Evening star., 1933-10-24
BUSINESS ADVANCE
FORECAST FOR 1884
Babson Statisticians Also
View Stocks and Bonds
at Conference Here.
BY EDWARD C. STONE.

1884 The first marked increase should
be among the group of necessities but
by 1884 buying should have gained mo-
mentum enough to bring practically
every line of industry into the buying
area he said.
The industries that seem to have the
most favorable outlook for the next IL
months, Mr.. Wilson believes, are auto
mobiles, agricultural implements, avia-
ton, chemicals, clothing. food, house
hold equipment, iron and steel, mer-
chandisings, oil, paints and varnish,
rails, railway equipment. radios, tex
tiles and tires
Leading indexes of wholesale COM
modify prices are expected to reach
higher levels next year. If there should
be direct imitation, which now seems
rather remote, the rise in commodity
prices would be much greater than
otherwise. Should it become uncon-
trolled the result would be rapidly soa1-
ing commodity prices.
Predicts Rise in Stocks.
The stock market at its present height
certainly has not discounted future
earnings possibilities of many of our
leading industries. Even though the
advance from March has been rapid,
stocks have recovered only about II per
SCllG VI lllC pSdl llldl hSI ocClulc. Ii tklc
top of this bull market is only half that
of 1929, Mr. Wilson said, We still have
about 80 points to 60 yet. Investment
opportunities are still hanging on the
trees. just little more care in select
ing is all that is necessary
Ordinarily imitation to any extent
means that high-grade bonds could be
expected to sell Off Medium grade
bonds might be stimulated temporarily
by better earnings pictures, but the
possibilities of advance would be re-
stricted after they reached a level
where they sold more on the basis of
interest rate than earnings prospects.
A limited or moderate amount of in
fation might not have a great deal of
effect on bonds if it was felt that things
were coming along fairly well and that
imitation would be kept under control,
the speaker asserted.
Real Recovery Reported.
Fear of imitation must not blind us
to the fact that business is on the
fundamental swing up. At least 10
per cent of our recovery is real The
readjustment of the past four years
has run its course and the natural
forces are now working toward recov-
cry. In addition to this the admin
istration is doing everything within its
power to bring back prosperity.
The N. r. A. is providing codes of
fair practice, increasing employment
and purchasing power, The farmers
and the railroads are being helped, the
bank situation is improved, boarding
has been stopped, the money situation |
is better. more banks are being opened |
and frozen funds freed for use and the |
great public works program IS getting
under way.
Failures have declined to the lowest
record lows. Government building
program is being rushed Buying is
better. The trend of purchasing power
is upward. The increase in the volume
of business is unprecedented The
fundamental trend is definitely up and
should continue up as one by one we
iron out our present problems-which
we shall surely do, Mr.. Wilson con-
cluded.
Strong Bond Market Forecast.
Lewis G. Gates, investment expert
with the Babson organization, spoke on
the bond market outlook, which. he
said, resolved itself into two viewpoints
"a normal business recovery without
initiation and the prospects for bonds
in case of severe imitation. At the out
set. he said:
In the event of a normal business |
recovery good bonds should gradually
work higher from present levels Steady !
Improvement in earning power would
increase the bond coverage and conse- !
quently the credit standing of COM
panies With the public assured that
no initiation would take place the bond
market would give good account Of
itself next year and many bonds would
sell substantially above present levels.
Particularly would this be true in
the case of medium grade bonds which
are still selling on earnings prospects.
High-grade bonds are up pretty well
now, but might be expected to sell some
higher if not disturbed by fears of in
f1ation. Generally, then, the outlook |
for the bond market next year Is for
higher levels-barring imitation.
If we should have imitation the effect
on the bond market would depend upon
its extent. Ordinarily imitation to any
extent means lower bond prices and if
the tn situation should develop along that
line high-grade bonds could be eX-
pected to sell Off Medium grade bonds |
might be stimulated temporarily by bet |
ter earnings pictures, but the possibili-
ties Of advance would be restricted after
they reached level where they sold
more on the basis OF interest rates than
earnings prospects"
Commodity Rise Also Predicted.
Henry H. Stafford, also of the Bab-
son firm, said that with or without |
direct imitation, leading indexes of
wholesale commodity prices are ex-
pected to reach higher levels next year. !
However. barring direct currency infla-
ton, the advance in wholesale prices |
will be much more Selective and, gen.
orally, at slower rate than during the |
rise from last March to mid-July.
Should direct currency imitation be
finally resorted to the upturn would be
greater than otherwise and wholesale
prices would soar, should imitation be-
come uncontrolled. Also there will be
hecting the increase in costs under the !
N. r. A.
To restore commodity prices to
around 1926 levels is a fundamental
part of the administrators recovery
campaign. Washington has dominated
the movement of commodity prices
since March and will continue pri-
mary influence on the course OF COM
modify prices in the next several
months, Mr. Stafford asserted.
Noted in Financial District.
Capital Traction stock figured in no.
share turnover on the Washington
Stock Exchange today. selling at 1872.
The largest bond sale was in Potomac
Electric Power IS, $1,000 moving at
107.
Samuel Ungerleider has announced
his resignation from Fenner, Beane &
Ungerleider, effective October 81, to be-
come president and chairman of Dis
tillers & Brewers Corporation Of Amer
lea, holding company, which will open
Offices November l at 81 Wall street.
Wholesale commodity prices again de-
clined, according to the index Of the
National Fertilizer Association. Dur
ing the week ended October 81 this in
dex lost 4 points, declining to 682 from
6s6. A week ago the index showed a
loss of points.