Professor Elam

Accounting & Investing Info for San Antonio A & M

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  • Professor Elam

    Your 401K

    Friday Sept 16 2022

    About Your  401K

     

    FedEx shares were off more than 20% in off-hours trading Friday. If sustained, that would be the biggest one-day fall for the shares going back to at least late 1984, according to FactSet. That's more than the 16% plunge it took on 1987's Black Monday.

    Wall Street Journal Today

    For new readers, here is the story to date.  All major stock indexes peaked between November, 2021 and the first week of January,  2022.  The bear market began ending bull markets dating back decades, 1982 for example.  Prices declined into the third week of June. A counter trend rally ended in mid-August.   The third or strongest wave down then began.  It has erased 3,000 Industrial points in just one month.  A brief rally ended Monday. The slide resumed with a 900 point decline Tuesday.  Check the openning quote on Fed Ex.

    What is your ‘financial advisor’ telling you?  Let me guess. Markets have periods of ‘volatility’ and one had to just ride them out.   He or she probably also told you that a balanced portfolio of stocks and bonds will buffer you from  misfortune. The problem is that the entire character of the market has changed from bull to long term bear.  In a bear market all prices fall.  Now the prices of bonds and stocks are falling.  Meta has lost over half its value and Google one-third since January.  

    It is said that a true bear market requires an absence of those who experienced the last decline That is what we have now.  None of the 40 year-olds sporting Certified Financial Planner designations were around from  1972-1982, a ten year period of stagnation.  Yet we have the same set-up now as then,  rising interest rates.

    I am getting questions from individuals. But when I suggest they simply get out of the market and roll CDs as rates increase, all I get is a bank stare.   The decline in prices will likely extend to year 2024. If  the FANG stocks which powered this rally are already down 30- 50% +, where will they be in another two years?

    Yes energy prices are falling. But like Fed Ex. That is a suggestion that the world economy is slowing. And natural gas prices, as in 1972-82 are soaring, crimping home budgets.

    Markets are a reflection of social mood. Just this week the CEO of McDonald’s warned his Chicago restaurants are awash in crime, homelessness, and drugs.  A borderless country facing higher interest rates and unchecked crime increase is not the basis to sustain a bull market. Take defensive action while you still can.

  • Professor Elam

    PCAOB JHeads to Hong Kong

    Friday Sept 16 2022

    WASHINGTON—U.S. regulators could know by Thanksgiving if Beijing is complying with an agreement designed to allow Chinese companies to continue trading on American stock exchanges.

    Inspectors from the U.S. Public Company Accounting Oversight Board are preparing to travel to Hong Kong to begin reviewing the audit files of publicly traded Chinese companies, Securities and Exchange Commission Chairman Gary Gensler told lawmakers Thursday. The PCAOB is a nonprofit created by Congress and overseen by the SEC.

    The inspectors are expected to depart Friday and start work next week, Mr. Gensler told members of the Senate Banking Committee. The process would take eight to 10 weeks. “So we’ll probably know somewhere around Thanksgiving or early December,” he said.

    Washington and Beijing reached an agreement last month to allow the PCAOB to inspect the audits of Chinese companies listed on U.S. exchanges, a 20-year-old requirement of U.S. law that China hasn’t met. The agreement, which came after a decadelong standoff between regulators in the two countries, created a path that could prevent some 200 Chinese companies from being kicked off U.S. stock exchanges in early 2024.

    The agreement allows PCAOB inspectors to travel to Hong Kong or mainland China for inspections. When it was signed last month, PCAOB officials said the deal promised “complete access to the audit work papers, audit personnel, and other information we need to inspect and investigate any firm we choose, with no loopholes and no exceptions.”

    China had previously denied U.S. regulators routine access to such documents on the grounds of national security. In a departure from that justification, China’s stock regulator said last month that audit working papers generally don‘t risk exposing state secrets, individual privacy, companies’ vast user data or other sensitive information.

    U.S. officials welcomed the change of tone but have questioned if China will follow through.

    “I don’t know if the Chinese are going to comply,” Mr. Gensler said Thursday, even though he said officials from China’s Ministry of Finance directly told him in video calls that they intended to.

  • Professor Elam

    EY Will Take Consulting Frim Public

    Friday Sept 16 2022

    EY will take its new separate consulting firm public if partners approve the deal. The WSJ article indicates EY will borrow $ 13 B to help fund the operation.

    The state of the world economy does not strike me as conducive to going into a lot of debt. Fed Ex shares dropped 18% on after market trading yesterday, more than their drop in the  1987 crash. And EU  delivery counterparts dropped as well. The world economy is slowing.

    ____________________

    Strong competition and a slowing economy could pose challenges for Ernst & Young as it looks to stand up a separate consulting brand as part of the planned split of its business.

    EY’s leaders last week approved separating the professional-services firm’s consulting and auditing businesses. The move would result in the breaking off of the faster-growing consulting business, which advises on tax issues, deals and corporate strategy. The proposed breakup “provides tremendous opportunities for our people, our clients and our partners,” Carmine Di Sibio, EY’s global chairman, told The Wall Street Journal last week.

    PricewaterhouseCoopers, KPMG and Deloitte—the other Big Four accounting firms—have said they don’t intend to pursue a similar split. Deloitte is a sponsor of CFO Journal.

    EY plans to raise roughly $11 billion through an initial public offering of a 15% stake in the consulting firm, as well as about $13 billion in net debt to fund the transaction. The plan now heads to a vote with the firm’s 13,000 partners, which is expected to begin later this year and wrap up by January or February. The company, which like the other Big Four is structured as an international network of private partnerships, would then prepare the consulting business for an IPO late next year.

     

    The separation would free up EY’s consultants to seek a bevy of new clients they previously couldn’t serve due to independence rules that limit what kind of tasks accounting firms can handle for audit clients.

    Under the Sarbanes-Oxley Act of 2002, accounting firms that audit a company’s books are prohibited from providing certain consulting services, for example implementing new software for a client. “Systems design and implementation is one of the most lucrative consulting opportunities,” said Elizabeth Cowle, an assistant accounting professor at Colorado State University.

    The global technology consulting sector was worth $350 billion last year, while the professional-services market was valued at $1.1 trillion, advisory firm Source Global Research said.

    The consulting business, once separate, will continue to invest in technology to expand its offerings to clients, EY said, declining to provide specifics. The consulting-only firm plans to focus on winning new clients in areas such as technology, financial services, private equity, government and life sciences, EY said. About 75% of its tax practice will become part of the consulting firm, while the remainder will remain part of the auditing business, which will also offer some tax and advisory services, EY said.

  • Professor Elam

    Accounting Educator Webinars

    Wed Sept 14 2022

    Here are a series of Acct Educator Webinars sponsored by AICPA. Meant for Professors, I thought you would  like to see the current topics covered.

    This is where accounting education is headed.

     

    https://thiswaytocpa.com/segmented-landing/educator-webinars/

  • Professor Elam

    SA TXCPA CAreer Day Sept 3

    Wed Sept  14 2022

    TXCPA-San Antonio’s first live-and-in-person Accounting Careers Workshop since 2019 takes place on Friday, September 23, between 5:30-8:30 PM at Norris Conference Center. 

    Local CPA firms will be recruiting for future internships, and CPAs in business and industry, public practice, forensic accounting and more will also share their experiences and answer students’ questions.

    Attendance is free to students, as always, and this year, student membership in TXCPA and the San Antonio Chapter is also free. Student membership makes your students eligible to apply for our annual scholarships and participate in Chapter committees, Young Accounting Professionals (YAP) events and community service projects.

    Students can scan the QR code on the attached flyer or go to https://www.tx.cpa/sanantonio/events/event-details/?eventId=c78d30ee-242f-459d-8cc8-726b2005f759 to create their membership accounts and register.

    We hope you will encourage your students to sign up in advance and attend the Workshop. Extra credit is also a great motivator😊 Let us know if you have any questions and would like for us to keep track of TAMUSA student attendance at the Workshop; we would be happy to do that.

  • Professor Elam

    Dennis Wilson Cashses in at Lululemon

    Wed Sept 14 2022

    Read this article to grasp just how much money can be made as an insidder

    Screen Shot 2022-09-14 at 11.11.49 AM

  • Professor Elam

    How to Embarasss Yourself

    Tuesday Sept 13 2022

    Call your opponent Hillbilly College

     

    https://www.expressnews.com/sports/article/Texas-A-M-Midnight-Yell-video-17438104.php?sid=5bbcfeb73f92a45e831e00e8&utm_source=newsletter&utm_medium=email&utm_content=headlines&utm_campaign=SAEN_210Report

    https://sports.yahoo.com/5-things-learned-texas-m-182511227.html?fr=yhssrp_catchall

     

  • Professor Elam

    IMA Seminar

    Tuesday Sept 13 2022

    Hello,

    IMA is hosting its biannual, virtual career panel on September 27th at 4pm PST/7pm EST. Students will get a chance to hear from four panelists and learn about what options they have in a career in accounting. Students can register for the event by going to www.myima.org/studentseries. I’ve also attached a flyer for you to pass along to your students or post to your LMS system. This panel is open to all students and faculty. We hope to see you there!

    Thanks,

    Tyler SkeltonBusiness Development ManagerIMA® (Institute of Management Accountants)

     

  • Professor Elam

    Meet Barbs and Daisy

    Tuesday Sept 13 2022

    Meet Sabrina Lopez Barbs and Daisy, a small and a large!

    Screen Shot 2022-09-13 at 1.06.29 PM

  • Professor Elam

    Debt on the Rise

    Monday Sept 12 2022

    Hi Dennis,With inflation putting pressure on people’s budgets and raising concerns about a prolonged recession, U.S. consumers are once again adding new credit card debt by the billion, racking up $67.1 billion during Q2 2022, according to WalletHub’s latest Credit Card Debt Study, released today. That is an all-time record for credit card debt added during the second quarter of a year, and WalletHub now projects that consumers will add a total of $110 billion in debt during 2022. This new debt is also likely to become even more expensive soon, with the Federal Reserve expected to raise its target rate by 75 basis points on September 21. WalletHub anticipates this will cost people with credit card debt an extra $5.3 billion over the next 12 months. In addition, the rise in debt is not uniform across the country, as some areas have bigger payment problems than others. With that in mind, WalletHub compared all the states based on how much residents owe to credit card companies – specifically, how those balances changed in Q2. Please find key takeaways below, along with commentary from WalletHub experts (audio and video files included). 

    States with the Biggest Debt Increase States with the Smallest Debt Increase
    California Vermont
    Texas Wyoming
    Florida North Dakota
    New York South Dakota
    Illinois Alaska

     For the full rankings, please visit:https://wallethub.com/edu/cc/credit-card-debt-study/24400/#debt-by-state  Credit Card Debt Study Key Stats

    • Record Q2 Increase. Credit card debt increased by almost $67.1 billion during Q2 2022, an all-time record for the second quarter of the year. 
    • Bigger-Than-Normal Buildup. Consumers’ Q2 2022 credit card debt increase was 3.5X bigger than the post-Great Recession average for a second quarter. 
    • Record Annual Projection. WalletHub projects that consumers will end the year with roughly $110 billion more in credit card debt than they started with, which would be close to an annual record.

     Fed Rate Hike Survey Key Findings

    • More Costly Debt. A Federal Reserve interest rate increase on September 21 would cost people with credit card debt an extra $5.3 billion in the next year alone. That’s on top of the $15.3 billion increase already caused by the Fed’s previous rate hikes this year. 
    • Inflation Concerns. 85% of Americans are concerned about inflation right now. 
    • Fed Increases Affecting Wallets. 63% of people say their wallets have been affected by the Fed's rate hikes this year. 
    • Monthly Expenses Affected. 62% of people say inflation has affected their monthly grocery expenses the most, followed by gas (32%) and housing (6%). 
    • Government Intervention at the Pump. 71% of people think the government should put a cap on gas prices. 
    • Not Recession-Ready. 44% of people do not think they are financially prepared for a recession. 
    • High Inflation Preferable to High Unemployment. 56% of Americans say they would prefer high inflation over high unemployment.

     Please let me know if you have any questions or if you would like to arrange a phone, Skype or in-studio interview with one of WalletHub’s experts. The key takeaways from above are also available in audio and video formats. In addition, WalletHub commentary is included below in text and audio format. Feel free to embed the YouTube video or edit the raw files as you see fit.  Best,Diana PolkWalletHub Communications Manager