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Bulls & Bears
This past week's Bulls & Bears: John Bradshaw Layfield, Northeast Securities senior vice president; Gary B. Smith, Exemplar Capital managing partner; Scott Bleier, HybridInvestors.com president; Rebecca Gomez, FOX Business News correspondent; Adam Lashinsky, Fortune magazine senior writer; Todd Schoenberger, Diligent Investor senior equities analyst.
Trading Pit: Convert Iran to Capitalism?
The terrorists want to convert us to Islam. But with Iranian President Mahmoud Ahmadinejad coming to New York City this week to speak at the United Nations, is now our chance to turn the tables and convert him and other radical Muslims to capitalism?
JOHN: Capitalism cures a lot, look at China. We introduced KFC and McDonald's to them and now the country has moved from a communist state to a quasi-communist state. Look at Cuba—we've put sanctions on them for 4 decades and have accomplished nothing. If we want to manipulate these people we can't make the poor poorer. Give them something and they will want a lot more.
GARY B: I don't even know how we could convert Iran to capitalism. Iran's President is a lunatic and these guys are bullies. And the best way to deal with a bully is to punch him in the nose. I think their hatred of democracies like us trumps any capitalist activity.
ADAM: Iran can make money with a completely broken economy because oil prices are so high. There are a ton of Iranians who live outside of Iran that are born capitalists. Iran could be a wonderful capitalist country, but as far as converting their president, who knows?
TODD: Ahmadinejad doesn't need a lesson in capitalism; he knows his rants about nuclear bombs and anti-Semitism results in higher prices for a barrel of crude, which trickles down to more money for Iran to support its proxy army, Hezbollah. As much as I hate to say it, Ahmadinejad is no fool. Just recently, he committed $6 billion to the country's education system. So he's putting their money back into the country. Iran's ultimate weapon isn't a nuclear bomb—it's oil.
REBECCA: If we convinced Ahmadinejad to embrace capitalism, it would just give him more money to pursue efforts against us. And even if a deal were reached with Iran to stop enriching uranium—they won't. Ahmadinejad will continue his pursuit of nuclear weapons. They will never give up trying to build a nuclear weapon—just like they will never stop hating Israel.
SCOTT: They are "accidental capitalists" already. They want and need money. Iran kept pumping oil throughout the Israeli conflict even though they said they would use oil as a weapon. They need money to build weapons. Iran should be embargoed with financial sanctions until they are no longer a threat.
Dow All-Time High: Can Anything Stop the Bulls?
The Dow is very close to its all-time high, of 11,722.98. On Friday, the blue chips closed at 11,560.77. Can anything stop this bull run to a new record next week?
Adam: We could reach an all-time high very soon. If the price of oil falls a couple bucks and the Federal Reserve makes some benign comments about inflation, we'll hit it. Right now, the economy is in a good place.
Todd: Adam's right. Anything is possible, but I don't think we will reach the all-time high next week. The Fed is meeting Wednesday and their comments will be the same as they were last time. There will be a pause in raising interest rates, but they will say rates could rise again. This will scare the markets and cause stocks to go down.
Gary B: The Dow can break the all-time high, but it bothers me that the volume has really dropped off. This tells me that there's not a lot behind the buying.
Scott: I still think it'll be December before we see the new all-time high. We might make a new high intra-day, but not close there. If the Dow does hit the high, I'd start selling because we'll see a sharp pullback.
John: We're going to finally do it! The stock market was terrible in August because there was so much uncertainty. We weren't sure if the Fed was going to stop rates, we didn't know where oil was going and what was going on in the Middle East. All of those things have abated. Right now, the rich are starting to step back into the market and we're finally going to cross that barrier.
Rebecca: If the Fed doesn't raise interest rates, then we will see the all-time high next week. All the indicators are there. We have low oil prices and the interest rate changes are lagging. The Federal Reserve will pause on raising rates. Investors are just waiting for the catalyst.