1937 and 1938

I figured I'd collect some newspaper references to show just how unknown the future is. For the past year or so I've been trying to figure out what the second leg down will look like, if it occurs at all.

What we know now:

Stock market hits 195 in March 1937. Hits 100 in April of 1938. Time from peak to bottom was 13 months. So I looked at what happened 2 months prior to March 1937 up to March 1938 to understand the mindset. Index closing levels from here.

I only focused on topics that are relevant today (debt, monetary easing, business sentiment etc). Of course, there was a little uprising occurring in Europe. So like all things, this is not a complete picture. At best it's like comparing a jigsaw piece to the Sistine Chapel. Even if I did have all the pieces it still wouldn't do justice.

Jan 1937

"Business has progressed so far that it could get along very well without further stimulants. Control of the recovery, however, is another story and the new year finds serious attention being devoted to it. The government intends to maintain an easy money policy but apparently will seek to regulate its consequences as is evident for the treasury plan...." pg 10 Jan 2, 1937 Milwaukee Journal

"Hopes Roosevelt will Settle Labor Troubles Sends Stocks Ahead" pg 6 Jan 5 1937 Milwaukee Journal

Feb 1937

"There is here no question of deflation: the problem is to only control inflation.
On the surface at least, the inflationary trend has not gone very far. Certainly it has not in commodities."
page 6, Feb 1, 1937

On Feb 11 there was an offer for $75M of Northern States Power Company 3.5% 30 year bonds.

March 1937

"Oh Me, Oh My, Why Didn't You Buy Some of Those Stocks back then?" pg 7
There were multiple articles about record profits.

April 1937

"Steel Copper Cited as 'Out of Line'" "President Roosevelt told a press conference Friday, that prices of durable goods such as copper and steel are far too high. He added that the time had come for the government to discourage federal expenditures for such goods and to encourage expenditures for consumer goods." Front Page April 2, 1937
"Roosevelt's Comment Takes the Starch Out of Stocks" pg 17 April 2, 1937
"Economy Dispute Flares; Roosevelt Orders Slash in Expenses" pg 2 April 14, 1937
"Optimism Over Business Is Reflected by Buying Orders On Stock Exchange" April 14, 1937 must have been a very confusing day.

May 1937

"Stocks Market Flutters Aimlessly as Volume Goes into a Tailspin"& "More Spending By Government" Government spent $2.3B more than it took in, bringing total debt to $34.9B(roughly in line % wise with recent times). May 3, 1937

June 1937

On June 3, 1937 more reports about the record breaking debt: "The amount of financing was far above all unofficial estimates."
And people loved gold then too.

July 1937

"Congress Cuts US Spending" July 1, 1937 pg8 Milwaukee Journal
"Profit Trend Continues Up" July 1, 1937 pg 8 Milwaukee Journal
http://news.google.com/newspapers?nid=jvrRlaHg2sAC&dat=19370701&printsec=frontpage&hl=en

August 1937 was pretty slow. Low volume was noted and not much action from the couple of papers I saw. It also started the slide from 190 down to the low in March of 1938.

September 1937

"Stock Market Shows Power Although Ticker Tape Goes to Sleep" Sept 2, 1937

October 1937

"Throw Jewels Out Put Meat in Freezer." It seems on Oct 4, 1937 a drought was causing a spike in corn prices.

Nov 1937

"One of the 'unfavorable indications' in the general situation, the report said, is the expected decline in government spending and 'deficit financing.' Government financing has played an important part in the recovery." This was in the article titled "Business Drop will Last Year" on page 8

Dec 1937

"Government Choking Business with Fear, Taxes, Alfred Sloan and Merle Thorpe Say in Speeches" pg 7 Dec 3, 1937
Also on the same page is an article about Social Security funds not being saved but instead being spent on other government uses.

And a headline that I thought was pretty good "Credit Stimulation Program is Halted- The Federal reserve board Friday revealed that it had discontinued last week..its credit stimulus program of buying government securities."

Jan 1938

"Budget Message Points to Further Big Deficits" Front Page

March 1938

"Optimism in Cautious Vein as Street Watches Dividend Cuts and Omissions and Further Unemployment" pg 4 March 2, 1937

Conclusion:

I'll never know the future.