Show BUSINESS end and widths th the STOCK MARKET by BABSON'S REPORTS INC 1971 WILL PHASE II BE SUCCESSFUL With the U U. S. S dollar under intense pressure on international money markets markets markets mar mar- the business recovery proceeding at a sluggish pace and the for forces es of inflation proving to be more stubborn than earlier anticipated the President abruptly proposed a new economic game plan part way through the third quarter ter tel of the year The broad program included included included in in- dramatic steps to combat inflation inflation inflation tion fiscal policies to stimulate both consumer spending and expenditures for new plant and equipment and measures to improve our trade balance and cause an upward revaluation of certain foreign foreign foreign for for- eign currencies in terms of the dollar Some Question Marks Since then the President has outlined Phase II H of the economic program a comprehensive pattern of controls that will cover most of the economy to become become become be be- come effective when the freeze expires November 13 But many questions still remain unanswered leaving observers in considerable confusion as to how Phase II will actually work Also many of the fiscal proposals of the new game plan will doubtless be changed somewhat somewhat somewhat some some- what before receiving congressional ap ap- Perhaps even more significant is the uncertainty surrounding the worlds world's international international in in- monetary situation A workable workable work work- able solution is still being sought for this critical problem But wl while le almost all parties involved agree that present conditions cannot continue for long without with out seriously disrupting world trade there is is' as yet little concrete evidence that a real answer is close at hand An Optimistic Outlook Despite these uncertainties the Research Re search Department of Babson's Reports is generally optimistic about the Ute new program It is felt that the fiscal proposals pro will wUl for the most part be approved approved ap proved by congress Thus the final blueprint blue print while perhaps differing from the original in some d details should serve the Presidents President's twin objectives of stimulating stimulating stimulating lating consumer spending and reviving c capital pital expenditures both essential if U business is to improve more rapidly While it will be much too early by years year's end to determine the results of the new program we do expect to see some positive indications of a healthier business atmosphere before 1971 draws to a close In fact consumer spending has already begun to show some degree of betterment reflecting a brighter buy DUy ing lag Details Detail Yet To Come Corns As far as Phase II of the war on Inflation inflation in In- Hatton is concerned much of the speculation ape concerning the workings of this plan will probably be clarified in coming com corn ing weeks Thus with labors labor's acceptance of the program at least initially things may work out reasonably well and the rate of inflation in time could be slowed to a more tolerable pace The Tha recent decline in interest rates supports sup ports this opinion The international monetary situation is potentially the most dangerous issue at this time However per perhaps aps Its Ha sheer gravity is in itself a hopeful consider anon With all aU parties clearly aware of the possible dangers an intensive effort effort ef fort to arrive at a reasonable solution solutionis is more than likel likely In f fact et substantial activity is already well under way behind be hind the scenes A Time Tim To Buy Puy In fn view of ot these considerations the Research Department of ot Babson's Re ports looks for tor a 3 more favorable Investment invest Invest- investment ment climate II in coming corning months The current market uncertainty should soon be replaced by a more positive attitude attitude atti atU- tude and stock prices price should resume their upward trend by the end pf pI be the year Furthermore buoyed by prospects of another solid gain caiD ia to profits next Dext year the Jones Dow-Jones Industrial Average could very well reach the magic 1000 mark sometime in the f forepart rep ft of 1972 Consequently Babson's Research Department Department De Department De- De is advising its clients to to add to their common stock holdings at this time |