September 7, 2009

Monday, September 8, 1930: Dow 243.64 +3.27 (1.4%)

Assorted historical stuff:

Editorial: Last fall, Fed. Reserve failed to heed urgent warnings for months before the crash; New York Reserve bank and others were noting “orgy of speculation” and urging increase in rates, but Fed “followed schoolteacher tactics of issuing admonitions and warnings.” If new Fed appointments are more “aggressive and forceful,” a great deal will have been gained.

Editorial: Prohibition school opened on Monday to instruct enforcement agents was, on Tuesday, advising making use of children since they could loiter near suspect houses without attracting attention. Thursday the school head retracted this policy. Country should be grateful for small favors; maybe someday prohibition agents can also be “restrained from shooting on suspicion, and wearing camouflage instead of uniforms.”

Veterans of Foreign Wars adopt resolution demanding repeal of Prohibition.

Complaint made in French Parliament about wine retailing for 12 cents/quart when wholesale price is 6 cents; “as the average French family consumes about 2 barrels of wine a year, the difference is appreciable.”

Argentina Pres. resigns, capital under martial law; unofficial reports of revolution.

History of gaslight goes back 3 centuries; discovered by Dutch alchemist Van Helmont, made practical by Scotch inventor W. Murdock using coal gas.

Fad for “Tom Thumb” (miniature) golf leading to construction of larger projects, including 72-hole course in Hollywood.

Market commentary:

Bullish demonstrations spread across market, encouraged by some good business news. Majors including US Steel, GE, Radio, GM, Consolidated Gas advanced; bull pools operated on favorites including US Industrial Alcohol, Vanadium, Loews. Coppers higher on short-covering. Volume increased on price advance, strong tone maintained to the close. Bond market slightly irregular, Argentina weak.

Sentiment was favorable after closing rally Friday, though some were cautious because of low volume. Many believe a movement through the summer resistance level at 241 would indicate strong further advances.

Good business news has started to accumulate over the past week, including better wholesale and retail reports (ex. Woolworth), good steel news (increase in production and some indications of price improvement), increase in freight loadings for second week in a row (although still well under 1929 level), some increase in gasoline prices.

Market observers call bear attacks in past week “rather theatrical,” often delayed until final hour to affect sentiment at close.

Public participation in trading still seen small, but public also hasn't been liquidating in response to bear attacks; all in all, public “still is marking time.”

Henry Ford, sailing on ocean liner Bremen, predicts early end to depression. Says might last past Oct., but no wage cuts needed for return to normal conditions.

A well-known automotive authority sees slow 1930 final quarter, but believes 1931 will be strong year due to production cuts in 1930. Production in first 8 months was 2.843M cars, not a large number considering over 27M cars are in use in the US.

Economic news and individual company reports:

Average yield on 20 representative long-term city and state bonds was 3.97% vs. 4.03% on Aug. 8.

S.S. Sandberg, US Shipping Board commissioner, says shipbuilding in US is most active in history excluding wartime; 40 ships totalling 425,000 gross tons are under construction. Jones-White law (Merchant Marine Act of 1928) has helped stimulate shipbuilding.

August plans filed for new construction in Manhattan were $11.5M vs. $33.5M in July and $22.6M in Aug. 1929; first 8 months were $125.2M vs. $472.1M.

Institute of Scrap Iron & Steel survey says all factors in industry indicate rise for scrap prices.

Oil, Paint, & Drug Reporter says sales of chemicals have finally picked up after a period of price stability. Coaltar dyes particularly strong.

Companies reporting decent earnings: American Can (sales holding up well, fruit and vegetable pack better than expected following drought), American Ice, United Light & Power, Colgate-Palmolive-Peet, US Gypsum (price war ended), D. Gestetner (duplicating/office printing), Apponaug (dying, printing & finishing).

Legal joke:

“Lawyer (handing check for $100 to client who had been awarded $500) - There's the balance, after deducting my fee ... Aren't you satisfied?
Client - I was just wondering who got hit by the car, you or me.”

Movie review:

Dixiana - “latest representative of an indeterminate breed of talkies which include haphazard elements of operetta, musical comedy, revue, and straight melodrama.”

+ The Boring Stuff:

Spanish govt. to lift press censorship on Sept. 12 after 7 years; currency up.

Japanese Privy Council to censure govt. for violating constitution by adopting treaty limiting naval buildup opposed by Naval Council.

English Trades Union Congress demands 44 hour week, pensions starting at 60, and compensation for displaced workers.

J.S. Bache recommends buying carefully selected stocks held for long-term investment; selection must be made with safety of dividends in mind “so that income will be assured even during what may be a long, slow ... business recovery.”

Railway presidents generally optimistic on traffic in coming months; comparisons with 1929 will also be more favorable since slowdown began in July 1929.

Quick recovery from short setback in past week has converted many to the bull side. However, conservative observers still advise waiting for setbacks, and then buying only “standard issues on a scale” (gradually).

Commodities mixed. Cotton down moderately. Grains rallied sharply off initial declines and closed up on news of Buenos Aires suspending futures trading due to political unrest.

Total known security loans as of Aug. 30 were $9.634B, down $58M in month and down from peak of $13.205B on Sept. 3, 1929. However, Fed. Reserve member banks are now supplying $8.377B or 87% of the total vs. 61% a year ago. Total of bank security loans has also increased 43% since Jan. 31, 1927; in this period, total value of NYSE-listed stocks has increased from $38.602B to $67.221B; total of stocks and bonds from $75.951B to $116.321B.

August total of corporate financing (bonds, notes, and stock) was $235.2M vs. $431.6M in July and $831.6M in Aug. 1929; lowest in 2 years. Of the $235.2M total, $193.3M was for domestic corporations. In addition, there were $9.8M in foreign and local govt. loans offered vs. $52.1M in July and $15M in Aug. 1929.

Volume of grain futures trading this year at Chicago Bd. of Trade was down 13.7% vs. 1929.

Agriculture Dept. reports index of farm prices for month ended Aug. 15 was 108, down 3 points from previous month and 35 from 1929; lowest August level for index since 1915; grains, dairy, poultry up but other farm products down.

Agriculture Dept. reports world production of feed grains from reporting countries down in 1930 (corn down 15.3%, rye 2.3%, barley 7%, oats 4.6%). Wheat production seen slightly higher, demand greater due to substitution for feed grains; this should reduce stored surplus but larger crop is expected next season.

Argentina to cooperate with Canada and other grain producers in “campaign of orderly marketing.”

Wholesale gasoline in Chicago market 6 1/8 - 6 1/2 cents vs. 6 - 6 1/4 cents previously.

Youngstown district steel operations reported at 58% vs. 57% last week, first gain in several weeks.

Commerce Dept. report Aug. shipments of locomotives were 77 vs. 56 in July and 129 in Aug. 1929; year to date 552 vs. 517 in 1929.

Wool shorn in US in 1930 estimated at 328M lbs., up 6% from 1929.

Pierce-Arrow introduces new models priced from $3,795 (5-passenger sedan) to $6,250 (convertible town car).

Oakland-Pontiac reports dealer sales have improved progressively through Aug.; total sales for Aug. were 7,443 cars, up 7% over July.

J. Chick, Chevrolet asst. GM, sees pickup in low-priced car sales; comparison to last year is better than any time yet in 1930.

Gillette plunged 3 5/8 to 61 1/4, off from recent high of 88; no news to account for selling except rumor company may issue bond to finance buying own shares.

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