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Hackers May Be Deeply Embedded In DoD: Former CIA Ops Chief · Bloomberg Intelligence

0:01
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
0:04
Speaker 1: with my co host of Bonnie Quinn. Every business day
0:06
Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
0:10
Speaker 1: along with essential market moving news. Find the Bloomberg Markets
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Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,
0:17
Speaker 1: and on Bloomberg dot com. Well. A huge number of
0:20
Speaker 1: investigations are underway inside federal agencies and private sector companies
0:25
Speaker 1: trying to determine the extent of the cyber attack and
0:28
Speaker 1: massive cyber attack. Of course, Russian hackers are suspected. Let's
0:33
Speaker 1: bring in somebody who may be able to tell us
0:34
Speaker 1: a little bit more. At least we'll be able to
0:36
Speaker 1: tell us what the process is right now for going
0:40
Speaker 1: about trying to solve this problem. Jack Divine is former
0:43
Speaker 1: chief of c i A Worldwide Operations and its founding
0:48
Speaker 1: partner and president of the ark And Group, which is
0:50
Speaker 1: a risk consultancy and an intelligence firm. Jack, have you
0:55
Speaker 1: ever seen anything of this scope and scale? Um? No,
1:01
Speaker 1: I think this is really a critical uh point in
1:05
Speaker 1: the cyber war that's taking place. It should be a
1:09
Speaker 1: real wake up call. The dimension, the aggressiveness the the
1:15
Speaker 1: collecting intelligence around the world is a common, common event,
1:20
Speaker 1: but the magnitude of going into our health units and
1:23
Speaker 1: into every aspect of of our defense system is really
1:30
Speaker 1: over over the top, an extremely aggressive thing. There's one
1:33
Speaker 1: other point I'd make. I think we're only looking at
1:35
Speaker 1: the tip of the iceberg here, Jack, give us a
1:39
Speaker 1: sense of kind of how this has progressed, this being
1:42
Speaker 1: kind of Russian state sponsored hacking of US government operations.
1:49
Speaker 1: Give us just maybe the history of this and and
1:52
Speaker 1: where are we right now in that compendium. We talked
1:56
Speaker 1: Paul on the show before about the fact that you know,
1:59
Speaker 1: there has been a continuous um continuous intelligence activities by
2:05
Speaker 1: the Russians over the last twenty five years. When the
2:09
Speaker 1: wall fell down, there was a temper every break, but
2:12
Speaker 1: there has been an aggressive operational activity. Was particularly brought
2:16
Speaker 1: the light in which we could touch on. So the
2:21
Speaker 1: Russians are still using the Cold War strategy of trying
2:24
Speaker 1: to keep the United States off balance and the collect
2:27
Speaker 1: information inside of our our system. The difference today as
2:32
Speaker 1: exemplified by they are so aggressive that they are now
2:37
Speaker 1: going beyond the collection to putting themselves in the position
2:41
Speaker 1: where they can act on it. And that is something
2:44
Speaker 1: that I think people have missed this point, not only
2:46
Speaker 1: during the election and shrugged at the fact that they
2:49
Speaker 1: were a collection, but they used it. And I'm afraid
2:52
Speaker 1: here what we're looking at through these trap doors that
2:54
Speaker 1: we are now only getting a handle on partially there
2:58
Speaker 1: will be in a position to actually make things happen
3:02
Speaker 1: beyond collecting bringing down our utility system, our communication system.
3:07
Speaker 1: And I believe they're much more deeply embedded in our
3:09
Speaker 1: defense contracting world than it's even represented by this most
3:14
Speaker 1: recent attack. You made a chilling comment a moment ago
3:18
Speaker 1: saying we're only looking at the tip of the iceberg.
3:20
Speaker 1: But before we get to that, I want to ask
3:22
Speaker 1: you what exactly are they planning on doing If they're
3:26
Speaker 1: you know, standing around in all of our systems in
3:29
Speaker 1: the Defense Department and you know, all of the agencies
3:33
Speaker 1: and in private companies, what are they waiting for? Well,
3:38
Speaker 1: I think not to go to television shows and drama
3:42
Speaker 1: and so on. But you know, they have sleepers, and
3:44
Speaker 1: they build, and we build as well, capabilities to be
3:48
Speaker 1: used in a crisis. So when you use it as
3:53
Speaker 1: part of a weapon, it's like having your nuclear weapons
3:55
Speaker 1: are all sitting there, And the question is when you
3:58
Speaker 1: use them. You use them when there's a conference, Asian
4:00
Speaker 1: or you want to exercise, um, exercise capabilities. They used
4:06
Speaker 1: it in the election. That was the That's where there
4:08
Speaker 1: was such a break in the rules that I operated
4:10
Speaker 1: and we had an understanding we weren't going to score
4:12
Speaker 1: around in each other's internal systems, and they did. That
4:16
Speaker 1: was the and I think we just didn't spend enough
4:18
Speaker 1: time analyzing that. So today they're in our systems. And
4:21
Speaker 1: when I say the defense contracting or when you look
4:23
Speaker 1: at the way they approached it, it's just classic. I
4:26
Speaker 1: mean they go through an outside contractor they get into
4:29
Speaker 1: the software system which then allows them windows in the
4:33
Speaker 1: other other other areas. So um, you know, that's to
4:38
Speaker 1: my way of thinking, that's that's actually so their preposition.
4:42
Speaker 1: Those trap doors were not meant for a one time collection,
4:44
Speaker 1: and that's been said by many many commentators on this.
4:48
Speaker 1: This was for persistent collection and for use in the
4:52
Speaker 1: time of crisis. Check. What should the US response be? Now?
5:00
Speaker 1: This is this is one of the trickiest questions I
5:03
Speaker 1: think of all that you know, the new administration has
5:06
Speaker 1: to deal with it. Um. I think there's been as
5:09
Speaker 1: I said, an awareness of this threat, but not the
5:11
Speaker 1: full dimensions of it, and there needs to be a
5:14
Speaker 1: strategy and an organizational effort to build to build a capability.
5:21
Speaker 1: We need to plus up and make additional expenditures and
5:25
Speaker 1: looking at the Russian threat, the Chinese threat, we need
5:29
Speaker 1: to give it the right priority and UH and develop
5:33
Speaker 1: the capabilities. Having said that, it's like the mutual destruction
5:37
Speaker 1: It's like the nucletor UH armament race. Eventually we could
5:42
Speaker 1: destroy each other and we sat down and started disarmament
5:45
Speaker 1: and basically not proliferation efforts. This is even more difficult
5:50
Speaker 1: because of the case of the missiles you could see it.
5:52
Speaker 1: We need to have new ground rule. New ground knows
5:55
Speaker 1: we can start threatening each other and responding and that
5:58
Speaker 1: becomes a really dangerou this world. That becomes the Cold
6:01
Speaker 1: War two UH area. We need. There needs to be
6:06
Speaker 1: a break in this and so far the Russians have
6:08
Speaker 1: not seen that. They've seen no indication that they're willing
6:11
Speaker 1: to sit down. But there needs to be a This
6:15
Speaker 1: is a subterranneal weapon system, so you need a subterraneal
6:19
Speaker 1: agreement that there was no one's going to be able
6:21
Speaker 1: to get out there and talk about what are the
6:23
Speaker 1: parameters of cyber warfare among among ourselves, But there should
6:27
Speaker 1: be a diplomatic and intelligence effort to open a dialogue
6:30
Speaker 1: about what where are the rules? What are the rules
6:33
Speaker 1: of the game. We did have them during the Cold War,
6:36
Speaker 1: and we're we don't have them, and we're looking at
6:39
Speaker 1: the same type of dynamic that we had with the
6:41
Speaker 1: juncular weapons. Other than cyber is not connectic, it's not
6:46
Speaker 1: going to not directly going to kill people. But we
6:49
Speaker 1: need a new we need a new approach, and we
6:52
Speaker 1: need to put this right at the top of our agenda.
6:56
Speaker 1: You mentioned that this is only the tip of the iceberg.
6:59
Speaker 1: Give us some idea of where you think this goals. Well,
7:03
Speaker 1: I think what's missing here is these are a lot
7:05
Speaker 1: of the systems. You see the sophistication, you see the approach,
7:09
Speaker 1: but what you don't see is how deep into our
7:13
Speaker 1: most sensitive secrets are they. And you don't really see
7:16
Speaker 1: a lot in this one about what are our defense
7:19
Speaker 1: systems that have been compromised. Nobody wants to talk about that,
7:23
Speaker 1: but I can assure you that the same techniques that
7:25
Speaker 1: are used here against the Energy and Commerce and Treasury
7:30
Speaker 1: and so I've been used for years. This is why
7:32
Speaker 1: when they talk about March, we're missing the point. This
7:36
Speaker 1: particular attack is a March attack. But I tried to
7:40
Speaker 1: issue since since cyber became an operational backage, you know,
7:45
Speaker 1: the turn of this decade. You know, there has been
7:49
Speaker 1: a unceasing effort. That's my point. This battle with Russia
7:54
Speaker 1: and what has shown up here, it's a texture of
7:57
Speaker 1: the relationship that someone was thinking that Russia it's not
8:00
Speaker 1: in an adversarial mode. This really should be a wake
8:04
Speaker 1: up call because they have been doing this for the
8:06
Speaker 1: past years. Yeah, so I think we need to sharpen
8:11
Speaker 1: our attention. Hey, Jack, we're gonna have to leave it there,
8:14
Speaker 1: just out of time. Jack Divine, founding partner of the
8:16
Speaker 1: ark And Group, also author of a new book entitled
8:21
Speaker 1: Spymaster's Prison. Well, the scientists have done their job delivering
8:28
Speaker 1: that one, but two and likely at least three in
8:32
Speaker 1: the near term possible vaccines for the marketplace. Now it's
8:35
Speaker 1: up to the supply chain to get those vaccines out
8:39
Speaker 1: to consumers. UH to get a sense of kind of
8:42
Speaker 1: where we are in that process and how this whole
8:44
Speaker 1: process may play out. We welcome Craig Garthwaite, director of
8:47
Speaker 1: the Program on Healthcare and a professor in Hospital and
8:50
Speaker 1: Health Services at the Kellogg School of Management at Northwestern
8:54
Speaker 1: University based in Evanston, Illinois. Craig, thanks so much for
8:58
Speaker 1: joining us here. You know, so again, the way I
9:01
Speaker 1: like to frame is, the scientists have just done a
9:03
Speaker 1: fabulous job of coming up with multiple vaccines and record time.
9:07
Speaker 1: Now the question is how do we get them distributed
9:10
Speaker 1: efficiently and timely to the marketplace. What are your thoughts
9:15
Speaker 1: as to how the US is doing on this front. Yeah,
9:20
Speaker 1: thank thanks for having me. I would expand a bit
9:22
Speaker 1: on not just it's not just distribution, it's also manufacturing.
9:26
Speaker 1: Unlike sort of a treatment for when people get sick.
9:29
Speaker 1: We have to vaccinate everyone in the United States. So
9:32
Speaker 1: we're looking at needing, you know, three hundred million people
9:35
Speaker 1: to get vaccinated. And if it's a two shot process
9:38
Speaker 1: like the Fiser and the Madurna vaccines that we have
9:40
Speaker 1: approved now for emergency use, right, that's six hundred million
9:44
Speaker 1: doses that we're going to need. Um And I think
9:47
Speaker 1: the US is, you know, initially doing well. What I
9:50
Speaker 1: mean by that is that we we placed orders to
9:52
Speaker 1: get up a lot of vaccine for our healthcare workers
9:55
Speaker 1: in December and early JUNI worry, and we're doing a
9:57
Speaker 1: good job rolling those out. My real con learned is
10:00
Speaker 1: that we seem to be are unwilling to really spend
10:03
Speaker 1: what's necessary to make sure that in the second and
10:06
Speaker 1: third quarter of one that we're getting all of the
10:10
Speaker 1: vaccine supplies that we need. And what I mean by
10:12
Speaker 1: that is we should be over investing here. We should buy,
10:16
Speaker 1: if we can, enough of the Moderna vaccine and enough
10:20
Speaker 1: of the Fiser vaccine so that either one of those
10:23
Speaker 1: will be able to treat as many Americans as possible,
10:25
Speaker 1: because you know, the supply chain could break down, there
10:28
Speaker 1: could be a manufacturing problem, uh, there could be any
10:31
Speaker 1: number of things that happened with one of the two manufacturers.
10:34
Speaker 1: And so this is this is when it's time for
10:36
Speaker 1: sort of a belt and suspenders approached to this. Is
10:39
Speaker 1: there any indication, Dr Garthwaite that we're not doing that
10:43
Speaker 1: or that there there would be the ability to do
10:44
Speaker 1: that and somebody decided not to UH for the Fiser vaccine,
10:49
Speaker 1: it appears that Fiser had asked us to exercise an
10:52
Speaker 1: option that we have in our initial contract to buy
10:55
Speaker 1: more vaccine, and for reasons that have yet to be
10:57
Speaker 1: explained by the administration, we we have not done that.
11:01
Speaker 1: Um from the reporting in the news and conversations of
11:04
Speaker 1: how people involved, it seems like Fiser asked to do that,
11:07
Speaker 1: to do that several times, we did not, and so
11:09
Speaker 1: instead Fiser then gave the option to the European governments
11:14
Speaker 1: that also had a similar options, who might have moved
11:16
Speaker 1: ahead of us in line. And I just can't understand
11:20
Speaker 1: any reason why we would not be trying to exercise
11:23
Speaker 1: every option we can to get access to as much
11:26
Speaker 1: vaccine as we can as fast as possible. There's given
11:28
Speaker 1: the amount of economic and sort of public health destruction
11:33
Speaker 1: that the pandemic is causing, there's just no rationale, particularly
11:37
Speaker 1: at the prices that are being talked about, why we
11:40
Speaker 1: wouldn't be trying to buy literally every dose we can
11:42
Speaker 1: get our hands on, because the worst cases will over
11:45
Speaker 1: buy and then we can give it to other countries
11:47
Speaker 1: when we don't need it. So, Craig, you say we
11:50
Speaker 1: we should buy, I'm not sure who we is? Is
11:54
Speaker 1: it the federal government we've because we really haven't had
11:57
Speaker 1: a federal government presence during this whole endemic. To begin with,
12:00
Speaker 1: it's really been left up to UH states, who is
12:03
Speaker 1: the we that goes out and you know, acquires the
12:07
Speaker 1: stock of vaccines, so that we is the federal government
12:11
Speaker 1: in this case. And this I agree with you that
12:13
Speaker 1: overall the federal government has really fallen down on the
12:15
Speaker 1: job yet, except when it comes to the focus on
12:18
Speaker 1: developing vaccines, where there has been there's been a lot
12:21
Speaker 1: of funding given. So the Maderna vaccine was was funded
12:25
Speaker 1: entirely by the US government. Feiser did not accept money
12:29
Speaker 1: for research and development, but did accept what we referred
12:31
Speaker 1: to as an advanced market commitment. And all that means
12:33
Speaker 1: is that we agree that if your vaccine works, if
12:35
Speaker 1: you get to prove, we're going to buy it, guarantee
12:38
Speaker 1: we will buy it. And we said we would buy
12:40
Speaker 1: a hundred million doses with an option for five million more.
12:43
Speaker 1: And that's what that's what we didn't exercise. But this
12:45
Speaker 1: is all being organized by the federal government. So if
12:48
Speaker 1: you were designing how to go about this, because certainly
12:51
Speaker 1: that the PPE rollout and that's a light chain never worked,
12:54
Speaker 1: still isn't working, apparently, how would you design this? I mean,
12:59
Speaker 1: I think think you run into some difficulties when it
13:02
Speaker 1: comes to the vaccine. That the public health authorities in
13:05
Speaker 1: every state have a lot of power as how things
13:08
Speaker 1: get distributed, and so the state of the government is
13:10
Speaker 1: really working with the state government. I don't think to
13:14
Speaker 1: date what we're seeing though, is a problem on the
13:16
Speaker 1: distribution of the vaccine to the states. But I think
13:20
Speaker 1: you know, we're we're getting it the people, We're getting
13:22
Speaker 1: it out relatively quickly. What we really need to be
13:25
Speaker 1: focusing on is making sure that we have the commitment
13:28
Speaker 1: from the manufacturers that we get the vaccine as fast
13:31
Speaker 1: as possible, and that that's it gets into what we
13:35
Speaker 1: sometimes referred to as vaccine nationalism, where you know, this
13:38
Speaker 1: is a global problem. I understand, but the federal government
13:41
Speaker 1: is supposed to be looking out for the United States
13:43
Speaker 1: citizens first. That's what we elected with them to do.
13:46
Speaker 1: Um And once we get the vaccine sort of pandemic
13:48
Speaker 1: under control here, then we can think a bit more
13:51
Speaker 1: magnantiously about the rest of the world. Alright, So, professor,
13:55
Speaker 1: if I'm a viser or Moderna or you know, Astrosencare
14:00
Speaker 1: Johnson and Johnson, if the US government comes knocking on
14:02
Speaker 1: my door and says I want everything yet, got I mean,
14:08
Speaker 1: how do I say? No? Yeah, I mean they do
14:11
Speaker 1: have contractual obligations, right, they did sign things with the
14:13
Speaker 1: European Union. But I'm very sympathetic in your position. No. Um,
14:17
Speaker 1: we've been debating why the United States pays high drug
14:20
Speaker 1: prices and higher drug prices and the rest of the
14:23
Speaker 1: world for over decades now. Um, I would hope that
14:27
Speaker 1: one thing we've gotten for being such good customers now
14:30
Speaker 1: and I promise to be good customers in the future,
14:33
Speaker 1: is a little bit of preference when it comes to
14:34
Speaker 1: getting access to things like the vaccine. UM. And so
14:37
Speaker 1: I do think that the door is not shut, probably
14:41
Speaker 1: on those visor doses. I think there's more negotiation that
14:44
Speaker 1: will happen. And I really just want to implore policymakers
14:49
Speaker 1: to not be pennywise poundful. Is here right that you
14:52
Speaker 1: pay extra for the vaccine. I don't care pay sixty
14:55
Speaker 1: dollars a dose, given what it can do for the
14:59
Speaker 1: economy for of a country. Thinking about we're passing a
15:01
Speaker 1: nearly one trillion dollar stimulus again to try and keep
15:05
Speaker 1: the economy limping along. Right, if we just get all
15:09
Speaker 1: of the vaccine we need, we don't have to worry
15:11
Speaker 1: about today. Most we can get people back to work,
15:13
Speaker 1: we can open back up businesses, and so they're really
15:16
Speaker 1: at the prices we're talking about, it is almost impossible
15:19
Speaker 1: to overpay for the vaccine. And we should make that
15:21
Speaker 1: clear to manufacturers that our checkbook is open if you
15:24
Speaker 1: will give us the supplies. How do you price this
15:27
Speaker 1: if you're a fiser or a cover or or or
15:30
Speaker 1: a Maderna or somebody with a vaccine that's maybe a
15:33
Speaker 1: little less desirable. So so for the fiser over there,
15:37
Speaker 1: they've actually I think shown remarkable restraint in terms of
15:41
Speaker 1: the amount of value of their vaccine capture or creates
15:43
Speaker 1: that they're trying to capture with their price. So we're
15:45
Speaker 1: looking at about four dollars for the two dose vaccine
15:48
Speaker 1: for fiser um and that's, you know, given what that
15:51
Speaker 1: vaccine is doing for someone that that's a pretty low
15:53
Speaker 1: price and well below a lot of you know, food
15:56
Speaker 1: vaccines and other things that people take that off far
15:58
Speaker 1: less efficacious um. And so I do think that they're
16:01
Speaker 1: going to earn a lot of money, Let's be clear, right,
16:04
Speaker 1: because forty times a billion doses is you know a
16:07
Speaker 1: lot that that that no one's gonna be upset about that,
16:10
Speaker 1: but I don't think that the pharmaceutical companies are trying
16:12
Speaker 1: to take too much value. Yeah, it really is a
16:14
Speaker 1: phenomenal thing to watch playoffs from a safe distance. Of course,
16:19
Speaker 1: our thanks to you, Professor Craig garth Waite. He's director
16:22
Speaker 1: of the Program and Healthcare at Northwestern University's Kellogg School
16:26
Speaker 1: of Management. It is time for Bloomberg Opinion were joined
16:31
Speaker 1: this morning by Bloomberg Opinion columns Brian Schapatta. He covers
16:36
Speaker 1: all things on the fixed income site and fascinating column
16:39
Speaker 1: out Brian has uh Jamie Diamond gets his thirty billion
16:45
Speaker 1: dollar buy back wish. Brian, thanks so much for joining
16:48
Speaker 1: us here. Boy, Jamie Diamond wasted no time in announcing
16:53
Speaker 1: this significant buyback program. Give us the background of what's
16:56
Speaker 1: happening here with the big banks. Yeah, it was pretty incredible.
17:00
Speaker 1: Just ten minutes after the Federal Reserve released its second
17:03
Speaker 1: round of bank stress tests, they decided to do another
17:06
Speaker 1: round because of the coronavirus pandemic and obviously it's impact
17:10
Speaker 1: wouldn't be clear for many months to come. So the
17:13
Speaker 1: Fed released its stress tests and basically said all the
17:17
Speaker 1: banks passed with flying colors UM, which was which was
17:20
Speaker 1: a clear bill of health, and as a result, they
17:22
Speaker 1: sort of loosened the restrictions on whether banks could buy
17:26
Speaker 1: back stock. And so within ten minutes of that announcement,
17:29
Speaker 1: Jamie Diamond and and uh JP Morgan came out late
17:33
Speaker 1: Friday after markets closed and said we're starting a thirty
17:35
Speaker 1: billion dollars buyback program. Overall, eleven billion dollars among the
17:39
Speaker 1: sixth largest US banks uh could potentially be bought back UM.
17:44
Speaker 1: So it's a it's a big win for the banks,
17:47
Speaker 1: a pretty decent win for the bank shareholders, and for
17:49
Speaker 1: Jamie Diamond, who has been counting the table wanting to
17:51
Speaker 1: buy back his stock when it's been so low over
17:54
Speaker 1: the past year. It's a big win as well. What
17:57
Speaker 1: were the assumptions made presume They were pretty harsh to
18:01
Speaker 1: allow for the pandemic, But were they harsh enough? By yeah,
18:06
Speaker 1: I mean one of the things that I looked at
18:08
Speaker 1: most closely was the unemployment rate that was assumed. And
18:11
Speaker 1: so there were a couple of assumptions with the unemployment
18:13
Speaker 1: rate would spike to twelve percent and either come back
18:17
Speaker 1: pretty quickly, or with spike into the double digits and
18:20
Speaker 1: recover more slowly, and in both of those scenarios, UM
18:24
Speaker 1: the banks did find. It was always going to be
18:26
Speaker 1: a question of whether UM the sides looking at slightly
18:29
Speaker 1: the right metrics, whether uh it's it was harsh enough.
18:33
Speaker 1: But I think what we learned over the course of
18:35
Speaker 1: this year especially is the SET itself can step in
18:39
Speaker 1: and and do a lot to uh stymy any um,
18:43
Speaker 1: any major crisis. UM. I won't expected that it could
18:46
Speaker 1: be a potentially for a long recession when we were
18:49
Speaker 1: staring at the worst of it in March and April,
18:51
Speaker 1: and it turned out to be to be pretty short lived. UM.
18:54
Speaker 1: Congress came through with obviously with a fiscal package on
18:57
Speaker 1: the SET as well on the market side. So, Brian,
19:02
Speaker 1: how do how do we characterize the I guess the
19:05
Speaker 1: financial health of some of these big banks here as
19:08
Speaker 1: they think about you know, buy backs and and things
19:11
Speaker 1: like that. Are they in I guess the FED feels
19:13
Speaker 1: pretty comfortable at this stage. Yeah, only little BRAINERD potential
19:18
Speaker 1: candidates to be the next SET chair actually just sensed
19:20
Speaker 1: and said that she would prefer that they don't do
19:23
Speaker 1: that and and hold on to more of their cash
19:25
Speaker 1: and their capital. UM. But I mean I think the
19:28
Speaker 1: moral of the story is that it was such a
19:30
Speaker 1: sharp snapback that even though you saw these massive loan
19:34
Speaker 1: lost provisions from the banks earlier this year, UM, a
19:37
Speaker 1: lot of those loans are performing now and it's not
19:40
Speaker 1: necessarily going to be as bad as initially feared, in
19:44
Speaker 1: part because there was a tremendous fiscal stimulus package. I mean,
19:47
Speaker 1: make no mistake, there's still a lot of pain out there,
19:50
Speaker 1: but it's not quite as widespread and potentially systemic as
19:54
Speaker 1: I think a lot of people feared. There are pockets
19:56
Speaker 1: and weakness as opposed to put all over the board.
20:00
Speaker 1: On the face of it, I can understand how the
20:02
Speaker 1: FED would give the go ahead. Right we're hearing a
20:04
Speaker 1: lot about how markets are at all time highs. The
20:06
Speaker 1: Khad recovery means that affluent people are not really experiencing
20:10
Speaker 1: a recession, and of course it's affluent people that are
20:13
Speaker 1: invested in the stock market and in banks. At the
20:16
Speaker 1: same time, the FED itself has suggested that it doesn't
20:19
Speaker 1: know what's going to happen next year. We don't know
20:21
Speaker 1: how much of this unemployment is going to be structural unemployment,
20:24
Speaker 1: and we don't know if there's going to be more
20:27
Speaker 1: pain when we expect demand to return, Will that demand
20:31
Speaker 1: return or will have habits have changed forever? Is that
20:34
Speaker 1: taken into account at old Bryan, Yeah, I think that
20:38
Speaker 1: the real thing that's going to be an issue for
20:39
Speaker 1: the FED going forward, all of your you know, like
20:41
Speaker 1: you said, they don't have a clear sense of what's
20:44
Speaker 1: going to happen with the economy. But even still, I
20:47
Speaker 1: think they have to be started starting to be looking
20:49
Speaker 1: at financial conditions today, notwithstanding um and just thinking, wow,
20:55
Speaker 1: the markets are wide open. People are people are happy,
20:58
Speaker 1: people are seeing their stock work ohios go up. Anybody
21:02
Speaker 1: who wants to borrow, whether it's a large corporation or
21:04
Speaker 1: a small municipality, is able to do so pretty easily
21:08
Speaker 1: at record low interest rates, And so I think they're
21:11
Speaker 1: trying to balance that that. There is still a lot
21:13
Speaker 1: of pain out there. The labor market is very uncertain,
21:16
Speaker 1: and inflation outlook looks better than it has been but
21:19
Speaker 1: still kind of dicey. On the other hand, financial markets,
21:22
Speaker 1: which they have a large hand in, are doing incredibly well,
21:27
Speaker 1: so that I think they're trying to balance both of those. Alright,
21:30
Speaker 1: we will see certainly the banks are performing just find
21:35
Speaker 1: day daping Morgan itself of three even as this market decreases.
21:39
Speaker 1: So we'll see how long that good feeling lasts. Daping
21:42
Speaker 1: Morgan itself with a thirty billion dollar buy back. Brian Chapatta,
21:47
Speaker 1: thank you very much. Brian is Bloomberg opinion columnist and
21:51
Speaker 1: has written a great column today on this stress test results,
21:55
Speaker 1: which children banks are weathering the pandemic and can actually
21:59
Speaker 1: give it's some dividend payments and also start buying back
22:04
Speaker 1: their own shares about six months earlier than people have
22:07
Speaker 1: been forecasting. So a little bit of a surprise after
22:09
Speaker 1: the close on Friday, very excited to talk to our
22:14
Speaker 1: next guest, who is the CEO of Wild Alaskan. It's
22:18
Speaker 1: exactly what it says on the tin, literally, Aaron Callenberg,
22:23
Speaker 1: Thank you so much for joining us on the seafood industry,
22:26
Speaker 1: on its supply chain and on business. You say, it's
22:30
Speaker 1: up four times from the start of explained to us
22:33
Speaker 1: how that manifested itself. Thanks for having me. Uh yeah,
22:39
Speaker 1: just a little bit of background. You know, Wild Alaskan
22:42
Speaker 1: Company is a monthly seafood membership service. We said, ship
22:45
Speaker 1: a curated box of wild Cot Sustainable seafood two members
22:49
Speaker 1: all across the country. And it's true, you know, UM,
22:52
Speaker 1: we have grown about four x this year over a
22:57
Speaker 1: hundred yeah, over a hundred and forty thousand members. UM.
23:02
Speaker 1: You know, obviously the pandemic has been a global tragedy,
23:06
Speaker 1: but Wild Alaskan is very grateful to be part of
23:10
Speaker 1: the solution of bringing sustainable seafood to members across the country.
23:14
Speaker 1: So Aaron, give us a sense of just kind of
23:16
Speaker 1: take us back to maybe pre pandemic kind of how
23:20
Speaker 1: your business was trending, and then you know how it's
23:23
Speaker 1: evolved over the last you know, nine to ten months. Yeah,
23:27
Speaker 1: you know, the business was doing quite well prior to
23:30
Speaker 1: the pandemic. UM. I would say that we are now
23:33
Speaker 1: in a position we had planned and projected to be
23:36
Speaker 1: three years from now. So really, you know, we've stayed
23:39
Speaker 1: the course. It's just been accelerated into a shorter amount
23:43
Speaker 1: of time. UM. And you know, nothing has really changed,
23:48
Speaker 1: you know in terms of our our targeting, you know,
23:50
Speaker 1: our ability to scale and accommodate UM. You know, the
23:54
Speaker 1: subscribers is really a tribute to uh, the Alaskan seafood industry, right. UM.
23:59
Speaker 1: This the fully domesticated product UM caught and processed in
24:05
Speaker 1: the United States, so we weren't dependent on any foreign
24:07
Speaker 1: supply chains for the seafood or for our packaging material,
24:12
Speaker 1: and so we didn't really have any supply disruptions. It
24:14
Speaker 1: was business as usual, just accelerated. So, Aaron, I'm curious,
24:19
Speaker 1: has Breggsit presented any opportunities for you or is that
24:22
Speaker 1: something you stay away from entirely? Is there is there
24:25
Speaker 1: a way for you guys to help out with the
24:27
Speaker 1: fisheries problem, let's say by providing your fish. We don't
24:33
Speaker 1: currently ship outside of the U s um It's something
24:38
Speaker 1: that's on our long term mid the long term, uh
24:41
Speaker 1: you know roadmap, you know, to part to start uh
24:44
Speaker 1: booting up for filming centers in other countries. But right now,
24:47
Speaker 1: you know, we're servicing the American domestic market. I will
24:51
Speaker 1: say that, you know, Alaska seafood in general is consumed
24:55
Speaker 1: primarily abroad. It's kind of ironic, you know, Americans don't
24:59
Speaker 1: actually eat their own seafood, the seafood from their own backyard.
25:02
Speaker 1: Most Alaskan seafood is exported already. So Wild Alaskan Company
25:06
Speaker 1: is an attempt to get Americans to eat as beautiful,
25:09
Speaker 1: sustainable seafood that that by and large they're ignoring in
25:12
Speaker 1: favor of farm farm fish. You know, that's being imported now,
25:15
Speaker 1: so so so quite the opposite from our perspective. Alright,
25:19
Speaker 1: So Aaron, I'm I'm you know, what I know about
25:21
Speaker 1: Alaskan seafood and fishing is kind of when I watch
25:24
Speaker 1: on TV with the Wildest Catch or whatever it's called,
25:26
Speaker 1: these crazy people going out and is just incredible rough
25:30
Speaker 1: seas of the Alaskan waters. There. Talked just about sustainable
25:35
Speaker 1: fishing market or the sustainable fishing business in Alaska. Yeah,
25:41
Speaker 1: I mean, Alaska is the seafood industry is really the
25:45
Speaker 1: global gold standard for sustainable management of seafood. Um. And
25:49
Speaker 1: you know, my family, you know, had a lot to
25:51
Speaker 1: do with that. Actually, my my grandfather was born in Manhattan,
25:54
Speaker 1: but he moved to rural Alaska. He began fishing in
25:58
Speaker 1: a wooden sailboat, and um, you know, he actually went
26:01
Speaker 1: back in nineteen fifty two to the East Coast and
26:03
Speaker 1: received a master's degree from Cornell University. He wrote his
26:08
Speaker 1: thesis a study of the Red Zamin of Bristol Bay,
26:10
Speaker 1: with particular reference to teaching its conservation. He eventually went
26:14
Speaker 1: on to serve to serve as the chairman of the
26:17
Speaker 1: Territory Border Fisheries. A lot of folks don't know, but
26:20
Speaker 1: Alaska actually incorporated as a state in large part to
26:24
Speaker 1: gain control of the fisheries over the federal government. And
26:27
Speaker 1: by doing that they put a mandate into the state
26:30
Speaker 1: constitution which mandates sustainable yield and that has over the
26:34
Speaker 1: years produced um the global gold standard for sustainable fisheries. Wow,
26:39
Speaker 1: that is really fascinating. There is a book in there,
26:42
Speaker 1: I think and Paul, deadliest catch is what you're thinking of. Yes,
26:46
Speaker 1: it's it really is. It can be a deadly profession. Aaron,
26:50
Speaker 1: what were the types of things that people ordered most
26:53
Speaker 1: this year? And I'm also desperate to know if you've
26:56
Speaker 1: been approached by people that are looking to take you
26:58
Speaker 1: public through his back. So, our most popular species is
27:03
Speaker 1: definitely the sack salmon. Um. There's five commercially harvested species
27:07
Speaker 1: in Alaska, soak salmon is the most popular. Most folks
27:10
Speaker 1: like to get some salmon in combination with whitefish, plibate cod,
27:15
Speaker 1: sable fish, rockfish, uh wild a last capolic, But the
27:19
Speaker 1: salmon is really that you know that the cornerstone of
27:21
Speaker 1: the Alaska sea food industry. In terms of going public,
27:25
Speaker 1: you know, we we look at you know, capitalizing the
27:28
Speaker 1: company UM in conjunction with our mission based approach to
27:31
Speaker 1: accelerate humanities transition to sustainable food systems. To that end,
27:36
Speaker 1: you know, we are a private company. UM, We're focused
27:38
Speaker 1: on stewardship. You know, I often say Wild Alaskan is
27:41
Speaker 1: a three generation overnight success. Obviously it takes capital to
27:47
Speaker 1: grow the company, but you know, I think down the road,
27:50
Speaker 1: the public markets would be a great place because a
27:52
Speaker 1: lot of the public is really ultimately aligned with our mission.
27:56
Speaker 1: You know, makes maybe more so than private private institutions.
27:58
Speaker 1: But right now, we're really just focused on stewarding that
28:01
Speaker 1: mission and uh right, you know, building the best business
28:05
Speaker 1: we can. That's really fascinating story. Aaron Collinberg, thank you
28:09
Speaker 1: so much for joining the CEO of the Wild Alaskan
28:11
Speaker 1: Company based in Get This Homer, Alaska in Brooklyn, New York.
28:16
Speaker 1: Thanks for listening to the Boomberg Markets podcast. You can
28:19
Speaker 1: subscribe and listen to interviews at Apple Podcasts or whatever
28:23
Speaker 1: podcast platform you prefer. I'm Bonnie Quinn, I'm on Twitter
28:26
Speaker 1: at Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter
28:29
Speaker 1: at pt Sweeney Before the podcast, you can always catch
28:32
Speaker 1: us worldwide at Bloomberg Radio