Show Business m in Hesitating stage At Present Bullish Bulish Evidences By Major Alva Aba Lee Manager Bond Department J. J A. A Hogle Hogla Co February cannot be bo labeled the turnIng turnIng turn- turn I Ing log point In the tle present bull bul market but It may prove to have havo been tho the harbinger of the change chango In trend During the tho month tho the stock tock market had one sharp break However with the tho exception o othe of the steels and coppers the last ground has haa as been recovered and averages are again hovering around the highs of January January January Jan Jan- uary and December Many conflicting opinions are being expressed l cd now whereas where where- as practically all al were bullish the first of ot Tho year John Moody I is 15 still stI opt opt- The Tho service Is U advIsing advising advising ad ad- caution cauton Hayden Harden Stone recommends recommends mends selling speculative stocks while Byron Dyron Holt takes take the positive stand that s security prices have more than discounted discount discount- ed d any possible busness business improvement this spring spring- or summer TREND TID UNCERTAIN The Tile market Is never much concerned with wih past pat history except as It Jt has a a. bearing bearing- upon future operations The constant aim of the Investing public as asre re reflected by the stock stok market Is to anticipate an an- the trend of trade by several leveral months month Usual Usually but by no means al always al al- ways way the market does predict this thi trend In a a fairly accurate accurate way Just now financial writers express a a wide variety of opinions as to whether or not present business conditions have Justified the re remarkable remarkable re- re stock advance advance- made by the market since the election electon last lut November Such an advance could be warranted only by the belief belef that bUlneS business Wa was wa duo for considerable expansion all al along along- the line lne In endeavoring to gauge the Improvement improvement improvement im Im- im- im provement that has taken place tho evidence is Inconclusive At the present time business bulnes is In a hesitating hesitating- stage This hll Is welt well wel by a a. study of automobile production returns and the evidently i vague expectations of that In Industry industry In in- as they are represented by the trade organs The production of passenger pas pas- cars care car in January was which was wal more mare than the December output but less lees than In January 1924 The view of the trade seems to tobe tobe I Ibe be that th the public demand demano for the closed car al will wi cause production during during- 1925 to exceed the previous record of cars car in 1923 Sufficient basis buls for this optimism seems lacking lacking- to the tile outside outside out out- side observer who has his not forgotten the automobile predictions for last year Building which Is U one of the strongest pillars of good business DHOWS a a. a 5 per percent percent percent cent decrease from last lut year but Is still very much above normal With building at Its present pitch of activity it is a I little unexpected that the production of building building- materials should be Blackening This however I Is one of ot the marks of the present condition of business The o case of bricks and cement is matched matche by that of silk sik which presents simultaneously simultaneously simul sImul- ti the te largest record withdrawals from rom storehouses and slack operations in Pennsylvania silk sIk mills Even more indicative Is the slight decline de de- de- de dIne cline in the rate of steel production It I now becomes become apparent that the tho big bIS Increases in orders order during December December Decem Decem- ber her and early January were due to the decision of manufacturing consumers consumer consumer to purchase Immediately an all al they mey would need for fol several months b re the price advanced Since then prices have advanced ad- ad adI I but are well wel stocked with low priced steel OUD J U orders delay deny they will vl probably probably until after they have tested the response of theIr own consumers The brightest spot in the Industry Is toe neavy buyIng Of f steel by the tho This would Would Production Pro pru- seem sufficient to maIntaIn present for two or three months ducton On the other hand hana many factors actOrs ar are stimulus to business A operating a as a a considerable increase has occurred Inmany Inmany In Inmany Increases are likely to 10 many lines Such increase cumulative During January yaW Taw prove material Imports Increased which shows show rather conclusively a a rapIdly rap rapS Idly expanding Industrial activity around Whether this rapid expansion the first frt of the year yea was based upon substantial improvement or was merely a flash fash in the pan is yet to be decided A notable deterrent to extreme enthusiasm enthusiasm enthus enthus- lam Is la the tendency of commodity prices to sag sag- During During- February the declines which effected the local situation most mose were metal and grain INTEREST RATES HATES AND no BOND m PRICES In general bond prices act contrarIwIse contrariwise wise to Interest rates However this action action acton ac ac- ac- ac tion is I not always in direct proportion nor nol ton I is I It exactly simultaneous Usually the first bonds to respond to a a change in Interest rates up or 01 down are es especially es- es high grade ones Frequently when Interest rates turn upward due to expanding Industry tho the highest grads grade rade bonds will wil move downward at the same cams time the second grade ones are ar moving I upward Eventually of or course If I tn the trend trend- of Interest rates rate continues upward all al classes of interest bearing securities must respond At the present time money rate rates are ars stiffening So far this Increase has been very small smal In amount and has effected only call cal money and commercial paper The chango change In the trend was made evi evi- deat deot on February 25 26 by the advance Inthe in inthe inthe the rediscount rate from 3 2 a p per r cent to tot 4 t per cent which change was put In effect simultaneously by y the New ew York Tone and the San Francisco federal reserve banks Whether this trend will wi continue depends upon the expansion of Industry I If I a boom period Is la in prospect then 1 higher Interest rates may be expected On the other hand Jf It trade trace maintains I Ionly only its Il present activity or if the ex expansion ex- ex 1 takes tales place very slowly present I interest rates should hold steady or 01 weaken In any event It H seem seema oble ble that comparably low interest rates will be the rule du the wi next two or three years ear We e believe beleve that gilt git edged I long time bonds have about r reached hed their peak peal Bonds yielding from 6 C per cent to 7 1 p per r cent have hare hae more opportunity to toIL ton n IL nove ove to higher levels TIlE IE FUTURE PROSPECT So far tar the tho expected Improvement In business has not materialized Unless it does soon It would seem improbable Improbable for fol present to hold Cheap money has been the chief sustaining influence up to the present time Money rates es especially es- es brokers' brokers loans are beginning to stiffen somewhat Although we look for easy eay money conditions all al summer that highest alone t does 5 not 5 seem to Justify the prices on average that the r market has ever Our position is one of cauton caution We e adie ad time the selling I J stocks on bulges |