Vaccine Is 'Strategic Asset' That Hackers Will Target: Clint Watts

about the hacking of various computer systems. We had the Twitter hack where a lot of the big name accounts were hacked on Twitter yesterday Today news that the UK, US and Canada jointly accusing Russia of cyber tax against coronavirus research centers. So again, cybersecurity right back into four which we're fortunate now to have Clint Watts joined us to talk about this. He's a distinguished Research Fellow with the Foreign Policy Research Institute's also senior Fellow the Centator

for Cyber and Holy and Security at George Washington University. Clint, thanks so much for joining us. I think I want to start with the potential allegations that the Russians have been trying to hack into some of the coronavirus testing sites. What do you know about that? Yeah, it's it's not surprising. Um, it's a little bit different for them. Traditionally we think of the Chinese hacking for intellectual property. That's always been

a big concern, particularly in the United States. UM. But the truth of it is, whoever gets the vaccine first, or whoever it can replicate it very cheaply and accelerate their ability to get that vaccine, not only are they going to be able to protect their own country and help their own country, but they will be able to really move economically as an exporter. It almost becomes a valuable asset for a country if they can gain that.

So I think any of these countries that are lagging behind, that really don't have the ability to develop such a vaccine are going to take targets. And one of the strategic assets of Russians have we know this from election to now is they use hackers prolifically to gain information in the UK UH and this at this point not just today with the vaccines, but also announcing with their parliament UH interpretence from twenty nineteen, it seems to be a big target for Russia. It does seem to be

in the DNA, so to speak. But Clint, isn't there an agreement among global superpowers or the ones that months were superpowers, that there will be sharing If there is, you know, significant breakthroughs when it comes to vaccines and viruses, it's in everybody's interest to share this. It is. But in this case, and it's interesting because that that was really kind of Bill Gates mandate, right. He was taking that on to make sure that all these vaccine could

could be used by everybody. But you have to look at it in terms of who's going to be able to have the capacity to develop it, who's going to have the economic structure and incentives behind it once they do develop it and be able to distribute it rapidly and all over And whatever country can get out in front of that first, he is going to have an advantage.

You'd just be able to replicate it. You'd be able to make more of the vaccine, you be able to distribute it quicker, which gives you a leg up geopolitically across all countries. I do think there will be sharing, um, But just imagine the United States right now, what a dire need we have for vaccines so that we can get back up on our feet, and if we had a competitor that could maybe hold that overhead to a different degree, it just becomes a strategic asset over time.

But do we have any idea as to the uh, the protections the security that the healthcare sties, big farmer companies, biotopic biotech companies have you know, in place right now to protect kind of they're testing and the results. This is one of those interesting things where sector by sector, as a sector you get hit, the cybersecurity of protections become better. So the first people who really get hit, we're banks and financials, right, and they stood up to it.

You saw that with manufacturing next, but healthcare and the health care sector lagged, and so did research and development for a very long time. Many of the big companies UM are very good in terms of protecting their their

I P in their their networks and their systems. However, you're talking about a global, you know, a global vaccine race where you see many many companies coming online, probably companies that weren't traditionally even trying to pursue a vaccine that maybe have an ability to jump over trying to enter that market, you're probably going to see excessive communication and people that are in a rush. When you're in a hurry, you're always more vulnerable for cyber incident or

a cyber attack. It's easier to be socially engineered. And so if you put all these circumstances together, people get hasty, people are moving very quickly. It's just a lot of opportunities there for someone to penetrate in network. So it might be a little less you know, disingenuous or or dangerous.

Let's say, but until we heard about Russia hacking on vaccines, potentially, we yesterday got some major accounts hacked at Twitter, and you know, bitcoins come going around the likes of Bill Gates, Joe Biden, Brock Obama, Jeff Bezos, Warren buff that they were all affected. Who might have been behind this? I mean, could it have been some kid with not very much to to, you know, to prove except that he could do this, or could it have been something more sinister?

I think it's definitely something more sophisticated than one off lucky hacker or individual. This seems to be an organized syndicate. What strange is that they chose bitcoin or as a bitcoin sort of like aggregation operation. Uh, there's a lot of different ways to do cyber attacks to make money.

That's not one that's necessarily the most profitable. But it did really illustrate a weakness or of vulnerability, which is if you can get inside Twitter systems and you can gravitate towards and be able to manipulate accounts with a very high following, which is what they did. They really focused on outstanding influencers, big companies. Uh, if you have that ability, you can broadcast, you can enter into the

information space in a very dynamic way. And so you know, this seems to be a financial scam and I'm sure will get more for Twitter, But imagine how to spend the day before the election or the day of the election. Um, what if they had taken over media accounts like Bloomberg or any of the mainstream media outlets right and started putting out in authentic results of elections or ballots. It would be would cause mass chaos in an election in a scenari and way. We are going to have to

continue this conversation. It is a fascinating one and it will be with us throughout the election and beyond our thanks to you, Clint there for joining us well. Given the market action that we've seen over the last couple of months that bounce off the bottom, a lot of investors are asking themselves, you know, how do I play this? Do I get in? Is it too late? Even Bill Miller uh said value stocks advantages is probably short lived.

He's counting on a comeback for growth stocks to get a sense of kind of maybe where we move from here. We welcome Barry Ridholts, Bloomberg opinion columnists and host of Masters in Business on Bloomberg. Ready is also founder and chief investment officer of Ridholt's Wealth Management. Barry, thanks so much for joining us here. Bill Miller talking about growth stocks? What do you make of that? So Bill nowhere tells a fascinating story about his um come to Jesus moment

after the eighty seven crash. You know, they had put together a nice track record, but in eighty nine they really were struggling, and he went back and re evaluated, under what circumstances does value beat growth and how can we better measure value? When they came up with a series of um variations that are different than the traditional price to earnings ratio one is straight up return on capitol.

And as soon as they began to implement these, he had a spectacular run from one to two thousand and five, fifteen consecutive years of a major fund beating the SMP five. There's never been another streak like that in his three So when when Bill Miller says, hey, coming out of a recession, value is cyclical, it tends to be more sensitive to interest rates and to inflation, and it tends to to do better. But in a very low yield environment, growth is going to be advant is going to have

the advantage. So don't expect the value stops to be growth for very much longer. And Barry has now done two Masters in Business podcasts with the legendary Bill Miller. I can't recommend them enough. Some things that you really would not expect to be in there in there, including what Barry has just voiced about, you know, a legendary value investor talking about growth stocks so much so, Barry, what about finings? I mean, are we do for sort

of a rollover? You know? I keep seeing these comparisons between the run up of the fang stock and and the dot com collapse in the late everybody wants to draw the wrong lesson from from the implosion we saw in two thousand and I think there are There are several really specific differences that that are important to note. The first is in the nineties, the tech stocks had a thousand percent appreciation over five years. Over the past five years, uh, the big Tex stocks are up about

a hundred and seventy. That's a huge difference. It's you know, it was five times more aggressive back then than than it is today. So that's number one. Second, you cannot help but look at the big Tex stocks and notice, dear lord, these are cash machines. Microsoft and Apple and Google and Facebook. They are just printing money. And and now you throw in Netflix, Amazon another one just gaining

market share, printing money. And on top of everything else, Amazon Cloud Services a big profit engine, so very different era today, a with profits, not only revenue, but profits versus the nineties. Certainly a big difference. But but I think the most the difference that explains why the market is confounding people to such a large degree. You know, people look around and they see the U. S. Economy

is not doing great. It's improving, but it's still wildly off from where it was in this time last year or even you know, January February, and the reopening has gone poorly. We've we've bungled the whole COVID nineteen management. But you look around the rest of the world and places like Germany and South Korea and Taiwan and China are all doing a better job than than we are.

And to tie that back to the fangs, to tie that back to the big tech companies, these companies derive the majority of their revenues from non US sources appled most of all, as much as six in some quarters. Uh, Microsoft, Facebook, Google, in the you know, about half, maybe a little more Amazon, Netflix, also a little more. Amazon is the lagguar because so much of the retail sales between whole foods and the

delivery service is in the US. Um So not only are most of the big tech companies getting the majority of their revenues from overseas, but overseas is their fastest growth markets. Also, it really explains why we could have such a mediocre economy in the US and why the big text box are doing so well. It's not as irrational as it appears. So Barry, I think I know a lot of folks would agree with you that the US federal governments bungled, to use your term, that the

response to COVID nineteen. At some point, do the markets need to see some significant coordination improvement here to move higher, because it seems like despite some of the weaknesses that we've seen in key markets at California, Texas, US Florida, the market has been generally pretty nonchalant about this flare up here. Yeah, so some of that is the improvement overseas. Some of that is we were expecting a second wave in the fall, and I think some people are incorrectly

considering this a second wave. This is just an extension of the first wave. And I can't help but feel that the run of very positive news about UM, the various vaccines MODERNA is one and the one out of Oxford is the other, and and the improving treatments for people even if they do get UM catch coronavirus kind of has people looking past this flare up and the full flare up to hey, we're very likely to have by this time next year, there should be some sort

of a widespread vaccine. That's a fair guest from a non doctor, and I think a lot of the investors share my lack of qualifications to open on this, but it appears that we're moving in the right direction on the medical treatment. Even if we mess up the reopening and we mess up the herd immunity, uh, there'll be a magic bullet that will allow us to return to normal sometime in the future. And and just the market seems to be saying, hey, it's a mulligan. Just forget

about it. Let's look towards Barry, always amazing chatting with you. Wanted to talk to you sometimes about Robin Hood as well, because apparently yesterday he saw the Robin Hood traders jump on the modern A bandwagon as well, and so we'll have to see how that plays out. But Barry is always full of really down to worth interesting market thoughts.

He's founder of Riddle's Wealth Management. He's also, of course a Bloomberg opinion columnist, and he is also host of Masters in Business and do go and have a look at those Bill Miller Masters in Business podcasts that he put out. One is for a couple of years ago and the other is just this week. So really interesting stories there from Bill Miller, a legendary investor Barry Rittle's

thank you. The World Trade Organization has been in existence for twenty five years, but it's never been more front of mind than in the last couple of years. President Trump and Brexit, of course, keeping the w t O in the news headlines constantly. Well, the referee at the w t O is the apple At Body. Let's welcome now the former chairman of the Apple Body of the w t O, Jim Bakas Distinguished University Professor of Global Affairs at the University of Central Florida and an adjunct

scholar at the Cato Institute as well. His latest work is The Willing World, Shaping and Sharing a sustainable Global Prosperity, and that's out from Cambridge University Press. So Mr Bacas, thank you so much for joining. Where does the apple At Body at the w t O stand at the moment? In terms of world significance? Of the Apple at bog body stands still because under the rules of the w t O Treaty UH, the I Thought Body cannot hear any new appeals unless it has at least three members.

It ordinarily has seven, it currently has one and um this is entirely because the United States under President Trump has refused to join in the needed consensus with other WTO members to appoint two judges. The significance of this is that it undermines the ability of the w t O to make binding and enforceable judgments in inevitable international trade disputes, as it is done in hundreds of cases

vary successfully over the past twenty five years. Were now suddenly back to the days before the w t O, in which in effect, any one country can block ruling against it by a w t O panel. Thus, we're heading towards a situation which anything goes, especially for the larger company countries that have the political and economic leverage to get away with ignoring w t t TOO rulings. So far, the US has been one and the only

one that has tried this approach. So, Jim, give us a sense of how you think this might play out at the w t O. Again, as vy as mentioning it's been in existence for twenty five years, the US has been a willing and able participant in the w t of the World Trade Organization to the extent we get a new administration in a matter of months, will that change perhaps the the way the US views it's rolled in the w t O. I think it will um. Donald Trump is not going to chan change, support him

or oppose him. I think we can all agree on that. And if he's reelected, this stalemate is likely to continue with previous effects in world trade for the United States and for all other countries. If Joe Biden is elected, I think we'll see a return by the United States to more multilateral approaches that give more emphasis to international cooperation.

The w t O is one of those places in which we uh will see that, I think and I predict that one of the first evidences of that new approach would be the United States joining with other members of the w t O to resume the work of

the Appellate Body. Mr Backus, I mean, we should remind people that one of the reasons why the Appellate Body is so important is that it protects countries really from retaliation against trade partners with you know, without fear of expressing their opinion or of you know, not having a referee in between the two. So smaller states, you know, might be at a disadvantage if it weren't for this

kind of referee, this global referee. But as we move into a period and we've were already in it really of countries turning inwards, of you know, states being more important again and so on. How can the w t O Appellate Body referee in a world like that where even trade is almost less important. Well, I don't think trade is less important. It's been declining during the pandemic, but I think trade links are all the more important

as they go forward in the world. We have to increase global wealth so that we'll be able to address all the many problems we have, and we can't increase proces verity if we're decreasing trade. As for the Appellate Body, uh,

it is a panel of jurists. They are independent and impartial referee, as you rightly said, and it's important to have them there so that we can resolve peacefully and positively the trade disputes that inevitably occur in the n of all world commerce that it falls within the scope of the w q O Treaty. Without an impartial and independent judge of these disputes, there is much more danger that the disputes could get out of hand, especially in

today's more precarious and perilous world. Um people forget that one of the reasons we invented the trading system in the first place, UH after World War two was to help prevent World War three, and so far we succeeded in that. But in order to continue to see seed in that, we need to have a global trading system based on agreed rules in which the rules are upheld fairly under the rule of law. That's where the impellate

body comes in. Yeah, it's interesting. We have to play continue to follow this, Jim Backus, thanks so much for joining us. Jim as a professor of Global affairs at the University of Central Florida, Florida and the former chairman of the Appellate Body of the World Trade Organization. I think it's a really exesting conversation, Vonnie, to think about the future of the World Trade Organization, what role is

going to play in global trade. As as you mentioned, Vannie, a lot of countries, not just the United States, a lot of countries are starting to look more inward, perhaps a little bit less international, a little bit less global, And we'll have to see if that is a trend that continues. Certainly in the pandemic will certainly have some impact on that. It is time for Bloomberg Opinion. We are joined by Bloomberg Opinion columnist Michael Schumann. He's author

UH and columnist Bloomberg Opinion based in Hong Kong. An interesting, really fascinating column out today talking about, you know, amid the rising tensions between the U S and China, the question is to what extent can US companies really decouple from China? Michael, thanks so much for joining us. So again let's go to that issue there. What are we seeing from corporate Americas it thinks about how to deal

with China, both as a supplier and as a customer. Well, I think what what CEO is have to have to kind of weak up to is that, you know, there's a lot of debate in the US about well, should should the US the couple from China? Shouldn't the US the couple? What should the strategy be? The reality on the ground is that it's kind of already happening. I mean, we don't know how far it's going to go. Are these two economies really going to pull totally, totally pull apart?

Probably not. But I think if you're if you're running a company, you have to have in your head that the relationship with China is changing going forward, and it's it's it doesn't look like it's it's really going to reverse back to the way things were. So I don't even if you don't wanted the couple, even if you don't you don't want to change your your business in China, I think you have to be thinking out five ten

years ahead. Well, what are what are my alternatives? What you know, what can I do to either decrease my reliance on China to diversify both in terms of where I'm making my products, will also where I'm selling my products. And Michael, this isn't because solely geopolitical issues are causing, you know, a bit of a deterioration in the relationship.

It's also for very practical reasons. You point out in your piece, for example, that it's a more useful consumer in Southeast Asia than it is and will be in

China for some time to come. And also that an age in China will lose thirty million people whereas the Asian region is going to add forty million working age people by well, look, you know you can't replace China as a consumer market, right, It's I mean, it's one point for billion people and they're getting increasingly wealthy and they and they increasingly like to spend more and more money. So you know, it's not like O, G. I don't

need this market. At the same time, you know, if you're if you're looking to diversify, you're looking for new sources of customers, they are out there. When you look at projections, for example, the growth of the middle class and in places like India, UH, Southeast Asia as you mentioned, uh, you know, there's a tremendous amount of potential growth out there.

And in some cases you know where where China is actually forth aging and the working age populations you said, they're shrinking in some of these areas for example, and you know in Southeast Asia you have much better demographics. You're actually you know, any working age people who are going to be you know, earning, earning more and more money. So you know, again, you know, I don't think anyone wants to pull out of the Chinese market and lose

all that business. But you know, if you're looking to diversify, if you're looking for you know, kind of hedging, hedging your bets, you know, there are other places out there where there's a lot of potential will make a lot

of money. So it's entering how much of this do you think is a result of President Trump and his you know, you know, America First type of policy, and that perhaps if we were to get a different administration here in several months, a Joe Biden administration, uh, that presumably would have more traditional globalist views, internationalist views, that this trend may be reversed. How much of it is

politically driven? Do you think? Well, you know, on on the U. S side, Uh, you know, I think what's really remarkable what's happened in the last let's say three to four years, is how how China has really lost its friends in Washington. You know. I I don't see the Democrats being particularly software on China at this point than than the Trump administration is. I think if there's a change, if there is a change in the White House, maybe some of the tone will be different, some of

the policies may be different. But are is China going to have a friendlier a White House? Probably not in kind of the big picture sense, you know. And then on the other side, there's politics, you know, going on in China as well, And when you look at what's happening with decoupling. You know, the Chinese have actually been

much more aggressive in this. I think I think Beijing, looking out in the future, has already decided that China is going to have uh, you know, China is not going to have the same relationship with the US going forward over forty years that they've had in the past forty years. And a lot of Chinese policy, let's say, on on technology, you know, has really been designed to

decrease Chinese reliance on on the US. So, you know, whatever is happening with US politics, you also have to look at what's happening in China, Chinese where Chinese policy is going in and Chinese policy is also kind of heading in the direction we are looking at decreasing their

relationship in the United States. So incremental moves like, for example, the Secretary of State Mike Pompeo talking about restricting visas for some Quawei workers yesterday, and the substantially greater move by the UK to actually restrict the use of Huawei elements in in in teleconstructure and infrastructure over there. How does that impact China? Does it cause China to make a sort of a proactive decision about these countries or

can China afford to ignore those kinds of soft power moves. Well, you know, I think what's really interesting about what's going on now is I think you're seeing more and more governments around the world. You know, you mentioned the UK decision on away. I mean, I think you're seeing more and more governments around the world reacting very negatively the Chinese policy right now, both economic policy would also in

terms of Hong Kong and and other matters. Uh. And you know is the Chinese obviously feels strong enough at this moment that they feel that they can do this and and uh. But you know, looking at it from a pure economic standpoint, Uh, you know, this is still an emerging economy. It's it's it's still relatively poor, it still needs technology from the rest of the world. And

China also has huge ambitions to be a technology leader. Uh. And if it's going to see doors closing uh to it and its companies and its technology around the world, you know, that's that's really really negative for China, China's economic future. So I I mean, I would hope in Beijing that there's a rethink of some of the things that they're doing they're doing there does not seem to be one at this point. But you know, this is not an economic vehicle that that can continue in isolation. Alright,

Michael's thank you. Fascinating conversations there, and Michael of course joining us from Hong Kong. We'll have to ask him about the situation on the ground next time he's on.

Michael Schuman's author Bloomberg opinion columnist and his latest book, author of Superpower interrupted the Chinese History of the World, and it is fascinating bold because to certain extent, China is already well beyond the US in terms of infrastructure, in terms of its major cities, and it was maybe supposed to be the promised land for American business, as Michael Schuman said, but calls are growing louder and louder

for the two economies to the couplic can be. Yeah, that's gonna be really interesting to see, if you know, from a supply chain perspective, so much of the product we have here in the US comes from China. And then of course on the other end, Vannie, you know, it's such a big market for so many US companies and Western companies in general. So I'll have to see how this plays opp it fascinating. Thanks for listening to

the Boomberg Markets podcast. You can subscribe and listen to interviews at Apple, Old Podcasts, or whatever a podcast platform you prefer. I'm Bonnie Quinn, I'm on Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio