Bad Time for Bears

Wall Street's dwindling colony of bears stayed in their caves last week, as the market rally stretched into its third consecutive week. The market seemed to like President Eisenhower's budget message (see below), and the way business was steaming along. The Dow-Jones industrials average moved up four points to 290.40, highest in ten months.

The bulls had other good news. Aircraft shares got a lift when Douglas announced an extra dividend of $1.50, in addition to the regular $1 payment; the stock shot up 6 1/2 points for the week. Douglas sales set a peacetime high of $874 million in 1953, and profits rose to $15.50 a share. Republic Steel reported that 1953 earnings were $56,743,547, second highest on record, equal to $9.25 a share.

The optimism seemed to be changing the minds of some pessimists. In the U.S. for a debate with U.S. Economist Wladi-mir S. Woytinsky, Australia's Colin Clark admitted: "I have raised my sights in ...

slight degree" since writing in the Manchester Guardian Weekly that the U.S. is in for a major slump, beginning this year (TIME, Jan. 11). However, Clark still insisted that there were more danger signals than there were for the minor 1949 setback, and that only a cut in taxes or an increase in Government spending big enough to create a federal deficit of $20 billion a year, would avert disaster.

The economy was still far from free of danger signals. The Federal Reserve Bank of Chicago predicted that farmers' net cash income would drop 10% this year to the lowest point since 1943. Scattered layoffs were announced--by Chrysler, Baltimore & Ohio Railroad, General Electric, Westinghouse, Alcoa. And Studebaker Corp., beset with troubles all last year (TIME, Sept. 21), cut its quarterly dividend from 75-c- to 40-c-. But Economist Woytinsky, whose record on predictions has been excellent, said that the present slip would be over by midyear and business would be about 7% above 1952 levels before the end of the year. Said Woytinsky, "Signs of danger are always with us, when [we] are traveling at such speed ... If the economy is strong enough ... these danger signs are just a challenge . . ."

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