One year ago today:
[Note: Continuing the recap of the 1929 Great Crash - the following describes the Saturday Oct. 26 short session, two days after Black Thursday.]
Market wrap: Friday's session considered very reassuring, as a large volume of distressed sales were absorbed with impressively steady prices (total volume was almost 6M shares). Floor reports Friday indicated brokers were steady sellers due to margin calls. Some buying was by “powerful banking interests,” while there was heavy buying by “moneyed people” picking up stocks they considered undervalued; some buying of this type also came from investment trusts (similar to mutual funds).Volume was much lower in Saturday's short session; price moves were typical of “cleaning up processes” after a drastic market break; these caused weak tendencies in many sections of the list. However, leading shares retained “powerful support,” and attempts to force a renewed downward movement were checked.
“It was natural that traces of nervousness should linger in trading circles, but the best opinion was that the worst of the selling had been seen, and that the market would settle down into a narrow range, allowing time for recuperation from the recent demoralized breaks.”
Bears seen as not inclined to try for a new reaction, fearing banking support for key stocks.
Public morale seen as damaged; many outside longs were forced to sell out [by margin calls] and in some cases are indebted to their brokers due to low sale prices realized during the sharp declines; “it will be some time before outsiders again enter the market with any degree of confidence.”
Broad Street Gossip: This panic, unlike those of the past, was brought about not by “something fundamentally wrong with finance or business,” - inventories are low, corporations flush with cash, etc. Instead, it was caused by “the position of the market itself.” Because of this, “the storm has left no wreckage except marginal traders forced to sell at a loss ... Mr. Mellon, Mr. Rockefeller and others who hold stocks outright stand just where they were ... They have lost a few tail feathers, but in time they will grow in again, longer and more luxurious than the old ones that were lost in what financial writers like to call the debacle.”
E.F. Hutton: Many leading stocks including US Steel, AT&T, National Biscuit, GE, etc. are now “cheap by any statistical measurement ... It should have been very obvious that many stocks sold at entirely ridiculous levels on Thursday's break.”
Editorial: Everyone in a responsible position is now saying conditions are sound. “From the President on down, what else could he or would he say?” Conditions are sound, but showing some weakness: stocks have been declining for almost 7 weeks, commodity prices are sagging, and rail traffic, while large, is declining when it should be reaching a peak. In this situation, the Senate, whose basis is “not infrequently sound and fury, signifying nothing,” shows signs of doing some mischief: it has kept the import trade “uncertain and exasperated” by lengthy consideration of an “indefensible” tariff increase, and it looks set to launch another of those Wall Street investigations that “return their findings first and hear the evidence afterwards. ... If conditions are 'sound' the US Senate can cooperate in so preserving them by keeping its hands off.”
Economic news:
Leaders of both parties now predict Senate passage of Smoot-Hawley tariff by Thanksgiving. However, chances of agreement any time soon between House and Senate to pass the tariff into law have become slim; House majority leader J. Tilson said possibility of tariff passage “completely vanished” when the Senate adopted the export debenture provision (designed to benefit farmers). It's already been demonstrated twice that the House will adhere to Pres. Hoover's wishes in rejecting the debenture.
Irving Fisher's index of 200 commodities for last week was at 94.6% of the 1926 level, a new low for 1929; the high was 99.2 on July 2.
First 27 rails report Sept. net operating income $53.9M, down 2.8% from 1928.
US Steel earnings for first 9 months est. $15-$16/share; earnings for all of 1928 were $12.50. Q3 estimated at $5-$5.50 vs. $6.68 in Q2 and $3.31 in Q3 1928.
Crude oil in storage in Texas, Louisiana, and Arkansas on Oct. 1 was 133.3M barrels, up 1.040M from Sept. 1 and up 8.274M from Oct. 1, 1929.
US exports of agricultural products (excluding forest products) in the year ended June 30 were $1.848B, up 2% from previous year.
Other stuff:
Amusing anecdote: A customer at one broker entered an order Thursday to sell 105 shares of a certain stock. The 5 shares were sold immediately at an odd-lot house for $108, but the 100-share lot was sent to the specialist and had to take its place in line with the many other sales; these shares were sold at $87. The customer complained bitterly, but was told this was the best execution available. “Execution,” he replied, “why I call that both execution and crucifixion.”
Amusing anecdote: Charles M. Schwab began his speech at the banquet of the Amer. Iron & Steel Institute: “After what has happened in Wall Street, it would probably be quite correct for me to start my remarks to you with the words: 'Friends and former millionaires ...'”
NY City long-term traffic plan recommends decking over of Park Ave. above 96th St. to create new highway at maximum height of 4 stories over street level.
The Irish Theatre, Inc. (formerly Greenwich Village Theatre) presents The Silver Tassie, Sean O'Casey's play about a champion Irish football player paralyzed by an injury in the war.
Lobsters have crossed the Suez Canal; an investigation finds a species previously confined to the Red Sea is now abundant near the Syrian coast. It's estimated it took 30 years for the lobsters to make their way through the Canal.
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