The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1936-07-06


This phase ended by April 1886, time when hopes of
ousng the Roosevelt administration had fallen to low ebb
and adverse utility decision and drastic taxation threatened
business Utilities and rails knocked down in February
Following late April reaction the market seems now
have entered third phase. We fully know its final
characteristics but diagnose it in preliminary way.
1t is not fear phase 1t is not of complete
anty There longer much greenbacks or
of further devauaon There is the beginning of hope
the Roosevelt Administration will be defeated the least
be ymied by Republican Congress- and that property and
contract rights will be safe.
This has strengthened the utilities.
More than that it has aroused hopes that investments may
become safe The capital goods industries have made
gains
The initiation factor has, temporarily least been reduced
to talk of controlled credit nfaon with discussion
means cutting down excess reserves in the foreground
Thus any initiation thought of chiefly stimulating
business and increasing earnings Stocks bought
much hedges for the purpose of participating in prof
its. Thus taxes have become of factor.
Accordingly the old 'leaders have again come to the
'front.' replacing metals invenory' ETC. The market shows
detailed seectvity. Dividends carefully con-
sdered.
Under these circumstances it fairly probable that
further period of dulnes regularity lies ahead
large, broad movement Immediately likely. Stocks
which high compared with earnings will probably suffer
from absence of buying
But selective strength various individual may be
maintained Thus the tax law will encourage buying in
cumulative preferred stocks of financially strong companies
having dividend arrearages It likely bring bank
stocks in greater favor since they exempt the
tax undistributed profits.
little further weakening of the New Deal party would
bring much strength into the better utility
thing would stimulate such capital goods machinery and
electrical appliances
This of course brings in the political factor While I
doubt that the campaign will have great bears effect
that improvement in Governor Landons chances would
have stimulating effect industry and investment Until
these chances be better known much will be doing but
reasoning suggests the conclusion that any considerable
change is likely to be for the better of the market
Much money seeking investment increased by larger iy
dend disbursements Prospective good earnings do
not to be fully discounted The inflated credit structure
constant stmulant and the borrowing Roosevelt Admin
sration does not dare do much that will shake credit
The New Dealers scared The wilder radicals segre
eating themselves into third party" where they like the
Socialists seem less likely to do any harm
On the hand tendency general liquidation is ap
parent On the other bearhness market action and
short selling have improved technical conditions would
not consider reaction of couple of points be bearish
All in ALL would hold carefully selected stocks in strong
companies and add to holdings declines to below what
regard fair values based earnings But remember
that dlversificatOn is important in these uncertain times