comes to those big airline industries. I mean, 0:22:28.240 --> 0:22:31.800 which if you look at them individually, Dealta still downcent 0:22:31.920 --> 0:22:34.840