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.
This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Pat Dorsey, Morningstar.com director of stock research; Scott Bleier, HybridInvestors.com president; Tobin Smith, ChangeWave Research editor, and John "Bradshaw" Layfield, Northeast Securities.
Trading Pit: Blame the Primary Election for Wall Street's Historic Sell-Off?
Gary B. Smith: Absolutely: The election will have a big impact on how the White House treats certain sectors, as well at how it treats taxes (including corporate taxes).
Tobin Smith: Its not helping…but the killer is the REAL unemployment rate which is REALLY about 5.5 percent and going to 6.5 percent because we are in a recession. Yes ChangeWave Research is now forecasting that we are in a stalled economy that goes to negative 1 percent growth in Q2 and Q3. We are moving from correction to bear market unless the FED goes ½ point cut pre-meeting and ½ point at meeting. But we are in a consumer led recession and it's going to be a real recession. So get ready for 3 percent Fed Funds rates by summer….
John "Bradshaw" Layfield: There is not an incumbent defending the economy, consumer sentiment guides spending, so yes, every candidate saying we need change is hurting. All of this talk of a recession and housing woes is hurting spending, cash on consumer balance sheets is up 10 percent. Consumers still have cash to spend; the question is will they? Fear is driving down this market; there is no doubt about it. Unemployment is still low as are rates. Europe is in trouble with debt and the strong euro, they will have to lower rates which is not what some countries need, this helps the dollar this year.
Scott Bleier: The election is having little to no effect on the market at this time. In a more "normal" market and economic environment I would say that the prospects of higher taxes would be a concern. But with an economic contraction that is spreading, home and stock prices dropping and the prospect of higher unemployment, the last thing investors are worried about right now are taxes they may have to pay a couple of years from now.
Pat Dorsey: It is uncertainty…but not about the election. It is about the economy. There's been a tug-of-war for months between the "mild slowdown" scenario and the recession scenario, and the difference between the two is not merely semantic. Economies are like airplanes: at too low a speed they go into a stall and roll over. Up until recently, the evidence was reasonably balanced on both sides, with the jobs picture being the crucial positive data point. Last Friday's jobs number moved the weight of the evidence much more strongly into the "ugly" camp.
The silver lining in all this is that many retailers and financials are already pricing in a very nasty recession. Industrials, however, seem to be still trading on fumes.
Time for a "Wicked Weather" Tax?
John "Bradshaw" Layfield: Yes: if you are in a flood plain and it floods, too bad. That is what insurance is for, not the government. This is not a socialist state. We cannot afford to keep bailing out people who don't buy insurance and look to the government for help. Should I get a bonus because I don't live near the coast and haven't lost my home, the answer is no. We don't legislate ignorance, or at least, we are not supposed to.
Scott Bleier: No way. Are we next going to see a crime tax for New York City? Natural disasters are mostly random. You cannot tax people on problems that have yet to occur. Those people at risk have to pay for repairs and that is enough of a cost. It's all about choice. If the advantages out way the risk, then that are the chose they've made.
Gary B. Smith: Yes (to the tax), and it should be levied by the State! Why should people who don't live in flood plains, near potential wildfires, and in tornado zones, be taxed to help out those who do?
Pat Dorsey: Alaska, Hawaii, Maryland, Virginia, North Dakota, and New Mexico are currently at the top of the federal expenditures per capita list. Should their residents have a "federal largesse" tax? Better yet, Utah, Wisconsin, Oregon, Minnesota, Nevada, and Illinois (my home state) are at the bottom of the ranking. Can I get a rebate?
"Comeback Kid" Stocks!
Gary B Smith: Lowe's (LOW)
Pat Dorsey: Vulcan Materials (VMC)
Tobin Smith: Direxion NASDAQ-100 Bear 2.5X Inv (DXQSX)
Scott Bleier: GSI Commerce (GSIC)
John "Bradshaw" Layfield: E*TRADE Financial (ETFC)
Gary B's prediction: Bear This: The Market Holds! Buy Dow Diamonds (DIA)
Bradshaw's prediction: Iran backs off and oil dips! Transocean (RIG) Up 30 percent by Summer
Scott's prediction: Don't Be "Blu" Over Sony (SNE); Up 50 percent In '08
Pat's prediction: Make New Money As America Grows Old With Zimmer (ZMH)
Tobin's prediction: Bank Stocks Still Struggle! Buy UltraShort Financials (SKF)
On Saturday, Jan 12, 2007, Neil Cavuto was joined by Ben Stein, "The Real Stars" author, Charles Payne, wstreet.com; Adam Lashinsky, Fortune Magazine; Sascha Burns, Democratic strategist; and Jack Welch, former GE chairman and CEO and "Winning" author.
Bottom Line: Hillary Clinton's $70 Billion Plan: Will it Boost Economy or Buy Votes?
Neil Cavuto: Hillary Clinton out with a huge, $70 billion plan to boost our economy. Would it help you out or would it only help her buy votes with your tax money? Jack, what do you think?
Jack Welch: Look, Hillary's plan is a reasonable plan. It won't hurt the economy, but it doesn't have fundamental tax policy in it; it's a stimulus package. All the candidates are trying to buy votes. I don't take any of them seriously.
Neil Cavuto: So you'd lump Hillary's plan in with Rudy Giuliani's?
Jack Welch: No, his is more fundamental. He threw everything in. There wasn't a tax cut he didn't include. I don't like his philosophy though. I'd rather his plan be more precise.
Neil Cavuto: Alright, we'll have more on Rudy Giuliani's plan, a plan he calls the largest tax cut in history, later. But first, Ben Stein, to Hillary Clinton. Some say it's a plan that has a $70 billion start and could go higher.
Ben Stein: I think what politicians do is use money to buy votes. That's the standard of Democratic politics. That's the standard of Republican politics. The Democrats do it by spending money. The Republicans do it by cutting taxes. That's just what they do. This is a tiny amount of money in the context of the US economy. As Jack said, it doesn't include anything fundamental. I don't think there's enough money in the world for there to be a relief plan that would work as compared to monetary policy. So, I don't want to be distracted by this. It's a monetary policy issue; not a fiscal policy issue.
Neil Cavuto: Alright, just to put that into perspective: Monetary policy is referring to interest rates and the effects of raising or lowering them versus what Congress could do. So, having said that, is this a waste of time?
Sascha Burns: Well, I think what Hillary's doing is what the American people say they want. Everybody wants change. So what is change? It's Washington working. It's getting through political gridlock. Hillary brings in this package, she's not going to get everything in it, but what she's trying to do is show that what she says she is, as a politician and candidates, is someone who's experienced and can accomplish. If she can work with Bush and get some of this done, then she's putting her money where her mouth is.
Charles Payne: I think there's a small degree to truth to that…
Sascha Burns: Charles and I never agree!
Charles Payne: I believe this week, the tears were genuine.
Neil Cavuto: I would get that same reaction working with Jack. He'd walk into a room and I'd tear up.
Charles Payne: Ok, so Hillary Clinton wants to use $30 billion to help low-income families stave off foreclosures. Now, where is the line drawn? Does that mean households who make $30,000 a year? What if I make $40,000 a year and I'm bustin' my butt… I don't get any help? It's still politics of envy. To me, it seems like she's positioning for the John Edwards crowd so she can get his votes when he drops out.
Neil Cavuto: Populism does seem to be a theme. And among the leading candidates, it's a consistent one. Maybe she's on to something?
Adam Lashinsky: We've done a good job so far talking about politics, but if we want to talk about policy, I think over the next few months we'll be getting a re-education on whether or not stimulus packages work at all. Ben made a good point that $70 billion isn't that much money. I think we should give Hillary credit for standing up and saying she thinks this economy is going into a recession. Now, you could say that's self serving because she's in the Party that's out of power so she can blame the Party that's in power… but, at least she's getting that conversation going. I do not like more money going to saving people who took out mortgages for houses they couldn't afford because that's just encouraging bad behavior. I'm really uncomfortable with that.
Neil Cavuto: You know one thing that disturbs me is people saying "only $70 billion." I can remember the President's program for Medicare… it was supposed to be $250 - $300 billion. Last time I checked it was running north of $500 billion. So, what starts out as seemingly permissible numbers turns into a disaster.
Jack Welch: Look, this is just a way to start the conversation; I wouldn't be all that concerned about this.
Neil Cavuto: Just so you know, Jack, we devoted this segment to it.
Neil Cavuto: But, seriously. Let me ask you this: Do you think it's the government's role to do something?
Jack Welch: I'm more impressed this week with Bank of America rescuing Countrywide. I'm more impressed with Warren Buffett coming into the mortgage insurance business. I love the fact that the private sector is working on these tough financial issues and resolving them themselves! The more this happens, the more the economy can handle it, and the better off we are!
Adam Lashinsky: But Neil, I'll take a stab at that. I agree with what Jack just said, but the fact of the matter is the government is going to do something. You're going to see all the Democratic candidates making proposals. You're going to see the Democratic Congress making proposals. And, you're going to see the President talk about it in his State of the Union address.
Neil Cavuto: Well, that doesn't make it right! Ben Stein, this is the same week, as Jack astutely pointed out, that we started to see the private sector deal with the mortgage mess. Maybe this has gotten to a point where savvy buyers are saying this is good time to buy and Uncle Sam should stay out of it?
Ben Stein: Well, the XLF is wildly oversold. The XLF is the financial index. In the long run, it'll work itself out. I'd rather the government stay out of it on the expenditure side. But, on the monetary policy side, the government needs to get busy!
Neil Cavuto: That's Ben's way of saying maybe Hillary Clinton is wasting her time?
Ben Stein: I think she is.
Sascha Burns: Well, Jack says no, so I'm going with that. Neil, you're talking about two different pockets of people. What Hillary's talking about and what the American people are concerned about is stagnant wages, people keeping up with inflation…
Ben Stein: The government can't control that.
Charles Payne: Now hold on for a second. People bought houses they couldn't afford so now they're looking to the government? Listen, I like the idea of the government broking deals, but not using taxpayer money to bail people out of deals they shouldn't have made.
Neil Cavuto: Can't we all just get along?
Head to Head: Property Owners vs. Government in Border Fence Fight: Who's Right?
Neil Cavuto: A border fence to protect America. American property owners on the border are putting up a fight. It's a bitter battle that the government is ready to take to the courts as early as next week. Does national security trump property rights in this case?
Charles Payne: "My fellow Americans, ask not what your country can do for you. Ask what you can do for your country." I gotta tell ya, in a time when we have young Americans dying overseas fighting for freedom, it seems outrageously insane that people wouldn't want to give up a sliver of their property to protect the borders of America.
Neil Cavuto: What if it was your backyard?
Charles Payne: Of course I would! Absolutely.
Neil Cavuto: You would not.
Charles Payne: Yes I would!
Sascha Burns: No, you wouldn't.
Charles Payne: Absolutely!
Charles Payne: Listen. Honestly though. This isn't eminent domain where the government wants to take your house to build a hotel. This is something that impacts all Americans.
Jack Welch: I'm with Charles. I'm all for security over personal rights. The wiretapping fight always drives me crazy. If you're not doing anything wrong, what are you worried about? I'm for a government that's able to protect us. I trust government.
Neil Cavuto: Ben Stein, a lot of these property owners do not trust the government. What do you say to them?
Ben Stein: I don't government one bit. Government is just a bunch of people who have the same selfish motives as everyone else.
Ben Stein: But, I think in this particular case, it's a necessity to seal off the border. We are not a country if we don't have borders. The illegal immigrants are swamping health care, prison, schools… I think it's incredibly selfish of these people to not give up some of their land. They're going to be paid for it anyway! I think it's shockingly selfish.
Jack Welch: Ben, they'll probably be paid a little more for holding out.
Neil Cavuto: Maybe that's part of their strategy?
Ben Stein: That may be. That may be. Good point.
Sascha Burns: You guys are so big government! It's just amazing to me.
Sascha Burns: Look. National security is obviously important. It's the most important. But why would a land owner believe that the Homeland Security Department is actually going to follow through? There's no money for the fence!
Neil Cavuto: All the more reason to take the money you get right now and wait a few years for the fence!
Sascha Burns: There's no funding to build the fence or to pay for the property. The Republican Congress couldn't get it through. They passed the bill that the fence should happen. But they couldn't get the funding.
Ben Stein: There's not no funding for it… there's not full funding for it.
Neil Cavuto: So let me ask you, there's no money for the checks they're going to write to these homeowners, right?
Sascha Burns: So it's not going to happen! They've had since last year to do it and nothing's happened.
Ben Stein: It's not fully funded.
Neil Cavuto: Ben Stein, clarify.
Ben Stein: It's not fully funded. It is largely funded. We've already spent billions of dollars on it. It's not a completely empty promise. They've made good progress on this thing. They will fund more year by year.
Sascha Burns: Ben, you love those government promises! I bet you a nickel it won't happen.
Ben Stein: I will win!
Adam Lashinsky: Listen. Everyone. This is what is great about America! I mean, the rules of eminent domain actually are quite clear. For gosh sake, the Supreme Court said it was ok for the government in Connecticut to take homes away from homeowners in the name of some economic development. I thought that was terrible. But, it became the rule of the land. In this case, the federal government wants to secure the borders of the U.S. It's a slam dunk! Having said that, if you're a homeowner, of course you complain about having your land taken away! In our country, you can do that. The government can't just take it away from you without explaining itself. But, the federal government will win. It always wins!
Neil Cavuto: What I would do… I would fight, fight, fight and raise the price.
Sascha Burns: That would be selfish. You should donate it.
Neil Cavuto: It might be selfish, but that's what I would do.
Charles Payne: You could have them pay off your subprime loans!
Neil Cavuto: Yeah, actually. You can have my backyard and pay off my loans.
Inside Jack's Head
Rudy Giuliani on Thursday: "Another one of the taxes that we talk about reducing is the corporate tax. The corporate tax is now 35 percent. It's the 2nd highest in the world. If we had a lower, more competitive corporate tax rate, one that was in the middle of the pack, not the 2nd highest in the world, we would help poor people. We would help middle class people. We would help all people because we would bring jobs to this country."
Neil Cavuto: Rudy Giuliani wants to give Americans the biggest tax cut this country has ever seen! Included in that plan is a corporate tax cut. Is that just what the doctor ordered for our ailing economy? Let's go "Inside Jack's Head" to see what he thinks.
Jack Welch: Without question, our corporate tax rate is too high. Places like Germany and France are bringing corporate tax rates down. Eastern Europe has had a sensational run with lower corporate tax rates. The best story of all is Ireland. I always like to compare Ireland to Portugal. Portugal kept the high tax rate. They've gone nowhere. Ireland's gone everywhere with low tax rates and tax incentives for jobs. It's a winner. It's a clear winner! We should not have the corporate tax rate at its current level. The problem we have is all these politicians think corporations are bricks and mortar. "Let's get the drug companies, let's get the insurance companies." There are hundreds of thousands of people who work in those places! And there would be more if the companies could grow! So the idea of making these companies grow and prosper is good. And the idea that John Edwards and people like him can stand up there and lambaste this thing called a corporation… Corporations are made up of blood and flesh of hundreds of thousands of people! And that's what it's about, Neil. It's not about some building you throw rocks at…
Neil Cavuto: All right, but the view in the media is that they're fat cats, they don't need a break, and the rich don't need a rate cut, as Rudy Giuliani would envision.
Jack Welch: For the corporate tax rate?
Neil Cavuto: No, I'm going from the corporate fat cats to the rich fat cats…
Jack Welch: I'm not going to argue that one. I am going to argue that a lower corporate tax rate benefits all people.
Neil Cavuto: And it attracts capital, right?
Jack Welch: And it attracts capital.
Neil Cavuto: That's the one thing hurting us, right?
Jack Welch: It makes you more competitive. And we've got to get rid of this idea that insurance companies, oil companies, drug companies are companies… they are people! These are people who are going to vote for the candidates!
Neil Cavuto: So why are all your old CEO buddies sucking up to Hillary and Barack?
Jack Welch: Well, most of them are Wall Streeters. Most of these guys live in New York. In New York, Hillary's been coronated. They go to the same cocktail parties. They all talk about Hillary. They all swim in the same water.
Neil Cavuto: I think there's more to it…
Jack Welch: They think she's going to win! Hillary has won in New York. You go to a party in New York, and there isn't a person who doesn't think Hillary's got it.
Neil Cavuto: A lot of those guys really have no compass…
Jack Welch: We have to stop bashing corporations. They're people, not buildings.
Neil Cavuto: And they employ people.
Jack Welch: That's what it's about!
Neil Cavuto: You don't have to yell at me. I was just echoing what you said.
Jack Welch: But, I am yelling at you!
More for Your Money: Stocks That Will Win in 2008!
Charles Payne: Nvidia (NVDA)
*Charles owns shares of this stock
Adam Lashinsky: Leucadia National (LUK)
Ben Stein: Berkshire Hathaway (BRK.B)
*Ben owns shares of this stock
In Focus: Dems' Plans For Change: Good or Bad for America and Markets?
Steve Forbes, Giuliani National Campaign Co-Chair: The only change the Democrats are after is the change in your pockets. Their idea of change is going into the past. We're talking about the future. They want to over-tax, over-regulate, over-spend and over-litigate. We've been there. Western Europe has tired it. It doesn't work.
Quentin Hardy, Silicon Valley Bureau Chief: A lot of Democrats say "change" but how many Republicans are you going to find that say "Yeah George Bush..8 Years..Right on..More of that". I don't think you'll find a lot, and there's a good reason why. Let's go through the facts. Iraq; dumb war of choice, bad reasons, near record number of Americans still dying out there, no real sign of it ending in any political way. Social Security; it's not fixed! There's a strong chance that the stock market is going to dip below the level it was when Bush came into office. Wage growth for most Americans is stuck! Healthcare is a continuing problem. Of course you need change. The status quo isn't working!
John Rutledge, Forbes Contributor: You know, the democrats are selling change, but change is not a policy. Change just means something different. Imagine you need a change. It's the winter. You get on an airplane, the airplane takes off. You ask the pilot, "Where we going?" He says, "I haven't decided yet." You know, Hillary has been pretty clear on what she's going do. She's going to raise taxes and work on healthcare. Obama hasn't told us really what he's going to do at all. If you dig through the speeches, you'll find out that both of them would double tax rates on dividend income, double tax rates on capital gain and raise the maximum tax rate which is the tax rate of small business. That would knock at least 3 thousand points off the Dow. We don't need change. Change is for tourists. We need growth.
Lea Goldman, Senior Editor: I completely disagree with John. I think the Democrats, first of all, acknowledge that there has been tremendous prosperity in this country in the last decade. What hasn't been acknowledged at this table is that millions of Americans have been left behind from that prosperity. Why? Because they're vulnerable to those misfortunes that the rest of us can be resilient about. One hospital visit and you're bankrupt. You can't afford to pay for school. Minimum wage isn't going put bread on the table. Those kinds of issues are prompting the Democrats to push for social helping hands type legislation that gets people back on their feet. More people back on their feet mean more consumer confidence. It's more people spending, it's more people moving forward.
Elizabeth MacDonald, Fox Business Network: I see election after election after election, candidates campaigning on the idea of change. You know, Chris Buckley Bloomsday, in his book he made some funny campaign slogans like, "Vote for me, you know where to find me." Or "Vote for me, I'm no worse than the others," or "Vote for me, I'm for the status quo." Of course you're going to see candidates say, "Vote for me, I represent change." But to think that Barack Obama thinks that he's some sort of haloed godsend, the enlightened one that is going to stop partisan bickering, I don't think so. I think that change for change sake is sort of an empty promise that will be more of the same Washington, and I think that Steve is absolutely right. More regulation, more tax spending and more pork spending.
Mike Ozanian, National Editor: The problem is that the Democrats want to control our lives by running the economy. They want to grow the size of the government to do it. As it stands now, government regulation costs the economy $860 billion a year. That's almost 3 thousand dollars per person and they want to increase those costs and that would be catastrophic.
Flipside: Ban Political Polls to Help Elections!
Neil Weinberg, Senior Editor: I'm all for free speech, but you can't yell fire in a crowded theater either. We found with the polls like we found in 2000, that they cannot only affect what's happening, but they can also affect how people vote. They can affect whether people go to the polls and, if that being the case, I think we should let people vote their hearts instead of voting for who they think is going to be ahead at the end of the day.
John Rutledge: We need more polls not less. The problem is that people believe the results of the ones they're hearing and there are only a small number of them. We need to teach people that polls are inherently with big errors and we need to have enough of them so we don't have to rely on the ones just coming across blogs on the Internet. More polls, not less polls, will help solve the problem.
Quentin Hardy: Look, I believe in markets but I also believe in knowing who the buyers and sellers are. The sellers are the pollsters, the buyers are the politicians and the media. The media likes them because they can turn everything into a horse race, some kind of sports event, some comeback. It doesn't really help the thinking or the debate.
Steve Forbes: Polls are free speech. They're simply snapshots of time. They also depend very heavily on how many women you poll, how many minorities you poll, youth, elderly. You get the mix wrong you get the thing wrong. So the more the better. And they're just snapshots, they were wrong in New Hampshire, they were wrong in the exit polls in '04 with Kerry, they were wrong with Gore. Tom Dewey would have been president in 1948. So loosen up! It's just one factor.
Victoria Barret Associate Editor: Well, you can't ban polls, practically speaking, but I think we can do a lot better job of ignoring them. The fact is, that these polls can influence people, influence how they vote. It's interesting. Surveys taken after people have already voted show that more people show they voted for the winner. It doesn't make sense, but it shows people want to feel like they voted for the winner and when they look at the polls it might influence their decisions for the wrong reason. Not for issues, but for the bias of wanting to vote for the winner.
Bill Baldwin, Editor: I got a different view here. I think that polls are totally old fashioned. What matters are prediction markets. Google Real Clear Fantasy, you'll get to a Forbes affiliated site that has these bets on who's going to win. That site's going to tell you the odds are five to three that the Dems are going get the White House. Now that's just play money. If you want to go with real money there is a trading site in Ireland, I don't know if it's legal for Americans, where you can find out that the probability that Hillary is going to be the next president is 36 percent.
Debate: Blockade Iran: Best Solution for Safety and Markets?
Mike Ozanian: Iran has been helping the terrorists in Iraq, they've been threatening the United States, and they've been threatening Israel for a long time. They almost attacked our ships. I think an effective blockade will put a stranglehold on the country's economy and possibly effect regime change for the positive and I think that would be a big plus for this stock market.
Steve Forbes: I think a more effective way, a more surgical way, would be go after the Iranian Revolutionary Guard. They're the brown shirts that protect these corrupt mullahs. You hit them, they're despised by the population, the army hates them. You go after them, you could have a rising in the streets and the army could overthrow this regime.
Lea Goldman: No blockade. I don't think this is a pronounced and indisputable provocation enough to merit a blockade. At this point we're going to end up playing a game of chicken with a bunch of boys in uniform beating their chests to prove who's got the bigger ship. By the way, I might also add, it's never a good idea to discuss strategic defense and decisions of this magnitude with regards to the market. Who cares what the market thinks? This has nothing to do with the markets.
Elizabeth MacDonald: They're not just boys in uniforms, but I think a surgical strike against the Revolutionary Guard would be a provocative act of war and would turn the population who resent the mullahs against us. Listen, you can't ignore the fact the mullahs are sitting on a powdered keg of resentment. There are people living in squalor while they're living high on the hog and blaming the west for their ills. And by the way, the mullahs don't agree with Ahmadinejad and by the way they don't want to see the west go down in flames because they have squirreled away a lot of money in overseas infidel bank accounts. They want to see the western banking system up and running to protect their own wealth. So, you got to watch it because you want to appeal to the population of Iran.
Josh Lipton, Forbes.com Staff Writer: I'm actually sympathetic with Mike's point of view. I would just worry about the consequences and the cost of a blockade. The market doesn't like geo-political conflict and tension. You slap a blockade on Iran, you're going to see the markets tumble and oil shoot up. I think there are alternative ways we can and we should keep pressuring that rogue regime strategically and economically.
Informer: Safe Stock Picks
Bill Baldwin: Brown-Forman (BF-B)
Victoria Barret: Pharmaceutical ETF (PPH)
Neil Weinberg: Novartis (NVS)
Josh Lipton: Pepsico (PEP)
Record Campaign Spending: Will It Save the Economy?
Flavia Colgan, Democratic strategist: I like the optimistic showing here that a hundred million dollars is going to save an economy headed straight towards a recession. This is particularly exciting for me because anyone who has worked on a campaign before knows that the engine rooms behind these candidates consists of young workers, which is good because it gives them jobs with more opportunities than many entry level jobs. But I think the way it affects the economy is more psychological. When you see these record breaking turnout numbers, when you see the sense of optimism that is reflected by more and new people giving money to these candidate, I think it shows that their hopeful about their futures and I think it shows that they're proud to be Americans.
Dagen McDowell, FOX Business Network: Consumer confidence is not going to jump up…people are looking at housing prices and how much they're paying for gas. They're not going to get excited to spend because they heard some speech Barack Obama made. However, the tens of millions of dollars that are going to be spent just on Super Tuesday will help some of the hardest hit states. Like California…they're facing their second budget crisis this decade. You're going to have these candidates hanging out at Dunkin' Donuts spending money and basically it's a transfer of wealth too…the rich are giving their money to these campaigns and here are the candidates spending it on food, parties, whatever.
Wayne Rogers, Wayne Rogers & Co: There's no question that this is helping the economy. Anytime you spend any kind of money, it's helping our economy.
Jonas Max Ferris, MaxFunds.com: Campaign is good for small states…where a campaign comes and it brings business to there small towns. It's doesn't move a needle on the economy though. The American consumer spends a few million dollars in a couple of hours. To compare that to a few hundred million dollars, even though it gets a lot of media attention, just not enough. What politicians are best at is spending our money, not their own, to juice up the economy. There's not enough money of their own to spend!
Jonathan Hoenig, CapitalistPig Asset Management: The election is a net profit for the economy….if we get a good product: a good president. But I don't think an election is a stimulus package. I tell you, if this election is having such a positive impact on the economy, you're certainly not seeing it in the stock market right now.
Wouldn't you rather see these hundreds of millions of dollars going into starting up a company instead of buying coffee for the Obama campaign staff?
Should Congress Stay Home to Help the Stock Market?
Jonathan Hoenig: Congress can unpack their bags but they should still do what they were elected to do which is to protect the Constitution and the rights of all Americans. The more these people try and fix things, like education, healthcare, poverty, and housing, the worse these situations are going to become. I think the question here is what is the role of the government. Flavia thinks the role of Congress is to set the minimum wage…I disagree with that. I think the more and more they fringe with individual rights, the worse the economy is going to get.
Dagen McDowell: This is one year that Congress better get back to work and do what their jobs like they are supposed to be doing. We need a fiscal stimulus plan and it's up to them to get that done.
Flavia Corgan: I don't know what Jonathan means by Congress' work week if he thinks a 3 day work week is what I along as many other Americans do not have. But I think this question is different based on which part of Congress you're talking about. Part of the problem is one party, no matter who it is, is not good. We've had a Republican in the White House and a Republican Congress for quite some time now and what happens with that is people pay back their supporters and you have bridges made to nowhere, pork barrel spending, the Bush administration spending like drunken sailors and a budget that is unbalanced.
Jonas Max Ferris: Historically, the government has done with worse with a Republican President and a Republican congress but has done the best with a Democratic President and a Republican Congress. Research shows that the market does insanely better when Congress is out of session and the reason for this is that people are concerned what Congress is doing with their money and nervous about stocks. When they're not there, people arte more comfortable and stocks drift up with the GDP like it has. Can you make money from this? There is a hedge fund which was started a few years ago which is going to actually trade in this pattern but watch, my theory will stop working once you try this at home.
Wayne Rogers: Maybe we have gotten to the point in our history where we finally have to accept a lower standard of living. Maybe we have lived so long and so well compared to the rest of the world that we need to accept a lower standard of living and means.
Presidential Candidate Says Pot Is Safe! Time to Legalize and Tax Marijuana?
Ben Ferguson, "The Ben Ferguson Show": A lot of people want to know what this guy is smoking and I have to ask the same question! He actually said to high school students that it was safer to smoke pot than it was to drink alcohol. He said Look, instead of drinking a fifth of Jim Bean, go out and smoke out. And the point is, he also said it was be great to have marijuana taxed and that people are more dangerous behind the wheel drunk than high. The point is, imagine people coming high to work. The government is currently trying to stop people from smoking cigarettes….imagine if people were now allowed to go outside at work and smoke a pack of marijuana cigarettes a day? It's bad for the economy and a terrible idea to tax something and more importantly, puts people's lives in danger. We have rules and age limits for buying alcohol and cigarettes. If you legalize pot, you are going to have people everywhere driving around high as a kite and coming into work high. I do not trust the American people enough to keep this under control.
Jonathan Hoenig: You don't think people are coming to the office high already? Of course they are! The question here is one of national productivity and tax. The question here is of individual rights. We live in a free country. People have the right to light up the chronic and smoke a doobie if they want to. It's our right as a free country.
Campaign Cash Stocks
Jonathan Hoenig: Swedish Krona Trust – FXS (Friday's close: $157.79)
Wayne Rogers: China Telecom Corp – CHA (Friday's close: $85.00)
Jonas Max Ferris: UltraShort Oil & Gas ProShares – DUG (Friday's close: $39.18)