Evening star., 1927-04-03
INVESTMENT BONDS
DISPLAY STRENGTH
Buying SeIective, But Weak
Spots in Obligations Fewer
Than in Stocks.
BY GEORGE HUGHES.

a III UEUhUE hN UHES.
Special Dispatch to The Star.
NEW YORK. April demand for
investment securities continued with
unabated strength this week. This
applies to stocks and bonds alike.
Naturally the buying of stocks was
selective. Shares representing part
nership interest in corporations which,
either because of a particular trade
outlook or because of situation eX'
listing within the company itself. are
in n doubtful position, did not paftlci'
pate in the favor accorded to the rest
of the list, but these cannot be CLASH
fed as investments. In fact, the
tendency of the stock market, the one
element that characterized II from
start to finish. was the way In which
the line was drawn between the weak
and the strong.
Iiuuidation i'm one section had 10
effect upon the accumulation IN the
other From a trading point of view
there were really two markets going
on at the same time, one i'm which a
vigorous advance was being extended
and another in which an almost
equally decided decline was in prog
resS.
Attention to Trade Developments.
1t is true that attention was paid
to business developments. There was
no slurring over of the difficulties
that confront the oil producers.
Where overproduction exists or is
threatened, or where intense compe.
titiOn prevails, the securities con-
ceFned were more or less sensitive.
but within these groups there was the
same discrimination that was in evil
dence in the market as a whole At
no time during the year so far has
there been such emphasis placed upon
The equities back of stocks as at pres
ent The best illustration of his lies
A the price level of the railroad
shares.
To a certain extent these observa-
uons are applicable to bonds as well
as stocks. The only difference is that
there are fewer weak spots in the
bond list. AT the close of the week the
average price of a selected group of
typical issues was at the highest in
more than decade. Foreign bonds
have gone along with domestic obli-
cations as surplus capital has pressed
for employment.
Injuries and Offerings.
Probably the averages" do not tell
the full story. They represent only
actual transactions and give no idea
Oh the TGIdllOU DSlNCSn tUC NOtdiiAC
of inquiries and offerings. In other
words, the price record does not in
clude the "size of the market" Re.
peatedly when investors have attempt
ed to acquire a block of desirable
bonds it has been found that only
nominal amount was for sale at any
where near the quotation on the last
transaction.
As the advance in seasoned bonds
continued there was turning either
TO stocks or to new issues. There is
no scarcity of stocks. but on the other
hand, there is no unwieldly surplus of
new bonds. Financing this week
shows $84, ,S75 900, compared with
2,fS5, 900 in the preceding week,
and practically all of it was eagerly
received. The problem that worries
the investment banker is not how to
sell securities. but how to get the Sc
curities TO sell.
All this is a matter of record. The
facts admit of no dispute. Bonds have
been strong and stocks have been
strong for the same reason, namely,
the abundant money supply and for
ne other The real question is how
long this is to continue, and as to
that the events of the week have con-
tributed no data on which to found
an answer The slight hardening in
the rate for call money is of no sig
nificance, because il is well under
stood that II is a temporary condition
incident to the quarterly interest and
dividend disbursements. These, by the
way, amount to the enormous sum of
$500, 900 900.
Strength of Credit Supply.
The fact that these could be cared
for with so little disturbance testifies
10 the strength of the credit supply.
Reinvesment of April ! receipts by
owners of securities may be an addi-
tiona1 stimulus to the market, but the
chances are that that has been dis
counted in large part already. Even
If the actual investors do not antici.
pate their requirements, the dealers
will do it for them.
Commodity prices are stabiliZing
after their long decline. In the COM
pilation of wholesale quotations by
Dun's Review % changes are declines,
against % advances. In the CORE
spending week year ago there were
Ae recessions and "a advances. Per
haps this is more important to bust
ness than to securities, but ii has
bearing on the outlook for both. AL
though a lower level for commodities
increases the purchasing power OF in
come and so enhances the value of
the highest grade Of investment bonds
il is a depressing influence where the
producers profit margin is impaired