The Challenge of China

China is a hot potato. In March I addressed the anxiety, complexity and--ultimately--benefits surrounding economic ties with China, specifically investment by Chinese companies in the United States.

Since then, the 2012 US Presidential campaign has officially launched, and public rhetoric surrounding relations with China has heated up. The dialogue was punctuated last week by comments from candidate Mitt Romney in New Hampshire, hinting at the need to reconsider terms on which the US conducts trade with China--partly in response to the very real, ongoing intellectual property issues that factor into trade and exchange with Chinese companies.

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Paying Dividends

The Chinese are coming. If you believe recent hype, we're keeping them out--or, on the other hand, if we're not, we should be. Scratch below the surface, the story is--thankfully--more complex.

The Chinese are coming--setting up shop here in the United States--via one of three routes: acquisition of US assets, building new plants from the ground up or opening US retail stores for their own emerging brands. The first of those three paths is the one that tends to create headline anxiety for Americans--as it has in the past, when those arriving were the Japanese in the 1980's or, more recently, investors from the Middle East. In those earlier instances, as today, anxiety was coupled with fears of loss of American economic competitiveness on a global scale. Fears magnify anxiety. The net result: all arrivals are cast as menacing.

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Risky Business

On Friday a headline in the Financial Times caught my eye: a day earlier Moody's had announced higher than expected revenue growth for the fourth quarter 2010 and an outlook for another strong year ahead.

This on the heels of Jesse Eisinger's January report that efforts, post-Lehman, to increase ratings agency oversight are quietly fizzling--or at least, stalling out. Portions of Dodd-Frank that were intended to impose greater legal accountability on agencies are currently on hold. Agencies responded to the potential change by refusing to allow their ratings to appear in offering memos, markets seized up, legislators backed down. And in December, in the wake of new fiscal belt tightening, the SEC's budget for the new Office of Credit Ratings was cut.

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Fashion Forward

Late last week Prada announced plans to go public. Rumors had been swirling about an IPO for most of 2010--actually, for most of the past decade. The new twist to the tales told last year was that the Company had decided to list on the Hong Kong stock exchange. And that is, in fact, what it plans to do. This move is either brilliant--or sheer, high-stakes lunacy.

Prada has always been more modern, more futuristic and more willing to take risks--aesthetically, strategically and financially--than other luxury companies. There have been some ill-considered acquisitions and the burden, at times, of an overly leveraged balance sheet. On the whole, however, Miuccia Prada and her CEO husband, Patrizio Bertelli, have done a masterful job of staying relevant and at the forefront of luxury and fashion, while growing Prada from $450,000 in sales, when they took over the company from her family in 1978, to well over $2 billion in annual revenues today.

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Vital Energy

There's nothing I love more than a maverick. By that measure, Boone Pickens has my heart.

Trained geologist, Texas oilman, vintage corporate raider, 21st century billionaire investor and philanthropist, at 82 years old he's going strong. And for the last two and a half years he's been a visible, dynamic force focused on a topic of vital importance to the United States: energy independence.

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