Evening star., 1927-09-04
OUTLOOK IN TRADE
STILL UNCERTAIN
Stocks Continue to Climb.
High-Priced Leaders Daz-
/; zling-RaIIies Are Abrupt.
BY CHARLES F. SPEARE.

Special Dispatch TO The star.
NEW YORK. September 5. 49, The
stock market declines gradually and
RECEIVERS abruptly. Ii is more active
when strong than on days when il is
weak The same shares are playing
the same parts on the speculative
STAGE in September as they did in
July and August. and TO the same
audience. There is considerable furore
at times, but not much general prog
Iess in prices,
Never has there been such a market
of star stocks whose brilliant careers
dazzle the public, but whose cost is
too high for all but the very wealthy
10 buy. Ten industrial and railroad
shares prominent in each days turn
over are quoted al an average in eX-
cess of $500 and yield less than per
cent.
1t is obvious that the regular buyer
of stocks is not represented in the
sensa tional movements taking place
in this group of securities, nor VIII be
so long as prices remain so high
However. when a split'up in the
shares Of a popular company occurs.
bringing the unit of trading down 10
a reasonable figure, it has been found.
as in the case recently of General
and Pullman, that there is a wide
spread demand, even though the re-
turn on the investment is no greater
than on bonds. Those who are late
sharers in the earnings of these sue
cessful corporations have the same
faith in their future as did others
who saw their possibilities and in
vested in them several years ago.
Return on Stocks Declining.
The unconvincing feature of the
market is that in most cases prices
of stocks bear no relation to current
earnings on stocks. They conform
somewhat closer in the income re-
turn to going rates for money. but
the average return on stocks is de-
clining faster than that on bonds. A
great many industrial shares have adj
iusted themselves to unfavorahle
business conditions. Many have not
done so. Railroad stocks this week
were not much affected by July earn
ings, which showed a decrease of
nearly IS per cent compared with
year ago.
The inference is that the profits of
, trade and transportation for the rest
of the year will counteract the losses
Of the last few months and that there
is nothing very unfavorable in sight,
and as money is likely to continue
easy, holders of securities will not be
disposed to sell. A constantly dimin-
ishing floating supply of stocks be-
comes automatically bull factor.
Trade Outlook Uncertain.
At the beginning of September the
trade outlook is still uncertain. Busi-
ness men are passive rather than ag-
gressive and are still postponing the
time for forward moves. Sentiment Is
more cheerful. New orders are unsat-
isfactory. 1t is no longer case of
speculation on the size of the wheat
crop, for the greater part of it has
been harvested. Corn is better than
ii was a month ago; cotton worse.
Conditions in the oil trade are an
open book to those who care to study
them. The first half of the year the
amount of crude produced in the
United States was 446,000.000 bar
rels, or 25 per cent greater than in
the first half of 1926. There is now
enough oil in storage in this country
to meet all needs for the next seven
months. However. the daily output
is uncontrolled and August will add
the previous months. We have had
a long bull market, without any par
ticipation of oil stocks. We may be
able TO continue the present volume
of general business in spite of the
fact that one of the major industries
of the country is in more critical
condition than it has been at any
time since before the split-up of the
old Standard Oil companies.
Automotive Industry Studied.
The outstanding success in the bust.
ness world today is the General Mo-
tors Corporation, and the automotive
industry is the one, judging from the
action of motor stocks, that is pro-
ducing the largest profits. In August
the Chevrolet Co. manufactured 81 .453
units, against ,5SS in August, 1926.
For eight months it's production was
% per cent greater than a year ago.
The August production of Buick cars
was larger than in any other month
and 90 per cent above August. 1926
The same kind Of comparisons can be
found in the production records of
other manufacturers of medium
priced cars.
The question now arises whether
the automobile industry, rather than
iron and steel, will not be the new
barometer of trade and whether. as
time goes on, General Motors com
mon may not take the place of United
States Steel common as the stock
most popular with investors and most
desirable in collateral loans Iron and
steel today depends as much, il not
more, on the automobile industry for
It's activity than on the railroads.
Many more individuals are directly
or indirectly affected by the manu-.
facture and the use of automobiles
than by the movement of trains and
the care Of railroad properties.
Money Continues Easy.
Time money rates have been de-
Ginning in spite of the fact that
September and October are the regu-
Lar periods Of the year when money
is expected to advance. The normal
tendencies would show now were II
not for the fact that business is
quiet and the requirements of trade
are relatively small. The time is one
when corporations are considering
the refunding of high coupon issues.
either with bonds of lower coupons
or with preferred stocks. The record
total of $191.000,000 September /
bond redemptions indicates the tend.
ency OF the day. Bonds were called
at prices ranging from par to llO.
with the greater portion bearing
coupons between and ner cent