Investment View 'Yes, But' Refrain Clouds Outlook
NEW YORK, April 26: Stock market behavior ÛÓreflecting the judgments of investment managers and speculatorsÛÓis being influenced at this juncture by an u n u s ual amount of ÛÏyes, but...Û type of rea-sonin;, wherein the very favorable nature of a given factor is rendered sus p c c t be- Dorsey</br></br>A prime example1 is the recovery of corporate earnings from a six-year period during which profit margin* were subnormal. The upward Orend in earnings measures an improvement in the attractiveness in American enterprise and hence is a bullish factor in the stock market.</br></br>But there seems to be an effort to create a public impression that this earnings improvement Is exorbitant and therefore subject to the criticism that prices are too high and/or wages are too low. Therefore, the favorable implication of the earnings improvement tends to be offset by threats of exorbitant demands by the labor unions</br></br>Another ÛÏyes, but. . .Û couplet that is currently being discussed by investment managers concerns the outlook for business activity. The statistics now being released for the firsjt quarter of the year are up to the most optimistic projections being made several months ago. The quarter-to-quarter improvement for Personal Disposable Income was 1.8 per cent compared with 1.6 per cent in the fourth quarter of last year, and 1.1 per cent in the preceding quarter.</br></br>With the full impact of the reduction in the income tax withholding rate being felt in the current period, the quarter-to-quarter increase is likely to be about 2.9	per cent. This latter pace of improvement will not continue in the final two quarters of the year but it should be better than it was last year.