Happy Monday, View fans. Here are your morning links.
Paul Gillis, an American professor at Peking University who publishes China Accounting Blog, has a noteworthy post about the Muddy Waters research report that sent NQ Mobile’s stock plunging last week. One criticism leveled by Muddy Waters was that NQ Mobile classified all of its cash and cash equivalents as “Level 1” assets in 2011 and then changed the label to “Level 2” in 2012. (Level 1 means there are market quotes available, and Level 2 means the valuations rely on models.) Muddy Waters cited the change as a sign that the cash wasn’t real. Gillis says it was “a self-inflicted wound” for the company not to explain why it changed the designations, but that “it is my view that they should all [be] priced using Level 2 inputs, as NQ Mobile has done.” One example he cited was a bank certificate of deposit that matures next year, for which quoted prices aren’t available. He said the change from 2011 to 2012 was probably the correction of an error: “It sure would have helped if they had explained that, but companies and accountants hate to admit errors.”
Tiernan Ray of Barron’s says the corporate raider’s share-buyback demands are wrong for a couple of reasons. First, “the act of buying back acres and acres of stock in one fell swoop is really a way to reward those who sell the stock, not those who stick with it.” Second, “large shock-and-awe buybacks of the kind Icahn endorses, along with other windfalls such as special dividends, have not had much benefit in recent tech-stock history.” Liam Denning of the Wall Street Journal also pans Icahn’s plan in a Heard on the Street column.
The never-ending euro crisis
It’s not over and won’t be anytime soon, writes Financial Times columnist Wolfgang Munchau: “In a monetary union adjustment is hard without any transfers and without a fiscal union. I know of no plausible plan how the eurozone can manage the dual feat of economic adjustment and debt sustainability within the straitjacket of official policy. And as long as such a plan does not exist, the crisis is not over.”
Big call on Hong Kong property values
Barclays Plc issued a report predicting that home prices will drop 30 percent by the end of 2015, due to supply increases and slowing growth in rents and household income. A “downward spiral of home prices is likely,” Barclays analysts Paul Louie and Zita Qin wrote. They forecast that office prices will drop 20 percent.
Matt Taibbi on the JPMorgan Chase settlement
Don’t shed a tear for the bank, he says: “It would be great if everyone covering Wall Street could sign a pact, and agree: No more crying, please, about no-jail, no-individual-penalty settlements in which companies use shareholder money to pay fines at huge discounts relative to the actual damage they caused. And again, wake me up when even one of these guys goes to jail. There are only about a million Americans doing time for less.”
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)