The New York herald., 1922-06-20
FINANCIAL NEWS
AND COMMENT
Foreign Exchange Exception
allyWeak-.MeX. Pete Rides
High as Stocks Are Firm.

Three important factors were at work
in yesterdays stock market and all had
some effect on the general trend of
prices. Principal among them was the
weakness of foreign exchange, which
amounted almost to a complete collapse.
AS a result OF the continued fall of ex-
change the most important of the cur
stantial part of their big gains earlier in
the year and some of them are at or
close to new low figures. Another factor.
influencing yesterdays trading, although
! in a much lesser degree, was the fiat
threat of an impending nationwide tieup
of the railroads as result of the strike
vote. The third, and not the least i'm
portant of the outstanding features in
the trading, was the manner in which
Mexican Petroleum shares were marked
up on the already severely punished
short interest.
| The extraordinary weakness of foreign
exchange was perhaps the most difffcult
of explanation of any of these factors.
Foreign exchange dealers were more or
less at loss to explain the continued
pressure against virtually all currencies.
That France Is beginning to realize the
effect on reparations OF the abandonment
of negotiations for a loan to Germany
is undoubtedly one explanation of the
extreme weakness of francs. In the case
! of sterling ii is not unlikely that the diff
ference of a full one per cent. between
the rediscount rates in the United
States and Great Britain is in some de-
gree responsible. The maintenance of a
rate here so far above that in London
| is almost certain to result In the ship
ping of funds to this center, with a re-
sultant heavy offering of sterling. What
| is probably the biggest factor in the ex-
change market. however. is the same as
that responsible for the break in stocks
| last week, namely, the correction of an
overdone speculative operation. 1t Is
| just as probable that the recent sus-
| tanned rise in currencies resulted in as
much an overbought condition in that
market as that which the bull movement
Of stocks created in the stock market
The question of the effect of strike
news on the stock market has never been
effectually settled. 1t has long since be-
come a maxim in Wall Street that to
| sell stocks on expected strikes is but to
invite disaster. Nevertheless, there Is
! little doubt that some of the selling of
! the rails yesterday, especially the lower
| priced issues in which bull speculation
| has been big and in which speculative
| groups were at work, could be traced
directly to the strike dispatches over
| the week end. Although pool operators
probably recognize as well as any one
else the futility of attempting to depress
stocks on strike news, they are suffi-
l IT,, xt,ot,. 20
seek safety in smaller holdings before
the storm breaks. The question Of the
success Of such strike was not raised.
That public sentiment would be largely
| against such a step on the part of rail-
way workers Is pretty generally ac-
cepted and without the backing of pub
| lie opinion the poor chances for its sue
cess likewise is recognized.
The remarkable gyrations of Mexican
Petroleum shares yesterday reminded
market observers of the days couple
of years back when that stock was the
greatest wonder in market of wonders.
A short interest of impressive proper
tions received one of the most severe
punishments ever meted out in the stock
market and at its high Of 1891 Mex
| lean Petroleum showed an advanc from
| Saturdays close of more than II points.
So heavy was the borrowing demand for
the stock that at one time premium Of
1-16 was quoted. Other shares held rea-
sonably firm throughout the day and not
a few of them scored substantial ad
vances. Call money touched the lowest
point of the year at 2A per cent. Week
end weather news indicating terrific
rainfalls in the Eastern belt resulted in
an advance of from 81 to nearly IS a
bale In cotton. but selling of grain con-
tinued with extreme losses of from / to
cents a bushel in wheat.