Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence with Alex Steinhl and Paul Sweeney.
The real app performance has been in US corporate high yield.
Are the companies lean enough?
Have they trimmed all the fats?
The semiconductor business is a really cyclical business.
Breaking market headlines and corporate news from across the globe.
Do investors like the M and A that we've seen?
These are two big time blue chip companies.
The window between the peak and cut changing super fast.
Bloomberg Intelligence with Alex Steinhl and Paul'sweeny.
On Bloomberg Radio. I'm Paul sween and I'm John Tucker filling in for Alex Steele.
On today's Bloomberg Intellivision show. We dig inside the big business stories impacting Wall Street and global markets.
Each and head. Every week, we provide in depth research and data on some of the two thousand companies at one hundred and thirty industries our analysts cover worldwide.
Today, we'll look at why Berkshire Hathaway's cash pile has reached a record plus.
We'll discuss where wind and solar energy storage will be within the next decade.
But first we begin with our top story, the twenty twenty four US election. This week, Donald Trump was elected the forty seventh President of the United States, reclaiming the White House and pulling off a stunning political comeback.
If heated Vice President Kamala Harris after she replaced an unpopular President Joe Biden in the campaign's final months.
For more on Donald Trump's election, guest host Damian Sasara and I were joined by Nathan Dean, Bloomberg Intelligence Senior policy analyst. We first asked Nathan how Trump's future presidency will impact different industries like banks.
With the financial services industry, it all came down to this rule called the Basel three end game. You know, as outlined by the FED. You're talking about a nine percent increase for the GESIPS, the Bank America JP Morgan's of you will about three to four percent in terms of the regional banks. Now, with President Trump winning the office of the control of the currency is likely going to flip on day one of next year. So this
rule is effective indefinitely delayed. You know this, you would need to FED, the OCC and the FDIC to move forward. Now we think at thirty percent chance of it being finalized by twenty twenty six. The reason why we're not down to zero is because there is potential out there that a Republican led regulator may try and move forth with it. But the idea is going to be completely different,
and they're going to essentially start from scratch. So if you're talking about capital requirements on a global scale, remember the European banks have already implemented their version of this. There could be some questions here on if the Americans aren't going to do this, why should the Europeans on these same sides. So certainly a lot to play here in terms of the you know, deregulatory efforts amongst the investment banks.
Nathan Dean, you are the consummate Washington insider. When I need to get my what ifs answered about what's happening in Washington, I call you. So I have a question here, What name should I be looking at more closely than others? Bill Lackman, Elon Musk's got Bess and Howard Luckneck. I mean, talk to us about what the potential for a Trump cabinet may very well look like.
Yeah, so you know, obviously the big question is you're going to get the Wall Street President Trump? Or are you going to get a populist President Trump? And that's the question that I don't think anybody really has an answer to, because you know, for example, at the SEC, you know you have Commissioner Hester Purse, who I think would be a very popular SEC chair coming from more of the conservative wing the populist side of the party. But then there's also going to be folks like former
JA Clayton. You know, obviously his name's been in there for a Treasury but you know, somebody like a disciple, if you will, a commissioner or chairman Clayton could be also a named at the SEC. So the question that we have, and we should find out about this more over the next few weeks, is are you going to
get the populist Trump? Are the Wall Street Trump? And I think you're probably going to get a combination of the both, where if President Trump cares about your issue in terms of he specifically wants to be involved, you'll get a populist Trump. If it's something where he's happy to delegate to other folks in Washington, then I think you may get a Wall Street Trump.
Well ly than it took a long time for Trump to pick his cabinet and his players back the first time around. Apparently he's much more prepared this time. Talk to us about timing around some of those selections. When can we expect to hear something there?
Yeah, so I think you're gonna hear it, probably before probably within the next few weeks. I mean to your point, you know, they've been talking about this for some time. But I would also note that the Republican Senate is gonna be able to confirm a lot of President Trump's appointees on a much quicker basis than if you were to have a Democrat controlled Senate or even a fifty or fifty one. Now why do we care about this, Well, because the faster that those regulatory leaders come in place,
the faster they can start these deregulatory efforts. You know, a regulatory leader, for the most part, can't just come in and say, right, this regulation, we're going to just completely roll it back on day one.
It's gonna take.
Nine months, twelve months, if not even two years to move forth on that effort. So the quicker those regulatory leaders come in place, the quicker the de regulatory effort can take place.
Nathan, President elect Trump is se had lame duck president? Is that a fair way to look at it?
Now?
So generally, and I say this generally, in the second term of a presidential term, if you will, I think President Obama or President George W. Bush, you usually have about eighteen months to expend your political capital. First one hundred days of the presidency is critical. But as soon as Congress begins to think about their mid term elections and then as the result when they come back, you know, why should they stick their necks out for the president
who's going to be gone? So what do presidents tend to do. They tend to go internationally, and they tend to travel because the power of the presidency is more powerful there. So, you know, we do think President Trump is going to be spending a lot of time abroad, Ukraine, Middle East, for example, China. There's a lot of stuff that he can do there. But I wouldn't call him a lame duck just yet, because again, the power of the presidency is more powerful there.
You know that China tariffs are coming. You're betting, man, what kind of tariff regime do you think we're entering into? Is it going to be that ten percent broad is it going to be sixty percent on China? What are you hearing?
So this is where I think the process of tariff is key. Now, remember, let's just say January twentieth, President comes in. You see a red line over the terminal. You say, President Trump signs an executive order saying tariffs are coming. In the language of that executive order, however, I think you'll see language that says the tariff is not coming for two hundred and seventy days or three hundred and sixty five days. Why, Because tariffs are negotiation tools.
President Trump doesn't know what the reciprocal tariff on China from China would be, and President Trump wants to use this as a negotiation. So I think there's going to be language in there allowing flexibility. Allowed President Trump to come back and say, ah, maybe not sixty percent, maybe we'll go to ten percent because China gave us a win or something like that. So what we're saying is watch out for that headline risk in the first or
second quarter of next year. But then you're gonna get probably six months to actually truly understand what that tariff will look like before it goes into fruition.
All right.
Thanks to Nathan Dean, Bloomberg Intelligence Senior policy analyst.
Staying on the US election guest host Damian Sasaur and I were joined by Wendy Schuller, professor at Brown University. She gave us her take on the twenty twenty four US election, along with some of its political ramifications. And we first asked Wendy, what happens next for the Democratic Party during a Trump presidency?
Well, you have to ask yourself why.
You know, popular incumbent senators have been reelected before could not withstand the red wave, and so you can attribute it to Trump charisma the Trump followers. We can do that if we want to as observers, but you know this and deep, This reaction across voters, across different kinds of voters, from different backgrounds, different ages. This ran deep, and it was a signal that said, we don't like the policies that you're enacting, So what can they do?
I think it's informative to go back to Obama. Obama had a much stricter border.
Policy than Joe Biden, and I think he did that because he sensed there wasn't enough support in America for something more liberal and more open, so you can say to yourselves, the Democrats closed the border for too late. The Democrats didn't push hard enough to get those interest rates down. The Democrats didn't pay attention to the price of eggs, and that's unusual for the Democrats, who usually
care a lot about the price of eggs. So I think this is not necessarily a reboot completely, but they have got to meet the voter where the voter is.
The voter was not with the Democratic Party.
Wendy, you mention the border, and let's look ahead here. Trump is about to embark on what many believed to be the largest deportation program in US history. How does he expect to round them all up? And does he intend to send him.
Well, you know Trump, Trump always surprises us in the sense that he'll sort of.
Go off the ranch and then I'll kind of moderate.
You know.
The idea is how long does Trump want to be president?
You know, he's constitutionally prohibited from electing, being elected, and serving, not from running, and so you know, does he want to last long time?
Maybe get rid of the twenty second Amendment. I don't know what he plans, but I think he.
Will scale this idea back especially since the border has been shut down and you know, undocumented migration has slowed so much.
Does he really have to do this? Does he have to disrupt the country this way? You know, he could do some of it, but I don't think the pressure's on.
Him to do all of it, because Biden has already taken this step and he'll keep that policy in place.
Wendy, you mention the twenty second Amendment. You're not the first one to talk about it, but you know what I'm most interested in, and it's the FED right. And Trump has made no secret about his intention to have a greater say and monetary policy here in the US. My question for you is what legal mechanisms can Trump take advantage of in order for the to give the over LA Office more control. More saying monetary policy, well, I mean the.
Federal Reserve Act.
I mean literally the Act creating Federal Reserve and all the bills that have come you know after that and reauthorizing it. You know, that's something that's been sort of a partnership with private monetary institutions, banks and the federal government. And the thing about Donald Trump is gonna need cash, right, you can't, you know, you can't crash the government and crash the economy by the federal government running out of cash.
So there is a symbiotic relationship between really big banks and the Federal Reserve itself and the success of a president.
So there's going to have to be negotiations there. But I don't think the.
Heads of big banks you're just going to hand over the keys of the kingdom to the president of the United States and amount of who they are, and so that will be a negotiation, and Trump fancies himself as a very good negotiator.
Wendy, does Kamala Harris have it future as a leader of the Democratic Party. I'm thinking maybe in four years time. I think.
I think, all things considered, she ran a good campaign what she was given, the time frame that she had to work within, and her balancing act of trying to separate from the Biden record and also present some sort of plan for the future and bringing in and solidifying particularly younger women, even older women. I think there's still a block and a constituency that she can tap if she wanted to run again. I just don't see this
as a Kamala Harris failed campaign. I see it as Trump being a former president and energizing their base and not making the same campaign mistakes they did in twenty twenty, and the Biden record. I don't know if anybody could have won in the face of those numbers.
Wendy, I wonder if you could shift your attention here to what's going on in Ukraine. Obviously, Zelenski was the firebrand who rejected Trump's request for information on Hunter Biden's dealings back during his first tenure. And what comes next for the Ukraine, for Zelenski, for Central Europe, and for Russia under a Trump administration.
Well, I think Trump is a fan of Putin, and I think Trump has said before that he thinks there's a deal that can be reached. So my guess is Trump says, listen, we're not going to send you the same kind of weaponry, We're not going to support the same way. Go to the table, cut a deal, give up crimea I mean literally, these are the things that he'll say. And maybe we'll make sure that more of your people don't get killed. I mean, I think that's
what we'll do. And in the Middle East, you know, I think people who think that he'll be a diehard suborn of Israel maybe, but he may go to the Saudia's and say, what kind of deal you want to cut to get this thing over with against Iran. I mean, he wants to make deals and be the hero. And that's something we've seen before and we'll see again. So whatever whoever's dealing with him has to be able to give him some sort of victory he can walk away with.
All right, thanks to Wendy Schilder, professor at Brown University. Coming up, we're going to talk more on why Donald Trump winning the US presidency is leaving banks hopeful.
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on two thousand companies in one hundred and thirty industries. You can access Bloomberg Intelligence via b I go on the terminal.
I'm Paul Sweeney and I'm John Tucker. This is Bloomberg.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple car Play and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
I'm Paul Sween.
And I'm John Tucker. Filling in for Alex Steele.
We continue with another conversation related to the twenty twenty four US election.
This week, Donald Trump was elected forty seventh president of the United States, and according to Bloomberg Intelligence Research, Trump's victory is giving banks optimism for less regulation.
For more on this, John and I were joined by Alison Williams, Bloomberg Intelligence senior analysts covering the global banks.
We first asked Allison why bank shares rallied afternoons of Donald Trump becoming president elect.
So we see three things. So the big one is less regulation. Secondly higher industrates, and then third we really see some momentum for fee revenue, which has really been
powering the big banks that I cover. So the regulation is the big one, and it's not just some of the specific issues for the banks as a whole in one or two banks, but it is just, you know, the feeling that the pendulum can swing the other way right so that there won't be new regulations and that some of the things that are sort of in the pipeline could be watered down or pushed out. That baso three endgame has been the big one for the largest banks.
And you know, basil dictates that all jurisdictions around the world have to do some form of implementation. But the US proposal that came out in twenty twenty three was
really much stricter than we saw in other regions. We had already had some expectations that that would be watered down from you know, comments that Powell had made and also comments from bar in September, so some of that was sort of in the stocks, but I think the feeling is, you know, from our regulatory group that the things could either get pushed further out or they could be water down even further. And so that's good for the banks because their excess capital is something like five
to fifteen percent of their market caps. So definitely that was something aiding City Group in Wells Fargo as well as someone like Morgan, Stanley and Goldman, where even with the water even with the sort of lighter touch in September, they were still going to have a deficit in their capital. So some positive news.
On that front.
Also, as you know, you know, Wells Fargo has had this asset cap for a long time. City Group there's been some concerns, especially around when they reported their results, that they could face more scrutiny, So just a particular easing I think also benefited those couple of banks. And then there are some other things related to card and
consumer and finance as well. On the interest rate funds, all these banks are positioned for higher rates, so we know that, you know, we'll be watching the FED in terms of short term rates. I think in general that also got a lift. And then finally from our viewpoint, the big thing is that we see momentum and fees and that's been a huge boost to the earnings for these banks.
Just back to the Buzzo three endgame rules, the idea is give me the dummies version. You had to set aside more capital basically in case things went south, so the financial institutions wouldn't ruin the economy, right, So that's freed up. Does that now go back to shareholders? Is that the idea?
That is the idea, and so Boso three endgame rules. So, as you know, Baso three is something that sort of came after the financial crisis, and there's been many iterations. Thus the reference to this last set of rules as endgame and basically what that dictated was that as they measure their risk weighted assets, there would be big increases in that, and thus they'd be having to hire a
hole more capital against that. And so based on third quarter earnings and fourth quarter requirements, their excess capital was five to fifteen percent of their market cap. Under the Basil three rules, that would turn to deficits across the bank, so they would have to find a way to increase their capital. There is a timeline, so they probably would have done that through internal capital generation. But to your point, they that would have been capital that they could not return to shareholders.
Can I just who has the most capital to be returned to shareholders?
Well, based on the requirements today, City Group, their excess capital is something like fifteen percent of.
Their market cap.
Okay, all right, And I would and I would point out also that you know these banks have and so by the way, like the banks do sort of target holding a buffer to the requirements. So there's a little bit of that, but I think you know, in general, it is the fact that buybacks will likely go up. These banks already have buyback programs in place so they can execute on them. But it's also the math. If you have higher equity, your return on equity is going
to be lower, and that's how investors value stock. So there is definitely the higher buybacks, but also I think it is the sentiment that is helping bank multiples. This specific regulation, but also less regulation in general. One other area I didn't talk about with regard to regulation is less antitrust. So that's good for M and A and that's really why you saw Goldman and Morgan Stanley very the stocks reacting to that.
All right.
Thanks to Alison Williams, Bloomberg Intelligence Senior analysts Global banks and asset Managers.
Each week we look at research from Bloomberg n EF previously known as New Energy Finance. They're the team at Bloomberg that tracks and analyzes the energy transition from commodities to power, transport, industries, buildings, and agri cultural sectors. This week we took a look at Bloomberg neef's outlook for wind and solar energy storage over the next ten years. Guest host Jess Mett and I were joined by Yao Sachini,
Bloomberg NEF head of Energy Storage. We first asked her where we are in terms of energy storage just.
For some context, and we're going to talk about some of the analysis that we actually published around the clean energy market outlook specifically look at the US for some contexts. There's just been a lot of investment that's been pouring into clean power segments. We've seen a lot of that accelerated over the last I guess two years, and since then Inflation Reduction Act passed, facilitating a lot of new investments into wind, solar and storage sectors, which are the
sectors that we cover in that particular report. There's about there's about three hundred billion dollars invested across these sectors a wind, solar, storage, and other clean transportation and other sectors in twenty twenty three. That's about twenty two percent higher than we saw in previous years. And then what we were doing this report is to have a twenty thirty five view, So in the next decade, what do we investments and capacity editions look like around these clean sectors.
There is actually a lot that's that's bound to happen in terms of just what's committed to date happening over the next few years, and that's likely to unlock a lot more investment over the twenty thirty five period.
Are the risks to some of those moneies that have already been committed ear marked.
Yeah, So what we did, I guess the way we think about it is to look at what is our expectation in the market out to twenty thirty five. So for some context, our expectation in terms of our forecast for winds, solar and storage installations is about one point one tarrawat of new yeah, new capacity editions out to twenty thirty five. For context, in the US power grid, as of the end of twenty twenty three, there was about one point two terrawat of cumulative installed power generation capacity.
So essentially we're about doubling in terms of capacity in the grid out to twenty thirty five. But that addition is just from when solar and storage, which is really impressive in terms of the risk factors to your question. So the way we were investigating that in the report, or analyze that in the report is to try to
think about us in the worst case scenario. So there's a lot of investment that's already been committed at the back of the investment tax credits and some of the other incentives in the Inflation Reduction Act, but we wanted to look at Okay, so what happens if these incentives, so the investment tax credit actually gets repealed right away, which is of course a worst case scenario. It's not our expectation of what will happen, but it gives us
some benchmark of what could happen. And under that scenario, it's about a seventeen percent decline, so it's a fifth of capacity that gets dropped or not built in the twenty thirty five timeframe. One additional component is like if that actually would were to happen, is that projects would try to rush to try to be built before that step down happens, which could happen in the end of twenty twenty six or the end of twenty twenty five.
So essentially there's a rush to build. A decline in the market, and then the market picks up up again, but not at the same rate or not to the same degree as it would in a non repeal scenario. So that's how we looked at.
That walk us through the key fundamentals that you think have helped build the industry.
Absolutely, so, I think we're obviously in an acceleration mode at the moment. It's almost like certain key elements are keeping the market from growing as quickly as it could. But in terms of the fundamentals in the past, major one is the fact that the cost of wind, solar, and storage and batteries has come down significantly over the last decades. That's really made the cost of these technologies competitive against conventional generation, conventional fossil fuel generators in the
US that would be trying to displace gas. And we do see in most of the markets of the US wind and solar are competitive against gas. Of course, they don't deliver energy at all, like twenty four to seven, and that's where batteries comes in. So the cost of batteries, like specifically lithiuman batteries has fallen by more than ninety percent over the last decade, which is significant.
How's the US doing you quote some really big numbers here in terms of investment in tara watts and all those. How are we versus the rest of the world in terms of, you know, just in terms of really embracing cleaner energy.
Yeah, so on a country level basis, the US is probably second in terms of staffed investments in these sectors. That's because China is really the giant in terms of attracting new investment into wins, solar and even batteries segments. And there's a bit of a pickup game in terms of some of the key segments in terms of the manufacturing side, so the supply chain and trying to invest that and bring that into the US. With mixed levels of comparative success across different sectors.
What should we expect for wind and solar capacity build in twenty twenty five for those forecasts.
Yeah, so we're expecting most of them to grow. That's certainly true for solar and storage. When when more or less keeping a pace, generally, our expectation is that there will be more investment going in. And that's because there's just a lot of projects in the pipeline that are
essentially contracted to meet utility demands. So a lot of the US utilities have been you know, contracting working in power because they, as I said, they're cheaper, but also because they might have some specific goals in order to decarbonize. I guess the other factors is just the corporate side. So a lot of the you know, the Amazons and Googles, these companies have increasingly also been looking for cleaner portfolios of energy generation to be meeting their demand.
Thanks to ye Josa Kenny Bloomberg, any head of energy storage.
Coming up on a program, we're going to break down why Berkshire Hathaways cash pile has reached a record.
You're listening to the Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on two thousand companies in one hundred and thirty industries. You can access Bloomberg Intelligence via bi go on the terminal.
I'm Paul Sweeney and I'm John Tucker, and this is Bloomberg.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Otto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.
I'm Paul Sweeney and I'm John Tucker filling in for Alex Steele.
We moved out of corporate earnings. Berkshire Hathaway recently reported third quarter earnings and said that it's cash power reached three hundred and twenty five billion dollars in the third quarter.
And this comes as Berkshire's CEO Warren Buffett continued to refrain from major acquisitions while trimming some of the most significant equity stakes for.
More at guests, Hos, Jess, Mett, and I were joined by Matthew Palizola, Bloomberg Intelligence Senior analyst P and C Insurance for First asked Matthew to break down berkshire most recent quarter.
When you look at their earnings, there's a couple of layers you have to unpeel. First, their gap earnings were swayed by investment changes. Buffett himself has said, you kind of just throw that out. We don't really look at that. It was like twenty six I think billion versus an eleven billion loss in the year ago. Those numbers are a little bit irrelevant. The next part is their earnings
from operating companies. Those, if you look at just the number they give you, those were down about six percent. What happened there, though, was they have a lot of yen debt and there was a big four x loss in there, so peel that back. The operating company's earnings were up a little bit, which is less than I expected. The insurance operation had a couple of unforeseen negatives in it, and that really turned it down, some of them I
don't think are ongoing things. But that was really the negative variance was in the insurance business.
Something because we were actually chatting about this earlier when it came to the percent of their cash pilot Berkshire Hathaway. So the last time it was around this high, the stock market continued to move on to records over the following fifty two weeks, but then the last time on this opposite into that the lowest percent of cash he had at any time over the past decade was right when the S and P five hundred briefly peid in
twenty twenty one. So what's your thoughts whenever you're kind of thinking about what this could mean more broadly for where like major indexes and equities could potentially be headed.
Yeah, so, I mean Buffett is a more of a time in than timing of the market right clearly, So I don't think he's making big moves on large expectations on the market.
If you look what.
Happened, they sold about twenty two billion dollars worth of Apple stock in the quarter. That's along with about nine and a half billion worth of Bank of America stock in the quarter. I don't think you look at that and say, Okay, he's completely parish on everything in the market. I think those were, you know, unique things. They were
highly concentrated in Apple. Their Apple position is down seventy percent from its high in terms of the shares they own, so I think those things were unique to the stocks they own. Buffett has repeatedly talked about taxes going up. I don't think it's even an election cycle now, but he's just saying even longer term, there's probably only one direction taxes are going for us, and that's up. So you'd not be surprised to see them taking large gains off the board.
So three twenty five billion dollars, is there any realistic scenario for deploying that capital over a multi year period.
You know, it's tough. They are limited in how much shares they can buy back just on the float.
We had wrote.
You know, it's tough to see them doing a tens of billion dollar acquisition. There is the ownership in Chubb out there, which is you know, perhaps the megadeal that may or may not ever happen if they do something. They bought Allegation, which was an insurance company kind of conglomerate a couple years ago that was about twelve billion dollars. It seems like that's going to be the max on what they're going to do. But if I could predict a Buffet would do, I'd be on an island somewhere.
So but no dividend.
There will not be a dividend as long as Warren Buffett is sitting in all is that? I mean, I think he likes getting them, he doesn't like paying them.
He says.
You know, look I and I would agree with him. I'm better off holding this money than giving it. Your return on a divid end is going to be less than my return investing it. That probably hasn't been true actually recently, but I think that's his mindset.
You were mentioning about how claims they were years ago are costing them more than expected. Walk us through that dynamic.
Sure, So this is called reserve development. So what happens is insurance companies like so for example, Geico, they write auto, some home, well not really home, but they'll write auto. You're either going to have a car accident in a year or you're not. But they'll write some liability business where you may have a claim and that you might
find out and they claim years into the future. And what is happening is you set up a reserve for that and that reserve could be wrong or they're almost always wrong right, but it could be wrong too low or wrong too high. And what had happened in the quarter was their reserve for their primary insurance business, A specific unit of it was quite wrong and there's there's new management took over that unit, and usually when that happens,
they add to their reserves. If this was if this was just a you know, XYZ insurance company, this would be really bad. But it's Berkshire. Their financial strength is so superior to anything you might see that it's kind of just.
A blip, all right. Thanks to Matthew Pallazola, Bloomberg Intelligence senior analysts P and C Insurance, it.
Turned out to a recent deal in the data security business.
Sofas agreed to buy secure Works for eight dollars fifty cents a share in cash at evaluation of eight hundred fifty nine million dollars for more.
Guest host MLI, Grifeo and I were joined by Secure Works c CEO Wendy Thomas. We first asked Wendy to talk to us about why secure Works sold to sofos.
This is a strategic combination of two longtime security market leaders, and so when you think about combining are two agnostic, very open platforms, decades of cybersecurity experience, and strong brands in the space. This is a way to really scale up and defeat the adversary at scale.
What does it say about the current market for cybersecurity companies that this acquisition is going through.
The market is really looking for a single partner for cybersecurity, sort of a consolidated platform play that a one organization can increasingly address multiple use cases for their security needs, from being proactive about vulnerability management to reactive to detection and response capabilities all the way to AI powered platforms
that can predict the next cyber attack. And so the scale all of R and D required to make that a reality for customers is one that requires scale in organizations. So to take two cash low positive growing leaders in the space and put them together means more scaled R and D to be better, faster, stronger for customers.
What are your customers doing with cybersecurity these days in terms of their spending their investment.
They are increasingly moving from what I would call preventative cybersecurity investments to proactive cybersecurity posture and risk management. This is all about moving towards increasing prevention and the reason is that dwell times of thread actors in an organization's environment have gone from months to days to now hours.
So with the power of an AI powered platform, in order to really be able to keep constant visibility about potential holes in their attacks, right those unlocked doors, as I like to talk about, it requires technology to do that, technology to detect that someone's rattling that door handle, and the ability to immediately protect the organization from someone getting in and taking those valuable data assets or encrypting their systems with ransomware.
So you're using an AI powered you're an AI powered security platform. I'm wondering how difficult it is right now to be a company that's using AI when it seems like demand is outpacing supply. Is that a challenge for you guys?
Well, if you think about AI, that's a pretty broad category. And while you know, natural language processing and generative AI is the is the hot topic right now, and it has its place in security in terms of things like changing cybersecurity detections into readable language of what's going on to a business person. We've been using AI for a
very long time in our platform. We started building it in twenty seventeen for things like machine learning, deep learning, statistical learning, in order to sort through tremendous amounts of data and find patterns of behavior that we can match to thread actors, the way that they try to come into an environment, the software that they use in those tactics and techniques, and a platform like that that can filter through a lot of data and find those patterns
is the key to being able to protect an organization. So it's home built for both sofas and for secure works their hub platform and our Tage's platform. It just makes a ton of sense to be able to take the best of both worlds and put those together.
All right.
So you and I, Wendy, we first chatted back in twenty twenty one. How is your company? How has the industry changed over the last several years.
The industry is, I think, on a path for the first long time to really consolidate, and that is frankly as a result of customer demand to be able to run a holistic security program. Understand frankly, quantify their risk, demonstrate where they've protected against that risk, and then have the accountability around who is attacking their environment and how they've protected against it for their boards and c suite.
It's become a boardroom topic for the last couple of years, and so the ability of a security professional to elevate sort of a technical pursuit into the language of business and risk. It's probably the biggest change that I've seen over the last few years.
I want to zoom out and just talk about the cyber industry more broadly and how different corporation should be thinking about the current state of threat to their businesses when it comes to cybersecurity. Are we worse off than we were maybe five years ago as hackers get more advanced.
I would say that the great things about AI that have enabled us as businesses security companies to leverage the power of that AI has also represented a certain amount of peril in terms of empowering those thread actors as well, and whether it's nation states or cyber criminals who are involved, their ability to use the same sort of natural language processing technologies to make that phishing email much more believable. It really does look like it's coming from your bank
or from a vendor that you use. And so the last line of defense, always beyond technology, is people, and the need for all of us to become more educated and just cyber aware is more important than ever. So there's always that human edge that can make the difference on top of technology to keep us all a little bit safer. When cyber criminals cannot make money off of global citizens, then we start to break that economic model, all right.
Thanks to Secure Work CEO Wendy Thomas.
This is the Bloomberg Intelligence Podcast, available on Apples, Spotify, and anywhere else you get your podcasts. Listen live each weekday ten am to noon Eastern on Bloomberg dot com, the iHeartRadio app tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.