August 10, 2009

Monday, August 11, 1930: Dow 222.59 -0.23 (0.1%)

Musical entertainment:

Most sought after entertainers in Europe are black American musicians, particularly jazz. Fashion started during World War, after which many musicians stayed abroad, particularly in France and Germany. “The tourist may sigh for the stringed orchestras which once seemed an integral part of the gayety of Paris; but the proprietors of night clubs, restaurants, and music halls have heard the clink of coin that, like the ticking of a metronome, keeps time to the nimble feet of jazz.” German musicians have been so affected by the competition that the conservatory in Frankfort is now teaching jazz, though Berlin and Munich are still opposed. Paul Robeson appeared last winter in “staidest concert hall in Paris.” Theatre de la Porte Saint Martin, former home to Sarah Bernhardt, now playing black musical.

Assorted historical stuff:

New RCA Radiola 86 with built-in recorder “operates so simply that a child can do the trick.” Sells for $285, not including radiotron tubes; Records on to 6 inch 78 rpm cellulose records, capacity about 70 seconds (more on early radio recordings).

Charles Lindbergh predicts regular overseas plane traffic within next few years. Calls for uniform flying regulations around the world.

King Feisal of Iraq arrives in Berlin to negotiate for equipment to help open Mosul oilfields and construct 700 mile pipeline to Mediterranean through Syria.

Fed. Reserve committee “analyzing causes of numerous bank failures in recent years,” to develop new national policy on branch banking.

Editorial: Senator Fess, Pres. Hoover's new choice for Republican Nat. Committee chair, seems out of touch with true foreign feeling about the tariff; his attribution of most opposition to domestic politics and denial of foreign retaliation is frankly ridiculous.

E.B. Reeser, Pres. American Petroleum Inst., “adduces statistics to show that profits to oil companies have not been exorbitant.” Points to high level of investment required, says return on net worth for 1913-1925 only averaged 11.5%.

Market commentary:

Bears encouraged by reappearance of liquidation, indicated by higher volume on Friday selloff, and by break through recent resistance level about 230; taken to indicate no further technical support until June lows about 210. Bears pressed further attacks early, leading to substantial declines in majors and trading favorites. Selling lightened in final hour and some recovery took place. Close irregular. Bonds mixed; lower grade declined, prime issues stronger, govts. active, firm.

Continued bond market strength considered bullish for stocks.

Some July bullish operators remain positive in spite of Friday's break blamed on drought effects; analogy seen to 1921 which had similar June selloff, weak July rally, and August break; this laid the ground for the great 1920's bull market.

Conservative observers continue to advise remaining on sidelines “until there is something definite to indicate that a decided change for the better has come.”

A. Legge, Farm Board chair, says “bottom of the trough” reached in depression, predicts gradual rise to normal conditions.

German Chancellor Bruening predicts continuation of world depression in near future, emphasizes need for business to adjust to low price levels.

Old Timer points out that considering England's 2M unemployed, French strikes, Chinese civil war, Indian unrest, Australian economic crisis, and multiple German complaints, the US by comparison “has much to be thankful for.” In spite of depression, “there is plenty to eat, things are quiet on the Potomac, ... roads are blocked with automobiles over the holidays, ball parks, beaches, and other amusement places are crowded ...”

M.H. Karker, Pres. Jewel Tea Co.: early and sharp recovery improbable due to “extent of the previous period of prosperity and inflation” and previous universal bullishness; “American business has danced and must pay the piper, and the future outlook will brighten in proportion as businessmen tackle the jobof putting their house in order and quit waiting for the fairy godmother of another bull market.”

Stock price changes in past week: American Can, 116 5/8, down 13; GM 43 1/2, down 2 3/4; US Steel 159 1/2, down 6 3/4; Vanadium 82 3/4, down 15 7/8.

Economic news and individual company reports:

General rail earnings outlook considered poor; loadings for week ended July 26 were down 16.6% from 1929, worst decline this year; this rate of decline is expected to last at least through Sept. Drought and rate reduction on grain also causing uncertainty.

Total money in circulation July 31 was $4.427B, or $36.48 per capita, vs. $4.522B on June 30.

Production of women's stockings to decline about 4M dozen pairs from record output of 24M dozen in 1929; first decline since 1923. Production of knitted outerwear estimated down 15% in first half.

Companies with decent earnings: Spalding (helped by “Tom Thumb” miniature golf craze), George W. Helme (snuff tobacco).

+ The Boring Stuff:

Westchester County Publishers news wire makes first practical use of teletypesetter to set type by telegraph.

Post office issues ruling prohibiting parcels marked 'Eggs' unless they contain eggs; too many using that mark to assure careful handling of fragile packages.

Commodities mixed after big Friday break; wheat down slightly, corn steady, cotton closed up slightly.

Market considered to have run through typical complete bear cycle, including severe break; technical recovery; secondary break; dull trading period. Good recovery usually follows, although observers unsure if it will come shortly or be delayed for some time.

Henry Ford sees no reason for objection if Canada raises tariff rates.

Editorial: plan by New York and Montreal bankers to help Cuban sugar growers can't be said to have bright prospects, considering fate of previous plans to stabilize rubber (Stevenson scheme), coffee (Brazil valorization), wheat (Farm Board), and lack of success of the copper and steel cartels. However, they are at least not soliciting the help of any government's aid. Their efforts are justified considering desperate state of Cuban sugar growers.

Baar, Cohen, & Co. predict switch in market leadership in 1931 from current leaders GE, Westinghouse, Vanadium. Suggests concentrating on earnings, recommends well-managed companies in automotive, airplane, tobacco industries.

Total security loans down $133M in July to $9.692B, lowest figure since end of Sept, 1928, and 3.513B below Sept. 1929 peak.

Unemployed in Australia 180,000, or 10% of number employed last year. About half of the population over 60 living on government charity.

Italy protests new Spanish tariffs; “disinterested financiers” present figures showing tariffs will damage Italy more than US.

ICC orders railroads to reduce rates on livestock, feed, and water to help drought-stricken areas.

World nitrate producers agree on stabilization plan; terms not disclosed.

American tourist expenditures in France in 1929 were $130M, down 20% from 1928; further 20% drop estimated for this year.

Railroad Commission announces plan to curtail Texas oil production by 75,000 barrels/day to reduce overproduction; Gulf Coast, Laredo areas protest.

International Harvester reduces Farmall tractor price to $825 from $875, other makes by $40 to $75. Other manufacturers haven't matched cuts yet.

Youngstown steel district operations at 56.5% of capacity vs 58.5% last week.

New Jersey Central and Chesapeake & Ohio railroads report income down from 1929, but expect future improvement from sharp expense cuts.

Rail freight cars ordered in July were 1,306 vs. 794 in June and 242 in July 1929.

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