Professor Elam

Bayer's Bad Bet on Monsanto

Thursday August 29, 2019

Page A 8 in today's WSJ details one of the worst corporate deals in recent history. Bayer, the company that invented aspirin, aspired to become a global crop science company. And so it bought Monsanto. 

Market capitalization is the price per share times the number of shares outstanding.  In  short what the market believes the company is worth. Now the total market ccap of Bayer is about what it paid for Monsanto. So the entire market value of Monsanto has evaportated.  Bayer's share price is down 30$.

 

Google and ther are numerous youtube articles predicting a merger made in hell.

The predictive social science of socionomics holds that mergers occur at market highs amid positive mood.  This is an inclusive form of 'let's get together.'  Yet often as not, mergers rarely seem to work out.  The WSJ article details

Bank of American and Countrywide Mortgage

Alcatel Lucent

AOL Time Warner

Sprint Nextel

and Chrysler Daimler

Note the car deal finally resulted in Daimler literally giving Chrysler away for free to a hedge fund.

Often as not the corporate cultures do not match and the savings and big profits prove illusory.

A goal of studying accounting is the ability to read and  understand such articles and explanation.

 

Trade Wars and Smoot Hawley

Wed August 28, 2019

Trade wars are not easy to win. In fact no one wins, the consumers pay a higher tax.

BMW makes cars in S Carolina which are shipped to China, now they the Chinese will pay a higher price to buy an American made product.

 

 

Read the history of the disastrous Smoot Hawley Tariff Act here. 

This disaster extended the Depression until after WW II.

Finally the General Agreeement on Tariffs and Trade GATT resolved the problems.

Learn about reserve currencies here.

The Bretton Woods Conference after WW II established the U S Dollar as the world reserve currency.

Trade Wars

Wed August 28 2019

There are articles in both the WSJ and the SA EN suggesting the on again off again Art of the Deal is bringing unnecessary uncertainty

to markets. After declaring he could not tell if his own appointee Jerome Powell was a bigger threat than President Xi of China. Articles today suggest the Chinese have leared to watch what Trump does rather than what he says. After the  600 point drop in the DJIA Friday, on Monday Trump said he thought the Chinese wanted  a deal and complimented Xi.   What a mixed message.

 

WSJ

 

Democrats want full time estate tax, tax wealth not income - ever desperate for more money

Page A 4 Swing District Dems Push for Vote on Trade pact

A 15 - Iran Israel War is Here

B1 - Shale Producers Export Natural Gas Glut - will this impact billion dollar LNG export terminal in Corpus Christi?

B 3 - First China Costco closes at 1 00 PM 8 hours early. overwhelmed

Business pushing new  Dems to vote on trade pact

 

SA EN

More predictions of recession or slow down with tariff uncertainty

Tuesday Aug 27 WSJ

Aug 27 2019

Ethics

Judge Rules against Johnson and johnson in Opioid Epidemic

See graphical representation of Student Debt 2001 - {resent, 90 or more days delinquent is rapidly growing, this is unsustainable

Psy Professor Sam Rock - Blaming companies for your opioid addiction is not a solultion, same with blaming gun manufacturers for mass shootings

Carlos Ghosn Ran Tech fund with Nissan Money, the real story now coming out

 

Finance

FANG stocks lose appeal, NFLX tips its hand

Another Trump Put on Trade, last Friday either Xi or Powell is our worst enemy, today China wants to make a deal

 

Why Study Accounting?

Friday August 23, 2019

 

As a college graduate you may well become involved in a non profit charity or similar venture.

You might become a board member. 

That was the case for the Board members of El Centro, many of who were or are prominent business people in San Antonio.

Read about the El Centro Fraud at this link.

The fraudster embarrassed the Board of Directors.   The CEO, former Deputy City Mgr, was fired and the CFO resigned.

NFLX Sheds $24 B Mkt Cap

Tuesday July 23, 2019

NFLX drops 15%

Point here is that earnings matter

Social mood towards NFLX was positive on the way up

 

Now it is turning negative on the way down

Mood drives markets

The Big Four Cozy Club

Weekend July  20 2019

In ACCT 5308 Ethics we note that the Too Big to Fail Firms now regularly pay fines without any admission of guilt and no on loses their job.

We are atarting to see calls for a break up ofthe Big Four.

SARBOX prohibited firms from being consultants and auditors. And so the audit firms just doubled their fees. 

We may be just one more Woldcom Enron series of events from facing that reality.

PCAOB Provides Rules on Auditor Independence

Weekend July 20 2019

PCAOB has issued guidelines on auditor independence.

The new guidelines address specific questions about auditor independence and whether lack of such can be cured.

Boeing Sets Aside $ 5 Billion

Weekend July 20, 2019

Boeing is setting aside $5 B.

The money will be used to compensate airlines for lost flights due to grounding 737 pplanes. In addition BA will settle with the families of 346 killed in two accidents.

TSLA has Terrible Quarter

Thursday April  25, 2019

Tesla has burned through more than $1.5 B in cash so far in 2019.

One of the TSLA bulls declares it the worst debacle he has seen in 20 years, uh no that was Lehman or PGE recently.

I have been suspect of Musk and TSLA all along. Everyone tells me he will make it with electric cars as he does so well with outer space. Those are two totally different enterprises.

And now most large European cities have passed zero emissions laws taking effect by  2025 This means the real car companies are now serious about electric cars. Dan Neil at WSJ recently announced Kia's electric SUV was better than the Chevy Bolt, and both can be bought now for about $37 K, a figure Musk has yet to match.

 

And with no dealers and scarce parts, it is hard to see how this start up will make it competing with the GMs, VWs, BMWs of the world.