I took that to mean that they have exploits they can run once they which will let them take over your machine and install keyloggers etc. to report back any further activity. It wouldn't take much for them to purchase or develop a suite of vulnerabilities for all the major operating systems/browsers which they keep current, and once they have that any encryption is pointless as they can see what you see/type/hear. He mentioned it right after talking about seeing your machine on the network and mentioned hardware bugs separately.