July 23, 2009

Thursday, July 24, 1930: Dow 239.33 +5.03 (2.1%)

Assorted historical stuff:

Editorial: Bethlehem Steel executives may have been worth $3.4M in bonuses in 1929, but it was a mistake to keep the size of the bonuses secret; openness would have avoided the current embarassment and allowed shareholders to express their opinion pro or con. “It cannot be imagined that Mr. Grace or his associates would have wished to continue in receipt of salaries condemned by holders of the majority of the company's shares.”

North Side Chicago community of "Little Sicily" has had 12 to 20 murders yearly for past 18 years in square half-mile area. Most have remained unsolved due to necessity of informants appearing in court.

J.G. Latham, Australian opposition leader, says unemployment is at 18.5% of working population; calls for cuts in government expenditure, against tax increases.

Spanish cars using olive oil as lubricant. Olive producers asking government to support research to expand its use.

"Mrs. A. Barton Hepburn, widow of A. Barton Hepburn," named director of the Industrial Banking Corp. Believed to be first woman director in industrial banking field. Selection is recognition of Mrs. Hepburn's business achievements and her long interest in "the advancement of women in active participation in financial and industrial affairs." Mrs. Hepburn is a leader in many civic associations. "Her clubs are the Colony, the Cosmopolitan, and the Colonial Dames."

Market commentary:

Market opened with large buy orders for major industrials. Many majors in early trading reached highest point of last week. Buying broadened to rest of industrials in late morning; upward movement continued almost all day. Some short covering seen. Car stocks strong, particularly GM; in spite of generally weak news. Utilities strong; amusement stocks dull. Banks and trusts weak.

Prominent brokers, rumored to be supported by banking interests, recommended buying sound industrial stocks. Believe this month marks the bottom of the industrial recession and stocks are likewise scraping bottom. M.J. Meehan & Co. expressed confidence in industrial outlook and recommended investment in representative stocks at current prices.

L.G. Federman, Pres. Interstate Dept. Stores, believes “Business in general hit bottom last month,” and likewise for commodity prices. “Both are now picking up and I am confident the advance will rapidly gain momentum.”

Conservative observers remain cautious; believe broker recommendations have so far attracted traders looking for quick profits, not long-term investors and general public. Recommend not reaching for stocks but buying leading issues on declines. Immediate outlook uncertain, but longer term considered encouraging.

Second-quarter earnings so far better than expected. Third-quarter predictions are difficult; current business is below second-quarter average; if seasonal pickup does not develop until September, as leading authorities expect, the improvement won't be reflected in third-quarter earnings.

Economic news and individual company reports:

Deposits at member banks up $1.494B to $21.317B in past six months. Similar increase to 1924, which was soon followed by business revival; caused by easy money policies of Reserve banks. However use of the money has been different from 1924; banks then increased commercial loans, but now there's been a large decrease in commercial loans and large increase in security loans and investments; easier credit policy has so far failed to increase demand for business credit. However, if a recovery does come, the Fed would be reluctant to allow rates to rise; necessary expansion in Reserve credit could then lead to inflation.

Current interest rates: Fed. Reserve NY discount 2.5%; commercial paper 3.25%-3.5%; 90-day bankers' acceptances 1.875%; call loans 2%.

First 8 rails reporting June earnings total $10.368M, down from $10.912M in May and $14.137M in June 1929.

Oil refineries now operating nationally at less than 70%; California at 58.2%. This curtailment should soon strengthen refined product markets.

First-class ocean travel in first-half down about 20% from 1929; third class travel increased.

New York Stock Exchange seat sold for $400,000, down $68,000 from last sale.


Mysteries of Nature. Film opens with scarab beetle rolling ball of camel dung; other details of beetle lifecycle; studies of plant life including the "uncanny fly-trap;" capture of large Nile crocodile; laboratory experiments with sound waves; large tropical spiders; and finally, "battle-to-death between the most poisonous tropical snake known and a non-poisonous adder," each more than 6 feet long (adder wins after terrific struggle).

+ The Boring Stuff:

Technical analysis: Last Friday's close recovered about 50% of the downward movement from May 29-June 24; setback of 10 points followed Sat. and Mon.; now upward movement has been resumed back to Friday's close of 240. If rally can carry well past that point, would indicate a substantial continuation of uptrend.

Sentiment in iron and steel positive although visible gains are still very small. Product prices stable in past week.

Conditions in bond markets seem positive, including low money market rates and commodity prices, and stock price instability since last fall. Rise in bond prices may have been slowed by large number of issues, selling of bonds to meet margin calls, and investors waiting for upturn in business.

Packard (cars) number of shareholders was 62,917 on May 15, up from 9,798 in 1929. Most hold 1-25 shares. Still controlled by small group of shareholders.

Cotton down, wheat fractionally lower. Metals little changed. Bonds generally higher.

New construction undertaken in 37 states east of Rockies $215.3M for July 1-18, down 43% from 1929; Total so far in year is $2.853B vs. $3.418B in 1929.

Washing machine sales in June were 48,383, down 19.6% from May and 17.6% from June 1929.

Ford extends vacation shutdown to three weeks from two.

Experimental farms operating in Alaska demonstrate possibility of raising wheat, oats, sugar beets, cattle, pigs, etc.

Spanish government raises tariffs on luxury articles, including cars; New Zealand gives tariff preference to British goods and disadvantage to American.

Argentine exports for first five months 300.5M gold pesos, down 34% from 1929.

International Salt's good results (first half net up 40% from 1929) attributed to advertising campaign.

Union Carbide Q2 net $.70/share vs. $.72 in Q1 and $0.88 in Q2 of 1929. Monsanto Chemical Works Q2 net $0.80/share vs. $0.71 in Q1. Westvaco Chlorine Q2 net $0.76/share vs. $.89 in Q1 and $1.21 in Q2 1929. Commercial Solvents Corp. Q2 net $.30/share vs. $.38 in 1929.

General Motors Q2 net $1.17/share vs. $2.01 in 1929.

Foster/Wheeler (engineering/power) first half net $4.27/share vs. $3.57 in 1929; unfilled orders June 30 were $10.7M vs. $6.6M in 1929.

Trico Products (auto equipment) Q2 net $1.56/share vs. $1.90 in 1929.

Sharon Steel Hoop first-half net $0.08/share vs. $2.46 in 1929. A.M. Castle (iron and steel) Q2 net $1.14/share vs. $1.96 in 1929. Michigan Steel first half net about $3/share vs. $5.36 in 1929. Gulf States Steel Q2 net loss $98,439 vs. profit of $405,630 in 1929.

Worthington Pump & Machinery first half net $1.053M vs. $1.099M in 1929.

Bowman Biltmore Hotels first half net $492,155 vs. $855,643 in 1929.

National Power & Light expects net for year ended June 30 about $2.30/share vs. $1.99 in 1929. United Light & Power net for year ended June 30 was $2.40/share vs. $1.78 in 1929. Los Angeles Gas & Elec. net for year ended June 30 was $4.038M vs. $5.995M in 1929. So. Cal. Edison first half balance after tax & charges $8.715M vs. $8.985M in 1929.

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