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Bulls & Bears
This past week's Bulls & Bears: John Bradshaw Layfield, Northeast Securities senior vice president; Gary B. Smith, Exemplar Capital managing partner; Scott Bleier, HybridInvestors.com president; Rebecca Gomez, FOX Business News correspondent; Adam Lashinsky, Fortune magazine senior writer; Todd Schoenberger, Diligent Investor senior equities analyst.
Trading Pit: Convert Iran to Capitalism?
The terrorists want to convert us to Islam. But with Iranian President Mahmoud Ahmadinejad coming to New York City this week to speak at the United Nations, is now our chance to turn the tables and convert him and other radical Muslims to capitalism?
JOHN: Capitalism cures a lot, look at China. We introduced KFC and McDonald's to them and now the country has moved from a communist state to a quasi-communist state. Look at Cuba—we've put sanctions on them for 4 decades and have accomplished nothing. If we want to manipulate these people we can't make the poor poorer. Give them something and they will want a lot more.
GARY B: I don't even know how we could convert Iran to capitalism. Iran's President is a lunatic and these guys are bullies. And the best way to deal with a bully is to punch him in the nose. I think their hatred of democracies like us trumps any capitalist activity.
ADAM: Iran can make money with a completely broken economy because oil prices are so high. There are a ton of Iranians who live outside of Iran that are born capitalists. Iran could be a wonderful capitalist country, but as far as converting their president, who knows?
TODD: Ahmadinejad doesn't need a lesson in capitalism; he knows his rants about nuclear bombs and anti-Semitism results in higher prices for a barrel of crude, which trickles down to more money for Iran to support its proxy army, Hezbollah. As much as I hate to say it, Ahmadinejad is no fool. Just recently, he committed $6 billion to the country's education system. So he's putting their money back into the country. Iran's ultimate weapon isn't a nuclear bomb—it's oil.
REBECCA: If we convinced Ahmadinejad to embrace capitalism, it would just give him more money to pursue efforts against us. And even if a deal were reached with Iran to stop enriching uranium—they won't. Ahmadinejad will continue his pursuit of nuclear weapons. They will never give up trying to build a nuclear weapon—just like they will never stop hating Israel.
SCOTT: They are "accidental capitalists" already. They want and need money. Iran kept pumping oil throughout the Israeli conflict even though they said they would use oil as a weapon. They need money to build weapons. Iran should be embargoed with financial sanctions until they are no longer a threat.
Dow All-Time High: Can Anything Stop the Bulls?
The Dow is very close to its all-time high, of 11,722.98. On Friday, the blue chips closed at 11,560.77. Can anything stop this bull run to a new record next week?
Adam: We could reach an all-time high very soon. If the price of oil falls a couple bucks and the Federal Reserve makes some benign comments about inflation, we'll hit it. Right now, the economy is in a good place.
Todd: Adam's right. Anything is possible, but I don't think we will reach the all-time high next week. The Fed is meeting Wednesday and their comments will be the same as they were last time. There will be a pause in raising interest rates, but they will say rates could rise again. This will scare the markets and cause stocks to go down.
Gary B: The Dow can break the all-time high, but it bothers me that the volume has really dropped off. This tells me that there's not a lot behind the buying.
Scott: I still think it'll be December before we see the new all-time high. We might make a new high intra-day, but not close there. If the Dow does hit the high, I'd start selling because we'll see a sharp pullback.
John: We're going to finally do it! The stock market was terrible in August because there was so much uncertainty. We weren't sure if the Fed was going to stop rates, we didn't know where oil was going and what was going on in the Middle East. All of those things have abated. Right now, the rich are starting to step back into the market and we're finally going to cross that barrier.
Rebecca: If the Fed doesn't raise interest rates, then we will see the all-time high next week. All the indicators are there. We have low oil prices and the interest rate changes are lagging. The Federal Reserve will pause on raising rates. Investors are just waiting for the catalyst.
Stock X-Change
It's a tradition on "Bulls & Bears": The new guy picks his favorite stocks. Will the guys agree with his picks?
Todd: Ford (F) is the comeback story of the decade. It just announced a restructuring plan where it will save $5 billion by the end of 2008. This will increase the company's earnings per share number. It also brought in a new CEO, Alan Mulally, the former chief of Boeing (BA). Ford is thriving and I want to invest in it. Buy it now. (Ford closed on Friday at $8.02.)
John: Unions are a liability and the company is bleeding money. Stay away.
Adam: I wouldn't go anywhere near this one.
Todd: I love ExxonMobil (XOM). It had $8.3 billion in revenue in the first quarter of this year when oil averaged $63/barrel. It's continued to do well and seems to be printing cash. This company is not recession-proof, but it's a stock you want to buy. (ExxonMobil closed on Friday at $64.65.)
John: ExxonMobil is a great pick, but I just sold a bunch because it's dead money until April. Wait, and buy this stock in April.
Gary B: John's right. My chart shows that XOM had a good run, but that run is over. I'd avoid it.
Todd: My next pick is Whole Foods (WFMI). It's had 21 percent revenue growth over the past 5 years. Going forward, it is expected to average 25 percent growth a year for the next 5 years. The company has 183 stores and another 85 currently in development. Plus, it's moving overseas and into Canada. I also love that it just announced a special $4 dividend for shareholders. (Whole Foods closed on Friday at $56.32.)
Adam: This is a high quality company.
Scott: Whole Foods is growing, but it's over valued. It costs $45 million per store.
Todd: Finally, China Life Insurance (LFC). It's the McDonald's (MCD) of life insurance in China. It has more than 660,000 sales agents in 4,500 offices. I love this stock. Buy it now. (China Life Insurance closed on Friday at $73.80.)
Scott: The stock has already gone up 2 ½ times this year. It's twice as expensive as other insurance companies.
Gary B: The chart tells all. It has a nice uptrend and continues to move higher. The stock trades a little thin, so just be careful getting in and out.
Predictions
Adam: Biggest housing bubble ever has burst; worst yet to come!
Gary B: Dow breaks all-time high; but falls 1,000 points by Halloween!
Bradshaw: Oil down and Wal-Mart (WMT) up; they meet in mid $50s by February 1st
Todd: Bud.TV will be huge hit! Anheuser Busch (BUD) gains 20 percent by Super Bowl
Scott: Get fat on the Cheesecake Factory (CAKE); gaining 20 percent
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Cavuto on Business
Neil Cavuto was joined by Jim Rogers, "Hot Commodities" author; Ben Stein, "26 Steps To Succeed In Hollywood" author; Gregg Hymowitz, Founder of Entrust Capital; Leigh Gallagher, Senior Editor at SmartMoney Magazine; Gary Kaltbaum, President of Kaltbaum & Associates; Barbara Corcoran, Founder of The Corcoran Group.
Bottom Line
Neil Cavuto: Gas prices are falling. But would they drop even more if oil companies received bigger tax breaks? Jim?
Jim Rogers: Of course. If we want more oil we have to give people more incentives to and find more oil. We haven't discovered any oil in more than 35 years. We don't drill in Alaska. We don't drill on the coast of California. And then people complain because we have high prices.
Ben Stein: We have to stop beating up on the oil companies and give them more incentives to drill. It is insane that the environmentalists would rather have us depend on Saudi Arabia and Venezuela then let us drill on the coasts of Florida or California.
Gregg Hymowitz: Jim says we haven't had major discoveries, but just in the last couple of weeks we've had a significant discovery, which has forced prices to go down. As far as tax breaks for the oil companies, they have enough incentive. They don't need more incentives to drill. The high price of oil has allowed them to make these discoveries.
Leigh Gallagher: I agree with Gregg. They've had an incentive for the last 2 years. It's called really high oil prices. I don't think the oil companies need windfall profit taxes, but beyond that I don't think they need any more breaks.
Barbara Corcoran: I'm with Gregg and Leigh. I have a really hard time feeling sorry for these fat cats.
Jim Rogers: But Barbara, do you know how expensive heating oil is now in New York City? It's expensive because we don't have enough oil.
Barbara Corcoran: And you're so sure that this oil exploration is going to get us to cheaper oil?
Jim Rogers: If we don't explore, we're not going to get more oil.
Gary Kaltbaum: These are companies that have made hundreds of billions of dollars in the last five years. They should do like every other company out here. Take your profits and put it into research and development. If you want, give me the money and I'll drill in my backyard.
Gregg Hymowitz: If you want to make life easier for people, if you want to ameliorate some of the difficulties of higher oil prices, then give tax breaks to the middle class.
Jim Rogers: Did you hear what Gary said? He said: "Give me the money and I'll drill in my backyard." He wants those tax incentives so he can drill.
Ben Stein: Let's make it as rewarding as possible to have our own oil and not be dependent on people who hate us and like to see us suffer. If that takes a tiny little addition to the deficit, I think it's worth it.
Neil Cavuto: But Ben, in the case of Chevron finding all this oil, they did that on the back of billions of dollars they've been getting as a result of these higher oil prices not through tax breaks, right?
Ben Stein: I couldn't agree with you more. They get enormous prices at the pump, but Chevron is actually not making as much in profits as compared to Exxon Mobil. But, let's give them every incentive we can. Every dollar we spend gives them incentive to drill instead of going to war and sending our young men to war.
Gary Kaltbaum: These oil companies will make money if oil goes to $50 or $40. This is like giving an allowance to Donald Trump. They don't need it. Let them use their own profits.
Jim Rogers: This big discovery that Gregg is talking about is less than one year's reserves. What good is that going to do us unless we find a lot of oil and find it quickly?
Neil Cavuto: But Jim, if you've already had collectively for the industry something like $28 billion in profits and that isn't going to help you find more oil, you think tax breaks are?
Jim Rogers: The Democrats are always giving tax breaks to people for doing X Y & Z. Let's do something we need. You want to go to war?
Gregg Hymowitz: That's just a band-aid on the problem. Let's give tax breaks to companies that are going to find new ways of doing things.
Barbara Corcoran: That's exactly it. We ought to be looking at other resources that give us something other than oil.
Leigh Gallagher: Look at these tax breaks that Chevron is fighting right now, these royalties. The trigger price is $36. When it gets that low, ok maybe we have a discussion, but oil is twice that right now.
Neil Cavuto: One of the issues that's been raised is, yes most of us can remember these sky high prices, but I'm old enough and Ben you're old enough to remember when prices were $10 or less a barrel.
Ben Stein: I remember when it was $2.50 a barrel. The problem is if it's not $2.50 a barrel we can't wish it back to being $2.50 a barrel. Some day we're going to have this choice, do we drill off the coast of Florida and endanger the sea turtle or do we beg and plead with countries that hate us and threaten to go to war to get their oil? I would rather pay more taxes and give the oil companies more incentive to drill.
Head to Head
Neil Cavuto: Will this big drop in oil and gas prices save the housing market from its fall? Time to go head to head. Leigh?
Leigh Gallagher: Here's an interesting statistic Neil, for every penny that gas prices decline, assuming they hold for a year, it frees up an extra billion dollars in consumer spending.
Neil Cavuto: Really?
Leigh Gallagher: I read it in the Wall Street Journal so it has to be true. So of course, that's going to offset everything. And sure, it's going to offset the loss in housing wealth that we're seeing now.
Ben Stein: Once prices start to turn in housing they turn and fall pretty hard. I agree that if the consumer has more money, the landing won't be as hard, but a soft landing in real estate is a concept that exists in the editorial pages of newspapers. It is rarely seen in real life.
Barbara Corcoran: I don't think housing has a thing to do with gasoline prices. Sorry to disagree.
Neil Cavuto: Just so you know Barbara, we've devoted a segment to this.
Barbara Corcoran: Have we really? Well, (laugher) another statistic in the Wall Street Journal is that you only get $600 in your pocket as an American family if gas prices go down by 50 percent. Compare that with $18,000 a year in mortgage payments. It has nothing to do with this. It's not going to make anyone run out and buy a house.
Neil Cavuto: So if housing is falling, it continues to fall.
Gregg Hymowitz: I agree, housing prices have very little to do with oil prices. Housing prices will be driven by interest rates and income, and somewhat by job growth.
Neil Cavuto: Well, interest rates stay low if gas prices stay down.
Gregg Hymowitz: Well, you could make that inflation argument. The interesting thing about interest rates is maybe we've seen the top of interest rates. We're not close to a bottom in housing, but we're not that far away either.
Jim Rogers: It's location, location, location. Some houses in America will go up and some will go down. The fact that the press is full of this now means we may even have a rebound. When the UK went through this, the UK had a big bubble, sales there went down and everyone talked about prices going down so they went back up.
Gregg Hymowitz: Jim always talks about that, but where are prices in the heavily populated areas?
Gary Kaltbaum: We're all forgetting one word, and it's called inventory. Lower oil prices are not going to reduce the massive inventory buildup around the country.
Neil Cavuto: Ben, if we're going into a slowdown mode for the economy, still growth, but at a slower pace here and abroad, that keeps energy prices declining and interest rates low. What then for real estate? Does that put a floor on how low it can go?
Ben Stein: It definitely puts a floor at how low it can go. Usually when you're in a real estate cycle, it takes a long time for the cycle to work itself out. A cycle that would have a peak and the trough 12 to 18 months later would be extremely unusual. As Gary points out, we have a massive overhang of inventory. People are afraid they can't afford houses.
Barbara Corcoran: I don't think people are aware that every housing statistic out there right now reflects closing prices. Deals being made now won't come out in the statistics for another 3 months. If we could look at the actual sales prices, you would see that prices have already come down.
More for Your Money
Neil Cavuto: In honor of fashion week... stocks our gang says will never go out of style. Time to get more for your money.
Leigh Gallagher: I really like Chevron (CVX). If you're thinking of a stock that's timeless and classic and that never goes out of style, you have to think long-term. And the long-term trend for oil prices is up. Chevron is at a really great place right now. It's cheaper in terms of valuations than Exxon Mobil. It has a low debt ratio. I don't think you can go wrong with this stock. Chevron closed Friday at $61.79.
Gary Kaltbaum: I disagree respectfully. It's a commodity and commodities go up and they go down. Just remember, oil was at $20 at one time so it's not something I would go with over the longer term.
Neil Cavuto: What would you go with?
Gary Kaltbaum: I like Bank of America (BAC). Whether oil prices are low or high, whether there's recessions or expansions, it's stood the test of time and had consistent earnings growth. And it's at all-time highs as we sit right here. Bank of America closed Friday at $51.45.
Jim Rogers: Whenever financial earnings are at 30 percent of the S&P, which they are at right now, you should sell them and sell them short. These are things you have to get out of.
Neil Cavuto: Gregg, what do you like?
Gregg Hymowitz: We like Genesco (GCO). Their biggest two divisions are Journeys and Johnson and Murphy. This company trades at 10 times earnings and at a 14 multiple. (Gregg's firm owns shares in GCO). Genesco closed Friday at $30.85.
Ben Stein: I think it's aimed at more of the urban youth crowd. For the individual investor, I would say put no more than a tiny part of your portfolio into this. And by the way, I think it's at 13 times earnings.
Neil Cavuto: Then, what do you like Ben?
Ben Stein: I like iShares MSCI EAFE (EFA) continuing with my long-term trend of ETF's that are overseas based. Long-term, the dollar is going down, down, down. Foreign offshore stocks have very little going against them. iShares MSCI EAFE (EFA) closed Friday at $66.63.
Gregg Hymowitz: It's at 17 times earnings. And look, the thing about index funds and ETF's specifically, it sounds great, but you're investing in international stocks and 50 percent of this portfolio is Japan and the UK. So you're not getting this global diversification. I think there are better places to put your money in this country.
Neil Cavuto: And Jim?
Jim Rogers: You can buy Austria Air. The airlines are full these days. If you fly the rates are going through the roof.
Neil Cavuto: How do I get Austria Air?
Jim Rogers: You just call up your broker and buy it. It's a major country in Europe. You must've heard of it.
Leigh Gallagher: I have to disagree Jim. The airline industry should be avoided. It hasn't really figured out how to save itself. And how to you buy it? It has no ticker.
FOX on the Spots
Barbara: Home prices falling; you ain't seen nothin' yet!
Gary: Lower oil prices help GOP keep House and Senate
Gregg: Oil prices won't save GOP; Dems win House or Senate
Ben: Beware a Dem House Majority; it will be a disaster!
Jim: We must grow with China; Bush gets that, Congress doesn't
Neil Cavuto: Be happy, oil prices are coming down. But also be worried: they're coming down for a reason. Things are slowing, here and abroad. Supply hasn't changed, demand has. We don't need as much, because we're not growing as much.
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Forbes on FOX
Flipside: New Threat to our Stock Market: The GOP!
Mike Ozanian, senior editor: The four Senators that voted against the way that President Bush wants to treat terror suspects are essentially modern day Benedict Arnolds. They are far too lenient on these terrorists. Basically, they want us to give away our intelligence when we capture these guys. It's crazy!
Elizabeth MacDonald, senior editor: This is about the battle for the hearts and minds. When we do things like this we lose our soul. What the Senators did will restore our honor and integrity. We won the Cold War because the world saw that the Soviet Union was using secret prisons and torture tactics. The West won it on ideology and that is democracy, freedom and human rights.
Jim Michaels, editorial vice president: When you talk hearts and minds you're talking public relations. What Sen. Warner and Sen. McCain have done is put public relations ahead of national safety. The Geneva Convention was never intended to cover people who are terrorists or who assassinate people. It was suppose to cover people who agreed to it themselves. These bastards have murdered and tortured American soldiers that they've captured. They have total content for it and we're supposed to obey it?
Quentin Hardy, Silicon Valley bureau chief: Imagine what this sounds like to the rest of the world? America actually debates whether or not to have torture. They debate whether or not to do this stuff. That's an amazing thing. It's a battle of ideology and they're right to bring it out and talk about it and then take it back underground.
Dennis Kneale, managing editor: It's horrible when we hear arguments that say protecting human rights makes you un-American. Back in the McCarthy era if you questioned your government they called you a Communist. Now if you dare question our War on Terror they call you un-American and unpatriotic. Colonel Powell said the world is beginning to doubt the moral basis of this War on Terror. Now Bush wants to rule out a ban on torture.
Neil Weinberg, senior editor: What Bush is trying to do is get cruel and inhuman types of tactics approved. This is wrong. This is about public relations, but it's really about how we look to the rest of the world. If we don't maintain some moral high ground then how does this look around the Western world?
In Focus: Al Qaeda's Plan to Destroy America: $200 Oil?
Jim Michaels: Al Qaeda has repeatedly said that they hate America because the U.S. is stealing Islamic oil. Stealing it at $70 a barrel? What they really mean is that they want to use oil as a weapon against us. They want to drive up the price and withhold it. If they ever overthrow the monarchy of Saudi Arabia and get that Saudi oil and make a deal with Iran, they can control the market.
Dennis Kneale: This will never happen. The problem with selling fear like this and making the terrorist the boogieman is that we assume that they're mastermind criminals. They're not. They're unemployed, uneducated losers who just want to get to heaven as quick as possible and enjoy the virgins. We do not need to fear these guys. We need to be ready for them.
Elizabeth MacDonald: Some of these guys are educated. Mohamed Atta was a trained engineer. But audiotapes, videotapes and chat rooms from Al Qaeda say this is the plan that started in 2004. Look what happened in Saudi Arabia in September 2006 with Abqaiq, the big oil processing facility in Saudi Arabia. Terrorists tried to attack it. Just like they did in 1993 with the World Trade Center, they're going to continue to go after it. If they blow it up that facility it will rock the oil market.
Victoria Barrett, associate editor: They can't go after Mideast oil because it's the only lever the Middle East has. It's their greatest asset. You take away that oil and these economies and societies unravel. And Al Qaeda looks like the bad guy in the Middle East.
Bob Lenzner, national editor: They already tried to get into the major Saudi oil fields and they're going to try again to do it. It's not that they want to drive the price to $200, it's that they want to destroy the economy.
Quentin Hardy: Take Al Qaeda at their word. They say they hate America and they attack America. They say they want to take out Western economies, I believe them. All they have to do is take out a couple port facilities and they could take it down. They hate Saudi Arabia, they'd love to destabilize the government. This is a signal to America to get off our oil addiction.
Informer: New Tech Craze!
David Andelman, executive editor Forbes.com: I think the Sony reader is going to be the newest and hottest thing and therefore I like the stock Sony (SNE). This is the iPod for readers. This is going to be a very hot item!
David Asman, host: Didn't Sony supply all those lithium batteries to Dell that got burned?
David Andelman: They did, but they also supplied a lot of batteries to other computers that didn't go up in smoke.
Victoria Barrett: There's a big boom in consumer technology but I think it's wise to look behind the trend. Dolby Laboratories (DLB) provides the sound systems for HDTVs and the new surround home theater systems and also the iPods.
David Andelman: Everyone wants this technology but do they want Dolby technology? There's a lot of competition out there for Dolby.
Elizabeth MacDonald: I like the Palm Treo, therefore the stock I recommend is Palm (PALM). The stock is really cheap at 5 times earnings. I think that this could be an acquisition target. This has a very hot product that always rates high in consumer satisfaction.
Dennis Kneale: I worry because this company has been such a roller coaster. The company screwed up how it dealt with some patent fights. I like Apple (AAPL). With the announcement they made last week, Apple is going to take over your living room. They're going to take anything you've got on your laptop and let you play it on your TV. The stock is up 25 percent in the past couple months and will keep getting better.
Elizabeth MacDonald: I'm worried that this Apple could get a little rotten from some vicious price competition from its rivals. Look at Sony color TVs, that got undercut. Motorola telephones and IBM personal computers got undercut. Apple is heading in that direction.
Makers & Breakers
• United Industrial Corp. (UIC)
Dan Frishberg, "Money Man Report" BizRadio: MAKER
They make the unmanned drones that we use to help the Al Qaeda leaders find their 80 virgins. The company has years worth of backlogs, so people shouldn't be worried about their earnings going down. I own this stock and think it will go to $70 in one year. (Friday's close: $54.90)
Neil Weinberg: BREAKER
I think this is bad idea. I think drones are great, but it's yesterday's story. You've got to buy the future. The stock is up 50 percent in the last year. I'd keep away from it.
Mike Ozanian: MAKER
Relative to its earnings, this stock is still very cheap. The CEO also bought a lot of stock in June. So he probably knows what's going on.
• Raytheon (RTN)
Dan Frishberg: MAKER
They make missiles that shoot into space. They just tested one that down a missile from space. They also make the Sidewinders missile that you see on the jet planes and helicopters. I own this stock and I think it can go up to $55 in one year. (Friday's close $47.26)
Mike Ozanian: BREAKER
I like the product, but the stock is a little too richly priced. And the company has been paying a very high price to buy back stock. That bothers me.
Neil Weinberg: MAKER
It's not too expensive and if you like defense this is a nice company with a lot of feet in the pie.
Dan Frishberg: When the company buys back stock it acts like a dividend and makes the stock price go up. As defense spending goes up Raytheon gets a big kick. And if spending goes down, it still gets a kick.
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; Dagen McDowell, FOX Business News; Charles Payne, Wall Street Strategies; Stuart Varney, FOX Business News; Nu Wexler, WalMartWatch.com.
Cashin' In: Red Alert for Stocks?
America's biggest enemies enjoying a weekend getaway, just 90 miles off our shores and accusing the U.S. of being a terrorist state.
The Cuban conference coming just days before Iran's president will arrive in New York for a speech at the United Nations. Should Wall Street be worried the groundwork is being laid for World War III?
Jonathan Hoenig, Capitalistpig Asset Management: Maybe Wall Street should be aware, not so much worried. These dictators could have as many state dinners as they want. It's pretty amazing that they call us dictators and compare the U.S. to Hitler. Meanwhile, most of these countries deny their citizens the most basic of human rights, such as freedom of press and freedom of movement. I think the real issue for America should be; who is a threat to this country? Cuba is not so much of a threat; they can't even keep the lights on down there. Iran is a threat. And I think countries that are threats to the United States should be made non-threatening. If it was my choice I would start with Iran, get rid of their nuclear program, and move on down the list from there.
Terry Keenan: By holding this just 90 miles off our shores, they are sort of thumbing their nose at the U.S. Kofi Annan is going down there…
Stuart Varney, FOX Business News: Yeah, they're trying to create a new bunch of people that hate America. We understand what they are doing. My point would be that they are fringe people at this moment and they really don't count. It's all talk. There's no clout. But, if the Iranians get a nuke, all bets are off. It's a completely different ball game. The threat is in the future, it's not so immediate.
Terry Keenan: Wayne, if they get nukes in their line with Cuba, it would be the Cuban Missile Crisis all over again times 20.
Wayne Rogers, Wayne Rogers & Company: I would agree and you've got to take them out when that happens. You are right; this is a lot of rhetoric but as we well know anti-American rhetoric has found a base in the world. You can't stop it, of course. You are right to say it's foolish, that everybody thinks these are guys shooting off their mouths but when they do shoot off their mouths, it does get press and people quote it around the world. And I think we should be much more active in our relations with the press to support what America is doing as opposed to what these guys are doing. Don't give them all that crap.
Dagen McDowell: Wayne, you are right, because this is just one big soapbox for Ahmadinejad and Chavez. We should ignore them because they will not take action against the U.S. either economically or militarily, they need us financially. Frankly, if this get-together was such a big threat, then oil would not have crashed in the last week.
Terry Keenan: But Charles, Wayne has a point that this week: The New York Times and all these newspapers will cover Ahmadinejad's visit to the U.S. as if it was some royal second coming.
Charles Payne, Wall Street Strategies: Yeah, well of course, because they are trying desperately to push a certain agenda and also desperately sell newspapers, which they don't do a lot these days. Back to this conference, this thing was conceived in 1955, it's been around since 1961, and since the 70s it's been anti-American. Most Americans don't care; we really should care, obviously, if some of these guys get nuclear bombs. You've also got to realize that this whole thing is an economic disaster. China used to be part of this thing, they started making money, they got out. Anyone in this group who starts to do well and turn their own countries around, they will get out of the organization. They're a bunch of also-rans who can't do well with their own countries. They get together and complain about America.
Wayne Rogers: But Charles, doesn't that tell you something? Doesn't that tell you that these are people who are lacking in something and will continue to do so along as they are.
Charles Payne: That's human nature. People who lack, rarely look in the mirror and say, ‘I lack.' It's always ‘this' person's fault or ‘that' person's fault. Unfortunately, on a global basis, it' s always America's fault. A lot of people think America could push a button and turn their fortunes around. It's not up to us to turn around the fortunes of those countries.
Wayne Rogers: We know that. Tell us something we don't know.
Jonas Max Ferris, MAXfunds.com: What you don't know is that this organization is a Cold War relic without relevancy. It's certainly not a threat of World War III. None of these countries are that dangerous, quite frankly. What is a reality, what Wall Street should worry about, is that when you have a bunch of countries, like half the globe, and most commodity producers start getting together an getting anti-America, we should be worried about the economic threat of these countries getting together and acting together.
Jonathan Hoenig: You don't think Iran is dangerous to this country?
Jonas Max Ferris: Jonathan, these countries are so much more dangerous to us as an economic threat. That is the danger to America; not some World War III scenario.
Dagen McDowell: We're getting the upper hand with Iran because oil is falling, Iran needs that money - we are getting more leverage because that happened this last week.
Terry Keenan: Stuart, we know Iran doesn't have the missile capability to deliver these nukes to our shores. We think they can only deliver perhaps as far as central Europe, but if they could ship them to Chavez or Castro then we have a problem.
Stuart Varney: Iran could get missile capability from North Korea. The North Koreans have already tested the missiles. The threat isn't right now: the threat is in the future. The threat is if any of these countries, Iran in particular, gets a nuke. That's what we are really talking about here. That is the threat. As Wayne says, if they get one, you've got to take them out.
Charles Payne: I think we have to be preemptive, we don't want to wait to be hit between the eyes, a surprise attack. He is already setting the stage to import these types of weapons by claiming that America is going to attack them.
Stuart Varney: Tell that to the democrats who will appease Iran at all costs.
Terry Keenan: The president is also going to speak before the U.N. this week. What should he do as the U.N. rolls out the red carpet for all our enemies?
Wayne Rogers: I will tell you what he shouldn't do: he shouldn't talk about making the world safer for democracy. What he should talk about is this: take a hard line about what these people are doing. The war on terror is not to be confused with the war in Iraq. You can't confuse the two. The war on terror is something separate. Terror is everywhere.
Charles Payne: I disagree.
Wayne Rogers: Please. I'm saying that's a sectarian thing we are trying to police over there, not to be confused with terror over here, or terror in other countries which is alive and well. We have to be careful of it.
Charles Payne: The war in Iraq is the war on terror. Every terrorist group known to man is fighting the best they can in Iraq and Afghanistan. That's why they haven't been successful. Look at the attack in Syria. That was ridiculous. One of the most anti-American countries in the world and all they could find is one or two guys to throw a hand grenade over a wall. The bottom line the war in Iraq is the war on terror right now. We have to win it.
Wayne Rogers: You must not have been around on 911 five years ago, my friend. You think the war on terror was not in New York City? You are crazy.
Stuart Varney: A bunch of anti-Americans get together, make a big scream and shout and the Dow is very close to an all-time high. If the Iranians get a nuke, the Dow will go to an all-time low.
Dagen McDowell: Stuart, to your point, you are absolutely right because the topics at that gathering in Cuba are on illiteracy and lack of health care.
Jonathan Hoenig: Meanwhile, they are all talking such smack about us 90 miles off the shore.
Jonas Max Ferris: Talk is cheap. Does anybody in this entire group think if any one of these nonaligned countries gets weapons they will launch an attack on America as a nation? Does anybody think that will happen?
Charles Payne: Absolutely.
Stuart Varney: Yes.
Charles Payne: Iran, North Korea.
Jonas Max Ferris: A nation with one or two bombs is going to launch an attack?
Charles Payne: Listen, in a situation where anyone can lose 10 men versus one man and claim victory, it doesn't matter.
Jonas Max Ferris: I'm not talking about terrorists, I'm talking about a nation attacking us with a bomb.
Cashin' In: Terror Over There, But Not Over Here: Wall Street Takes Note!
This Friday terrorists tried to hit key oil facilities in Yemen and earlier in the week took aim at the U.S. embassy in Syria, both were thwarted and both were a long way from our shores.
Does Wall Street pay attention to that?
Stuart Varney, FOX Business News: Wall Street is paying attention to it. Frankly, things are going rather well. I hate to be a cynic about this, but our enemy is divided. Sunni, Shia, nihilistic jihadist, and they are all killing each other. What' s wrong with that? I think things are going rather well and the market reflects that.
Terry Keenan: What is wrong with that?
Wayne Rogers, Wayne Rogers & Company: Nothing is wrong with it and I think Stuart is right. We ought to be promoting it. I don' t think the market is reflecting it, I think the market is in disconnect, I think the market is not paying attention a lot of attention to that. I think the market is paying attention to the economy more than anything that has to do with terror.
Terry Keenan: So what is it seeing then? Why is it so positive?
Wayne Rogers: The economy is good. Earnings are up, people have reported good earnings the second quarter with the exception of a few like Ford and G.M.
Jonathan Hoenig, Capitalistpig Asset Management: The president keeps saying we have to fight the terrorists over there, so we don' t have to do it here. I wish we did more fighting of the terrorists. To me you aren't fighting terrorists when you are dropping food and building roads. I don' t think getting an American kid killed is worth it so that an Iraqi woman doesn't have to wear a burka. We should be focused on eliminating the enemy and showing militant Islam that any aggression put toward the United States will result in their death. We need to start fighting the war on terror, not just talking about it.
Terry Keenan: So, no nation-building...
Charles Payne, Wall Street Strategies: The bottom line is that we are fighting the war on terror. A lot of people can disagree with the tactics that we're using. I think that's one of the problems. There is a disconnect. Wayne, I don' t know what you are looking at, but the market is certainly reflecting the fact that we are winning the war on terror. The market is the best poll out there. The market knows before the average person knows. The market knows we're winning this war. Whatever happened to oil? Oil went down this week. Dagen mentioned it. The terror premium, remember that one? It's been in our vernacular since 2003. Everyone acknowledged it was about $20 a barrel, now oil is down, we know we are winning the war on terror because the market is up and oil is down.
Dagen McDowell, FOX Business News: Charles, one thing that is a little disturbing is that even when there are attacks like the past week or even the London bombing, stocks went up. That says complacency. The longer we go without an attack on U.S. soil, people are starting to act like there won' t be one. It's a little unnerving.
Charles Payne: What would be unnerving is if we went down every time these guys throw a hand grenade somewhere. I think we are reacting in the right way.
Jonas Max Ferris, MAXfunds.com: First of all, I think the oil thing is due to the lack of hurricanes more so than the lack of terror attacks around the world. Number two, when Wall Street thinks we are fighting terrorists in Iraq instead of here, that' s become a recent thing. I don't think that Wall Street buys that argument. Wall Street should be more concerned about no end in this fighting terror over there and not over here thing, quite frankly. It's getting very expensive, which I've said before.
Terry Keenan: If we are successful in anything in the war on terror, we have been successful in going after these guys' money and watching all the wire transfers around the world, isn't that something to cheer?
Wayne Rogers: Of course it is, I think we have a lot to cheer about. We haven' t had a direct attack here in five years, since 9/11 and Israel has lived with this kind of thing where they have an attack every week. So we have been very successful, so far, in stopping this thing. The administration has done a good job, I think it's been terrific.
Face-Off: Did Wal-Mart (WMT) Defeat "Economic Socialism"?
Last week, Chicago's Mayor Daly struck down a law that would have required big retailers like Wal-Mart to pay workers at least $10 an hour, $13 if you include benefits. Wal-Mart said that it wouldn't open a Chicago store if that law had passed. Jonathan, you are in Chicago, the average starting worker only brings home $300 a week, is that something to cheer about?
Jonathan Hoenig, Capitalistpig Asset Management: It is something to cheer about, Terry: more jobs and a stronger local economy. Beyond the practicality, morally it was the right thing to do. The truth is that there is no such thing as a right to a wage. Freedom, if you're going to be free, means you have to have the freedom to trade freely. The minimum wage law not only violates the rights of the employers, but also of the employees, to voluntarily trade.
Terry Keenan: Nu, you were in favor of the law that didn't pass.
Nu Wexler, WalMartwatch.com: We were very much in favor of it. Wal-Mart wages do not pay a living wage. They pay poverty-level wages. As a result, you have Wal-Mart employees in state after state, relying on state Medicaid laws, and on state Medicaid plans. 46 percent of Wal-Mart children are either uninsured or are on Medicaid. In the end, the free-market economists will make their argument, but in the end it's costing taxpayers.
Jonathan Hoenig: Nu, let me ask you something. How come when they opened a store outside the Chicago limits, 25,000 people showed up to apply for something like 300 jobs? If a Wal-Mart job is so terrible, how come millions of people are looking for them?
Nu Wexler: Two reasons here. One, that stat they come up with is based on sloppy methodology. It's based on a 50-mile radius outside Chicago. These are people that are applying for jobs in Indiana, elsewhere way outside of Chicago. Two, these stores are setting up in economically depressed areas - some of these people are applying for second jobs. Bottom line is that these are not good jobs. These people can't afford healthcare. In the end they are costing taxpayers money.
Jonathan Hoenig: And you are lobbying against a company that is trying to set up a store in an economically impoverished area. How many jobs has "Wake Up Wal-Mart" created in the last 10 years?
Nu Wexler: I can't speak to "Wake Up Wal-Mart". But I can tell you that "Wal-Mart Watch" is working consistently to get Wal-Mart to provide decent wages. They are one of the largest companies in America. They have an obligation to pay a moral living wage; they aren't doing it. $11 billion in profit and they can't provide health care for more than half their employees, it' s not right. They should be doing better and they can do better.
Terry Keenan: Jonathan, you are all for private enterprise, so if we are going to end up paying for these people's healthcare costs through our taxes, why not just let Wal-Mart pick it up? Aren't they more efficient?
Jonathan Hoenig: Of course, I'm against that too, but you just can't pick a wage out of the air and say, ‘why doesn't Wal-Mart pay $20 an hour?' The truth is that someone who stacks the shelves at Wal-Mart, I'm sorry, but maybe they aren't worth $13 or $14 an hour.
Nu Wexler: The average shelf stocker at Wal-Mart is making $16,000 a year. How are you going to live on that? How are you going to get health care for your kids or pay your rent? It's tough - they can't get by. If Wal-Mart wants to get in these cities they have to pay a living wage.
Money Mail
Question: "My local drugstore is already stocking candy for Halloween, and I still see lots of Hershey (HSY) stuff. How's the stock?" – Alyson, Ridgewood, NJ
Wayne Rogers, Wayne Rogers & Company: I think that a lot of Hershey is in the company. I don't think a lot is in the stock. In the last quarter, Hershey reported gains in earnings and gains in revenue and everything else but Mars has been nipping at their heels and I think that between now and the end of the year I don' t think you will see a lot of movement in that stock. That stock is a very safe stock, but not something I would look for.
Jonathan Hoenig, Capitalistpig Asset Management: I would never call any stock 'safe'; a lot of the food stocks Unilever (UL), Smuckers (SJM), Danone (DA) are doing pretty well here. I don't own them. I put my stop in Hershey at $46, but you don't fight the tape on this one.
Question: "I'm looking at buying the Evergreen Asset Allocation Fund (EAAFX). Thoughts?"
Dagen McDowell, FOX Business News: First things first: if you are buying any fund on your own, if you see a letter at the end of the name, it means you will have to pay a sales charge. Do not pay a sales charge. It's a fund of funds. It's run by a great firm. However you can find some with no load at places like T. Rowe Price or Fidelity. If you are doing it on your own, that's where you go.
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