Detroit evening times. (Detroit, Mich) 1921-1958, 1942-02-02
Bearish Forces
Hold Edge in
Stock Market
BY LEWIS HANEY

Profesor Of Economics n. Y. University
The stock market last week
performed exactly as here an
ticipated. A small rally oc-
Cured at the beginning, but did
not get far. The week ended
with a little reaction. Imme-
diately, the bearish forces ap-
pear to have the edge.
There are very few indica-
tions in the markets action
which suggest any rising ten
dency, the dizziness on the de-
cline being about all.
In general, this is a period Of
uncertainty, in which there IS
an attempt to discount the eff
fects of a war economy,-in-
Guiding taxes, upon American
equities. The standard troubles
are we'll known - unfavorable
war news, high taxes. laborism.
and socialistic government poll
cies.
The last two are much the
most serious and important.
Aside from them. stocks dip and
rally, but would not be so dead
at low price-earnings ratios and
high yields.
Such matters as the Go
leaders advice to his followers
to take advantage of war con-
ditions to demand higher wages,
and the Roosevelt move to sit in
with representatives of the ALL
and Go as committee to deal
with labor problems, are very
'discouraging symptoms.
But, while it looks as if some
further weakness is TO be ex-
pected, the investor should not
forget that if the market is not
discounting the future, it is not
turning in a performance that
is bearish for the long pull.
1t has held rather well with
out any great liquidation. giving
little evidence of conditions
ahead being worse than have
already been discounted. I fear
that things will have to get
worse before they get better.
But the market may have FORE
seen all this. 1t is not con-
pineed that its present lines are
untenable.
The Immediately unfavorable
symptoms are as follows: After
early strength. the market again
failed to follow through. despite
a considerable uplift in senti-
ment and participation by a
good many old line investment
issues.
This failure came at the same
level where an abortive attempt
to rally occurred on January
10 and 20.
There have continued to be q
good many soft spots" among
stocks. including some impor-
tant issues. The number of new
lows exceeds the new highs
and the latter recently have
most been sugar stocks. The
number of stocks showing de-
clines has exceeded the ad-
vances for several days.
The rails have recently shown
some weakness. On the whole,
there is feeling that their re-
Spouse to the passenger fare adj
vances has been disappointing.
The earnings statement of the
steel corporation was not very
good considering the fact that
the company is at 100 per cent
Of capacity, while increased
labor and tax demands face il.
The immediate effects of the
war economy are "deflationary."
But back of all these signs,
is the fact that two great bodies
of American stockholders are
not liquidating. They are not
doing so, because one believes
that such a vast initiation is de-
veloping that stock holdings are
advisable, while the other be-
lieves that all the current UNI
sound and socialistic tendencies
will end with a demonstration
Of their futility.
Some, too, think that q
transition to a war economy
will be made more smoothly
than is feared. and point to the
huge volume of war orders on
which General Motors is already
beginning to operate.
You must admit that the ac-
tons of Congress at least show
that our democracy is not yet
lost.