Hacking the President's Phone is Straightforward, Weaver Says

whether at the grocery store or the trading floor. Find the Bloomberg P and L Podcast on iTunes, SoundCloud and at Bloomberg dot com. The President's phone the point of much speculation and worry. Now we have a new worry. President Trump is fond of using his Android phone, which is not as well protected as some newer versions of other phones. I want to bring in Nicholas Weaver, who's

a security researcher at the International Computer Science Center in Berkeley, California. UM. Nicholas, you wrote in a recent UH a recent column that you said that you would basically assign to your UH advanced graduate students the project of hacking into the President's phone. How how easy is it um, assuming it is a Galaxy S three or S four, It is very straightforward,

and it's for two reasons. First of all, that phone has known vulnerabilities that you can just basically download and to use one of those vulnerabilities, all you need to do is convince your victim with that phone to click on a link. And given the president's temperament, it's probably pretty easy to tweet something at him that would attract

his attention and cause him to click. Well, why doesn't they Why don't they just use them more secure phone, give him that function if you wants it, that outgoing function, and then pair back any of the any of the incoming data. The problem is is what is his workflow. His workflow on that phone is he wants to take phone calls off the book from his friends, and he

wants to tweet and read links. And so you could build a more Trump resistant phone, but you'd still need to get him to cooperate in terms of switching over to basically separate devices for his different roles. Well, so let's talk about sort of the past precedent for this. I mean, what have previous presidents in the high tech era done? Obama, who was a notorious BlackBerry addict just broke down and used a government device, and um, he joked about the morning process of no longer having his

own personal device. What's the what's the drawbacks for them? Um? In order to do a secure device, it's going to be locked down and more limited. So let's say I want a phone that Trump can tweet on. I'm going

to want to remove the microphone and camera. I'm going to want to remove the cellular connectivity in GPS because I know he's going to carry it where he shouldn't and he's not going to want a device that's that crippled, all right, So if he doesn't want that device, is there, for example, another device that would do some of this? For example, I know that there's something called the black phone. What would what would that doesn't have the kind of functionality,

I guess, but what would be? Uh? What what would be the advantages there? Well, the black phone and Boeing's black type things, those are more locked down Android devices. Um, but it would be a new device for him. He's very set in his ways on comfort level, and it's just a really hard problem to convince the boss to do things securely when he's used to doing things his own way. So if this is a problem CSO's face

all over the planet. Well, so, so this is this is my thinking right now, is that potentially, unless he were to remove the phone from the room during any confidential conversation, this could be a pretty pretty serious national national security concern. Is there anything to sort of contradict that that impression? No, And what's right is that he's had this phone for months, and so the real question

is is not what is he doing now? Because looking at his Twitter feed, the staff seemed reasonably adept at keeping the phone out of his hands during working hours, since those working hour tweets seemed to be dictated to an aid on a different device. But the problem is is he's had this phone for months, and we have

to assume that that phone was compromised months ago. And so what needs to happen is people need to go back and go, Huh, what conversations did I have around the President elect at the time that I would worry if it got to Moscow, Beijing, Tel Aviv, Paris, or any place else. Well, so Nicholas zooming out, Uh, you know, there's been a lot of concern about the security of information among various government officials. We saw this with with Hillary Clinton and the and the d n C. I mean,

what's your impression of how secure the overall governmental system is. Well, those systems, in many cases are private. Um, the US government, if it's classified, has really good protection. The US government uses multiple layers of protection for classified data, and so unless it's safe for all we know discussed in a

marra Lago dining room, the protections are really good. The problem is with the U s government is the unclassified systems, the stuff that's connected to the Internet, and that's just often such an attractive target. The other problem is personal devices. So let's look at that famous photo at maral Lago of a AID illuminating some briefing document with the cell phone camera. This was related to the missile launch from

North Korea. Yes, so we had a whole panicked gathering and we saw photos of an AID illuminating a who knows what classified or unclassified document with a cell phone. Now, if this was a government phone, I think it's no worse than having the conversation at marl Ago, where, for all we know, the Russians tip the weight staff better than Trump does. But if it was a private phone, that person is still a high value target and the

private devices are nowhere near as secure. So as it was a personal phone, they might as well have just facts that document to Moscow in terms of trying to

do a damage assessment. Nicholas, I just curious if let's say, one of the patrons at Mara Lago or in any public setting a meeting of any kind, not just with the president, but if there are mobile phones that are present, is it possible or is it How easy is it to hack into one and use them almost as a listening device for everything that goes on in the room. I keep thinking also of those home devices like the Alexa, the Echo and so on. It really depends on the

device and the security model. So like, I use an iPhone and I'm very happy because i know I'm not worth risking a one point five million all or exploit to attack. However, if somebody's using a Galaxy Note or a Galaxy three or Galaxy four and they know they are a worthwhile target, they basically need to throw that phone in the trash because for that phone it costs basically nothing in terms of exploits. That just basically costs having to take a little time to get that victim

to click on a link. Thanks very much for taking the time to explain all of this to us. Nicholas Weaver, security researcher at the International Computer Science Center, Berkeley University. Let's get a little bit more color on what exactly happened with Kraft, heins and you Leaver at Hammond is here with us UH he covers takeovers F four Bloomberg News, and I just want to start with some questions. I've

got a lot of questions. My first question is, so Kraft made this one billion dollar offer for Unilever, UH, but Uni Leaver spurned that offer, and yet we're still seeing the gains persist in the shares. Can you why why? Well, it's a good question, I think for two reasons. I think one, this is not how Craftines intended this information to come out. The rumor had started to get into

the market. There was some speculation this morning, so they were forced by the UK Takeover panel to make a statement. I think behind closed doors they maybe would have tried to increase the bid for Unilever and get Unilever to to come to the table and then to negotiations. Isn't it dead, Then it's not necessarily dead. I think there's opportunity for craftin's and obviously backed by three G, this very very ambitious and sort of deal loving Brazilian private

ecuity firm. I think there's an opportunity for them to come back with a higher offer. It's unlikely that this

would have been their best and final offers. So I think one of the things we were seeing in UNI do the stock right now is the market pricing in a very good chance that this is not end game and that three G, you know, in the form of craft himes, come back to the table and try and get this thing done well Kraft heinds, as statement specifically said, and I'm quoting here, we look forward to working to reach agreement on the terms of a transaction. So in

other words, they're still interested. This is just the opening salvo and we see where it goes from here. I mean, you're know leaver her talking about the you know, the the deal undervaluing the company. I mean that's sort of classic takeover speak for give us more money and maybe we'll come around. Well, but it's interesting to me that craft shares are up to so in other words, the market thinks that even if Craft were to offer a higher amount, that that's still it would be worthwhile to

be a creative right. And and look, this is this is a very good point that speaks exactly to the three G business model, which is they acquire companies to go out, they get scaled, and they essentially make money off of them by cutting costs in an extremely aggressive, almost a sort of barbaric way where they'll go in and they will fire a ton of people, the scale back on every single small item they can to make you know, cost savings, so that the market is looking

at this and saying, well, look, you're going to put together a company that is worth a hundred fourteen billion dollars with a company that they're going to pay upwards of a hundred forty billion dollars four and you're going to have this monster, monster sort of consumer products food business, and they're going to extract some huge cost savings from it, just because that is what their model is. You saw

them do it with Burger King and Tim Horton's. They obviously did it when they put Craft and Hinds together. They're doing it at the moment when they're in this merger with ant Busch in Bev and s A P. Mayonnaise. That's what I was going to tell you about mayonnaise, because if this deal does go through, you'll have Hellman's mayonnaise along with Heinz Ketchup and Mama. Yeah. Well that was I know right. It's all on the go ahead, Dave. A big deal for the Brits, not so much for

the Americans. Well, now, the name that hasn't come up yet is Warren Buffett. Berkshire has behind three absolutely, and you've got to bear in mind I was just looking for the nos Berkshire under the third quarter of about

eighty five billion dollars of cash. So what it means is that three G, through their support from Berkshire, has a lot of firepower to go after a company as big as Uni Leaver and bear in mind, this offer as it stands is the fourth largest ever made for any company worldwide, only a O L Time Warner Votus Phone MONISMN and Fightser's failed bid for Alegant or bigger. Those of the kind of stakes we're talking about, Ed,

real quick, How big could this get? What are you hearing it could obviously go up a little bit from here. But I think one thing to note on this this buy union of three g war in Buffer is that they do not overpay for stuff. They're quite rigid on price and and they obviously are not gonna want to go in with a huge number and then have to extract a much cost. I think the real issue here is what it would mean for Union Leaver in terms

of employment. This company has some of the hundred seventy thousand employees worldwide, and you can bet that if this merger was to be consummated, a lot of those people would would see their jobs go. We're to follow this and we want to thank you for keeping us up to date. Ed Hammond on you know, Leaver turning down a craft Hens takeover approach. Thank you very much, Thanks to Dave Wilson, Bloomberg Stocks, calmnesst, P and L. Is brought to you by proper Cloth, the leader in men's

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visit proper cloth dot com custom shirts made Smarter. The US Leading Economic Index increased again in January, pointing to a positive economic outlook in the first half of this year. Here to tell us more is I can Goldstein can of course economist with the conference board. Here to tell us more can thanks for being where This has always an increase, a jump, and it is described perhaps as being a sharp increase zero point six percent higher. Tell

us about the details. Sharp increase for a second straight month. The Coincident Index, that's the one that tells us where we are right now, that continues to sort of move along, creep along, um, you know, not not very strongly. But this is the second straight month that we've got a real strong push and turns the lead index, which is a signal about where we might be going. So we

already start with a strong consumer market, strong housing. Maybe this is suggesting either trade and or investment might begin to start to kick in this ring. Maybe you know, earlier this morning, Jeff Rosenberg fixing come strategists at black Rock was on Bloomberg Television and he was talking about how the bond markets right now are wrong in his opinion, and that they are not adequately pricing in the upsurge

that we are seeing in inflation prospects. Do you agree, Oh, the bond market has been under pricing for a couple of years, so this is not anything new. But but what indicator in here in this report might point to Jeff's point, which is that that that that it's going to be caught off guards. In other words, it's been wrong. Uh, and yet it's been wrong for a long time, so people could say, well, it's actually been right. The flip side is at what point does this hit the hit

the wall? See, this is exactly the question because it isn't just this sector. This isn't just manufacturing or just consumer or just labor. It really is the different you know, pulse beats in the different pieces of the overall economy, either by industry or by region, are all suggesting that the pace of activity will at least steady or pick up as we move into the spring, move into the summer.

The bond market is not fully picking that up. Hasn't been for a couple of years, and so the bond market in fact might be caught, you know, dragging its heels at the same time that the stock market might be peaking well. The bond market, you do have to add that it has been artificially uh, I don't even know not you know, help right influenced, I want to say, because of the balance sheet of the Federal Reserve and a variety of other things. So sometimes it's difficult to

even call that, um, you know, natural market. I want to go into a little bit of detail on the report because I was looking at two items. One was average average weekly initial claims, plus I was also looking at building permits. Tell us about those two areas well. Claims you know, I have moved down lower than we've seen. I think these are lower numbers, and we've seen in two decades the housing starts and housing permits they move up and down one month, you know, or you know,

they fluctuated lot, but they're moving up steadily. And even with that, building supply is below demand, so that there's more room for housing to continue. So that, as I say, both the consumer market and housing they were already doing better than good they're above average in terms of growth. Maybe that's going to finally lead some support to the rest of the economy, specifically trade or capex. So at what point will we be able to see the pickup

in inflation enough to cause a disruption in markets. It's not a pickup in inflation, in the fact, we might not see that, and it's a pickup in growth, so that you want to look at manufacturing, you want to look at at signals about business investment, you want to

look at trade. But so if you said it's not about inflation, so we could get sort of the steady inflation rate that we've seen for a longer period of time, even as growth picks up, Oh absolutely, I mean we're close now to about a two and a pcent rate of growth in terms of inflation. In terms of wage growth, maybe that might move up to three. It might not even move up that much. It certainly isn't gonna move up more than that. So that inflation isn't and hasn't

been the problem. The problem really has been how do we goose up growth specifically, how do we get more out of manufacturing, how do we get more out of business investment, how do we get more at a trade and it there's at least a chance that there's enough growth going on, there's enough demand going on to finally force business to move in those kinds of directions. Maybe I can as an economist, I'm gonna pull you out of your your your comforts on just a little bit.

I want to get your thoughts on interest rates. You think the Fed is going to raise two three four times this year? Yes, to three or four? I knew that was that was the economist joke. What do you think not only two or three or maybe even four this year, but another two or three next year. We know that they want to get to about a three percent rate for the short end of the Yeld curve, about four and a half five at the long end,

and they're finally going to start to move that. The biggest anchor is not what does or does not happen in the States. The biggest anchor is how low, even how negative interest rates are elsewhere. So there's a little bit of balance here between what we're doing and what's going on elsewhere in the globe. Do you think that the U. S economy is strong enough to withstand three

four rad hikes this year? Oh, easily, easily, and and what tells us that is there is this momentum that is building in terms of either this is a two month plateau in terms of the YELI turns the leading index, or there's momentum that has been it has been building for some time. It's starting to finally show up. And the surprise is that it took this long to show up, not that it's showing up. Thank you so much for joining us, Ken Goldstein, really interesting discussion economist with the

conference board talking about the leading indicators. Matt Miller, who is our Bloomberg Tell Levision uh and Bloomberg News correspondent, is at the Munich Security Conference. Matt was wearing a hat that in the rain earlier today reporting on what he was hearing. Matt, thank you so much for joining us. Now, so, what what's been the biggest headline that you've experienced at

the Munich Security Conference? Well, um, so far, it's interesting to ask all the world leaders who walk past whether or not they think the White House has lost credibility and what their expectations are as far as um the US supporting NATO, especially in regards to any kind of Russian conflict. Most of the people that I've asked and said, Look, we're here to find out the answer to those questions, so we can't give you our answer just yet. It's

really a wait and see kind of thing. UM. So it's been very interesting to see that everyone from the most important leaders I speak to, to UM to the soldiers walking around this conference really just want to hear what the U. S position is on Russia, especially as relates to Ukraine. Well, you've got the secred is the Secretary of State? Is he at this meeting, Rex Tillerson? Because I know Maddis, James Maddis and John Kelly they are attending, as well as Vice President uh, Mike Pence.

But I thought that maybe it was Rex Tillerson. Is he he's there as well. I I have seen General Maddie walking around, although I was corrected and told he is now to be addressed as Secretary of Maddis. Um. I'm not sure which one is is better, but um, no, Rex Tillerson is not here. UM, But we do obviously expect Mike Pence tonight, so and and Rex Tillerson. Tim, I'm sure you're referring to the comments that he made in Bonn yesterday has said he expects Russia to uphold

its commitments to the mint Minsk Agreement. Um, it'll just be interesting to see it. Pence is um supportive of that as well when he gets here tonight. And I'm actually just about to speak to the President of Lithuania. So that'll be an interesting interview because Donald Trump wrote a letter to her last week saying that he does support Um, well, he supports let's put it this way, it's gonna sound strange, he supports her support of the

Ukraine as an independent and sovereign nation. Well, um, and just sort of to your point of that, people are waiting to hear from the US and get there get its position on national security issues. Is there anything else that sort of come out that's a little bit more definitive than just waiting for Vice President Pence to speak or get more color around our policies here. So, so I was asking a lot of people this morning whether or not they think the White House has lost credibility

because of this Mike Flynn resignation. And I spoke with John McCain, Senator John McCain UM as well as UM a couple of the other senators who are walking in and asked them, hey, do you think that Mike Pence has lost credibility because um he you know, gave misinformation as far as the contact with with our Russian allies. And Senator McCain said, he didn't, you know, give misinformation, He was given misinformation. He didn't miss lead, he was misled.

Uh so appearing to support and the Vice President tent on his way into this conference. Hey man, I'm wondering if you could tell us a little bit about the Russians and the feeling about Russia's power. I mean, we just got a report that Russian fighter jets had buzzed the US worship in the Black Sea. You got the report that Finland is going to boost its army by over because of heightened tensions with Russia. Your schedule to speak with the President of Lithuania. Give us the details

if you can. I mean, well, as far as the buzzes of the work, you know, uh well, as a names man that military men often do these kinds of shows of bravado, and it's that's not the kind of thing that's ever probably gonna completely stop interest in Russia's position. And let's say that the two most highly regarded guests here other than Mike Pener and he had a arrived are um president por Shanko from the Ukraine and Sergey Labor.

Everyone media pool at least has been following those two around um you know, uh, putting, putting down their every move and just watching to see if we get any hint of whether or not there's capitulation of Russians or a little bit more confidence on the side of Ukraine. Can we just get your thoughts on not a completely different topic, GM selling its European operations to p s A to Pugeau. Yeah, this is fascinating. I was in Russell time yesterday right outside of Frankfurt, which is where

um Opal has its main factory. The Germans initially were very unhappy about the way they found out about this deal. I'm talking about Anglo America on her cabinets, not thrilled with the fact that they had to find out that the fact that Kim wanted to sell to the show from a Bloomberg scoop on I believe late day. So that uh that aside. Um, it seems that they've kind of come around with possibility that every years have been

slightly charmed married bar It. She flew here right after this uh cross star wire, and so it may be a little bit closer to a deal now we're here. Thursday might be Wait, we're losing you in this field. All right, let's we're gonna Matt Miller, thank you very much, reporting from Munich, giving us an update on that G twenty meeting, and also a little bit of color on

General Motorists and p S a group. You know, the valuation I believe what is it about two billion dollars billion dollars right now, the valuation of opal uh in this deal that that GM is talking about with PS like half in cash and half half in liabilities, right, so probably will be some debt issuance if this goes through. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at iTunes, SoundCloud,

or whatever podcast platform you prefer. I'm pim Fox. I'm out there on Twitter at pim Fox. I'm out there on Twitter at Lisa Abramo. It's one before the podcast. You can always catch us worldwide on Bloomberg Radio. P and L is brought to you by Proper Cloth, a leader in men's custom shirts with proprietary smart sized technology and top rated customer service, ordering a custom shirt has never been easier. Visit proper cloth dot com to order your first custom shirt today