0606FullPodcast

Rosalind Matthison in our Bloomberg Interactive Broker studio today. She's Executive everit for International Government for Bloomberg News based in London, but we have are here in the States this week. We found on the last hour meth that she is Australian. From some little news. What's the name of the town again, Ros, it's a code Goombungee Bungee Goombungee. It's an indigenous name. Wow,

go figure. I mean, I I don't know. One day me and Roz traveled to a remote town in Austria to interview the former head of the FBI, James Komy. Together really was that in Austria? Yeah, that was awesome. That was such a cool I mean, you know, he had just written a book and obviously it was like comy versus Trump. But he's amazingly fascinating and also really tall, dude, extremely tall. Yeah, explained to us, what's happening in London today, folks forting us, we need to pay attention to a

vote that's going on in Parliament. What's going on over there? Well, that's right. So it seems like enough of his own lawmakers have had enough of him, and so they've submitted letters calling for a leadership vote on his him leading the Tory Party, which of course means his leadership of the country as a whole. So that vote will happen in a couple of hours today, it goes. It takes about two hours for it to happen. They fall into a room one by one and cast their vote, yeah,

your nay, and then there's an outcome. It looks like at this point he will probably win that vote because they need hundred eighty Tory lawmakers to go against him. But the question is, what is the damage that's being done simply by having this vote happen in the first place, And what is the margin by which he would presumably win this vote. It could be quite tight and tighter

than he would like. Can that suggests of course that other knives will be out for him even despite the outcome today potentially, but the base cases that he wins, right because, um, his own party is bringing this vote essentially, and it's a system that I think a lot of Americans are unfamiliar with. They have this committee. It all seems so old and weird. Um, But what if they lose. They're bringing on an election that they're sure then later

to lose. Well, that is the risk also from this is he might win, and then he might decide to call an election to try and get a fresh mandate from the public or to get rid of some of these Tory rebels. But why how could he? I mean, they're experiencing inflation just like we are, and they're doing

very little about it, just like we are. I mean, people are a lot of people are being driven into poverty by these high energy praises right well, exactly in all the polling shows that going to an election anytime soon would be very self defeating for the Tories because of all the things that you mentioned, particularly the state of the economy, inflation, the idea has not delivered on his promises to bring development to areas in northern England

UM and so on. He came in, of course in a landslide when UM in intercalentinam with a very large majority for a British prime minister, and that's all seemingly evaporated at this point. But he may decide just to go that because he is a very charismatic politician. He's a very charismatic campaign and maybe he thinks somehow, if you can call an election and get out there, he can somehow rally the faithful and get enough voters back for the Tories. But it's a very big ask given

what we're seeing at the moment in the polling. All right, let's switch gears rather since we have you in studio, want to cover broad range here Ukraine, but we're not going into our fourth month. I guess over there in Ukraine, is there a consensus amongst the folks that really file this closely how this might play out here or is

this just going to be a long, long slog. Well, it's certainly hitting that kind of grinding more of attrition, which we would imagine could go on for an extended period. You're seeing Russian troops make incremental gains and then get pushed back again. And then further gains, but suddenly holding some of the ground that they've taken in the east of Ukraine at this point controlling about of Ukrainian territory

either way, and very much entrenching themselves there. So what you'll see is potentially months and months and months of this very sort of like small bore fighting that's going on on the ground. And then the question is what does the rest of the world do with that, um, even if they ship in more and more weapons, particularly artillery, does that change the course of the war or are

we stuck with this for the foreseeable future. And at some point, as you see France and Germany and other sort of dipping their toe into the water, does the Ukrainian president need to negotiate with with Russian the Russian Russian president and does that in turn involve him agreeing to see territory. What do we know about the casualties that the Ukrainians are are facing or you know, even if it just versus the Russians, I mean, do we

know about numbers? Do we know, um, if they're if they're losing by a light Well, the numbers are very hard to get a clear view of because of course they're coming from either side with their own interpretation on it, but what's clear is that both sides are suffering extensive casualties in terms of manpower. At this point, Russia has lost a lot of equipment as well, which has been very difficult for it in terms of its campaign on the ground. But just as Russia has lost all the trips,

so has Ukraine. And it's got conscriptions, so it's got fresh people coming in. But that will also become a problem for Ukraine the more this goes on. And because it's more experienced fighters, of course, we're the ones who are in there first. So what you do is you bring in less experienced people who are conscripted um and then over time that becomes very difficult for you crime

as well. Difficult, difficult situation. Rosalind Math is an executive editor for International Government Bloomberg News based in London, but here in the States. This week, I getting the least briefly here in New York and head down to Washington, d C. Rights Power. That's where the power brokers are met, and that's where ros Mouth needs to be. I mean, you know, there's just us here in New York and

some others. So anyway, appreciate that. Let's get right to our next guest, because we got a lot to talk about. Prea Misra, Managing director and global head of Rates Strategy A TV Securities Cupria. You know, I'm looking at my Bloomberg terminal. My tenure treasury is kind of my first place to go and talking rates. I got a little

headline there. It's a three spot on. That's notable, I guess, but it just seems like we're in this trading range here for interest rates, and that despite the fact that my Federal Reserve has said that it's raising rates pretty aggressively here, So well, what do you make of that? Sure? So thanks for having yes. I think rates are likely to be in a range for the near term because,

as you said, the Fed is hiking. I think they want to see clear and convincing signs in Chapel's words of decline, and they were not seeing it yet of inflation. But I think what's happened in the rates market is we're also starting to price in growth fears, which is why I think we stay in a to seventy five three and a quarter ten year range because when you start getting to the upper end of the range, and

we're right in the middle of the range now. But if we sell off, and I do think rates are likely with QT to get to that upper end of the range, then the market is going to get concerned about growth fears. And at what point I interest rates high enough that you start to impact intersensitive sectors housing, consumer durables, you know, the savings that we're all banking

on the consumer. Those sailings are getting depleted every day, and so I think that the growth fears prevent rates from rising too much further out because we've priced in a lot. A lot in terms of FED hikes have already been priced in, so I do there's a ceiling there in terms of growth fears that prevents rates from rising a lot. And on the downside, which is why

I think we stopped around that. To this, inflation is just too high, and so I don't think the FED is ready to blink or even um sort of suggests that it pauses. Likely I do think they won't be able to hike as much as is priced in. So we like the front end, but the long end, with inflation high QT happening, I think that long end has

some more room to rise. How much of this is I mean, obviously, if the FED is going to keep hiking rates, and you know, the econ one oh one lesson is you don't want to hold this paper because you're going to be able to get something that yields more later. Um. But that's program perspective of somebody who wants UH to be clipping coupons? Right? Are they drawn in at three three and a quarter to a point where it kind of puts a cap on on the yields that can how high they can rise? Yeah, so

you're bringing up the supply demand. I think supply demand is still negative for treasuries, meaning you know, three and a quarter with inflation at six eight, depending on which measure you're looking at. Yes, coupons are higher today than they were a year ago, but I think it's I'm hard pressed to think that it's attractive. We're still seeing outflows from fixed income funds. We've had one week of inflow, so I still don't think there's demand coming from you know,

how much interest rates have risen. Where the demand is coming from people trying to hedge for recession risks or growth slow down, And so if you have a risk asset in your portfolio, having some treasuries that will provide that hedging property, which I have to say, treasuries were not a great hedge in the first quarter, but that hedge has come back. I think now we've growth slows down. Yeah, those hikes are going to get priced, and so it's

more from a macro economy slowdown risk asset performance. That's where the demand for treasuries is coming from, not just from a raging stand I mean a key question is, um, how quickly you see inflation coming back down to you know, the two percent what we've decided I guess as an acceptable level. Does that come down to to you know, two or three percent at the end of I struggled to say that, or we we don't even have it at three. We have it a little bit above three

at the end of next year. And so that's the tricky part. I mean, as much as the FED is committed I think to price stability, the administration's committed to it, there are aspects of inflation that are out of their control, food, energy, even parts of shelter. We have a demographic shift in housing and there just hasn't been enough creation of that

housing in the last few years. So I think, um, you know, and I think this is a question, a tough question the FED will have to answer by your end is do they are they okay with inflation decelerating? They clearly want a deceleration, but if it decelerates to three and a half, it's still significantly lower than here is at okay? Can they be a little more patient trying to get to that two percent target over four

years rather than one year? So you know, in our forecast right now, even so, at the end of this year were four and a half on PC, at the end of next year a little over three. But we think the FED might be comfortable as long as it's heading in the right direction, as long as we age inflation, which is also an important part of this, is not accelerating.

I think, you know, their tolerance band will be tested by the market, but slowing growth will allow them to say, maybe we just have to tolerate high inflation for a while. But it's something I think we haven't really heard from the FED yet, and that that's still an open question. All right, pre Miser, thank you so much for joining us.

As always, we love getting your thoughts on kind of where rates may be heading and what this feder reserved maybe thinking about as we passed through the data misras a Managing director and global head of rate strategy at TD Securities. Here, all right, let's talk side our security

will shift gears there. We're all putting more and more as we you know, in the last two years, work from homes, learn from home, putting more and more data in the cloud, doing more and more with technology, and of course that raises the concerns about data security, cybersecurity broadly define. Our next guest is absolutely on the front lines of that. Guilt Schwed is the CEO of Checkpoints Software Technologies. You can find that on nastack c h KP is a tick of your you put into your

Bloomberg terminal. Guil, thanks so much for joining us here. Again, it just seems like your business cybersecurity is more important than it's ever been as we put more and more or we engage more and more with technology and put more and more data in the cloud. Give us just your thirty thousand foot view with where this tech stack is in terms of cybersecurity. Hi, Paul, I met the

first year. Absolutely right, we are more vulnerable than ever to cyber attack, both because we're dependent on the Internet and the network so much, and also because the attacks are becoming more more sophisticated. The software that we use on every device, on our laptop, on our you know, home TV or vacuum cleaner, each one of them has software. Unfortunately, all that software has vulnerabilities, and the hackers do take advantage of that. And and we are I think almost

all time high in terms of number of attacks. So what's the answer. I mean, um, do you just have to keep building a better mouse trap over and over and over again? First we do, I mean our the systems we build in our industry are all are many of them are real time updated and they try to adjust themselves all the time. We're building systems that try to stop attacks, even attacks that we don't know about.

That using AI looks at the different patterns of usage and when they see something that's suspiciously just stop it. And the yes, we do have run as fast as we can to top the attackers. Give us a sense guil. I think what gets some people who don't live this every day but get some really concerns when they hear about state sponsored cyber attacks. State sponsored ransomware, that type of thing. It gives a sense of how that has evolved and kind of what you think at all do

going forward. So first, many large, many advanced economies and countries developed state sponsor technologies to either spy on the enemy or even attack at time of four. The challenge is not that we're trying just to fight our government were not. The challenges that with technologies falls into the hands of the wrong guys. And that's something. For example, last year there was a devastating attack on the city

of Baltimore. The attack was by some foreign countries, but not foreign countries, foreign groups from foreign countries, but the technology they used was actually technology were developed by the n say that I think about a few miles from the same place the US and show the security agency. So the challenge that we have is that this is software technology, and sooner or later, almost any attack technology falls into the hands of the wrong guys. Bear us

by publishing. Don't want to look like having some practical difficulties there with with he was about to share way too much truth with us, I think, and somebody hacked his phone line. Yeah exactly, But I know this company is based in Israel, as well. But I mean, I just think this. I mean, we hear from everybody, um and it's just when it hits the news every once

in a while that comes to people's attention. But we hear companies talk about it all the time, the amount they're investing in cybersecurity, because every it seems like most, if not every company has a lot of data dependency. I gotta be honest with you. Listening to Gil just now, I was by the realization that technology is going to be the death of us all simply, we're we are basically engineering the end of our own world. Here. Should

make a movie about that. At some point, AI is just gonna take over and you're not gonna worry about your social secourney. Ne're getting hacked. Kil Let me just ask you. I think we got you back on the line. Here is technology going to be the end of us all? Are? We? Are we eventually going to face our globe, our own global demise at the hands of like AI and technology. I'm actually quite optimistic. I think technology has a bigger

and bigger role in our lives. But if we look at our personal safety and so on, it's much better now than it used to be. A twenty or fifty years ago, though the risks that we have to face are different. Gil What are gen V cyber text and why to they matter? Gen vere do what we call Gen five cyber attack are the most sophisticated attacks we

see today. They are what we call ulti vectors. So the attacks get from one place like an up you download into the phone, which turns into something that gets into your computer, but at the end gets the malware into the data center of on the cloud or at your company. They are usually very hard to spot. They are usually every time they come they look a little bit differently, so you can just say this looks like an attack and they can create a lot of damage.

Sometimes they would hide and still the data for a long period of time. Sometimes they would just create an attack that all on the same minute take down the entire hospital, or at the same minute take down the entire nation. We just celebrate, not celebrated. We just mentioned last week the fifth anniversary of the big attack on Ukraine, not the war in Ukraine now, but five years ago there was a huge attack. They took down the entire country.

So these are pretty difficult attacks to deal with. When I think that's what we need to deal with today. Al Right, Gil, thanks so much for going joining us. Gil shwed there I think the longest serving CEO any NASDAC company, which is pretty cool talking about um uh, cybersecurity that in a sense, his company, Checkpoint, kind of invented, you know. They started this whole firewall thing, and that

just seems like a great business to be in. I mean, I just can't imagine a company over until it's all over. I can't imagine a company saying we're gonna spend less this year on cybersecurity than we did last year. I just think every budget that comes in, you know, to the CFO, is a higher budget for spending on and that's good for the Checkpoints of the world and the

other folks that cater to that. You know. One of the things that's definitely changed here during this pandemic kind of a I'm not sure if that's an anticipated fallout, but workers have a lot more leverage. It seems people are saying, I'm not coming back to the office, or you know, it's such a type market, I'm gonna go leave my current job for a better paying job. It's just really changed the whole dynamic of the workforce and how and where you work. Nia set Home joins us.

She's a managing partner at set Home Law Group. Are these things let's start just with the work from home hybrid how do you do it kind of thing? I guess companies large and small still trying to figure it out. But it seems like the hybrid thing is kind of the preferred model that's emerging. Is that what you're seeing. I'm hearing a variety of opinions on this from the employees. I'm certainly hearing that hybrid is here to stay and

that's what they're anticipating and what they're hoping for. But a lot of business owners are struggling with the hybrid model for many reasons. You know, the economics of it, and of course, you know, building culture and managing teams is more difficult when people are in disjointed um parts of the country. But you know, um, RONNIEA, the thing is um A lot of employees want to have the hired option or even completely work from home, and a lot of their old white male bosses say, no, you

have to be in the office. Um. If I want to work from home and I am producing just as much or even better than I would be in the office, but I get fired for not coming in. Do I have a case? I don't believe. So. As long as the rule is applied the same for all employees, then I don't think you would have a case. But that's

the debate right now. I work with a lot of small business owners not you know the fortune or even Fortune two thousand, if there is such a thing, and they're not yet certain as it's a productivity and whether it's better for employees to work from home or not. All right? How about another issue. Employed at a tech firm in Silk and Valley pandemic hits, I go to Jackson Hole and relocate and they say, fine, you can do your job there, but we're going to pay at

Jackson Hole level wages, not Silicon Valley level wages. Is that okay? I think that is probably okay from a legal perspective, but it is a very tough, tough till to swallow. You're doing the same work, You're the same person, you just move to geography. I don't think that's the best conversation to have with employees. Is that conversation happening though? Because I can see, if I'm an employer, I would

definitely want to have that conversation. It is. It is definitely happening, and a lot of the reason for that is because of the additional financial and administrative burdens that come with allowing your workforce to work in states where you may not be you know, already registered. If you're already registered to do business there, it doesn't make too

much difference. But if you have to now pay taxes there and do a whole host of other things like for chesse, workers compensation insurance in these other states, then that conversation is taking place with a lot of stride. Now yet, Yeah, that's interesting. You know, my um my wife is looking to hire for a position and her company is willing to allow someone to work from home, but she says she can only hire from certain states.

And I didn't really understand why, but I guess the point is for companies, this is a difficult landscape to navigate because, um, you've got to be able to pay workers comp in different states, or pay taxes in different states if you want to have employees who I guess have an I P address there. Right, Yes, that is true, and some of the laws are extremely cryptic as to what does even working from home means. So if you're working in another state and the company registers to do

business there, are you really working from home? Are you working in the cafe? And then if you get injured, who's paying for that? So it can get quite complicated. So how do you think this is complaing for you? The smaller businesses that you deal with, Ronnie, I would think they would have less flexibility, less resources. So what are you advising them or what are you seeing them do? Well? I don't want to get into exactly what I advise

them to do. However, I do have a discussion with them about the costs associated with expanding into states where they're not already uh, you know, having employees. So a lot of the clients that I work with that are in fashion and tech, so they marry both fashion and tex They don't really have any brick and mortar, but they have limited the states in which will allow people to work from home because of these additional burdens. It's

a whole new world out there. It's a brave new worlds new world I know, and people are doing that remote work, Runnie said home, thank you so much for joining us. Ronnie, a Sad Home managing partner set Home Law Group. Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three and on False Sweeney

I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio