• A devastating attack on the internet
  • Batteries and the “death spiral” in credit markets

In my recent briefing on the CyberSecurity Shakeout, I stressed that there are no real defences against cyber attacks, and the massive outage on Friday shows just how vulnerable the internet is.

The attack on Dyn, a crucial internet domain service, managed to cripple a big chunk of the Internet on the East coast of the US several hours.

What’s scary is that millions of objects — including cameras, dvrs and printers — were used to launch the attack. And what’s even more troubling is that it was aimed so deep within the internet infrastructure

More are attacks are sure to follow. As security analyst Brian Kreps pointed out: “At least one computer security firm has come out saying the attack involved Mirai, the same malware strain that was used in the record 620 Gpbs attack on my site last month. At the end September 2016, the hacker responsible for creating the Mirai malware released the source code for it, effectively letting anyone build their own attack army using Mirai.”

No wonder it’s rumoured that banks are buying bitcoin to pay for more DDOS attacks and ransomware for the return of stolen data.

Or that a Los Angeles hospital has admitted to paying over bitcoin to get patient data back.

We’re in a vulnerable place with cybersecurity. It’ll be at least a five years before we can start talking about secure networks and there are several immediate implications for investors.

  • The expense of cyber attacks will continue to escalate for every industry.
  • There is a serious risk of a systemic event that knocks out a number of networks at once — financial, utility, aviation, social — causing immense damage to the economy and potentially damaging our trust in the stability of the internet.

Apple vs China in AI

Tim Cook has spoken about Apple’s AI plans, explaining that machine intelligence is now part of the deep engineering of everything that Apple does.

This strikes me as a rather unconvincing rejoinder to Google’s recent pivot.

Apple has now found Russ Salakhutdinov <a CMI associate professor> to head up its AI drive, who is clearly not in the same league as the top Google and Microsoft people. Siri is a joke and the best of the Siri pioneers have gone to Samsung via the Viv acquisition.

If Jony Ive calls the shots, Apple is going to be about health app wearables vs Fitbit, cars <yes despite the fog Titan is still there>  and fashion…most of Ive’s time of late was spent on the Regent Street store re-design and he’s been doing a spot of christmas tree designing too.

Meanwhile, Cook scoots back and forth to China to do the Politburo’s bidding…hence the recent announcement of a second R&D centre.

On Thursday, Apple will unveil its refreshed MacPro line in an effort to go toe-to-toe with the Microsoft Surface…however exciting it’s not going to provide a strong following wind for the whole vessel.

What a contrast Microsoft and Apple present. The former, not so long ago seen as a busted flush, is now breaching new ‘highs’ on the back of Nadella’s cloud/mobile pivot.

And Apple? The Apple without Jobs sentiments are back…that it’s become like Sony became without Morita, while resembling the Stephen Leacock character who leapt on to his horse and rode off in all directions at once.

But it’s China were I’m looking for new directions in advanced AI and deep learning however.

On the avoirdupois test of the weight of cited scientific papers on the subject it’s now ahead of the US, but real things are also happening… Baidu is genuinely world class in the field of AI and there are some very interesting listed specialists such as iFlytek in voice and language processing and Hikvision in sound and movement recog/response for security apps.

As are startups like SenseTime in facial recog and security and Google China spin-out Mobvoi in voice-driven Android wearables. This industry is really heating up.

Credit Contagion from technology

Finally, just one suggested article this week. It’s worth reading this analysis by Dr Joe Romm — a response to the Bloomberg warning about of a multi-trillion dollar credit meltdown due to disruption from batteries:

Batteries could cause a death spiral in credit markets

This piece is not an exercise in hyperbole, which is why I flag it up. It hangs together, provided that batteries don’t start combusting all over the place and that supplies of refined lithium remain sufficient.

If, as seems more than likely, China sees an accelerated mass adoption of smart NEVs in its cities and a low interest in car ownership among its 250 million urban millennials, there will indeed be a credit meltdown in the oil and gas sectors, which will ramify through the global financial system.

Moreover as battery supremo John Goodenough pointed out in a BBC interview last weekend the broad scale use of battery stored energy will totally disrupt the global power infrastructure.

Till later in the week…

Drop me a message here if you have any queries or questions.

Follow me on twitter here.