Threat Finance & Market Intelligence

StrategyWatch™

The StrategyWatch™ Application of WatchCen24™ was created in response to the threat of U.S. rivals implementing their strategic goals through financial means, rather than political or military means.

Macroeconomic indicators have always been a part of the geopolitical calculus. However, recent capital markets activities have emerged as a leading-edge strategic instrument in the hands of large and expanding powers. Examples include the control of sensitive technology and critical infrastructure through corporate acquisitions, foreign exchange rate pressures, market manipulation, commodity price squeezes, credit crises and informational advantage.

These actions can be offensive (e.g., conducted through Sovereign Wealth Funds and proxies) or defensive (e.g., conducted through hedging and derivatives). But such actions do not take place in a vacuum. They involve counterparties such as banks, brokers, dealers and exchanges. And such actions are not "silent." They leave detectible signals in the form of price and other anomalies. With proper behavioral modeling, algorithmic detection and expert analysis, the actions of strategic rivals in capital markets can yield a wealth of actionable intelligence.

How StrategyWatch Works

StrategyWatch begins with the proper identification of potential strategic threats. Examples might include a Chinese invasion of Taiwan, Russian dominance of European energy distribution, an Iranian attack on Israel, a coordinated assault on the exchange value of the U.S. dollar, and malign disruption of critical infrastructure.

Based on the threat being considered, a behavioral model is constructed that contains steps that would be taken in capital markets directly to implement the threat, or facilitate the targeted goals. These models consider direct action such as corporate acquisitions, technology and information transfer, and forms of market manipulation. The models also consider indirect actions through the use of agents and conduits and other legal intermediaries located in principal jurisdictions such as London, Geneva and Zurich as well as jurisdictions of convenience such as the Cayman Islands, Channel Islands, Macau and Cyprus.

Next, specific financial techniques are evaluated, including the use of derivatives and leverage and the coercive or manipulative use of contracts and loan agreements.

Finally, the attack and strategic scenarios are considered in relation to particular sector and company targets and associated listed securities. Out of a universe of more than 10,000 potential companies, StrategyWatch selects those exhibiting factors most sensitive to the types of conduct anticipated. StrategyWatch also observes numerous other market metrics such as commodities prices, "spreads" (the relationship of the price of one instrument to another), volatility, momentum and technical trends. We also apply Modern Portfolio Theory to the composition of entities such as Sovereign Wealth Funds to distinguish between commercial and strategic behaviors.

Results

The result of this modeling, processing and analysis is the ability to disaggregate market data to discern the actions and intentions of market participants based upon their market behavior.  When those participants are strategic rivals or non-state and transnational entities, the intelligence is not only actionable but unique.

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