Accounting & Investing Info for San Antonio A & M
Tuesday Oct 22 2019
SLB took a $12..7 billion impairment charge on its fracking operation.
I mentioned in class that important lows in markets were accompanied by gloom and doom articles. Here is another example of just that.
At the same time Liz Warren declares she will ban fracking her first day as President. A consulting firm suggests this will result in soaring natural gas,oil, and gasoline prices.
Stay tuned.
Weekend Oct 19 2019
The writing center is located on the second floor of the Central Academic Building.
https://jagsync.tamusa.edu/organization/writing-center
See APA help in Get Smart located on your main BB page
It was handily on the library page but of course they had to move it for no good reason and of course this morning the school IT cannot locate BB
Weekend Oct 19 2019
Energy Prices Headed for November Low
Excerpts from Energy Shares Decline Faster than Oil Prices
WSJ Today
Horrific, terrible, abysmal, the worst
Growing consensus that the exploration and production business model just won’t ever work for investor in a $50-$5 a barrel world
“I expect there will be a number of insolvent companies looking for help in six months”
“It’s under siege, almost, it’s tough to go in with conviction.”
For months we have warned that weakness particularly in the energy service arena, XES, was warning of just this type of situation. Now it appears that things are bad enough to set off a final climatic sell-off.
Several things characterize significant market lows. A rapid mark-down in price, shares falling to below book value, and finally doom and gloom articles such as the above usually days or weeks prior to a bottom. , We can now check all those early warning boxes. Expect more doom and gloom articles right up to the moment of a market low. Recall that maximum negative mood occurs at the end of just such a move.
Natural gas prices may have to fall to $2.00 before a bottom is made.
This is because changes in mood are unremembered; all assume the linear trend will continue forever. It won’t and rarely does.
RIG has risen from $4 to $4.80. Energy service XES is dead in the water. Ditto for Halliburton and Schlumberger.
I have been positive on refiners. That is the preferred area for fund managers. In the last two months that buying has pushed Valero VLO from $72 to $90.
West Texas Intermediate has managed to stay above support at $51 but expect that level to fall in a last ‘we give up’ dismay of negative market mood.
Meanwhile social mood in Washington DC continues to trend negative. Just yesterday Trump informed Speaker Pelosi she was a ‘third rate politician.’ Impeachment is having difficulty moving forward and not House vote is scheduled.
But investors have pushed the Transports higher which is a positive for the Industrials. This may well mark the seasonal low in stocks. But the low in Washington DC mood will surely be much lower
Thursday Oct 10, 2019
Duane Gordy admits to tax fraud.
He under reported gross income by $1.8 M costing the Us Govt$120,494. State Senator Carlos Uresti authored a billl in 2013 allowing counties to collect fees for roads destroyed by oil field traffic. Gordy created a firm to help counties do that, collecting a lot in fees himself. The law was repealed in 2015. ONe has to wonder if like the Galindo case, Uresti profited as well with payments from Gordy.
Tuesday Oct 8, 2019
Tuesday Sept 24, 2019
Here is a concise explanation of the repo market.
The repo market is a system of overnight loans paid back the next day. Collateral should be low risk Treasury securities. The narrator explains how Lehman got in trouble, using low grade collateral and eventually there was no one on the other side of the trade. And Lehman was issuing short term commercial paper in its own name while borrowing 10x that amount to purchase longer term sub prime mortgages
Tuesday Sept 24 2019
I copied part of ther article in the WSJ below. How is it that Sprankle can be personally fined, barred from practicing before the SEC for four years, and remain a partner? Truly these firms are Too Big to Fail. What message does this send to all the other employees at PwC? Break the rules, we look the other way?
PricewaterhouseCoopers LLP is preparing to pay about $8 million to settle claims of improper professional conduct and violating auditor independence rules, the U.S. Securities and Exchange Commission said Monday.
The regulator said it also charged Brandon Sprankle, a partner at the Big Four audit firm, for causing the firm to violate independence rules.
The allegations of improper conduct were in connection to a total of 19 engagements with 15 unidentified companies over a three-year period ending in 2016.
The activity violated a rule issued by the Public Company Accounting Oversight Board—which regulates U.S. audit firms and is overseen by the SEC—which required the firm obtain preapproval from an audit client’s audit committee to perform nonaudit services related to internal controls over financial reporting. The audit firm also must fully detail its work to the company’s audit committee in writing.
In several cases, PwC mischaracterized nonaudit work as audit services to auditor committees, the SEC said. The firm failed to adequately review and monitor whether audit clients’ audit committees had approved the nonauditing services it was providing, the SEC
The frequency of PwC’s alleged improper conduct over that period could be part of a systemic industry problem, Michael Shaub, an accounting professor at Texas A&M University’s Mays Business School, said in an interview. “Trust probably builds between the auditor and the audit committee and, over time, it leads to sloppiness,” Mr. Shaub said.
The alleged violation of auditor independence rules involves one unnamed company in 2014. PwC made decisions over the implementation and design of an audit client’s financial-statement software, thus violating rules that prohibit an independent auditor from performing management functions.
Mr. Sprankle, who is based in California and has been a partner at PwC since 2014, agreed to a $25,000 civil money penalty and suspension from practicing or appearing before the SEC. He can apply for reinstatement after four years.
Mr. Sprankle continues to serve as a partner at the firm, a PwC spokesperson said.
Posted Monday Sept 23 2019
This Friday Sept 27 5 30 – 9 00 plan to arrive way early as the traffic on north 410 late Friday is impossible to navigate
Norris Conference Center
Register above
Professor Elam 