The Washington times., 1934-05-07

m r e defines ~
than advances; - ~ AS
but a notable Lewis Haney
fact is that among the most &C.
tive stocks and the points last
were the following: Chrysler
(-33s), Gene:al Motors (-2bD, &,
U. S. Steel (-33s), National Dis
tillers 80, General Electric
-13s), and American Telephone
(-93D.
Many sound stocks which have
not been overbulled as "specula-
tive favoriteS" or "blue chips" I"
held their ground well. Stocks
which are high on an earnings
basis suffered, and especially
those whose earnings have been
stimulated" by artificial new
deal policies.
Weakness centered in alcohol,
farm machinery, motor, utility,
and railway issues. But U. S.
Steel and du Pont broke through
important resistance levels, and
fell to their levels of last De-
cember.
It seems conservative to say that
some important good news" from
Washington will be required to
check the decline short of the low
level of last December. CThis is
two and one-half to four points
down, depending on which "aver-
age" you uSeO Such news may
come, but one of the unfortunate
aspects of conditions nowadays is
that business and financial affairs
hang on political action. the vaga-
ries of a brain trust, the pulling
and hauling of the silver crowd,
etc. This makes planning and
forecasting matter of gueSswork.
Plainly liquidation has been 60
ing on, for Shortselling has not
been important. In part, this may
be due to imminence of stock ex-
change control legislation. But
mainly it is due to fears of more
than seasonal reaction in business
at a time when the President is
still bent upon stimulating en-
ployment" and having business
men take up the slack"
The idea at Washington seems
to be two-fold. 1. Make business
a means of employing labor, re-
gardless of earnings. 2. Make bust
ness of paying bonuses to farmers,
regardless of earnings.
This can be done as long as in
tlationary price advances are oc-
curing. Just now, however, the
President seems to be tired of
money-tinkering, and initiation has
been checked. Commodity prices
have had a setback, and stocks
have come along.
The immediate outcome Of all
this. no man can foresee. But it
seems to me that the attitude of
certain silver spectators is signifi-
cant. They have recently COM
planned that the President said he
would put the price up! Others
will have the same idea about their
commodities.
The new deal has put the cart
before the horse. It has sought to
put prices up first, and let demand
and supply come after. That
means initiation. Now, as prices
react, business follows. The Presi-
dent will hear from the millions
of unemployed and the farmers.
Will he turn business into a sort
TO non-profit unemployment insur-
ance for laborers and farmers? Or
will he not finally resort to the
initiation needle again? My guess
is, the latter.
Barring some white Rabbit"
it seems that nothing more than
small technical rallies are likely
in stocks. The December low
now seems rather probable. I
doubt, however, that the October
low will be reached. That would
make the market sell ex-New
Deal! But the New Deal is SO
per cent initiation Ito Tighten
debt burdens" by Government
debit, and sooner or later this
side should turn up again in the
experimental whirlagig.
So hold the sort of stocks I
have favored (Which have not
included rails, utilities, alcohols,
farm machinery, motors, Steels,
etcD and be prepared to buy
more when we get some climax
selling" No one can make busi-
ness good, either temporarily or
permanently, and at the same
time hold fairly priced good
stocks down.
FOrpinn R0nn Rise