Neil Cavuto was joined by Gregg Hymowitz, founder of Entrust Capital; Jim Rogers, president of JimRogers.com; Ben Stein, economist; Mike Norman, founder of the Economic Contrarian Update; Meredith Whitney, FOX Business News contributor; and Bill Wolman, chief economist of Businessweek.
Neil Cavuto: History is not always doomed to repeat itself! It is an historical fact, August has been the absolute worst month for the market over the past 15 years. So why does someone here say ignore history and buy stocks now to get more for your money. Meredith you first, you say this August is the time to buy?
Meredith Whitney: With every pullback, comes a great buying opportunity. There's a lot of economic data that shows that the economy is really improving. More consumers own homes than in the last recession. People are concerned about unemployment. It peaked over 8 percent in the last recession. I think the economy has given you every indication that the economy is improving.
Jim Rogers: That's why the market went up. That's old news. The market is looking ahead for the next six months. That's why August is a bad month.
Gregg Hymowitz: More people are unemployed today than we've had in the last 20 years. And most people think those unemployment numbers are understated.
Neil Cavuto: So do you ignore 3 weeks in a row of declining jobless claims?
Gregg Hymowitz: No, I think it's good. I think it's stabilizing. The other issue is refinancing. Refinancing is the thing that was keeping this consumer alive.
Ben Stein: It still surprises me that stocks, even after the rebound in earnings, are still trading at 29 times earnings, 30 times earnings on the Dow, 32 times on the S&P. Those are very high numbers. If I bought anything, I'd buy the Dow Diamonds (DIA). I'd be very wary at these levels.
Meredith Whitney: I think if you look at price-to-growth you've got really good opportunities there. I like EMC Corp (EMC), which is the largest storage operator.
Gregg Hymowitz: One stock that is very cheap is Reebok (RBK). Five dollars of cash on the balance sheet. And it trades at 9 times. There's plenty of these opportunities. You just have to look for them. It's not a perfect science, but that's what the job of a stock picker is.
Ben Stein: But the question is, is the market too high?
Jim Rogers: I make the same point Ben does. The market is too high. Even if Reebok is a great company, it doesn't mean that it will go up if the market is going down.
Gregg Hymowitz: Stock prices ultimately reflect earnings power. It's buying a piece of the company and the earnings they generate.
Jim Rogers: So you're saying if the Dow goes down a thousand bucks, Reebok will go up?
Gregg Hymowitz: No, if the Dow goes down a thousand bucks, Reebok will go down.
Neil Cavuto: Ben, back to you, August typically the worst month. If you're right, it will live true to form and be the worst again, right?
Ben Stein: No, I don't know that it will be the worst month. I know that the market is way too high right now.
Meredith Whitney: I think that a core performing market lends itself to great buying opportunities.
Gregg Hymowitz: Look for opportunities.
Jim Rogers: No, stay away.
No Saddam – No Bull?
Neil Cavuto: What if we never get Saddam? After killing his sons, word was we were close to catching the big fish. But we're still searching and still getting shot at. Some fear the trail is growing cold. So if he remains at large, will that keep the bulls away from wall street? Mike, no Saddam, no bull market?
Mike Norman: The market would love it if we caught Saddam, but in terms of the bigger picture, it's not going to matter unless he owns an employment agency and he has a lot of jobs to fill. If we did get him and found out he was dead, it would be a tremendous boost to the market.
Gregg Hymowitz: I think without Saddam it prevents us from leaving Iraq and prevents us from really making progress in the rebuilding process. I think if we got him you'd see some relief, but I don't know if you'd see it in the equity markets.
Jim Rogers: I think the market would rally but it would be a short rally.
Mike Norman: It would give investors the idea that we're not going to be there indefinitely.
Neil Cavuto: Ben Stein, if we never get Saddam, does it make a big difference to investors?
Ben Stein: It won't make a difference if we get him or not. He's a spent force. Going back to what Gregg said. I think the connection from deficits to interest rates is far from proved. There's a lot of historical data to show that there have been many periods of low interest rates and high deficits. I just think it's an irrelevancy all together.
Mike Norman: It's not irrelevant. Deficit spending has been one of the things that has supported the economy. We need it right now to support it.
Neil Cavuto: I want to focus on Saddam and the hunt.
Jim Rogers: There are a lot more guys out in Iraq who don't like the U.S.. There are plenty of enemies out there.
Gregg Hymowitz: I can't imagine us leaving Iraq without Saddam. And therefore, you're there for a long time.
Mike Norman: I think this would be a signal. That if we find this guy things will get better. Investors would become more confident.
Ben Stein: The reaction on the market would be really short, and would be irrelevant over the long term.
Head to Head
Neil Cavuto: Does the media have it all wrong about how the economy is doing? Bill, I say the economy is on the road to recovery, but the headlines ignore anything positive.
Bill Wolman: They tend to put a smile on statistics. Let me give you some examples. Last quarter, defense spending went up by 45 percent, federal spending went up by 25 percent. X out the federal government's role and the growth rate of the economy was not 2.4 percent but instead 0.7 percent.
Neil Cavuto: So why were durable goods orders up 2 percent, why are leading indicators up three months in a row? And why, even in the face of backed up interest rates, did we have home mortgage applications running up 7 percent? I'm just saying there's a propensity of many journalists to focus only on the bad numbers.
Bill Wolman: We're in a slow growth economy.
Neil Cavuto: Fine, but to hear many tell it in this profession you'd think there's no growth.
Bill Wolman: My check used to say I worked for 35 hours a week. I'm not a hard worker, but I work more than 35 hours a week. In terms of those productivity numbers they measure work.
Neil Cavuto: You've seen retail sales be strong. You've seen Wal-Mart and Home Depot all reporting strong advances going on in our economy. Why do you ignore it?
Bill Wolman: Neil, the fact of the matter is the economy has had a slight pop and has not collapsed. But the economy is not that strong at this point. Even the press is overstating the strength of the economy.
Neil Cavuto: Here's an example, when we had the unemployment numbers out, everyone focused on the jobs that were lost. No one focused on the fact that the unemployment rate went down. When we had a backup of interest rates, everyone said, 'oh, no one is going to be buying.' Yet that day we had a real surge in mortgage applications. Whether it's driven my politics or anything else, there is a habit to bash this country, to bash this administration and to bash this economy.
Bill Wolman: It's a strong real estate market. The real estate market is really over heated and the rise in rates will make a difference.
Neil Cavuto: I'm saying the country as a whole is doing better. I'm saying that the last recession we went through, as a whole, was mild.
Bill Wolman: We are failing on our long term promise because our government is over committed. Research shows that the expected deficit has a big negative impact if it goes up on what happens.
Neil Cavuto: And these are the same projections that said we were going to have six trillion dollars surplus.
FOX on the Spot
Meredith Whitney: Oil hits $34/brl. Buy Dow Chemical (DOW).
Jim Rogers: Korea crisis averted. Buy MS Japan iShares (EWJ) on pullback.
Ben Stein: Bond prices rebound. Buy Treasury Inflation Progected Securities.
Gregg Hymowitz: Government moves to stop export of U.S. jobs.
Mike Norman: Budget deficit shrinks as economy grows.
Neil Cavuto: Watch out for consumers. They're baa-ck. The latest retail sales figures confirm it, and those child tax credit checks will only strengthen it. Good news for economy!