White House Lax Protocol Opens Window For More Security Breaches

difficult is it to hack into the US election system? While, according to one report, Florida's Department of State has criticized an experiment to thwart hackers because an eleven year old hacker needed only ten minutes to bust into a replica site and make it look like the wrong candidate had won a presidential election. Here to tell us more about the situation is Clint Watts. He is a senior fellow

for the Far Policy Research Institute. He is also Senior Fellow at the Center for Cyber and Homeland Security at George Washing at the George Washington University. He was previously an infantry officer in the United States Army, executive officer of the Combating Terrorism Center at the US Military Academy at West Point, and a former FBI official. Clint watts. Should we just go back to paper ballots? Yeah, I

would seem that way, doesn't it. I it's amazing that our tech, you know, we should expect it to be able to return a vote very quickly and to do that efficiently, but it is almost impossible to secure it if it has any sort of connection to the web. And at the same point, we're relying on just a few programmers to try and prevent thousands or even you know, hundreds of thousands of potential hackers out there over time from breaking into systems. So we're in a tough spot.

And I think the important thing America is that we have some sort of audit trail and paper ballot backup so that we can verify a vote, because we've seen this happen, particularly Ukraine for example, of Russia had hacked into the system there and the Ukrainians caught it before it went live. But we will always have this threaten as long as we have candidates that are as also going that maybe we can't trust the vote, we're going to have these sorts of problems over the horizon. You know.

Pim raised a good point, which is there are these tests and studies being done of just how compromise the U. S. Electoral system really is right now, And I have to wonder, especially as we head into the midterm elections, just how far have hackers gotten, How how pervasive has some of the influence already been, And are you worried about the integrity of these elections. I'm not so much worried about the integrity as much as the perception of the integrity.

And by what I mean by that is it actually is, you know, fairly difficult to change the votes. We have a lot of people looking at it, but we still have about five states. It sounds like that don't have a sufficient audit trail or a paper ballot backups that we can verify. What I'm more nervous about, though, is the perception or the casting of doubt about the integrity of elections. We saw this in twenty sixteen when we

were watching Russian influence. UH. When I was studying this, the second way was really about making people nervous that democracy isn't true or that their votes didn't count. And we're seeing that come up again in twenty eight team. We're already worried about it now months in advance, but looking forward we're hearing Canadas say that the vote is going to be rigged or the election is rigged against me.

That sort of doubt is almost impossible. And even if you didn't change a vote, let's say you just took a proemptive hack, you just made it look like you hit a voter database, or you change something and then dumped it out online. That would create widespread doubt in the electoral system. That's an attack on democracy and it really under undermines the trust and integrity in both are

elected officials in our institutions. Clint, what do you believe that any conversation or communication is secure, particularly if it takes place in the White House. Yeah, it's it's fascinating. I would have said yes up until now. I just don't know. We've seen unprecedented things in the last two years. Uh. One example is the Russian Foreign Minister lab Ra going into the Oval office without any US media there, but

there was Russian media there. Uh. We've seen cases in Helsinki with the president is talking with Ladimir Puttin one on one and there's no witnesses and we don't know what the electronic situation was there. And then this amrose to tape that that came out in the last week. These are all unprecedented things, and so I don't have confidence right now in terms of communications, uh, the way I did pre two thousand sixteen. I just know working in the government, you didn't take a cell phone in

anywhere or recording device in anywhere. So it's pretty startling to see these revelations come forward, if they're true. And just to be clear, uh, Omar rosso Manigald Newman, she was a former White House advisor who got fired uh and is releasing tapes that she made of President Trump. Uh. And she is saying that she has more that she will release. President Trump has a couple of colorful tweets

in response, for example, I'll read you the latest one. Well, I know it's not presidential to take on a low life like Omar Rossa. And while I would rather not be doing so, this is a modern day form of communication, and I know the fake news media will be working overtime to make even wacky h Omar Rossa look legitimate as possible. Sorry, So what is the possible consequence other than being this sort of soap opera that everybody is following.

What is the potential security consequence of have somebody taping the current president in the White House and potential advisors. What is the security concern here? Yeah, Well, as we talked out with the uh eleven year old that may be hacked into a simulated voting machine, we don't know who's hacked into those devices. Uh, John Kelly, the Chief of Staff, there was another point just a few months ago where there was reporting that his personal phone had

been compromised at one point or hacked into. We know the President tweets a lot, and so he's carrying around a device as well, and so all of the security protocols that they're not being followed through on provide an open window, uh, you know, either in terms of access via microphone, email, or even possibly video at some point into our government. And this is just unprecedented. Usually, I know, working at the FBI and even with the military, you leave your phone in the car, you leave it at

the door, checked into a box. And so this is the highest pinnacle of our government and we have people carrying around devices, not only using them uh in places maybe they shouldn't be, but using them to record each other. Just think the erosion of trust on that staff, right, now if you thought you were being recorded by your coworkers, where you couldn't openly discuss policy or move forward. It slows down the wheels of government at every single level.

And it also probably makes long time civil servants in our country very nervous to not be sure that they can openly and discuss policy freely with leadership without maybe being recorded by one of their colleagues or with somebody in the administration. It's a really dark time in terms of personal trust inside the White House. Clint Watts, do you believe that your communications are monitored or have been monitored, either by US intelligence forces or by overseas intelligence agencies.

I assume so, you know, in a certain context. I traveled overseas before. I know in in certain countries just in terms of their cyber capabilities, and in authoritarian regimes in particular, they tend to monitor very heavily. That's whether you're in Southeast Asia, China, you know, Europe, whatever it might be. I always kind of operate under the assumption that when I'm particularly in a foreign country or accessing through WiFi when I'm traveling, that I'm putting myself at risk,

because that's it's just different. The standards of surveillance are different in different countries. In terms of the United States, I can't say that that's the case, but I've definitely had hacking attempts against me and and institutions that I've worked for. Clint Watts, thank you so much for being with us and for all your insights. Clint Watts is a former FBI Special Agent. He is currently Senior Fellow

at the Foreign Policy Research Institute. He also is UH a Senior Fellow at the Center for Cyber and Homeland Security at the George Washington University. You know, Lisa, at the beginning of the year, one dollar would get you three point seven for Turkish lira. How many you get today? Yes, good question, six point nine one. That is a drop in value of more than eighty per cent. Dr Win Thin is the global head of Emerging Markets FX for

Brown Brothers harrim and he joins us now. Dr Win Thin, were you able to call this decline in the value of the Turkish lira? Well? Uh, first of all, thanks for having me. Um. Yes, I've been embarrassed on Turkish lever for most of this year, but I think the speed of this decline is is great than anyone imagined. Why Well, I think in general markets surprise that there's been a putal lack of action by the policymakers. Um, if they'd come in and allow the center brank to

high grades. Uh, it takes some orthodox measures. We wouldn't be in the situation who we are now, I think. But by waiting so long, the situation is really close to getting out of hand. Um. And you know at this point the sky's limit, all right, So when you stay close to getting out of hand, what's the worst case scenario and how much should investors in other parts of the world care? Well? Luckily? Well, let nas the second part first, that you know lucky. I have been

down playing the denotion of compasion. I mean, if you look at em and we've been in a bear market for e M for for really much of this year, and so you know, I shy away from atasion. I think you know, we have rising US interest rates, we have rising global tensions, we have economic ris from China. There's all very negative em. So my what I've been telling clients is that well, within this bears e M backdrop, we've got five currencies that are have idiosynocratic risks. That

are underperforming. That would be Turkish Layer, Argentine Pasto, Brazilian Real, Russian Rouble, South Africana Ran. So if you hold any five of those currencies, and yes, that would be very concerned.

That's the bad news. The good news is if you look at your wonderful w c RS page, you see here to date we actually have the Colombian paste to in the mixing pay up here to date Malaitian ring get only down three proven sold down when so there's definitely divergences within e M and that to me sort of speaks less of the sort of contagion and more sort of divergences within a bear market. Do you believe that there are going to be any surprises from European

banks that hold large amounts of Turkish debt? Well, we know already from ECB that there are several European banks that have exposed to Turkey. But uh, you know, if we're talked about systemic risk, I don't think it's big enough, big enough that big of a concern. Strongly they'll be against either scar risks to certain corporates, certain banks, but in terms of a widespread systemic um sorry or two

seven eight type crisis. I really would downplay that. I don't think we're as leveraged as we were back in those days. The fundamentals in many of these countries are better. You know, of course I always hesitate to say this time is different, but uh, you know, I'm going to kind of go on a limb and and and say and downplay the systemic risk. Well, just to be Debbie Downer, what would you have to see in order to change

your view that perhaps this does have more potential for contagion. Uh, well, I think we have to see, uh, some greater knock on effects. I think the global growth and in that respect, Turkeys is no China. Uh, It's one of the larger EM countries, but it's it's it's by no means a heavyweight. Uh. We have uh several other EM current countries that are much more important to the sort of the global supply chain. You know. I think the one sort of big unknown

as sal political risk. I mean, in that respect, Turkeys certainly punches above its weight. Um, but you know, again it's you know, I think the banking systems in the developed world are much stronger now after crisis. Again, you know, we've been through a multi year period of de leveraging. Again, that's not to say they're not gonna be individual victims and individual casualties. But again I'm I'm at this point

downplaying the systemic risks, al right, down the risks. What if there is some political repercussions in Turkey because of this in terms of its relations with the West, or were relations internally with the government of of President Urdwan because of increased inflation, or because of the inability of the country in order to import its necessary fuel obligations. Well, I will say this, Um, you know, in some ways urd One is lucky this happen after selection, because obviously

there's gonna be a terrible pain. I went back and look back at the two major crisis Turkeys. Turkey that suffered in recent years. We had a seventy percent evaluation that year. The economy contracted five back in two thousand one. Uh. The litteral loss I think, uh seventy percent of its value UH and the economic contract about six per So at the very least, I think that the risk of a hard land are there. The way things are going,

we're going to the brink. We're gonna have hard landing. Whoever, recession in Turkey, spiky inflation, corporate default um and probably some banking failures. Yes, that's very bad for Urwan, but he's lucky. He just got releacted, so he's he's safe the next four or five years. So and one of the things, we get your crisis, you might as well get it early in your term. Well, he certainly has a crisis on his hands, but he's got plenty of play of runway to go there. Dr Winton, thank you

so much for being with us. It's always a pleasure having new Dr Winton is Global Head of Emerging Markets f X for Brown Brothers Harriman in New York City. Another day, another announcement of new tariffs. It is hard to keep track of which country and which as a class commodity is getting hit. Arlen Siderman is going to help us understand where we need to be focused right

now when it comes to the commodity market. Arlan is Chief Commodities Economistic I N T l f C S Stone, or rather I N T l F C Stone, based in Kansas City, Missouri. Thank you so much for being with us, so Arlena, and just we do hear about President Trump? Doubling tariffs and Turkish steel and aluminum Russian sanctions. Obviously, we have the escalating tariff off with China and European Union,

although that's cooled a little bit. Which set of tariffs so far have had the greatest impact on commodity prices from your view, Well, certainly the trade war with China has had the biggest impact. China is the largest importer of commodities overall, and they tend to set the tone for the world, and to to lose that market is certainly has the biggest impact. Well, they might lose a certain market, but what about the market for energy that's

made by the United States. Hasn't that changed things? Well, it certainly has, and we saw as Bloomberg reported on Friday that China lifting the tariff, the retaliatory tariff on crude oil, I think really shows a significance that the United States plays now in the global energy markets. And I think it also shows a crack in the armor armor of China. Their economy cannot afford to see inflation

pressures right now. Even some of the social media within China, UH seeing some resistance starting to come up from the general public. UH comments that the soybean cargo from the United States that was holed up in their port for about five weeks trying to get unloaded. That all this is going to end up costing the consumers. So there are some signs of the cracks in the armor there in China. I don't expect an end anytime soon. Um,

but it's still the big player. The big question, Arlen, is at what point will all of these tariffs significantly slow global growth? And I'm particularly talking about the tip for Chad that we're seeing between the US and China. What's the answer. Well, I think we're seeing it already in China and the US numbers are still strong. Uh. China United States are certainly big players in the world market. UH. China has an influence on Europe as well. And so I think as we go forward and we look at

the fourth quarter, we probably start seeing some numbers. I think we probably, in my opinion, we get a trade deal, probably negotiated somewhere in the November December time period. By that time we'd probably be starting to see some effects on global economic growth. But if we get a deal in that time period, then I think some of the other trading partners that we have spats, we start to fall in place as well, and we start picking some momentum backed up again in the first second quarter of

next year. Arlen, what can you tell us about the soft commodity complex, specifically when it comes to soybeans and wheat and corn and how their prices have just tumbled I mean soybeans nearly twent in just the last sixty days. Oh, it's a really amazing since we're setting record exports this summer, for this time of year now, the fall is our big exports season. Of course, China is a big part of that, but with China being the only customer really

for Brazil, Brazil has a captive customer. Their prices are running about above US prices, So the rest of the world's coming to United States for soybeans and will likely continue to do that as supplies become tight in Brazil, this falling right into probably late January February when they have new crop supplies available. Uh. Corn and wheat are really little affected by this, so they're really caught up

in the current. And if you look at the numbers from USDA on Friday, they were really pretty positive even though it had a bigger corn crop than expected. We're still seeing domestic stocks decline year on year and just in time supplies and global stocks are falling at a fast space. When you look at the major exporters of wheat in the world, supplies are near thirty year lows at around fourteen percent stocks to use the ratio, but corn and wheat were pulled under by the tsunami of selling,

and soybeans did some chart damage. I think at some point the trade starts to see the disparity between them and starts a trade appropriately. Marlyn, is there a commodity that you think has really big upside a really big downside going forward? The people perhaps aren't pricing in I think a long term the big story is in corn, and I think corn and the energy has come out the winter. In any trade agreement we've got have with China, UH coming maybe at the end of the year or

early next year. Corn supplies globally are just in time supply heavily dependent upon US production year in and year out, and and UH we're continually falling short. Production is falling short of demand. Then if you throw China in there with their move towards ethanol, blending mandate by they're rapidly building ethanol production facilities there. They do not have enough production to meet that demand. They'd like to clear up their air ahead of hosting the next Olympics. And uh,

they've got some real shortages of corn. They're rapidly moving through their reserve supplies and they need to get this trade deal done before they need to start importing corn. And I think corn is probably the long term winner once we get a trade deal with China. Thanks very much for being with us. Arlen Superman is the chief

Commodities economist for International fc Stone talking about corn. The Kingdom of Saudi Arabia's public Investment Fund had approached to Elon Musk going back almost two years about taking Tesla private. It's according to a blog post by Elon Musk, the founder and the president and chief executive of Tesla, also happens to own nearly of Tesla shares. Here to tell us more about this potential investment is Matthew Martin, our Mid East finance reporter for Bloomberg. He's based in Dubai,

but he joins us from London today. Matthew, thank you very much for being with us. What can you tell us about the interest that the Saudi Arabian Investment Fund has has made in Tesla? Well, thanks for having me. UM. Look, I think the Public Investment Fund really embarked on a

very strategic shift about two years ago. It used to be very domestically focused and investing within Saudi Arabia, and then under the new rulers in Saudia, Saudi Arabia that the the onus came on the fund to start looking at investing outside um and in start trying to diversify the country away from the reliance on oil and obviously, you know, one of the biggest oil exporters in the world, so they're looking at ways that they can diversify around that.

And I think, you know, as we've seen from what Elon Musk has said, as long ago as two years ago, they had identified Tesla as being part of that strategy. And I think we've seen the Saudi Is now being very interested in the electric vehicle space as as a way of hedging against the country's obviously huge oil exposure. UM So I think you know we're going to see the Saudis being very keen on seeing this transaction go through UH and and and very keen on playing a

big role in Tesla's future. So, Matthew, you said it's the Saudi Arabia would be very keen on seeing this transaction go through. Are you talking about Tesla going private? Is this transaction? And if so, why are Saudi Arabia only committing to a five percent stake of Tesla when

there's a lot more up for graps. Well, so, yeah, I think they what we've seen them do is they've quietly built up this steak of five percent um just or just under five percent to avoid having to disclose what they've been doing, so that they've quietly built that up in the market in the background while they've obviously been having these conversations with Elon Musk. Um And now I think now that the potential is there for a

deal to take Tesla um off the public markets. Um, the p i F is very keen to be part of that. And you know, I think that the question now is going to be how significant um an amount, how big a check can the p i F right

to support Elon Musk's plan of taking Tesla private? You know, clearly with the sort of patient sovereign capital that the p I f has behind it the much that then they're going to be interested in the sort of short term volatility that we've obviously seen in Tesla stock, and I'm making a much longer term bet on the future of electric vehicles, right. I guess that, Matthew. There has been a lot of skepticism about how serious Saudi Arabia's

Sovereign Wealth Fund can be. If soft Bank, which is partnering with for a lot of its assets to invest, has basically said they're not interested in Tesla, and when you have a lot of mainstream, large producers of cars getting into the electric car business, in other words, they're big competitors for Tesla, and they actually have shown that they can produce the cars that they promised to make. Do you have a sense of sort of given the fact that soft Bank is not interested, how serious Saudi

arabia Sovereign Wealth Fund could really be. The impression that we've got speaking from sources close to the Saudi Fund is that they are very serious about this transaction. Um and uh and yeah, and they do see this as part of building that strategic portfolio, hedging their oil exposure. I think in terms of the relation between what the Saudis do themselves through p IF and what they also do through the very big exposure they have to the

soft Bank Vision Fund UM. I mean, look, I think you know, clearly the two of them cooperate a lot in some ways UM, and I think this is one of those instances where their views are probably going to differ. And I think Soft Bank and the Vision Fund thinks that it has to some extent made its bets on on electrification UM. But the p I f is UH is keen to go further on that and and do

some more. And you know, I think I've had this discussions with other people as well about you know, obviously that there is a question of you know, why not get exposure to another car manufacturer which is also UM. Other car manufacturers obviously also exploring UM creating electric vehicles UM.

And sure that opportunity is there. But I think if you look at the kind of the ambition of the Kingdom around the new Crown Prince Mohammad beIN Salman, the way he talks about the sorts of investments they want to do, is they want to be you know, this is a thirty two year old UM, a guy who's

you know, ultimately directing the fund and its investments. Um, and he wants to he wants to take very big and aggressive and headline grabbing bets, and so you know, putting a big steak into something like Tesla um fits into that character profile, probably a lot more than than putting some money into an established carmaker that also has a sideline in electric vehicles. Matthew, just quickly give you

twenty seconds. Is there any evidence to support that previous investments that are similar to this in nature by the Investment Fund have been successful? Very early to say the strategy is um two years old. UM so um. You know, I think we've still got to wait a little while before we see whether they can ride this out. But clearly the appetite for risk is very very high if you look at also taking stakes in companies like Uber

um uh you know, and Tesla. You know, these a companies which are not big revenue generators yet, but have that promised to be in the future. Right, Matthew Martin, thank you so much for being with us. Matthew Martin is mintist finance reporter for Bloomberg News. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter

at pim Fox. I'm on Twitter at Lisa abramowits one before the podcast. You can always catch us worldwide on Bloomberg Radio