Spike in Mail Theft Fueled by Black Market

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube search Bloomberg Global News. Well. Among the headlines we are following at this hour about the Russian invasion of and war with Ukraine is more businesses exiting, Credit Suites Group and Abu Dhabi's Well Fund will stop investing in Russia, while beer makers Carlsberg and Heineken announcing plans to exit

the country. So we have been following that. We've also been following what's going on with Ukraine's I T and tech community in a big way. Buscar Chalk Revordy is Dean of Global Business at the Fletcher School at Tufts University. That, Dean joins us once again on the phone from Boston. How are you, Dean. I'm doing very well, thank you and you we're doing well. It's good to have you

back with us. UM. I wanted to just start by because you are in constant conversations and Carolin I have talked a lot over the last month, in the last five six weeks about the I T community on the ground in Ukraine and how much international businesses, American businesses rely on tech workers in that part of the world. UM, but you're in constant contact with with the I T community there and give us an idea of what's happening.

Has it been disrupted and if they're still able to work, Yes, absolutely so, no question, it has been disrupted and they are. The community, of course, is spread out across the country, and in my conversations with them, UM, I realized that you know Ukraine, you know, just to look at the map will remind us of the fact that Ukraine is

a very large geographic area. So the I T community is spread out across the country and they literally seem to break the country up into what they called the hot zone and you know, perhaps the cooler zones and the cooler zones are towards the western side of the country, and many of the I T firms that are still operating are on the western side or they have relocated their personnel and and and other equipment to the western side.

So they're adapting their adjusting, and certainly the ones that are based on the western edge of the country, they're operating and they're looking for business well. And as Tim said, you know, we unfortunately as a result of this war in Ukraine, we are realizing what a important and large I T and tech community is in Ukraine and how many you know, global companies interact or rely on that

tech community. From what I understand, you have been as you said, you know, entire with many members of that community on the ground. I believe they call themselves the I T Army. What are you hearing though, about what they are seeing, their expectations maybe about when this ends? Uh? And what is the future? Can they even think about

it at this point? Yes? So of course, uh, you know, their guests as to how and when this ends is um just as challenging you know, for them as it is for us, and you know us being all those of us who are watching this UH, this war UH in in horror and shocks on the outside because the end game is still unclear. What they are doing is they have set up backup plans and they are continuing to at least the ones, as I mentioned on the western side of the country see themselves as the economic

soldiers food soldiers in this war. President Zelenski has encouraged UH, everybody who is a significant contributor to the economy to do their best to keep the economy running. They have also the Ukrainian government has made some significant changes to the tax code and they have essentially made the tax scheme simple, pay two percent tax and it's voluntary. It's voluntary. So they're trying to encourage people to get back to

work to keep the economy running. And they see the I T industry as the prime engine for the economy to be running because it's the one industry that can survive as long as the internet infrastructure survives. So this industry has at least the ones that have been successful have got internet connectivity, they have got backup power. UH, they are storing their data offshore, and they're continuing to do work with their science. As you mentioned, they do

see themselves as the i T Army. They see that they are contributing to the war by keeping people employed, by bringing in revenues and potentially contributing to the TACH survenues that the government sorely needs in order to you know, keep everything that it is doing uh operating. So here here's my question. If you're a startup right now and you have a germ of an idea and you're somewhere outside of Ukraine but you need I T workers, are you less likely to look to Ukraine for that I

T work given the disruptions there? And my question is really about long term economic damage to the country as a result of this, because I imagine that if you're if you're looking for stability, it perhaps isn't the right

place to go right now if you're that startup founder. Absolutely, and I would empathize with everybody who is either a startup or an established company, because when you're looking to get any kind of outsource work done, whether it's I T or any other kind of service, you're looking for not only quality, but also agreements at the service level and the stability you know that even if I have you know, a great talent and capital I want the work done and I want to make sure that the

work doesn't get disrupted by something like a war going on. So um, absolutely, people are concerned about the risk. That said, a lot of companies, startups included, are looking for ways in which they can help this war effort. So my ask for the startups would be take on some of the risk. And some of the folks are spoken within this I d Army. They're saying they have tried to ensure against many of the priss and the contingencies. Of course that's not guaranteed. Well, great to check in with

you once again. Another important important aspect certainly to this story in this reality buscar check Orty, he's doing of Global business at the Fletcher's School at Tufts University, joining us once again on the phone from Boston. Really appreciate his time on this Monday. I mean, I feel like I learned so much about Ukraine right in terms of the I T community, remarkable resilience. You're listening to Business Week,

Carl Master, Tim Stanovic. This is Bloomberg Radio. This is Bloomberg business Week with Carol Messer and Bloomberg Quick Takes. Tim Stenovic on Bloomberg Radio Now for something um a little bit different, but definitely on our radar. It's a story coming up in the New is Shoe of Bloomberg business Week, out later this week, already online and on the Bloomberg and Tim. It's about a Smike, a spike in mail theft, and it's been fueled by a black market for stolen checks. The story by Jack gil I'm

cybersecurity correspondent at Bloomberg News. He joins us from the ninety and one studio in Washington, d C. With us in person here in New York City. Joel Weber, editor at Bloomberg Business Week. He's with us in the Bloomberg Interactive Broker studio. Joel, It's interesting. We talked so much about hacking and cybersecurity and then I read a story like this, and it's like, does it get any more old school than stealing checks from the mail and trying

to change who they're addressed to. Yeah, there are the new ways of hacks, and then I guess there's like the ultimate old school. This does involve technology? It does? It does? And Jack's story and reporting like totally caught r I because it was just like wait what And the whole scheme centers on basically getting people's mail like hardmail. Uh, there's been a raft of thefts of mail keys which

can open boxes. There's all these Telegram videos online of of these grabbing as much meal as they can, stuffing it into cars getaway vehicles. But that's where it gets interesting, because what do you do with those those checks that are in the mail that you're still paying your your

bills with. Jack, Well, this is an interesting theft or a thing of a string of thefts, right, It's like we're kind of bringing it back here, as you mentioned, to the old school, and what's happening here is it's a new twist, I would say on an on an old problem. It's not new that people have tried to fish letters out of the mailbox, right, but it is a new phenomenon that they are taking these checks, putting them on apps like Telegram, and selling them by the thousands.

And it's pretty straightforward. I mean, I've even looked at a bunch of YouTube videos about putting these a nail polish remover, uh, stripping away the ink that you may be right out to your your power company, maybe for your mortgage or your rent check. Or Grandma sent it or or right, yeah, Grandma sends you fifty bucks for your birthday, you know, in lieu of a nice knitted sweater. And guess what this thing gets posted online? Someone over

over draws your account like a gentleman. We spoke with your in the DC area and it's off to the races. So the whole thing here the scam is basically if you can remove who the check was was made out to, but keep the the amounts right so or do you just strip it all and sell? Are you selling a blank check? When you do it this way, you're essentially

selling a blink check. And one of the victims we spoke with said that, you know, he found out at first, he found out about it because I called him up and said, hey, did you try to make a credit card pavement for such a chuch bank? And he says, how do you know? I said, well, I'm looking at your check right now, and he was very much taken aback. But then, you know, about a week later he said that somebody tried to withdraw a much larger amount than he,

of course had in his account at the time. His bank had already been flagged for this and and said, oh, look there's another check that got pounced. So I think it really it's kind of a guess, right, how much is somebody going to have in their account? Maybe they seem wealthy, you know, maybe we'll try for a thousand bucks. If it doesn't work, you know, no skin off our nose. If it does, well, here's a stack of twenties. We can now go around town with. Okay, jack, So many questions,

so little time. But I do wonder, uh, if somebody makes a checkout to themselves, aren't they incriminating themselves then? Or do they make it out to cash? How does that work? So there are a few different ways that could do this. Um, you know, these these channels that we had talked about, This professor at Georgia State, uh, David Mayman, had actually tracks not just stolen checks, but stolen identities, bank account information, so user names and passwords

to get into these accounts. So I wouldn't put it past these folks to actually create fraudulent identities that they then used to make a check out to themselves to you know, a Joe Smith or maybe a less suspicious looking name. Perhaps go to a check cashing place. It might not be as reputable as a major bank and walk out of the bank with the stack of twenties. And these dudes and du dats man, they're not trying to hide, right, They actually are posting photos of themselves

with piles of money. They are. I mean, some of these videos I have to say no one other word is just wild. I mean there are there are just stacks of maile like flowing out of this one guy's back seat when you open up at the back of it, another guy's photograph with a you know, a real sort of you know ear to ear grin pulling a you know, a stack at Andrew Jackson's out of a out of

an envelope that he just got. Um, they don't hide themselves, and you know, the folks we spoke to you said, is because there's no incentive for them to be anonymous. These thefts have increased while the rate of at least federal prosecuts of this mails have to have gone down. So you know, you'd be the judge about how often someone's actually gonna get caught and how how big of a problem do we think this is. I mean, I know it's going to be difficult to put number on it.

But how how big of a spike in mail theft are we seeing? So, I mean, if you look at the numbers that so the the the watchdog, the Inspector General for the USPS says that at least in the last year or so, the check thefts have gone up by about a hundred and sixty one percent. Or rather, complaints of mail thefts now the postal services. Not all those are indeed bona fide. Maybe somebody lost how to check lost in the mail, got upset reported as stolen

and it was fine. But you know, by and large, when we talked to some of the experts, some of the officials who study this, they say, look, these numbers are significantly going up. And just by you know, Bloomberg's view of looking at on these telegram channels of our own, I mean just anecdotally, every day, every hour, almost every minute,

you know, these things get posted. Unbelievable. All right, we gotta leave with their jackuell um uh He is Sobersecurity correspondent Bloomberg News from our ninety nine one studio in Washington and our thanks to Jill Webber, editor a Bloomberg Business Week. You're listening to Bloomberg Business Week with Carol

Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So, one of the stocks that we've been watching in today's session, and that is Test Lab stock is pretty much holding onto its highs, up about seven point seven percent this company. I haven't done the math in the last half hour or so or hour, but it looks like it's on pace to add about eighty five billion to its market cap today. Not too shabby. It's been on a tear. I think it's up around the past ten trading days. Uh. Yeah,

that was before the stock split was announced. That was before that's with today's game. So that's with today's game. If you propose stock split right, I'd love those. West Coast correspondent for Bloomberg News. He joins us from the Bloomberg nine sixties studio in San Francisco, also joining us on camera for our YouTube audience, h D. When it comes to stock splits, nothing fundamental changes about a company

when more shares are created. And in this day age when you can buy slices of stock through trash wa the delity, Robin Hood and more, why do we still see investor optimism with an announcement like this. Yeah, I mean we've been having this debate on Bloomberg television and radio all day. Right. Essentially, the rationale in the past has been to lower the barrier to entry. You know, a thousand dollars a share for the retail investor who only wants to buy a few shares, you can't get

access to them. Now, you made the good point. You could go on one of the trading apps or platforms and buy a fraction of a share um, but it's not the same sensation, right, And remember that Elon Musk has talked about this in the past. Tesla shareholders retail investors are normally people who own the vehicles, they own the Tesla energy products. They believe in the long term thesis, they believe in Elon Musk, And it's about shared ownership

and democratizing that ownership. And we don't know what the rational is here. All we have is the eight K filing and the tweet to go on, Right, but you'd assume that lowering that barried entries what their motivation was. Well, and it's interesting because I was thinking about, right, you reduced when you do buybacks. That's initially when investors get excited, and because you reduce the amount of shares and then

improves your earnings per share. Right, that's just simple math. Yeah, and you know the way the mechanics of this will work. We don't know, because again in the eight K filing, all they said was they're going to ask shareholders to approve the idea of a stock split at the annual meeting. But in the past, what usually happens is you you do a split three for one, five, one, twenty, foe, whatever it may be, and you offer a nominal tent of a cent value for each additional share you issue.

But I think what's really interesting is that it depends on how big the split is. But a lot of folks they've been talking about whether Tester could be included on the dal Jones Industrial Average, for example, because the mechanics of that index work differently to the SMP five and therefore you have a broader slice of the population

having a slice of Tesla investing in this company. Okay, so the news coming out in a tweet before even the a K came out, and what if you follow Tesla really closely, it doesn't really have a formal communications department those days, which is I think still so so yesterday, Tim, What is that it doesn't have a formal communications Yeah, I mean what Elon Musk does all the they have a formal communications. It's called Twitter and media. Well that's that's why. But it but it truly is that that's

unique in the sense of large companies like this. But we have more questions than we have answers. Right, this is what you and I are discussing now. And don't shed a tear for me. But it's difficult, you know, covering Tesla, you come in for a lot of criticism for from Tesla owners test the shareholders to say, oh, we get it. You know, why can't you guys report on this and that they disbanded disbanded their press team in UM But that's the point, you know, there isn't information.

We don't know what the rationale behind this move was. We don't know what the stock split will be in terms of the ratio. We just have an idea that it will happen if shareholders of appre We don't even know where the annual meeting is. You know, last year is in October. The year before it was in June.

It's difficult, all right, So what do we know? Like I always think about, you know, God blessed Jina Martin Adams, because whenever we're like lost among debates, whether it's about markets, rates or blah blah blah, She's like, Okay, here are the fundamentals. Here's what folks are saying about earnings and stuff. What do we know fundamentally about Tesla in terms of its growth trajectory? We just saw, right, the German facility being opened up, But so what do we know it? Yeah,

this is the question. And by the way, you pointed out the stock move, it's one fords worth of value gained. But until that move today, the stock was down here today, right, that's a nice metric, right, But the stock has been under pressure. It's caught up in this narrative around the outlook for higher rates and the fed um and also you know what drives it higher. Well, you're right, Berlin's online now, Austin will come on line next month in April.

That will add to their production. And then in Shanghai you have a resurgent COVID nineteen situation that's halted production at Testas plant. According to Bloomberg, sources. The cars built in China, those are the profit drivers, right, iron margin vehicles because they've produced more efficiently there. So you know, amongst all the noise, I think you know, Wall Street investors, institutional investors will look at this and say, as Tim said,

it doesn't really fundamentally change much. Thank you. I appreciate that, um, because this is something I've been talking about whenever we talk Stark splits. Hey, uh, ed you mentioned the shutdown in Shanghai, the disruption there in general. How is how is Tesla doing managing the supply chain crisis? Yeah, Look, Tesla has demonstrated over the duration of the supply chain crisis, which from memory has been going on for about two and a half years, but they've demonstrated their more nimbles.

So in the case of semi conductors, they've said, we're impacted by a shortage of semi conductors, but what we're able to do is use alternative semi conductors and rewrite the code on our end. Remember, semi conductors are used to transmit electronic single signals essentially, um, what where they have less flexibilities on the commodities side, right, you can't impact raw price, raw materials prices that degree. But Tesla also has long term contracts with a lot of metal

supplies for example, so they are hurting. They did discuss at the prior innings about the potential for margin erosion. But what did they do? Guys? They raised prices because the demands there and they have pricing power which a lot of corporate America can't necessarily say right now with higher input costs. It does feel like in terms of visibility, we see more and more players getting into this market.

But it does feel like there's been a lot of writing about this that in terms of at least for them, maybe mid term, longer term, I mean, Tesla is kind of fairly entrenched in this market. Yeah. I would say that the most bullish elements of the street would argue, and I'm talking about cell side analysts, but people don't want an electric vehicle necessarily, they want a Tesla. You know that there's two different things here. If you believe in the transition, right and so the demand that's out

there for Tesla products, remember their supply constrained. You go on Tesla dot com right now and try and get yourself a vehicle. You could be waiting until August or you could be rating until October November of this year. That's how backlog they are. But that's not really that's an outlaw. That's what would have been an outlier in a different world. But if you want an electric car from Ford right now, you're probably gonna have to wait in a similar amount of time. That's true, And so

let's bring it full circle to Shanghai. In February, Tesla delivered fifty six thousand vehicles from that plant, which indicates that their stated capacity of food vehicles a year from China, they're actually beating that. But now the plant shut down, and so what's incredible is that Tesla is able to navigate the supply chain crunch, bring new plants online, but

maintain volumes globally and pull ahead. Whereas you know, you see a lot of the other legacy players they argue, well, we're having some problems lifting up our production ramp because of supply chain constraints. Yeah, it's pretty impressive how he's been able to navigate so much, But I go back to when he wanted to open up the facility in China and how quickly he got the deal done Like that just doesn't happen. But Elon must somehow figures it out ed Ludlow, so terrific. Thank you so much. We

appreciate at Blomberg News West Coast correspondent head Ludlow. Let me try to try that again, Bloomberg News West Coast correspondent Ludlow joining us from Bloomberg nine sixty studio in San Francisco. Tesla shares up about eight percent. I was doing some quick math. It looks like arc uh in terms of their position as at the end of last year, maybe about a hundred and forty six million dollar game based on that bump in Tesla. If that share position is still go look at what ARC is done in

the last three point four percent today. It's just in the last few days. Yeah, yeah, exactly. I'm broad. Yeah, but you let me drive. No, no, no, run leaves. I want to drive. It's a good question. Good drive in the drive to the Clobe on Bloomberg Radio. All right, I'm getting to sound like a broken record because we're seen buying into the clothes. In fact, folks, we are pretty much at our eyes to the session. Go figure SMP. As you heard from Charlie right now, just up about

twenty four points. Not a big move, um, but we're seeing buying into the clothes. I always feel like that's to some extent significant about the yield curve in version which yield curve? Because which which curve do you look at? Wells's which curve matters? That's a that's a question for Gina mart And Adams or Mike McKinney. Right, we've talked to him about like three months in the ten year like which want to focus on? Anyway, let's get to it in terms of the equity trade. Dave don Obedient,

let's say, if he's got a yield curve preference. His chief investment officer over at CIBC Private Wealth Management on the phone from Baltimore. I have to say, Dave, it's easy for Tim and I to get like, like, ah, there's so many yield curves that people are looking at. What do you look at when it comes to figuring out where to allocate money for your clients, your institutional clients who really for the most part are making long

term bets. Well, it's a great question. And the divergence and what different yield curves or for her thing right now is uh, you know, dimergen as I can ever remember, I tend to place more emphasis on looking at the ten year and then and then comparing it to something I would say one year or in now. You know, if you look at the FED itself, they place emphasis on the FED funds rad of the three months t bill. Uh. That's what's used in the Index of Leading Economic Indicators

as a as an important measure um. And you know they're signaling something so different from the twos to tend spread now. But but we tend to look one year and in and so the message there is that yes, the yield curve is h is flattening, but that it's more gradual. It's going to continue to flatten, but it's pretty far away, um, you know, for from going inverted. So two tends to get a lot of a lot of the attention we would say today that's overstating recession risk. Okay,

so what should then? What should? Because they're does seem to be like there is this disconnect, dave between what the bond market is telling us some of the equity market is telling us. How do you make sense of this? Well,

it's it's tricky. I think a lot of it um revolves around commodity prices, where they've already come and where they might go because of course, uh, you know, commodity prices give us sort of more certainty about the near term inflation outlook, which is it's going to stay high and probably go higher, and more uncertainty about the negative impact it might have on growth later in the year if this level of commodity prices sustained or um or

goes higher. So, guys, I think what we're seeing now, um, you know, it's somewhat mystifying to people to see such a strong rebound in the equity market since the invasion of Ukraine. And it's not because markets decided that was a good thing obviously. Um. I think it goes back to the Fed and and it just the timing just happens to have kind of converged with what happened in Ukraine when the FED really clarified that it's an inflation fighting mode clearly, and I think that's what the market

needed to hear. And of course now we'll go through the phase of where they're going to do too much too soon and and all of that. It just speaks to a year of uh, you know, of you know, reduced return expectations in the equity market and enhanced volatility expectation. I feel like we've got some great reporting on the Bloomberg today, Dave and maybe a lot of folks just thinking about kind of the last couple of weeks and

trying to figure out where we go from here. And one was about demand destruction, about a world that's more expensive starting to destroy demand, and I do think we have to think think about that. We need to think about we're seeing slowdowns potentially in China or increasingly slowdowns because of economic shutdowns, economy cities being shut down once again because of COVID, you know. And then we've got a story that that talks about the fed's best hope

increasingly looks like a semi hard landing. They're talking about a growth recession, that we will have an economy that's expanding but a lot more slowly than everybody anticipated, and so we will have an outright contraction, but it's not

going to feel so great. And I think I think your story that you like, because I like them all know that ladder scenario is probably closest to where were we came into the year with a strong growth three and a half to four percent real GDP growth year based on what we're seeing in the job market, the housing market, etcetera. UM, But I do think that that commodity prices are likely to stay elevated. The demand destruction that you talked about will start to seep in. What

do you think the demand destruction happens. I think we'll start to see some of it in the second half of the year. And we know from prior inflation about you do reach a point where you know, here from companies, now, well, well we're passing price increases along and our customers are paying it. You do get a point where you start to get a buyer strike right where they just say no, not paying it. Um. And I think that may emerge

in the in the second half of the year. So we've marked our GDP four gast down from a three and a half to four change to the two and a half, which isn't a hard landing, but it's kind of mediocre growth. And um. You know, and I think you look at all the variables out there and you can't say that there's no chance of procession. We would put the odds of procession. You know, things go badly in the next year at um at one and three. So our base cases the economy grows but more slowly

than we thought. But tell lists of risen Do you feel like that's what we're gonna hear from CEOs? You start to report earnings because our Gina Martin Adams, who covers the equity markets for US, so that when stocks were recently at their lows, that's when you had a lot of analysts coming out and raising their earnings estimates, and not just for the first quarter, but for the

second quarter or third quarter. I'm going to sound like a broken record, but to me, that's fundamental analysis and that gives you some indication and maybe what's to come this year. Yeah, I'm really curious on not so much the numbers, but the color. You know, CEOs and CFOs talk about their at their force Quark results and guidance

for the future. I would expect them to kind of, uh, you know, as usual, have a lot of hedging about commodity prices and you know a lot of I think statements about how they've been able to pass along price increases, but that's you know, that's unknown going going forward. Um So I I think that you know, you're putt on. Analystis right that the every week the consensus expectation for earnings growth this year creeps a little higher. That doesn't

make sense to me. Uh So, you know, you look at that nine kind of consensus earnings expectation, that's I think a roll over some at some point this this year.

And you know another likely source of volatility, Jay, let's talk monetary policy here, because a week ago we'd be sitting here talking about FED share J Powell's hawkish comments at that for at that forum that they and they were so much more hawkish than what we heard from him just a few days prior when we heard from the f O m C. What's what is the FED? What should the Fed do? Or what are you banking on the FED doing at its next policy meeting? I mean,

I think they've they've laid out a pretty clear course. UM. I expect that the next meeting that we'll get visibility on the plan for for quantitative tightening and that will commence, you know, shortly um, shortly after the meeting. Um. You know, there's a question about do they do a fifty basis point increase? I think that's data dependent, data dependent on the employment report coming up on this Friday will will

be an important input. Um. And I also think that you know, the the inflation data, that there's a chance that the next you know, print on the the c p I, you know, could get up close with a double digit print. And so I think they'll be evaluating all that they Had the Russian aggression not happened, they probably would have gone fifty at the last meeting if I had to guess CPI double digit, Tim and I we just turned up from Mikes and like, did you just say CPI double digit? How how much would that

freak out investors? We know, we understand the reasons why fundamentally, but just quickly, you know, was as when you see something like that, it doesn't matter, you know, your logical side of your brain kind of like like rule pushes aside the fundamental reason just quickly. How much might that freak out markets? Maybe even just for a day or for a few hours. Yeah, I think it would round

numbers get get a lot more attention. And I think if you see very significant acceleration and the say the energy and food components, that would be most of the reason why you get big acceleration from here. Yeah, but you know, we still think we're not seeing the most of what we're going to see. See how a service extor inflation, uh, shelter related inflation and just the general uh you know, kind of core inflation rise due to uh uh you know the excess of money and wage growth.

All Right, we gotta run, Hey, Dave, thank you so much. Dave dan obed and he's chief investment officer over at CIBC Private Wealth Management on the phone from Baltimore. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube search Bloomberg Global News