The Washington times., 1935-04-22

~ been character.
~ istic of this
rise, bonds and
Lewis nancy railway stocks
made relatively little progress.
Stocks, for example-and espe.
cially the industrial" right
up to the highs of the year made
on February Is. But bonds are
considerably lower than that, and
the same is true of railway stocks.
The most active stocks were all
on the rising side. These included
motor accessories (Houdaille Her.
shey and Murray Corporation),
motors (Chrysler and General
Motors, oils (Barrisdale and
Socony-Vacuum), electric appli-
ances Westinghouse and General
Electric), and utilities North
American and Consolidated Gas).
Union Carbide was conspicuous
among the chemicals for its activ"
ity, but Allied Chemical and Air
Reduction also advanced consid-
erably.
1t continues to be obvious
that short covering has been
playing a part. Wall Street has
been beariSh underneath and
does not now regNrd conditions
as sound. Only a few weeks
ago a good many analysts were
talking of a bear market and a
large decline. In so thin mar
ket as this has been the cover
ing of even moderate short pO-
sitiOnS is apt to be an expensive
matter, as shorts in telephone,
COca-COla ETC., will know.
But the outstanding feature has
been the rise in the old "blue
chips" that is the high-priced in.
dustrials. This has doubtless been
due chiefly to so-called investment
buying, resulting largely from
dwindling interest rates.
Money rates and high grade
bond yields are both so low that
the pressure to do something with
idle funds has been increasing.
At the same time, 1 think there
has been some increase in the
feeling that socialistic measures
may be checked, so that equities
in the leading corporations are
less likely to be destroyed by Gov
eminent interference. (This feel.
ing is based upon evidence that
the radicals cannot agree among
themselveS)
In the event Of more extreme
initiation, such equities would prob
ably do better than bonds. So,
while the buying is not primarily
for rise in price, such high-grade
equities are being bought and held
at yields around 212 to 3 per cent,
or even less.
For the rest, we find the auto
mobile demand still holding at q
high level, and, with respite in
the labor difficulties, the urge to
buy stocks naturally is directed to
the motor accessory and plate
glass manufacturers, whose earn
ings will reflect interpretation
activity.
The statistical position in the
oil industry shows moderate inn
provement and gasoline markets
are under control at the moment,
so oil stocks are getting some Of
the usual seasonal rise.
The better utilities continue to
respond to opinions that the hold.
ing company bill will be modified
and thus tend to rebound to the
level occupied before fears Of this
score became acute.
Underlying all this, is the
growing realization that the
President set to spend four bill.
lion dollars between now and
election time, and that the out.
look for business recession had
become such that he is likely to
go to considerable lengths to
speed the process and seek some
quick results. This will force our
inflated currency to circulate
for a while.
All in all, I expect this move to
run into resistance soon. The Sat.
urday rise was hardly commensu.
rate with volume and breadth Of
the trading, and some of the
gaps" in individual stocks may
well indicate temporary "exhaus.
ton"
But the general position of the
market seems more similar to that
Of October II last year than to
that Of June 16, and no very i'm.
portant recession seems likely.
I assume that the Administra-
ton will be able to maintain it's
credit for some months yet, and
will find ways to spend enough to
support what we have come to
call business"