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Practically all the news during the past week has been dis- 

 couraging. The American public has been confronted with a serious 

 development within a period of a few days comparable to those suggested 

 in a recent Iv'eekly Market Review, but the effect has been less devas- 

 tating than might have been anticipated. The inability of England to 

 get the numerous factions in India to accept any sort of a reasonable 

 proposal was accompanied oy further Japanese aggressions in Burma and 

 the Bay of Bengal, and was followed by the capitulation of Marshal 

 Petain to German pressure and installation of Laval as a pov;erful 

 member of the French governing body. This was enough to upset a weai:- 

 ened stock market and caused a sympathetic decline in grain prices. 

 Although averages of representative stocks on the New York Stock Ex- 

 change did penetrate the 193^ lo^^ ^^cL came fairly close to reaching 

 the 1935 '^o\j , there was no panic. The volume of turnover was not es- 

 pecially heavy and the averages dropped only about 2 per cent. It 

 would not be surprising to see some slow recovery in the stock market. 

 It would seem that bad news is pretty well discounted. 



The war news may get better. The Russian situation is far 

 from hopeless and the increased bombing raids against both the Japanese 

 and G-erman controlled territories v;ere encouraging. It is a little too 

 early to evaluate the effect of French developments. If the fleet is 

 turned over to Germany, if Germany obtains control of northern and 

 western Africa and if Japan obtains control of Madagascar, the situation 

 will be seriously impaired from our point of viev/. 



The strongest reason for believing that no future serious col- 

 ^ lapse may be expected in the stock market is the high yields obtained 

 from stocks vjith present low prices and relatively high earnings. A 

 representative list of industrial stocks showed yields in excess of 7 

 per cent February 22 as compared with the yield of 3 per cent October 31, 



