Neil Cavuto was joined by Gregg Hymowitz, founder of Entrust Capital; Michelle Girard, senior vice president of Prudential Financial; Charles Payne, CEO of Wall Street Strategies and Gary Kaltbaum, senior portfolio manager at Investors Edge Partners.
Deadline Dangers
Monday brings the U.N. report on Iraq’s weapons of mass destruction, then Tuesday brings President Bush to Capitol Hill for his State of the Union Address. Will they both bring us closer to war, and what happens next to your stocks if they do?
Gregg says the more important date to concentrate on is the president's State of the Union address. Gregg says there is a risk to the market if President Bush makes the war on Iraq his whole agenda and that investors also need to hear the president’s plan for the economy. Gregg also thinks worries about a war are priced in the market, which is making stocks relatively cheap and poised for a big rally if we avoid war.
Michelle says she believes the U.S. will take action against Iraq in late February or early March. She thinks people are not taking the move as seriously as they probably should. And so when it does happen, the market will react negatively.
Charles says we should also focus on the consumer confidence numbers due out on Friday. He thinks jitters over war will make those numbers very low. And that consumers are the most important factor to any economic and market recovery. He fears if we do attack Iraq and we don’t see a decisive victory within three weeks, that could spell trouble for consumers, the economy and the stock market.
More for Your Money: The Most Important Week of the Year?
Since 1950, the S&P 500’s performance in the first month of the year has predicted how the market would end the year 42 out of 52 times. With one week of trading left this January, the S&P 500 index is down 2 percent. So, how important is the next five trading days to the market?
Gary says he does not think it matters, because the usual barometers like the January Predictor, have not worked during this bear market. He also says recent earnings from Home Depot, Nokia, AT&T and others have been weak, and that is a bigger worry than war. He also thinks the market is fully priced right now.
Gregg disagrees, saying he sees earnings estimates up 14 percent next quarter. He thinks the markets look attractive now.
Charles is not sure if stocks will end higher this month, but thinks it will end slightly higher this year.
Neil also asked his guests what they think is the most important stock to own regardless of what happens to the market next week. Gary says gold is the only secular group that he thinks is in the bull market right now. He owns and recommends ASA Limited (ASA).
Charles' most important stock pick is Quest Diagnostics (DGX). He owns it and thinks Quest is a monopoly in its field, and that the stock got oversold last week over the company’s cautious outlook.
Gregg's most important stock pick is R.H. Donnelley (RHD). He owns it and says RHD owns the yellow pages market. He also points out that it's a highly leveraged company but thinks it's very cheap.
FOX on the Spot
• Gary: Stocks will test October '02 lows
• Charles: If Dow does not stay above 7900-8000 range it will drop to 7500
• Gregg: Peace Rally for stocks! No smoking gun in Iraq will mean no war in Iraq
• Michelle: Fed stops cutting interest rates and will not go back to an easing bias
• Neil: Prices for this year’s Super Bowl commercials are back up to record levels, $2.1M for a 30 second spot, and that is a sign the economy is coming back
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