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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; Pat Dorsey, Morningstar.com director of stock research; Tobin Smith, ChangeWave Research editor; Scott Bleier, HybridInvestors.com president; Joe Battipaglia, Ryan Beck & Co chief investment officer; Jon Najarian, OptionMonster.com founder, and John Carlisle, director of policy for National Legal and Policy Center.
Trading Pit: Weak Wal-Mart: Di$a$ter for America and Market
Is Wal-Mart caring more about its critics than its customers? What would that mean for America and the market?
Jon Najarian: We should all be worried about Wal-Mart caving in to its critics. If Wal-Mart caves in, they risk the same fate as Ford (F) and General Motors (GM). Wal-Mart needs to keep its focus and keep prices low, which benefits all Americans. 127 million Americans shop there every week. If Wal-Mart starts bowing to pressure and is unable to provide those low prices, it's a bad thing for America and could be a disaster for the market.
Gary B. Smith: Wal-Mart is going to do what's best to keep or grow its market share. If it takes something like placating the local town council to gain land and resources, that's what it will do. Even if Wal-Mart caved into critics, so be it. It gives competitors a chance to come in and take out a niche. This is a win-win no matter what happens.
John Carlisle: Wal-Mart has already caved in by endorsing a controversial agenda to environmentalists, endorsing economically damaging reductions in carbon dioxide emissions, supporting race and gender quotas in the workplace, and supporting homosexual movements which demand to legitimize same-sex marriage. These issues are broadly and deeply unpopular with Wal-Mart's customer base. Consumer preference polls show that its customers are very conservative consumers. They tend to be socially conservative and pro-gun, as opposed to Bloomingdale's customers, who tend to be more urban and more fluent. This is not a win-win situation. It's a wrongheaded attempt to woo consumers who are fluent, which will alienate their natural base.
Tobin Smith: The business model is what it is. Wal-Mart pays its workers $11 per hour. Raising the minimum wage is not going to affect Wal-Mart. The big issue is healthcare, which is exactly what bankrupted Ford and General Motors. Wal-Mart is not going to do it, especially when it is competing with local businesses that don't provide healthcare either. Wal-Mart creates disinflation and low prices for our economy. I don't know much about the social issues John talked about, but the business model is not going to change.
Joe: Their granular strategy is to keep the unions out. The way to do that is to have proper pay and compensation so the workers don't go the way of the union. You can talk moderate on a variety of issues, but when it comes to the business, Wal-Mart's model is going to stay in tact.
Pat: Part of Wal-Mart's business has gone out the door recently, but that was because it tried to go after a market it wasn't good at going after. The biggest mistake was the Metro 7 women's fashion line that worked well in a few urban markets, but didn't sell very well with its core consumer base. That was a merchandising mistake, not a social mistake. At the end of the day, Wal-Mart knows how to do one thing well and that is sell stuff cheap. When it gets beyond that, that's when trouble comes. As Wal-Mart gets back to selling stuff cheap, it will be just fine.
Is President Bush the Best Ever on the Economy?
In last Sunday's Washington Post, an editorial called President Bush the worst president ever. We like to give you a fair and balanced debate, so is George W. Bush the best ever for the economy?
Gary B: Yes, President Bush is one of the best ever for our economy. He's definitely the most underrated. I developed a scorecard:
A for unemployment at 4.4 percent and at a 5 year low
B for job growth with 6.8 million jobs since 2001
A for wage growth growing faster than inflation
A for household net worth at an all time high
A for the stock market at an all-time high
Forget all the stuff in Iraq, how can anyone say he's no good for our economy?
Tobin: If you're going to say best of all time, you have to look at all time. FDR did good things for us that helped tremendously in a very difficult time. This ultimately set the table for the expansion that we've had. President Bush is not the best, but he is definitely underrated.