Merryn's Blog

How tiny satellites could change the way we invest

A new fleet of shoe-box sized satellites could soon be providing investors with proper, real-time economic data, says Merryn Somerset Webb.

150720-cubesat

When I interviewed Roger Bootle of Capital Economics a few months ago, we agreed that one of things that makes economic forecasting tricky is the impossibility of knowing what is happening right now. Neither MoneyWeek nor Capital Economics has ever been approached by the statisticians who make up our GDP numbers to fill in the relevant surveys despite both being fast-growing small businesses.

It was a point backed up in a recent conversation with Lord Lamont: practically none of the economic numbers he worked with when he was chancellor turned out to be worth the paper they were written on. He was under the impression that he was managing the economy through the worst recession in decades. He wasn't. And, as he points out, if you can't know the present until it is well in the past, how can you have a hope of forecasting the future?

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

The good news is that it might be about to get a tiny bit easier because of shoe-box-sized satellites. Planet Labs, a San Francisco firm set up by ex-Nasa engineers, has says, Bloomberg Businesss, "one of the largest ever imaging fleets aloft". Each of the 50 satellites orbit the globe every 90 minutes, and together "they can photograph most of the planet every day".

These are no ordinary photographs. They come in such high resolution that big data software can then be used to the extract proper real-time economic indicators from them.

Advertisement
Advertisement - Article continues below

"Satellite images of activity at 6,000 Chinese factories are being translated into a new manufacturing index. And energy investors will soon be able to access data based on satellite photos of oil tank farms worldwide to know if stocks of crude are rising or falling."

This is a genuine game-changer. Currently, the US and the UK both rely on surveys of a few thousand businesses (not including MoneyWeek or Capital Economics) to tell them what is going on, and by extension to act as the base for monetary policy. The proper use of photos and big data could lead to a whole new world of economic transparency, and hence a transformation in the way we make policy (hopefully for the better).

At the same time it is producing some interesting information of global significance (one study of night light around the world suggests to a Columbia University professor that global poverty is running at a mere 6% rather than the 30% the World Bank estimates).

Finally, and from our point of view, possibly most excitingly, the satellite data, if properly analysed, really could change the way we invest. The oil data mentioned above is clearly interesting, but Bloomberg also reports that that Rich Abbe of Iroquois Capital Management recently bought stakes in consumer companies such as Chipotle Mexican Grill and JC Penny on the back of reports on the vacancy rates in their car parks from satellite firm Remote Sensing Networks. He also I suspect wisely, given the potential here bought a stake in Remote Sensing Networks.

PS We might look at this in more detail in the magazine soon but other start-ups in the sector in the US are Spaceknow and Orbital Insight.

Advertisement

Recommended

Visit/519858/how-long-can-the-good-times-roll
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Visit/504252/brace-yourself-the-global-economy-might-be-healthier-than-it-looks
Economy

Brace yourself – the global economy might be healthier than it looks

Investors have been worried about a global recession since the start of the year. But the latest indicators suggest things might not be so bad. John S…
2 Apr 2019
Visit/501578/the-charts-that-matter-the-powell-put-is-in-place
Economy

The charts that matter: the Powell put is in place

The Federal Reserve has done not so much a U-turn as a handbrake turn on monetary policy this week. John Stepek looks at how that’s affected the globa…
2 Feb 2019
Visit/investments/investment-strategy/600709/the-coronavirus-is-scary-but-its-irrelevant-to-your
Investment strategy

The coronavirus is scary – but it's irrelevant to your investments

The spread of the coronavirus is causing alarm around the world. And, while it could be a serious short-term threat to human health, it’s not somethin…
24 Jan 2020

Most Popular

Visit/investments/commodities/gold/600686/gold-and-silver-bull-market-2020
Gold

Want to make money in 2020? Gold and silver are looking like a good bet

If you want to make money from investing, says Dominic Frisby, it’s simple: find a bull market and go long. And in 2020 gold and silver are in a bull …
22 Jan 2020
Visit/economy/600667/money-minute-wednesday-22-january-uk-public-borrowing
Economy

Money Minute Wednesday 22 January: UK public borrowing

Today's Money Minute looks ahead to the latest on of the UK's public finances, with the Office for Budget Responsibility’s forecasts for borrowing thi…
22 Jan 2020
Visit/economy/600690/money-minute-thursday-23-january-european-interest-rates
Economy

Money Minute Thursday 23 January: European interest rates

In today's Money Minute we look ahead to Christine Lagarde's second interest-rate-setting meeting at the European Central Bank.
23 Jan 2020
Visit/economy/600691/money-minute-friday-24-january-the-key-to-uk-interest-rate-cuts
Economy

Money Minute Friday 24 January: the key to UK interest-rate cuts

Today's Money Minute looks ahead to the release of data that could hold the key to UK interest rates cuts. 
24 Jan 2020