AT&T Data Breach Exposes Almost Every Customer’s Call Records | Business Matters (July 12)

Elon Musk's ex charged with violating EU laws, potentially facing huge fines, and news hackers stole call and text records of almost all of AT&T's customers. That's coming up today on Business Matters. Good afternoon, and thank you so much for joining me here today. I'm your host, Don Ma. Quickly, let's go through markets. Wall Street's main indexes closed higher today. The Dow Jones broke 40,000 for the first time. And as well, closing at a record high, some of the market's most valuable companies bounced back after dipping in the previous session with rallies by Apple and Nvidia. The small cap Russell 2000 rallied as well, for a third straight day and reached the highest since 2022. Data showing that producer prices were slightly hotter than expected. In June, we have more on that in just a bit. Traders betting a 94% chance of a rate cut by September, according to CME Group's FedWatch. As I mentioned in the beginning, almost all of AT&T's customers have had their text and call records stolen. Just to be clear, the content of the texts and calls have not been. Here's the story. AT&T revealed Friday that nearly all its customers had their text and call data stolen in mid 2022. What exactly was stolen? Call and text message records. This doesn't include the content of the calls and texts or when the calls and texts were made. It does include phone numbers, the number of calls and the length of the calls. Customer names were not exposed, but AT&T says there are ways to find the name associated with a phone number. It just gives them a way better picture in order to mount better quality attacks against people. You'd be able to tell exactly what doctors they interacted with or firms of doctors from the reverse phone numbers. You'd be able to know which services online they registered for. Tech expert Ashley Monrage says criminals may not be able to harm you directly with the data itself, but they can use it to learn more about you. It's the culmination of all the pieces, those digital breadcrumbs that provide value to a hacker, to a cyber criminal. They can use that against you. Cyber security expert Scott Schober says all of our data has value. Correlating phone data with social media account data builds a fuller picture of you. Criminals can then use this information for phishing campaigns, ransomware attacks, and doxing. They build up this beautiful digital profile about you, your whereabouts, your habits, and they use that against you to take your money, to take your identity, to take your credit, you name it. AT&T said in a statement that it has secured the access point where the hackers got in. The company says it doesn't believe the data is publicly available. Authorities have reportedly arrested one suspect. AT&T also says it constantly evaluates its security to address evolving cyber threats. I don't think AT&T is likely to suffer too much from this breach at all. The data that was compromised is more just who their customers are, which I don't think most people are that concerned about. So I think they'll weather this storm, they'll have a bad press cycle for a few days, and then they'll move forward. Evan Neerman is the CEO of Red Banyan, a crisis communications firm. He says if the content of people's messages and calls were stolen, it'd be a different story. And unexpected bad news for inflation. Wholesale prices accelerated in June to their highest rate since March 2023. So an indicator of where consumer inflation may be headed, the Producer Price Index, or PPI, rose to 2.6% for the 12 months ending in June. And the increase was driven by a sizable 0.6% rise in services, led by higher profit margins for machinery and auto wholesalers. Now, gasoline prices tumbled nearly 6% at the wholesale level. Food prices also dropping. Now earlier, I discussed the PPI report with the chief strategist at Mill Street Research, Sam Burns. Take a look. So Sam, we got some not so welcome news today on the PPI number. Just to start off, is this a sign of inflation pressures building in the pipeline? I think today's report was kind of a mixed bag. There were definitely a higher number on the headline and the core rate than people were looking for. But when you exclude trade, it was actually zero. It was flat for the month. So I think there was some noise in the data. And I think the overall picture is not one of accelerating inflation. It's just kind of some back and forth in the month to month readings. And so coming after the CPI, I think that there was a relatively benign number in terms of the market reaction, at least so far. So I mean, we do agree that there's a noticeable difference between today's inflation report and yesterday's inflation report. So how do you interpret the discrepancy between the CPI and the PPI today? I think part of it just comes down to they measure different things. And there have been some previous months where the CPI was a little higher and the PPI was actually weaker. And so I think you see this happen sometimes where they kind of flip back and forth. And in a particular month, one will be strong and one will be a little weaker. But if you look at the year over year growth rates and inflation rates in both, they're both generally trending down or at least stable. So I think once you kind of take out some of that short term noise, you get a picture of inflation that's stable or improving. And that's really what the markets and the Fed are looking for, the signs that things are moving in the right direction. And that those data, the CPI and PPI are used to calculate the PCE, the personal consumption expenditure data will come out in two weeks from today. That will be the most important one for the Fed. That's the number they really look at. And those expectations are actually fairly modest now looking for, you know, 0.2% or something like that for this month. So overall, I think the inflation data is still reasonably good and probably fits the description of improvement in the data that the Fed has been looking for. OK, so speaking of which, how close are we, do you think, now to the Fed's officials, to Fed officials having that confidence that they've been talking about? So I think they're going to start to lay the groundwork now for a rate cut and probably September is what it's looking like. So in this July meeting they'll have coming up, I think they'll probably start to talk more about how inflation has made progress and the unemployment rate has ticked up a little bit. The labor market is not so strong and therefore they'll be more comfortable with a rate cut sometime soon or something like that. And that will probably set up a September rate cut and then maybe another one again in December. So I think that's probably the path they're going to try to start talking about now that we've seen the CPI and PPI data. Is the Fed thinking that if they cut too late, because there is a delay with all this, that the labor market may suffer too much then than needed? Yeah, that's really the risk they're balancing now is that if they wait too long, keep rates too high, then they'll make a mistake like they have in the past. And once the economy really starts to weaken and really you see the job market really start to kind of deteriorate and unemployment go up, then it's kind of too late. The interest rates won't affect anything for months after that. And you're already potentially risking a big slowdown or recession before any rate cuts would really help. So they always have to battle that kind of long lag between a rate cut or a rate hike and the effect on the economy. And the fact that a lot of other things driving the economy outside of interest rates, they have no control over at all. And so they're trying to work within all that. So I think that's the thing they're trying to balance out right now. But my guess is that, yeah, they'll probably want to go ahead and do something in the fall. Well, all right. Thank you for your time today, this Friday, Sam. My pleasure. Thanks for having me on. As I mentioned, European regulators have charged Elon Musk's X with breaching its Digital Services Act. They're accusing the platform of misleading its users, among other violations. Musk denies the claim, saying that he looks forward to a public trial where the European people can learn the truth. So the charges allege X does not comply with Europe's Digital Services Act by using, quote, dark patterns. We'll discuss more about that in detail in just a bit. They also allege that malicious actors could abuse the blue check mark on X to deceive users because anyone can subscribe to it. Musk seemed to dispute that on X today. Now, if found guilty, X could face a fine of up to six percent of its global annual turnover. To explain the European Commission's charge and what it means for Musk's X, we spoke with social media professor Andrew Selibak from the University of Florida. Andrew, as always, thank you very much for coming on the show. So there's a lot of technical speak in the EU's accusation. For example, dark patterns, advertising transparency and data access for researchers. Can you just explain to us what are they saying? Well, and that's where this becomes a little bit confusing. So dark patterns are something that are kind of used often by a lot of tech companies where they basically put two options in front of a person, often when it relates to how much data they're going to request to use an app, to use a platform. And one is often brightly lit and nice, big colors, big font. And the option to opt out of having your data collected is in much smaller font. It's not in colors. It's often almost difficult to see, especially on a phone. When we look at deceptive advertising practices, that's where it's a little bit maybe unclear. You know, part of that, what we can see from the EU is that they seem to be very upset about the blue checks. They seem very upset that their blue checks were taken away. They seem to be upset that anybody can pay for a blue check rather than having the app pick and choose who's important enough to get a blue check. Okay. So what do you think is going through Elon Musk's mind right now or Twitter officials? What are they feeling right now? Well, one of the things that keeps popping up is basically Elon Musk has said, hey, the European Union said, if you give us the ability to censor stuff that we don't like, we won't bother you with this. Now, we'd need to see receipts. We'd need to see where Elon Musk is saying this actually happened. But, you know, we do know that the European Union, European countries definitely have different censorship rules and regulations. They don't have a First Amendment like we do here in the United States. They do ban a lot of speech over there. So there could be some truth to what Elon Musk is saying that basically the European Union was like, we don't like that you have a free speech platform where people are saying things that we don't like, especially after they've seen the EU elections. They saw the elections in France, the elections in the UK. So there could be some validity to what Elon Musk is saying of them basically threatening you need to allow us to ban content we don't like and therefore we won't try to take potentially billions of dollars from you. All right. One final question. What are the chances that X is going to be found guilty? And is it going to have to pay a fine of six percent of its global turnover? Well, you know, the other thing is that Elon is obviously going to fight it because they're saying what he's doing is wrong and everybody else is following their rules. Eventually may even, you know, Elon Musk being Elon Musk will probably take to Twitter and complain about it a lot and basically let people know, hey, I'm being unjustly singled out and get some of these people who may be even in Europe to continue to look for different political parties to vote for and vote out some of these regulators who have been involved in this. Even if they can't vote directly for the regulators, they can vote for the people in the EU parliaments. All right, Andrew, thank you so much for your time today. Thank you. You know, falling energy prices were a big bright spot in this week's CPI and PPI inflation reports. But with the recent hurricane in Texas, could prices be heading back up? Well, at least in the near term, I asked Patrick Dahan, head of petroleum analysis at GasBuddy. So, Patrick, we saw gas prices fall in today's and yesterday's inflation reports. So I want to ask you, where are fuel prices going right now? Of course, taking into consideration the hurricane, the heat, and it is peak travel season right now. Yeah, well, gasoline prices move somewhat sideways. They have gone up about 10 to call it 13 cents a gallon since the bottom that we saw a little over four weeks ago in early June. A lot of the increase, though, is because the price of West Texas Intermediate and oil prices have risen about $10 a barrel since early June. We're seeing very little impact from hurricane barrel. Of course, that's the earliest category five storm on record. It did make a second landfall in Texas, but only low level impact shutting down some refineries. Overall, though, being a relatively weak storm, there aren't a lot of significant ramifications from that weather event. For now, gas prices moving sideways are only up about a penny in the last week national. I do think that prices may continue drifting upwards, although that's going to be more subject to the price of oil, which has rallied to about eighty three dollars a barrel. I think it may be a relative quiet week or two here as we move forward, though. Obviously, the peak of hurricane season starting in mid August is certainly a worry with barrel now behind us. The worry now is that there will be other storms coming down the road. Can you just elaborate a little bit more on a U.S. central bank rate reduction and the impact on demand? Well, it's certainly something to watch. Borrowing costs in the U.S. remain somewhat prohibitive. And so that is certainly keeping Americans probably closer to home from making bigger travel plans, from spending more. We do start to see the Federal Reserve cutting interest rates. That could be a catalyst for an increase in consumption here as we get to the closings, closing innings of the summer and potentially moving down the line. But again, with current interest rates somewhat prohibitive for borrowing, I think Americans have slowed down their consumption of goods and services. If we do see a rate cut, that certainly could be a bit of a catalyst for overall gasoline demand. OK, let me get your thoughts on this as well. So BP predicted that global oil demand is going to peak in 2025. What's your view on that? Well, you know, as we've continued to see an Alex in a accelerated approach to the EV transition in some of the world's largest countries like China and the United States, there may be a case that oil demand could peak sooner rather than later. Now, personally, I think 2025 is a little bit soon with the continued global recovery post pandemic. I don't know if we're going to see such a quick transition, but it is notable how quick countries are starting to make the jump onto EVs and how governments are now incentivizing EVs at a relatively quick pace. OK, just one final thing here. Speaking of which, fossil fuels and green energy, is it going to be a zero sum game or are they going to coexist in some form in the future? I do think there's going to be some level of coexistence between both battery EVs and internal combustion engine vehicles. Look, geography is a little bit difficult in some areas of the world where you're in a rural environment where there may not be infrastructure for either EVs or internal combustion engine vehicles. So I think we're going to still see somewhat of a hybrid approach here. At some areas of the globe, it just makes more sense to use liquid fuels than it does building extensive power plants for electric production. All right, Patrick, always great to speak with you. Likewise. Thanks for having me. Take a break. Coming up, the Chinese economy heavily burdened by the cost of natural disasters. That's like flooding, drought and extreme temperatures. And back to school campaigns are already starting. Major retailers luring shoppers with deals on sneakers, computers, kids clothing and backpacks and more. After the break, don't go away. Welcome back. Some China related stories to start off the second half. Natural disasters like flooding, drought and extreme temperatures costing China 93 billion yuan or nearly 13 billion dollars in the first half of this year. So what am I talking about here? That's heavy snow, 22 strong earthquakes, landslides, mudslides, as well as flooding on the Yellow River and in southern provinces. These have affected almost 33 million people, according to Beijing officials. Now, the CCP has a record of underreporting, but official data shows hundreds of people have died, tens of thousands of houses destroyed and over 11,000 square miles of crops damaged. Meanwhile, Chinese e-commerce vendors are struggling for survival. Sales growth is slowing down. Price pressure is rising and shopping platforms are waging price wars to win over cost conscious customers. So as China's economy slows, e-commerce's recent years of double digit growth are said to be replaced by single digits. And this is according to data from Euromonitor and a Shanghai based e-commerce operator who sells everyday items to small vendors. He says that, quote, the good times for e-commerce are over. I don't think a lot of sellers will survive another three years. Now, back here in the U.S., although many kids don't start school until late August or September, U.S. retailers are launching sales campaigns this week and the next. This is two days earlier than in prior years, and of course, an effort to capture dollars ahead of Amazon Prime Day later this month. Here's more on the story. When it comes to back-to-school sales, retailers across the U.S. share a common conundrum, how to beat Amazon, which is why major chains including Walmart and Target are offering discounts even earlier this year, hoping to capture dollars ahead of their online rival's signature event, Amazon Prime Day, held July 16th and 17th. Target on Sunday launched a week-long sales promotion two days earlier than last year, offering 30 percent off on school uniforms and backpacks. Walmart is holding its largest deals event ever from Tuesday to Thursday, also two days earlier than last year. Last year, Amazon had its biggest single day of sales in the company's history on the first day of Prime Day, with sales totaling $12.7 billion. Overall, consumers last year spent a record $41.5 billion on back-to-school items for children in kindergarten through 12th grade, according to the National Retail Federation. With college students included, that number ballooned to $135.5 billion. And travelers are expected to skip Paris this summer due to the Olympics and its costing airlines. Now, you might assume the upcoming Summer Olympics is good for the flight business, but Delta says the Paris Olympics will cost it $100 million as tourists try to avoid the busy city. Delta has the most flights to Paris of any U.S. airline and has a joint venture with Air France, who together make up 70 percent of nonstop flights between the U.S. and France. So Air France's parent company, Air France KLM, expects a revenue hit of up to $200 million this summer. And Delta's president said that the kind of people that go to the Olympics are not the kind that make his company money. But their CEO expects things to look up in the following months. Friday is National French Friday, and here's how you can score some free fries this week and beyond at no cost. The organizers of the National French Friday made sure it is always recognized on the second Friday of July. At McDonald's, through its app, you can get a free medium order of fries with any purchase of a dollar or more. Over at Burger King, members of its loyalty program also get a free order of fries any size with the purchase of a dollar or more. And that is all the stories we have for you today. Thank you very much for watching. If you have any feedback for the episode, please feel free to let me know. And you can email us at business at ntd.com. I do read them. And as I always say, business matters.