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Bulls & Bears
This past week's Bulls & Bears: Lt. Col. Oliver North, host of "War Stories"; Gary B. Smith, Exemplar Capital managing partner; Tobin Smith, ChangeWave Research editor; Pat Dorsey, Morningstar.com director of stock research; Scott Bleier, HybridInvestors.com president, and John "Bradshaw" Layfield, WWE superstar & nationally syndicated radio show host
Trading Pit: Does Wall Street Want Hezbollah Destroyed?
Does Wall Street need Israel to eliminate Hezbollah?
Col. Oliver North: Israel will not be able to eliminate all of Hezbollah. This organization will be able to continue as a political and social force. But Israel must eliminate Hezbollah as a military force inside Lebanon. Failure to do so is potentially disastrous. Hezbollah has killed Americans since 1982 and other than al-Qaeda, which got lucky on September 11th, it has killed more Americans than any other terrorist group. They are still a threat to the U.S. and are very dangerous. Everything Israel can do to stop it now is very important.
John "Bradshaw" Layfield: Wall Street and America wish that every country in the world were killing terrorists. Wall Street loves certainty. And if you have a dead terrorist, you are certain he will never commit another crime against another human again. I don't know why anyone would want to stop Israel. They are doing something that benefits us. If there's a cease-fire, Israel is going to have to go back in and do this all over again. It's good that we have someone on our side that's doing the work we would have to do on our own.
Tobin Smith: Wall Street is looking more for containment. Colonel North is right. Hezbollah will not totally be destroyed. The United States cannot go in because we have too much going on. Israel must take care of this. Everyone is saying that a tie is a win for Hezbollah. But Wall Street really wants most of all is to keep Iran out of this situation.
Gary B. Smith: Wall Street is focusing on whether this will be a threat to the U.S. The worry is if Hezbollah makes big inroads. Let's say for example it destroys a large part of Tel Aviv. This would scare Wall Street because it would mean this is not just a bunch of guys with rifles in the jungle. They have some serious firepower. Any kind of win for Hezbollah and the stock market will sell off. But if anything else happens, Wall Street will be fine.
Pat Dorsey: If Iran gets involved, all bets are off and this situation changes entirely. But until then, the market is focused on the Fed, inflation, and earnings. Economically speaking, Israel and Lebanon are small countries with little economic power and little influence on the US market.
Scott Bleier: Hezbollah must be destroyed. Think about the flip side. If Hezbollah defeats Israel confidence in the ability to fight terror would be undermined. The market and probably worldwide markets would take a dive.
Stock X-Change
Which stocks will shoot up when the Mideast shooting stops?
Gary B. Smith: Teva Pharmaceuticals (TEVA), whose headquarters are in Israel, will really get a big boost when the fighting stops. The stock had been selling off for months. It reached a bottom when the conflict started, but the stock has been going up ever since. It broke up through a downtrend line and now looks set to take off. (Teva Pharmaceuticals closed on Friday at $34.31.)
Pat Dorsey: Teva's problem isn't that it is based in Israel. The problem is that other big pharmaceutical companies are launching generic versions of their own drugs, and can do it cheaper. Teva is facing a lot more competition. I would wait for it to fall to the mid $20s before buying. The stock's future doesn't look as bright as it once did.
Scott Bleier: I really like DSP Group (DSPG), a small-cap semiconductor company. Its big thing right now is Bluetooth communications systems. Now is the perfect time to buy. (DSP Group closed on Friday at $24.03.)
Tobin Smith: The problem is that the people the company is selling to are buying less. They are not going to be indulging in Bluetooth systems. I wouldn't want to own this stock right now.
Pat Dorsey: I love Cemex (CX). It sells cement and makes about 20 percent operating margins from it. Cemex has cement assets all over the Mideast. When the fighting stops, there will be a lot of rebuilding and this is the company you want to own. (Cemex closed on Friday at $29.18.)
John "Bradshaw" Layfield: Interest rates are rising around the world and money is tight. I don't think now is the time to invest in infrastructure.
Tobin Smith: After all of the fighting ends, there will be a huge buildup in airplanes and missiles. Titanium Metals (TIE) is what you have to buy now. I see the stock going to $35-40 by the end of the year. (Titanium Metals closed on Friday at $28.49.)
Gary B. Smith: Toby, it's been going down and will continue to go down.
John "Bradshaw" Layfield: Go with GlobalSantaFe (GSF). People want to get independent of foreign energy and this is the company that helps them do it. (GlobalSantaFe closed on Friday at $50.64.)
Scott Bleier: GlobalSantaFe is a great company, but unfortunately, its great expectations are built in.
Backyard Threat?
Is there a growing threat in America's backyard that has Wall Street worried?
Neil Cavuto asked President Bush about Venezuela's Hugo Chavez in a national exclusive interview.
(BEGIN VIDEO CLIP)
Neil Cavuto: So is he a military threat to the United States? Is Hugo Chavez a threat?
President George Bush: No. Not a military threat. We've got a very strong military and we can deal with any threat to the homeland there is. And will if we have to. But, no, I don't view him as a threat. I view him as a threat of undermining democracy. And I view him as a threat. You know, I wish he would invest his petro dollars with the people of Venezuela and give them a chance to, you know, get out of poverty and give them a chance to realize hopes and dreams.
(END VIDEO CLIP)
President Bush isn't worried about Hugo Chavez's military capability, but is he a threat?
Col. Oliver North: Yes, Hugo Chavez is a threat to us. He just closed a $3 billion deal with the Russians to buy everything from fixed-wing aircraft to attack helicopters. He's bought 100,000 AK-47s. He's cozied up to the Iranians and is potentially a destabilizing force for everything south of Mexico. Chavez has tried to intervene in elections in both Bolivia and Peru. Now, he's trying to romance Daniel Ortega back into power in Nicaragua. If he decides he wants to support terrorism or if he wants to turn Venezuela's national oil company, Petroleos de Venezuela or PDVSA, into a font for China, it could make the cost of oil go up. I wouldn't buy any Citgo stations.
Tobin Smith: PDVSA used to produce 3 million barrels of oil a day and now it does only 1.5 million. Chavez has no power without selling his oil. He needs to produce another 1.5 to 2 million barrels a day. He may talk a good game, but Wall Street understands that without oil he has no power.
Gary B. Smith: I can't disagree with Col. North, but if you ask people on Wall Street where Venezuela and Chavez rank on the list of things to worry about, he's not on the radar screen. Maybe he will someday, but right now there are bigger things to worry about like North Korea, Iraq, and Hezbollah.
John "Bradshaw" Layfield: Hugo Chavez is on my radar screen because of what he is trying to do. His oil production has fallen like crazy, which is why he's trying to get strategic partners. He's been talking to Iran and Russia and he would like to impose an embargo on us. The only defense we have is to get politicians that aren't so worried about steroids and baseball, and care more about the health of our nation to get us off our dependence on oil.
Scott Bleier: Wall Street doesn't view Hugo Chavez as a threat. He is only a threat to his neighbors. He's trying to turn them to socialism by spreading oil money around. He will take those countries and deprive them of capitalistic and democratic opportunities.
Pat Dorsey: I agree with Gary B. Mr. Chavez is really far down on the list of things Wall Street is worried about. It's more worried about the Fed, inflation and earnings. Militarily, he's an issue. He has spent more money re-investing in social causes than putting it back into oil and PDVSA.
Predictions
Gary B. Smith's prediction: Mideast fighting continues; Dow down 500+ points by Labor Day
Tobin Smith's prediction: Mideast missile protection boosts Orbital (ORB) 25 percent
John "Bradshaw" Layfield's prediction: Iran nuke crisis lingers but oil prices go lower
Pat Dorsey's prediction: Newfield (NFX) helps break our Mideast oil addiction
Scott Bleier's prediction: Elbit (ESLT) rearms IDF; gains 20 percent by year-end
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Cavuto on Business
Neil Cavuto was joined by Ed Koch, former New York City Mayor; Gregg Hymowitz, founder of Entrust Capital; Rebecca Gomez, FOX News Business correspondent; Joe Battipaglia, Ryan Beck & Co. CIO; Mike Norman, BIZRADIO Network host; Aaron Cohen, former Israeli defense counter-terrorism commando/IMS Security; Ahmed Younis, national director of Muslim Public Affairs Council.
Bottom Line
Neil Cavuto: What's the impact on Wall Street if the Mideast turmoil blows up into a wider and deadlier war?
Mayor Koch: It won't widen because if Iran or Syria wanted to come in it would've been before this because Hezbollah, while it has done a very credible job, is losing.
Aaron Cohen: With all due respect to Mr. Koch, I think he's wrong on this. We have seen an escalation. There's 300 plus missiles falling a day. And this could potentially get a lot worse. Israel is at war right now with Syria and Iran. And there's no other way to really look at it.
Neil Cavuto: The interesting thing is if you just looked at our markets to see if we're getting anxious, so far we're not.
Rebecca Gomez: So far, yes the markets are holding up despite all the violence. Investors are used to this unfortunately. We did a historical look at this and in other Mideast violent situations the markets faired very well. Now that could change if there's one big event or if other countries get involved.
Gregg Hymowitz: Look, the big risk in the Middle East is obviously oil prices. They're so high already and so much risk is already built into the oil markets. I don't think people feel they can go a lot higher. So I think that takes the market out of the Mideast picture a little bit. And when we're talking about Israel and Hezbollah, remember what's going on in Iraq too. There are fears now that they might break out into a sectarian civil war.
Mike Norman: Well, oil has not spiked. It has been moving higher. The economy and market has been able to digest it to a certain extent. I agree with the mayor. I don't think there's going to be an escalation. Israel, feeling international pressure now, might lead us to see a cease-fire. What we should be hoping for is to see Iran and Syria come in at this juncture because Iran is not a nuclear power yet however they might be at some point. If they came in now we could deal with this rat's nest once and for all. If it's another one of these agreements or cessations of hostilities that just puts things off …
Neil Cavuto: Well, let me bring Joe into this. Joe, what do you think?
Joe Battipaglia: Well, if you take Iran at its face they, want a confrontation with Israel directly. But they're not prepared for that at this time. The stock market, being a discounting mechanism, sees clearly what this is. But on a longer term basis, that threat is there and the market may well behave and respond to that, meaning that the war premium is now higher than it ever has been.
Mayor Koch: Interestingly, the president of Iran is absolutely nuts. But he's indicated that Hezbollah will lose and is losing by supporting an immediate cease-fire. And he said the extermination of Israel could come later. His goal is to destroy the state of Israel.
Mike Norman: By the same token, if it were to stop now from an enforced cease-fire that could easily be spun as a victory in these countries like Iran and Syria.
Neil Cavuto: Aaron, I want to ask you: has Hezbollah won by simply surviving? Israel is pounding the heck out of them but they're scoring P.R. points in the Muslim world, are they not?
Aaron Cohen: Listen, Hezbollah is the Muslim world. It's what the Muslims respect. They respect the power to get on television and be strong. Hezbollah is the P.R. master. For Israel, this is going to escalate because there is no backwards for them.
Rebecca Gomez: You talk to some investors and I heard someone liken this to, imagine if there was a terrorist group in Canada launching rockets to the U.S. You would want your government to go in there and take care of them.
Neil Cavuto: This is not an issue to many Americans because they think this is Mideast violence, what else is new. I think it becomes an issue, and tell me if I'm wrong, if Syria or Iran are dragged into it or quite willingly want to become a part of it.
Mayor Koch: Sure that becomes a danger. But Israel has never wanted and never asked for American soldiers. They understand that that would be a big mistake so that's not an issue.
Neil Cavuto: Aaron, real quickly, so you think this gets worse?
Aaron Cohen: I believe it does get worse and bottom line Israel will continue. If they have to go to Syria then they have to go to Syria. Israel has no backwards anymore. They made that mistake once and they won't do it again.
Head to Head
(BEGIN VIDEO CLIP)
President George Bush: (from his interview with Neil Cavuto on 7-31-06): I have got two big issues, Neil, as we go into the future. One is to remind people we're still at war, but have them comfortable with the fact that the government's doing everything we can to protect them; and, two, to remind people that the terrorist activities of a Hezbollah or an Al Qaeda or a militant Hamas, are all linked, that they may not be coordinating together, but they have this kind of same attitude and same desire to stop the advance of democracy.
(END VIDEO CLIP)
Neil Cavuto: President Bush linking radical Islamic terrorist groups in a shared bid to halt democracy. We'll have much more of my interview with the President later but first is radical Islam's war on Democracy an attempt to wipe out capitalism? Mayor, is it our freedom or the economic success our freedom allows us that makes us a target for radical Islam?
Mayor Koch: I do believe that we are now engaged in a war on civilization and that the Islamic fundamentalists, fascists if you will, resent the West. They resent our culture. They resent our success. They haven't been at the cutting edge of world civilization for hundreds of years. Remember, they invented the alphabet and the numerical system, the number zero and other concepts. But it's all gone because of their fanaticism.
Ahmed Younis: With all due respect to the mayor, I think that's exactly the wrong answer. That's exactly the argument that the terrorists are trying to make. That there is a fundamental difference between an Islamic approach to the world and a Western approach to the world. In reality, most of the discontent on the ground is people feeling that economic success for America and the West has been had at the expense of that part of the world.
Neil Cavuto: Well, Rebecca what do you make of that that they're disenfranchised and disadvantaged in that part of the world?
Rebecca Gomez: It's probably part of it. But they're using Islam as a basis saying that capitalism is the way of the devil. And these extremists are nuts.
Neil Cavuto: The extremists are nuts. You're not talking about all Muslims.
Rebecca Gomez: Absolutely, the radical Islamists.
Gregg Hymowitz: I think many people in that part of the region are kept down by their own governments. So it's interesting that they attack us. I agree with the mayor and Rebecca that they do look at capitalism as a threat. And there is some resentment.
Mayor Koch: Zarqawi said, "Killing the infidels is our religion. Slaughtering them is our religion until they convert to Islam or pay us tribute." That's what we're fighting.
Ahmed Younis: When we hear that I think we have two options: to ratify the Islamic arguments of these terrorists and criminals or to argue that Islam does not in fact say this. The Prophet Mohammad, peace be upon him, married the most successful capitalist, a woman in Arabia at that time. And capitalism and free markets are very much a part of the Muslim world.
Joe Battipaglia: Ironically the religions have been around for centuries and they're still fighting age-old wars. The Sunnis and the Shia have each had an economic tool and that's oil. Neither one of them have been successful in making that a commercial success for everyone.
More for Your Money: Exclusive Interview With the President
Neil Cavuto: Earlier in the week, I sat down with the President of the United States. Here are his thoughts on a U.S. economy that seems to be defying gravity.
(BEGIN VIDEO CLIP)
Neil Cavuto: Are you amazed, Mr. President, in light of all the turbulence in the Middle East, the ongoing Iraq war, threats from Iran, threats from Syria, threats from Hugo Chavez, that the economy has been doing extremely well? The markets have held up extremely well.
President Bush: Yeah.
Neil Cavuto: Americans are still buying. McDonald's numbers have never been higher. So, they're still eating. So, what -- what's going on?
President Bush: I think the entrepreneurial spirit is strong. I mean, America is a land of entrepreneurs and small businesses. And people have responded. Particularly, they have -- they have been encouraged by tax cuts. If you take money out of the pockets of the entrepreneurs and small businesses, there's less money to invest in jobs and new products and new ideas. And these -- these tax cuts are working. But the main reason we're doing well is because of -- the spirit of America is strong. People want to take risk. And people feel like they'll be rewarded for their risk. And it's just -- it's amazing to watch. We -- we got a fabulous country. And we've got a lot of things we have got to overcome. We've got to overcome protectionism. And that's why I'm here in the Port of Miami talking about making sure that we have free and fair trade around the world. We've got to do something on energy, which you and I have just discussed. We got to keep taxes low. We got to do something about the lawsuits that make it hard for people who risk capital. Health care is an issue that we have got to confront, and the -- the problem of unfunded liabilities when it comes to Social Security and Medicare, which is a long-term problem for our economy.
Neil Cavuto: But the economy, as you said, is doing fairly well.
President Bush: Yeah.
Neil Cavuto: Job growth is respectable. I mean, we have numbers that were akin to what they were 10 years ago. And, yet, when polls come out on Americans' attitude, six out of 10, I think, in a "Wall Street Journal" survey, Mr. President, said they're nervous. They're anxious. They don't think times are good.
President Bush: Yeah.
Neil Cavuto: Why is there that disconnect?
President Bush: Well, first, we're at war. And I can understand people not being comfortable with the future, about the future, when they see, you know, the loss of innocent life on their TV screens. I mean, war -- it's a difficult period. But, as I told you, there's -- there's just a clash of -- between terror and democracy taking place, now manifesting itself in the Middle East. And -- and, so long as I'm the president, I'm going to continue doing everything I can to defend the country and press democracy. Secondly, now there is worry about competition. People look at China and are concerned about competition. Somebody told me the other day that, if you're under 30, you will have changed jobs four or five times, you know, by the time you reach the age of 30. And, for some older people, that would seem to be -- you know, to be disconcerting, to see jobs -- a person changing jobs that often. Ours is a very vibrant, fluid society now. And -- and that creates concern. So, I understand it. On the other hand, the -- the numbers are strong. I mean, people are working; 4.6 unemployment nationally is real good numbers, particularly if you're somebody who wants to work.
Neil Cavuto: I just wondered if you knew anything, when you talk about changing jobs, about my fortunes, but I'll…
President Bush: I think you're doing fine.
Neil Cavuto: Could I ask you this, Mr. President? We slowed down from 5.6 percent growth to around 2.5 percent.
President Bush: Yeah.
Neil Cavuto: Still very strong. It's expected to be at or about that, I guess, for the remainder of the year. But there are some who worry that these higher interest rates, higher energy prices, are going to lead a severe slowdown, if not a recession…
President Bush: Yeah.
Neil Cavuto: And soon. Are you in that camp?
President Bush: No, I'm not at all. I mean, look, in my line of work, I hear all kinds of forecasts and, you know, prognosticators. And, you know, that's the great thing about our society, is, a lot of people are allowed to express themselves. And, no, I'm not. I believe -- listen, I believe that we're going to remain strong, precisely because of what you said. Look at what we've overcome to get here.
(END VIDEO CLIP)
FOX on the Spot
Mayor Koch: Mideast conflicts won't end in my lifetime.
Gregg: Syria betrays Hezbollah by cutting deal with U.S.
Joe: Defiant Iran tests Bush doctrine of pre-emption.
Rebecca: Stocks won't stumble on Mideast violence.
Mike: Arab world splits: Sunni vs. Iranian-backed Shia.
Neil Cavuto: The Federal Reserve is a bigger threat to America than the Middle East.
We are already getting the first signs the Fed has overdone these rate hikes. Job growth slowing, unemployment rate rising. I fear they'll compound the problem by hiking rates again, thereby assuring a slowdown, if we're lucky, and a recession, if we're not.
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Forbes on FOX
If Hezbollah "Wins", How Will Stocks React?
Steve Forbes, editor-in-chief: If Hezbollah is seen as the winner, it will not be good for the stock market. It's bad for a free society when it looks like the bad guys are winning. Just look at the 1970's, when OPEC rose up and cut off oil supplies to try and hurt our economy. Israel has to win this conflict, otherwise stocks won't perform as well as they would if we score a big victory against these terrorists.
John Rutledge, Forbes contributor: Our market is as tough as crabgrass and will do just fine. We have survived two world wars, the Cold War, the bird flu and every other thing that has come along.
Mark Tatge, Chicago bureau chief: The greatest risk is that Hezbollah achieves some sort of legitimacy. This terrorist group can not be allowed to survive through some negotiated settlement or truce. At what cost are we willing to accept if they do survive and destabilize the region: a recession or a depression?
Quentin Hardy, Silicon Valley bureau chief: The market can "bake" in risk and will "bake" in this one as well.
Jim Michaels, editorial vice president: If Hezbollah is not disarmed and if Lebanon does not get its sovereignty back, there will be a perpetual war in that area. And war is not good for markets. The market survived the Great Depression, but people still lost all their investments. So, in the short term investors could get wiped out and that's not good even if stocks come back over the long term.
Elizabeth MacDonald, senior editor: I agree with John Rutledge. The market has survived all kinds of strong headwinds. It will survive this thing and we will beat the terrorists. When we do that and develop alternative energy to stop our oil addiction, stocks will go a lot higher.
Steve Forbes: Yes, the markets are durable and have survived, but that's because we have beaten the bad guys in the past. If the terrorists score a victory this time, then the markets will be hurt. We have to win, then the markets will do well.
In Focus: Cut Off Foreign Oil to Cut Off Terror Money?
Jim Michaels: We are giving oil producing countries the rope to hang us with. Every bomb that lands on Haifa, Israel is paid for by petro-dollars. Every penny that Venezuela's President Hugo Chavez, pays to subvert democracies in Latin America is paid for by petro-dollars. We have to slow the flow of money we give these countries for their oil. Once we do that, these nations will go back to what they once were, which are backward Third World countries. It will take us 10 years to move away from our dependence on foreign oil. But this is a 30 year war and we need to start planning for it now, regardless of what it will cost us at the pump and economically.
Mike Ozanian, senior editor: Even if we cut back our oil use by 5 percent for 10 years, nothing would happen. Having the government run our energy policy would be catastrophic. If we had a government controlled energy policy, it would look like the 'big dig' project in Boston, where the tunnel cost billions of dollars more than estimated and the tunnel still leaks.
Lea Goldman, associate editor: It's time to make a visionary approach diversify our energy policy. Saudi Arabia, Iran and other oil producing countries have us by the neck. Our dependence on their oil dictates our foreign policy. Our money spent on their oil, helps fund radical Islamic schools, Iran's nuclear program and terrorists groups.
John Rutledge: The problem is not the "Axis of Evil," it's the "Axis of Idiots." We are driving Hummers and Land Rovers while oil is $75/barrel and all that money is flowing to our enemies. We need to drill off the coast of Florida, we need to drill in the Alaskan Wildlife Refuge, we need to conserve more, we need to use technology for alternative energy and a carbon tax wouldn't hurt either.
Steve Forbes: If we open up ANWR to oil drills, we could replace Saudi Arabia's million barrels a day. Our outer-continental shelf has 85 billon barrels of oil in reserve -- that would replace Iranian oil. The lack of our will to drill is why our enemies are getting our money for their oil.
Jim Michaels: If we could do these things and oil dropped to $40/barrel, Mr. Chavez would be bankrupted and the Iranians would have trouble feeding their people. Anything we can do to lessen oil demand will help us and hurt the bad guys out to destroy us.
Lea Goldman: I agree, and this not just about finding other venues to drill oil, it's about developing America's business of alternative energy. We could be the world leader in this new industry.
Mike Ozanian: I'm all for that, but let's let the private industry do it and not the government.
Informer: Stocks to Help Drive Down Gas and Oil Prices
Elizabeth MacDonald: I like Toyota (TM). It sells the Prius, which could be the best hybrid car on the market. It also just came out with a strong earnings report, it's cheap at 14 times earnings and it pays a nice dividend.
John Rutledge: Toyota is the gorilla of all automakers, but Japan is going back to interest rate targeting and that could hurt the Japanese consumer and that will hurt Toyota.
Lea Goldman: I like BP (BP). It's a big oil company but you can hedge your bet because the company made a huge investment in alternative energy last year. So they have all the bases covered.
Dagen McDowell: It's investment in alternative energy is small compared its overall oil business. How will this pay off?
Lea Goldman: By 2008, BP will already see profits off its solar energy business.
John Rutledge: I have a broader view of alternative energy plays. That's why I like Cisco (CSCO). We lowered the amount of oil per dollar of our Gross Domestic Product by 50 percent since 1974. And we did it through technology. Investing in tech is the way to help reduce our dependence on foreign oil.
Elizabeth MacDonald: The company's profits have been down over the past 9 months, its long-term debt has spiked higher, $6 billion, and revenues are down in Japan.
Flipside: A Busy Hurricane Season Would Help Stocks!
Elizabeth MacDonald: We don't want to sound like we're profiting off of other people's troubles, but reconstruction after storm damage does add to mini economic booms in certain areas. The reality is that after Hugo, Camille, Andrew and Katrina, the stock market did head higher.
Steve Forbes: What hurts after hurricanes, is the hurricane pork tacked on by Congress. The extra government spending adds to our national debt, which ends up hurting our economy not helping it.
Mike Ozanian: As Elizabeth pointed out, after the last several big hurricanes the stock market has gone up. I think the reason is that our economy is far too big and far too strong to be slowed down no matter how big the hurricane is.
Quentin Hardy: Hurricanes cause loss of economic flow and massive government debt spending. Both are bad things for economy and market. Rebuilding does give a boost temporarily, but it's money spent very fast by shamed politicians making bad bets and is not a very good way to develop.
Elizabeth MacDonald: I agree that deficit spending is bad and that needs to stop.
Dagen McDowell: Steve, if another big hurricane hits and we see another spike in oil how will that effect the economy.
Steve Forbes: Another spike in energy prices would be bad, because it would take away money Americans can spend elsewhere.
Mike Ozanian: Hurricanes do not change the underlying fundamentals of an economy. The fact remains, that when hurricanes hit and stocks fall, it's a good opportunity to buy.
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Cashin' In
Our "Cashin' In" crew this week: Wayne Rogers, Wayne Rogers and Company; Jonathan Hoenig, Capitalistpig Asset Management; Jonas Max Ferris, MAXfunds.com; Charles Payne, Wall Street Strategies; Leigh Gallagher, SmartMoney.com; Gary Kaltbaum, Kaltbaum & Associates, and Brigitte Gabriel, American Congress for Truth and author of "Because They Hate."
Stock Smarts: Cease-Fire Disaster?
Israel battling to get rid of Hezbollah once and for all, but much of the world is pressing for a total and immediate cease-fire. Would stopping the fighting before Hezbollah is crippled spell disaster for America and for the market?
Brigitte Gabriel, American Congress for Truth: Absolutely. They tried to do that in 1982, and they held Israel’s hand back. We had a multinational force in Lebanon in 1982, made up of the French, the British, the Americans and the Italians. And what did Hezbollah do? They bombed the Marines and the French in one day, and within four months they left. So the multinational force came to Beirut in 1982 and left in 1984, and they accomplished nothing and left Hezbollah to grow and regroup and rearm. We need to let Israel disarm and basically kill Hezbollah once and for all.
Terry Keenan: And grow and rearm they have Wayne. Are you surprised at the extent of their munitions?
Wayne Rogers, Wayne Rogers & Company: Yes, I am a little bit. I am surprised. But I think that Brigitte is right that this is a constant goal of Hezbollah. They have sworn to erase Israel, you know. If you have fanatics on one side who are irrational and insane, and they are fanatically religious about it as well, you have to get rid of them. I don't know any other answer to that. I think you just clean them out from that area that's north of Israel, and if the U.N. can't do it, then Israel has to.
Terry Keenan: Jonathan, the clock is ticking on a cease-fire. Looks like it could be days away. How would the market react?
Jonathan Hoenig, Capitalistpig Asset Management: The market would hate it and the cause of freedom would hate it. Israel doesn’t think there’s a clock. I think anyone who loves peace and freedom doesn’t think there’s a clock. The panel so far is right. If you want to end the fighting, you have to win the war and you do that by crushing Hezbollah. And I’m sorry, but if these guys are hiding in a civilian neighborhood, level the civilian neighborhood. That's the fastest way to bring the fighting to an end. Crush Hezbollah and crush Hamas. Level them. That's the quickest way to ultimately bring peace to the region and the world.
Terry Keenan: Would the markets sell off if we got a quick cease-fire?
Jonas Max Ferris, MAXfunds.com: No. You just said there were peacekeeping troops in 1982. That was the start of the greatest bull market in American history, first of all. Secondly, the premise that war is good for stock markets anywhere is absurd, particularly a war on terror. I think we have come to the conclusion you can see that fighting a conventional war on terror costs more lives than the terrorist attacks.
Terry Keenan: Well, a terrorist attack isn't a good thing for markets either.
Jonas Max Ferris: No it’s not. It’s a terrible thing. But I will say that Israel and Lebanon are about to collectively kill more innocent people than all of the terrorists attacks in the history of Israel.
Terry Keenan: But innocent people get killed in wars.
Jonas Max Ferris: People do get killed in wars.
Charles Payne, Wall Street Strategies: Jonas, I am confused. Since we went to war in Iraq, the Dow is up 3,000 points. Since Israel really got traction in Lebanon, their market has recovered. Our market is up about 500 or 600 points. What are you talking about war isn't good? It’s not a matter of war; it's a matter about right versus wrong.
Jonas Max Ferris: We do not know what the market would have done if we did not go Iraq; if oil wasn’t as high as it was.
Charles Payne: You're saying if oil was lower, the market would be lower?
Gary Kaltbaum, Kaltbaum & Associates: Words do not equal peace. Actions equal peace. And Hezbollah has been loading themselves up for years under a resolution where they are not supposed to load up. Cease-fire is meaningless. Actions are meaningful. Israel needs to get rid of these guys. You have this guy running Iran who says the only way to fix this is to destroy Israel off the map. Being on the offensive is exactly what needs to be done, and I hope Israel continues to take it to them until the head of the snake is gone.
Wayne Rogers: How do you ultimately get rid of Iran, who is supplying them, and Syria? That's the problem. I agree. You have to get rid of Hezbollah. You have to erase them. You have to disarm them and get them out of there. But Iran and Syria continue to arm Hezbollah and Hamas and all of these various organizations. You have to stop that somehow.
Terry Keenan: Brigitte, how do you stop it? If we put in an international peacekeeping force, would that help at all?
Brigitte Gabriel: No that will not help at all. After all, Syria was in Lebanon when we had a peacekeeping force. And after the peacekeeping force Syria was supposed to be the power broker in Lebanon. Syria and Iran have been meddling in the Lebanese economy and the Lebanese capitol for years. It was Syria that was financing and supporting the PLO. with the Muslims back then. It was not called Hezbollah. And it was because Syria was shelling Israel, using Lebanon territory under the name of the Lebanese resistance that Israel had to invade Lebanon in the first place in 1982. We need to take care of Syria and Iran. The longer we put it off, we'll have a bigger enemy to fight and nuclear bombs that we'll have to take care of. The sooner we do it, the better off we are as a civilization. This is a war against western civilization. It’s as simple as that.
Jonathan Hoenig: Talking hasn't done much, Terry. We don't need a peacekeeping force against Germany and Japan anymore. The reason was we won those wars and we did it by teaching these people that any act of aggression equals their death. And I agree with the panel once again. That's exactly what needs to be done with all of these Islamo-fascist groups. Teach them that the minute they fire a Katyusha rocket, we are going to shove 10 more right up their you-know-whats. That's the way to win a war.
Terry Keenan: A cease-fire after 3 1/2 weeks isn't going to teach that message.
Jonas Max Ferris: There's also a chance that if Israel continues to bomb into Lebanon, Lebanon will go with the other side and go against Israel and other Arab countries will come in.
Terry Keenan: Like the Israelis were safe before this happened?
Jonas Max Ferris: If you launch attacks on countries because there are terrorists there, it's possible -- the premise being that country is going to side with you and hate the terrorists.
Charles Payne: They didn't just arbitrarily launch attacks. This action was triggered by action by Hezbollah. And the bottom line, the U.N. peacekeeping force, that's a modern day “Keystone Cops.” Everyone knows that's a joke. At the end of the day, there's a public relations aspect to this that Israel is grappling with when innocent people die. Obviously, that is still Hezbollah’s fault. If you fire a rocket from a hospital, that's a problem. I feel bad for the Lebanese people. They are victims here. But so are the Israelis and they must secure the peace no matter what it takes.
Gary Kaltbaum: I want to touch on what Wayne said, and that's Iran. Iran was about to get hit with a U.N. resolution about nuclear weapons. This all occurred before that to give them cover. What if Iran had nuclear weapons right now? Do you think they would hesitate to start lobbing them at this point? You have a guy that does not value life. He wants death to Israel. He wants death to the democracy in the Middle East. And that is not a good thing. It will hurt markets. It will hurt all countries around the world. We need to get peace by offense.
Terry Keenan: Wayne, if Gary is right, we are leaving that to the U.N. right now in terms of dealing with Iran.
Wayne Rogers: Gary touched on something that nobody has really mentioned here, and that is the fact that they have a weapon we do not have. And that weapon is themselves. They are willing to blow themselves up for that belief. We cherish life. We want life. They have no respect whatsoever for it and they are willing to sacrifice for it. When you have people that fanatical and that crazy, I agree there's only one way to deal with them. Now, having said that, is it necessary for us to do it or why can't we use the balance of power in that area where Sunnis are fighting each other and where you have sectarian violence, that kind of thing? We ought to promote that. Let them kill each other.
Cashin’ In: Forgetting 9/11?
President Bush sat down for a rare one-on-one with our own Neil Cavuto (7-31-06). Neil asked the president about the lessons of September 11:
(BEGIN VIDEO CLIP)
Neil Cavuto, FOX News Managing Business editor: The historian Victor David Hanson had said very recently, ‘as we near the fifth anniversary of 9/11, most have forgotten about the dangers of a terrorist attack. Often the public appears to worry more over the Patriot Act and wiretaps as if our leaders pose a greater threat to the U.S. than the mass murdering Islamist terrorists.’ Is he right? Have we forgotten?
President George W. Bush: I think there's a certain truth about people not wanting to, you know, kind of remember the horrors of September 11. It seems like a faded memory to some. I think a lot of Americans don't understand the stakes of the world in which we live in. My job is to do two things. One, remind people about the war on terror and that we're doing everything we can to protect them so that they are able to go about their lives. What you don't want is you don't want an economy to shut down because people are worried about the next terrorist attack.
(END VIDEO CLIP)
Terry Keenan: Charles, here in New York, it’s hard to forget. There's a huge hole in the skyline and in the ground. Do you think the rest of America has forgotten?
Charles Payne: I do. Wall Street, the physical location where I work, will never forget. But Wall Street the metaphoric place, probably the only thing it forgot quicker was Y2K. And it really is a tragedy.
Terry Keenan: Leigh Gallagher, what do you think?
Leigh Gallagher, SmartMoney: I have to disagree. For all of the obsession the markets have with one thing and one thing only, which is interest rates, you look at how resilient the market has been to what's going on in the Middle East and to the bombings in London last year. I think there is a deep-seated fear that the one thing that could really shake up the market is another big-scale attack on U.S. soil. I don't think America has forgotten it either.
Charles Payne: They don't think about it on a day-to-day basis.
Leigh Gallagher: Of course they don’t think about it on a day-to-day basis, but it’s there. Think about all the resistance there was when “United 93” came out. People are thinking that "World Trade Center", the Oliver Stone movie is too early.
Terry Keenan: Those are New Yorkers, though. Wayne, what do you think? You travel around the country a lot.
Wayne Rogers: Well, it's interesting. You know, Wall Street, from a financial point of view, always has a generational gap. In other words, they forgot what that last generation learned. In the 1990's everybody made so much money and all of the boiling up of the dot-coms and everything. Now that's all forgotten. However, 9/11 is a different thing. We are constantly reminded of it because we are reminded of terrorism around the world. And I think people do remember it and I think people are aware of it.
Jonathan Hoenig: People remember 9/11, Terry. But I think they underestimate the real danger, the real evil, of militant Islam. I have to tell you, I wish President Bush would stop talking about the war on terror and start talking about the war against militant Islam. These people murdered Nick Berg. They would not hesitate to come to any American town and slit your throat in the middle of the night.
Terry Keenan: You don't like that we just have this war on terror? You would like to have it on an actual religious group of people?
Jonathan Hoenig: Terror is a strategy. The real war here is the war on militant Islam. We have to keep up the offensive to make sure that the war that we are fighting in the Middle East doesn't end up in New York or Chicago or any other American town.
Gary Kaltbaum: Wall Street hasn't forgotten. Americans haven't forgotten. I have a drawer full of newspapers from 9/12 that I go back to all the time and read over and over again. You just have to remember that Wall Street gets back to business. These things that happen are events, some worse than others. But Wall Street gets back to business. And that's the great news about Wall Street that it goes back to what it needs to do; and that’s to worry about the economy and things like that. We are always aware of things that can potentially happen, but there are events and there are things that continue on and on.
Terry Keenan: I know people who even live on this island of Manhattan who haven't gone below 34th street since the attacks. They don't want to think about it.
Jonas Max Ferris: Wall Street is paying for 9/11 every single day. You can't forget it. Terrorism insurance. Higher oil prices. Rising inflation from a war on terror. Every day.
Terry Keenan: You're saying that they won, the terrorists? They hurt our economy?
Jonas Max Ferris: They hurt our economy, yes. We are paying for it to this day, years later, and Wall Street is underwriting the bond offerings that the government needs to pay for the war on terror, so they are in the center of it.
Charles Payne: Everybody remembers, but I don't think we think about it consciously. I do believe that we are getting complacent as a nation about terrorism. And I do believe that it goes everywhere around the country.
Cashin’ In: Wa$te of Our Money?
Four hundred and twenty three million dollars: That's how much the United States will pay into the U.N. budget for this year. Meantime, the Deputy Secretary-General of the U.N., Mark Malloch Brown, saying that he is not convinced that Hezbollah is even a terrorist group. Jonathan, you say this is the final straw. Cut the U.N. off and send that money into our homeland security budget.
Jonathan Hoenig: Spending on the U.N. is a complete waste of money. The U.N. is a waste. What has been one accomplishment of the U.N.? They condemn Israel over self-defense. They legitimize crackpot dictators like Hugo Chavez. They put Syria and Libya on their human rights commission. What is the purpose of the U.N. other than to waste our taxpayer dollars? I say get rid of the U.N. and let Wayne put a condo development up there on the Upper East Side. Our participation with them is ultimately hurting American foreign policy rather than helping it.
Terry Keenan: And the building is nice is skinny. They say it would make a nice hotel. Wayne?
Wayne Rogers: I disagree in the following sense; as a peacekeeping operation; it's been a miserable disaster. I couldn't agree more. On the other hand, there are a lot of things that the U.N. does in the form of humanitarian aid and in the form of studies and in the form of international health, all of those kinds of things. I wouldn't just totally write off the U.N., but you're right from a peacekeeping point of view, it has no teeth. Otherwise, they would have enforced the disarmament of Hezbollah a long time ago.
Charles Payne: Wayne, those things that you're talking about don’t mitigate the things Jonathan that was talking about. He is 100% right. It's a huge waste of time and it's become a political organization.
Wayne Rogers: Wait a minute. Did I say it mitigated it?
Charles Payne: You're saying that one thing is good and one thing is bad. The bottom line is the bad heavily outweighs the good and that’s the bottom line. It’s a political organization. Small countries can try to throw their weight around against America at our expense. It doesn't make sense for us to be involved in the United Nations. We never get their backing. They don't agree with common sense. It's one thing to go ahead and have different opinions. But come to the table with the same amount of money. Don't tell America how to use our military. Don’t dictate our rules and our government.
Jonas Max Ferris: First of all, we come to the table with more money because you pay based on your GDP.
Charles Payne: Give me a break.
Jonas Max Ferris: Mexico can't pay as much as we do. Number two, it’s $40 million. I don't care if they shovel in the East River. This is the worst time to bail out of the U.N. because other countries are losing a lot of faith in us already. The U.N. isn’t there to do what we want them to do.
Charles Payne: We should lobby for them to believe in us? We have to stand up to them.
Jonas Max Ferris: Can you think of a department other than homeland security that needs money less?
Charles Payne: We were talking about terrorism a minute ago. Now you’re saying homeland security doesn’t need money?
Jonas Max Ferris: They don't need any more money. That’s the biggest waste in the government right now after welfare.
Jonathan Hoenig: It’s the ideology of the U.N. It's completely bankrupt. They worship multiculturism and altruism and collectivism. Burn it to the ground and start from scratch. Right now it is completely worthless. From a humanitarian and a political side.
Terry Keenan: Venezuela may be on the Security Council next year if they get their way.
Jonathan Hoenig: Unbelievable. And that's the problem. They legitimize these crackpots.
Money Mail
Question: "I saw Ford (F) had a recall of over a million vehicles. Is there any hope for the stock?"
Wayne Rogers: When you say any hope, yes, maybe there is some hope. But I wouldn't invest in auto stocks right now. First of all, Ford has dropped this last month to fourth place. This is a tragic American story; this was the number-two automaker in the world and is now in fourth place. And it's horrible management. General Motors (GM) has had the same problems. I would stay away from these stocks.
Terry Keenan: Does Bill Ford have to go?
Wayne Rogers: Well, I don't know. I guess so, because he is not doing the job. Sure. You have to bring in somebody who knows how to run the company.
Leigh Gallagher: I agree with Wayne here. And I don't think it is just Ford. It's the auto stocks. They are basically where the airline stocks were a couple of years ago. Everything that's great for consumers, these discounts and employee incentives, are horrible for the auto industry. And on top of that, you high gas prices which everyone is saying could trigger a sales slide the likes of which the industry has not seen in a decade.
Terry Keenan: Toyota (TM) stock could have made you rich though.
Leigh Gallagher: It could have.
Question: "I'm a driver for UPS, and I'm wondering how the stock is looking right now?"
Gary Kaltbaum: There's a lethal combination going on right now. That's higher oil prices and a major slowdown in the economy. The stock has been kicked and the one thing Wall Street hates is when you miss estimates and warn going forward. I think it's dead money for quite a while at this point. Sorry to tell you that.
Terry Keenan: Bad news if you believe Gary K. What do you think, Jonathan?
Jonathan Hoenig: If you want to know how it's doing, look at the chart. Weak stock. I don't buy these types of dips. I would try to make money some other place besides UPS right now.
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