July 16, 2009

Thursday, July 17, 1930: Dow 235.63 +1.84 (0.8%)

Assorted historical stuff:

France proposes "United States of Europe" federation. Britain cool to the idea, but it's probably workable without them. However, German participation would be essential. German response "conciliatory in tone," but raises some big obstacles, indicating desire for revision of the World War peace treaties, "including, presumably, alteration of certain of her new boundaries and removal of the treaty restriction upon her military establishment."

German Pres. Von Hindenburg grants Chancellor Breuning dictatorial powers to enact economic program and to dissolve the Reichstag (parliament) if it attempts to obstruct. Legal experts question constitutionality of the last part.

World registration of automobiles was 35.1M at start of 1930, about 76% in the US (about two cars for every nine people in the US). This suggests a large market to be developed in the rest of the world since desire for cars is almost universal. "Even in Arabia, where the love for the horse is almost worship, the automobile is making its way and finding friends."

Construction begins on Boulder [later Hoover] Dam; Interior Sec. Wilbur predicts this will enable homes and industries for millions of people in Southwest.

New York City has 26 new hotels being built with 16,324 rooms, bringing total rooms to 123,607.

Trend to longer skirts apparent even in sports outfits.

Eddie Cantor to write a farce about investing for Universal, Selling at the Top.

Market commentary:

Some early continuation of downtrend late Tuesday; volume again dried up on declines. This encouraged bulls, and many sectors advanced in the afternoon. US Steel, nature industrials, and popular trading stocks rebounded well. Auto and oil stocks especially strong; banks, trusts, and insurance companies also higher.

Some traders believe uptrend established, are buying leading shares on dips. Others still cautious until "return of public buying on a larger and confident scale."

Editor: "We can feel for a certainty that business is scraping along the bottom along with most commodity prices, which should begin to firm up due to the marginal producers finding the going difficult and finally being eliminated ... The great American public is not so badly off as some people would like to have us believe."

GE target of much bearish propaganda, large amount of short-selling. First-half earnings were only 5% off peak level of 1929, and well above 1927-28.

Farm Board plans no further price stabilization operations, will keep previous purchases of 60M bushels wheat and 1M bales cotton off the market. Advises reducing production to domestic demand. Meeting of Kansas farmers not receptive to the advice - Governor Reed calls it “gospel of despair.”

Economic news and individual company reports:

Positive economic stats: dividend payments, new life insurance, and savings bank deposits are all up in the first half vs. 1929. Since the November panic big corporations have increased shareholders of record by 10% to 50%.

Some hopeful news seen from steel (some recovery in order levels, seasonal upturn anticipated), rail freight (percentage decline was smaller vs. 1929, though both were holiday weeks), and oil (drop in gasoline stocks).

France doing best of European countries; economy worsening in UK, Germany, Poland, Czechoslovakia, and Austria.

Nitrogen producing nations reach agreement to lower ammonium sulphate production by 50%, control production of all nitrogen products.

IBM sales seen up this year, doing better than other office equipment makers. Big fluctuations in stock price due to lack of sponsorship.

Bank earnings generally lower than last year, but better than expected. Capital positions seen generally good. New source of increased revenue is loans on securities (replacing brokers' loans), on which they can get 5.5%-6%. Average price/book for 25 leading local banks was 2.38 on June 30; average P/E was 23.03.

A&P files trademark suit alleging J. Henry Koenig "Eight Bells" coffee infringes on their "Eight O'clock" coffee brand.

Madison Square Garden sees better year; business normally slow until hockey and 6-day bicycle races late in year, but this year has a couple of big fights.

Montgomery Ward announces price reductions fully reflect lower commodity prices; also mails 100 million announcements of new easy installment plan.


"' How's public sentiment out there?' asked the candidate who was campaigning through a rural community. 'Still going strong.' answered the native. 'There was 16 cars parked in my lane last night.'"

+ The Boring Stuff:

Golf booming in the North- and Mid-West; Minnesota had 200 courses in 1929 and will add 30 this year; many cities maintain municipal courses.

Orlando 1930 population was 27,241, up from 9,283 in 1920.

US Bureau of Chemistry experimenting with paper made from corn stalk waste.

Colorado plant begins production of first self-service gasoline pump with coin slot and automated pump dispensing correct amount.

Commodities mostly lower with trading in narrow range; grains generally lower, cotton unchanged. Copper down to new post-1921 low; zinc up. Credit continued easy with call rates at 2%. Bonds generally dull, little changed.

Dow has now recovered almost 30 points from a low of 207.74 reached on June 25; this is almost 50% of the loss from May 29 to June 24, and many major stocks have already passed the halfway recovery. Technical market students now look for a period of correction to consolidate the gains.

Demand for stocks may be increased by lack of new issues since last fall.

US agricultural exports in May were lower than any month since August 1914; attributed to worsening unemployment and industrial depression abroad. No recovery seen so far in June.

US electric output for week ended July 12 was 1.565 GWHr, down 2.5% from 1929; largest weekly decrease so far this year. Households use up strongly but industrial use down. Output had been running ahead of 1929 until end of April.

National Retail Credit Assoc. reports bad debt losses for 24,000 retail stores doing total business of $5B was 3%.

World output of copper averaged 4,852 tons daily in June vs. 5,853 daily in all of 1929.

British unemployed July 7 were 1.934M, highest total since 1921.

Pennsylvania factory employment down 2.3% in June from May, and 6.1% from 1929; wage payments down 6% from May and almost 15% from 1929.

Machine tool orders down 7% in June from May; likely improvement seen in July.

Oil field operators in Texas recommend drastic production cut of 126,000 barrels/day from current 863,450 level.

New York building contracts for first half were $506M, down 14% from 1929. However, planned projects at end of June are up 21% from 1929.

Chase now includes seven separate large organizations, including Chase National Bank, Chase Securities Corp., Equitable Trust, and American Express.

Bethlehem Steel Q2 net $1.75-$2.00/share vs. $2.60 in Q1 and $4.17 in 1929. Current business slow; hopes for seasonal improvement in the fall.

Timken Roller Bearing first half net $2.54/share vs. $3.51 in 1929.

Mathieson Alkali Q2 net $0.81/share vs. $0.96 in 1929.

Alpha Portland Cement net for year ended June 30 was $1.78/share vs. $3.11 previous year.

Wrigley Q2 net $1.50/share vs. $1.49 in 1929. Canada Dry Q2 net $2.29/share vs. $.88 in Q1 and $2.18 in Q2 1929.

Congress Cigar Q2 net $1.11/share vs. $2.34 in 1929.

Sutherland Paper first half net $0.60 vs. $0.51 in 1929.

Duplan Silk (silk and rayon fabrics) reports net profit for year ended May 31 almost same as previous year in spite of plunge in raw silk prices.

Purity Bakeries net for 12 weeks ended July 12 was $1.45/share vs. $1.75/share in 1929.

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