The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
0 basic business C 0 0 0 0 0 0 0 0 0 0 iNEWSi 0 O 0 0 0 0 - - - - - - - 0 0 ~ C 0 ~ ~- - - - - - - ~ - ~ ยท Published Weekly by the FEDERAL RESERVE BANK of CLEVELAND to December 2, 1957 November 26, 1957 STOCK MARKET The mercurial nature of the investing public was evinced by the happenings of last week. Although information regarding the President's health was fragmentary and confused, the stock market broke badly in the last half hour on Tuesday. The reaction on Wednesday, when more details became available, sent stock prices skyrocketing. The sharp turnabout seemed to be based not so. much on the news, as on second thoughts. The rally which followed, and carried through to the end of the week, indicated that there was considerable technical strength in the market, regardless of what the level will be six months hence. (Forrest. N. Y. Times, 12/1 III p .1) The Department of Labor reported that unemployment had increased in most major production and employment centers during the autumn. The survey said three-fifths of the 149 major areas had experienced increases in unemployment, but they generally were small to moderate. Areas reporting the most significant increases in labor supply were mostly those with concentrations of employment in aircraft, where employment has declined as a result of defense procurement cutbacks, and in machinery and primary metals. The Department said that area employment conditions, while less favorable than in September, had not been seriously affected by the increased unemployment and that job totals had remained at or near peaks -for the season in many areas. (N. Y. Times, UNEMPLOYMENT UP IN MOST AREAS 11/30 p.4) COI1TON MILLS BOOST PRICES Cotton goods price increases are broadening. Mark-ups were announced by four leading textile producers on various types of finished cotton fabrics. The C?mpa- nies ascribed the price boosts chiefly to the recent sharp climb in Selection of these items does not imply t_his bank's guaranty of their accuracy, https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis nor agreem ent with the views expressed. raw cotton costs, but said they also reflected strengthening demand. Price improvement in finished cotton cloth came in the wake of increases over the past fortnight in quotations for cotton gray goods-unfinished cloth. Extended shutdowns which many mills plan to make over the Thanksgiving and Christmas holidays have been a factor in the turn-for-the-better in gray goods markets. These curtailments are expected to lighten the burden of mill inventories, which have been holding prices down for months. (Wall St. J., 11/26 p.1) While many key industries are turning downward, tire sales this year are expected to run 4% ahead of 1956. And next year will see gains of 3% to 5%, rubber company officials are estimating. This reflects the still growing influence of the automobile and other motor vehicles. It's the passenger car replacement market that is giving tire men something to shout about. Rubber manufacturers say it is the most stable, steadily gaining and profitable end of the tire business. Since 1950 the number of cars on the highways has grown to an ~stimated 51.5 million from 35.7 million--a gain of 44% in seven years. A further increase of 3.5 million is likely a year from now, one official observes. Other tire men say the outlook is indeed good. In weighing the 1957 outlook a year ago, officials forecast moderate gains of 1% to 2% in total passenger tire replacement shipments. Rubber company executives have boosted their estimates several times since then, and now they figure on record 1957 shipments of 56.5 million, about 6% above a year ago. (Byrne. Wall St. J., 11/29 p.18) TIRE SAIES EXPECTED TO RUN 4% ABOVE '56 DISPERSAL OF BASES URGED Two prominent scientists, speaking before a Senate investigating subcommittee headed by Lyndon B. Johnson, urged the immediate strengthening and dispersal of the bases of United States heavy bombers as a precaution against Soviet ballistic missile attack. This recommendation led a list of five proposals for action submitted by Dr. Edward H. Teller, known for his work in developing the hydrogen bomb. The five proposals were endorsed by Dr. Vannevar Bush, former head of the Research and Development Board. Dr. Teller suggested the following as of the highest priority: Carefully look into the strength and capacity of the Strategic Air Command, with special emphasis on dispersal of bases; accelerate and expand the missiles program, including research on space platforms and the like, and introduce overtime work on production, if possible; examine the country's passive defense situation, with a view to building a network of atomic radiation shelters and storehouses of food and raw materials; enlarge the program for building nuclear-powered -submarines; and improve the nation's facilities for scientific https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis education, with special emphasis on techniQues that would change the public's attitude toward scientists. (Raymond. N. Y. Times, 11/26 p.1) LOW REDEMPTION LEVEL "GOOD" Surveying the recent refunding operations, the Treasury said that only a small perc.;entage of holders of a maturing $10 billion issue decided to take cash rather than swap for new securities. Officials rated the low level of cash redemptions as "good". Of the total amount of the maturing issue, some $8 billion was held by the Federal Reserve System or was in Government accounts and was completely "rolled over" or refunded. The other $2 billion was in public hands, and Treasury officials estimated the attrition (cash redemption) of this portion of the issue was only 7%. (Wall St. J., 11/29 p.11) The Government (November 25) offered investors $200 million of new securities in what it hopes will be its last borrowing operation this year. The securities were offered by the Federal National Mortgage Association. The $200 million will be turned over to the Treasury to repay earlier mortgage association borrowings from the Government. The maneuver will give the Treasury money that it needs to pay its bills, but won't shrink the perilously close margin that now separates the Treasury from the $275 billion statutory debt ceiling. FNMA now has come to the Treasury's rescue on two separate occasions. The Government has been skidding along just under the debt ceiling since last summer, and earlier this fall FNMA borrowed $802 million which it turned over to the Treasury. Financial officials believe that completion of the FNMA offering will make it possible for the Government to stay out of the securities market until early in Janup,ry. (Slevin. N. Y. Herald Trib., 11/26 III p.6) $200 MILLION ISSUE OFFERED BY FNMA LAKES FREIGHTERS The last of a fleet of more than 100 ocean freighters is scurrying eastward from the Great Lakes bound for overseas and leaving behind a season's cargo record unsurpassed in the more than 27-year history of the inland shipping link with European ports. While several cargo tonnage figures are still in the unofficial stage, others estimate the tonnage in and out of the lakes this season will show about a 40,000-ton increase. Last year a lesser number of ships carried out or brought in 575,000 tons of export-import general cargo. The feeling among shipowners is that the cargo increase is an indication that shippers are experimenting with the Great Lakes navigation routes prior to the opening of the St. Lawrence Seaway in 1959 to determine whether or not time and money can be saved by using the inland shipping route CHALK UP RECORD https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis rather than by moving freight through seaboard ports. J~ of Comm., 11/26 p.1) (Mantrap. 12 NEW ORE BOATS Pittsburgh Steamship division of U.S. Steel Corp. has long-range plans for building 12 large new iron ore carriers for the Great Lakes trade, Admiral Charles R. Khoury (Ret.), president of the division, said at a news conference. The program probably would involve an outlay of around $100 million. Adm. Khoury stressed that no final decision has been reached on the vessel building program. It is doubted that the new vessel building program, when completed, would result in any substantial gain in total capacity of Pittsburgh Steamship's lake fleet. The division has plans for replacing 29 older, smaller and less powerful vessels with the new boats, actually reducing the total number of ships in the fleet by 17. Adm. Khoury said Pittsburgh Steamship is considering building vessels with cargo capacities of 20,000 to 25,000 tons and 700 feet long. The largest vessel in its fleet at present is the A.M. Anderson, with a capacity of a little under 20,000 tons. (Wall St. J., 11/27 p.8) FOR GREAT LAKES SECURITIES SALES AT RECORD LEVEL U.S. corporations tapped the capital markets at a record third quarter rate between July and September of this year. A Securities and Exchange Commission survey showed the companies marketed $3 billion in new securities in the third quarter, up from $2.7 billion, the former record for the corresponding period set in 1956. Wh le the third quarter total fell short of the $3.6 billion offered in the first quarter and $3.3 billion in the second quarter, the SEC said it lifted the combined offerings for the first nine months of 1957 to a record $9.9 billion, up $2 billion from the previous high during the like period last year. The Commission ascribed the record flow of securities offerings to a "high level of business spending for expansion". It reported the corporations floated $1.9 billion in securities for plant and equipment expenses during the third quarter, while another $900 million of securities were offered for working capital. (Wall St. J., 11/26 p.16) https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis
@FedFRASER