November 18, 2009

Tuesday, November 18, 1930: Dow 180.50 -6.18 (.%)

Assorted historical stuff:

Editorial: Preparatory Disarmament Commission meeting at Geneva has run into many obstacles, but it doesn't follow the nations involved “are secretly bent on making war”; they may just be “accustomed of old” to armament and mutual suspicion. Latest obstacle is reluctance of US to base limitation on spending due to higher prevailing US wages. London Naval Conference also had potential flaw since it limited number of ships but not each ship's capabilities. These obstacles, however, are not final and may be overcome; there may be “many short steps on the long hard road toward limitation of arms.”

Gov. Roosevelt reappoints committee named in March to study unemployment, asks members to plan loan funds to sustain those completely out of work

Some descriptions of early steam locomotives: “puffing billies,” “snorting race horses,” “hell on wheels,” “devil wagons,” “iron horses,” “black dragons snorting sparks.” The term “devil wagons” was also applied to early cars.

In its first 2 weeks Transcontinental & Western Air, first all-air line between NY and Los Angeles, carried 2,041 passengers, completed 95% of scheduled flights.

Number of movie theaters in Europe and Britain is 33,870, up 11,445 theaters and 5.283M seats since 1926. Germany has most, Russia and Britain follow.

Warner Bros. announces golf champion Bobby Jones will retire from competition to make series of one-reel instructional films for them.

Market commentary:

Market wrap: Extensive profit taking set in after five days of rising prices; active stocks suffered sizeable setbacks from rally highs. Market opened down on accumulated orders, steadied momentarily, but began another slow decline around 11. However, action of majors was very encouraging to bulls, since “it was evident that the selling was coming mostly from day-to-day traders, and that distress liquidation” was no longer substantial. With “banking sponsors ... standing aside to allow the market to digest its recent gains,” efforts by bears to speed the decline were thwarted by drying up of selling volume. Banks and trusts weak. Bond market showed early strength but then turned dull and mildly reactionary; US govts. firm; foreign slightly lower; corp. mixed.

Dominick & Dominick point to enormous US savings reserves as placing “people in a better position to withstand the present depression” than any time in history. In past 15 years, savings bank deposits tripled to $28.5B, or $232 per capita, vs. $40 in Britain, $33 in Germany, and $10 in France.

Harvard Economic Society says “now near the end of the declining phase of the depression,” which should happen in early 1931; sees “steady but gradual revival for the remainder of that year.” Sees low interest rates enabling long term borrowing on favorable terms.

Head of one of the largest steel cos. says operations below 50% are not bearish but rather indicate “customers will have to buy in the very near future. Even in a depression the country, through actual needs, requires more than 50% of the country's steel capacity.” Confident industry will be at 80%-90% by next spring.

Head of an oil company, when asked if his stock was cheap: “Use your own judgement ... If we liquidated today, we could, out of working capital, pay our shareholders more than the stock is selling for,” while still having fixed assets such as refineries, pipelines, wells, etc.

When buying for yield, make sure dividend is safe; stocks with unusually high yield “are often dearer in the long run than stocks not so attractive” in terms of yield.

Economic news and individual company reports:

Numerous banks closed - 6 in Kentucky, 3 in Illinois, 4 in Missouri, over 30 in Arkansas. Many of the closures said due to “rumors” and “hasty withdrawals” following collapse of Caldwell & Co. of Nashville, Tenn., largest investment house in the South. Among larger banks closed were National Bank of Kentucky ($41.1M in deposits), Amer. Bank & Trust ($15M), and Quincy State Savings ($6M).

Income tax receipts running slightly below expectations so far in the fiscal year; for the first quarter (Jul. 1 - Sept. 30), receipts were down $55.0M, vs. expected decline of $160M for the whole fiscal year. Treasury expected to wait until Mar. 15 to complete borrowing plans since extent of decline will be better known then.

Commerce Dept. reports Oct. exports $328M, up $16M from Sept. but down from $528.4M in 1929; imports $248M, up $22M but down from $391.0M.

1930 earnings for 8 leading car cos. estimated at $154.7M, down 53.9% from 1929 and 58.7% from record 1928. At recent lows, total market cap of the 8 cos. was $1.724B, down $761M from 1929 and down $3.566B from 1928 (cos. are GM, Packard, Nash, Chrysler, Studebaker, Mack Trucks, Hudson, and White).

Farm Board announces has resumed purchases of wheat to check panic selling; about 10M bushels bought in past 4 days, bringing total holdings to 70M.

S.W. Straus reports building permits issued in 589 cities in Oct. were $153.1M, down 10% from Sept. and 40% from 1929; usual Oct. seasonal increase is 5%.

US Bureau of Mines reports petroleum storage (crude and refined) on Sept. 30 was 678.5M barrels, down 10.7M from Jan. 1, but still problematically large.

Companies reporting decent earnings: Procter & Gamble, Cuneo Press (commercial printing).


Hello, Paris - musical comedy presented by the Messrs. Shubert. “Charles 'Chic' Sales, our most thoroughgoing and hilarious mimic,” plays his standard character, “practically extinct in farce and vaudeville ... the hick, from the small town, as distinguished from the rube, from the small farm. He and his cronies take a chaw from the same plug, spit in the stove,” and believe anyone from a town of over 50,000 is morally suspect. “Care and expense have been bestowed on settings and costumes, appropriate to scenes on an oil field, in a New York speakeasy, on a pier, in the salon of a liner, and in the Cafe Lapin Agile in Paris.”


“'Did you cancel all my engagements as I told you, Smithers?' 'Yes, sir, but Lady Millicent didn't take it very well. She said you were to marry her next Monday.'”

“An orator, warming to his task, took off his coat, which rather disconcerted one of the stewards of the meeting ... Toward the close, he said to the speaker 'I don't suppose you knew, when you removed your coat, that a newspaper man was present?' 'Yes, I did,' was the reply, 'but I kept my eye on the coat all the time.'”

+ The Boring Stuff:

Editorial by T. Woodlock giving evidence that private electric utilities supply power more cheaply and with fewer employees than public ones; also points out private utilities pay taxes while public ones don't; “Governor Roosevelt will, perhaps, be good enough to note this for future reference.”

Editorial: Value of agricultural exports in Q3 was $286.3M vs. $366.7M in 1929; some of this decrease is caused by lower prices and world depression, but not all. Our current farm policies are failing miserably, and new approaches are needed; this sector is important, still accounting for a third of exports.

NY State Commission on Tax Revision considering proposals to increase State income tax, impose sales tax; S. Rayburn, Lord & Taylor pres., leads opposition.

First New York - Chicago all-air service to be started by Nat'l Air Transport Dec.1; westbound flight will take 8 hours.

Leading observers continue to advise picking up standard stocks “on a scale” during reactions, with stops for protection.

Considerable criticism is heard” of the recent sharp rise in copper metal, “but that has come from those who have been short of copper stocks.”

Broad Street Gossip: Majority in trading circles believe “market definitely has turned for the better,” though severe interruptions may occur. Of course, many felt the same way on Sept. 10, when a 2-month decline ensued. However, due to general deflation in that time, “majority believes the market is in better shape for permanent improvement now than at any time since the first of the year.”

Demand by short sellers for stocks in the loan market was somewhat higher.

Greater hope seen for commodity price stabilization. Optimists can point to recent quick turnarounds in copper and cotton printcloth prices following production curtailment efforts, as well as ongoing efforts in oil and sugar. General commodity prices have also shown improved tone in recent weeks.

Commodities mixed. Grains up sharply on Farm Board buying. Cotton almost unchanged. Large copper producers holding at 12 cents but some smaller sellers at 11.5 cents; little domestic buying, some skepticism on whether 12 cent price will hold.

Fed. Reserve member banks weekly report for Nov. 12: loans on securities down $181M to $7.904B, “all other” loans up $42M to $8.763B.

Total US and Canada Oct. output of cars and trucks was about 156,743, down 60.8% from 1929 and 62.3% from 1928. Decline from Sept. was 32.1%, much worse than the decline of 8.1% from Sept.-Oct. 1929; attributed to earlier showing of new models. First 10 mos. was 3.223M vs. 5.269M in 1929; industry may see lowest production in 1930 since 1922, when total was 2.646M.

New securities listed on NYSE in Oct. were $346.3M vs. $211.1M in Sept. and record $2.089B in Oct. 1929; of current total, $266.7M were bonds, of which $105.8M were foreign govts. and $79.2M were rails. First 10 months were $7.459B vs. $13.868B.

Industrial bonds now generally selling at considerably higher yields than rail and utility bonds; examples include Chrysler 8.3%; Amer. Ice 6.4%; Liggett & Myers 4.63%; Republic Steel 4.93%; Int'l Paper 8.15%.

Financial experts report Florida bond situation materially improved from a year ago; banks in the state appear sound, and public opinion seems “in favor of doing everything possible to meet debts.” State courts have ruled municipal obligations must be met; St. Petersburg expected to start catch up on defaulted interest, and West Palm Beach has increased payments after litigation. State Supreme Court to rule on whether municipal issues of refunding bonds can proceed in spite of Florida constitutional amendment passed on Election Day that appears to forbid most bond issuance without a referendum.

Steel trade reports some increase in inquiries after recent announcement of minimum prices.

Ford Motor Co. of Mexico will quote prices and pay wages in silver instead of gold to cooperate with Mexican govt. efforts to stabilize silver currency.

Spanish pesetas plunge on general strike, concern that Republican movement will overthrow monarchy.

Canadian report: Wholesale price index in Oct. was 81.4 vs. 82.5 in Sept.; retail index 97.1 vs. 97.4 (base of 100 in 1926). Govt. revenue in 7 months to Nov. 1 was $235.6M vs. $284.8M; spending $192.5M vs. $182.7M; net debt Oct. 31 was $2.149B vs. $2.137B in 1929. Canadian Bank of Commerce reports manufacturing activity in first half 1930 was comparable to previous years except 1929, but sharp decline in Q3 due to construction, mining, and agricultural weakness; some seasonal recovery in past month. W. Gordon, Minister of Mines, predicts Canada will be first nation to recover from depression.

Cuba Pres. Machado signs Chadbourne plan for sugar stabilization involving purchase and removal of 1.5M tons from market.

Calif. citrus crop in past season valued at record high of $135M.

A&P sales for Oct. were $101.0M, down 4.75% from 1929 and first monthly decline this year; decline due to lower prices, as weight sold was up 5.82%.

Cuneo Press stock about 29, yield 8.6%, earnings in 1929 were $6.72/share, equal or higher earnings expected for 1930.

No comments:

Post a Comment