Illicit Photos & Cyberthugs

Topless pictures of singer and actress Bella Thorne were recently stolen from her Twitter account.

When the hacker threatened to release the photos online unless Thorn paid a ransom, she decided to teach the hacker a lesson. She posted the images herself, with a message:

“I can sleep tonight better knowing I took my power back. U can’t control my life u never will.”

But it isn’t just celebrities at risk. Business is also feeling the heat. Including Wall Street.

Wall Street Spending Big

Financial middlemen (stock exchanges, clearinghouses and payment processors) spent as much as $3,600 per full-time employee on cybersecurity last year — the most per capita on Wall Street, according to a new report by Deloitte.

Wall Street chiefs’ biggest concern is a large-scale data breach like the Equifax fiasco that compromised information on more than 147.9 million people in 2017.

Equifax is still reeling, almost two years later.

Continuing litigation and related investigations cost Equifax $690 million in the first quarter. And analysts predict the credit-ratings firm will spend an additional $400 million in both 2019 and 2020.

“Cyber risk is probably the biggest risk the financial system faces,” says JPMorgan’s Jamie Dimon.

Dimon is right to worry: His bank got hacked in 2014, exposing the data of 83 million people.

It’s now spending upwards of $600 million per year on cybersecurity.

Weak Link in the Supply Chain

Every business relying on a supply chain is vulnerable, too.

A Hiscox report showed that 65% of firms surveyed experienced one or more cyberattacks due to a weak link in their supply chain in the past 12 months. The average loss from the attacks rose to a budget-busting $369,000 … an increase of 61%.

The frequency of supply chain attacks is on the rise for two reasons:

First, cybercriminals can target more than one company at a time, creating a better return on investment.

Second, attacks can be launched from the inside through software bugs, as seen with the recent Asus attack.

Plus, the increase in the number and types of IT assets — the “cloud,” Internet of Things (IoT), mobile and “containers” (hardware, software, information systems, and even people, paper or CD-ROMs) — makes it a challenge to identify and protect against any kind of cyberattack.

And foreign adversaries are hitting our national interest more than ever.

Government Cyber Spending Swells

In response, the FBI has launched its biggest transformation since 9/11.

“The future of cyber, that’s the future of the organization” said Amy Hess, the new head of the FBI’s criminal, cyber, response and services branch.

President Trump’s 2020 budget proposes $732 million for the FBI’s cybersecurity efforts — a 7.6% increase.

But it isn’t just cyber-defense. It’s cyber-offense, too.

The New York Times recently reported the U.S. planted malware inside the Russian electrical grid as a warning to Moscow. This after Russia launched cyberattacks allowing hackers remote access to American nuclear power plants, water facilities and other infrastructure.

The incursion into the Russian electric power grid was conducted under the military authorization bill passed by Congress last year. Under the law, the defense secretary can independently authorize “clandestine military activity.”

“We’re now opening the aperture, broadening the areas we’re prepared to act in,” National Security Adviser John Bolton said at The Wall Street Journal’s CFO Network annual meeting.

U.S. Cyber Command Commander and NSA Director Gen. Paul Nakasone also supports an aggressive posture of “persistent engagement.”

Not surprisingly, companies are cashing in.

One of them is Iron Mountain (NYSE: IRM).

Almost all Fortune 500 companies trust Iron Mountain to keep their physical documents and artifacts safe at more than 1,400 facilities worldwide.

And Iron Mountain is expanding into cyberspace.

By 2020, management hopes to get 7% of revenue and 10% of EBITDA from their data center business.

The company also offers cloud storage services, including data backup, disaster recovery …

… and protection against hackers.

Plus, its business sports a hefty dividend yield of 7.6%, with plans to keep raising it.

Trade war jitters continue to rock the markets. But companies are still going to produce reams of data. And they’re going to pay Iron Mountain (and their shareholders) to store it safely.

For more on Iron Mountain and the other stocks of my hotlist, why not check out my monthly advisory, Wealth Supercycle?

For a limited time, you can grab a trial membership for only $9.

All the best,

Sean

P.S. If you think you’re relatively immune to cyberattack as a “regular American” … you should know that cyber criminals are now breaching trust in that padlock icon and “https” you thought made a website safe!

About the Editor

Supercycles aren't daily occurrences. They happen in stages and can last for years. Sean Brodrick identifies them early and mines for the most financially sound stocks within them. And he taps into the powerful Weiss Ratings, along with our proprietary AI Performance Booster, to help him do it!

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