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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; Eric Bolling, FOX Business Network; Tobin Smith, ChangeWave Research editor; Matt McCall, Penn Financial Group; and Mike Papantonio, Radio talk show host.

    Stocks Up Despite Bad News: Sign Bulls Are Ready to Run?

    Matt McCall, Penn Financial Group: The market is discounting the future. The market is pricing in what's going to happen six months from now, and six months from now the market will start to improve. The only way to go is higher. The Fed is putting trillions of dollars into the marketplace, and this will help markets rally in the New Year.

    Tobin Smith: Changewave Capital: The really bad news has not even hit the wire yet. The economy fell off a cliff in November and December. It won't even start to be reported until mid January or early February. The markets will not rally for quite some time.

    Pat Dorsey, Morningstar.com: What's not priced into the market is that earnings expectations are unrealistic for next year. People are expected the S&P to earn around $80 aggregate. That number will come in more around $60. People's expectations for earnings next year are still too high.

    Gary B. Smith, Exemplar Capital: Despite wave after wave of bad news, the market just isn't going down significantly. I think we could see a sizable market rally over the next couple of months.

    Eric Bolling: FOX Business Network: Investors are ready to light the fire. Consumers are doing better because prices are lower and mortgages are lower. Consumers are doing very well. This is a 70 percent consumer driven economy. I think we're at the bottom, and have no where to go but up.

    States Hiking Taxes to Raise Cash But Does Economy Need Tax Cuts?

    Gary B. Smith: Everyone is feeling the pinch right now. If governments start raising taxes across the board, we're going to have even bigger problems. The states got addicted to having high revenues and property taxes in flush times. Plus, government employees refuse to budge or adjust salaries given declining revenues. State and local governments are actually spending a higher percentage of their GDP on infrastructure projects than they did in the previous two decades.

    Mike Papantonio, Radio Talk Show Host: The fact is that democracy requires a tax for infrastructure. Most states are running out of funds for infrastructure. Schools are closing, bridges are crumbling. Not wanting to raise taxes is the same formula that the fiscal conservatives used to bankrupt the federal system. Now they want to bankrupt states like Alabama, or Massachusetts where they're saying they don't have enough money to pay for roads.

    Tobin Smith: California screwed itself by raising state expenditures two times over their revenue. These fiscal problems shouldn't come as a surprise to anybody. If we cut taxes on people who take risk and invest capital, these bailouts wouldn't be necessary.

    Eric Bolling: How about we cut spending? The governor in New York wants to raise taxes on 137 products -- cab rides, sodas, etc. -- and then apply for a bigger state budget!

    Pat Dorsey: What's not being talked about is that in many cases public employees have benefits that would put the UAW to shame. Those are the folks you least want to disappoint and most want to please. When times are good, you increase health and pension benefits, which never come back down again.

    Obama Says Work for Common Good: Good or Bad for American Dream?

    Tobin Smith: Adam Smith said that only a beggar would have his or her success be dependent on the benevolence of his fellow man. Successful economics is based on the idea that all parties at the table will act in their self-interest. When that goes away, the system dies, and welcome to Russia.

    Mike Papantonio: Most Americans today distrust banks, Wall Street, corporate CEOs, etc. That's the picture of American capitalism today. Americans rightfully believe that Wall Street is made up of a bunch of thugs, hustlers and boobs. The only way this gets turned around is to go to the heart of the problem and turn this mentality around.

    Gary B. Smith: Is there any institution out there with more thugs, hustlers, and boobs, than the federal government? The dealmakers in Congress are good, or the inept people running the SEC? You want to give them more money and empower them? The government is not smarter than the American people.