DISCLAIMER: THE FOLLOWING "Cost of Freedom Recap" CONTAINS STRONG OPINIONS WHICH ARE NOT A REFLECTION OF THE OPINIONS OF FOX NEWS AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE WHEN MAKING PERSONAL INVESTMENT DECISIONS. IT IS FOX NEWS' POLICY THAT CONTRIBUTORS DISCLOSE POSITIONS THEY HOLD IN STOCKS THEY DISCUSS, THOUGH POSITIONS MAY CHANGE. READERS OF "Cost of Freedom Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.
Bulls & Bears
This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Pat Dorsey, Morningstar.com director of stock research; Scott Bleier, HybridInvestors.com president; Tobin Smith, ChangeWave Research editor; Patricia Powell, Powell Financial Group president; Kinky Friedman, former Texas gubernatorial candidate and author of "You Can Lead a Politician to Water, But You Can't Make Him Think."
Trading Pit: Stocks "Up" In 3rd Quarter! Proof Huge Rally Is Coming?
The Dow, NASDAQ and S&P 500 were all up in the 3rd quarter. This despite a summer of stunning sell offs, a mess in the mortgage market and a credit crunch. Can we expect an even bigger rally in the 4th quarter?
Gary B. Smith: The fourth quarter is going to be great! The Dow will certainly tick over 14K and the NASDAQ will have an even bigger rally. We got through this credit crunch, the Federal Reserve is behind us, and housing is near a bottom if not at a bottom. We have all these bad things behind us, and the market is ready to go up.
Scott Bleier: This rally has been bought and paid for by the Fed. They pumped billions of dollars into the market, and what they have bought is 500 points on the Dow and time: time to work out the problems that the economy and credit markets are having. They gave a great opportunity to sell.
Tobin Smith: People who have jobs spend, and they will continue to spend. Companies that are selling outside of the United States are going to continue to invest. The magic secret sauce here is this global market and global expansion, which has never happened before.
Patricia Powell: I think we will come in with a strong finish. It's going to be a great 4th quarter. Most of the bad news is already out. Subprime, the slowing economy and the housing slump are old news. The Fed has begun lowering rates. The only concern is if Congress throws in a tax increase, but that is not likely so soon.
Pat Dorsey: News is good overall, but we aren't out of the woods yet. We haven't completely passed the credit crunch. There are a few more time bombs left to come out.
Busting Illegal Workers: Should Businesses Do the Dirty Work?
Kinky Friedman: Once we secure the border we need to “sock it” to businesses that take in illegals. We should have a taxpayer ID card; the idea has been there for some time and we're just not doing it. I don't trust the government to do anything correctly.
Tobin Smith: Businesses are always the whipping boy on this issue. The fact is they are hiring people, who happen to be illegal immigrants, because we don't have people in the United States to do many of these jobs. It's becoming a convenient source of labor. The government has gone “wink, wink” and allowed this to happen for twenty years. And now all of a sudden corporate America has do be the watchdog here? I don't think so!
Gary B. Smith: It's not just the businesses that are at fault. It's the entire US economy. The fact is businesses want to provide what consumers want. They want a low cost of goods and a wide range of services. The average age of the American in the work force is almost 42 years old and getting older. They are brining in young, vibrant labor. We need these people!
Stock X-Change: Fourth Quarter Touchdown Stocks!
The names our guys say will finish the year on a winning streak.
Tobin Smith: Anadigics (ANAD)
Gary B. Smith: Microsoft (MSFT)
Scott Bleier: SiRF Technology Holdings (SIRF)
Patricia Powell: Sasol (SSL)
Pat Dorsey: Cimarex Energy (XEC)
Gary B. Smith's prediction: GM is back! Stock drives up 50 percent in next 12 months.
Patricia Powell's prediction: Election tech rally! Nasdaq and the QQQQ's up over 30 percent by Nov '08
Scott Bleier's prediction: Harman (HAR) deal not dead! Up 25 percent by year end
Tobin Smith's prediction: Sun rises for Sun Microsystems (JAVA); stock soars 50 percent by spring
Pat Dorsey's prediction: Fuel Tech (FTEK) may be down. But it's not out!
Cavuto on Business
On Saturday, September 29, 2007, Neil Cavuto was joined by Charles Payne, wstreet.com; Tracy Byrnes, New York Post business writer; Stuart Varney, FOX Business correspondent; Gary Kaltbaum, Kaltbaum & Associates; Ben Ferguson, "The Ben Ferguson Show"; and Regina Calcaterra, Democratic strategist.
Neil Cavuto: Kids here illegally. Should you pay for their doctor bills? Earlier this week, the Democratic-led Congress agreed to expand a popular children's health insurance program called “SCHIP.” It comes with a $60-billion price tag and a loophole that GOP leaders say covers kids who are here “illegally.”
Stuart Varney: This is a backdoor way of politicians getting control of our nation's health care. And I oppose the government giving this type of health care to people who are here illegally. This is also a way for politicians to buy votes by saying we'll give you health care if you vote for us.
Tracy Byrnes: I agree with Stuart that this is an attempt to bring nationalized health care to America, which is something I oppose. But these kids are not here by choice and we need to provide them with emergency medical services. The real problem is that their parents are here illegally and that we need to do a better job of preventing illegal immigration so we don't have to deal with health care for their kids.
Charles Payne: This is a Trojan horse that would lead to universal care. In addition to the illegal issue, NY wants to expand health coverage to people who make 400 percent above the poverty rate. It's ridiculous for the government to pay for health care of people making $83,000 a year.
Regina Calcaterra: If we don't pass this bill, children with no health coverage will be at risk. President Bush said at U.N. that we should not let any child die from hunger.
Neil Cavuto: But we don't have an endless well of money to pay for everything, right?
Regina Calcaterra: That's right, but we need to pay to help protect the most vulnerable in our society, including the young children here illegally.
Charles Payne: We're not letting children die. If they go to the emergency room, they will get coverage.
Regina Calcaterra: Yes, but by the time they get to the emergency room, they have pneumonia or some other acute health issue because they didn't have the proper care.
Charles Payne: But that's the parent's fault for not taking care of their child. That has nothing to do with the government not paying for the child's health care.
Neil Cavuto: The one thing we keep forgetting is that these people are here illegally. End of story.
Gary Kaltbaum: This does give incentives for other illegal immigrants to come to the U.S. for free health care. But our government has allowed these people in and if they are working and following the law then we need to take care of their kids if they need help.
Head to Head
Neil Cavuto: Gaming Web sites in Europe telling the U.S. government that it owes them $100 billion. That's how much they say they have lost since the U.S. banned online gaming. Now some here in the states are saying we should make it legal again?
Ben Ferguson: This is a bad idea. Online gambling is such a game of non-reality. You can use a credit card number and not realize how much money you're losing till it's too late. Vulnerable young people can access these websites. If we legalized it again in America, we will see young people on these sites and we will see a huge increase in gamble-holics.
Stuart Varney: Most of these sites are overseas, so most of the revenues and profits would leave the U.S. That means we would lose more than we would gain from taxes declared on online gambling.
Charles Payne: Gambling addiction is already a real problem in the U.S. If we made it legal online, that would make the problem a whole lot worse. And don't forget about the lost productivity that would occur if more people could access these sites 24/7.
Gary Kaltbaum: The government already has legalized gambling casinos, racing, lotteries, etc. We should make online gambling legal too. The government would benefit from raising taxes and it's easy to track online gambling revenues.
Tracy Byrnes: If you want to gamble away your hard earned money, you should be allowed to. The government has more important things to worry about than protecting citizens from gambling websites.
Ben Ferguson: Online gaming makes it too easy for people without restraint to have access to it. And how can you verify the person on the site is of legal age. It's impossible to confirm this 100 percent.
Tracy Byrnes: But that is a personal problem, not a problem the government should be involved with.
More For Your Money: "Crash"-Proof Stocks!
Neil Cavuto: Every time the stock market crashed, it crashed in October. But, keep in mind several bear markets have been broken in October, too! So will this month get you “More for Your Money”?
Charles Payne – Joy Global (JOYG)
*Charles owns shares of this stock
Tracy Byrnes – Garmin (GRMN)
Gary Kaltbaum – NYSE Euronext (NYX)
FOX on the Spot
Tracy Byrnes: Forget "Snakes on Planes"! Internet on planes by 2009
Gary Kaltbaum: Airline stocks down 20 percent by year's end; Oil nears $100
Charles Payne: High oil prices good for coal; buy BTU
Ben Ferguson: Economy will rebound and GOP will win White House
Stuart Varney: The “China Bubble” is about to burst!
Neil Cavuto: France's Sarkozy ends cozy relationship with Iran
Forbes on FOX
In Focus: Dems Lower Bar For Rich: Does That Mean Higher Taxes For Everyone?
Steve Forbes: The Democrats' motive is if you make money, they want it. The U.S. is moving in the same direction as Europe. That will lead to economic stagnation. Raising taxes will hurt economic growth. How is that going to help the middle class? You pay taxes on your income whether you take the money out or leave it in, that's the law.
Quentin Hardy: Only about 10-15 percent of the country earns $97,000 a year, the other 85 percent make less. The proposed tax cuts will do nothing for the average American. 85 percent of Americans make less than the proposed amount. That's not the middle.
Rich Karlgaard: The people you have in this bracket are people who live in big cities or who own a company. Rich is defined differently in different areas. The value of the dollar is declining so fast that we're on the brink of moving the middle class into the rich class bracket, this is a horrible thing. People work hard for their money in this country, and they shouldn't have to give away their money, which they give away already in federal, state and city tax. Inflation is kicking in which is going to push the middle class into higher brackets. There is going to be a lot of pain.
Lea Goldman: Obama is the only Democratic candidate who has gone on the record as saying $97,000. Clinton and Edwards have defined rich as up to $250,000. Median income in the US is 50,000, so rich is an income more than that. Outside of major cities, an income of $97,000 is a lot. The people who will be most affected by this are the 1 percent top earners. This is going to put more responsibility on wealthier people who have gotten a free ride under the Bush administration.
John Rutledge: $50,000-100,000 is the sweet spot on the income scale….is usually from a household where two people work. If it's only on earner, then it's a small business. If you tax those who make over $100,000 you are taking small business capital, which provides many jobs in this country. This is a tax on capital. Capital taxes push capital offshore, which means less business, less jobs and less growth for the middle class.
Mike Ozanian: This Democratic proposal is very socialistic. They want to tax the middle class, take that money and increase insurance. They're basically saying to the middle class, if you don't know what to do with your money, give it to us and we'll tell you how it should be spent.
Flipside: Be$t Thing for American Workers: GM Firing All the Strikers!
Victoria Barret: American automakers are fighting for survival. The big 3 lost $50 billion last year. Any worker is going to have to realize that they may not have a job in 5 years because the company will be bankrupt. The promise of having a job at a company for long does not exist anymore. You have to send a signal to workers. Fire the strikers. Offer rehires some profit-sharing. We're in a global competitive marketplace. Outside of Michigan, the US auto industry is doing well. And Japanese automakers are doing well in this country because they don't have heavy union burdens. If we want this industry to survive, there has to be big cuts.
Josh Lipton: The problem for companies like GM is national sales. Their revenue has been deteriorating for years. That problem is not because of the workers, it's the people in the front office. GM should focus on selling cars Americans want.
Rich Karlgaard: Both sides share the burden of bad sales. Toyota has a huge advantage with its lean and flexible manufacturing. The U.S. auto industry isn't in bad shape, it's the Michigan auto industry. You have to get rid of the union burden.
Quentin Hardy: In Japan, they have unions and they're making cars that are kicking our butts with better design and executives who don't overcompensate. They also have government sponsored healthcare, so there isn't a burden put on executives of those companies.
Steve Forbes: Problems with healthcare is what causes these strikes in the first place. Union leaders had to show workers they were fighting but eventually had to give in. If you fire the workers at GM, you're going to put the company out of business. You can't replace 73.000 workers overnight. The managers now know they're doing something wrong, so they have a good idea about how to make it better.
John Rutledge: The UAW is already dead, they just don't know it yet. The people who should be fired here are the union leaders, because they put their workers in jeopardy. The load from the cost of retired workers is the real problem for GM. Now it's a question of how fast it can die.
Poi$on Ivy: Are Ivy League Schools Worth the Money?
Bill Baldwin: You're going to spend over $200,000 on tuition at an Ivy League for the same classes you can take at any other institution. Ivy Leagues should offer one out of two things; a four year diploma or an entrance diploma. An entrance diploma would show that you were smart enough to get into an Ivy League school, but chose not to go.
Lea Goldman: I went to Columbia and I got my moneys worth. I found the experience very rich and rewarding and got a job right out of school at Forbes. Everyday I interact with people who did not go to an Ivy and are very smart and intelligent. I wouldn't trade in my college experience, it was expensive but I think it was worth it. I got a job at Forbes from someone who came to Columbia to recruit, so for me it was absolutely worth it.
Josh Lipton: An Ivy league diploma is a great resume booster and gets you great connections but as we saw this week at Columbia, it doesn't protect students from hypocritical, narrow-minded faculty and administrators. Do Harvard graduates get a better job and salary because they're a Harvard graduate or because of what should have gotten you the job in the first place, drive, intelligence and ambition:
Neil Weinberg: If you look at the highest paid Ivy League graduates, Columbia has the high paid graduates. Yale grads are the lowest paid and Harvard are the least happiest grads.
Steve Forbes: The whole academy is in trouble, just not the Ivy leagues. All colleges and universities need to step up their education and improve their institutions. Ivy League schools have the top professors and administrators there, so that makes it worth it for people who want a first-class education.
Informer: Best Stocks Under $10
Evelyn Rusli: Rite Aid (RAD)
Neil Weinberg: Ford (F)
Bill Baldwin: Bearing Point (BE)
Victoria Barret: RealNetworks (RNWK)
Mike Ozanian: Kemet (KEM)
Our Cashin' In crew this week: Wayne Rogers, Wayne Rogers & Co; Dagen McDowell, Fox Business Network; Jonathan Hoenig, CapitalistPig Asset Management; Jonas Max Ferris, MaxFunds.com; Cody Willard, Fox Business Network; and Danielle Babb, Co-Author of Finding Foreclosures: The Insider's Guide To Cashing In On This Hidden Market
Stock Smarts: Dems' 50-cent Gas Tax Plan: Planet Savior Or Economy Killer?
Some in Congress are proposing a 50-cent tax on every gallon of gas to help fight global warming. Is this a good idea?
Jonathan: We're already paying 46 cents at the pump (in federal taxes). It's amazing to me that this is what Congress is doing to lower the cost of gas, proposing a 50-cent gas tax. I'd like Congressman John Dingell (D-MI) to save the poor, working mother I'm always hearing about. Now, she's got to pay 50 cents more to get to work in the morning. It's not going to save her. It's going to absolutely collapse the economy.
Cody: I don't know if it will collapse the economy, because gas has doubled and tripled over the past 5 years anyway and it hasn't really hurt the economy or consumer. What drives me crazy is that Democrats and Republicans are always coming up with endless subsidies and pocket liners with all the games they play for corporations supposedly doing right by the environment. Now, on top of that, they want to come and take more money out of the citizen's pocket. Why do we not give the tax breaks to the consumer and go after the corporations?
Wayne: It's not a good idea to have a tax on something to promote this when they should be doing subsidies to support it. In other words, we can be green here if we support alternative fuel usage. That's what we should be doing. That is where the money should be invested. We shouldn't be taxing the people necessarily to do that.
Cody: You're just going to complicate it further with more and more subsidies.
Dagen: There's nothing complicated about a 50-cent gas tax. It does what this hodge-podge, amalgam of nonsense subsidies and breaks do not do. It will cut consumption and change our behavior. This is not about saving the planet. It is about saving this country and ensuring our national security.
Jonathan: You're going to make it more expensive for Ma and Pa to take their kid to the baseball game.
Dagen: You take the money from a gas tax if you listen to Rep. Dingell and others in favor of it and cut taxes elsewhere.
Cody: It's not just a tax cut though. He's not talking about simplification. Under Rep. Dingell's plan, homeowners would receive 85 percent of the mortgage interest deductions for homes between 3,000-3,200 feet, 70 percent for homes over 3,200 feet, etc. It's nonsense.
Jonas: I think everyone is dodging the core issue: is it good for the environment if energy prices are higher? There's no question about it, higher energy prices lead to conservation, which lead to efficiencies into free market solutions like solar panels on people's roofs and hybrid cars. It's all because of higher energy prices.
Wayne: If we are subsidizing alternative fuels, it's a lot better than taxing something and taking it out of the economy. Put something back into the economy that will make it competitive.
Jonathan: We're just going to throw more money down the drain in ethanol. Subsidies are the reason corn prices are so high right now. If you get to the root of what Rep. Dingell and all the environmentalists are about, it's not even about clean energy; it's about less energy. That's what a tax like this is supposed to do, discourage productivity and consumption. It's to sacrifice human life for a prairie dog.
Dagen: You always bring up the prairie dogs and environmentalists like I am a kook, because I don't want this country to be dependent on Russia and crazy other nations like Venezuela for the oil. That's why I'm in favor of a gas tax.
Cody: Who decides who gets the subsidies? You know it will end up being a lobbyist thing and will not be good for the consumer.
Home Sales Fall Again! Is This Finally The Bottom?
There were more hits this week for housing: the most recent numbers on new home sales hitting a seven-year low. Could this finally be the bottom?
Danielle: Things are looking up for the rest of the year. We finally have median home prices stabilizing, which is a really big indicator. Yes, we have 10 months inventory of resale homes and 8 months of new homes, but that's primarily because people couldn't get loans on these homes. As we start to see money come back into the market, we start to see banks getting smart by offering higher rates on CD's to get money back so they can lend to people. We also see homeowner expectations become realistic. Then, we'll finally start to see the bottom of this and be better off going into next year.
Wayne: We don't know what state the housing market is in because the banks are not telling us everything. They are not sharing how much they have in delinquencies and are making deals with borrowers to say, “Ok, we'll rewrite your loan, give you a lower interest rate, give us no interest for the next 6 months and we'll tack it on at the end.” This is all hidden in the economy that we don't know about. The housing market is dead for the next six months and maybe even a year or two.
Cody: Things are bad and we are talking about it. Once the problem is recognized, you start getting into putting a bottom in place. The problem is that there is so much inventory out there. I can't say that I am excited about home prices for a trade, but we're getting close to some temporary relief
Dagen: I don't think we are close to a bottom in home prices. The homebuilders are cutting prices by 50 percent from where they were and having auctions and fire sales. That's what forces the prices of existing homes way down, which we haven't seen yet.
Jonathan: I watch all these stocks. Dagen mentioned the homebuilders. If you own a home you can afford and can make the mortgage payments on it, I think you're going to be fine. If you looking for a home and buy one you can afford, you will be fine. I don't pick bottoms, but I don't see real estate as a smart asset class to put your money to work in right now.
Danielle: I would absolutely be buying a home right now. I'm actively looking for homes to buy. This is a pocketed problem. We've got the west coast with a 10 percent price decrease since January. If that doesn't signify a bottom, I don't know what does. I'm not buying in the northeast where prices have continuously gone up.
GM-UAW Deal: Will It Make "Hillary Care" A Reality?
Hillary Clinton's “dream” of national health care: did the GM/United Auto Workers union deal just make it a reality?
Jonas: It's a huge boon for Hillary's health plan. People don't want to pay their own health premiums. They want their companies to pay it. If it looks like their companies are cutting back, what's the second best choice? The government getting involved! That is still a superior choice to most voters. This does drum up support for those who are open to a government health care plan.
Wayne: The way the GM deal was worked out with the union was setting up a trust fund for this, is a terrific idea. Medicare is a disaster. Anytime you get the federal government in there running something, it is a disaster. This is a much better plan and it should be followed as a model. I am a member of a guild that runs a health plan that takes very good care of me and I'm very happy with it.
Jonathan: I don't know why people can't shop for health care like they shop for car insurance or hamburgers. There's not a free market for health care. The government already regulates every element of health care - from the doctors to the medicines to the hospitals. If we get a Hillary socialized health plan, the red tape, the waiting lines, and the quality of health care will be terrible.
Cody: The good news is that it is not going to happen. We are living in the age of empowerment. The individual is being empowered. You see it all over the Internet, in music, video, and soon enough in health care.
Dagen: People are not used to individual empowerment in health care. You see more companies pushing responsibility over to individuals who have retired for their health care. What worries me is that it has pushed more people over into Medicare, something no politician can fix at this point.
Best Bets: Wayne's $tock $ouvenirs
Wayne: Central European Distribution (CEDC) (Friday's Close: 47.91)
Wayne: China Unicom (CHU) (Friday's Close: $20.84)
Wayne: UltraShort S&P 500 ProShares (SDS) (Friday's Close: $50.67)