Recap of July 5: Terror no Longer a Worry?

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Neil Cavuto was joined by Gregg Hymowitz, founder of Entrust Capital; Jim Rogers, president of; Ben Stein, economist and former advisor to President Nixon; Kathy Boyle, president of Chapin Hill Advisors; Gary Kaltbaum, president of Kaltbaum and Associates; and Yolanda Gaskins, attorney and radio talk show host.

Terror no Longer a Worry for Investors?

Neil Cavuto: Worries over another terror attack at home are heating up this holiday weekend after a new study says we're still not prepared for the worst. But is Wall Street (search) telling you just the opposite?

Jim Rogers: The market has moved on to other things. Investors are now worried about interest rates, dividends and earnings. It has forgotten about terrorism for the moment. It will come back if we have another terrorist attack or if we have another battle in the Middle East.

Kathy Boyle: I disagree with Jim. I think investors are still very careful and I think the slightest blush will make the market take a dive.

Neil Cavuto: Ben Stein, why haven't we had a dive yet though?

Ben Stein: I think the market is taking a pass at every bit of bad news that it gets. The market is ignoring all the bad news we're throwing at it. The market ignored the very bad news on Thursday about unemployment. The market is happy, happy, happy. It's in bubble land.

Gregg Hymowitz: I think the market is clearly focusing on earnings and earnings haven't come through that much yet to justify the multiples. That being said, I think there's still big questions. Where is Usama bin Laden? Where is Saddam Hussein? We should be concerned. The market is gaging that the economy is going to pick up, but there are still some big unanswered questions out there.

Jim Rogers: There will be more attacks. If you don't think there will be, we're all living in dream land.

Kathy Boyle: The market will go down if terrorists attack our transportation systems in D.C., New York or another major city. Terrorists are out there. They're regrouping and they don't like us.

Ben Stein: I think the terror that people should be afraid is the terror they will feel when they wake up and they see that the Nasdaq QQQ's have no earnings. Or that the Dow is at 34 times earnings. I would not be putting any money into stock. I'd be putting it all under my pillow at home.

Gregg Hymowitz: The bond market had a different read on the economy than the equity market. Bonds went down because they were looking at the manufacturing numbers and were bullish. And the stock market looked at 6.4 percent unemployment and was negative.

Jim Rogers: Profits are up. The economy has been getting better.

More for Your Money: Bigger Paychecks = Bigger Rally?

Neil Cavuto: The tax cuts went into effect last week. And as a result, the average paycheck had about $21 more in it. It may not sound like much but it will buy a tank of gas. And when you add it all up, it's nearly an extra $2 billion in the pockets of Americans each week. Gary Kaltbaum, will all that extra cash help the market?

Gary Kaltbaum: The full magnitude of the tax cuts will be felt throughout the next year and I think that can only be good for the economy and help the market in the long run.

Jim Rogers: I'm very much in favor of tax cuts. I don't think there are very many people in the world who don't like tax cuts. The market has been going up because of these tax cuts. The economy will come later.

Gregg Hymowitz: Federal taxes may have gone down but state taxes have gone up. People who live in New York pay 18.8 percent higher real-estate taxes. Average hourly earnings are down. Wage earnings are down. These tax cuts are going to be a net negative.

Ben Stein: I must say, Gregg is taking a contrary viewpoint to every economist who's ever been teaching in any graduate school. Saying that fiscal stimulus is not going to help the economy is against every principle of economics. I'm just so shocked.

Neil Cavuto: What stocks would benefit from this economy Ben?

Ben Stein: I think we have way too high multiples. I like iShares C&S Realty (ICF) because it's a good conservatively run index of REITS.

Gary Kaltbaum: I look for companies that are accelerating their revenues. Starbucks (SBUX) just came out with good numbers. I worry about valuations too. But I think momentum is going to take this stock along.

Gregg Hymowitz: I'm hoping that the really rich people who got this tax break go out and go shopping and buy some brown shoes. And the leader in brown shoes right now is Timberland (TBL). It trades at roughly 15 times earnings. It has a pristine balance sheet. And a great management team.

Jim Rogers: I would sell stocks. I think the market has run up a whole lot. I wouldn't spend the money. I'd put it in the bank and save it. And I'd say to Gary, be careful about coffee. The price of coffee is about to go up, at least in the futures market.

Gregg Hymowitz: And to Ben's point, there is no evidence at all that tax cuts cause an increase in jobs or any economic growth.

Head to Head: Do Lawsuits Help or Hurt Stocks?

Neil Cavuto: Suing because fast food is fattening or because you lost money in the stock market. If those lawsuits were outlawed, would that help or hurt the stock market?

Yolanda Gaskins: There's a big difference between cooking up a burger and cooking up the books. You can take responsibility for what you eat, but when you talk about the very nature of the stock market and not knowing what goes on in these brokerage houses, that's different. I think people need to get out there and put these lawsuits together. There are always going to be frivolous lawsuits. But there are also a lot with substantial amount of merit.

Neil Cavuto: But when I go into a McDonald's and order a Big Mac I know what that entails. Why shouldn't people start to take responsibility for their own actions?

Yolanda Gaskins: Why are you trying to lump that in with the same thing as knowing what's going on with a company?

Neil Cavuto: Where do you draw the line?

Yolanda Gaskins: I draw the line with the fast food industry. Yes, people have to be responsible. There's plenty of knowledge out there about what you put in your body and health facts. But when you're talking about Wall Street, you don't have that knowledge.

Neil Cavuto: Do you think this fast food case is legit?

Yolanda Gaskins: I think there may be some merit for some people, but I'm not enthusiastic about it as a whole. But again, when you're talking about Wall Street, it's different. You're talking about big business versus small business. There's little knowledge about it out there. And lawsuits will help to change that.

FOX on the Spot

Gregg Hymowitz: Sending troops to Liberia is good political and economic policy

Kathy Boyle: Sell treasuries & buy gas pipeline stocks instead, in order to get high paying dividends

Ben Stein: Cash is king again! Stocks stay flat or go down in near future if earnings do not rise soon

Gary Kaltbaum: Market run up proves economy will recover in 2003

Jim Rogers: Trade wars hurt President Fox's political party in Mexico. His party will lose government seats in next week’s elections thanks in part to concerns of increase competition with the U.S. and Asia

Neil Cavuto: Orders for goods are up. That's a good sign for the second half and for the economy and markets