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    Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In

    Bulls & Bears

    This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Tobin Smith, ChangeWave Research editor; Pat Dorsey, Morningstar.com director of stock research; Scott Bleier, HybridInvestors.com president, and John "Bradshaw" Layfield, WWE superstar and nationally syndicated radio show host.

    Trading Pit: Line in the Sand with Iran!

    The United States getting tough on Iran and its nuclear program — setting tough conditions for negotiations or face serious sanctions. And it seems to be just what Wall Street wanted to hear. Stocks rallying when the U.S. made the announcement. Is removing the Iranian nuclear threat a priority on Wall Street?

    Gary B: Yes! The more we proactively defend our country, the better off the economy and stock market will do. Most people know what we have to do, but now we have to play every single card to appease every single faction. Getting Iran to concede and give up its nuclear program will definitely be great for Wall Street but Wall Street wants to see us come to this conclusion quickly. Then stocks would go up.

    Bradshaw: No, no, no! The market does not want us messing with that idiot in Iran. This isn't 1981 when Israel went into Iraq, blew up their nuclear capabilities, and got out. We can't do that. The sanctions don't matter because Iran wants to be noticed. They want to wave their nuclear weapons and think the world has to deal with them. They won't come to the negotiating table and won't to drop their nuclear program. It's a bad idea to go in there with the military. It's better to use a policy of containment.

    Pat: Resolving this uncertainty would be great. However, I think this is going to be long and drawn out. Look at North Korea, for years and years there has been tremendous uncertainty and we've had to deal with a crazy guy who has nuclear weapons. And use of the military is a tough option because this won't be resolved for quite some time.

    Tobin: This is all strategy. We're putting out the carrot at the same time that we're putting together a coalition. Everyone will be against them. Pat and Bradshaw are right. We can't use our military, but the pressure on Iran will be great because so many countries will be against them. And when everything is laid out on the table, Iran will have no choice but to give up their nuclear program.

    Scott: Everyone wants this to go away, but it's going nowhere. Every time they say something, it adds a dollar or two to oil prices. This is going to be long and drawn out and we have to isolate them. But remember, Russia and China are their friends. Russia supplies them with nuclear material and technology and China buys their oil. Stocks will have tough time because the more belligerent they become, the more oil prices will rise, and the more the market will suffer.

    Is Wall Street Predicting Democrat Sweep in the Midterm Elections?

    Was May's stock sell-off Wall Street's way of saying it thinks the Democrats will win big in the midterm elections?

    Tobin: Maybe for a day Wall Street was worried about the Democrats winning the midterm elections. Then, it realized the Democrats have Nancy Pelosi, D-Calif., and the market snapped right back. I live in Washington, DC. The bigger issue is who will be elected as President in 2008. I think we're too early here. This sell-off has nothing to do with the House and Senate midterm elections.

    Bradshaw: Wall Street loves political gridlock. Republicans aren't getting anything done. It would be a disaster if the Democrats got into office and repealed the capital gains and dividend tax. We would see a 1,000-point drop in the Dow. Right now the Dow is worried about recession and inflation. It is also hoping that Federal Reserve Chairman Ben Bernanke doesn't do what Alan Greenspan did in 1991 and send us into a recession.

    Gary B: Wall Street is not looking at the midterm elections at all. Bradshaw is right. The market is more worried about earnings and inflation. In regard to the market, Bernanke is the most important man in America.

    Pat: President Bush's poll numbers have been sliding for some time. They didn't just fall off a cliff in May. I agree that earnings and inflation are the larger issues. Plus, there is a nasty deficit and people realize it is not going away.

    Scott: The American public and the market hate both sides. It could care less. The market is bigger than the Democrats and the Republicans. It doesn't matter what taxes they instill or repeal, the market and economy are bigger.

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