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Neil Cavuto was joined by Lt. Col. Oliver North, host of Fox News' War Stories; Gregg Hymowitz, founder of Entrust Capital; Jim Rogers, president of JimRogers.com; Joe Battipaglia, chief investment officer at Ryan, Beck & Associates; Meredith Whitney, Fox Business News contributor; and Jenny Anderson, NY Post business reporter.
If Iraq Is Out of Control, Why Is the Market Soaring?
Neil Cavuto: Another deadly week in Iraq (search), a flurry of coordinated attacks giving some the impression the situation could be getting out of hand over there. But stocks didn't blink an eye over here. In fact, they continued to add to this year's long bull market (search). Col. North, the market seems to be ignoring this, despite the fact that Iraq is a mess.
Col. North: The market obviously knows more than what some in the media are talking about. The news out of Iraq is actually much better than what's coming out, partly because we no longer have as many embedded correspondents out there. The news we get of course is there's a bomb, they run out there with a camera and they talk about the smoking wreckage behind them. The reality is today we have more people with electricity in Iraq than before the war started. Eighty-six thousand Iraqis have now been trained as policeman and as national guardsmen.
Gregg Hymowitz: I completely disagree. It's almost impossible to spin Iraq as a positive. The market knows as much about Iraq as it did about the NASDAQ two or three years ago. The market is up because earnings are improving and operating earnings are there. You've had these gigantic tax cuts, which has caused fiscal stimulus. So you have a lot of money flowing into the system. But as a vote on what's going on in Iraq? I think it's absolutely ridiculous.
Meredith Whitney: It doesn't help that forty people this week have been killed and over a hundred have been wounded. So I think it's hard to convince anyone, excuse me Col. North, that things are really great over there. The market has been fed with so much stimulus. G.D.P. numbers coming out this past week are so encouraging, inventories are so low that basically you're jumping in front of a bus with all the good news there is.
Jim Rogers: No matter if Iraq is good or bad, it's not important enough right now. Remember, the market went up as the Vietnam war got worse and worse. In Israel, stocks go up a lot when there is bad news all around. Right now, we do have huge fiscal and monetary stimulus, which has been going into the market.
Gregg Hymowitz: The market tends to be a predictor and it might be saying, Iraq can't get any worse than this. But to say the market sees that we're doing well in Iraq and that's why it's up, makes absolutely no sense.
Col. North: That's not what I said. And Meredith I didn't say that there was "great" news coming out of Iraq, I'm just saying that the news is better than what we're seeing on the television and what we're reading in the newspapers, particularly the New York Times. In reality, little investors like me will look at the market and ask, are things going to get better? I conclude that they are.
Meredith Whitney: One good thing did happen and that is we got monetary commitment from the United Nations and the market didn't move. So it's hard to draw a correlation between Iraq and the market.
Neil Cavuto: I would argue the Colonel's point that if it was so bad in Iraq that the market would reflect that calamity. Just as the market was selling off ahead of the Iraq war. Would the market be telling you something different?
Gregg Hymowitz: I don't think the Iraq issue is the controlling issue in the equity markets. Very few investors are trying to figure out what's going on in Iraq and then figure out what to do with their money. I think a little positive for the market is that maybe the market thinks, look things can't get much worse so maybe they'll get better. One thing that could be a real positive, and I thought this was why we went in there, is to find Saddam Hussein. If we'd be able to do that, then maybe we would see a real bounce.
Neil Cavuto: So if we find Saddam Hussein, would you stop criticizing this war?
Gregg Hymowitz: No. Absolutely not.
Jim Rogers: If Iraq gets better and better, it's not going to affect the markets that much. There are other things more important.
Neil Cavuto: That's not what you said going into this war. You said it was a big mistake and we would rue the day doing so.
Jim Rogers: And we do rue the day. Are you happy we're spending $200 billion in Iraq? I'm not happy we're spending $200 billion in Iraq.
Neil Cavuto: I'm in the camp that says we've done a lot more good there than the bad press we're getting out of there.
Jim Rogers: Iraq will effect us if it gets worse. The market will start paying attention if we send more troops there or get hit with more bombs.