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Neil Cavuto was joined by Gregg Hymowitz, founder of Entrust Capital; Jim Rogers, president of JimRogers.com; Ben Stein, economist; Meredith Whitney, Fox Business News Contributor, and Charles Payne, CEO of Wall Street Strategies.
New Market Threat?
Neil Cavuto: Talk about a bull in a China shop! On Wednesday, the Chinese joined America and Russia as the only countries to put a man in space and safely return him home. Why should all of us and our stock market stand up and take notice in a big way? Jim, does China pose a threat to America and our market?
Jim Rogers: Neil, they call themselves Communists but they're among the best capitalists in the world right now. They've also been the fastest growing country the last 20 years. They're going to be the largest economy in the world within the next 20 years.
Neil Cavuto: Should we worry about what they've been able to accomplish?
Jim Rogers: No, we should embrace it. We should try and engage with them and try to trade with them. This is not bad. We've replaced England and England is still there.
Gregg Hymowitz: In many ways, China has helped us because they've been the biggest buyer of U.S. treasury securities. They've been able to keep U.S. interest rates very low. So without that, this economy would be in much worse shape. The problem is that China has a lot of cheap labor supply and that creates a real problem for some of our industries here.
Jim Rogers: The Chinese buy from the Japanese and they buy from the Germans. The wage rates in those countries are huge and somehow or another they, the Germans and the Japanese, are able to compete. We brought this upon ourselves.
Ben Stein: I'm worried about China attracting U.S. jobs. Manufacturing jobs are disappearing by the millions in this country. I've never heard an economics professor say that free trade is a bad thing. But I've never heard of an economics professor lose his job because there's a cheaper, less well paid economics professor in Shanghai. Similarly investors say China is a great thing because it's great for consumers, but investors don't lose their jobs over cheap Chinese imports. So there is a real human cost to this.
Meredith Whitney: We still dwarf them in terms of economic output. Ben's point presumes that we're not going to be flexible enough to diversify from manufacturing, which clearly is a threat but competition rises to the occasion.
Gregg Hymowitz: I agree with Ben. You're not going to be able to compete with China when the average Chinese worker gets paid fifty cents an hour.
Jim Rogers: The Japanese can compete with them. The Germans can compete with them. Why can they and we can't? I'll tell you why. Because they don't tax savings and investing in Japan.
Neil Cavuto: How would you play this then Jim? Which stocks would benefit from China's rise?
Jim Rogers: BHP Billiton (BHP) sells a lot of raw materials to China. Buy anything that has to do with commodities, because China buys commodities. I own it.
Ben Stein: I like and own FedEx (FDX). FedEx is greatly expanding its shipping back and forth to China. They are an amazingly efficient supplier. I love this company a lot.
Gregg Hymowitz: I'd try and sell into the huge consumer market in China with a company like Procter & Gamble (PG). I own it.
Meredith Whitney: To benefit from the infrastructure built in China I'd buy any of the base metal companies. Alcoa (AA) is my pick. They're the biggest aluminum producer. I do not own it.
More for Your Money
Neil Cavuto: Polls, Schmolls! Does Wall Street already know who'll win next year's presidential election? The latest polls show President Bush's approval rating is inching back up, though it's still down 19 percent since peaking in April. But during that same time, stocks have jumped 19 percent. So which poll matters more? The political ones or the stock market?