Evening star., 1940-03-09
Stable Markets Show
Strong Basis Laid
For Trade Rise
Auto Orders to Clear
Steel Price Outlook
In Spring Months
Special Dispatch to The star.

NEW YORK, March 9-Carnegie-
Illinois Steel Corp. made news this
week when it reaffirmed prices for
the second quarter, but this Is apt
to be overrated as a guide to the
general commodity price trend. says
Business Week in its analysis of
the business outlook today. On the
surface 1t suggests that the steel
industry will maintain current quo
tations. But, as every one who buys
steel realizes, prices will remain an
unknown quantity until the auto
mobile industry puts in its bids for
194l model Observation-Disclosures
now and May.
With or without guarantee of
steel prices. commodities in general
are doing all right. The non-fer-
rous metals have been buoyant, lead
by copper. Wheat, despite oft-re-
peated warnings of a huge world
carry-over, shows intermittent
bursts of strength. And on the
whole the list of sensitive staples
has been more strong than weak.
Moody's Index, for instance, has
just turned up again, and though
it still hovers within an unusually
narrow range, its stability suggests
that purchasing agents are in the
market whenever offerings bring
quotations down peg or two.
Market Stability Cited.
Indeed, one of the remarkable
features of the current decline in
industrial operations is the stability
in general market movements. So
far the so-called financial indicators
have been "above" the deterioration
that has taken place in business.
Common stock prices, for instance,
have held within four point range
since Thanksgiving Day. And of
late, except for the utilities, there
have been signs of champing at the
bit. Bond prices, too, have not given
any indication of the uneasiness
that usually accompanies a sharp
decline in production and employ
ment.
Nor has there been the contrac-
ton in banking figures which,
historically-should attend a. gen.
eral decline in business. Demand
deposits of weekly reporting men,
Der banks have just pushed to an
other all-time high. Excess reserves
OF member banks have reached a
total which would have been in
conceivable back in 1885 .69O.-
100000 Moreover, commercial loans
are showing a seasonal tendency to
expand, and banks, unlike in the
fall of 1896 and the spring of 1897,
are holding on to their Government
bonds instead of selling.
Strong Basis Seen.
All OF this makes for a strong
financial background for general
business. Interest rates are easy.
banks are expanding (rather than
contracting their loans and invest
ments, buying power as measured
by bank deposits is at record levels,
and excess reserves get bigger week
by week These are economic phe-
nomena which customarily accom-
pany a rise in general businessmen
a decline. And this performance
tends to fortify the view that the
decline is nearing the end of It's
run-in distance If not in time. It
will take several weeks more to
reach bottom.
What happens in Europe Is apt
to play an important part in the
ultimate timing Of the upturn. TN
less there is substantial volume
OF buying from abroad. industrial
production might we'll drag along
around the expected low level of
los in the Business Week index for
weeks before turning up.
stimulus conceivably could come
from domestic orders. Consumer
purchasing power is holding up fair
ly well-the dip so far is not nearly
as sharp as in the first two months
of 1887. Auto sales are Just GAL
Looping along.
But it's hard not to wonder wheth-
er the February record of car buy
ing was too good to be true; whether
some let-down now Is not a logical
expectation. Meanwhile general re-
tail sales are somewhat mixed. De-
partment store volume, cut down by
the weather, is just running a few
per cent above that OF a year ago.
But the mail orders, after adjust
Ing for the extra day this February.
are running approximately IS per
cent ahead of 1920