Evening star., 1922-09-23
BUSINESS OUTLOOK
CONTINUES GOOD
Tendency, However, Is To-
ward Higher Rates in
Money Market.
BY BYRON SELLER,
Special Correspondent OF The Star.
Copyright. 1872. by The Starr

| " "1HsoN SEILEN.
| Special Correspondent OF The Star
Copyright. 1872. by The STAR
NEW YORK, September 23-The
Investment markets were subjected
TO conflicting influences during the
week. When in doubt the investor
waits. There has been a great deal
OF talk about new government financ-
! ing which was not helpful to prices.
| The bonus conflict was disposed OF.
institutional buying of high grade
/ administration. Also there was heavy
| bonds still to be had on per cent
| basis or thercabouts. All these in
| Huchces. however, are aside from the
man consideration. Obviously the
| 1uture depends on the business situa-
| tion and on the course of the money
| Nlafket principally the latter
Outlook Continues Favorable.
As far as business is concerned
| ther" mas been no great change. The
outlook for the fan and winter is
SUN good. The strikes are settled.
| Unemployment is steadily decreasing
The tariff bill has become law. What
ever may be thought of the economic
| WlSuofn of Congress, there is no
| lohGer the uncertainty as to rates.
| ana nothing is more chilling 10 en-
| terprise than uncertainty
Perhaps the most encouraging de-
| Velopment of all is the surprisingly
large business done by the automobile
| manufacturers. 1t looks now as
! though production figures for 1922
would be greater than in 1920 which
(; was the record year
! The trend of the money market is
not SO plain. Quotations for sixty
and ninety day paper We're again
! hrmer. and for longer periods late in
the week 4&i per cent was bid and
, per cent was asked. This. of course,
may be only temporary. but at least
| the tendency for the present is to-
| ward higher rates.
More important is the progress Of
| expansion in commercial loans Here
| the significant figures to be watched
are the reports Of the 796 member
| banks in the federal reserve system
| These reports issued weekly showed
; a steady decrease in funds out on
c@mmereial paper for the first half
! of 1922 the low point being reached
for the week ending July ) last Since
that time there has been a slight
but fairly constant increase. At the
present rate, however, it will be a
| long time before the demand for
money for strictly commercial pur-
poses has appreciable effect on the
, general situation.
Present Levels Maintained.
So far as the price OF investment
! securities is concerned. there is no
| immediate prospect of money con-
ditions making for lower quotations
hut there is also no reason to expect
! high grade bonds to sell on a basis
| to yield less than the present level.
In other words. bond prices seem
| stabilized for the present
A great deal depends on what is
done about government financing.
| Wall street had .he report during the
week that the expected refundinE op-
! Grafton would include a new liberty
| issue with n per cent coupon to the
amount of s1000 600. 600. The partly
taxable liberties are at present selling
on basis that ranges between AIS
and 4.e0 per cent.
Meanwhile. it is hard to see how a
taxable bond. even though legal for
| savings banks. such as Atchison gen
| eral As. should sell to give higher
; return than at present, which Is
around z.%5 per cent The Atchison
! issue is only an example, the same
applies to all the very high-grade
! first mortgage legal railroad bonds.
and is true to less degree of the
! highest grade of Industrial and util-
| ity bonds.
Present Levels Maintained.
Take, for instance. United States
Steel sinking fund IS, perhaps the
strongest of its class. Selling at lO4.
the yield is 4.75 per cent. The high
for all time, for this bond was around
DuI tilAl AS III lJuS-
are very different now. American
! Telephone and Telegraph collateral
trust is are selling TO yield per cent
Ne wEork Gas. Eiectrict Light. Heat
and Power first 5s and the Niagara
Falls Power first IS give about the
| 81 me return at current quotations.
1t is perfectly possible that over a
period of years such high grade Sc
curtes may sell on 4ie per cent
basis. but there appears no immediate
prospect of such development. For
one thing. the income take law is a
barrier. Quality considered, second
grade bonds seem to be in about the
same position a the first grade. Prob
ably there is d little more room for
fluctuations in response to conditions
affecting the prosperity of otherwise
of the debtor corporations.
; There has been some increase Of in
ouiry for desirable short term securi-
ties vry rcntly. This. of course. comes
from investors who are either uncer-
tain of the stability of the present
quotations for long term securities or
who anticipate an opportunity TO re-
place their holdings at lower price
later on.
small Return on Short Termers.
Most short-term high-gr obliga-
tions. however. give a small return
and the result is that callab!e bonds
selling around or even slightly above
the rH'iahl~ price are again looked
upon with favor SIX months ago in
vest0rs were eager for non-callable
iSStl,s The demand was greater than
the supply. The ida had been firmly
fixed in the mind OF the average bond
buyer that he had the opportunity OF
a life time to place his funds where
, tthey would yield permanently vary
large return. Nor or less that was
true.
Just now. however. with the suh-
stantial decline which has come into
! the average coupon rate upon new
offerings and with the sharp advance
in market price for seasoned securi-
ties the appeal of the non-callable
!. bond is not so large. 1t is being
pointed out that callable security.
, the quotation on which is more or
, | less pegged at the callable price,
: gives a very large current return.
All this should not be taken as
, prediction of any decline in the aver
|. age bond price of today. IT Is not.
! Nor is there the slightest indication
| of n Willingness to make any such
, prediction on the part of the invest
: ment banking fraternity who are
still putting out securities to give
, constantly decreasing yield. This is
| especially true in the field for mu-
; niripals. where, of course. they have
the help of income tax provisions.
|