Common Sense Advisors Week In Review -Trending Indicators.
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The last week in August is traditionally a time when professional money managers take a vacation in order to recharge their batteries so they can be ready for the final quarter of the year. I obviously didn’t get the vacation memo!
That’s OK, because there is plenty of work that needs to be done to protect clients and pursue prudent profits.
Geopolitical events continue to dominate the nightly news. The ISIS/ISIL/IS threat continues. I read a report over the weekend that the city of Qaraqosh fell and that ISIS was systematically beheading children ( Crisis In Iraq ).
I don’t have a way to verify that information but it seems consistent with previous reports by major news organizations. And it is being reported the Russian soldiers continue to flow into Ukraine. And Vladimir Putin upped the ante on Friday when he warned that Russia is a preeminent nuclear power.
ISIS and Russia/Ukraine are just two threats on the Macro radar. But they may not be the most important. Often, it’s what isn’t being talked about on the evening news that poses the biggest danger to your retirement lifestyle!
It was reported last week that the 5 largest U.S. Banks were hacked. The sophistication of the attack indicated that it had to come from a nation state and is rumored that it was done by Russian hackers in response to US sanctions on Russia ( JP Morgan Hacked. )
This attack has been described as ‘Stuxnet-like’. Stuxnet is the virus that was surreptitiously planted in Iran’s nuclear programs computers that set its development program back several years. Imagine something similar being planted within the core processing systems of America’s largest banking institutions and you can begin to see the potential for harm. Here is an excerpt from a Fox Business article:
“Information security professionals see large financial firms as the gold standard. Since they have so much to lose if they’re hit with an attack, banks often invest millions to hire top-tier talent and build the best protection. And generally speaking, they have been very successful in thwarting a wide range of attacks, including frequent distributed denial-of-service attacks that bring their consumer-facing websites to a crawl.
That’s why news that five banks – including JPMorgan, which spends nearly a quarter billion a year on cyber security – came as such a shock to experts in the cyber security space.
“This is not a normal malware attack,” said Larry Ponemon, founder of The Ponemon Institute, a respected computer security think tank that is often tapped by the government and private firms, “it’s pretty scary.”
Ponemon said the computer programs – known as malware – were “very sophisticated,” exploiting methods that could even rival the Stuxnet worm that reportedly roiled Iran’s nuclear centrifuges. It’s likely, he said, that the software was actually “composite malware,” meaning multiple programs joined together to access banks’ systems and exfiltrate data, all while avoiding detection.”
The article continues to detail the sophistication and significance of the attack:
“Perhaps most worrisome, Ponemon said the software targeted JPMorgan’s “core infrastructure,” specifically something called its “network layer.” The network layer is generally highly secured, and connects many key components, like mobile banking and trading systems, Ponemon said.”
And it concludes with an ominous warning:
“The hackers were apparently highly disciplined: While there are reports they got away with “gigabytes” of data, Ponemon said they were “determined to demonstrate they can access critical systems” more than causing actual damage. Basically, the bad guys were hitting the financial system with a virtual shot across the bow.
The U.S. security community is still working to reverse-engineer the malware. Ponemon said that means banks might not know yet whether they were, or are still being, hit. At the same time, it also speaks to the complexity of the attack.
Taken together, the intense sophistication and the discipline shown by the hackers, the prevailing thought across the computer security community is that a state-level player was likely involved.”
In case you missed it, the conclusion is that banks in the United States of America ‘might not know yet whether they were, or are still being hit’!
I have been following the threat of financial terrorism for years, yet the threat it poses to Americans has been largely ignored. This latest attack should be a wake-up call for us all.
Am I over-reacting?
Not according to the National Security Agency (NSA). The NSA is the U.S. Government’s intelligence agency responsible for monitoring these types of threats and is “charged with protection of U.S. government communications and information systems against penetration and network warfare” (Wikipedia).
In December of 2013, National Security Agency Director Gen. Keith Alexander admitted on CBS’ 60 Minutes that “a foreign national could impact and destroy a major portion of our financial system” by placing a virus in our computer systems “and literally take down the U.S. economy” if the virus was spread around.”
Alexander told CBS in blunt terms that “right now it would be difficult to stop (the virus attack) because our ability to see it is limited.”
(emphasis mine, Cyber Capability )
What does all of this mean to you? I will address that and more in the next Week In Review.
Have a wonderful and Blessed week!
Always At Your Service,
Jeffrey D. Voudrie, CFP® Practitioner
Common Sense Advisors.