The Turn

With the passing of Labor Day, business rounds a definite turn in its seasonal orbit, enters upon the straightaway that usually is marked by its greatest speed. Last week economists, statisticians, chart readers anxiously awaited the first indication of what business will do after this year's turn. It will probably speed up. The question: Will its advance be as great as that of a normal year, or will it be a sluggish, short response which, in a weighted chart, would represent decline? Factors began to appear last week. The Market. As if in anticipation of the long-rumored "bull market after Labor Day," the market began steadying last fortnight, crept higher last week. Brokers, as usual, issued bullish letters, said further reactions will be small. Few traders could find a sound reason for the advance, but many held that it would be the impetus which Business awaits. Especially encouraging was the strong bond market. From Massachusetts, where about a year ago was sounded the dismal warning which none heeded, last week came a bullish statement. Statistician Roger Ward Babson, 1929--5 most famed "Prophet of Doom," made his first modification of his very bearish stand of last year, his first general recommendation to buy stocks since 1924. Stocks suggested by the Babson Statistical Organization Service were divided into two groups. "Good yield" stocks were: National Dairy Products Corp., General Foods Corp., North American Aviation, Inc., Texas Corp., American Smelting & Refining Co., Utilities Power & Light Corp. "Active issues" were Standard Oil Co. of New Jersey, Electric Power & Light Corp., E. I. du Pont de Nemours & Co. Inc., United Corp., United States Steel Corp., General Electric Co. In discussing present conditions, the Babson report said the drought had been one reason clients have been kept out of stocks since November. Apparently misconstruing the meaning, Barren's (Dow-Jones weekly) decried this prophet who foresaw drought months ahead, wondered why he did not have the power to prevent it as well. While Roger Ward Babson's recent fame gave his report wide publicity, dispatches from London quoted a more bullish viewpoint on the part of a far greater financier. As president of the mighty Sun Life Assurance Co. of Canada, Thomas Bassett Macaulay must know about common stocks. For Sun Life has a special partiality toward common stocks, is reputedly the world's largest stock buyer and stock owner. When Mr. Macaulay joined the company in 1877 he was 17 years old, the company was six. Not until 1915 did he succeed his father as Sun president. His words carry weight in financial circles. He does not look like and is not a casual commentator. Mr. Macaulay's statement was undoubtedly the most bullish utterance yet heard from a responsible financial rather than political source. "I think," he said, "by the end of this year selected common stocks of the type we have in our portfolio will on the average have regained in market value 60% to 70% of the loss sustained last autumn.* By the end of 1931, or at any rate, of 1932, I expect the average to have, perhaps, even attained the 1929 peak again." Steel. Although Iron Age's prices of finished products are at the lowest since 1922, firmer scrap steel prices are encouraging. The industry as a whole is operating at 54%, against this year's low of 52% (Aug. 10) and 90% last year at this time. Unfortunate last week was a roseate report by Dow-Jones that U. S. Steel's opera tions had risen to 66%. Quickly the Steel Corporation refuted this, said operations were unchanged at 63%. Scotsmen. Said the leader of the Aber deen, Scotland, Chamber of Commerce, of which 35 members are touring the U. S.: "If you want to see a good depression just come to Scotland; it's chronic over there."

* In Sun Life's portfolio as last revealed were many utilities, few railroads, no coppers, numerous industrials.

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