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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; Cheryl Casone, FOX Business correspondent and host of "FOX Business Now" on Yahoo! Finance, and Patricia Powell , Powell Financial Group president.
A man with a super strain of tuberculosis — rare and extremely dangerous — gets on several planes, and puts many at risk for the devastating disease. It's so serious, the government issues its first quarantine in almost 45 years. If this becomes a TB outbreak, what will it do to our stock market and economy?
Cheryl Casone: I think we could have a problem if there is an outbreak. It's not just TB that we're looking at. A lot of these diseases have become drug resistant. Strains of the flu, HIV… look at what SARS did to Asian economies. I know people that lost their jobs because they couldn't travel to Asia to do business. This could become a real problem if people stop traveling and start freaking out. Also, some could bring lawsuits against the airlines. It could get much, much worse.
Gary B. Smith: This won't have any effect on the market. Maybe three other people will get this strain of TB. It will be very bad for them, but this is no reason for concern in the market. Let's say the worst happens and the economy slows. The market will dip and that will give all the people who haven't participated in this rally a chance to buy and that will shoot stocks higher!
Pat Dorsey: Look at what SARS did to Hong Kong. It essentially shut the whole city down. The worst of SARS hit the Hong Kong about March or April 2003. The Hang Seng, the big index in the Hong Kong stock market, was about 10,000. Today it is at 20,000. Was that a better time to be a buyer or a seller?
Patricia Powell: This should be a wake-up call to the Department of Homeland Security and every health care professional. How do we get people on the "No Fly" list? How do we export that "No Fly" list to other countries? How do we shut down someone infected like this? I was a little shocked about how cavalier we were in dealing SARS and the avian flu because pandemics have killed millions of people. You have to take this very seriously. If terrorists were infected with some kind of pandemic and got on planes or subways, it could be spread all over the country or perhaps the world.
Tobin Smith: Let's take the SARS example. China covered up all the information and tried to keep it away from the public. But here in the United States, we would hit it hard. It's a rare strain, because it's a rare disease! Trust me, before this could ever become an epidemic, we would hit it with everything we have and eliminate the problem.
Scott Bleier: It's a legitimate concern. This one infected guy is no concern for the stock market. Practically nothing matters for the stock market right now. However, if people get scared, they are going to stay home, and if they stay home, the economy will slow. If that happens we will obviously run into a hard time. But it will cause the internet economy to explode. People will stay home and will have their FedEx and UPS guys delivering everything to them.
Dems' Best Chance in '08 Promise "Not" to Raise Taxes?
If one of the top Democrats made a pledge "not" to raise taxes on "anyone"…would he or she automatically become the person to beat in 2008?
Gary B: Absolutely yes…and that person would be Rudy Giuliani! He's already in the race. The odds of a Democrat making this pledge is about one in a billion, so I don't think it's going to happen.
Cheryl: If the American people are listening to what Democrats are saying, they're all saying, "Here's my plan. It's expensive." But the top three people in the polls are Hillary Clinton, Barack Obama, and John Edwards. They're all saying their plans are going to cost a lot of money.
Tobin: No one has ever won an election by saying they were going to raise taxes. So, in theory they wouldn't want to do this. But essentially what they are saying is, "We aren't raising taxes, we're just letting the Bush tax cuts expire."
Scott: I don't think the Democrat that says they're going to cut taxes will come even close to winning because people that will vote for them don't care about lower taxes. The one who has the best—and probably most expensive—social programs that Democrats want is who's going to win.
Patricia: Raising taxes is going to cause havoc with this economy. The paradox here is that people don't understand tax policy. Raising taxes actually lowers revenue and results in less money for programs that you actually want to do. The smart candidate is going to come forward and say they are going to extend the tax cuts… and put out even more! Tax cuts work and benefit everybody.
Pat: Anyone who believes any promise from any candidate—from any party—is a complete fool. Whatever promises they make on the campaign trail are useless. I don't really care if it's raising taxes or cutting spending, but we have to balance the budget somehow—especially with the Medicare and Social Security issues looming.