Good morning, Quartz readers!
What to watch for today:
Greek misery = happy hedge funds. It looks like hedge funds invested in Greek debt are set to make decent profits after European policy makers raised the price for how much the recession-stricken country would pay to repurchase its bonds. Some hedge funds have scooped up debt at 15% of its face value while Greece and its European backers will pay up to 34% in an auction that will run until Dec. 7. The financial speculators have done nothing wrong here. Betting on mis-priced assets is their job. But the idea of champagne corks popping throughout London’s Mayfair – the hedge fund district – while many Greeks cannot afford to buy milk certainly makes for an uncomfortable juxtaposition.
South China Sea row ratchets up. Vietnam is standing up to China by setting up patrols to protect its fisheries in the South China Sea. This came after state oil and gas company Petrovietnam accused Chinese boats of sabotaging one of its explorations. India has also said it is prepared to deploy naval vessels to protect its oil interests in the disputed waters. While India is not one of the half-dozen countries involved in the dispute over maritime territory, its military seems to have deeper concerns over the rapid modernization of China’s navy.
Spotlight on big auditors’ work in China. The Securities and Exchange Commission has charged the Chinese affiliates of the world’s biggest five auditors with securities violations after they refused to share papers related to accounting-fraud investigations of nine unnamed US-listed Chinese firms. This represents a new twist in an ongoing argument over US and Chinese accounting laws. Luckily, an accord between Chinese and US authorities may resolve the impasse. Elsewhere, the Ontario Securities Commission accused big-four auditor Ernst & Young of failing to properly scrutinize the accounts of Sino-Forest, a Chinese logger that was listed in Toronto before it was accused of fraud and filed for bankruptcy protection.
Canada’s central bank (probably) leaves rates on hold. The bank, headed by soon-to-be governor of the Bank of England Mark Carney, is expected to keep interest rates low in the wake of GDP data showing the economy at its lowest level all year. Here are five things to watch for in the decision; monetary policy watchers will want to keep an eye on Eurostat’s producer inflation index, also released today.
Talks continue on control of the internet. A UN agency, the International Telecommunications Union, has been meeting in Dubai to discuss proposals for regulating the internet. Some American commentators say this sort of talk is terrible, as it may lead to repressive regimes being able to suppress comment about them made in freer societies. The New York Times’s Eric Pfanner argues that the panic is overblown. Talks began yesterday and continue today.
While you were sleeping:
Australia’s central bank cut rates. With economic indicators turning upside down and other developed economies easing policy, the Reserve Bank of Australia lowered interest rates by 0.25%, to 3%. This was a level not seen since the 2009 financial crisis and reflected fears that Australia’s China-dependent economy is deteriorating.
Very similar campaigns kicked off for Japan’s snap elections. Liberal Democratic Party leader Shinzo Abe, the nationalist former prime minister whose party wants to oust the current government on Dec. 16, is focusing his efforts on reviving the country’s failing economy and weaning the country off nuclear power. But Yoshihiko Noda, the current prime minister, has made similar pledges. Here is a summary of the main parties’ policies. Noda and Abe have different views on the yen and on inflation. It’s likely that the election will result in yet another uncomfortable coalition that gets very little done, pundits say.
Abramovich played peacemaker in oligarch spat. Roman Abramovich, the Russian billionaire and owner of Chelsea football club, will spend $2 billion on 7.3% of Arctic miner Norilsk Nickel. This is part of a wider peace treaty (pdf) concerning governance and dividends that should end a long-running battle for control of Norilsk between two other billionaires, Oleg Deripaska of mining firm Rusal, and Vladimir Potanin of the Interros conglomerate. Abramovich’s investment vehicle will get three seats on the Norilsk board while representatives of Rusal and Interros each get four. If either side breaches the agreement, the other can buy extra Norilsk shares at a discount.
Chinese shares slumped further. The nation’s benchmark index declined to its lowest level since 2009 today. The Shanghai Composite is now trading at its lowest price-to-earnings ratio since 1997, Bloomberg calculated. The issue may be government and corporate corruption. Or it could be declining corporate liquidity. Chinese firms like to play the market to boost their profits in good times. Some economists view the Shanghai exchange as a proxy for how cash-rich companies are.
Quartz obsession interlude: Steve Levine looks at the economics of renting nuclear-powered icebreakers to help ship liquefied natural gas. “The icebreakers have dangers transcending the ice—a fire broke out aboard the Vaygach last December, and killed two sailors. The Ob River itself had to be reinforced for the trip. So why take the risk? It is to tap growing Asian markets as Europe’s appetite for gas has fallen, and the US import market has vanished. When they ship east, producers going from Rotterdam to Yokohama (a roughly similar distance to Melkoya-Tobata) traverse just 8,500 kilometers, compared with 20,600 km if they go the long way through the Suez Canal. Shanghai, too, is shorter—14,875 km compared with 19,300 km the long way.” Read more here.
Matters of debate:
Microsoft’s bid to destroy Apple’s tablet dominance is not going too well. The combined Microsoft-Intel push is off to a slow start and seems to be sputtering.
Portugal does not need a Greek-style debt reduction deal. In fact, Portugal’s situation is entirely different, the country’s Prime Minister has said.
Once, China’s guarded leadership allowed its people some curiosity about the outside world. Now the People’s Republic is an open system but with closed minds.
What is the difference between self- immolation and suicide bombing? The first is an extreme form of protest, while the second is insurgent warfare.
Carbon on Mars? Nasa’s Curiosity Mars rover has found hints of carbon, though whether this is a building block for life on the planet remains unknown.
In China, having an iPhone can be a career killer. This student failed to get hired because his iPhone made him seem pampered and bourgeois.
New York Mayor Bloomberg wanted Hillary Clinton to take his job. But the Secretary of State, whose term ends next month, did not want the position.
Yes, the Duchess of Cambridge is having a baby. No, it will not be called Princess Conseula Banana Hammock. John and Elizabeth are the current bookmakers’ favorites.
Best wishes from Quartz for a productive day. Please send any news, queries, feedback, and suggestions for what Hillary should do next to firstname.lastname@example.org, or hit “Reply” to this email.