P&L: We Need to Deploy New Tech Faster to Prevent Cyber Attacks

He's the chief executive officer of Checkpoint and they can be followed, of course on Twitter at Checkpoint sw and Gilshwed joins us here in the studio. Thanks very much for being here. You are described by many people as the creator, the inventor of the modern firewall. First, well, do you use that name, you know, in public at any time? And if you do, maybe explain what is this idea of stateful inspection? What is this? Okay, good afternoon.

The first day I did invent the technology stateful inspection, and the technology which was which is quite all today, but it's actually still relevant. Basically knows how to inspect every traffic flow, analyze it at all levels and understand what's going on, and based on the organizational policy, decide whether it's something that should be accepted, which is allowed or not allowed. Now, over the years there is a

twenty three years have passed since it was invented. The technology ground grown and has many more layers that can actually even today prevent and stop some of the most sophisticated attacks. So it's grown well well beyond what I could have dreamt of twenty five years ago when I started started thinking about the idea. Can you tell us about the sort of mechanics behind some of the more sophisticated hack attacks. I mean, how people or how different

operatives try to break into different systems. So I think many of the first very many, many types of attacks, and they use every possible bug or issue that we have in all the software that we are surrounded with. But many of them starts today by sending you something that looks like an innocent up fred your mobile phone or an innocent file. You get a CV from a work candidate, vet up or let's c V includes something that would break into your computer from their point on.

It basically owns your computer and can download off the web or of its control servers, any kind of software that can control the device. Is this a type of attack that got into, for example, the JP Morgan system when the JP Morgan was dealing with a hack, or the type of hack that could have gotten into the R and C and the deans the Democratic and then the Republican national committees during the the election in this

is exactly the same kind of attacks. Again, we use different problems, different bags, different vectors, but this is always attacks sharevice in common and now we live into your computer controlled by somebody in a different country or or somebody that you don't know, and that person can use your computer to just click on some people's websites, or to destroy everything, or to get all your data, or

basically to do whatever they want. In your mind, are there specific things that President elect Donald Trump can initiate that would increase the level of cybersecurity for let's say, US government offices as well as for the general public in the United States. I think what can be done is to really escalate the level of technology that the

government or the public use. It's less about regulation. I think the issue of the government is something is sometimes with the bureaucracy and the complexity and the sophistication makes everything takes five years. So by now they start to draft and new RFP on a new technology, by the time it's completed, it's ten years have passed and the

technology is outdated. So I think there should be a way to encourage the government agencies to deploy new technologies fast in a in a less structured manner, even because that's the only way to work fast. One big concern is that right now the safety is not very good to protect important US files from a cyber attack. UH, do you have any insight into that? I mean, is your sense that Corporate America and UH and and the US government have been taking some serious and fast steps

towards cybersecurity. So I think, first America is relatively sophisticated in technology that that we all use here more than any other country in the world. But still I think that you're absolutely right, we're not safe. Corporate America is not a percent safe. And again today with lou if you look at the most advanced security technologies, less than five percent of companies use them company wide, so they actually block every every incoming threat. So we are wide

open today. Let's talk about Checkpoint a company and what it's doing. I was looking, you're going at a run rate of about four hundred and twenties seven eight million a quarter. What's the biggest seller right now for Checkpoint? I think the fastest growing is what we call the sund blessed technology, which is the most advanced. Is a

set of technologies that blocks the attacks of tomorrow. Whereas under that umbrella overs at least twenty seven different technologies that each one can block a different variant of attacks. And again we're talking mainly about the unknown attacks. That's the biggest challenge is how do we block something that we didn't see before. Have you seen an incredible increase in interest recently? Um, it's growing. The interest level is growing.

If you look at corporate buying, which is where we are, unfortunately doesn't behave I mean, when you see a big attack, it's not tomorrow morning, you get five hundred more enterprises being interested. And that's something that can be changed because I think some of the enterprises should be foster to act. Thank you so much for being with us. Gil Schwed, chief executive officer of Checkpoint, which is based in Tel Aviv. Coming up today at Trump Tower in Midtown Manhattan, a

meeting of the elite in technology. Chief executives of Amazon dot Com as well as Alphabet, parent company of Google, and IBM. They will all be speaking with President elect Donald Trump. We want to speak with Ching Kao, now, our technology reporter for Bloomberg News, to find out what this meeting is all about and how companies have perhaps positioned themselves prior to the meeting in order to perhaps

make that conversation a little smoother. One of the executives who is going to be at this meeting, Jenny Roman of my BM, wrote a letter, an open letter to Donald Trump while he was running for uh president, I believe, and I'm just curious, does that have the President elect?

After he won the election and he She got a lot of pushback because apparently IBM employees didn't necessarily think that she was speaking for the company's there any combination, who didn't she on the Stephen Schwartzman council that is going to advise the president elect. That's right. So she did write the letter after he was elected. It laid out some issues she thought were important, which included vocational education, it included, um, things about bringing more tech to government,

her focus on healthcare of that kind of thing. Um, she is on that council, and the council is basically too bring private sector expertise to the table. She's basically the only tech CEO on the panel as well, which means I think she will focus a lot on bringing more technology to the federal government, which of course helps

IBM if they get those contracts. Yeah, you can. Image and Genie Remedia actually also announced last night that you planned to hire as the CEO of IBM about people in the US and invest one billion dollars of the next four years. Was there any reason why she released this other than as sort of a bargaining chip ahead of the meeting with the tech leaders and President electro Well. The company told me that these plans have been in

the works for months. Obviously the timing is pretty nice for them, right, Um, But you know this, people, the one billion dollars in education and retraining, I think have been part of IBM's plans to try to attract the workers that they need, which are folks who have the skills or who want want to learn the skills, and things like cloud computing and artificial intelligence. Thank you so much,

Jing Cow Bloomberg Technology reported solve the problem. Let's solve the problem of increasing interest rates and people who hold fixed income. Marvin Low, senior global market strategist for b n Y Melon joins us. Now, Marvin, thank you very much for being with us. So what is the prevailing zeitgeist when it comes to owning bonds, holding onto what

you've got, and perhaps buying or selling UM. You know, I think that we're in a period where we're all trying to guess what the new administration UM is going to pursue, what would winds up being UH their main UM focus. And depending on how you come out with that, and you know, we're all making these decisions with a limited amount of information, UM, it's going to guide how you should look at your portfolio. If you're in the

inflation camp. You know, certainly UM, the curve steepening type of trend that we see that we've seen UM is going to be a concern. And with rates having been that low for that long, you see an outsized movement in yields percentagewise. So, Marvin, is the global search for yield over I mean, why is this divergence between US and German yields in particular, and the divergence is the widest on record. Why is this able to continue without

European investors flooding into the US to capture the higher yields. Well, you know, I think that we have to remember that the central banks, even though there's a concern that they're stepping away from UM the heavy policy tools that they've

been using, they're still actively in there. So in Europe you are still very much influenced by UM n ECB that while they're buying less per month, they're still buying, and there's still our supply issues around there, and you kind of see the changes in the shape of their curve, but they're still buying. The set isn't buying. They haven't

been buying for for several years. And UM, we are going down this kind of fiscal path that people have been talking about for a while before everybody else is and you know, whether or not that revives the economy, whether or not that drives inflation. UM. Further, you know, we can make an argument that it might or might not get out of hand, but that it really is the concern. But there is still that policy divergence. Marvin, there are many institutions which have been buying bonds throughout

the last decade. If you are an institution and you have bonds that are currently underwater in terms of capital appreciation, should you sell them or should you hold them? You know, every every every situation is is unique out there. I'm in the camp that yields UM do have the potential to continue to go higher UM I I do UM remain concerned about the steeping of the curve, and you

know that trend continuing. So if you are a total return type of investor where you're not locking in that income, I think you have to bring that into the equation. The Bank of International Settlements had an interesting report in the past five days or so where analysts who were talking about why we haven't seen a more disorderly rotation out of bonds. I mean a lot of been a lot of concern leading up to this year has been focused on bond market liquidity and the ability for investors

to move around. It seems like that hasn't been a huge problem this time around. The b i S was attributing this to the fact that so many sticky investors. The Central bankers, the pensions own these bonds and aren't going to sell them. Do you think that that's accurate or do you think that that we still are at risk of a potential disorderly unwind of the market. You know what, I'm not really concerned about disorderly unwind. I do think that those large pools of money UM are

out there. I think that it takes a while to to change them. That doesn't mean that we UM I won't see and may continue to see kind of these momentary flash crash type of of events which seemed to be more common rather than you know, once a decade type of events. And I think that that's where the market is at this point. You know that those liquidity pools UM are ultimately a thin when you get that volatility, and you know, I think that we have to build

that into UM into our thought process. What about how yield debt? You know what UM so so I think that's UM HI You'll still remains a decent asset class to think about. We talked about the talked about that the last time I was here. And if anything with kind of this UM UH stabilizing growth profile and potential for UH some physical stimulus around. It pushes the credit story, um a little further out. You know, you might want to be short in that type of discussion, particularly you're short,

uh particularly concerned with the curve. I mean, would you take any would you take the game? I mean, I'm just looking at, for example, the exchange traded fund j n K up fifteen and a quarter percent this year, which is actually lagging behind the broader index. Yeah, yeah, yeah, absolutely. I mean, um, you'll you'll never get reprimanded for for taking some gains, particularly as we go into the beginning of the year, and if we remember how this year began,

there was certainly volatility in it um as an asset class. However, with the income that you might need to be feeling, I still like that as a class. You know, Mortgages is some is an area that I'm really intrigued by right now. You have some investors saying, look, yields are rising. That could be a problem for mortgages because people, it will make credit tighter. It'll make it, uh, it'll make it harder to refinance your home or less uh less

worthwhile the refinance. But I hear other people saying this is a fantastic opportunity because you will not get that refinancing, so people will actually be paying you what they say they would paying you for a longer period of time. Where do you weigh in on this? You know, I think that's true, and I think that there's so many different flavors of mortgages, with so many different types of structures out there that you know, you kind of need

the expertise to to get in there. But you know, certainly, um, that refi risk goes down with with this rising yields, which is positive right for for for mortgage it yes, So is that something that you're bullish on right now? Um? You know what I think I'm I think I'm on the sidelines with that at the moment. There's, um, you know, a lot of influences that we're still trying to figure out.

You know, I'm just looking at mortgage rates right now, and there are four four and a half percent four point four five percent for a thirty year fixed refi in the New York metropolitan region and that is a big increase from when you saw those rate under four percent. Uh Marvin one of the area automobile loans. We've been tracking those as well, particularly in the in light of uh, well,

the link when payments have been increasing. Yeah, everyone's read about up primato bubble, are you, um yeah, But from from a global market, from a global micro perspective, um, absolutely, given how um long that that asset class and um kind of that durable discussion has driven a lot of the economic growth that we've seen. So yeah, I mean it's it's certainly flashing red. Thank you so much, Marvin low It's always great to hear what you have to say.

Marvin Lowe, senior global market strategist at b n Y Melan, talking about what he sees in the year ahead of uncertainty. 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 him Fox, I'm out there on Twitter at him 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.