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    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; Gary Kaltbaum, Kaltbaum & Associates president, and Adam Lashinsky, Fortune Magazine senior writer.

    Trading Pit: Cea$e-Fire Deal: Market Impact if It Falls Apart?

    Tobin Smith: If a deal falls apart, it is trouble for the stock market. Friday, when news of a possible deal leaked out, the market got a bounce. Obviously, the market felt that if there weren’t missiles going up in Israel every day, that’s a good thing.

    Gary B. Smith: I don’t think the market is not in trouble if a deal falls apart. It has had all these up and down days, where it can’t decide. If a treaty falls apart, the market just goes back to where it has been. The fighting will continue, almost indefinitely. Because of all the fighting, I think the market will just continue a slow, drift downward.

    Gary Kaltbaum: Oil has topped. There’s been all this bad news, but oil still came down. Friday, the market actually rallied on news of a possible deal. In the short term, if we get some good news, it could help the market. The problem is, when have these resolutions actually gotten anywhere in the Middle East? Absolutely nowhere. I will add that if Iran and Syria get involved in any way, the market will be bludgeoned.

    Pat Dorsey: Right now, all this has become background noise for the market. Certainly, if there is a cease-fire put in place, it might affect the market positively for a day or two. However, the market is mainly focused on the Federal Reserve, inflation, and earnings. That’s really what drives the market. I do agree with Gary K, though, that if Iran enters the picture, that changes everything entirely.

    Scott Bleier: Last month, when all of this started, the market was very relieved to see it didn’t escalate and get out of control. It had a nice rally. Now that the Fed is out of the way for the time being, this matters. If a cease-fire does fall apart, the market will fall as well.

    Adam Lashinsky: I don’t think this conflict, even if it escalates, is background noise. It’s number seven or eight on the list of things the market watches very carefully. This happened on Friday in the absence of anything else going on in the market. It’s not unusual. In the past month, there’s been any number of things that are more important in the market.

    Dissolve the U.N.?

    Gary Kaltbaum: Yes, the world would be more peaceful and profitable without the United Nations. I’m a results-oriented guy and we haven’t seen that many great results from their resolutions. I do think UNICEF and the World Health Organization do good things and should be kept. As far as keeping peace, the U.N. is not doing a good job and it is not a necessity to have it any more.

    Adam Lashinsky: Everything Gary said is beside the point. Yes, there is a need to have a forum for the nations of the world. There needs to be a place where the countries of the world can come together and meet. For example, look at what happened in the first Gulf War. President George H.W. Bush’s program never would have been as strong as it was without having the U.N. as a place to talk about it. The fact that it took a month to get where we are, is kind of irrelevant.

    Gary B. Smith: Adam touts the standard liberal law, “Give peace a chance.” I agree in principle that some form of the United Nations is appropriate. It’s just not this form of the U.N. The United States spends $3 billion a year and what do we see for it. Yes, we should keep the buildings and keep the mission, just re-work the idea. The U.N.’s just not working as it was implemented.

    Scott Bleier: The United Nations is corrupt and anti-American. It needs a change in management. I don’t think it has ever prevented a war. I do believe there needs to be a forum for our leaders to sit down and have a discussion. I suggest that it be relocated out of the U.S., maybe to the French colonies.

    Pat Dorsey: Most large organizations have corruption. For example, look at the Hurricane Katrina rebuilding or the Iraq rebuilding. There’s corruption everywhere there’s a large organization spending lot of money. On balance, the U.N. does do more good than harm. UNICEF does a lot of good and it provides a lot of humanitarian aid. There is value to having a world forum.

    Tobin Smith: There was a big tsunami, but who laid out all the money? The Americans. The U.N. was secondary. When there were issues that had to be fulfilled, who went in and actually fulfilled it? The Americans. I suggest we build a NEW World Peace and Development Council where countries contribute based on how much oil they consume per citizen and how many barrels they produce. When one country invades another, its oil capacity is restricted. When one country uses LESS fossil fuel, it gets assistance.

    Terror Plot Busted: Victory for Democracy and Stocks?

    Gary B. Smith: The fact that this terror plot was busted is a huge victory for democracy and our stock market. It looked like the market’s reaction was tepid. The upside of avoiding all that tragedy and horror is huge. If this plot had gone through, I cannot imagine the loss of life, and the disruption in the market.