Neil Cavuto was joined by Gregg Hymowitz, founder of Entrust Capital; Jim Rogers, president of JimRogers.com; Ben Stein, economist and former Nixon speechwriter; Meredith Whitney, FOX Business News contributor; Tom Dorsey, president of Dorsey, Wright & Associates; and Rob Stein, managing partner at Astor Asset Management.
Cut Off Saudi Arabia?
Neil Cavuto: Saudi Arabia (search): always a questionable ally in our war on terror. Now maybe proof they actually help fund terrorists. Is it time to cut them off as a friend and as a business partner?
Ben Stein: It would be a good thing to cut them off, but we can't. We are a drug addict. They're our supplier and what we want is oil. We're now paying the price for not making ourselves energy independent.
Meredith Whitney: I hate to agree with Ben but he's absolutely right. 17 percent of our consumption comes from Saudi Arabia. What's important from a market perspective is that the Saudis have $400 billion invested in our securities market. $70 billion of that is in our equity market.
Gregg Hymowitz: I agree with Ben and Meredith, but I don't feel so hopeless about it. We need an administration that will rid us of foreign oil dependency.
Jim Rogers: We need their oil right now. We could probably do without it. There are plenty of different places we could get oil from. But it would be a difficult transition.
Gregg Hymowitz: Isn't this the irony of it all. We invade Iraq because we think they have weapons of mass destruction. But we know that the Saudi Arabian royal family funds terrorism. Why do we do nothing? We know that 15 of the 19 hijackers were Saudi Arabian and we still do nothing.
Jim Rogers: Gregg, there are people in America that fund Democrats. Should we throw them out too?
Neil Cavuto: There is this perception that we cow tow too much to the Saudi Arabians. Many feel that the more we show support for this royal family, the more we'll be in trouble down the road. So why not cut them off?
Ben Stein: We can't cut them off because we desperately, desperately need their oil. President Nixon, who I worked for, had a proposal to make us energy independent. We need to work toward that now.
Gregg Hymowitz: There are 30,000 members of the royal family. That is what the country is being run for and we have to change that. They all get a monthly stipend and Ben is exactly right. We need to start now. Someone needs to start ridding our alliance on Middle Eastern oil
More for Your Money
Neil Cavuto: Can big stock losses actually help you get more for your money? A bumpy two week stretch for stocks, highlighted by a number of triple digit down days for the dow. But Tom Dorsey, you say these bad days are actually good news for investors?
Tom Dorsey: The problem we have now is that the short term indicators have turned negative. What your viewers should understand is where we are in the investment spectrum. In other words, if you were to draw a bell curve, 40 sectors are skewed to the oversold side of the ledger. Today they're skewed all the way to the right. We are as high on the market as we were at the top of the market in 1997. So you have to understand you're operating in the red zone. Any more ups from here will be very high risk ups.
Gregg Hymowitz: The market is trading at 19 times next year's earnings. It all depends on whether this economy catches up to the market multiple. One company I'd be buying in this market is Liberty Media (L). Advertising revenues are picking up mildly.
Jim Rogers: I'm selling and I've been selling for a couple of weeks. I've sold most of my European Exchange Traded Funds. The market is very expensive right now.
Ben Stein: There's not a whole lot out there right now that I'd want to buy. The Dow is trading about 33 times this year's earnings. The only thing I like really long term is Washington Real Estate Investors Trust (WRE).
Jim Rogers: The problem is those dividends are not tax-free like they are on regular stocks.
Ben Stein: But they're so big that even after paying taxes it's a good dividend.
Gregg Hymowitz: I think if you're going to buy a REIT, this is the wrong one to buy. It has a dividend yield of roughly 5.4 percent, which is actually sub par. And it doesn't get the benefit of the new tax laws.
Ben Stein: But it's capital gains record has been breathtaking.
Tom Dorsey: I like Bed Bath and Beyond for the long term (BBBY). It finally broke out of its base. A lot of people are buying from Bed Bath and Beyond. I like this stock.
Head to Head
Neil Cavuto sits down with Rob Stein of Astor Asset Management to discuss whether housing prices will fall.
Rob Stein: The thing about housing bubbles is that they can keep going higher then anyone could expect. But when you look at real estate price appreciation, they're very much out of line with what they historically do. Historically, real estate appreciates at the same rate as GDP price deflator. But for the last few years it's appreciated significantly above that.
Neil Cavuto: But I could argue that the years before that, we had sub par returns. So it all evens out.
Rob Stein: Income levels are just about flat. We have unemployment down in the last couple of years. So I don't know what's going to be supporting it.
Neil Cavuto: Supply and demand Rob. This planet is not getting any bigger and the available land is not getting anymore plentiful.
Rob Stein: They're starting to increase supply in areas outside of 5th Avenue. In those other areas you're seeing homes and condominiums pop up like crazy. Even though we've had huge appreciation, the real estate market has increased in the last couple of years. Followed by vacancy rates now being at a 10 year high.
Neil Cavuto: I will agree with you that there are some hotspots where you had double digit advances. But I do not look for something a kin to an internet boom in the housing market. Again, going back to supply and demand, there are simply so many buyers out there that offset the supply of homes.
Rob Stein: About 65 percent of people own their own house right now. It's the highest rate in history. The last time the rate of ownership of something was this high was the stock market in 2000. So I don't know if the supply and demand formulas are really going to pan out. Another interesting thing to note is that debt levels are at extremely high levels. Even with interest rates down to where they are right now, mortgage payments-- as a disposable income-- are at the highest they've ever been in many many years.
Neil Cavuto: If delinquencies is such a big problem then why are they falling for about seven months in a row now? Usually that's a precursor to the type of bubble we experienced in the late eighties when overbuilding was a problem.
Rob Stein: Delinquencies have been coming down with the interest rates. But if you look at PMI insurance, that's actually begun to rise a little bit.
FOX on the Spot
Meredith Whitney: July 4th sell-off; then summer rally!
Gregg Hymowitz: Mortgage rates bottom; refinance now -- or never!
Tom Dorsey: DaimlerChrysler (DCX) drives up your bottom line!
Ben Stein: Iraq killings will be proven to be linked to Al Qaeda & Hamas.
Jim Rogers: Strong dollar means a stock market negative.
Neil Cavuto: The number of companies "confessing" problems this quarter are surprisingly few, and that bodes well for ok earnings reports, and a more than ok rally this summer.