CAN BOOM LAST ?

Hokitika Guardian, 12 September 1932, Page 5

CAN BOOM LAST ?

LONDON EXCHANGE SEVERAL UNCERTAIN FACTORS. (United tHess Association—By Electric Telegraph—Copyright.) LONDON, September 10. Questions uppermost in investors’ minds are:-r-Can the boom last.? Is it the revival- we have awaited for three Jong years? The Stock Exchange here seems determined to emulate the Wall Street .acrobatics. The, investors have ignored the adverse factors, like the continuance of the, cotton dispute, and the increase of Britain’s unemployment. Even the railroads stocks have improved, while some issues have moved in accordance with the best 1929 tradi-' tions like America; , / Celanesey stocks, which already had spurted oyer one - hundred per cent, rose by. a further 100 per- cent, last week. . |

1 Conservative city circle?;:declard that the improvement is based,; ; .on nothing more substantial than , j .psychology. They consider the impressive rise of world 1 prices in commodities. s\ lik wheat, copper, tin ahd.jrhbber :is fostered by. speculative interests,-; and that trader* .were caught with attenttuatod supplies. Therefore a restocking movement bus again bee ’started, whiah may reduce the visible markets’ stocks,, without involving any increased absorption by the ultimate ©onsumers. ■

There is an, «dverse l cotton reaction nt New York, under the pressure of half a million bales of cotton. This indicates that the rise had already exceeded a reasonable recovery, anc tends to reflect speculative possibilities in the remote future. ,■„ Referring to the great,disparity stil] remaining between the values of the dollar, sterling j, and Australian bonds, a conservative, .city opinion maintains that while the dollar is over-Valued the latter ,; (Australian bonds) are under-valuedi This opinion holds that until wheab and wool prices advance by 25 per cent., Australia’s external debt payments .are still. insecure. The “bulls;?’ on the contrary, contend that .cheap moneyqis the historical solvent of the depression, and that such money has. only just now begun to permeate trade; ... v<? The bull* say the Bank of England’s statistical-summary indicates that an equilibrium of money supply and demand has only recently been, re-attain-ed. Finally,- the bulls afgue that a Stock Exchange sentiment ‘should precede, and not - trade fluctuations. They hold that the importance of & restoration, c# ■ thfe investors’ iriorals hold pgy Is an essential precedent to a re-

oov#ry, ■

The aew»p«per “Ewnomfet" takes e «• cautious view, It says that the .bulls correctly diagnose the facts, while the ©there rightly emphasise the dangers, if international harriers are maintained, internal discrepancies and industrial hosts are uncorrected, and the long term interest rate will prove to be too low to restore a healthy demand for capital and goods. • What is now required jit says, is h perceptible autumnal quickening to the tempo of industry, first'in the United States, and subsequently in Europe*