Assorted historical stuff:
New book Why You Win or Lose, by F. Kelly, columnist, speculator, and “amateur psychologist.” Practical approach to psychology of stock market. An important principle is to be contrary (do opposite of what most are). Says most common mistake is vanity, leading to taking small profits and large losses. Next is greed; next is “will to believe.” Also believes it necessary for traders to be illogical, since everyone else is usually being logical. Finally, recommends being cautious.
Editorial: A bright spot in the depression is California, now in a strong financial situation by a number of measures. Bank deposits and life insurance are up; commercial and agricultural real estate is more active; securities issued are almost back up to first half 1929 level; department store sales are down, but Wells Fargo points out they're doing better than rest of the US. All in all, California “is carving out for itself a future prosperity that must in time rival that of the eastern seaboard.”
Attorney General charges price of bread in New York controlled by racketeer ring with enormous profits.
First transatlantic pay load flight by heavier-than-air craft to carry cargo of souvenir postcards and bank correspondence from New York to Paris via Bermuda and Azores in Oct.; specially designed Bellanca seaplane with Wright motor being constructed.
Fokke-Wulfe Co. of Germany constructing “fool-proof” plane able to fly and land itself.
Bulls encouraged by $27M reduction in brokers' loans in spite of rising market (considered good technical indication of stocks passing to strong hands), and by resistance of major shares to some weak spots (including coppers, rails, Goodyear, Warner). Bears had some initial success in spreading declines to market leaders, but effective support came in and buying spread in afternoon; most leaders closed up. US Steel, GM, Radio, Vanadium, American Tobacco advanced strongly. Utilities strong. Investment grade bonds stronger, Dow 40-bond average at new 1930 high of 96.73; govts. steady; convertibles weaker.
Some desperation observed in bear camp: “The bulls in their most excited moments did not bring forth such absurd ideas as some of the bears are talking about.”
Market considered technically strong; bears unable to prompt widespread liquidation as in past breaks due to low margin positions, short interest still large.
Pres. Hoover, after conference with Treasury Sec. Mellon, refutes earlier report that 1% income tax cut won't be continued; while there have been some indications of reduced revenue and increased spending early in fiscal year, there's no ground for making a firm prediction yet, and help should come from a number of areas including trade rebound (temporarily depressed due to imports in advance of tariff), and expense cuts. Mellon also says hopes tax cut can be maintained.
Moody's reports “prosperity index” for July at 86.77; this level has in recent times always meant “thorough liquidation or deflation,” and all recent recoveries have started from this level. “We are, therefore, inclined to regard the present level of business activity as the approximate level from which recovery will begin.”
Conservative observers still advise staying out of market until “next important move has been demonstrated by the action of leading stocks.” Also counsel against taking short positions due to range-bound market.
Savings banks deposits have been increasing in the depression (reverse of usual seasonal pattern) due to consumers cutting spending and saving more; also some investors have transferred balances from brokers to get higher interest. This does increase the potential call on the banks' resources that may happen on short notice.
Economic news and individual company reports:
July income tax (personal and corp.) receipts were $29.699M, down $5.037M from 1929. Tobacco tax receipts $42.982M, up $2.782M. All Internal Revenue collections were $86.055M, down $3.765M.
Bradstreet's and Dun's reviews both report some improved sentiment, and slightly better manufacturing activity and buying of fall goods.
Initial weekly bank reports have not yet shown the usual seasonal increased demand for currency or commercial credit.
Movie companies reach antitrust settlement with govt. agreeing to end practice of denying films to independent exhibitors.
Companies reporting decent earnings: Kansas City Power & Light, Tide Water Assoc. Oil (sales down but cut expenses more), Pig'n Whistle (restaurants).
American Tobacco reports July sales of Lucky Strikes up 583M over 1929, best gain so far this year.
“If a Hottentot tot taught a Hottentot tot to talk ere the tot could totter, ought the Hottentot tot be taught to say aught, or naught, or what ought to be taught her?”
+ The Boring Stuff: