Dow Jones Newswire January 24, 2003
War Fears Send Wall St Scrambling For More Info Sources
By Michael S. Derby
NEW YORK (Dow Jones)--For financial market participants, finding advance information to get an edge over competitors is an eternal quest.
But with the market's focal point shifting from the normal diet of corporate earnings and economic data to uncertainties surrounding a potential war with Iraq, a nuclear-armed North Korea, global terrorism and espionage, getting the right insights on which to trade has become a much different task.
Economic policy makers frequently cite uncertainty over these very factors as key weights on business spending - and the overall economy, rendering access to geopolitical information even more crucial.
This is driving Wall Street strategists into the less-traveled recesses of the Internet in search of the most up-to-date developments, mostly to media sites that traffic in shadowy and sometimes apocalyptic tips on the political issues of the day.
"There's a lot out there and the more arcane, it seems, the better, especially if you have the time to tie things together" said Drew Matus, economist at Lehman Brothers in New York.
Wall Street veterans have long been accustomed to forking out large sums of money for the right information. From real-time electronic news services to high-profile consulting groups - traders and strategists need that one-second edge that could mean the right trade.
But the current focus on geopolitical issues has blunted the advantage of some of these traditional services, leaving market professionals turning to information sources that not so long ago would have warranted barely a glance. The problem, of course, is that as they surf these sites, how do they know what they're reading is true?
Some dealers are clearly trading first and asking questions later. But generally, analysts and traders acknowledge that their news sources have widened and say they're using common sense to separate the wheat from the chaff in deciding what to trade on.
Security experts say that's the right strategy. They warn any glimmers of information, especially from venues dealing with the uncertain world of war and terrorism, must be carefully weighed and evaluated.
Trading Places
A new stop for many on Wall Street is Jeruselum-based Internet publication Debkafile, which is as controversial as it is watched. Founded in 2000, the website's operators say they've seen a huge increase in readership since Sept. 11. The site specializes in insider military and intelligence affairs.
In some ways, global uncertainty has done for Debka's profile what the Bill Clinton-Monica Lewinsky scandal did for Internet gossip Matt Drudge.
Indeed, Debka's content is emblematic of the more secretive and often speculative nature of this sort of news gathering. While many Debka stories have never gained traction, the web site has appeared to have some stunning scoops that have ultimately been reported in more mainstream media.
One such story involved their coverage of the U.S. infantry raid in Kandahar, Afghanistan in the beginning days of that campaign. The Pentagon deemed the mission a complete success, in a presentation dominated by night vision videos of the soldiers on the ground.
Debka shortly countered that in fact the troopers met considerable resistance, planning was poor, and that some of the elite soldiers were wounded. British media sources later reported a similar story, and The New Yorker magazine's investigative reporter Seymour Hersh published his account.
Then there was a Debka report last November warning of an imminent terrorist attack somewhere in the world, which it based on sources monitoring al-Qaeda Internet traffic. Emphatic but very vague, it was only days later followed by the failed missile attack on an Israeli airline in Kenya, which was itself coupled with a more successful truck bombing.
"We are one of the few that are ready to publish," these types of story, said Giora Shamis, chief editor of Debka and a former reporter with The Economist magazine. `We take a lot of risk in it, because we really believe" in the accuracy of the information.
While he declined to expand upon Debka's sources of information, observers have long speculated that the website has close ties with official intelligence.
Digging Deep
Debka may be getting the lion's share of the attention from those looking for nontraditional news sources. But there are other publications such as those from Jane's Information Group, a venerable military affairs publisher, that are seeing broader readership on Wall Street.
"With the Internet, information has never been more accelerated," said Richard Bell, an analyst with GlobalSecurity.Org, in Alexandria, Va. "On the other hand the signal-to-noise ratio has gotten very high."
Bell regularly combs what he calls "open" sources - government web sites, small sites run by ex-military officials - for leading cues on geopolitical concerns.
He dismissed much of Debka's content, pointing to the many issues it's gotten wrong in the haste to publish quickly. Bell suggested that sites such as Cryptome.org, which purports to publish national security documents, and Intelligence Online, at intelligenceonline.com, may be of more interest. So might Intellnet.org.
Bell's note of caution is reflected in the financial community. But that doesn't diminish the desire for say, a bond manager, to keep hunting for extra clues that might give him a split-second advantage in adjusting a Treasury bond position.
"You don't really know what's fact and what's not," said Peter McTeague, a Treasury market strategist with RBS Greenwich in Greenwich, Conn.
But "I read Debka everyday" and make the effort to see how items there play out and are backed up by reporting in the more established media, he said. By doing so one may well be able to know about something days before somebody else, McTeague added.
On Wall Street, that may be all it takes to make that killer trade.
-By Michael S. Derby; Dow Jones Newswires, 201-938-4192
michael.derby@dowjones.com
Copyright © 2003, Dow Jones Newswires
