Neil Cavuto was joined by Gregg Hymowitz, founder of Entrust Capital; Jim Rogers, president of JimRogers.com; and Meredith Whitney, FOX News Business Contributor; Charles Payne, CEO and Founder of Wall Street Strategies; Colonel Cowan, Fox Military Analyst; Hussein Ibish, American Arab Anti-Discrimination Committee.
Bring Our Troops Home?
Neil Cavuto: We got the sons. We got a rally. We get the dad and we get a new bull market? Uday and Qusay are gone and we hope soon to say the same of their Dad. But is the real key to bringing back our bull market bringing back our troops first?
Jim Rogers: It would be wonderful for the bond market if they came home. It would be wonderful for the dollar if they came home. We would save a couple of billion dollars, so it would certainly help the stock market.
Colonel Cowan: The troops aren't going to be coming home in the short run. Even with Saddam and his sons gone, there are still people coming in from outside Iraq to fight us. We're going to be in Iraq for a while.
Meredith Whitney: The current administration has a very haphazard foreign policy. I think the market is really looking at capacity and growth concerns in the long term.
Gregg Hymowitz: The bigger issue in Iraq is establishing peace and stability there. To get confidence back in the market, we need to show that we did a good job in Iraq and that we not only won the war but we also won the peace. And Jim is right, it's costing us $5 billion a day.
Jim Rogers: Plus we're getting over extended. Half the U.S. army is tied down in Iraq. We have troops all over the world.
Meredith Whitney: Right, and the policy seems haphazard. We might go into Liberia. Where will we go next? And where does this end in terms of an economic drain for the country?
Gregg Hymowitz: The other problem is we have no one to share the price with. We went in unilaterally but now we really need help. Without any help, we have to bear all the cost. It's costing our deficits to balloon to about $450 billion next year. And that weighs on the bond and equities market.
Neil Cavuto: Colonel Cowan, do you see the possibility that there is some good here. All of our panelists seem to be saying nothing has gone right.
Colonel Cowan: We're making a lot of progress in Iraq. Paul Bremer, the U.S. Administrator in Iraq, was back here last week talking about the progress we're making. The pockets of resistance are getting stronger, but that doesn't mean that they're going to go away. We need to get the Iraqis to be more involved in the reconstruction.
Meredith Whitney: The bond market is thrown into an absolute frenzy because there doesn't seem to be any thought out plan as to when we go in and when we get out.
Neil Cavuto: Wait, you're saying the bond market is reacting to our presence of troops in Iraq? I just don't buy that.
Meredith Whitney: I think the bond market is reacting to the lack of diplomatic unity in terms of our efforts abroad.
Neil Cavuto: We had a lack of unity going into this war and through this war, but interest rates were tumbling.
Meredith Whitney: Yes, but the bills keep getting higher. In the past week or two week, long term rates have backed up 100 basis points.
Neil Cavuto: I could credit that to a perception of improved economic activity.
Gregg Hymowitz: I think we'll get confidence in the equity markets once we show that we've gone into Iraq and created some stability there. But at $5 billion a month, I think it'll have an effect on the equity market.
Neil Cavuto: Colonel, if we were to leave after we get Saddam some would read into that say it's a retreat and be Vietnamesque. Do think that's true?
Colonel Cowan: If we left right now, we'd be leaving another breeding ground for terrorists to come after us. And that’s something we will not do.
More for Your Money
Neil Cavuto: A stock market that's gotten ahead of itself? Or is it a stock market full of bargains? Charles, plenty of reports out there suggest business is getting better. Does that suggest stocks should keep going up?
Charles Payne: All of the news validates the rally in the market thus far. Stocks from a macro view did get ahead of themselves, but there are some good buys out there. Another thing that has happened over the last couple of weeks is a distinction between individual industry groups of winners and losers. Now you have to be very very specific on what you buy.
Jim Rogers: I have to disagree with Charles. I am still selling. I've sold the Nasdaq 100 (QQQ). And I'd sell the Dow Diamonds (DIA) as well.
Meredith Whitney: It's unfortunate you feel that way. The market is so undervalued right now. I'd put all my eggs in the technology basket and the best way to do that is to buy the Nasdaq 100 (QQQ).
Charles Payne: I think after a three year bear market, people are looking for more of where this market has come from this year. Let's pull out a three or four year chart and see where we've come from. I think for a lot of individual investors are worried about Price to Earnings ratios right now. I think there are better ways to measure the market like price to sale ratios, price to book ratios. J.B. Hunt (JBHT) is a way for me to be in the market conservatively. It's a stock that I think is undervalued when measured by price to sale and price to book ratios. I do not own it but several of my investment clients do.
Gregg Hymowitz: The S&P is trading at roughly 18 times next year's earnings. I fall in the middle of this whole discussion. I don't think this market is cheap or expensive. I'd buy Comcast (CMCSA). It's a cheap stock and the largest cable company in the country. They've done a very good job of selling assets. They've sold some assets to Liberty Media. Earnings growth from the bottom of the recession to today are up roughly 26%. So you see an improvement to the bottom line.
Head to Head
Neil Cavuto: The 9-11 report criticizes the FBI and our intelligence. we're trying to fix that. But the report also shows Saudi Arabia has no interest in stopping Muslim extremism. Should we fix that situation by saying "sayonara Saudi Arabia" once and for all?
Hussein Ibish: There's a legitimate kind of argument you could make for the Saudi government and the apathy the United States government showed towards al Qaeda before 9-11. And people think they really could have and should have done more in the months leading up to 9-11. But after the Riyadh attacks, they've really cracked down on the financial transactions.
Neil Cavuto: We now know that there was a Saudi business man connected to at least 2 of the 9-11 hijackers. We also know that 2 of the 4 terrorists were part of a terrorist probe that we asked the Saudis to continue and they did not. We now know that there is an individual in Saudi Arabia who was in contact with al Qaeda groups here in the United States. We've asked for information from the Saudis about him and we haven't gotten it.
Hussein Ibish: This report has been censored. We haven't seen the allegations that have been made against us. I don't believe the administration is trying to cover for Al Qaeda or anything like that. We've heard this kind of bashing of the Saudis before. Al Qaeda is targeting the Saudis too so to say that Saudi Arabia is funding them means that they are insane that they would help a group which is trying to destroy them.
Neil Cavuto: Don't you think that until Riyadh and the attack on Saudi Arabia by al Qaeda, they were perfectly happy with seeing our buildings being blown up?
Hussein Ibish: I think they realized they couldn't kid themselves anymore that these things were only taking place in East Asia or North America. They got a new sense of urgency like we did after 9-11. Should they have done more? Probably and maybe we, the United States, should've done more before. But it's wrong to say that they just didn't care.
Neil Cavuto: But if you're a friend, then act like it. When a friend is holding a telethon for the families of terrorists who are bombing buses.. then you don't help the families get information about 9-11. That's not a friend.
Hussein Ibish: First of all, if you ask the administration what the relationship between the Saudis is and the cooperation level, they'll tell you across the board that the relationship is strong and the cooperation is good. I don't think the Bush administration is interesting in covering up for any country that is funding terrorism. There's no way you can say that the Saudis and the United States have not been strong allies. There's 40 years of good cooperation there.
FOX on the Spot
Colonel Cowan: U.S. businesses replace U.S. troops in Iraq. That’s good news for Halliburton (HAL) and other companies awarded Iraq contracts.
Charles Payne: Buy Siebel Systems (SEBL) and BEA Systems (BEAS) before IBM goes shopping. They are likely takeover targets for Big Blue.
Jim Rogers: For the first time in decades, mutual funds will have a net withdrawal from investors this year.
Meredith Whitney: Retailers get boost from tax cut money.
Neil Cavuto: Meredith is right-- retail spending is picking up, getting added boost by those child care tax credit checks coming their way in next few weeks and that is good for the economy and markets.
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