Cavuto on Business

Recap of December 7: Money Threats

Neil Cavuto was joined by Ben Stein, economist and former White House speechwriter; Jim Rogers, president of; Tom Dorsey, president of Dorsey, Wright & Associates and Gregg Hymowitz, founder of Entrust Capital.

Money Threats

Over there, United Nations weapons inspectors are trying to find out if Saddam is giving them the run around again. Over here, President Bush runs his economic team out of town asking both Treasury Secretary Paul O'Neill and White economic adviser Lawrence Lindsey to take a hike. Which one should investors be more worried about?

Ben Stein thinks a war with Iraq would be more worrisome, but not devastating to the market because he does not believe it would be a long war. He says investors should be more worried about the fact that stock prices are too expensive, and earnings do not seem to be recovering.

Jim says war is something investors should be concerned about. Tom thinks the shakeup in the Bush’s economic team is good news for the market, and will be the start of turning the market and economy around. Gregg thinks the biggest threats to the market are a long protracted war with Iraq and bin Laden and his activities.

All Neil’s guests think last week’s pullback in the market was due to profit taking after an eight-week bull run.

Stocks to Trust

One year since Enron’s financial house of cards came tumbling down, Neil asked his guests if we are any safer today?

Jim says investors are safer now because many companies have collapsed and/or changed their books, but there are still many who have questionable books like General Electric (GE), IBM (IBM), and Fannie Mae (FNM).

Tom also thinks investors are safer now. The cheaters have been exposed and the excesses have been wrung out. The balloon is deflated so buying stocks at these levels is better than buying at the top of April 1998.

Gregg thinks the new rule requiring executives to certify their company’s financial statements has been helpful.

Neil also asked his guests what stocks they trust right now?

Ben said he usually recommends buying shares that track market indexes, but when it comes to a stock to trust, he recommends Boeing (BA) because its leaders have great character and he believes the slump in commercial aviation has bottomed out. Jim owns and recommends Unilever (UN), because it’s a well run and diversified company. Tom recommends General Dynamics (GD). He does not own it, but says it has clean books and is well positioned in its industry. Gregg owns and recommends Nucor Corp (NUE).

Stop Iraq Inspectors?

Neil says we already know Saddam has cheated in the past and is cheating now, so the weapons inspections in Iraq are a waste of time. Tim Trevan, a former U.N. weapons inspector says the inspections are important because they will prove if Saddam is hiding weapons or not, and if he needs to be removed from power.

FOX on the Spot

Gregg predicts stocks will jump 10-15 percent if double taxation of dividends is dropped!

Tom thinks Sun Microsystems’ (SUNW) stock will double if it hits $4.75!

Ben says stocks will drop because prices are too expensive!

Jim says that peace in Colombia will mean less aid from the U.S.

Neil says President Bush will choose a Democrat for one of the three top economic posts. And that Erskin Bowles may be that Democrat.