Leading Wall Street firms anticipated military action against Iran before the U.S.-Israeli strikes, thanks to a growing industry of ex-military and national security advisors. These consultancies, tapping into open-source intelligence and high-level contacts, provided clients with early warnings about potential geopolitical events. For example, WestExec Advisors, a geopolitical risk consultancy, advised its clients, including major banks, of a 65% probability of military action against Iran that weekend. WestExec Advisors, co-founded by Antony Blinken before he became Secretary of State, offers geopolitical risk analysis and strategic advice. The firm helps financial institutions plan for various conflict scenarios.
The demand for geopolitical analysis has surged in recent years due to rising U.S.-China tensions, the COVID-19 pandemic, and the war in Ukraine. The recent Middle East conflict has further underscored the importance of these investments, particularly given the potential for erratic foreign policy decisions. Investors and companies are scrambling for insights on various issues, from Iran’s military capabilities to the knock-on effects of the conflict on vital industries like semiconductor manufacturing. Kilo Alpha Strategies, another geopolitical consultancy, highlights how national security and economic security are increasingly intertwined.
Several indicators pointed towards imminent military action. These included a “last ditch” Washington visit by Oman’s foreign minister, the arrival of the USS Gerald R. Ford aircraft carrier in Israel, and reports that the U.S. had allowed some embassy staff in the region to leave. Unusual movements in U.S. Treasuries also suggested that some investors were betting on these signs, as traders moved into safe-haven assets despite surprisingly hot inflation data.
In response to growing investor demand, major financial institutions such as JPMorgan, Bank of America, Lazard, Goldman Sachs, and Deutsche Bank have launched their own geopolitical advisory operations or invested in military and national security expertise. These divisions provide situational updates, intelligence on shipping routes, analysis of oil price trajectories, and assessments of the crisis’s impact on energy-sensitive industries.
