DISCLAIMER: THE FOLLOWING "Cost of Freedom Recap" CONTAINS STRONG OPINIONS WHICH ARE NOT A REFLECTION OF THE OPINIONS OF FOX NEWS AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE WHEN MAKING PERSONAL INVESTMENT DECISIONS. IT IS FOX NEWS' POLICY THAT CONTRIBUTORS DISCLOSE POSITIONS THEY HOLD IN STOCKS THEY DISCUSS, THOUGH POSITIONS MAY CHANGE. READERS OF "Cost of Freedom Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.
Bulls & Bears
Brenda was joined by: Gary B. Smith, RealMoney.com columnist; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; and Charles Payne, CEO of Wall Street Strategies.
Trading Pit: Saddam Indicted, Stock Ignited?
Last week, Saddam Hussein (search) was in front of Iraqi judges. This is the first step in a trial that many believe will result in his execution.
So now that Saddam's indicted, are stocks about to be ignited?
Charles: Saddam's indictment is good for the market, but on a scale of 1 to 10, it's only a 2. On Thursday, when everything began, the market reacted negatively because some are afraid that true justice won’t prevail.
Tobin: Saddam’s trial will show us the extent of his insanity. It will also help build a case on why we invaded Iraq. But this trial will move from the front page to last page of paper—which will help the market.
Gary B.: I think that most people don’t know about the atrocities that Saddam committed. But once they do, due to this trial, its impact will get bumped up to 5 (on Charles’ scale of 1 to 10). The market has moved sideways since the start of the year. On its chart, the S&P 500 has been locked between 1075 and 1150. But once the news of Saddam’s evil acts reaches the majority of the population, people will be glad we liberated Iraq and this will help bump the market above its sideways movement
Scott: Saddam’s trial has not impact on the market because the market doesn’t care about it in the slightest bit. His trial makes us look bad because we didn’t kill him and having him in a public forum like this will do us no good.
Pat: This indictment and trial has no importance to the market. Saddam’s atrocities are well known. The Bush administration was very vocal in getting the word out to justify going into Iraq. This has been in the in press for a long time and it’s no secret he was a very bad dictator.
On our first show of the year, Scott, Tobin, and Pat each picked stocks that they thought would make the most money in 2004. Well, we’re halfway through the year, so let’s see how they’re doing.
Scott’s stock was China Petroleum & Chemical (SNP). Since January 1, it is down 15 percent. Even though the stock isn’t doing well, Scott still loves it and predicts it will go up for the year. He thinks it could reach $100 in the next couple of years. (China Petroleum & Chemical closed on Friday at $36.94.) Tobin said it looks good long-term and likes it pays a good dividend. Pat said, in his opinion, PetroChina (PTR), is the best Chinese oil company and a better stock to buy.
Tobin had picked ChipMOS (IMOS). It is down 24 percent in six months. (On Bulls & Bears, we usually do not mention stocks below a $500 million market cap. When Toby picked this stock at the beginning of January, it was above this cap, but has now fallen below it.) Toby admitted he was wrong at the time, but he still likes the stock. He said this company is going to get bigger as the LCD screen business grows. Pat said the stock is reasonably priced, but he isn’t too excited about it. Scott said the entire group has been under pressure from sellers, but agreed that the stock is reasonably priced. (ChipMOS closed on Friday at $7.15.)
Pat chose iPayment (IPMT), which has made a gain of 22 percent since the beginning of the year. The company does credit card processing for smaller companies. He likened it to a smaller version of First Data (FDC). He said the company is growing quickly and has a very high quality management team. Pat admitted the stock is pretty expensive and he wouldn’t buy more at its current price, but if you own it, hold on to it because it’s heading higher. Tobin said Pat made a good call, but sell the stock now! Scott thinks iPayment will have good growth. He added that Pat took a risk by recommending it, and it paid off. (iPayment closed on Friday at $41.30.)
Gary B. and Charles each picked the stocks that will be the best for the rest of the year.
Charles chose Solectron (SLR), because he thinks corporations are going to start spending money on technology. This stock has been battered, but now it’s starting to come to life. Gary B. thinks Charles mixed things up and picked the stock that performed well in the first half of the year. He charted Solectron and said it has gained 40 percent in less than 2 months. It’s also right at a resistance line and isn’t promising to break out. He doesn’t like it. (Solectron closed on Friday at $6.20.)
Gary B. chose Deluxe (DLX), the nation’s largest check printer. He looked at the chart, and showed that Deluxe got bounced the first time it tried to break above $43, but it recently broke out a second time. He thinks the second time will be the charm and you can bank on it hitting $50. Charles said the stock has done well, but he thinks it will fall apart. He also asked who uses checks anymore, now that we’ve turned into a paperless society. He added this is not a growth industry. (Deluxe closed on Friday at $43.21.)
Charles' prediction: Bush unveils plans to withdraw troops from Iraq and market soars
Scott's prediction: Kerry picks Hillary as VP; Bush re-elected and stocks take off
Gary B's prediction: Nasdaq goes on a run; up 7 percent for new yearly high by October
Tobin's prediction: Gary is too conservative; Nasdaq goes up 10 percent this month
Pat's prediction: Emulex (ELX) is a tech stock even I like! Up 40 percent over the next year
Cavuto on Business
Neil Cavuto was joined by Stephen Moore, President of the Club for Growth; Gregg Hymowitz, founder of Entrust Capital; Ben Stein, author of, "How To Ruin Your Financial Life"; Meredith Whitney, Fox Business News Contributor; Michelle Gerard, Senior Economist at RBS Greenwich Capital; Barry Ritholtz, Market Strategist at Maxim Group; and Bill Fleckenstein, President of Fleckenstein Capital
The Bottom Line: Should Iraq Pay Us Back?
Neil Cavuto: A big week in Iraq. The country taking back power and taking back custody of one Saddam Hussein. So now should they pay us back?
Stephen Moore: I think so. I think if you look at the situation in Iraq right now, we’ve given $87 billion just this year and don’t forget about $20-25 billion of that is for the economic reconstruction of the country like rebuilding pipelines and infrastructure to get the oil flowing again. Iraq has the second most amount of oil of any country in the world. And once that oil starts flowing this will be an asset rich country, and there is no reason why they shouldn’t pay us back for the cost of getting their country moving again.
Ben Stein: I think they should pay us back. I mean we not only sent over a great deal of money but something that can’t be paid back, American lives. The least they can do is pay us back. And they are, as Stephen said a fabulously rich country because of their oil. I doubt if they ever will. We help all these countries around the world and they never pay us back.
Gregg Hymowitz: I think to some extent. To the extent we give them money to rebuild the country, and I’m assuming not to rebuild what we’ve destroyed, but new projects. Maybe it would make sense to do that in the form of a loan, however, I think if we start talking about the oil it hurts us internationally. It then gives too much power to the people who said we went in there for the oil and now they’re taking the oil revenue I think it really de-legitimizes the reason we said we went in there in the beginning.
Meredith Whitney: I am flabbergasted. I think this is the craziest thing I’ve ever heard of. If what you say is the case? Then shouldn’t we make a great business opportunity of invading any country and making them pay us back. Remember what we did to Germany in the first World War and what dire situation we put that country and those people in. Iraq is so unstable now and to saddle them with debt would make them more so. But to put them in a tenuous situation financially, only gives the radicals more fuel to their fire. I think that would be a big mistake.
Ben Stein: Germany had no means of paying us back and they had to float the currency to try to pay us back, which caused ruinous inflation, whereas Iraq has a virtually limitless supply of oil. They can pay us back with a small percentage of their oil revenues over the next thirty years, they could pay us back with hardly a debt in their income.
Neil: Stephen I know what you’re saying. That we have to get money back from all of this, but a lot of people are saying that the Iraqis at this juncture are the wrong people to expect it from. What do you think?
Stephen Moore: Well, one of the things I want to point out is that the two countries that are owed the most money from Iraq are Russia and France. And those are the two countries that have done nothing for the liberation of Iraq. In fact, you can make the case that Russia and France were working against the liberation of Iraq by propping up the Saddam Hussein administration. So my point is, rather than letting them get the first in line to be repaid, I’m not saying let’s make money off this, I’m simply saying the American taxpayer should be reimbursed for some of the cost for rebuilding the economy of this country.
Neil: Stephen, Where would the money come from and what would you be compensated for?
Stephen Moore: I think it is analogous to your neighbor’s house on fire and you try to put out the fire, like we did in Iraq, and your neighbor says you have to rebuild the house. We paid for the rebuilding of Iraq both with blood and money. And I think it is very reasonable for an asset rich country to devote some of that money to repay us back and it should come from their oil money.
Gregg: In this case, some people would say that you were the one to put the house on fire in the first place.
Ben: That is the essence of crazy talk. We didn’t set up Saddam as the dictator there or force him to gas his people; we liberated that country. There is a lot of chaos there, but that is often true with newly liberated countries. We liberated that country, and for doing that an awful a lot of Americans are writing checks for it that can’t afford it. It’s not really unfair to have them pay us back for liberating their country.
Meredith Whitney: It was our decision to go in there, and so it was our decision to pay that price for freedom. And I think we’d all say that $87 billion is certainly worth not one terrorist attack since 9/11.
Neil: Stephen, if it costs us $100 billion for this war, how much do you think we should get back?
Stephen Moore: I think we should not get back the money for the military expenditure but we should get the money back for rebuilding the pipeline and getting the oil flowing again.
Neil Cavuto: I’ve done some of that math, and it is about $15 billion.
Stephen Moore: A better way to repay this month is to not gauge us with the price of oil. It costs Iraq about $1-2 to produce one barrel of oil, and then they’re going to sell the oil for $34-35 a barrel on the world market. They should not join OPEC, they should sell us that oil at a reasonable price.
Neil Cavuto: That’s kind of dangerous telling what clubs they can and cannot belong to. It is a slippery slope.
Stephen Moore: I think OPEC is doing serious damage to the economy. It is very reasonable for them not to gauge the prices out of American consumers who liberated the country.
More for Your Money: Hike My Day!
Neil Cavuto: Michelle, you say the sooner the Federal Reserve hikes rates the better? Michelle Gerard: We have a long way for the Fed to go in terms of getting policy to a more neutral stand. That's a level that's neither stimulating nor slowing the economy down. It's somewhere between 4 and 5 percent.
Neil Cavuto: That’s quadruple where we are now.
Michelle Gerard: In a perfect world, if the Fed could aggressively raise interest rates and get to within shooting distance, where we'd like to be and then move more gradually, that would obviously be a more preferred strategy.
Barry Ritholtz: I think what the Fed is trying to do this time is not make the same mistake they made last time, which was not effectively communicating what they were doing to the markets. If you remember the '99-00 rate hiking cycle, they raised from a neutral bias, they cut from a tightening bias. They hike a ¼ point one meeting then a ½ point the next meeting. We didn’t know what they were thinking and it really made the market crash much worse.
Gregg Hymowitz: I think the question is do we need to get to neutral? I hate to rain on everyone's parade, but the current numbers coming out show an economy slowing down. Jobless numbers were more than people expected. GDP was less than people expected. The Fed needs to go slow because at some point it may need to reverse itself.
Ben Stein: This is really a tough one but I have to agree with Gregg. The economy is not roaring along the way we thought it was even six weeks ago. The job numbers were disappointing and corporate numbers were disappointing. Growth is anemic. I don't know where we get this idea that we have to cut down on growth.
Michelle Gerard: Wait a minute. We're talking about some softer numbers here after three blow out numbers. We're talking about the Fed keeping the funds rate now at a level that they lowered as an insurance measure against deflation.
Neil Cavuto: But Michelle, why risk torpedoing that? It's coming along, but the sprint now is a trot.
Michelle Gerard: Because the long-term risk of running a simulative policy is that inflation is going to creep higher.
Barry Ritholtz: Remember the last time there was a Bush in the white house. Last time the fed took the blame for Bush’s loss, for not lowering early enough. He doesn’t want to risk getting the blame this time.
Ben Stein: We’re seeing deflation in China and Japan with oil prices decreasing. I don’ t think inflation is an overwhelming risk. I would hike rates slowly.
Gregg Hymowitz: I think the Fed should go slow, because the economy is not out of the woods yet.
Head to Head: The Coming Crash?
Neil Cavuto: October 19th, 1987 the worst single day of the market. The Dow plunging 23 percent. Bill you say it could happen all over again why?
Bill Fleckenstein: I’m not saying it will happen, what I’m saying is ingredients are in place to allow a low probability event like a dislocation to occur. In 1987’s stock speculation was tame, we had inflation and the weak dollar, but the real cause was portfolio insurance. Though we do not now have portfolio insurance, we have mutual funds where investors can call up and get out, but what they need is a reason. There is a reason why the Fed has the funds rate at 1.25 when we had some good GDP growth even though inflation is at 3-4 percent because we are in the post stock bubble recovery and they used the speculation of the house prices as people used their equity in their houses as an ATM machine. And if people think things are gonna get worse because they start, that’s what will kick off a dislocation.
Neil Cavuto: But what about the improving economic numbers, steady growth, steady job growth, etc? People are extremely conservative today.
Bill Fleckenstein: The cash on the sidelines is the lowest its been when measuring mutual fund-cash ratios. I would argue that if you look at the valuation of many over the counter stocks its extremely expensive to buy. The 12-15 months of good economic growth is behind us because we’ve run out of stimulus.
Neil Cavuto: What are the odds a dislocation will occur?
Bill Fleckenstein: I’d say they are as high as 20 percent, 1 in 5.
FOX on the Spot
Michelle Gerard: President Bush is going to be right we’ll have 2.6 million jobs added by the end of the year. When he came out with that forecast in February he was very publicly criticized for it, but despite a soggy June number we’ve got 1.6 million jobs under our belt. And I think we’ll continue to have robust job growth. And by the end of the year we’ll have 2.6 million.
Gregg Hymowitz: For the vice presidential candidate I think it is between John Edwards and Dick Gephardt, and the betting money is on John Edwards
Meredith Whitney: With John Kerry’s economic plan talking about the middle class squeeze, I think this is going to be a campaign misfire. There is no middle class squeeze, I think there is a lower class squeeze, but maybe those people don’t vote so he’s not paying attention to them. And I think his ratings peak at the end of the month at the convention. And the markets will respond favorably after they peak out.
Barry Ritholtz: Buy Honda Motor Corporation (HMC). At the end of this year Honda introduces a full size five-passenger car. They are not selling as a green car, it has more horsepower and better acceleration. In five years 25 percent of cars will be sold with this technology. My clients own Honda, but I do not.
Ben Stein: I think inflation is not going to rise the way people fear, I think interest rates aren’t going to rise like people fear. I think the housing boom is going to continue strong and I think real estate investment trusts are still a good buy. As always I recommend and own iShares Cohen & Steers Realty Majors (ICF).
Neil Cavuto: Mortgage rates will stay low and housing sales will stay very high.
Forbes on Fox
How are politics and global events affecting your wallet? We'll put the story In Focus and give you the bottom line.
Have the terrorists won the War on Terror?
David Asman: Lots to celebrate this weekend, our freedom of course, along with our strong economy, a healthy stock market, more or less, and over a million jobs created just in the last four months. Pretty much everything terrorists are trying to take away, is thriving. This is proof that Al Qaeda is loosing the war on terror. So have the terrorists failed?
Mike Ozanian, Senior Editor: They have clearly failed David. After the attacks the economy was in recession, the economy is now growing at better than 4 percent a year, jobs are roaring back, the stock market is up 8 percent ahead of the 9/11 attacks and our true allies, like the Brits and the Australians stood fast with us…
David Asman: Unlike the Brits and the Germans…
Mike Ozanian: And consumer confidence just came out and it's at a two year high.
David Asman: Quentin, what do you think?
Quentin Hardy, Silicon Valley Bureau Chief: I think this week we had to handover power to the Iraqi government two days early because we were afraid of terrorist attacks. I think there were two polls this week where the majority of the American people feel like the war in Iraq has increased the threat of terrorism and thousands of terrorists have been created. Meantime we would have emerged from a recession anyway. That's what you do - you come out of recessions and I don't think the Bush administration has much to show domestically. There weren't that many cells to bust or else they failed to find them.
David Asman: So Rich any good happening here, is that just luck? Essentially that is what Quentin is saying.
Rich Karlgaard, Publisher: No. We have to get to the bottom of the matter. We have to fight this war on terror. We will win, we are winning. But the cost is not going to be free. Quentin is complaining that the cost isn't free. Quentin I think you forgot to take your medicine this morning -- this is a great time of year.
David Asman: First to Dennis for a response.
Dennis Kneale, Managing Editor: Well its the July 4th weekend guys so lets be patriotic. But lets not forget Pollyanna and the thought that terrorists have not had a profound impact on our country in many ways. Little tiny ways and big ways.
David Asman: But we are at war for god sake.
Dennis Kneale: That's like the black knight and the might python, they lop of his arm and he says "its just a flesh wound." They have had a huge impact on our society. My nephew, 16, is here visiting. He went to the Statue of Liberty yesterday. You are not allowed to go inside the Statue of Liberty anymore. They stopped it after 9/11. We are too afraid something's going to go wrong.
David Asman: Elizabeth we are at war, and it has changed our lives but that doesn't mean we are not winning.
Elizabeth MacDonald, Senior Editor: Well I don't think we can raise the victory flag just yet.
David Asman: No because we are in the middle of the war.
Elizabeth MacDonald: That's right. But you know Iraq is still in chaos. Even the defense department over there -- what they have over there -- it doesn't have a working phone system, the banking system is in chaos, there security forces are still coming up. But I do think that there is a bit of a turn around going on with Saudi Arabia, they just killed their top terrorist leader, so did Algeria, they are rounding up terrorists in Morocco, but still we kept the weight of it to see how this thing goes.
David Asman: So Quentin we are still in the middle of this thing but the battles that we are fighting seem to look good, don't they?
Quentin Hardy: Well you know, in 1993 the terrorists tried to hit the Twin Towers. They came back. You know they are on a very different timeline from most Americans who seems to think that if nothing happens for a year or two then great. I am much more concerned about how we have prosecuted a failed war that has created thousands of terrorists and increased international animosity, giving these guys…
David Asman: Wait a minute, how do you call it a failed war? First of all Saddam is on trial, we are winning some of the battles, Fallujah is a mess I grant you that, but its too early to say we failed in this war is it?
Quentin Hardy: Well as I recall we have found a tenuous 1995 discussion between Al Qaeda and Iraq, not much more than that. And they haven't found weapons of mass destruction. So we created anger at the US, sort of around the world on primacies that turned out not to be true and hundreds, maybe thousands of terrorists have been created by the US…
David Asman: Alright Dennis, go ahead.
Dennis Kneale: This is a lasting symbol of just how much they wanted to make us feel fear. They didn't need to destroy the entire country, they wanted us to feel fear. They are going to rebuild the World Trade Center. It is going to be a gorgeous structure, it is going to stretch into the sky and those top floors are going to be empty because we are afraid to put people up there. And the terrorists did that to us.
Elizabeth MacDonald: Wait a second, would you work up there? I wouldn't work up there on the top floor. Who would at this time?
Mike Ozanian: This isn't just a war against people, this is a war against our whole economic system. And we are winning that war, and that's the most important war. This is a war against capitalism and democracy and we are winning.
David Asman: So Rich I heard Dennis say that's true, do you agree that that's true, that we are winning the war on democracy and capitalism?
Rich Karlgaard: We are winning the war and this argument against my colleague Quentin, his argument that we are creating more terrorists - first of all, he is not measuring the terrorists that haven't gone in to terrorism because of the fear of god that we are putting into them, and its just an old and tired argument. You know when Reagan put missiles into Germany in 1983, oh my gosh we were going to recruit people from the red brigade, they were going to blow up all of Europe, it didn't happen, its not going to be happen this time.
Quentin Hardy: I am somewhat shocked that my capitalist colleagues would have any doubt that terrorists would somewhat prevail against our market based system. They will not win against us. They never had a chance on that level. But look at what the administration has done in response to them. They acted fearfully and willfully in Iraq and we have grandmas taking of their sneakers in airports…
David Asman: Yeah, but Quentin hold on a second, you are not saying that we created people like Zarqawi, Zarqawi had designs against the US way before we went into Iraq.
Quentin Hardy: Zarqawi was a pipsqueak off the meter a year ago. We went into Iraq and now he is like a big face.
David Asman: So you murder enough people and you get notoriety, what does that prove?
Quentin Hardy: We gave him that opportunity.
David Asmen: We gave him that opportunity Liz to murder people?
Elizabeth MacDonald: I do agree that new people are coming into these terrorist camps because they hate America and we bodged this war, we did. But right now Saddam Hussein is going on trial and that's a huge deal. You know I am just waiting for Michael Moore to do a movie Saddam and me or Chemical Ali and me.
David Asman: Mike do you agree that we bodged the war?
Mike Osanian: No, at the beginning of the war we said this war is going to take a long time. And lets not let Quentin forget that long before Bush became president they bombed an embassy in Kenya. And like Quentin himself even said that had a bomb in the basement of the World Trade Center.
David Asman: Well one thing we can all agree on here is patriotism. Everybody here, even the protestors are patriots and we appreciate that.
Tired of hearing the same investing advice from every side? We'll give you the contrarian approach to investing in our Flipside segment.
David Asman: North Korea has nukes and Iran is on its way so do we bomb these two terrorist states in a submission? Or send in the business folks? So Neil, trade with the access of evil?
Neil Weinburg, Senior Editor: Yes, you wonder why Presidents get old while they're in office. These are the kind of decisions that makes them get old. These are awful people in both countries and there are no good choices. But I would argue that if we are going to boycott them its not going to work. We boycotted Cuba, 40 years later castro is still there. So what are we going to do? We have to absolutely try to engage them at this point. Because without doing that they are just going to continue building bombs.
David Asman: Leah, your head is moving from side to side.
Lea Goldman, staff writer: I know. Its such a disturbing argument that these people are building nuclear arms and committing human rights atrocities at all levels, but lets send them over our business, lets make nice and develop capitalism over there and that's the cure. It's not the cure. What the problem is we are going about unilateral sanctions instead of building support internationally for multilateral sanctions, which worked in South Africa to help end apartheid.
David Asman: Quentin It worked in South Africa…
Quentin Hardy: South Africa was a business engagement, I think Lea is on the same page as we are.
David Asman: No she's saying the embargo worked in South Africa but go ahead.
Quentin Hardy: But that was shareholders with companies there, but anyway. I admire our military; I am awed by our mercantile culture. You know we would have done so much better in Vietnam if we'd just come in low and dumped Levis all over the country, 45 RPM records, they'd love us and want to be part of us. We traded with the Soviet Union -- we sold them wheat. Reagan did cruise missiles but we flooded the country with VCR's and fax machines too.
David Asman: So Bob, you can do two things at once. You can beef up the military and trade with them.
Bob Lenzer, National Editor: This is absurd to talk about trading. This would be like feeding the sharks. We can buy oil from Iran but this isn't going to stop them from financing Hizbollah all over the world, giving money to the Palestinian terrorists, building nuclear bombs and threatening the safety of Israel. What are we going to trade with North Korea? Its ridiculous. They are going to continue to be a power in South East Asia, and we not going to be able to prevent them. We have to do it by diplomacy and by other means, but trade wont work.
David Asman: Ok Mike, and we heard the Iranian friends, the Hizbollah, may now be in the US about to start a terror strike, do we really want to trade with these people?
Mike Ozanian: I say use a carrot and a stick. Lets outsource there, lets manufacture there. They have plenty of cheap labor but lets also beef up our military. We are only spending 3.2 percent on our military. Lets support the surrounding area with our military and make it stronger. My good friend Lea who is afraid that we are supporting the enemy -- lets put Starbucks and MacDonald's there so they get fat and addicted to sugar.
Lea Goldman: Lets point to our Southern ally China and look at what's happening there. Its debatable whether or not capitalism has had an impact to undermine communism principals. Why? What you have done is you have improved the living qualities marginally. People who are used to making four bucks a week, now they are making five. Money goes to the coffers of the establishment -- to the rules.
Neil Weinberg: I don't care about undermining capitalism. I care about making this country safe. China is not the threat that it used to be.
Bob Lenzer: When we recognized the Soviet Union in 1933 we said we were going to trade with them and we said that was going to change things. Its ridiculous it's not going to happen.
Quentin Hardy: You know here's a little message for the white house. Most of them only hate us when we shoot at them. But when we change with them they tend to like us. China sponsored the greatest slaughter in the bloody 20th Century and now there are billionaires there. We trade with them, we have business with them.
Bob Lenzer: We are on the border with Canada and the Canadian government hates the American government right now. We are not at war with them, but we have more business then you could possibly have with Iran and North Korea put together for the next fifty years.
Neil Weinberg: Look I would argue that Clinton in 1984 cut a deal with North Korea and promptly cheated on the deal. Bush came into office and said he was not going to deal with these awful people but meantime we have been developing weapons in the last four years and what do we have to show for it?
Makers and Breakers
• Ford (F)
Bernie Schaeffer, Schaeffer's Investment Research: I like stocks with strong price action, strong earnings trends and signs of investor skeptism. Ford's been trending very nicely, its been outperforming the market by a bit, raised their earnings outlook by 10 percent recently, 2.5 percent yield, 9 P.E. …
David Asman: You think it could go up above 20?
Bernie Schaeffer: I think it could reach 20…
Pete Newcomb, Senior Editor: BREAKER
You know I like the stock but I don't think that now is the time to buy it, I don't think they are going to have a strong third quarter, I would wait till after the third quarter.
Dennis Kneale: MAKER
I think Bernie is right, I like this stock. I think Ford has been to hell and back, it wasn't too long ago, remember with Firestone tires? I think William Ford has shown what he can do to run the country.
• palmOne (PLMO)
Bernie Schaeffer: Palm is one of those stocks that has been leading the market that everybody does not believe. Only two analysts have buyers on it, strong demand for smart phones and all there products. Its at its 12 months high. I think it can go to 55, this stock was down to 6, it is now about 30, it was trading at around 2000 at the peak of the moment.
David Asman: Dennis, you think a 40 percent rise is possible?
Dennis Kneale: BREAKER
This is a "what are you crazy?" stock. This stock has tripled in like the last four months and this is a hardware maker, we are talking thin margins. You want to buy something? Buy software, by the software for palm.
David Asman: Yes you're a breaker on this. Pete, what do you think?
Pete Newcomb: MAKER
Smart phones are hot, it's a hot little thing. This is a speculation but I like it.
Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
David Asman: Fruits and grains or grease and fat? Low-carb or not? Answering those questions can make you some money. Lea Goldman, Staff Writer: It's all about the calories. I like Krispy Kreme (KKD). It has been under the limelight negatively lately. It's at a 52-week low. It's cheap right now. Buy it. They are moving beyond doughnuts, which they say low-carb fanatics have dissed already. So they are moving to low sugar doughnuts, and 'mocha-choco-lattes' like they serve at Starbucks (SBUX).
David Asman: The stock at an all-time low, why not buy it?
Chana Schoenberger, Staff Writer: My issue with Krispy Kreme is I don't like their doughnuts. I prefer Wendy's doughnuts.
David Asman: Victoria, what do you think of Krispy Kreme before we go to yours?
Victoria Murphy, Staff Writer: I think Krispy Kreme is a great company. They have turned a commodity product into a brand and they have really strong earnings. All diets are a fad. They need to coin an all-doughnut diet and they're in the money.
David Asman: Victoria, you're recommending a stock that is very healthy for us.
Victoria Murphy: It's very healthy because I live in California and we eat healthy foods here. A company called Hain Celestial (HAIN). They are still kind of tiny, but they're being really smart. They are buying up all these natural food brands like soy milk and grain companies. And they have 13 of the top 15 natural food brands. If you are a natural foods entrepreneur you don't want to sell Altria (MO) which owns Kraft (KFT), or Philip Morris, who makes cigarettes -- they are being smart.
David Asman: You have heard of Celestial Teas, Hain is the one that makes it. Let's go to something unhealthy.
Elizabeth MacDonald, Senior Editor: I like Wendy's (WEN). I'm one of those deluded people who feels that if I eat a salad but have some french fries I'm still being healthy. Wendy's has great salad offerings. The stock is pretty cheap. I like the stock.
David Asman: We have to move on to Whole Foods (WFMI), Chana.
Chana Schoenberger: I think you guys are all on the wrong page here. Americans are richer. They're healthier. And they are snobbier than they used to be and they want this gourmet chain of health food stores.
David Asman: And there is no gourmet chain more healthy than Whole Foods Market.
Chana Schoenberger: Pretty much. It's really just a theater of the food. It's these beautiful displays of produce.
Elizabeth MacDonald: This is a fake stock. An overpriced stock that sells overpriced goods.
David Asman: At a 52-week high.
Elizabeth MacDonald: A lot of the food is not organic but produced by conventional means. If they call it 'Whole Paycheck' because that's how much it costs to shop in their stores. I don't like this stock.
Lea Goldman: And they sell all this stuff at your local Stop & Shop and Shop Rite. You don't need to go to a specialty store.
David Asman: Victoria, you are a 'Whole Food' kind of girl. What do you think?
Victoria Murphy: I do shop there and I think the stock is as overpriced as organic oranges. Once they start getting more competition, and they will, they will lose their first mover advantage. And their margins will get hurt.
David Asman: Chana, they are at a 52-week high. The stock is. Is that a problem?
Chana Schoenberger: It's an expensive stock but whenever they buy out somebody's local brand like 'Bread and Circus' people love it.
StockSmarts: Kerry’s French Kiss?
Here we go again! The French and the United States at odds over the use of NATO (search) troops in Iraq. John Kerry says he can fix relations between the U.S. and France, but would the market approve of his method?
Jonathan Hoenig of Capitalistpig Asset Management says John Kerry cares a lot about what the French think of him. He cares a lot about how he looks in the eyes of multi-national organizations like NATO or the UN, and he wants to protect America's reputation, but it’s America's interests that are important, and John Kerry doesn’t get that. Jonathan believes it is better for the United States to act alone than not to act at all. He says the market doesn't want to see us in bed with the French, or our troops side-by-side with NATO. He says the market wants to see a safe, free America with a strong, moral leader who knows right from wrong, and that’s not John Kerry.
Bob Beckel, democratic strategist, says he thinks John Kerry will win the election and he will try to bring the French around with diplomacy first -- and because he’s new, and not Bush -- they may throw him a few bones. But, he says it won’t be long before Kerry realizes those tactics won’t work. He thinks Kerry should start a trade war and place tariffs on French goods. He says it’s the only thing the French understand -- selective sanctions would have the French farmer’s union driving their tractors through Paris in no time. He says so far the French have paid no price for their actions, and this latest balk about the NATO troops is evidence its time they do.
Stuart Varney of Fox Business News says John Kerry has an albatross around his neck, and its name is France. He points out that John Kerry speaks French and he has French relatives who are active in French politics. Stuart says American voters regard the French as adversaries, which is the polite word for enemies. He says the fact that French President Jacques Chirac would back John Kerry is not a plus for Kerry’s campaign. As for the market, he says a Kerry victory would mean tax increases and a French veto on America's security and the market would never stand for that.
Dagen McDowell of Fox Business News says the market doesn’t like France and doesn’t care about the French. She says France has no military might and very little economic power. She says our damaged relationship with the French has had no material impact on the market so far. So, even if Kerry can fix it, it won’t make a difference to the market.
Jonas Max Ferris of MAXfunds.com says the French are going to love Kerry for many reasons including the fact that he has French relatives, family homes in France, and he speaks French fluently, but, he says if Kerry can get the French to help pay to rebuild Iraq the market would view that as a positive.
Wayne Rogers of Wayne Rogers & Company says he loves the French people but the French leaders are “morons.” He agrees with Bob Beckel that the United States should just tax everything that comes out of France. He says France is irrelevant, old Europe and the French leaders are obstructionists, and we don’t need them. His disagrees with Bob Beckel with regard to Kerry’s chances at actually winning the election though. He says Kerry doesn’t stand a chance.
Best Bets: Is the Trend Your Friend this Year?
Our gang took a look at the top performing stocks so far this year in each of the three major stock market indexes. Will these stocks remain hot throughout the year?
Dow’s Mid-Year Winner: Boeing (BA) up 21 percent Friday’s close: $49.52
Jonathan says Boeing has been a great stock in a very strong sector, and he thinks Boeing has more juice in it. He says it would be a good buy right now for anyone looking for stock exposure. Wayne agrees that Boeing has been a strong company, but he thinks the stock is fully priced right now. Jonas thinks Boeing is going to have the government working in its favor for a while, making it a relatively safe bet.
S&P 500’s Mid-Year Winner: AutoDesk (ADSK) up 74 percent Friday’s close: $42.11
Jonas says the stock hasn’t gone anywhere until recently, and there is a major piracy problem in the software industry, which he doesn’t think has been resolved to the point where a software company can support such a high-priced stock. He wouldn’t buy it now. Jonathan says he always gets nervous when he sees a stock move straight up the way this one did. He would buy Microsoft (MSFT) instead of AutoDesk if he were looking for exposure in this sector. Wayne also prefers Microsoft. He owns shares in the software giant.
Nasdaq 100’s Mid-Year Winner: Research In Motion (RIMM) up 105 percent Friday’s close: $70.91
Wayne thinks RIMM”s competition is coming on too fast, which will make it difficult for this company to grow and sustain its stock price at this level. He points out that RIMM was up about 20 percent in the last four days. He wouldn’t buy it now. Jonathan says the company’s product is very good, and the stock is strong, but he agrees with Wayne that the hot money is playing the stock and you would be crazy to get involved. Jonas says people lost enough money in this stock once. He thinks competition from Microsoft and Dell (DELL) will eventually ruin this company’s stock value, and he wouldn’t buy it.
Challenge Update: A mid-year look at the Cashin’ In Challenge
Check it out: www.foxnews.com/challenge
Question: “Ebay (EBAY) admitted double billing customers recently. Is this an honest mistake or another Enron in the works?”
Dagen says the “E” in eBay does not stand for Enron. She says the company admits to having some billing problems due to a glitch it is experiencing as it transitions to a new software program. She says while the company did over bill, it claims that it has not automatically taken any more money out of accounts that it was owed. She adds however that the problem is ongoing, and many customers are very angry. That said, she points out that eBay stock is “priced to perfection” and the company better be perfect if it wants to sustain its stock price, because any bad news could whack it.
Question: “How come last year’s 20 percent hike in milk prices doesn’t count when the government decides whether or not there is inflation? Doesn’t George Bush drink milk?”
Wayne says the Consumer Price Index, which tracks the rate of inflation in the United States, is so complicated you would have to be a genius statistician to calculate it. He does not believe that even the government knows where inflation is occurring. He says inflation is here, and it’s not being recognized, and the CPI is part of the problem. Jonathan points out that the price of commodities has been rising rapidly, so it is true that we are in an inflationary period. Dagen says commodity prices are very volatile, which is why the government doesn’t count them when trying to determine the real rate of inflation. She says if you want to determine whether or not we are suffering from real inflation all you need to do is look at your paycheck.
Question: “I think Baby Boomers are heating up the recreational vehicle market and am looking for a play on RVs. What do you think of Winnebago (WGO)?”
Jonathan says this stock’s story is played out, and he wouldn’t but it here. Wayne agrees. Dagen says the stock has had a really good run, and now is not the time to buy it.