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Bulls & Bears
This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Tobin Smith, ChangeWave Research editor; Pat Dorsey, Morningstar.com director of stock research; Scott Bleier, HybridInvestors.com president; Patricia Powell, Powell Financial Group president, and Gary Kaltbaum, Kaltbaum & Associates president.
Trading Pit: Does Wall Street Think Iran Wants WWIII?
Iran: We know it funds terrorists like Hezbollah. We know it's working with nuclear material and continues to defy the United Nations. And we know its leader wants Israel wiped off the face of the earth.
Is Wall Street concerned Iran actually wants to start World War Three?
TOBIN: Wall Street is concerned when someone acts the way Iran's leaders have acted. But let's not forget, if they were to make a move, Tehran would be wiped off of the face of the earth. Wall Street is concerned because you have to be concerned with the oil issue. Oil runs our economy. But I don't think Iran is stupid enough to start something because they know what the consequences will be.
PATRICIA: Wall Street should care, but it doesn't. Wall Street has the attention span of a two year old. Wall St. will only care if the behavior on Main Street is changed — if consumers stops spending, if we are afraid to go to the mall, if we stop charging, or if we stop driving.
GARY B: Wall Street is wonderful at whistling past the graveyard. But Iran won't be so overt and make a direct move against us or one of our allies. They will do it like how they just attacked Israel — through Hezbollah or some other terrorist group. Wall Street will probably shrug its shoulders, until it's too late and there's some type of major action on the part of Iran
SCOTT: The stock market is in denial about Iran's true intentions. Stocks don't want to face the idea that Iran is trying to be a global colonial power. The stock market does not understand that Iran's intention is to take over the world. They want to take over Iraq, Kuwait, and Saudi Arabia and control half of the world's oil. That's what they want. Wall Street is in complete denial about Iran.
PAT: This is one of the background issues like missiles in North Korea or Hugo Chavez in Venezuela. It bubbles in the background and makes the headlines once in a while. If they do anything, it won't be overt; it will be through proxies, because any big attack will assure their destruction. But as far as Wall Street, this is a relatively low concern.
GARY K: We are dealing with a person that doesn't care if the world ceases to exist. We cannot have a nuclear Iran. In the short-term, the market could care less because Iran is years away from attaining anything that even resembles nuclear capability. But there are huge long-term repercussions. Also, Russia and China have not helped. They have said nothing against Iran or placed no sanctions either because they economic issues with them.
GOP or Dems: Who Is Wall Street Rooting For?
Republicans criticized for out of control spending. Democrats accused of being soft on terror and wanting to push through tax hikes. With the midterm elections quickly approaching, who does Wall Street want to win?
PATRICIA: In the short run, the stock market hates change and uncertainty. So, it is easy to say the Wall Street would prefer no change in the status quo. But Wall Street is not Main St. I think that this election is the Democrats to lose. But if anyone can do it, it would be the Democrats!
GARY K: Normally, the stock market does better with Democrats in control, but these are a different type of Democratic party. This is not the JFK Democratic party. They have already stated they want to raise taxes immediately. If they win Congress and the Presidency, we would see 50 percent tax rates. Wall Street and the economy will both hate this.
GARY B: Honestly, I'm not sure the market really cares right now, as there doesn't seem to be much of a difference in the two parties. Both spend like drunken sailors and support for the war seems waning on BOTH sides! The market probably would like nothing better than a draw.
TOBIN: Wall Street wants the Republicans to win. It would be an economic disaster for us to leave Iraq now. We have to finish what we started. This is very important for our credibility. Plus there are tax issues. Democrats want to take away tax benefits from the top 2 percent of earners, and this will scare the heck out of the market.
PAT: Neither party wants to cut spending. Neither party wants to focus on the long-term issues. These are the issues that have the potential to do serious damage to this country, such as the unfunded liabilities like Social Security, Medicare, and Medicaid. No one wants to address these huge issues. And that's the real problem.
SCOTT: Over the last 10 years, Republicans have been much more business friendly than the Democrats. The first thing the Dems would do is get rid of President Bush's tax cuts, which have helped to stimulate the economy. Dems don't want to stimulate the economy. Wall Street needs to see the Republicans win or there will be a quick and dirty drop in the stock market.
Stock X-Change
Which way are gas prices going? The Bulls & Bears name the stocks that can make you money if gas prices go higher ...or if they keep falling!
SCOTT: Gas prices are going lower. Buy United Parcel Service (UPS). The company has been at war with FedEx (FDX). UPS disappointed greatly and got clobbered. If gas prices go down, they'll make more money, and have an upside surprise.
(UPS closed at $70.57 on Friday.)
GARY B: I don't despise UPS, but it needs to get above $72.
GARY B: I agree that gas is going lower, but I think you should buy Ford Motor (F). The stock has made a comeback. It broke out and paused and I think it's going higher.
(Ford closed at $8.00 on Friday.)
TOBIN: Ford cannot even sell trucks! They're in trouble!
TOBIN: Gas prices are going higher and Valero Energy (VLO) will benefit most. Ten years ago, the company made $1 per barrel every time they shipped one out. Now, they're making $11/barrel. I own this stock.
(Valero closed at $62.40 on Friday.)
PAT DORSEY: Their earnings are at a cyclical peak and the hurricane season looks pretty light. I wouldn't own this one.
PAT DORSEY: Gas prices are most likely headed down. I like Tuesday Morning (TUES), a small discount retailer that pays a 6 percent yield. It's cheap and has no debt.
(Tuesday Morning closed at $13.39 on Friday.)
PAT POWELL: I'm shocked that Pat picked this stock. He's missed the boat on this one.
PAT POWELL: I think prices may dip, but over the long-term, gas is going higher. I think you should buy CSX (CSX). This railroad company is priced right and will do well due to energy. Its number one freight is coal.
(CSX closed at $29.69 on Friday.)
GARY K: Transport stocks are in a bear market. I'd take a look at this one 10-15 percent lower.
GARY K: Gas prices are headed down. But it is not a good thing because the economy is getting much worse than expected! When economy does worse, you buy the most defensive stocks like PepsiCo (PEP).
(PepsiCo closed at $64.18 on Friday.)
SCOTT: This stock is overbought. Everyone's been buying it!
Predictions
Patricia's prediction: More bad news for housing! iShares Dow Jones (DVY) up 25 percent
Gary K's prediction: Economy slows down; Nasdaq loses 10 percent by Halloween
Scott's prediction: Mideast cease-fire fails; Raytheon (RTN) gains 25 percent
Gary B's prediction: Smith Indicator! Comcast (CMCSA) up 40 percent by 2007
Tobin's prediction: Touchdown! Under Armour (UARM) up 25 percent by Super Bowl
Pat's prediction: Drink it up! Cadbury Schweppes (CSG) gains 20 percent
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Cavuto on Business
Neil Cavuto was joined by Jim Rogers, "Hot Commodities" author; Gregg Hymowitz, Entrust Capital founder; Juan Williams, "Enough" author; Mike Norman, BIZRADIO Network host; Rebecca Gomez, Fox News Business Correspondent; Hussein Ibbish, Hala Salaam Maksoud Foundation for Arab-American Leadership Executive Director; Michael Smerconish "Muzzled" author and Sara Nunnally, Material Profits editor.
Bottom Line
Neil Cavuto: Are we getting border security all wrong? Should we be more worried about stopping terrorists than about stopping Mexicans who come to America to work?
Michael Smerconish: Terrorism poses more of a risk to American security right now. I'm still frustrated five years after 9/11 that we are not taking into account the commonalities of those who threaten America. The bottom line is, they are all Muslim men. Everyone needs to be screened, but some need to be screened more than others. At least let's allow profiling by exclusion because urban Black men don't threaten the United States, nor do country clubbers with whales on their pants, nor do women.
Hussein Ibbish: There are already a lot of changes in immigration policy that do target Muslims whether that's right or wrong. There are new visa screening procedures; there are new waiting periods for people from certain countries. We've got all kinds of new regulations in place, but none of them produce a single counter-terrorism benefit, because these racist policies don't work.
Jim Rogers: Hussein is exactly right. It is very difficult to get into America right now if you are from a Muslim country. As far as immigrants from Mexico are concerned, I welcome them with open arms. We need people who want to come to this country to work.
Rebecca Gomez: People coming from Mexico love this country. They are risking their lives; leaving their families; they are not the terrorists. These are not the people we should be spending money to keep out. Put that money toward tracking terrorists on both borders and at airports and ports around the country. People coming from Mexico who are willing to work make consumer products cheaper for all of us.
Juan Williams: I don't see why we would target Mexican immigrants. Here in Washington the Chamber of Commerce supports President Bush's comprehensive immigration plan because they want those workers. They should focus on the Canadian border. Every time you hear about a terrorist threat, it's coming from that direction. But as far as profiling goes, terrorists are not dumb, and if you concentrate efforts on profiling, terrorists will get others to do their work. One of the most recent terror threats involved a woman with a 6-month-old baby, and you would have lost your life if you relied on profiling.
Gregg Hymowitz: The reality is that it has been mostly Muslim men who have threatened the security of the United States, and there needs to be some rationality to screening. The security lines are amazing, and it's a fine line, but there has to be some rationality to how we do this, and that may include some profiling. But I would also like to say that I am glad we are talking about the Mexican immigration issue in a different context, because we have been talking about it for a long time as if it is a security risk, and I am glad we are talking about is a financial and not a security issue. That often gets blurred.
Jim Rogers: Anybody who is immigrating to this country is leaving his home, his security. I want people like that in this country. Just like our forebears; they are coming here to work. It's very easy to figure out who is coming here to work and who is not.
Head to Head
Home sales slowing down big time from last year, but so far no noticeable drop in the price of those homes. Is that next?
Sara Nunnally: In certain parts of the country you are going to see price drops. Certainly in those areas where there were sharp run ups like California, New York and Florida, which are already starting to come down. But overall, national median prices are up.
Jim Rogers: Prices in Nevada, California, Arizona, Florida, Massachusetts are going to go down a lot – thirty, forty, fifty percent. But in some parts of the country prices are going to go up. When these bubbles break, prices go down a lot. In California fifteen years ago people were mailing their keys back to their bankers because they couldn't pay the mortgage. That's going to happen again. But in other parts of the country, prices are going to be going up. If you are in a place that's got a good economy – in agriculture or mining – your house is going to go up.
Gregg Hymowitz: It shouldn't surprise anybody — as interest rates went down, housing prices went up. It was just easier to buy houses. You were able to afford more. Now it's going in reverse. The key determinate will be how income fares. If job growth and wage growth don't hit the fan, then I don't think you will see the kinds of declines Jim is talking about, but I think you are still going to have flattish to slightly down prices in most of the big areas.
Rebecca Gomez: Yes, sales are down; inventory is up, but prices aren't following suit, and that's because a lot of these people want to hang on to these homes. They don't want to admit that they aren't going to get the gains that they've had over the last several years. Also, keep in mind that the economy is doing well, so they are able to make these mortgage payments and they are holding on and hoping for some relief from the Fed to quit hiking or cut rates and bring people back into the market.
Mike Norman: We are not going to see the kind of declines Jim is talking about. There's no question that there has been an over investment in residential real estate and now that is starting to correct. However, some of the background conditions are already starting to improve. We are seeing market interest rates come down. The ten-year Treasury yield dropped from about 5.30 percent to about 4.78 percent, so that means mortgage rates are going to come down. At the same time home prices are falling. So you combine the two things and you see that affordability is going to improve.
More for Your Money
Neil Cavuto: Halfway through hurricane season and no major storms making landfall yet. So which stocks win if things remain calm?
Gregg: We own Carnival (CCL). Assuming things stay this way, the cruise industry benefits. It's a duopoly business with high barriers to entry, and trading at thirteen times earnings it's very attractive. Carnival closed Friday at $39.02.
Jim Rogers: America's in recession, and the recession is going to get worse.
Sara Nunnally: Insurance companies are going to do really well. They hiked their rates from last year's hurricane season. No hurricanes this year, and they are going to be flush with cash. I like Aon Corp. (AOC). Aon closed Friday at $33.89.
Mike Norman: Aon is a great company, but I think it's fairly valued. I would like to buy it a little bit lower, and it's having problems gaining market share against its bigger rivals like Marsh & McLennan and AIG. I think the bigger insurance companies have an edge over it.
Neil Cavuto: So what are you doing Mike?
Mike Norman: Last year with the hurricanes nobody was able to shop. I like Claire's Stores (CLE). It's a consistent performer with a rock solid balance sheet. Claire's Stores closed Friday at $27.27.
Sara Nunnally: No question Claire's Stores has done really well in the past year or so, but it's looking like the top, and I'd be wary of the downside potential.
Jim Rogers: If there is no storm, people are going to fly more, and the price of oil will consolidate, so you should buy airlines.
FOX on the Spot
Mike: U.S. or Israel bomb Iran nukes by Nov.; stocks soar!
Juan: Buckle your seat belts; stormy campaign season ahead
Gregg: More than 15 Dems will vie for the White House!
Sara: Chavez's China oil deal bad for U.S. energy market!
Jim: Oil's oil, if Chavez cuts off U.S., we'll buy elsewhere!
Neil: Be careful the companies you put on a pedestal. There once was a time Sony could do no wrong. That was before millions of its laptop batteries were recalled and its T.V. quality started being called into question. Bottom line: Being good for a while doesn't mean being good for a lifetime. Sony's learning that, as are its investors, the hard way.
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Forbes on FOX
In Focus: "Lifetime" judges: Threat to America's Security and Stocks?
Mike Ozanian, Senior Editor: The federal judge, Anna Diggs Taylor, who ruled that the President's wiretapping program is unconstitutional made that decision based on politics, not the rule of law. Fortunately, it will be overturned.
Dennis Kneale, Managing Editor: If we put term limits on judges it would open up every judge to all kinds of political pressures. I'm sure all your liberal friends who are for abortion rights, would love to limit the terms of supreme court judges so they could change the balance of the high court. There's a reason we gave them life terms, it's so judges could make rulings the best they know how. If a judge is consistently wrong or taking bribes, there are other laws that can get that judge out of office.
Elizabeth MacDonald, Senior Editor: I do believe in term limits. These judges are often only accountable to themselves. They sit there for 40-50 years. They are not supposed to create the law, they're supposed to uphold it.
Quentin Hardy, Silicon Valley Bureau Chief: Should judges be running for office and in the pockets of lobbyists like congressmen? We have this system of checks and balances for a good reason. The independence is a check and a balance on the other branches of government. I don't think 9/11 changes that and makes it a bad idea.
John Rutledge, Forbes Contributor: We have separation of powers for a reason. I don't want judges accountable to anyone. I want them to read the law. And by the way, the wiretapping program was illegal and the White House knew it!
Mike Ozanian: Every case prior to this one the courts have ruled in favor of this wiretapping. And the Federalist Papers and the Constitution clearly put the President in charge and he's allowed to wiretap for foreign intelligence.
Dennis Kneale: The Bush administration has directly conceded that they are violating that 1978 law, but we can because it's a time of war. You don't violate and then ask for permission later.
John Rutledge: This is a clear breach of the law. We can't afford to let the mobs and the lynch mobs run the judicial system. Wiretapping was illegal and lifetime appointments are a protection against politicians.
Elizabeth MacDonald: I believe in term limits. Why not have a 10-year review? A review of what these guys are doing. When you have a judge sitting there for 40 years they're not keeping up on the Internet, etc. You waste tax dollars explaining to these judges and precious time catching these terrorists.
Quentin Hardy: Being around for a long time use to be called wisdom. If you are worried about activist judges, worry about the Supreme Court. Limiting them to 10 years solves nothing. It just makes them lapdogs of the Congress and the President.
Mike Ozanian: Here's a judge who is out of touch with reality. If you read her decision, she doesn't cite any precedent in her decision. What kind of wisdom is that?
Is the U.S. Funding Terror by Helping to Rebuild Lebanon?
Lea Goldman, Associate Editor: The U.S. shouldn't contribute a penny to the rebuilding of Lebanon. It's the responsibility of the Lebanese government. A government who let a known terrorist organization run a de-facto government in the south. The cost of rebuilding should be so financially and emotionally high that they think twice about letting Hezbollah run amuck in the south.
Quentin Hardy: Let's set aside the need for compassion for those in need and focus only on the war on terror and how much of it takes place in the media. So far, we're famous in the Middle East for giving Israel bunker buster and cluster bombs, some of which, intentionally or not, killed a lot of people. Shouldn't we also help with the rebuilding to seem like the good guys in all of this.
Elizabeth MacDonald: I have no problem spending money to win over hearts and minds. But we as journalists have fallen down on the job in tracking just where this money goes. Look at Katrina and the corruption there. No one was tracking that money. Who knows where the money is going overseas.
Dennis Kneale: We can make sure that that money ends up in the right hands for the right uses. If you want to receive it, you have to let us watch where the money goes. The best thing we've done to improve our image in the Islamic world since we began the War on Terror turns out to be the aid we provided after the tsunami. In Indonesia, the most Muslim nation in the world, our approval rating went up drastically because American doctors went over there to help people in need. We have an opportunity to do that again and show the people of Lebanon that Hezbollah isn't their protector, we are.
Victoria Barret, Associate Editor: I think inevitably Hezbollah gets some of this money, and you have to be ok with that. And when we give aid overseas, it's impossible to track. It's very hard to follow the money. This is a PR campaign, and this is very important.
Lea Goldman: It's unacceptable for Hezbollah to get the money. Their mission in this world isn't only to wipe out the existence of Israel, it's to wipe out our existence. These people blew our marines up!
Quentin Hardy: So they will live in poverty among the rubble for generations like the Palestinians. You're going to create another terrorist group.
Victoria Barret: Lea, you're assuming that the Lebanese government wants Hezbollah in power, which is simply not true. They are struggling with terrorists in their own country and we should be helping them.
Lea Goldman: Really? Because every interview I've seen of the Lebanese President has been very sympathetic and supportive to Hezbollah.
Dennis Kneale: Let's not forget that Hezbollah was elected to like 5 percent of the seats in the Lebanese Parliament. This is turning from a terrorist group to a political organization and they need to be dealt with. But we can hire a subcontractor to go in there and track where this money is spent.
Elizabeth MacDonald: When Israel left Lebanon in 2000 the U.S. sent a lot of money over there that was not tracked and apparently ended up in Hezbollah's pocket.
Victoria Barret: We need to make this money visibly American aid. Put American flags on everything. Unfortunately, some of this money will end up in the hands of Hezbollah.
Lea Goldman: This is a superficial analysis and response to what's going on over there. We can't give money to a known terrorist organization that is out to get us. We're not free and clear of Hezbollah.
Dennis Kneale: Arm them with hammers and nails. Give them the job of rebuilding what Israeli bombs blew up. If they have a job and a way to feed their kids they're going to be less likely to strap a bomb to their chest a meet their maker.
Quentin Hardy: Their ports and airports are destroyed. Those are big contractor jobs. Those are easy to track, and without them their economy can never recover. Start with those first.
Flipside: Economy, Not Terror: Why Gop Will Win in November!
John Rutledge: It's always the economy stupid! We learned that with Clinton. If the Republicans have a problem, it's because they've fatigued people by overplaying terrorism. The economy is strong, inflation is staying down and profits are rising. The stock market is going to go up and the Republicans are going to do all right on the economy side.
Quentin Hardy: Voters see after six years with Bush that median family incomes are down in real terms, the stock market hasn't moved and gas prices are over $3. Yuck!
Mike Ozanian: Look at what happened since the Bush tax cuts: the stock market is way up; family income for the average person is way up; jobs are way up; and wealth is way up. It's been a big Bush boom. This is what the GOP has to run on.
Lea Goldman: I don't think the Republicans can shift the discussion away from the war and security. Every day since 9/11 we've been bombarded with code red, code blue, code orange. I don't think Americans can move away from that so easily. If you're a Democrat and you want to rebut a Republican on the economy just say gas, home prices or immigration.
Victoria Barret: The numbers look good, but we don't feel good. If you look at consumer sentiment right now it's right where it was post-Katrina. I think the pitfall for the GOP is housing prices. We've felt really wealthy because our home prices were rising in value on average of 8 percent annually. People were using their houses as ATMs. That's not happening anymore. People don't feel great.
Mike Ozanian: Look at the Democratic strategy for 2008. They want to attack Wal-Mart, one of the greatest success stories in America in terms of corporate profits, employment, and in terms of making goods affordable to Americans. What kind of plan is that?
John Rutledge: Home prices are 50 percent higher than they were four years ago. That's about $13 trillion dollars of net worth.
Victoria Barret: But they're not still rising, and that's the perception issue we're talking about. And that's what is going to matter when people go to the polls.
Informer: Hou$ing Winner$
Mike Ozanian: Housing prices are going to fall 10 percent over the next two years because prices are way too high relative to income. I like a company that has nothing to do with housing, Ballard Power (BLDP), which makes fuel cells. I like this because of the way alternative energy will be coming on board five years from now. It is going to be selling a lot of products.
Victoria Barret: This company makes no money. The stock is trading on sentiment, not fundamentals. It's too pricey. Housing prices are certainly not going up and that's going to impact consumer spending. I'm going for a company that services businesses, called Bright Horizons Family Solutions (BFAM). This company provides childcare for businesses. I think it's a good play when we have high employment and businesses are doing what they can to retain employees.
Lea Goldman: This stock is hot, you're buying it at a high. But my issue with it is that the perks that Victoria is talking about in a tight labor market are really applied to young people. And young people prefer their perks in terms of cash. I think the housing market is going to crash in some areas. If your not investing in real estate, you're investing in the stock market. I like the brokerage house TD AMERITRADE (AMTD).
Dagen McDowell, Host: If the housing market comes crashing down won't the stock market do so as well?
Lea Goldman: Not necessarily. Some sectors will do just fine. People will always want to invest their money and I don't think the large part of Americans are pulling out entirely.
Elizabeth MacDonald: I think we're heading for a housing slowdown. I like United Community Banks (UCBI), they own properties in the south. I like it because the south's population has grown. Also the housing market in the south hasn't heated up as much as the rest of the country. This company is smart about it's real estate.
Mike Ozanian: I think the run in this stock has been too big over the past year for it to be sustainable.
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Cashin' In
Our "Cashin' In" crew this week: Wayne Rogers, Wayne Rogers and Company; Jonathan Hoenig, Capitalistpig Asset Management; Jonas Max Ferris, MAXfunds.com; Tracy Byrnes, The New York Post; Charles Payne, Wall Street Strategies, and Bo Dietl, Beau Dietl & Associates.
Cashin' In: Muslim Profiling
The London airline plot served as a grim reminder about what the free world faces in this war on terror. Now many are saying, ‘forget about being politically correct and do what the Israeli's do;' profile, profile, profile. Jonathan, is profiling the answer to this problem?
Jonathan Hoenig, Capitalistpig Asset Management: Absolutely, Terry. We should be profiling Muslims and Arabs. We are wasting law enforcement's time going through some suburban housewives belongings. The terrorist threat is from militant Islam, young Arabs and Muslims, around 18-40. To pretend that some granny is the same level threat as Mahmoud with the prayer rug, is insane. They're kidding themselves.
Terry Keenan: Wayne, you know I get profiled all the time coming off the airplane by US customs officials. That's not a problem. So why is it a problem to profile people who are getting on?
Wayne Rogers, Wayne Rogers & Company: Well, you're just a beautiful girl. That's why they always profile you. Jonathan is absolutely right. We should be profiling everybody. We should be profiling psychologically, not just racially. We should be profiling everybody. That's what El Al does. That's why they've been very successful. They are wonderful at it. We should copy exactly what they're doing.
Bo Dietl, Beau Dietl & Associates: I always use this as an example, because it's the only fair example I can use. I was a detective up in Harlem, we had two white guys who were sticking up Chinese restaurants up there. I'm not going to pull over a car with black guys. I'm going to pull over a car with two white guys. If you are looking for people committing the crimes out there, you're going to look for people that look like the terrorists. There are maybe 1 percent of them that don't look Arabic, but right now, until you show me different, that's the one I want to look at. The shoes, his ears, up his butt, everywhere.
Charles Payne, Wall Street Strategies: I think you guys are missing the point. You talked about the stereotypical guy; a guy in a turban and a sword on the side. The rest of the world looks at America like we're arrogant and ignorant. You know why? Because we make statements like this. You can't say, "what the hell is a Muslim?" You know that the number one most Muslim-populated nation in the world is Asia? So we are going to stop all Asian looking people?
Bo Dietl: Our transportation secretary said we can't profile. We have to stop every fourth person. So when my mother comes in with her wheelchair...
Charles Payne: If you pay too much attention to dark-skinned Arab-looking people, a lot of people are going to board those planes with bombs. That's what I'm trying to say.
Terry Keenan: Tracy, the alleged London bomber is a white-skinned Brit.
Tracy Byrnes, The New York Post: We all know that not all Muslims are terrorists, but most terrorists are Muslims and so to protect us and to protect our country, why not? I'm Sicilian; everybody thinks that therefore my family is part of the mob; I deal with it.
Jonas Max Ferris, MAXfunds.com: Let's just forget that it's state-sponsored racism. It's no better than what we did to the Japanese in World War II. Let's ignore that. Does it even work?
Jonathan Hoenig: That is a crock, Jonas. There is a big difference between in interning people in internment camps and asking them a couple of more questions at the airport.
Jonas Max Ferris: No there's not. They were considered a threat to the country at that time, during the war. Let's just talk about if it works and drop the racist card for a second here. The bottom line is, as you said, ‘let the old ladies through.' Do you think terrorists are this stupid that if only Arabs and Muslims are put aside, they will put bombs on white people who won't even know they are carrying them. It happened in Israel in the 1980's.
Bo Dietl: I have something to say to my friends here. If those 10 planes went down over the Atlantic, every one of us here would be rushing around asking, ‘what should we do?' I guarantee those lines would be a lot longer at the airport and people would say they have to do something. We can't become complacent.
Charles Payne: I agree with you. And I racially profile, I think we all do. I was on a plane recently with an Arab-looking guy was sitting next to me. I was nervous. But the reality is that if we become too myopic, they are going to get by us with somebody that is not on the list.
Terry Keenan: But Wayne, hasn't the Israeli experience proven that it is the best way to screen out terrorists?
Wayne Rogers, Wayne Rogers & Company: Absolutely. And all of this talk about whether you are racially profiling or not; we haven't found any terrorists yet who were not Arabs, have we? And if most of them, then we should be racially profiling them. Yes, we should. Israel's example with El Al is perfect. You don't have to improve on it, all you have to do is copy it and that's the end of it.
Bo Dietl: In 1993 we had an explosion at the World Trade Center. The investigation brought it over to Newark, into all these supposedly houses of worship. My problem here is that if we are going to go after the terrorists in this country, we have to profile in Muslim neighborhoods, because it is in those houses of worship where they are preaching terrorism, killing Americans and that's what it is all about. If you stop throwing these little puffballs here, maybe we can stop the terrorism from coming back. Complacency is the death of success.
Terry Keenan: And Jonathan, what about also this reverse profiling where honest Americans can sign up, give their fingerprints and then just sail right through customs? Couldn't we at least start with that?
Jonathan Hoenig: Well, I ultimately think the security decision should be up to the individual airlines but the facts, at this point, speak for themselves. Wayne alluded to this. The ‘72 Munich Olympics, the '79 embassy attack, the '83 Beirut bombing, the World Trade attacks; it's hard to find a lot of terrorism that hasn't been committed by some faction of militant Islam.
Jonas Max Ferris: 1986, in Israel, a white woman from Ireland went in with plastic explosives, her husband was Palestinian. Israel does behavioral as much as racial profiling. What about the New York police thing in the 1990's when they did this stop and frisk and they pulled over more black people than white people? What happened with that program?
Bo Dietl: What happened with it? In New Jersey what happened is that they cannot stop a car even if they have a suspicion now, because of that stupid law that they put into effect then.
Jonas Max Ferris: It's lazy police work. It seems like a good idea, but the former head of the CIA Counter-terrorism said it doesn't work.
Tracy Byrnes: We can't massage feelings. We can't worry about people's feelings.
Bo Dietl: Boy, we forget 9/11 so fast. Jonas, we forgot that 19 of them came and they took our buildings down. They killed innocent Americans. We weren't doing anything wrong. They came here.
Jonas Max Ferris: Why is being Muslim a crime or a probable cause for doing a terrorist attack? It is a fraction of a percent. We need informants from these people to give us information. If we start putting them all aside, they are all going to start hating Americans.
Charles Payne: All I'm trying to say and I agree with common sense because I think what everybody is saying common sense. Obviously you're going to be afraid of people that are committing these crimes. But let's not focus on them so much. Like I said, Indonesia is the largest Muslim country in the world. An Asian guy could walk right past you with one of these bombs while you're frisking a dark-skinned Arab guy. Let's pay attention to everyone.
Terry Keenan: Jonathan, do you think we are going to see profiling in our lifetime?
Jonathan Hoenig: I hope so, because you can't search everybody and if I'm sitting there at the gate…
Charles Payne: We already see profiling. I know when I'm at the airport, I'm profiling,
Wayne Rogers: I have said it before. It's very simple; you do exactly what the Israelis are doing whether they happen to be Arabs or Indonesians, or whomever. You psychologically profile all of the people who are trying to get on the plane and that's the west way to do it and it's simple. They have proved it. I don't think they have to go any further.
Cashin' In: Worthle$$ U.N.?
August 31st is the United Nations D-Day for Iran to abandon its nuclear ambitions. But so far, Iran has given no indication that it will bend to the will of the U.N. So if the U.N. fails, will this prove once and for all that it is just a worthless waste of time? They can't even get 15,000 troops together to enforce the weeklong ceasefire in Lebanon. What is going to happen with the Iran situation?
Tracy Byrnes, The New York Post: I think something has to happen. We dropped the ball with Saddam back in the 1990's. We can't let it happen again with Iran. Somebody spits if your face once, do you just wipe it off and walk away? How many times do you do this before we become a total laughing stock? And I think this is part of Bush's theory that we don't speak to people who do bad things. But therefore we don't speak to Iran, Hezbollah, Hamas, Syria; we're not getting anything done.
Terry Keenan: Wayne, do you think the U.N. will be able to do anything with the Iran situation? Call them on the carpet?
Wayne Rogers, Wayne Rogers & Company: How about ‘no'? No, they can't. The U.N. is worthless when it comes to that. We talk about the French saying they will lead this, but what did they come up with? 400 Troops? Big deal. Rumsfeld said they are old Europe, they are passé, they don't know, and we should just forget them. If you can involve them, yes, but what we should be doing is involving the rest of the Middle East. That is to say that if the Sunnis and the Shiites are going to fight each other, let's promote that, let's let them do that work?
Terry Keenan: If we are not talking to a lot of our enemies, the U.N. is the forum to talk. But maybe not a good one?
Jonas Max Ferris, MAXfunds.com: Their success will be more proven with the peacekeeping with Israel. I don't think anyone thinks they have the potential to stop Iran. There's a simple reason for that. The biggest problem with Iran is that a lot of countries want to do business with Iran. Russia, China, the United States was doing business with Iran, until very recently, with offshore companies. Until all of these countries collectively stop doing business and punishing this country, that's the only way to really put a stop to it and the U.N. can't really enforce that.
Jonathan Hoenig, Capitalistpig Asset Management: But Jonas, you don't think that we should punish Iran, correct?
Jonas Max Ferris: We should and have had a boycott that, unfortunately, we didn't strictly enforce as much as we should have.
Jonathan Hoenig: We send hundreds of millions of dollars to the U.N., which only emboldens and encourages these despotic dictators.
Jonas Max Ferris: Giving money to the regime of Iran emboldens the regime, so we have to stop money from getting there.
Terry Keenan: But Charles, now we have a situation there where the U.N. is putting troops from Indonesia and Malaysia, two countries that don't even recognize Israel, on Israel's border.
Charles Payne, Wall Street Strategies: Well, Wayne talked about old Europe, but new Europe's not stepping up to the plate either. Let's face facts. Iran showed their contempt for the U.N. by setting up their own deadline. They've already given their answer. They're saying, ‘go jump in a lake.' At the end of the day, you want to try diplomacy but I think it's just going to have to come down to physical force. It's going to have to the United States or Israel that's going to have to go in there and try to surgically take out those nuclear facilities to avoid a gigantic war. But Iran has already shown its contempt for America and for the United Nations. The United Nations is a paper tiger and, at the same time, the U.S. has sort of fallen behind the ball in public relations and public opinions. We don't seem like we have the stuff that it takes to really enforce harsh punishment on these countries.
Jonathan Hoenig: Charles, why have we gotten to the point where the American public feels that we need Kofi Annan's permission to protect our own self interests?
Charles Payne: I don't know, because that was a big platform for John Kerry and I think America made its stand that we're not going to let the U.N. dictate how the U.S. uses its military. That's why we voted for Bush. But instead, public opinion polls have changed, our politicians don't know what the heck they're doing, and the U.N. never knew what it was doing. It's a waste of time.
Face-Off: Pull Out of Iraq?
President Bush pulling no punches when it comes to fighting for freedom in Iraq.
PRESIDENT BUSH on MONDAY, 8/21: "The American people have got to understand the consequence of leaving Iraq before the job is done. We're not going to leave Iraq before the job is done and we'll complete the mission in Iraq."
Does the Cashin' In crew see eye-to-eye with the president? Wayne says he has a better plan.
Wayne Rogers, Wayne Rogers & Company: I'm for the good old USA. Let's start with that. So I care about our troops, I care about our people, and I care about the amount of money that's being spent over there, so we should not be doing this. The Shiites and the Sunnis are culturally at odds and have been for 1400 years. They have been fighting each other. We should be promoting that. It's not up to us. We should get out; we should get out as gracefully as we can. And the biggest problem with the president's policy is that he uses the word, ‘democracy' interchangeably with ‘freedom and liberty'. He says ‘democracy' is God's given right. Well, he's going to falter on the altar of history if he believes that. It killed Woodrow Wilson at Versailles in 1923 and it's going to kill Bush in the Middle East.
Charles Payne, Wall Street Strategies: Wait, wait, you are bringing up history lessons right now. You became famous for starring in a TV show called "M*A*S*H", about the Korean War, a war that we left prematurely. And now the most dangerous country in the world is North Korea. And that can happen again in Iraq. This is not about having a couple of savages kill each other because the reality is that most of the people in Iraq, most of the people in Lebanon are also victims; victims of radical Islam. And I'm going to tell you something right now. If we leave Iraq, we might as well have a coronation for Usama bin Laden and get ready to build those bomb shelters that we used to have after World War II, because radical Islam is a greater threat to the humanity of the planet than communism ever was.
Wayne Rogers: Charles, I agree with what you say in the sense that that is the enemy. Yes, I'm talking about how we go about fighting it.
Charles Payne: How do you fight it if you are not there? If we run away, these people are already emboldened. We just said that in the last segment. The rest of the world is looking at us like we are weak and you say, ‘let's run away. Let's put our tails between our legs and leave and hopefully they will kill each other.' That is not going to happen. They are going to become stronger. They are going to have building bases, they're going to have launching pads; you have got to be crazy, Wayne. If we leave right now it can lead to so much destruction.
Wayne Rogers: With all due respect, Charles, I think you are a reasonably bright guy, but you are just too excitable. You say things without thinking about them. You are not based in history. It's historically that you realize that what we are fighting over there is not a war. It's an insurgency and it is between two religious people who don't care. They are willing to blow themselves up and take us with them. Why don't we just let them blow themselves up? We don't have to be the author of our own demise.
Charles Payne: Let me speak for one second with the reasonably bright portion of my brain. We cannot stick our heads in the sand. It's not a problem that is just going to stay there and be isolated. It's going to spread like a virus.
Wayne Rogers: You want to stick our head into a canon.
Charles Payne: What would you do if you were diagnosed with cancer? Would you fight it today or would you wait a couple of years and fight it?
Wayne Rogers: It has nothing to do with cancer.
Charles Payne: This is a virus that is going to spread throughout the world. It's already spreading throughout the world. This is a global problem, Wayne. The reason why the insurgencies are there is because we are there. We are keeping them at bay, keeping them off our shores. That's what we want.
Money Mail
Question: "What do you think about selling a home, renting, then buying again when prices fall?" – Matt Euse, Needham, MA
Wayne Rogers, Wayne Rogers & Company: You never know because selling a home is the same thing. If you're going to buy a home, are you going to sell it in a down market or are you going to buy? I have talked about this for eight months that the housing market was going south. It has now proven to be so. We are going to go through this period again where absorption rates are going to stretch out and prices are going to drop. Yes, he can wait probably a year or year and a half.
Terry Keenan: They haven't fallen much so far, Jonathan –
Wayne Rogers: That's in the second phase. It will happen. Ultimately you'll have foreclosures then when it's over, it will start back up again.
Jonathan Hoenig, Capitalistpig Asset Management: Maybe I'm old fashioned, but I think you buy a home you can afford, you live in it for a long period of time and you sell it 20, 30 years later. To me, your home is not something to trade. And I don't see a lot of money being made in scalping houses.
Wayne Rogers: Well, Jonathan, I think you are right. It should be a home where somebody lives. But, the fact of the matter is, I thought the question was should he be buying a home to trade? If he's buying it to live in, you're right.
Tracy Byrnes, The New York Post: I think a lot of people tried to do this and therefore, rents went through the roof. So people need to be careful. Make sure your rent payment is not higher than your mortgage payment would be.
Terry Keenan: If you don't own, you might want to wait.
Jonas Max Ferris, MAXfunds.com: If you've got a second home, you might want to do it. I think it is a workable plan, but it's risky and you have to watch out for rents going up.
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