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; Eric Bolling, FOX Business News; Pat Dorsey, Morningstar.com; Tobin Smith, Changewave Research; Marc Lamont Hill, Ph.D, Temple University.
Trading Pit: Paris Hilton v$ Nancy Pelosi: Who's Right on Drilling?
Tobin Smith: All hail Paris! She finally understands "Pelosinomics." Pelosinomics says it's bad to outsource low labor and good to outsource our energy policy. Come on! The only thing Paris doesn't understand is that our actual drilling technology is so advanced that we're "being careful" by an inordinate magnitude. I say "Drill Drill Drill." Pelosinomics doesn't work. All hail Paris Hilton.
Marc Lamont Hill: I love Paris Hilton, she's a great author… but this is the one area that she doesn't have expertise. This is one area that we can't afford to compromise. I don't agree with Nancy Pelosi about a lot of thing, but she is absolutely right here. We cannot allow the American people to be persuaded to make bad decisions with the environment and to choose options that actually won't lower the price at the pump. That will ultimately lead to all sorts of disasters.
Gary B. Smith: Once again Marc thinks that the government knows better than the people and that the government should decide what's good and bad. Drilling is our most efficient way to increase our energy supply, and we should have more of it rather than let foreign companies produce it for us to import. The only thing I don't like about it is the tax-incentives part. Look, if hybrid, electric, wind, whatever, is economically viable - they should be economically viable on their own. Again, it's not for the government to decide what is the best market response to this "energy crisis."
Eric Bolling: Let's hope that the next 30 cents that the price at the pump is down doesn't make people say "maybe we don't need to drill right now." We need to drill now because if we don't, next time we're not $150 a barrel, we'll be talking about $300 a barrel.
Pat Dorsey: This is not as dire a thing as the environmentalists think, nor is the panacea that a lot of the pro-drilling crowd seems to think it is. At the end of the day, oil is a global commodity. Best case estimates are that by drilling every bit of outer-continental shelf we might increase global oil supply by around 3-4 percent. That assumes that someone else doesn't cut back supply by 3-4 percent to keep supplies stable. We don't just drill for oil and suddenly get oil at a very low price.
Be$t Calls to Date (Through August 8)
Eric Bolling: FMC CORP (FMC ): UP 29 percent SINCE 2-15-2008
Pat Dorsey: APOLLO GROUP (APOL ): UP 34 percent SINCE 4-18-2008
Gary B. Smith: AARON RENTS (RNT ): UP 43 percent SINCE 2-22-2008
Tobin Smith: COMPASS MINERALS (CMP ): UP 59 percent SINCE 1-04-2008
Worst Calls to Date (through August 8)
Gary B. Smith: ISHARES OIL & GAS (IEO ): DOWN 24 percent SINCE 5-30-2008
Eric Bolling: VALE (RIO ): DOWN 35 percent SINCE 5-9-2008
Tobin Smith: EMCORE (EMKR ): DOWN 67 percent SINCE 12-28-2007
Pat Dorsey: CHENIERE ENERGY (LNG ): DOWN 82 percent SINCE 4-11-2008
Dow Swings 500 Points in 2 Days: What's Next?
Gary B. Smith: The Bulls are going to win this. Oil cratered. Gold cratered. Financials are up. The Bears will say this is a "Bear market rally," but we're going to get a pullback, and then we're going to go up even further towards the end of the year.
Tobin Smith: Of course it's a Bear market rally. You only get gigantic spikes in the top ten movements of the DOW when they come in a bear market. We are, however, in the bottoming process, and the point is that the people who bought Citigroup (C) at $35, or Wells Fargo (WFC) at $35, are still 40 percent undervalued. When they come up they'll throw in the towel, we'll get right to 12,500, and they'll pull back again. That's okay. You want to be buying stocks on pullbacks, not chasing 300 point up-days.
Eric Bolling: Over the last 24 trading days, there have been 8 up-days and 7 down-days in excess of 1 percent on the S&P. It happens quite often, and 80 percent of the time, the next three months are a winner. We've bottomed and the market is good from here.
Pat Dorsey: For me it is a global issue. The question is: will our economy come back as the world starts to slow down? Or will we stay slow while the world rolls over? If that's the case, you're going to have a trough for a few quarters where that growth prop is no longer there. U.S. blue chips will be hurt if the slow down Europe's seeing in consumer spending rolls over into the corporate spending sector
'Gold Medal' Predictions
Gary B. Smith's prediction: Win with the housing rebound! "DHI "; up 50 percent in 5 months.
Eric Bolling's prediction: Win the Games with "BYD "; up 30 percent by end of '08.
Tobin Smith's prediction: No money mirage with "MGM "; up 50 percent by 2010 winter Games.
Pat Dorsey's prediction: Call on Motorola (MOT ) for champion gains; up 50 percent in 2 years.
Cavuto on Business
On Saturday, August 9th, 2008, Neil Cavuto was joined by Charles Payne, wstreet.com; Dagen McDowell, FOX Business Network; Adam Lashinsky, Fortune Magazine; David Nelson, DC Nelson Asset Mgmt; and Howard Gould, Conservationist.
Bottom Line: Obama Wants to Tap Emergency Oil Stockpile – Would Tapping It Send Gas Prices Lower or Higher?
Neil Cavuto: Barack Obama wants to tap America's emergency oil stash to help bring down your gas bill. But would it really jack gas prices back up?
David Nelson: The prices in the long run would go up because we would take our eye off the ball. Obama had it right the first time, but he's flip-flopped on this. We need politicians to stop making decisions based on polls and focus groups. The Strategic Petroleum Reserve (SPR) was designed for a reason; it was designed to prevent a supply disruption. There's plenty of gas everywhere; Obama is giving bad advice.
Howard Gould: Prices are coming down regardless. After Katrina in 2005, we tapped into the SPR and gas prices came down by $125 per family over a 100 day period. That's a pretty sizeable give back over 100 days, so it's proven that this strategy will actually work.
Adam Lashinsky: That's completely confusing the facts. What happened in the time of Katrina was that there was a lot of refinery capacity that was taken out temporarily by the storm. That drove prices up. Once the refining capacity was back on line, the prices came back down again. You could argue that tapping the reserve now would have absolutely ZERO impact on gasoline prices. It wouldn't put any more gasoline into the system, and as David has already said, we don't need any more gasoline in the system.
Charles Payne: This was without a doubt a bad week for Obama. Not only did he say that they want to take oil out of the SPR, he said they want to take out the good oil, the light, sweet crude that's easy to refine, and replace it with the heavy stuff that's hard to refine. A few weeks ago, when President Bush really pushed for offshore drilling, oil began to break down. It happened again this week when Obama jumped on the band-wagon too. We haven't built a refinery in this country for 30 years. He did much more by talking about drilling offshore than you could ever by tapping into the SPR.
Dagen McDowell: Releasing oil from the SPR wouldn't do a thing. You release 70 million barrels, and countries in the middle east are just going to pump less, pure and simple. This isn't about environmentalism, it's about not buying oil from countries that hate us.
Head to Head: Homeless Medicare Scam: Proof National Health Care Would be a Waste of Taxpayers' Money?
Neil Cavuto: This one will make your blood boil. Several California hospitals were busted in a health insurance scam this week. They allegedly picked up homeless people off the streets, took them to medical centers and treated them for non-existing illness. Then they billed the government false Medicare claims, costing taxpayers millions of dollars.
Does this prove national health care would be an even bigger waste of your tax dollars?
Charles Payne: Any time you have the government handing out checks people are going to abuse the system. Even beyond that, national health care systems have been somewhat of a disaster with people dying waiting for basic services and people waiting for months for things you can go to outpatient for in America. At the end of the day we should probably look for a capitalistic solution. Our government is already too involved for capitalism to work. As long as the government is writing checks at the taxpayers' expense, it stifles innovations and competition.
Adam Lashinsky: Back in 2000, Enron had a fake trading room where they brought people in and they weren't really doing any business, but they attracted billions of dollars in investments. Should we throw out the capitalist system because there are criminals and other miscreants doing nasty deeds? If these allegations are true, punish the people involved, but don't punish the victims. This doesn't mean that we can't do government sponsored health-care, it means that this one didn't work. The burden is on the leaders of society to make sure that everyone gets a minimum level of health care. The government won't necessarily screw this up more than anybody else will. There aren't more criminals in government then there are in free enterprise.
Dagen McDowell: Medicare fraud is a problem and you would have to ramp up policing if the government takes a role in some kind of universal health insurance program, but that shouldn't get in the way of insuring the tens of millions of people in this country who don't have insurance. Charles talks about private enterprise and the private sector, but just this week we saw 41 million credit and debit card numbers and records that were stolen, and that was private enterprise. There's fraud everywhere, whether in health care or not. You can't throw out the entire system because there is fraud and waste in it. You have to find a way to fix it.
David Nelson: It's a given that we'd all love a utopian health care system. But when you look at the numbers, the façade starts to slip away. We can't afford this with the numbers out there now. The taxes that would have to be used with new medical cost-saving technology would inevitably go up each year that the plan expands. Five years from now, medical innovation technology won't exist in this country because the medical system will be at its lowest common denominator. If you're okay with that, this plan is for you.
More for Your Money: Gold Medal Stocks
Neil Cavuto: Time for our "Stock Olympics" so you can get "More for Your Money."
Adam Lashinsky: Copel (ELP )
Charles Payne: Freeport-McMoran (FCX )
David Nelson: Activision (ATVI)
*David owns shares of this stock.
FOX on the Spot!
Charles Payne: Green Energy Plan Helps Coal Shines Bright; Arch Coal "ACI " Jumps 50 percent in 1 Year!
David Nelson: "Back to School" Trend of Adults Taking Continuing Education Classes Boosts Apollo Group "APOL " 20 percent in 1 Year
Adam Lashinsky: Consumers are Crybabies! Quit Whining about Airline Fees
Dagen McDowell: Christmas in August Will Not Cheer Up Consumers
Neil Cavuto: Low Oil Prices Are Great! But Congress Still Needs to Drill
Forbes on FOX
Flipside: Will Obama's Tax on Oil Profits Keep U.S. Addicted to Foreign Oil?
Mike Ozanian, national editor: Absolutely. Once the government starts using the money from the windfall tax on oil profits to fund its new projects, it won't stop taxing. Why do you think Obama suddenly became a fan of offshore drilling? Because he suddenly became a big pusher of the windfall profit tax. The more oil sold, the more profit oil companies make and that means more tax revenue for the government to spend on their pork projects.
Victoria Barret, associate editor: This wouldn't keep us addicted to foreign oil because exploration would cease and prices would skyrocket. Therefore, the spread between what it takes to fill up your car at the gas station, versus what it takes to fill it up with other alternatives, would widen, making those alternatives look more attractive. This would have the benefit, in a very painful way, of cutting our addiction to oil.
Steve Forbes, editor in chief: This will keep us more addicted to foreign oil rather than domestic oil because it punishes our domestic producers and makes it less worthwhile for them to take those huge risks to drill offshore. This a gift to the Arabs, to the Middle East, especially to Iran and Venezuela. Our enemies will benefit.
Elizabeth MacDonald, FOX Business Network: Steve is absolutely right. You just have to look at history. When Carter passed the windfall tax after the Iranian revolution, Arab oil embargo, and high demand, there was a complete disaster; the government did not collect the revenues. Why? Because American's started to conserve, and oil cratered anyway. When you tax economic activity, you kill it, so this would stop the oil majors from exploring, and you wouldn't have the money to put in to exploration to find oil.
Neil Weinberg, senior editor: New taxes would keep us addicted to foreign oil. When you call it a windfall profit tax it's actually a tax on capitalism, it's a tax on risk taking. These are cyclical businesses, sometimes they make money, sometimes they don't. When they make money, if you take it away, they won't have money to invest, and they won't be able to develop resources here at home. As Steve said, we'll be more dependant on Middle Eastern oil.
Quentin Hardy, Silicon Valley bureau chief: This is a global economy, and more than anything, oil is a global product. We should be grateful for that because that's what keeps prices as low as they are. If we counted on U.S. supplies, we'd really be in the stew.
In Focus: Should the Government Force Companies to Pay for Worker's Commute
David Asman: The San Francisco City government is proposing an initiative to have businesses provide more assistance for employees' commute to work, including shuttle buses.
Victoria Barrett: This is arrogance posing as virtue because it just ends up hurting the employees. This will come out of their paycheck at the end of the day. What the plan says is that employers either have to offer door to door shuttle service, free transit passage, or tap an already popular federal program that allows you to take your pre-tax dollars and put them towards transit. Employers are fine with the third choice, it doesn't cost them anything, but the other two do cost, and they're going to factor in to every hire, and every salary raise. It just raises the cost of doing business here.
Quentin Hardy: In California we take cars to work. Why do you think New York is the most productive city in America per square foot? It's because they don't have to have all these parking garages, and highways, and bridges overused unproductively the way we do. Buses are a more efficient way to use highways.
Steve Forbes: This is preposterous. There's no such thing as a free lunch or a free ride. This is going to hurt businesses, which is going to hurt job creation. What they've done in New York and other places is for employers to make it possible for you to use your pre-tax dollars for mass transit. Of course in New York they make it even more stupid by subsidizing your parking. They subsidize both the subways and the cars. That's why we need a flat-tax; to let you make the choice, instead of these government politicians.
Lacey Rose, Forbes.com senior reporter: The pre-tax idea makes sense environmentally and economically. You haven't seen any major opposition from the Chamber of Commerce and the local business groups here, because even once you factor in the administrative costs, employers still come out ahead financially. It also saves employees up to 40 percent of their transit costs and the headache of traffic, not to mention the environmental benefits are huge.
Josh Lipton, Forbes.com staff writer: Why is it your boss's responsibility to get you into work every morning? If that's a part of his job, why do you stop at transportation? Maybe we also force bosses to come to Dave's house, wake him up, get him coffee in the morning. The bigger issue here is that this is one more reason companies wouldn't start to open businesses. It's one more burden.
Mike Maiello, associate editor: This is just a local government trying to encourage its businesses to make a decision that Steve Forbes already made. He subsidizes my transportation by helping me to get a tax break that I couldn't legally get on my own. If Steve will always help me get tax breaks, other employers should help their employees get tax breaks too.
How "Controversial" China Olympics Could Ruin American Companies
Josh Lipton: The Chinese Communist Party is a vicious, cruel regime that brutally intimidates it's own people. It's hosting these Olympics to try to paint over its image as a more moderate government, but when the Olympics end, they're going to revert back to form, censoring websites, locking up dissidents, and I think the American corporate sponsors are going to regret their decision to take any part in it.
Evelyn Rusli, Forbes.com anchor: Outside of Chinese politics these companies are going to be skipping their way to the banks, because China is the greatest growth story today with a huge growing middle class. That means purchasing power. Besides that, these Olympics are a point of national pride. You're going to get the middle class, poor class, and rich class tuning in. You have the attention of a nation.
Steve Forbes: It's going to be a mixed bag. The sponsors are going to do fine. China is discovering exactly what it means to be a part of a global economy – it means you can't control things, it means things are going to happen that you don't want to happen, and they've got to get used to that. I think they thought they could choreograph this like a May Day parade, but this is an entirely a different thing.
Lacey Rose: U.S. brands will be helped. It's a good thing for them, they're going in hoping to raise their profile within China, increase their market, and encourage partnerships with local partners there. It's an untapped market of 1.3 billion people. It's a great opportunity for companies.
Quentin Hardy: These are global brands in a global event, and global brands count on associating themselves as "halos" in events like this. Unfortunately the halo is very tarnished at this point. This is going to be a debacle.
Informer: Gold Medal Stocks
Evelyn's Champ: Sohu.com (SOHU)
Mike's Champ: Manulife Financial (MFC)
Josh's Champ: Oracle (ORCL)
Neil's Champ: Visa (V)
Obama Slips in Polls; Is That Why Stocks Are Coming Back?
Matt McCall, Penn Financial Group" Look back three weeks ago. The market was hitting the bomb. Obama had a big lead. Over the last three weeks, that lead is neck and neck and over that time stocks have rallied five percent. Obama's change campaign has now sunk into Americans that want change, it cost billions. Get rid of the Bush tax cuts is going to be bad for the economy. It is helping the stock market.
Wayne Rogers, Rogers & Co: No, I do not believe this, not at all. To equate the stock market with what is going on in the political climate I think is a mistake. I don't know how you think that suddenly it is going to change in a week and one guy is going to lose, the other guy is going to win and that is going to affect the stock market. There are too many forces going on in the stock market that have nothing to do with politics in the United States.
Tracy Byrnes, Fox Business Network: I think this market is still and will always be about the financials and office. Until the financials get out of the mess they are in, they are going to continue in the market we are in. It is very correlated with the financials. It is more than what this crazy Obama guy is doing. He should back away and hire new P.R. People.
Jonas Max Ferris, MaxFunds.com: Three weeks ago oil was touching there are 150. Oil is down 20 percent. That is the primary driver of the stock market at this point. As far as are either one of these candidates the reason oil prices are falling? They both have half-baked policies. Stocks have done better with Democrats in the office. I don't know why because Republicans are more pro business. I don't think either one of these candidates are good or bad for the market that the market would be making these calls this early. If Obama was a brilliant economist, maybe you might see something. But not now.
Jonathan Hoenig, CapitalistPig Asset Management: John McCain -- he doesn't want to drill in ANWR, and John McCain calls Wall Street with the cause of the sub prime crisis. It looks like it is ripped out of Karl Marx's communist manifesto. A lot of the weak dollar stocks, it is like there is a new script being written, and those stocks are no longer in it. I wouldn't describe it as a strong environment, but more of an erratic environment.
John Bradshaw Layfield, Layfield Energy: There is no doubt that Obama is not as good for the country as McCain country. His social programs and lack of energy programs…He has none. He talks about renewable energy and talks about the taxes that will kill it. When the President says we are going to start drilling on the outer continental shelf, we see prices fall. That is what is making the move. Financials are a disaster, but people understand that.
401k Debit Cards: Will They Bankrupt You and America?
Jonathan Hoenig: I think if you need it, it is a good idea. All these lawmakers who are against it, these guys are not financial advisors, this is your money. You have every right to spend it, borrow against it or invest it as you so cheese.
Tracy Byrnes: Jonathan, this card is your entrance key to your fridge box because that is what people are going to be living in if they keep using their retirement account. They are going to have nothing left. People are going to use this card to buy the next cool flat screen TV. They are not going to be using it for anything practical. If you borrow from a 401 k, you have 90 days to pay it back, otherwise it is taxable. With these you have five years. The worst again, it is not a parole deduction to pay the loan back. It is like another credit card bill that will sit on your desk that you're not going to pay.
Wayne Rogers: It is called a 401k savings plan, not a spending plan. This is crazy. You are going to let them spend their retirement. There was a time in this country when thriftiness outweighed virtue. Now consumption is a virtue. You have to consume and buy things. This is crazy.
Troy Dunn, Author of "How to Raise a Future Millionaire": My gosh, ladies and gentlemen, Big Brother has entered the building. The question is is it a good idea to spend your 401 k. The idea is absolutely not. The question is will technology allow easier access to it. We have debit cards that allow people access to their entire paycheck. This card is not going to make smart people stupid and stupid people smart.
John Bradshaw Layfield: It is a horrible idea. Look what happened when we started letting people use their homes as ATMs. They lose their homes. If you have too many cocktails, show up with a card, and decide you want an extra lap dance at Scores. That is a horrible idea.
Should Air Travel Be Luxury for Rich Only?
Troy Dunn: Flying has always been a luxury service. It is only recently that people have decided it is a right. It is not a right. It is a luxury service. Tracy and I have battled over this, but she wants to fly with her children and be affordable. But it is a business first. We have scared these airlines into making them think that if we suddenly raise fares, we are going to walk away. I am probably the world's biggest fan of JetBlue. I don't own it currently however. The fares need to go up a whole lot so that we don't do this thing anymore. People have asked me how far do they need to go up? They need to go up to profitablity and not a penny less. I just did a speaking engagement and flew on Singapore Airlines. That is how flying used to be in America. I have one more comment and then I will let everybody jump in and destroy me. When they make it a luxury again, and it pushes back in two other areas of travel. Warren buffet agrees with me. He is putting money into the train industry!
Jonas Max Ferris: We have ripped the airline industry. They have done an outstanding job of bringing what was a luxury industry to the masses. You can fly to California for not a lot more for what it costs to get to the airport. The service is crummy, but that is what people want. I have to blame the consumer as much as the airline industry. Every time the airline industry tries to do some incremental increase, people one pay for it. If you peg $50 to $100, they won't do it. People will fly the cheapest way. We are getting what we deserve.
Tracy Byrnes: We have to thank the airlines for creating this global world. If we didn't have the ability to get on a flight tonight and be in London tomorrow for a meeting, we wouldn't have this global economy. So the price is absolutely true and you know it. How would you get from point A to point B. As far as me taking my family, the rates should go up. It should not be cheaper for me to fly a family of four to Florida than to drive them to Great Adventure. At the same time, it can't get to $1,000 a ticket. There will be no customer and at that point there will be no airlines.
Jonathan Hoenig: It is not that different from the entertainment industry. Some people want eat at Peter Lugers and others want to go cheap and eat at Grey's Papaya. I think there is this entitlement mentality out there. The wages should go up, but the cost of a gallon of gas should always be $1.50. Why should your wages rise but costs should never rise? That is not right.
Best Bets: Gold Medal Stocks
JONAS MAX FERRIS: DB Gold Double Short ETN (DZZ )
JONATHAN HOENIG: Hitachi (HIT )
WAYNE ROGERS: WebMD Health Corp (WBMD )
JOHN LAYFIELD: Hansen Natural Corp (HANS )