Treasury Alleges Hack from China; Mike Johnson Speakership Uncertain
17:40 Share

Legacy Technology has IT and cybersecurity teams feeling overwhelmed. Research shows that 59% of security decision makers feel unprepared for the future with their current tools. What can they do to stand on firmer ground? Learn more later in the podcast.

From hobby farmers to weekend gardeners and everyone in between, Tractor Supply trusts 5G solutions from T-Mobile for Business to make shopping more personal. Together, we're connecting over 2,200 stores with 5G business internet and powering AI so team members can match shoppers with products faster. You're all set. This is enriching customer experience. This is Tractor Supply with T-Mobile for Business. Take your business further at T-Mobile.com slash now.

Bloomberg Audio Studios. Podcasts. Radio. News.

Good morning. I'm Amy Morris. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin in Washington with a major story out of the U.S. Treasury. The Treasury Department says it was hacked earlier this month by Chinese-based cyber attackers. In a letter to Congress, Treasury says the major cybersecurity incident led to unauthorized accessing of workstations and unclassified documents.

Bloomberg's John Harney says the news is likely to further complicate relations between Washington and Beijing. U.S.-China relations, which cover a vast, vast scope of issues and agendas, etc., have been improving somewhat. But this, you know, as the Trump administration is about to take office, suggests that much, much remains to be resolved. Bloomberg editor John Harney says the hackers gained access via a third-party software provider, BeyondTrust, which...

which has contracts with the defense and justice departments. In a statement, the Chinese embassy in Washington called the claims smear attacks against China without any factual basis.

Well, Amy, over on Capitol Hill, the House votes Friday on the speaker of the next U.S. Congress. But Mike Johnson's reelection bid remains uncertain. Yesterday, President-elect Donald Trump threw his support behind the Republican congressman. But with a thin GOP majority and Democrats expected to vote for Hakeem Jeffries along party lines, Johnson can only afford to lose one GOP vote.

And yesterday, Arizona Representative Andy Biggs told Fox News he has not publicly or privately committed to voting for Johnson. And GOP Representatives Andy Harris of Maryland and Thomas Massey of Kentucky also signaled they might not back Johnson. Bloomberg's Joe Matthews says a fight over the speakership will make it harder for President-elect Trump to govern on the mandate that got him reelected.

When it comes to the legislature, this is an incredibly tight majority for Republicans in the House, and it could get tighter. Donald Trump has actually tapped three members to join his administration. If they all join, Mike Johnson has a majority of one. And good luck renegotiating the tax code, right, in an environment like that. We've got some big stuff coming, including the debt ceiling that they were unable to manage.

Bloomberg's Joe Matthews says the Republicans who have signaled possible opposition to Mike Johnson as House Speaker are concerned about government spending. Elsewhere in Washington, President Biden marked Thursday, January 9th, as a national day of mourning for former U.S. President Jimmy Carter, who died at the age of 100 on Sunday. U.S. stock markets will close in observance as part of a longstanding American tradition. Bloomberg's Tyler Kendall has more on what we can expect on January 9th. We are expecting there to be a

funeral procession. First, though, Jimmy Carter will lie in state in Atlanta in the Georgia state capitol over the weekend. His body will then be transported to Washington on Monday, where he then will lie in state at the U.S. capitol. I've learned that only 12 other presidents have had that honor of lying in state at the U.S. capitol before his funeral procession to the National Cathedral.

Bloomberg's Tyler Kendall says President Biden is also expected to deliver a eulogy for former President Carter on January 9th.

Well, in politics overseas, Amy, German leaders are expressing anger over Elon Musk's repeated public support of the country's far-right party, AFD. In a televised New Year's Eve address, German Chancellor Olaf Scholz said, German citizens alone will decide the direction of the country, not owners of social media channels. Other major parties attacked Musk after he expressed support for the AFD party. But less than two months until the election, the conservative CDU-CSU alliance...

has a comfortable lead in opinion polls with the AFD in second place and Schultz's SPD party in third.

Meanwhile, over in Asia, we are seeing positive signs from China's economy to end the year. President Xi Jinping says the Chinese economy is expected to expand around 5% for 2024, signaling that Beijing is on track to meet its official targets. Now, this comes as new data shows China's services activities expanding at the fastest pace in nine months, while manufacturing grew for a third month in a row. China is expected to set a 2025 growth target similar to 2024.

Well, elsewhere in Asia, Amy, a South Korean court has issued an arrest warrant for President Yoon Suk-yool over insurrection allegations related to his short-lived martial law declaration. If executed, Yoon would be the first sitting president in South Korea's history to be arrested. It's unclear if investigators will be able to take him into custody. Yoon's team has called the warrant illegal and invalid and plans to seek an injunction from the Constitutional Court.

Let's turn now to markets. On the final trading day of 2024, global equities are on course for their first quarterly loss of the year. Meanwhile, in the U.S., the S&P and Nasdaq each declined more than 1% yesterday, marking the third time the indexes dropped more than 1% over the past eight sessions. Still, the S&P has gained more than 20% on the year, driven by the rally in mega caps tech stocks.

Anna Rathbun, CIO at CBiz, says with the Fed expected to keep monetary policy tight in 2025 to bring inflation down to 2%, traders could see more choppy sessions in the new year. 2%, we need to revisit that. And we need to really talk about whether or not that's a realistic goal without slowing down the economy. And we think that we're in a higher for longer inflation environment. And all of those things just basically mean higher 10-year yields.

And that's one of the reasons why we think there's going to be price volatility. Anna Rathbun, CIO at CBiz, says additional investor concerns in 2025 range from President-elect Donald Trump's protectionist policies to the health of the European and Chinese economies.

And finally, Amy, as we ring in the new year, estimates from the U.S. Census Bureau say the world population will be almost 8.1 billion people on January 1st. We get more on that with Bloomberg's Charlie Pellett. Those estimates say the global population increased by more than 71 million people in 2024, representing a 0.9% increase, which was a slight slowdown from 2023 when the world population grew by 75 million people.

The U.S., meanwhile, expanded by 2.6 million people, and on New Year's Day, the population count will be 341 million people. The nation is expected to have one birth every nine seconds and one death every 9.4 seconds in January of 2025. In New York, Charlie Pellett, Bloomberg Radio.

It's time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. Tight securities planned for New Year's celebrations, but no specific threats, according to law enforcement. Times Square in New York City will be packed with partygoers to ring in 2025.

Mayor Eric Adams vows that their increased NYPD presence, including canine teams, drones, boats, and helicopters, will provide a safe environment for visitors and New Yorkers alike. We'll make sure each one of those who come here to visit and enjoy the ball drop will be safe. In Atlanta, large crowds are expected for the peach drop returning this year after a hiatus. In Las Vegas, 250,000 expected on the strip for the countdown to 2025.

In Philadelphia, Deputy Police Commissioner Mike Cram says the city is preparing for tomorrow's Mummer's Parade. We always take a very layered approach, right? And that's everything from law enforcement to the use of other parts of the city. If you go around, you'll see sanitation trucks that double as blocking vehicles as well to restrict access onto the parade routes, things of that nature. It's the oldest continuous Folk Day parade and a New Year's tradition since 1901.

New York City's controversial pricing plan for drivers coming into parts of Manhattan is set to take effect Sunday, but a federal judge said hold on. They want more information about the effects of congestion pricing on communities in New Jersey. Lisa Daglian is an advocate for congestion pricing in New York who says the MTA plan can still move forward. There will be different responses that will have to happen over some time, but it will have started.

But New Jersey lawmakers disagree. New Jersey Congressman Josh Gottheimer. The way New Jersey's lawyers are responding is when you remand back for answers and further study, New York can't go ahead. The judge set a deadline of January 17th for New York to respond. President-elect Donald Trump lost a bid to overturn a $5 million judgment against him for sexual abuse and defamation. A federal appeals court upheld the damages awarded to E. Jean Carroll,

The columnist hailed the decision in an online post writing, 2024 ends with a win. Carroll accused Trump of raping her in an apartment store dressing room about 30 years ago.

Global News, 24 hours a day and whenever you want it. With Bloomberg News Now, I'm Michael Barr and this is Bloomberg, Karen. All right, Michael Barr, thank you. As criminal ransomware and state-sponsored attacks continue to escalate, a bolted-on approach to cybersecurity isn't cutting it. In fact, the more security tools an organization uses, the more security incidents it has.

According to new research from Google, companies that use 10 or more security tools average 14 incidents per year. That's more than double the amount for those that use fewer than 10 tools. To proactively manage cyber attacks, organizations should invest in productivity tools across email, documents, and video conferencing that are secure by design, hopping off the treadmill of software patching and lightening the load on their embattled IT and cybersecurity teams.

To learn more, visit g.co/workspace/moresecure.

Even if you think it's a bit overhyped, AI is suddenly everywhere, from self-driving cars to molecular medicine to business efficiency. If it's not in your industry yet, it is coming, fast. But AI needs a lot of speed and computing power. So how do you compete without costs spiraling out of control? Time to upgrade to the next generation of the cloud, Oracle Cloud Infrastructure, or OCI. OCI

OCI is a blazing fast and secure platform for your infrastructure, database, and application development, plus all your AI and machine learning workloads. OCI costs 50% less for compute and 80% less for networking, so you're saving a pile of money. Thousands of businesses have already upgraded to OCI, including Amazon.

That's oracle.com slash strategic.

Time now for the Bloomberg Sports Update brought to you by Tri-State Audi. We bring in Dan Schwartzman. Dan, good morning. Good morning, Karen. The Lions improving to 14-2 with a big road win in San Francisco. Goff, here's a little lateral to Williams, and he's down the sideline and gone for a touchdown. Amon Ross St. Brown made the catch. He's done this before this year, Amon Ross St. Brown, and this time the lateral for the touchdown.

That's Kirstie of ESPN Lions beating the 49ers 40-34 in a rematch of last year's NFC Championship game won by the Niners as Jared Goff throws for 303 yards and three touchdowns. The win by the Lions setting up a week 18 Sunday night showdown versus the 14-2 Vikings for both the NFC North title as well as the top seat in the NFC and a first round bye heading into the playoffs.

The loser will become the NFL's first 14-win wildcard team. Knicks win their eighth in a row. They knock off the Wizards 126-106. Carl Anthony Towns leading the Knicks with 30 points and 13 rebounds. Elser and Nikola Jokic putting up a ridiculous 36 points with 22 rebounds and 11 assists. And the Nuggets 132-121 win over the Jazz 132.

while the Cavaliers improved to a league-best 28-4 with a 113-95 win over the Warriors. College football playoffs resuming tonight in Glendale, Arizona with the first of four quarterfinal matchups as the third seed Boise State battles sixth seed Penn State at the Verbo Fiesta Bowl. Kickoff is scheduled for 7:30 p.m. Eastern time. Light schedule in the NHL. Rangers, though, lose their 15th game in the last 20. They fall to the Florida Panthers 5-3. They remain in last place.

in the Metropolitan Division. That's your Bloomberg Sports Update. I'm Dan Schwartzman, Karen and Amy. Coast to coast on Bloomberg Radio. Nationwide on Sirius XM. And around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak.

And the Treasury Department says Chinese hackers have remotely accessed several Treasury Department workstations and unclassified documents after it was able to compromise a third-party software service provider. We're joined now by Bloomberg Radio and TV Markets correspondent, Kreeti Gupta, to sort of fill us in on exactly what's going on here. Kreeti, we're getting a little more information now about the cyber incident. So Chinese hackers have accessed Treasury Department workstations

there was a third-party software provider that was sort of their doorway to this. Tell us what's going on here. Good morning, Amy. Yeah, so Beyond Trust is that third-party software provider, basically sells access software, cybersecurity products to the likes of the U.S. Treasury and other federal government agencies as well. It's a contract that's worth more than $4 million at

according to data compiled by Bloomberg. But Amy, I think what's scary here is that this is a kind of notification that Beyond Trust gave to the U.S. Treasury Department that there was some sort of hacking tied to China, as you had just said, but that they also, Beyond Trust also does business with other departments like the Department of Defense, Department of Veterans Affairs, the Department of Justice, just to name a couple of other agencies.

So, it's unclear the extent to which this has been affected or the amount of customers that were really involved. But so far, all we know is that Beyond Trust had notified the Treasury that a certain amount of data and contact information, etc., from an undisclosed number of Americans was accessed by this hacker that they have now traced back to China.

Now, this is coming right after U.S. officials dealing with the fallout of another cyber espionage campaign, accessing those private texts and phone conversations of an unknown number of Americans. Are we going to see more of this? What's going on here? I mean, we don't know if we're going to see more of this. I mean, there seems to be a pattern developing, as you just laid out, but that's exactly the pattern that the Chinese government is trying to get ahead of, because we still don't know if this was associated with the Chinese government at the end of the day. The embassy...

the Chinese embassy over in Washington already kind of being very outspoken about this, saying, quote, smear attacks against China without any factual basis. The U.S. needs to stop using cybersecurity to smear and slander China and stop spreading all kinds of disinformation about the so-called Chinese hacking threat. Those are the words of the Chinese embassy in Washington, which really speaks to this trend, Amy, as you said, that this has

been coming out of, at least associated with China lately in the campaign you were talking about, and now with this leak as well. But again, it's unclear who's actually behind it. There's just a clear that the U.S. government is exposed in a way that they may never thought they would be before.

And taking a broader look at this, as you said, very rightly so, we don't really know if this is specifically associated with the Chinese government, but it's sure not going to help relations between Washington and Beijing. They absolutely aren't at a time when we know not only Donald Trump, but even under the Biden administration, have been looking at ways that the American economy and the way the American kind of stock market, for example, and other parts of the American infrastructure are intertwined, but also under threat with China. And remember, this comes after

not only a trade war looming between the United States and China, and perhaps even more tariffs in a new administration, but the idea that we're talking about things like how much debt China buys from the United States. We're talking about how Chinese companies can or cannot be listed on the New York Stock Exchange, on the NASDAQ, etc. Not to mention some of the kind of spyware and cybersecurity threats, as we were just talking about, and other alliances that they're making internationally. Remember the

partnership between China and Russia, between China and India, between China and the EU, are all under the magnifying glass right now in terms of how that all affects the United States. And I think Donald Trump is going to kind of put that under an even hotter spotlight.

Absolutely. And you mentioned that other agencies that use this third-party vendor may be at risk. It isn't clear yet, but that this third-party vendor also is associated with other federal agencies. Fair enough. Could this put a chilling effect on using these third-party type contractors for something like this? It absolutely could. And remember, we are not only seeing this in the government space. We saw this in the corporate space as well when the Microsoft outage with Amazon

several kind of data and cybersecurity providers with CrowdStrike led to a global outage, a grounding of flights that the London Stock Exchange was affected. So this is something that's getting a little bit scarier. And Amy, I'm sure you'll remember on the onset of the war in Ukraine, for example, cybersecurity stocks did really, really well because of this anticipation that that cybersecurity product would be needed. You talk about AI, this is just another element where cybersecurity has to be kind of intertwined with that story. But in terms of using software, you also have to talk about what

the government is going to be using. Ann Neuberger, who's the deputy national security advisor for cyber and emerging technologies, said that the administration has actions planned to hold Beijing accountable after moving ahead with a ban on Chinese telecom in the United States. So that may be something they expand upon.

This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify, or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121.

Plus, listen coast to coast on the Bloomberg Business app, now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Amy Morris. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

From hobby farmers to weekend gardeners and everyone in between, Tractor Supply trusts 5G solutions from T-Mobile for Business to make shopping more personal. Together, we're connecting over 2,200 stores with 5G business internet and powering AI so team members can match shoppers with products faster. You're all set. This is enriching customer experience. This is Tractor Supply with T-Mobile for Business. Take your business further at T-Mobile.com slash now.

In today's data-driven world, you need real data to shape an effective marketing strategy. That's where Ahrefs comes in. Ahrefs is a marketing intelligence platform powered by big data. It shows you exactly what your target audience is searching for and how you measure up to your competitors. Whether you're making day-to-day marketing decisions or defining your long-term digital strategy, Ahrefs delivers real-time insights that help you grow your brand. Head over to Ahrefs.com to get started.

That's A-H-R-E-F-S dot com.