FINANCE AND INVESTMENT
MANY, and especially those outside the City, will feel it is an odd world in which a speech as bitter as that of Herr Hitler at Monday's assembly of the Reichstag can send stock markets soaring. Is it really quite as odd as it seems? Let us remember that it is the stock market's business to look ahead, and that looking ahead in the fortnight pre- ceding Herr Hitler's speech it saw nothing to its liking. The probabilities appeared as a fairly early dinouement in Spain, followed by specific demands on France and at least a sabre-rattling speech from Berlin, even it did not thiow down the gauntlet. In that atmosphere prices fell sharply, and a substantial " short " interest was built up by " bear ' speculators and others seeking a " hedge" against large portfolios. Thus, technical conditions were such as were bound to produce a violent upswing in prices if for any reason the outlook improved.
Whether Herr Hitler's speech is a good and sufficient reason for supposing that the political prospect has changed is a matter on which I must leave investors to make up their own minds. The City's reaction has been demonstrated in a spectacular recovery in quotations, which, even allowing for the purely technical influence of the heavily over-sold position, does indicate not merely relief at the absence of any threat of imminent hostilities, but a feeling that the way may shortly be opened for a negotiated settlement as part of a general disarmament plan. To take this kind of view is not inconsistent with not accepting Herr Hitler's declara- tions at anything like their face value or with a recognition that we shall probably get spasmodic attacks of nerves during the next few weeks. My own inclination in the matter of investment would still be to go slow and keep one eye firmly fixed on international politics. At the same time, I would not dissuade the genuine investor, who is prepared to ignore temporary fluctuations, from picking up first-class indus- trials, such as Imperial Tobacco, Thomas Tilling, Stewarts and Lloyds, and United Steel, at current prices. There will be scope over a much wider field if and when American business really shows signs of getting further ahead.
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