Wednesday, January 29, 2014

4 Businesses Making a Killing on the Polar Vortex - TIME

4 Businesses Making a Killing on the Polar Vortex

Read more: Businesses That Boom During Cold Weather | TIME.com http://business.time.com/2014/01/29/businesses-that-boom-during-cold-weather/#ixzz2rnrjF74x


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Snow Plow Working
Cold weather isn’t great for the economy, as cancelled plane trips and snowed-in commuters causes billions of dollars in losses to businesses across the country. But not every company fears heavy snowfall and subzero temperatures. Some obvious businesses applauding the cold weather include ski resorts, snow removal and makers of cold weather clothing, but here are four types of businesses that are loving it:
1. Salt producers: Many of us know names like Morton Salt from our kitchen tables, but in fact 41% of salt sales in the U.S. go toward highway de-icing. And the cold weather and snow means business is booming. “We’re seeing demand for de-icing salt that’s simply unprecedented in recent memory,” salt-producing Cargill Inc. spokesman Mark Klein recently told The Wall Street Journal. 
2. Ice fishing: While the densely populated coasts of America may get their fish from nearby oceans, the midwest is all about ice fishing. $260 million worth of ice fishing gear was sold in 2012, according to the American Sportfishing Association, an 11 percent jump from the prior year. In places like Minnesota, the practice is evolving from a niche means of survival to a full-blown past time, a trend only boosted by recent cold snaps. According to the Minnesota Star Tribune, sporting goods companies are now selling high-tech “fish houses” that keep anglers warm out on the lake, and can run upwards of $30,000.
3. Natural gas: Natural gas prices have reached historic lows in recent years as the fracking boom has flooded the U.S. market with supply. But a cold snap, especially in the northeast, has allowed energy companies to charge sky-high prices for those wishing to heat their homes. Bloomberg’s Matthew Phillips writes in a recent post:
” On Jan. 22, thermostats in New York City bottomed out at 7 degrees, a day after the price to deliver natural gas into the city spiked to a record $120 per million British Thermal Units in the spot market on the outskirts of town. That’s about 30 times more expensive than what the equivalent amount of gas cost a hundred miles away in Pennsylvania’s Marcellus Shale, the biggest natural gas field in the U.S. and home to some of the lowest gas prices in the world.”
4. Plumbers: Cold temperatures mean busted pipes, a goldmine for plumbers. Max Hofmeyer, an Ohio-based plumber told Cincinatti.com that his business went from fielding 125 calls per week to more than 100 per day since the deep freeze set in, due to pipes bursting in the cold.“We’ve been bombarded by people mainly with frozen pipes,” Hofmeyer said. “People are literally crying over the phone.”


Read more: Businesses That Boom During Cold Weather | TIME.com http://business.time.com/2014/01/29/businesses-that-boom-during-cold-weather/#ixzz2rnrzsC84

Is China About To Plunge Into Financial Crisis? - TIME

Is China About To Plunge Into Financial Crisis?

Read more: Is China About To Plunge Into Financial Crisis? | TIME.com http://business.time.com/2014/01/28/is-china-about-to-plunge-into-financial-crisis/#ixzz2rnqUGhLW


China money
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Is China about to have its own Bear Stearns moment? I have been thinking a lot about this after reading a smart report released today by BofA Merrill Lynch Chinese economist Bin Gao, which looks at the recent debt restructuring at the China Credit Trust Co., a major Chinese financial institution. Just a few days ago, the Beijing based company was in danger of defaulting on a high risk, complex debt product. Then, suddenly, it managed to get its hands on enough money to restructure the half a billion-dollar deal and prevent the debt from going bad. Nobody knows who the investor was—the central government? a state owned bank? a worried Chinese billionaire? As if that wasn’t bad enough, the secret bailout comes at a time when intra-bank lending rates in China are rising (which means banks don’t trust each other), market volatility is increasing, and the value of risky debt products is plunging.
Sound familiar? That’s exactly what happened in the run up to the 2008 collapse of Bear Stearns in the U.S. Indeed, says Gao, “the bailout looks very much like the Bear Stearns moment.” The CCT problem isn’t the only red flag out there–over the last few months, there have been a number of investment projects that have gone bad in China, including debt issued by a coal mining company, and a provincial government real estate project. The risk of infrastructure projects going wrong and creating a domino effect of exploding debt, just as the subprime mortgage crisis did in the U.S., is something that TIME warned about over two years ago, in a cover story by Ken Miller entitled The China Bubble.
Are we at that moment now? Economic secrecy in China means it’s impossible to know for sure, but Ruchir Sharma’s column in the Financial Times today makes it clear that he thinks the Middle Kingdom is already in trouble. I’ve talked many times with Sharma, who heads up global macroeconomics for Morgan Stanley about the issues in China, and his metrics tell it best. The most reliable indicator of financial crisis is the pace of growth in debt (not the size, but the pace). Over the last five years, debt levels in China have increased by 71 percentage points. Looking back over the past 50 years, there are about 33 cases of countries with similar debt run-ups—22 of them plunged into a credit crisis, and all suffered a major economic slowdown. Needless to say, I’ll be watching this space very carefully.


Read more: Is China About To Plunge Into Financial Crisis? | TIME.com http://business.time.com/2014/01/28/is-china-about-to-plunge-into-financial-crisis/#ixzz2rnqgltRu