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Bulls & Bears
This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Tobin Smith, ChangeWave Research editor; Scott Bleier, HybridInvestors.com president; Charles Payne, Wall Street Strategies CEO; Peter Schiff, Euro Pacific Capital president, and Jonathan Tasini, Labor Research Association executive director.
Trading Pit: Stocks Caught in Crossfire?
Democrats have chosen Virginia's freshman Senator Jim Webb, D-Va., to answer the President's State of the Union Tuesday night. He is one of President Bush's most outspoken critics. Are Dems declaring war on the President, and what's that mean to stocks?
Charles: The Democrats have already declared war and there will be a lot of collateral damage. Wall Street will get hit, but the general public will get hit even more. We saw it this week with the attack on the oil companies. But it's not just going to be the oil companies. Drug companies and any company where the CEO is making too much money will also be under attack. This is an attack on capitalism. The stock market will pay a price, but consumers and the American public will pay the ultimate price.
Gary B: The stock market will be fine. This Tuesday in his State of the Union address, I'm sure President Bush will present his policies in a very strong way. I'm also sure that Jim Webb will also present a very strong case. The more the Democrats tip their hand, the better, because they will show either no policies or bad ones. This will open rigorous debate and will lead to gridlock. And that is good for the market.
Peter: I definitely think confrontation is probably better than cooperation when it comes to the President and Congress. The last thing we need is bipartisanship. The more legislation passed, the more harm done to the economy and stocks. Neither the State of the Union or the Dems' response will move the market. Stocks have been going up, but investors have been ignoring some powerful fundamentals that really should have the market moving down.
Tobin: Wall Street has discounted the Iraq War and thinks it is a lost cause. Jim Webb is way off in left field. The Democrats are showing that they are trying to polarize the Republican base by choosing him to offer their response to the State of the Union address. We are coming into earnings season, and that's what's important to Wall Street.
Scott: Since the start of the unpopular Iraq War, the market has gone up. During the elections and all of the Bush bashing, the market has gone up. Now that the Democrats are in office, the market will still go up. Jim Webb and the Dems will inflict class warfare on the American people in order to win the election in 2008.
Best Thing for Wal-Mart Workers: No Unions!
Is Wal-Mart doing its workers a huge favor by discouraging unions?
Gary B: Yes! Wal-Mart is not only helping its workers, but is helping people across America by offering cheap prices and saving the average family about $2,000 a year. Wal-Mart is also good to its employees. The company pays double the minimum wage, offers good benefits, and across the board, workers are happy there. When a new store opens, thousands of people come out for just 300 job openings.
Jonathan: The reality is that the average Wal-Mart worker makes about $13,000 a year, which is below the poverty line for a family of two. Even full-time workers make below the poverty line. A family of two needs at least $27,000 a year to survive. We wear different hats in society: one as a consumer, and the other as a worker. To Gary B's point of saving consumers money, Wal-Mart could raise wages by a dollar per hour and the cost to the consumer is two pennies. Jesse Jackson said that even slaves had jobs. The fact that people are forced to work at Wal-Mart is not a good reflection of our society. Wal-Mart may be the biggest private employer, but it is reflective of what is happening in our country. We have a growing divide between the rich and the poor, many people don't have pensions, and 48 million Americans don't have healthcare. This is a huge problem.
Charles: General Motors, the airline industry and several other industries are all examples of companies that have shown that having unions may improve the lives of some, but in the end, others will be hurt. Those that don't get work are hurt. You can pay workers more money, but there will be fewer workers. This means fewer people in the community get jobs.
Tobin: Wal-Mart is the largest private employer in the United States. No one put a gun to anyone's head and said, "You have to go work at Wal-Mart!" If someone decides to work at Wal-Mart, it's their decision. People have to live with the repercussions of their own decisions.
Scott: Unions would help Wal-Mart employees make more money, but the company would have to fire 20 percent of its employees. Worker flexibility, part-time workers, employee satisfaction, and consumer satisfaction would immediately be impacted for the worse. Customers would have to wait on lines longer and eventually would go to another store. So the bottom line is that unions would hurt Wal-Mart's bottom line.
Each of the guys picked the next stock he's going to buy. (If you want to watch what each had to say about his stock, click here.)