The Washington times., 1930-06-25
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Ultimate Recovery Forecast
BY Expert; Weakness in
Rails Is Pointed Out
BY THE SPECTATOR

BY THE SPECTATOR
My forecast of lower prices
In the stock market came true
yesterday when, in the absence
of support on declines, prices
receded to new lows for the. year
and commodity markets suffered
a further setback which sent
values TO the lowest levels in
many years.
The pronounced weakness in
railroad shares justified another
one of my predictions, which
was based on expectation OF un"
favorable earnings reports to be
published next month. Such
earnings statements will be issued
also by many leading industrial
corporations. Whether these un-
favorable reports of profits have
been, or are being, discounted at
this time is a debatable question.
Personally, believe further
weakness will crop out as soon
as reports of lower earnings are
published. ...
This opinion is bearish, Of
course, but in fairness to readers
of this column I must say that
I expect further weakness to
follow the rally that came into
the market Monday. It is the
time to buy on recessions and
sell on rallies.
Weakness In Rails
For several weeks I have been
warning readers that a new at
tack would be leyeled against the
leading railroad stocks, on the
theory that these shares were par
ticularly vulnerable. due to declin-
ing earnings resulting from buSi
ness depression. Yesterdays sell
ing of the carrier shares proved
that my claim was warranted.
The bears centered their attack in
the rail group, and had little or no
trouble in hammering them down
to new lows for the year. I think
such stocks as New York Central,
New Haven, Baltimore and Ohio
Chesapeake and Ohio, Wabash,
Erie, and Nickel Plate will seek
lower levels within the next
month; ......
General. Motors, has held UP
amazingly we'll while other motor
shares were declining. For this
reason, many smart operators are
short, of General Motors and ex-
pect to cover with good profits.
Yields VS.. Profits
The. nnfSlic is not buying stocks.
Investment . trusts and strong
banking groups have been taking
most OF. the large offerings during
the last few days. All of which in
dicates that high yields offered by
leading issues in these days of de-
preston are proving attractive to
the best informed operators in the
street. It. looks like the time TO
buy for. the long pull.
1 have stated repeatedly that
there is little, hope for improve
ment IN the bond market; bonds
of holding corporations and i'm
portant Government issues were
weak yesterday. I still doubt
whether the public can be tocerd
out of common stocks and into
the bond market. $500.
Commodities Weaken
After firm opening yesterday,
wheat and cotton prices slumped
to new low levels. Wheat prices
were at the lowest points in Is
years, off 334 cents bushel at
the close. A new low for all time
is likely to be established before
the drop in wheat is checked.
The Governments artificial sup
port Of the wheat market is the
only factor that has prevented
establishment of new low prices
before this time. The relation
of the commodities markets to
the securities markets is an end
less chain. Weakness in, the
stock market brings further de-
cline in commodities, and vice.
versa. Not even the most power
ful bankers in America know
when the decline will be curbed.
Now that the wave Of liqulda-
tion has been checked, conStruc-
tive forces are afraid to buy
stocks and the bears are afraid
to sell. It looks like duH Gays
for some time to come.
international Salt Merger >
From the most reliable sources,
I hear that international Salt
Company soon will announce
terms Of a. merger with another
competitor on q basis peculiarly
favorable to international Salt.
The consolidation will expand the
company's earnings to a subStan-
tial extent and should result in
q good runup of the stock which
recently was split for after
the old stock had been advanced
Sensationally by a strong pool.
The new stock. currently selling
around IS, has been active at
advancing prices and. with any
temporary display of strength in
the general market, should bring
good profits for spectators.
. yellow Trucks earnings are
~ improving each week. and the
daily market action Of the stock
proves that insiders are taking
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