How things look to Clifford A. Greenman

Title

Language

English

Source

The American Chamber of Commerce Journal Volume XVIII (Issue No. 6) June 1938

Year

1938

Rights

In Copyright - Educational Use Permitted

Fulltext

22 THE AMERICAN CHAMBER OF COMMERCE JOURNAL June, 1938 How Things Look to Clifford A. Greenman Business enters the second summer of the current major depression facing the certainty of further curtailment in indus trial production schedules over the near term. Present indications are that new low levels in aggregate business volumes will be reached during July and August. The mere prospect of a moderate further decline in industrial activity below the low levels of recent months is, however, of less importance from a security market stand point than the complete absence as yet of any indication of the forces which might be expected to promote a broad upturn later in the year. All things considered, the stock market has withstood a barrage of generally bad news comparatively well in recent weeks. Prices have merely drifted in the past fort night in about the same pattern that was traced by the reaction witnessed in the second half of April. The rails are again close to their 1938 lows, but both the in dustrials and utilities still have some dis tance to go before former resistance levels are pierced. With business news over the next several months likely to provide little encourage ment to speculative sentiment, intermittent weakness in stock prices is quite conceivable. Even though we may be passing through the final stages of the depression and of the bear market, no incentive for the assump tion of increased speculative risks has yet appeared. An important effect of the tax law enact ed recently is that prime-grade corporate bonds must sell at a greater discount un der tax-exempt Government ^onds of com parable coupon rates and maturities in or der to provide the same yield after taxes. The present discrepancy suggests an ulti mate widening of the spread, either through a decline in prices of best-grade corporate issues or a further advance in Govern ments. This may not take place immedia tely—the discrepancy has already persist ed for some time—but it is a factor to watch in realigning portfolios of highest quality bonds. The prime bond market as a whole promises to continue stable for some time, since there is no sign as yet of any firming of money rates. Prospects for medium- and low-grade bond issues have changed little. The dis couraging outlook has been reflected in a renewed downtrend of bond prices, follow ing the spurt from the beginning of April to mid-May. The advance had been large ly technical in nature, reflecting the feel ing that prices of many issues had been driven down to reasonable levels, rather than any signs of a turn-about in business and profits trends. With even the beginnings of recovery not yet in sign, and some months at least of continuing retrenchment definitely in pros pect, final judgment as to which stock groups will offer the greatest potential ities for price appreciation in the next major recovery period must be reserved. The groups in the following tabulations must, therefore, be considered as strictly tentative. (Please turn to page 30) TABACALERA VICE PRESIDENTE ‘Beals them all IN RESPONDING TO ADVERTISEMENTS PL EASE MENTION THE AMERICAN CHAMBER OF COMMERCE ‘JOURNAL 30 THE AMERICAN CHAMBER OF COMMERCE JOURNAL June, 1938 rangement will supersede the present one, by which Marsman and Company has been receiving a substantial management fee and other perquisites. ROYAL GEKKO MINING SYNDI CATE: This investment syndicate held a special meeting a few days ago at the Univ ersity Club, to discuss a “new type of enterprise”. The membership is very small, being composed of a fc.v well to-do Manila businessmen. Organized in the early days of the boom, its units have gone against the trend, and advanced consistent ly in price. Original memberships were P100.00, and nominal quotations give sellers as demanding P150.00. As a matter of fact, however, no units are available at tliis figure. SORIANO: The Soriano group of three mines turned in an all-time high monthly production figure during May. Total gold output was ove.- the million-peso mark for the second time, running to Pl,032,330.21. Masbate Consolidated and /. X. L. both beat their previous reco'rds, while Antamok gained substantially over April. NIELSON: Thiago Consolidated and Paracale Gumaus reported their first pro duction last month. Tinago started its history with P21,000.00 produced from S50 tons of ore treated during May, while Para cale Gumaus recovered P20,089.38 from 2,160 tons. with the East Mindanao Mining Company, whereby up to 12 tons daily of Mapaso’s ore will be milled at the East Mindanao plant. The ore is high-grade, running around P100.00 per ton. Under the arrange ment, Mapaso will receive 90% of the gold, and 85% of the silver extraction, less P8.00 to P8.50 per ton for treatment. In addition, it is estimated that it will cost Mapaso around P7.00 per ton to ship the ore to the East Mindanao mill. The purpose of this arrangement, from the point of view of Mapaso, is to obtain enough income to pay for all operating ex penses during the development stage of the mine, pending completion of plans to erect a mill on the Mapaso property. Felipe buencamino, Jr., managing director, an nounced that development work has been very satisfactory this year, and stated that geologists and engineers estimate ore re serves at around Pl,700,000.00. SURIGAO CONSOLIDATED: A strik ing increase in the value of the mill heads was reported by this company for May. During that month, P68,607.00 was extract ed from 2,080 tons of ore milled, and the tonnage was for an average extraction of P33.00, as compared, with P19.50 per ton for April. How Things. . . (Continued from page 22) The following groups of stocks are con sidered as offering “near term attraction” in the sense that these industries not only will make relatively good earnings show ings this year, but will also share fully in cyclical recovery. Holdings of selected stocks in these groups should, therefore, be retained in full under present conditions, and recommended issues should be utilized for switching from less desirable stocks. Chemicals Containers Oil Mail Order and General Chains Variety Chains Stocks in the following groups are still vulnerable to intermediate downswings in stock prices. In the aggregate, however, this second classification includes industrial groups for which the expectation of better than average cyclical expansion in earnings appear warranted. At levels nearer the lows of the recent broad trading range or at a time when reversal of depression trends appeal's closer at hand, selected stocks in these groups would likewise merit Aircraft Mfg. Autos and Trucks Auto Parts Auto Tires and Electrical Equipment Industrial Machinery Non-Ferrous Metals Office Equipment Paper and Paper Products Refractories Steel and Iron Main Office: 343 T. Pinpin Tel. No. 2-39-36 KUENZLE & STREIFF, INC. MANILA CEBU ILOILO ZAMBOANGA Branch Office: 11-48 Isaac Peral Tel. No. 2-17-62 Tel. 2-32-51= i Carmelo & Bauerm ann, Inc. I---------- Lithograph ers P r i n t e r s Bookbi nders Box Makers 2057 Azcarraga, Manila. IN RESPONDING TO ADVERTISEMENTS PLEASE MENTION THE AMERICAN CHAMBER OF COMMERCE JOURNAL

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