Professor Elam

SEC Moves for Audit Oversight on Chinese Companies

Wed Nov 18 2020

The SEC will apparently insist by year end on audit oversight of Chinese companies listed on American Exchanges.

Chinese companies like to list here and have shares traded. But they have resisted attempts to be audited by American firms.

Looks like the SEC is going to stop that practice this year, read the link above.

SEC Eases Regulations on Auditor Independence

Monday Oct 19 2020

Page B 5 of today's WSJ

 

The U.S. Securities and Exchange Commission adopted changes that relax some conflict-of-interest rules for companies and audit firms, making it easier for them to avoid violating auditor independence in certain situations.

But honestly I am not sure what this means.

the article says it gives auditors more discretion in assessing conflicts of interest. 

Two SEC commissioners disagreed arguing it would inject moe opportunity for uncertainty and error.

Positive mood results in a  loosening of accounting restrictions near market tops. That appears to be the case here.

GE Stock Declines after SEC Issues Wells Notice

Wed October 7 2020

 

The SEC issued a Wells Notice to GE this past Tuesday.

A Wells Notice is an intent to investigate and gives the respondent a chance to defend past actions against such an investigation.

As beat up as GE has been I would not consider a 6 or  7% decline as falling off the cliff.

Under Jack Welch, GE was turned from a manufacturing giant to 50% financial services.  One of his bad ideas was this 'insurance policy' which was supposed to pay for extended care. Reading the article it look like GE wildly under estimated its liability, ie people are living a lot longer than they used to.

Now GE accounting is under scrutiny.

Jeff Immelt succeed Welch and never had any good luck recovering the firm.

Welch was at least smart enough to retire around  1999 when the stock peaked. GE was the only stock originally in the DJIA which was still in the index, it has been removed since.

Wednesday Walll Street Journal

Wed July  29 220

One of the steps in Conquer Accounting The Twelve Step Method is to have a daily routine of reading the news.

 

Consider these items today in the WSJ

Ethics - former PM of Malaysia given  12 years in prison and $50 M fine

the theatrical window the time a movie is in theaters before it goes on sale or is streamed has been shortened from 75 days toi 17 days,  will that be the end of sit down theaters?

 

Bezos Cook Zuckerverg and Pichall are all testifying before congress, expect show trial type conditions especially given the treatment the AG Barr received yesterday

3M sales drop  12%

Hotels rush to raise money

HD sales fall  27% in quarte 2/3 of dealers will not receive any more inventory this year

SBUX has worse  loos in years $ -704 M

L BRands Victoria Secret owner lays off hundreds, stock jumps four percent, go figure

NIssan annual loss to exceed 6 billion

Pfizer sees long term manufacture of virus vaccine

MCD manages 74 cents a share business down  68% from a year ago, thank good ness for the drive in window

 

One Analyst Still Bearish on Tesla

Monday March 2, 2020

At least one analyst is still short Tesla.

He notes, as I have noted, that Tesla is now facing competition from major car makers who have internal combustion vehicles to finance their electric car research.

Here is an interesting quote from the article.

“This cash-burning Musk vanity project is worth vastly less than its over $130 billion enterprise value and — thanks to nearly $30 billion in debt, purchase and lease obligations — may eventually be worth zero,” he said.

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.