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This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital; Tobin Smith, ChangeWave Research; Eric Bolling, FOX Business News; Pat Dorsey, Morningstar.com; Ann Coulter, author of "Guilty"; Michael Brown, Democratic strategist.
Dow Dives 20 Percent Since January 20; Is This President Obama's Bear Market?
Tobin Smith, Changewave Research: This really is Obama's bear market. If he had put forward coherent ideas that would actually get this country going forward, it would have bumped the market up 1,000 points. This idea Obama has that we can do everything at one time with an unlimited budget is scary.
Ann Coulter, author of "Guilty": I think Obama wants a catastrophe. The Democrats are going to dump everything on at once. They can blame Bush for a little while, but it's clear Obama owns this crisis. Democrats criticize Republicans for saying taxes should be cut and the size of government reduced, but it's certainly a better idea that just spending vast amounts of money.
Michael Brown, Democratic strategist: This crisis is clearly something President Obama inherited. It's going to take several years for us to get out of it. Every time the Republicans mess something up, it takes a Democrat to fix it.
Eric Bolling, FOX Business Network: Markets are forward looking--they don't look in reverse. Since Obama's been in office, we've seen a 20 percent down move, and about 12 percent or 15 percent down in the last couple of weeks. The market does not look good. The labor market doesn't look good. The housing market is on its ear. Forward looking markets are very wary of tax and spend politics.
Pat Dorsey, Morningstar.com: What's hurting the market more than anything is a lack of clarity on Geithner's plan to rescue the financial system. Until more specifics are released as to how these bad assets are going to be priced, what kind of leverage will be used to get them off balance sheets, and which banks are going to fail or not, the markets will not do well.
Gary B. Smith, Exemplar Capital: Of course it's an Obama bear market. The market is forward looking. It doesn't like the fact that people who have done well are going to get punished. Never have I heard the word "inherited" used more than over the span of the last few days. Freddie and Fannie, and the Barney Franks of the world had just as much to do with causing this financial crisis as George Bush. The Obama administration has to stop whining about Bush and give us a coherent, established plan.
President's Health Care 'Reform'; Code for 'Universal' Care?
Ann Coulter: Does anyone actually dispute Obama's health care "reform" is code for national health care? The one good thing about Obama's health care plan is computerizing medical records.
Michael Brown: Obama's reform does not call for the nationalization of health care. It calls for ensuring young people and children are covered. It gives better coverage to seniors with Medicaid and Medicare. There isn't a single reference to nationalization anywhere in Obama's health care plan. If we don't pay for coverage on the front end, then we certainly pay at the back end with all the resulting diseases and health ailments.
Tobin Smith: Any and every corporation would like to reduce health care costs to become more competitive. But the way Obama's plan is designed, it will increase costs. Similar health care "reforms" we've tried to put in place over the years haven't worked. To think that this will work in the middle of the biggest recession we've had since the great depression is crazy.
Eric Bolling: Doctors are opting out of some of the currently existing medical plans, because they don't want to be pressured more by the government. Obama's proposal will create lines at the turnstiles. The quality of health care will go straight down. More people might get it, but the quality will decline.
Gary B. Smith: Every time national health care has been enacted in other countries, you see rationing of health care with lower quality. That's why people come to this country to receive treatment if they can. If you want an example of government health care in this country, just look at V.A. hospitals. With Medicare and Medicaid, we already have trillions in unfunded liabilities, and Obama wants to make that worse.
$410 Billion Pork-Filled Spending Bill; Should President Obama Veto It?
Ann Coulter: Yes, Obama should veto the bill. But I doubt he'll do it. Not all pork is bad. It's the overspending and increasing the size and influence of government that has such negative results. The people and groups with connections in Washington are the ones who prosper.
Michael Brown: Both sides of the aisle are guilty of pork spending. They have to do it. It's politics. People need to get re-elected, and they need to bring goodies back to their districts. I don't know why this is a shock to people. If you look at the recent polls, clearly the majority of the American people are happy with the direction Obama is taking the country.
Tobin Smith: What blows me away is that Obama acts like he's still running and that words don't count. But when you're president, your words have to add up to something. You can't say there is no pork in a bill, and then pass the second largest pork-laden bill in the history of government.
Tobin Smith: Swine odor smells good for "GSK "! Up 25 percent in 1 year
Gary B. Smith: GE's CEO buying stocks, so should you! Up 50 percent in 6 months
Pat Dorsey: Global warming tax heats up "EXC " -- up 20 percent in 1 year
Eric Bolling: We are family! "FDO " up 25 percent in 1 year
This past week, Neil was joined by: Charles Payne, WStreet.com; Dagen McDowell, FOX Business Network; Adam Lashinsky, Fortune Magazine; Gary Kaltbaum, Kaltbaum & Associates.
President Obama's Money Messages; a Double Standard?
Charles Payne, WStreet.com: The real message is coming through the stock market. It's confused and afraid. The biggest moment of hypocrisy came this week when the president started talking about prices, earnings and profits. He's going to raise taxes on corporations and put them under stricter regulations. That means lower profits. You can't talk about corporate profits when you're going to put policies in place that will drive them lower.
Gary Kaltbaum, Kaltbaum & Associates: Obama is approaching the financial crisis all wrong. You can't irresponsibly spend hundreds of billions of new dollars one week and then host a fiscal responsibility summit the next week. What's crazy is that the mainstream media isn't covering this. This kind of behavior gets a pass, and the result is that nothing effective gets done. The markets don't like what they see coming out of Washington, and that's the core of the problem right now.
Dagan McDowell, FOX Business Network: How can anybody be surprised about hypocrisy in Washington? Look at the spending bill. There's waste on the right, waste on the left. This money is going to all these organizations as stimulus. If people and organizations don't get what they voted for last year, we'll certainly see the consequences of that in the next election.
Adam Lashinsky, editor-at-large, Fortune Magazine: Obama is absolutely sending mixed messages. But let's look at the omnibus spending bill. In the $410 billion bill, about 2 percent of it is earmarks. That's less than $8 billion. We can have a big, long argument about what's an earmark and what's not an earmark. But when Obama says he wants to address the $40 billion in budgetary waste every year, I say good for you.
Who's Right About the President: Wall Street or Main Street?
Gary Kaltbaum: Wall Street has it right about President Obama. Since Obama released the first details about his health care plan, health care stocks have crashed. When Barney Frank mentioned he wants defense spending cut by 25 percent, defense stocks crashed. If Obama doesn't start listening to how the market is responding to his policies, he's going to be four and out. Wall Street is millions of investors voting with their hard-earned dollars.
Charles Payne: Everybody is hopeful about Obama, even people on Wall Street. But the stock market reflects not just current reality, but reality in the future. A poll looks at what people hope things will be like. The stock market tries to predict how things will actually be. It's clear nothing and no one is infallible.
Dagan McDowell: You can't pretend the market is always governed by calm, rational emotion when clearly it is not. Right now, the market is basically demanding Obama to fix everything and do it now--which of course is impossible. The American people have more patience than investors do. Right now, the market is responding to a major financial crisis that has been years in the making.
Adam Lashinsky: Investors are scared for a variety of reasons, among them the fact that they're less employees out there to help companies generate returns. Right now, Main Street is thinking long term value when it comes to investments, while Wall Street is not. Consumers are beginning to make much more prudent decisions again.
Union Retreat at Luxury Resort; Proof They Don't Need Our Cash?
Charles Payne: Bottom line, we saw an incredible mount of prosperity over decades that coincided with union membership dropping. Look at the two biggest unions, the UAW and Teacher Union. They represent the worst hit areas of the economy, and this retreat in Miami shows they're just as materialistic as everyone else.
Dagan McDowell: Why create more division right now in the country? This issue is small potatoes in the wider scheme of things.
Gary Kaltbaum: This all goes back to the issue of mixed messages. Why do some organizations get to go to Miami and have a good time, and others who planned to go to Las Vegas cannot? Let these organizations have retreats where they want to.
Adam Lashinsky: If the country is still in dire economic straits next year, I'd hope the AFL-CIO would do something a bit more sedate than what they did in Miami. That said, I bet they're a hundred corporate retreats like this for every union retreat. This issue is a red herring.
Companies Ready to Hire and Stocks Ready to Head Higher
Charles Payne: Big Lots (BIG )
Adam Lashinsky: Procter & Gamble (PG )
Gary Kaltbaum: Family Dollar (FDO )
On Saturday, March 7, 2009, David Asman was joined by Steve Forbes, Quentin Hardy, Mike Maiello, Rich Karlgaard, Victoria Barret, Neil Weinberg, John Rutledge and Jack Gage.
Flipside: Hidden Energy Tax for 'All' Is 'Good' for America!
Neil Weinberg: The fact of the matter is that using oil is bad for us from a security and environmental point of view. Punishing polluters with an extra tax is a good way to change our behavior putting us at risk, even if the energy companies pass that cost on to customers. We have a tax code that punishes some things and rewords other things, so this is good.
Steve Forbes: We are punishing the economy in the name of punishing oil. This is a is regressive tax that will cost a trillion dollars over the next 10 years and will devastate the manufacturing sector, which is already reeling. While people poo-poo oil, the facts of the matter is our standard of living is dependent on oil. We need energy, period.
Quentin Hardy: Yes, oil is important, but oil is also the cause of the global warming problem. And buying oil sends our money to Middle East dictators and terrorists, which is a really bad thing. This is nothing like the kind of punishment poorer people felt when oil was $140 a barrel, which it will be again unless we find ways of getting off it.
Victoria Barret: This works as kind of a sales tax because businesses that produce carbon are going to be charged, and they are going to pass that along to everyone else. The contradiction going on in Washington is that lawmakers are taxing the very businesses they are trying to encourage to stay in the United States. Auto plants and manufacturing jobs will go over seas if we try to tax carbon. You can't do this right now.
Mike Maiello: No. The real tax in oil that targets the little guy is not from President Obama, it's from OPEC. When the economy starts to recover, oil will run right back to $200 a barrel if we are as bad with our oil usage as we were. That will really hurt the little guys.
In Focus: How Long Will It Take You to Recoup Your Stock Losses?
A recent survey showed that 55 percent of financial advisors believe it will take at least three years before investors recoup stock losses suffered over the past six months.
Steve Forbes: I think investors will recoup losses sooner than three years. Right now we are being destroyed by the financial system which is being undermined by a crazy accounting rule called mark-to-market. Banks have more cash than they ever before, over $600 billion, which is twice as much as they had a year ago. We need to remove that rule and put in road bumps on short selling. I f you do those two things, this market will rally. Do I think they will eventually do it? Yes. Why? Polls. When democrats see their poll numbers decline, they are going to ask themselves 'what do we do now?'
John Rutledge: The market always moves faster than you think it will, whether it's up or down. Stocks are selling for half the value of the cash flows the companies produce, which is cheap. Unfortunately, the government is reducing the value of those cash flows with its costly programs and policies. So we will get a bounce-back, but long term damage is being done. Stocks can't come back if the government passes these tax increases, especially this crazy carbon tax.
Rich Karlgaard: I think what we are going to see is a replay of the 1970's where the market will recover, but the Dow will be trapped between a 7,000 to 11,000 range.
Victoria Barret: I am not as optimistic about it as Steve. This downturn is global and across all industries. You have unprecedented government intervention and involvement. Look at what happened over the last two weeks: health care was a sector that was holding up, but now health care is down with the rest of the market on worries about a government health care program.
Jack Gage: I believe in equal and opposite reactions. Now that President Obama has his own personal bear market that he has presided over, you will see a bounce-back with the politics changing. You may see a republican majority in 2010. I'd look back to the Clinton presidency. During the first two years the democratic congress, the market gained only 20 percent. During the last six years of his presidency, the market tripled with the republican congress.
Mike Ozanian: It will take at least five years. Barack Obama isn't the president. Nancy Pelosi really is president, and she is anti-business, particularly small businesses. I think she basically wrote this last budget, which was anti-small business and contained huge tax increases on capital. That is terrible.
President Promises Employee Free Choice Act; Will It Cost Jobs?
Mike Ozanian: It will make matters much worse. This bill will allow unions to bully people into joining them. That will in effect make companies less productive. It will hurt profits, which will hurt hiring.
Quentin Hardy: The current plan is to have this card check system which you all don't like because you say they don't have free elections the way we have now. What we have now is closer to North Korea-- where one side controls all the media; businesses are told that managers have to go argue against unions; workers have to go attend those company meetings; and the penalties for being against unions are so modest, it is a cost of business. We need to re-establish the playing field, it's gone so bad.
Steve Forbes: This is Hugo Chavez here in North America; this is the old Soviet Union. It's North Korea right here. The fact that you can't have a secret ballot and this will devastate small businesses. It is going to inhibit job hiring, profits, innovation and job creation.
Mike Maiello: I think it is going to be good. It gets employees more involved and gives them more options. I am a lucky guy. My company doesn't fire people over what they believe, even if it is mark-to-market. The AFL-CIO says one in four of these secret ballot elections have been marred by illegal anti-union firings in this decade. That's a lot. That's a big problem.
John Rutledge: Jobs are the least of our problems with this bill. I spent all last week in North Korea. They have elections there. You elect the officials by standing in front of the officials with your ballot. People have died to preserve secret ballots. That is the core of the constitution. We need this in order to protect minorities from pressure. I have conducted union elections and have witnessed pressure from both sides. We have to allow the workers to vote in secret. I don't care what the job implications are.
Stocks to Help You Rebuild Your Wealth
John Rutledge: Chevron (CVX) – Close: $58.27
Mike Ozanian: Bars of Gold – Close: $942.70 an ounce
Neil Weinberg: Johnson & Johnson (JNJ) – Close $47.97
President Obama Not Watching Wall Street's "Gyrations"; Maybe He Should?
Jonathan Hoenig, CapitalistPig Asset Management: It is inexcusable for him not to be paying attention. What is good for Wall Street is good for America. Wall Street is America. This is where free people come to trade and invest. Ma, and pa kettle comes here to invest. When you look at what has happened, there is no question that the market has zero confidence in the economic policies.
Wayne Rogers, Wayne Rogers & Co: He is not listening to make policy to encourage Wall Street. Joe the plumber has a lot more to do with it than Jonathan and his new tie. This is ridiculous to say that you base policy on what Wall Street says or does. Otherwise you would be ignoring international crisis, oil prices, ignoring all the other things that affect the stock market.
Rob Stein, Managing Partner, Astor Asset Management: It is all about time frame. You have to see what period of time you are looking at. Sure he has been in office a couple of months and the stock market hasn't performed well. I don't know that there is anything he could have done that would have turned the market around when he came into office. Maybe we need to give it a quarter or two or three.
Tracy Byrnes, Fox Business Network: They are not trading on earnings and fundamentals anymore. The market ticks up and down based on the things we hear out of Washington. So Wall Street is clearly listening to DC. Maybe the President and his administration should be a little more careful about the things they leak out or that they mistakenly say, or the bomb shells they drop. Because the market moves in tandem to those bomb shells.
Jonas Max Ferris: Obama says if you have time, you should buy stocks, which I agree with. I think the stock market may be the best indicator we are going to have a depression. It is going to be close. This bear market started in 2007, not at the beginning of the Obama administration. Hopefully it will be ending with the administration. He has four years. Let's see how the market does over the span. We will compare it to the last administration which had an eight-year span of lousy returns.
President Obama's Tax Hike Plan: 'War on Success' in America?
Tracy Byrnes: This is like kicking somebody who has been down for months and months. There is no incentive out there to keep going. If you know that the better you get, the more they are going to take. Granted, dollar for dollar at the end of the day, is it that much money? Probably not. But it is the whole psyche that kills people, knowing that if I do well, you are going to take it from me and give it to someone who is not working as hard as me. That is the worst time for that psyche.
Wayne Rogers: I don't see it. Capital gains goes from 15 percent to 20 percent, you say ordinary income tax going from 35 percent to 40 percent, is that going to make a difference in somebody's work? I don't think so. But the fact that you are taking our money and bailing out somebody who doesn't deserve it. If I have a mistake, nobody is going to give me money. On the other hand we are giving our money to people like Citibank, and Bank of America. I think that is outrageous and shouldn't happen.
Rob Stein: But the topic of is it disincentivizing people to work and work harder, I disagree with that. The fact that taxes may be going up and they may have less dollars at the end of the day I don't think is a disincentive. If a government is a drag, it is upsetting, but I don't think it is telling people not to work?
Jonas Max Ferris: This country can handle the tax rates we had in the 90's, both on capital and income. Look, I am for the tax increases and capital gains rates. You have to cut spending to show the people you are actually using the money to pay
down debt, not redistributing the income. If they say we are going to close the deficit, people may feel good about it. But if you raise taxes and don't cut spending, it doesn't make you feel good.
Jonathan Hoenig: When is the President going to realize that you don't create wealth by taking money from one group and giving it to another? That is the whole notion. The rich got rich on the backs of the poor, and we need Obama to come in here and redistribute the money in a more fair way. We are in a culture where earning money doesn't entitle you to it, but needing money does entitle you to it.
GM's Own Money Watcher Says It May Go Bust: So Let It?
Jonathan Hoenig: You have no right to success. G.M. Has been poorly managed for decades. We have given them billions of dollars, and now they are coming back for more? They have no right to it. GM is not productive and bankruptcy is exactly where this company belongs. Should have been there months ago.
Jonas Max Ferris: The philosophical case is if they make crummy cars, they should fail. But the case is they are competing with foreign automakers, and their government gives them money. Toyota is trying to get money from the Japanese morning. They are giving people money to buy cars, which we are scared to do in America. Now it is a global economy. If we let ours feel, we are going to have all Peugeot dealers.
Tracy Byrnes: This is the big problem I think with the whole thing. JD Power and Associates said car prices for GM in 2009 will be the lowest we've seen since the 80s.
So you could give all the money in the world to these guys but people aren't buying cars. They can make the best cars in the world…actually many of their cars are the best cars in the world according to JD Power and Assoc, but it doesn't matter. Unless the economy changes, people aren't buying cars and money is going down the toilet.
Wayne Rogers: If you can't run your business properly and said it's a free economy – I know Jonathan is. And Jonathan is saying I want a market economy. He is absolutely right. If you have that, these companies should fail. I disagree about one thing. Jonathan you said months ago they should have failed. Years ago they could have failed. It happens to be one of the only things that Michael Moore might have been right about, General Motors. It's horrible but it's the truth.
Which stocks are a safe buy in this shaky market?
ROB STEIN: SPDR S&P Retail (XRT) Friday's Close: $18.30
JONAS MAX FERRIS: Adobe Systems (ADBE) Friday's Close: $17.16
JONATHAN HOENIG: iShares COMEX Gold Trust (IAU) Friday's Close: $92.46
WAYNE ROGERS: XTO Energy Inc. (XTO) Friday's Close: $31.07