Recap of May 17: War on Terror

Neil Cavuto was joined by Oliver North, host of War Stories and FOX News military analyst; Jim Rogers, author of Adventure Capitalist; Ben Stein, author of Yes, You Can Time the Market; Joe Battipaglia, chief investment officer at Ryan, Beck & Company; and Meredith Whitney, FOX Business contributor.

Winning the War on Terror and Winning on Wall Street

Neil Cavuto: That deadly attack this week in Saudi Arabia reminded the world and investors that the war on terror is still being waged. But did that attack also reveal a major weakness within Al Qaeda? And if so, could this be very good news for your safety and your investments? No question the attack in Saudi Arabia was brutal, tragic and well coordinated. But it was not nearly on the scale of September 11th and it was not in America. Is this the best shot Al Qaeda can take now?

Col. North: We are winning the war on terror and that is good news. We now have the terrorists who can't hide anymore in those safe havens. Also, the financial support for terrorism is now gone. Also gone are the kinds of places where these terrorists can get their equipment, like those bomb jackets we uncovered in Baghdad. This is not to say that we won't have anymore terrorism. But we won't see attacks to the magnitude of attacks we had on 9-11.

Jim Rogers: The stock market seems to agree. The mood of the country is better. And the economy is getting better. I'm long stocks.

Neil Cavuto: Joe, do you still worry as an investor about attacks and their effects on the market?

Joe Battipaglia: I worry on two fronts. One is the growing cost to defend ourselves both here and abroad. And second, I worry about international relations taking a turn for the worst, in terms of countries fostering this kind of terrorism. The frequency and size of attacks are very important to the investor day to day. If attacks are few and far between we are winning.

Neil Cavuto: What if we see situations like the attack in Indonesia, Riyadh and even Chechnya. We're seeing more cases of these attacks. Does that unnerve people?

Ben Stein: The stock market is a market for selling future earnings. Terrorist attacks, unless they're on a titanic scale, do not effect future earnings.

Joe Battipaglia: If we have setbacks in the reconstruction of Iraq though, it could stir this pot again and have many ramifications.

Ben Stein: This is all very important but has nothing to do with the markets, or corporate profits or earnings.

Jim Rogers: If there's war, future earnings go down.

More for Your Money: Can the Tax Cut Rescue the Economy?

Neil Cavuto: Congress is working out details on the third biggest tax cut plan ever. One, many said, would never see the light of day. But will it be enough to light up the economy and market?

Meredith Whitney: I think the President's tax cut is the piece of the puzzle for this economic recovery. What's most important is the dividend tax change. A stock to buy before the tax cut passes is Microsoft (MSFT) because you get growth and earnings there, along with a previously announced dividend. I do not own it.

Jim Rogers: We tax savings and investing in the United States, other countries don't. We have to change that. In this environment I would be inclined to sell bonds and buy stocks. I would sell iShares 20 yr Treasury (TLT). I am currently shorting TLT.

Ben Stein: I love the idea of a dividend tax cut. If the dividend tax cut is passed, I would buy Nuveen Preferred Income Fund (JTP). It pays a huge dividend and I currently own it.

Joe Battipaglia: The dividend tax cut doesn't change the asset allocation because the risk factor to stocks is still there as they were before. As far as the plan is concerned, it's poorly crafted. I would buy H&R Block (HRB) because now you've changed the tax code. I do not currently own it, but everyone has to get a new rule book, so to speak. The tax code needs major reform, but this back door approach of getting there is not the answer.

FOX on the Spot

Col. North: Expect more terror attacks against Americans in the Middle East.

Ben Stein: Sell QQQ! New Nasdaq bubble will burst!

Jim Rogers: Buy Asian travel stocks! SARS scare selloff is over.

Joe Battipaglia: Trade in treasuries for REITS, munis & corp bonds.

Meredith Whitney: Weak dollar strengthens U.S. companies.

Neil Cavuto: Deflation worries will help keep interest rates low and market up.