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As part of a growing trend among hedge funds and Wall Street firms, Cold War-style satellite surveillance is being used to gather market-moving information.
The surveillance pictures are often provided by private-sector companies like DigitalGlobe in Colorado and GeoEye in Virginia, which build and launch satellites and take pictures for US government intelligence agency clients and private-sector satellite analysis firms.
Looking for an edge, institutional investors such as UBS have begun to use satellite imagery to gauge customer traffic and economic activity, observing everything from parking lots and oil refineries to shipping terminals.
What kind of images used by investors? Click ahead to see some examples and how they are used!
By Eamon Javers
Posted 16 Aug 2010
Satellite surveillance of the largest port in Europe measures container traffic, storing or stacking of raw materials like iron ore, or the number of vessels at port. Taking it all together, analysts can estimate the port's revenue growth, and can develop macro-economic indicators of the health of the European economy.
By peering down on all the world's major ports, analysts can do the same for the health of the global economy. Under constant surveillance are the ports of Long Beach, CA, Shanghai, Singapore, and Dubai, among others.
The Port of Long Beach is the second-busiest container port in the United States and acts as a major gateway for trade between the US and Asia. With the activity from this port estimated at over $100 billion per year, this specific port is a location it will pay to keep track of.
Satellite analysts use these images to count shipping containers coming off ships in California and are able to get a sense of overall US import activity, comparing activity month by month.
Since 2005, the Port of Shanghai has been the world’s busiest port by cargo tonnage. Increased activity in this port, by the number of shipping containers or the amount of shipping activity can give analysts unique insight into the health of the regional and global economy.
Looking from space, analysts use images such as this one of a Washington, DC McDonald's. Retail analysts count the cars in McDonald's parking lots in order to measure overall customer traffic, and use this as a guide to benchmark the company's quarterly earnings.
Analysts at Remote Sensing Metrics have concluded that Lowe's is doing somewhat better than its competitor, Home Depot. But they say they have also measured an uptick in weekend traffic for both chains, which may be a hopeful signal for the US economy.
The current image shows the Lowes in the Moraine Point Plaza located in Butler, Pennsylvania.
Satellite analysis of the refinery by the company Remote Sensing Metrics measures throughput of oil and gas.
The analysts measure the number of tanks, construction of new tanks, as well as the "fill level" of each tank by looking at the height of tank roofs. Each tank has an adjustable roof that is lowered as product is removed from the tank so gas vapors don't collect.
Analysts count cars in Wal-Mart parking lots to measure overall customer traffic. Among their discoveries in recent months: traffic at Wal-Mart and its competitor, Target is growing.
That's a departure from earlier in the year, when it appeared that Wal-Mart's growth was mostly coming from areas of high unemployment, and Target's growth was coming in areas of relatively lower unemployment. The analysts say that's one sign that the fragile economic recovery is starting to recover.
The current image shows a Walmart in Wichita, Kansas.
Earlier in the year, analysts comparing satellite parking lot data with regional unemployment trends found Target's growth tended to come in areas of lower-than-average unemployment, while competitor Wal-Mart showed growth in areas of higher-than-usual unemployment.
However, Tom Diamond, president of Remote Sensing metrics, says that recently the trend has evened out, and both chains seem to be demonstrating even growth. Diamond says that could be a sign that the US economic recovery is taking hold.
The current image shows the Target in the Moraine Point Plaza located in Gardiner, North Carolina.