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The China Syndrome, Part 1
A Joe-Duarte.com Retrospective
by Joe Duarte, MD
Joe-Duarte.com & IntelligentForecasts.com
January 22, 2005

Editor’s note:

The attention of the mainstream press is on Iraq. And while this is understandable, there is more to the world than the Middle East at this point.

More specifically, the developments of the Middle East have become a catalyst for other areas of the world to become more interesting and important from many points of view.

At the forefront of the countries that have taken advantage of the situation in the Middle East as an opportunity to project their own power and influence around the world is China.

In Part 1 of this series, the goal is to set the stage for what can only be one conclusion, that China is not just a power to be reckoned with in the future, but rather that China is a major player in the world now.

Parts 2, 3, and perhaps more are certain to follow.

When that realization becomes the conventional wisdom, it may be too late to do anything about it on any front.

This is a continuation and an expansion of the themes initially presented in the November 8, 2004 retrospective titled: “China: A Looming Crisis Or A False Alarm”

November 5, 2004 China: Waiting For The Other Shoe To Drop

Financial markets, in the throes of a post U.S. election rally, continue to ignore the possibility of global market problems posed by the Chinese economy.

With the trend in China toward higher interest rates now in place, the Chinese government is now hinting that it might loosen the Yuan’s peg to the U.S. Dollar.

And while we favor a market approach, the Chinese economy is, in our opinion, not secure enough to withstand the scrutiny that a free currency exchange will bring, raising the potential for a currency crisis, which could, much as the 1997 Thai Bhat crisis did, lead to major global market repercussions.

According to the Wall Street Journal, on 11-4: “China is signaling its readiness to relax the yuan's tight peg to the dollar -- part of a policy shift to give Beijing added leverage to cool the domestic economy and lessen tensions with the U.S. and other trading partners. Central bank officials and senior government analysts in recent weeks have suggested publicly that deliberations on exchange-rate moves are reaching fruition. To their usual statements emphasizing exchange-rate ["stability"] -- long a euphemism for the dollar peg -- central bankers have begun adding the need for flexibility.”

To be sure, much of this could be talk. According to the Journal, the Chinese “give no indication of when and how the shift will occur, no one doubts that for now any loosening will mean a rise in the value of the yuan against the dollar. With the dollar weakening against most major currencies during the past year, the U.S. has hectored the Chinese government to alter the peg, which they say keeps the yuan artificially low and makes Chinese exports unfairly competitive. With the dollar expected to weaken further on world markets, continued Chinese intransigence could force the high-priced Japanese and European currencies higher.”

The Journal added: “economists and analysts say other pressures are forcing a government reckoning. The economy, which expanded 9.1% in the third quarter, reaccelerated in recent weeks, as administrative fiats taken in the spring to restrict bank lending were eased, inflation pressures persist and the flow of dollars from abroad continues to stoke investment.”

But there is more to it. Stratfor.com, which has been ahead of the curve on China’s economic situation notes: “The rate increase, the first in nine years, indicates that Beijings economic situation is growing desperate. Normally, when an economy is growing too quickly, strong demand raises the cost of the economy's basic building blocks: everything from workers' salaries to cement to microchips. Such price rises are inflation. One tried-and true-method of reining in inflation is to reduce access to capital -- raise interest rates -- so the cost of accessing those building blocks rises, and demand falls a bit. But for China, hiking rates when growth is chugging along at more than 9 percent is not that simple.”

Stratfor notes, that the problem is cultural and structural, given China’s political focus on its economy. “In Asia, unlike the United States, profit it not necessarily the overriding concern for businesses. In China in particular, the state's right-to-rule is largely predicated upon keeping the population well fed and working. That makes China's massive state-owned enterprises (SOEs) more job farms and a social security net and less manufacturing centers. Since profitability is a secondary concern, it becomes important to simply keep the firms active.”

Stratfor notes that keeping the Chinese system going “takes money -- a lot of it -- so China keeps its interest rates far lower than they otherwise would. That grants China's SOEs continual and immediate access to cheap loans so they can act as job incubators and expand without being concerned about profits. In the process, they scoop up more cheap loans so they can continuously roll over their debt, which they know they never will be able to repay.”

In other words, a cooling of the Chinese economy, aside from causing job losses, could lead to massive social unrest, in a population that is not familiar with the vagaries of the business cycle. “Higher interest rates would end this dysfunctional state of affairs because the cost of keeping the SOEs chugging along would increase to the point in which some would crack apart. This would be as bad for China's surplus workers -- and the government's legitimacy -- as it would be for China's image as an investment nirvana.”

There is another major point raised by Stratfor, which add up very negatively for global financial markets:

If the Chinese government indeed continues to raise interest rates, as it seems ready to do, and then loosens the dollar peg: “The damage would not stop at the SOEs or at the tens of millions of Chinese who would be out of work -- and rise up in protest. All of those SOE loans are issued by someone, typically the state's four state-owned banks -- the Bank of China, the China Construction Bank, the Agricultural Bank of China and the Industrial and the Commercial Bank of China -- so if the SOEs were to move from being zombie companies to just plain corpses, the banks will be saddled with billions in non-performing loans.”

Here is where it gets very tricky. The situation above, according to Stratfor “is bad enough for any bank, but Beijing has spent much of the past year spit-shining the state financial institutions for either sale or initial private offerings. The question then becomes: Who would buy stock in a bank whose primary clients just imploded? If someone were investing in China and the crown jewels turned out to be made of plaster, how closely would they scrutinize their investments in the country? Business partners? Supply chains? In other words, China's go-go economy is gearing up to fizzle.

Indeed, the game is being played at the Federal Reserve, whose post 9/11 massive easing kept the U.S. economy from falling into a deep recession. The side effect was that cheap money made its way to China, and has fed the runaway Chinese economy freight train.

But here is the scenario painted by Stratfor. “The U.S. Federal Reserve, the body that controls U.S. monetary policy -- and does all the economic crystal ball peering -- meets again in two weeks; the markets are widely expecting yet another rate hike. Because of the deep trade relationship and the currency peg, a Fed rate hike not followed by China unleashes a torrent of capital from China to the United States. If cheap bank loans are the blood that keeps the Chinese system going, direct investment is the skeleton that keeps the Chinese economy upright. Beijing, then, is truly damned if it does, or damned if it does not.”

Stratfor concluded: “The Chinese economy is now walking a multi-layered tightrope, balancing between extreme energy prices, foreign investor confidence, an entrenched economic model incompatible with the new way of doing business and, of course, the shaky SOEs and the teeming hordes of not-quite unemployed who -- the Chinese leadership knows from first-hand experience -- are quite capable of bringing the entire system crashing down. Stratfor has little doubt that something, if not everything, will give. The only question is: What will give first?”

Nothing is ever certain. But the building blocks of something very negative are certainly in place in China. It would not, in our opinion, take a whole lot to bring the whole thing crashing down.

December 1, 2004 China’s Energy Panic

The Chinese government is secretly paranoid about an energy shortage. And it is that one thing that could be the emerging giant’s Achilles heel.

According to Canada’s Globe And Mail, the situation is increasingly tense as “China's obsession with energy security has put it on a collision course with the United States, which disapproves of Beijing's eagerness to cut deals with ["pariah states"] such as Iran and Sudan.”

In fact, in a recent communiqué’ from an inside the beltway source, we were notified that there is now a small group of voices of those “in the know,“ that China’s problems as a country, despite the recent economic boom, are significant. One reliable former Bush I insider told our source that “there is a very good chance of China (is in the process of ["deconstructing"], i.e. breaking up into four or more component parts (separate countries).” As this former insider told our source, “It is a combination of the internal social and economic strains, the current inability of the central government to exercise much control over the country (they can't even collect taxes) and the fact that China is a patchwork of various ethnic groups stitched together by the Manchus, European imperialists and Mao.”

Our source allowed that the thought of China splitting up “is too conjectural and too long-term,” but correctly saw the potential for such a thing to happen. As the former Bush I insider put it to our source, if indeed this came to pass “he thought there would be two economic centers -- one in the Southeast (Hong Kong, Guanzhou, Fujian province) and one around Shanghai and the Yangtze. The northeast would also be viable while the Northwest would flow across the Russian border. Some entity (it wasn't clear if it was the southwest or the southeast) would move closer to southeast Asia.”

Which brings us back to the original thought, China as an energy paranoid gobbler. According to the Globe And Mail: “Beijing sees the risk of an energy shortage as one of the biggest potential threats to its national security and social stability. It has become fixated with the goal of diversifying its sources of oil, gas, electricity and coal.”

Indeed “Beijing has become frantically active in its quest for new energy supplies.” And there is more evidence that the Chinese government is in major motion. “The Chinese government has reportedly drafted a plan to build a 90-day strategic reserve of crude oil -- much bigger than its previous plan for a 30-day stockpile. It is already building 52 massive tanks near the East China Sea, south of Shanghai, to stockpile a month's worth of oil. Each tank would hold more than 25 million gallons.”

More distressing is the fact that “this might not be enough. China's economy -- with its emphasis on voracious energy-gobbling industries such as steel, cement, and manufacturing -- is increasingly dependent on heavy energy consumption. For every dollar of GDP, it consumes three times as much energy as the global average, and almost five times as much as the U.S. average. By 2020, China is projected to have 130 million private cars -- five times as many as today -- and its cars are already consuming far more gasoline per car than the average car in the United States or Japan.”

And perhaps the most telling of all statistics is this: “China's oil imports leaped by 40 per cent in the first half of this year. It recently surpassed Japan to become the world's second-biggest oil importer. Its own oil production, once large enough to supply its needs, has fallen into steady decline. By the year 2020, China expects to depend on imported oil for 60 per cent of its oil supply, up from 36 per cent today, leaving it increasingly vulnerable to an oil embargo or an unexpected cutoff of supply.”

 Desperation Leading To Questionable Decision Making

China is indeed aggressively making deals, which may have some significant long term implications beyond their own borders.

The Globe and Mail noted the following: “China is aggressively negotiating trade and investment deals with almost any country that boasts a supply of oil or natural gas, regardless of the cost. It is already co-operating with 27 countries on oil exploration. In Africa alone, it has reached agreement to buy oil from Cameroon, Nigeria, Gabon and Angolia. In Latin America, it has signed a trade deal with Brazil to finance a drilling and pipeline program that would provide oil and gas to China, even though the Brazilian deal is estimated to be three times more expensive than simply buying supplies on the open market. To secure Russian oil, Beijing gave favorable terms to Moscow to settle a long-standing border dispute on a Siberian river. Russia reciprocated last week by promising to deliver as much as 420 million barrels of oil by train to China annually by 2010, up from the present level of 140 million barrels.”

What is increasingly obvious is that China is openly linking its energy policy to its politics. And while it is not an unheard of practice, other countries seem to have a bit more flair and sleight of hand associated with their actions, while China is showing no finesse whatsoever, despite the lack of notice from the mainstream media.

The Globe And Mail listed the following examples: 1) “Last month, China signed a $70-billion deal to help develop an Iranian oil field and purchase natural gas from Iran. Within a few days, Beijing signaled that it would oppose any effort to seek UN sanctions against Iran over its nuclear program.“ 2) “China has supported Sudan against allegations of human rights abuses. China has invested hundreds of millions of dollars in developing oil fields and pipelines in Sudan, its biggest single African energy supplier. “ 3) And in another far-reaching consequence of China's energy appetite, China and Japan are jostling for control of the vast natural-gas deposits below the East China Sea. Both countries have laid claim to much of the sea, and China has begun the construction of drilling platforms to tap the gas deposits in disputed waters, provoking sharp protests from Tokyo. When a Chinese nuclear submarine was discovered in Japanese waters this month, a three-day chase by Japanese warships ensued. The incident was widely believed to be linked to China's challenge of the Japanese gas deposit claims.”

The Weakness In Beijing’s Strategy

According to World Tribune.com columnist Sol Sanders: “Owning oilfields (as the Chinese are now doing) is not necessarily the name of the energy game.”

Sanders adds the following: “ The long haul from the Middle East [or even Southeast Asia or Australia] as well as Africa and Latin America is extremely vulnerable. It is one of the reasons why - Washington considers a stable and market-oriented Persian Gulf with more than half the world’s known hydrocarbons as essential to its security. But the U.S, with the cooperation of its allies in the region and along the way, has the wherewithal to keep the pipeline open. Not only does Beijing not have that potential – even the most [“optimistic”] straight-line projectors of its modernizing military power do not see it for decades – but its policies of aiding and abetting proliferation of weapons of mass destruction and aiding reactionary and unstable regimes [like the Sudan or Burma or Iran] is hardly congruent with that aim.

Sanders continued his interesting analysis with this: “Leaving aside the issue of physical security, the economics of their strategy also is dubious. China is, despite its hoard of foreign exchange, a capital short country. It is using scarce funds to buy oil in the ground. In many instances, it is overpaying or buying into reserves more experienced competitors have thought marginal. Getting oil out of the ground will take technology Beijing does not have and require going to the oil majors cap in hand. Otherwise, Beijing will mess up as it did in the famous domestic Daqing field which is rapidly being depleted, decades before it should have been. The majors already outsmarted Chinese planners, by buying into domestic government oil, then dumping their equities at a huge profit.”

Sanders concluded with three valid points: 1) With each energy crisis, industry and machinery producers take a serious look and up efficiency – something the Chinese have not yet tackled with energy ratios from three to five times even the wasteful U.S., much less Germany or Japan. Eventually as the market demands there will be breakthroughs in [“alternative energies”.] 2) In contrast to Beijing‘s get it at any price strategy “Japan, with the same problem as China in its period of rapid growth, never invested in foreign oilfields. With control over its exchange [which Beijing is likely to have for a long time still], it allocated licenses to the importers every six months. With a formula rewarding those who gave the cheapest price for the best oil, it maintained the lowest imported energy costs – one of the basis of the Japanese postwar industrial miracle.” 3) “China’s wheeling and dealering in the overseas oil market may be building political capital in some quarters. But the price is going to be high. And with so many chinks in its mushrooming economy, the energy [ouch!] might better be used for other economic problems at home.”

Conclusion

As with any newly emerging economic power, there is a learning curve. China currently finds itself in what history will likely show to have been a golden age, one in which a centralized economy gave way to something else. Most are hoping that the something else is a big time, vibrant, market economy that morphs into a consumer led marketplace for international companies to expand into.

Some of that is already apparent, and in many ways has helped the international economy. The dark side is that at some point China will either slow down its growth rate, or have an outright crash. Crashes, unfortunately are part of the learning curve.

If the former happens, the repercussions, although serious, could likely be handled and managed, since no one wants the Chinese economy to implode, given the involvement of so many nations ranging from the U.S. to Europe, and even Sudan and Iran.

But, if there is a crash, what will happen is anyone’s guess, given the speed with which information travels, and the extent to which China is now intertwined with the global economy.

Which brings us back to what the Bush I insider described to our source, a disintegration of what is now known as China into multiple entities. That, as far as we can tell, is not something that too many economists, lobbyists, think tank types, and even intelligence experts are thinking about at this point.

And just as the Saudis and the rest of the Arab world didn’t expect Bush II to invade Iraq, or to get re-elected, history has a way of making the unlikely become the norm.

As the old Chinese proverb says: “may you live in interesting times.”

December 2, 2004

A Derivative Implosion In The Oil Markets

An off-shore based, but government controlled Chinese company lost $550 million in an oil based derivative bet, once again raising questions about the extent and understanding of Chinese companies playing in the wide open global markets.

According to the Wall Street Journal: “A massive trading miscalculation in which the overseas arm of a Chinese state-controlled jet-fuel supplier lost at least $550 million on oil derivatives raises fresh questions about corporate governance at Chinese companies and, in particular, the risks that arise when state-owned enterprises begin operating as commercial entities. The episode represents one of the biggest losses from derivatives trading in years. Nearly a decade ago, Barings Bank collapsed after a Singapore-based trader hid losses that eventually amounted to more than $1.3 billion.”

The article continued by noting that the company has now acknowledged that it was involved in “speculative trading,” and that a $100 million rescue package is now being put together by the governments of China and Singapore. According to the report: “China Aviation Oil (Singapore) Corp. bet wrongly on a drop in oil prices in recent months and then blew through internal trading limits that should have notified senior management and shut down trading if companywide losses grew to $5 million.”

The Journal reported: “China Aviation Oil Singapore said losses on derivatives tied to the price of oil, which were growing over the summer, accelerated suddenly in October. Since Oct. 26, it lost $390 million in trades that have been closed, and faced further losses the company estimated at about $160 million on positions it was still trying to exit.”

So far, no charges seem to have been brought against anyone in particular. “Chief Executive Chen Jiulin, a mainland Chinese lawyer and businessman who fashioned the former ship-broking company into a flashy derivatives trader and rode the company's stock-market rise to the top of Singapore's corporate scene, has been suspended from duty. But it remains unclear whether he knew about the company's mounting losses.”

And yet, “for all the money it lost, it appears that few have profited thus far from the company's misfortune. China Aviation Oil Singapore has paid little if any of the $550 million it owes, according to people familiar with the matter. What is more, the company owes $160 million on a five-year loan it took last year from a syndicate of banks including Societe Generale SA and China's Bank of Communications. Other creditors include Goldman Sachs Group Inc. and Singapore's DBS Bank. Just last week, Societe Generale, one of China Aviation Oil Singapore's main bankers according to its annual report, scrapped a $183 million loan it was arranging.”

A Parallel Path To That Little Ol’ Company From Houston?

This story is getting no major airplay, which is immediately of concern to us, as it could steadily fester, and suddenly explode and expand beyond the Asian markets. But, in many ways, it has the makings of a very familiar tale.

Indeed, there are some clear telltale signs, that suggest that this is not necessarily a one time occurrence. According to the Journal: “The episode marks a sharp reversal for China Aviation Oil Singapore CEO Mr. Chen, 43 years old, and the company he built up nearly from scratch.”

First, there is the familiar story of the self-made man from humble origins who made it big. “Born in rural central China and educated as a lawyer in Beijing, (Mr. Chen) was sent to Singapore to revitalize a then-dormant trading company.” Has that Ken Lay, Andrew Fastow, and company ring to it. Doesn’t it?

Second is the huge handout and government carte blanche that creates an amazing amount of leverage, and a feeling that nothing can go wrong. “Handed a lock on procuring jet-fuel imports for China's rapidly growing aviation industry, China Aviation Oil Singapore expanded rapidly, turned profitable and was listed in 2001.“ Enron, was going to revolutionize the deregulated electricity industry. Right?

Third: the whole thing begins to sound more like Enron with each turn. “It became a stock market darling, with its shares rising sevenfold after the initial public offering; last year, the Securities Investors Association of Singapore awarded its ["most transparent company"] on the city-state's exchange.” Hmmm.. Wonder if they owned any barges. Maybe the transparency was referring to the lack of clothes on the traders at the jet fuel desk.

Fourth: The inevitable feeling of invincibility appears: “In the past year, Mr. Chen also had grown increasingly ambitious. Under the slogan ["Leveraging China, Going Global,"] the company announced a half-dozen acquisitions, including the purchase of the United Kingdom's Fortune Oil stake in a mainland Chinese jet-fuel company to a stake in Spanish petroleum-transport company Compania Logistica de Hidrocarburos.” Enron was quite busy for a long time, buying generating plants in South America, Europe, and elsewhere.

Fifth: the bursting of the bubble and the gushing dose of humility: “Mr. Chen's star rose quickly in corporate Singapore. Admired for maintaining a modest lifestyle even as his pay soared to make him the city-state's fourth-highest-paid executive, he was outgoing and increasingly visible. He spoke at the World Economic Forum meeting in Singapore in 2003 and gave his cellphone number to journalists. Reached on his mobile phone yesterday, Mr. Chen said: ["I'm not the CEO anymore, and I can't comment. Read the company statements."]” Well, we’re still waiting for the humility thing on Enron.

Why China Is So Incredibly Vulnerable

As we noted in this space yesterday, China, like all newly emerging global economic powers will have a learning curve. This story is undoubtedly, at least partially that. But, it does put up still another red flag about the ability of China to deliver on the promise on which so many big time investors have bet on, based on easy money printed by the Federal Reserve, which is clearly and steadily being taken away with each rate hike.

And there is no sign that the interest rate increase is going to stop any time soon, as The Wall Street Journal reported on 12-2: The Federal Reserve “is likely to keep raising rates at its next few meetings, as a growing number of the central bank's officials believe inflation risks are on the rise.”

At some point, the trend toward higher rates will reach a point in which Chinese investments will not be so rosy. At some point, the go-go momentum crowd will realize that China, like any other market, will offer diminishing returns, and, oh yes, rising risk.

The Lemming Run Has Begun

At the top of any trend, major players that have missed the move, whatever is its, rush to the playing field, waving lots of cash, in order to make up for lost time.

And with China, just as the walls are beginning to crack, more signs of madness are appearing.

In the same issue of the Wall Street Journal that broke the story about China Aviation Oil Singapore, we found this: “Stock markets around the world are jousting with the New York Stock Exchange and the Nasdaq Stock Market, and each other, to have Chinese new issues listed on their exchanges. In the past month alone, the London Stock Exchange has opened an office in Hong Kong, while senior officials of stock exchanges in Toronto, New York and Singapore have visited China. The NYSE already has two offices in Asia and is planning to open a branch in Beijing. The Nasdaq is considering opening an office in Beijing or Shanghai. The prize: an expanding array of Chinese initial public offerings of stock and follow-on issues as China slowly pries open its capital markets. The world's biggest IPO by volume last year was a $3.01 billion deal from China Life Insurance Co., which listed on the NYSE as well as in Hong Kong.”

Indeed, the situation is heating up. According to the Journal: “the exchanges are getting into high gear, calling on companies and leveraging their connections with hometown lawyers, accountants and others who may provide introductions to potential clients.”

And of course, never mind having to meet with strict regulations and transparency. According to the Journal “Hong Kong lawyers say more Chinese companies are considering listing on non-U.S. stock markets because of concerns about potential legal liability associated with U.S. listings. According to data from the British law firm Herbert Smith, 11.5% of the Hong Kong and mainland Chinese companies listed on the NYSE have been hit with class-action lawsuits during the past five years, while the figure for the Nasdaq is 17.2%. Companies also face considerable costs in complying with the accounting regulations of the U.S.'s Sarbanes-Oxley Act. ["Obviously, a major issue for a Chinese company [listing in the U.S.] is that they'll have to adopt far-more-stringent internal controls and corporate governance,"] says Rupert Purser, head of corporate finance and advisory at accounting firm Baker Tilly in Hong Kong. A Chinese company listing in the U.S. is ["going from a somewhat more loosely regulated regime in China to something at the other end of the scale in one leap."]

And we thought it was called protecting the public.

Conclusion

To be sure, no one knows if and when a Chinese catastrophe in the financial markets will occur. But, the signs that China has come too far, too fast, and that it has left too many loose ends untied are clearly there, as the gold rush mentality among investors is clearly visible.

The China Aviation Oil Singapore situation, in our opinion, could very well be the tip of the iceberg, as other questionable strategies by government sponsored entities pretending that they are privately held companies continue to get perpetrated. There have to be at least one or two more of these little surprises waiting out there, given the huge impact of the Chinese expansion over the last several years.

But, you can rest assured that it won’t take more than a couple of other similar situations to get Wall Street’s attention. And when they do, they’ll suddenly realize other things such as Stratfor.com’s recent appraisal of the Chinese business model points out: “as China's cheap exports begin flooding markets other than the United States -- as is happening in Europe and has begun to happen in Latin America -- trade deficits with China will cease to be strictly a U.S. problem. China knows it will suffer economically if it adjusts its exchange rate, but it likely will suffer a global economic backlash if it does not.”

Our guess, is that China will do as they have been known to do before, try to milk the last ounce of advantage possible from their current situation. But, we suspect that just as they bet the wrong way in the oil markets, they will bet the wrong way with their expectations of how much slack they can get from their “trading partners.“ The fact is that in the current world, few, if any at all, have any patience or tolerance left.

When Morgan Stanley, Citigroup, Fidelity, Goldman Sachs, Merrill Lynch and the hedge funds start pushing buttons, capital flies across the oceans at the speed of light. And during that flight, as China will eventually and painfully find out, along with investors all over the world, some, or in some cases, most of that capital will never be seen again.

For us, at least for now, we get our Chinese delivered, and we don’t ever read the stuff inside the fortune cookies.

Part 2 is forthcoming.. Stay tuned.

Editor's note: The above reports appeared on www.joe-duarte.com and www.intelligentforecasts.com.

© 2005 Joe Duarte, M.D.
Dr. Duarte's Bio and Archive

Joe Duarte, M.D.

Joe Duarte M.D. is founder and Editor in Chief of Joe-Duarte.com. Dr. Joe Duarte's Daily Market I.Q. is a premium service that provides daily intelligence, trading strategies, and technical analysis at www.joe-duarte.com. Duarte offers free analysis and news coverage at www.intelligentforecasts.com . Dr. Duarte is a board certified anesthesiologist, a registered investment advisor, and President of River Willow Capital Management. He is author of "Successful Energy Sector Investing" and "Successful Biotech Investing" (Prima/Random House). Duarte's analysis appears regularly in major outlets including CBS MarketWatch and Investor's Business Daily.