How Alternative Data is Helping to Measure the Pandemic | The Corona Correction | Refinitiv
Welcome to the Corona Correction Series in association with Refinitiv I'm your host Roger Hirst. Getting hold of useful data is becoming increasingly important in a world where corporates are unable to provide future earnings visibility, and macro data has been impaired by the limitations of the surveys in which many respondents are not even at their desks. Investors are therefore turning to alternative sources of data, such as satellite imagery and web analysis in order to fill that void, and I asked Tim Harrington, CEO of BattleFin Group, about the types of alt data that are being studied, and how it is being applied to analyse the current environment. So that can be anything from satellite imagery, geo-location, credit card data, email receipt data, web scraping, anything. When we think about alternative data, we think about how it relates to ways to get information that may not be coming directly from the company. So outside of a typical 10-K 10-Q earnings report, really ways to get an alternative read on what's going on within an industry or a company sector, anything like that. So what we saw was demand for alternative data sets that could give a read into capacity utilization at different manufacturing facilities, different regions such as Wuhan, and just what was happening there. So we worked with a company called Kumi Analytics that's on our Ensemble data platform. And what they do is they measure radiance levels, which are light levels, as well as pollution levels, to determine the amount of utilisation that these factories are typically at. We can overlay satellite imagery with geo location data to see how many people, or how many cell phones are going in and out of those buildings. And it was really interesting to see because, you know, say if utilisation levels were 90 percent pre-crisis, they really got down to closer to sixty five percent. And a lot of the manufacturing started moving from the northern regions to kind of some of the southern regions. And that was what we were seeing two or three months ago. Where I think people are really focused now, is what are those utilisation levels getting back to? You know, they're not getting back to 90, but they have started to climb in that direction. And people are then trying to extrapolate what's going to happen in Europe. What's going to happen in the US? How are those recoveries going to take place? What we're seeing now that people are most interested in is A. tracking the recovery. So which industries are going to spring back the fastest? Which industries are going to also take longer to recover? And what data sets specific to those industries can we provide over Ensemble? So if you are looking at a Home Depot, for example, we could put together data sets that could show you various locations, how full the parking lots are with satellite imagery, what the foot traffic going in and out of those stores may be, or what it's starting to recover to, using geo location, using email receipt data to figure out what types of products people are buying. And then also overlaying that with sentiment data and even some of the fundamental and reference data from Refinitiv so that we can get an idea of, you know, what were people looking for? What are the estimates and where do we think the truth is actually going to come out at? And it's really it means, you know, the alternative data moniker is really it's an alternative way to get information on these companies and these different sectors in times like this when there's not a lot of information out there. Some of the airlines are coming back and saying, you know, how can we use this data to help us predict which types of professions are going to be travelling first? And what are some of the patterns? Are people not going to go back to Disneyland for a longer time, but they might take a beach vacation and instead of two days, it might turn into 10 days. Because they want to get in and scrub things down or they just feel more comfortable. Will there be more driving vacations? Are people going to buy more cars? Because, you know, if you live in New York City, you're going to probably want to drive somewhere and spend the weekend versus getting on a plane or a train. And so a lot of our clients are coming to us now and trying to see what behavioural changes we could also see. It's a very macro driven market. So we're seeing a lot of demand for macro driven data sets. It might be surprising the capacity utilisation levels in China only fell to 65 percent from 90 percent. But remember, these are the findings of alt data. This is not official data. So although it feels like our economies have come to a shuddering standstill, this is actually a relative experience compared to where we were in January. Investors are now looking at the U.S and Europe and trying to calculate how quickly businesses will be coming back online. The process is likely to be much slower in these regions than the centrally planned return to work experienced in China. U.S. and European businesses will open, but gradually, and alt data will help analyse this process during a period in which analysis of earnings reports will have little relevance until the global economy has returned to something close to normality. We’ll see you later with another update.