The New Bull Market

>Already in 1943 more shares of stock have changed hands on the New York Stock Exchange than in all 1942.

>In the first full week in May, more than 2,000,000 shares were sold in every full day of trading.

>Last week, when the conquest of Tunisia was a fact, not a good speculation, the market slumped, as usual after good news, but the daily volume still continued over 1,000,000 shares.

This kind of activity makes plenty of money for the Street. But hardly anyone, from Stock Exchange President Emil Schram down to the lowest customers' man, really enjoys the boom. They fear that it will boomerang. They note that blue-chip stocks still back & fill (or rise very slowly), that cats, dogs and longshots account for most of the trading. They shake their heads when they see today's market leaders--Radio, International Telephone, Cities Service--the very stocks that led the bull market in 1929. Although prices are still much lower, brokers grouse that the ratio between price and earnings is just as high in many cases, that higher taxes, higher costs, anti-inflation measures, postwar unemployment are ahead.

No Hedge. All this is true, but it looked very much last week as if once again most Wall Streeters understood too little of the music to which they danced--this time in trepidation. They were so preoccupied with the fact that too many people are buying penny stocks, just be cause they are low-priced, that they failed to notice the real forces that underlie today's speculation. For, although Emil Schram cries out that stocks are no hedge against inflation, stock prices cannot remain unaffected by a general price rise.

Inflation such as is now going on in the U.S. does more than give people money with which to speculate. By reducing the real burden of all debts and fixed charges, it tends to repair wobbly fortunes. And, when accompanied by a very high rate of business activity, many a business that has been all but hopeless of profit may be gin to acquire new prospects. This change has been reflected in railroad securities, to utility holding-company common stocks (many are at four to six times their recent lows). It is happening to other businesses.

Examples: Curtis Publishing Co. common stock (up from if to 7 within the year); American Cable & Radio (3 1/2 to 8); Ward Baking "B" ( 5/8 to 2 1/4).

The combination of inflation and high business activity does not make all cats & dogs good buys for an undiscriminating public, but cats & dogs tend to benefit from it much more than blue chips.

Hope Abroad. The Street is also alarmed by the boom in foreign securities. Belgian, Norwegian and French bonds, all backed by considerable assets outside Axis control (shipping, gold, etc.), have long had substantial value. But in recent months Latin American dollar bonds--especially those in default--have had a 20% to 75% rise. Chinese, Burmese and Philippine securities (governmental and private) have generally risen. But most startling are the jumps in the bonds of occupied countries whose prospects seem most dubious. Kingdom of Serbs, Croats & Slovenes 8s last week hit 18, an 80% rise from this year's low; Greek 6s went up to a high of 24, a 100% rise. Even Czarist Russian dollar bonds (long since repudiated by the U.S.S.R.) rose perpendicularly from a 1943 low of 2 1/2 per $1,000 bond to 9 1/2.

Although somewhat different forces (from those affecting domestic cats & dogs) affect these foreign bonds, they operate in the same way: giving the most despaired-of buys the biggest boosts. Most significant of all: the rise in foreign securities reflects not only ebullient hopes of Allied victory but also tacit faith in the establishment of a workable world economy afterward. As faith in the domestic future is necessary for good business at home, so faith in the future of the world will make it far easier to take the necessary steps (see col. 3) to set the world on its economic feet.

If it does not turn into a wholesale speculative orgy, the new bull market which has Wall Street shaking in its galoshes may prove to be a real sign of hope--especially for many things for which hope had long since been abandoned.

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