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Bulls & Bears
This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Tobin Smith, ChangeWave Research editor; Scott Bleier, HybridInvestors.com president; Tracy Byrnes, New York Post business writer; Charles Payne, WStreet.com; Adam Lashinsky, Fortune magazine senior writer, and Joe Battipaglia, Ryan Beck & Co chief investment officer.
Trading Pit: Anti-American Rants at U.N. — Good for U.S. and Stocks?
Anti-American rants at the United Nations—and that's the nice way of describing them. But does Wall Street think these two insane rants from the Presidents of Iran and Venezuela are actually a good thing for us and our stock market?
Tobin Smith: These rants showed how insane these guys are and will unite us against them. It should also give us some incentive to find other forms of energy. They control the strings for the oil we need. Now maybe Americans will get serious about alternative energy development.
Adam Lashinsky: No. This is not good. It reminds people that these times are uncertain. Iran is more than just a major oil producer; it is trying to get a nuclear bomb. Wall Street doesn't like this ranting and raving, especially from Chavez, because his country is only a few hundred miles from us.
Charles Payne: This will unite us. I put the stock market up there with the American flag and bald eagle as symbol of our country. Emotions play a big part in the short-term performance of the stock market. A lot of times the stock market is a proxy for the American people.
Gary B. Smith: I don't see how it's good news for the market. These two wackos, that control a lot of oil, and would love to point nuclear weapons at us, come here and say they hate us. I think the market tends to ignore this stuff, but I don't see how this is a positive.
Joe Battipaglia: Investors want a vigorous defense of America and a vigorous prosecution of the War on Terror. Karl Rove couldn't have scripted it any better than to have these two, in their own words, tell Americans how much they hate us and want us eliminated. This will help to solidify public policy on this issue going forward.
Tracy Byrnes: This is so good for us. "Keep your friends close, and your enemies closer." Having our enemies here solidifies to the American people why we need to take these two out. Anyone that had any doubts as to if we are fighting a losing war now knows better.
Will Lower Gas Prices Cause Red Hot Rally?
Gas prices are at six-month lows. Is this what the market needs to really head higher?
Charles Payne: Gas prices are a key part to leading the rally. The most important thing to the market is the Federal Reserve. Gas is number two. The terror premium is starting to fade and the American consumer is moving a lot quicker in adjusting to higher prices. Lower gas prices are a fantastic thing for the market and will be great for corporate earnings.
Gary B. Smith: I disagree with Charles. The market tends to focus on events, which become a big deal for a discreet amount of time. The price of gasoline is yesterday's news. We've moved on. The market was going up when the price of oil was rising. There's no connection now.
Tracy Byrnes: Lower prices have a lot more to do with investor psychology. Seeing $2.50/gallon at the pump, rather than $2.90/gallon makes a huge difference.
Tobin Smith: There's a lot of money now that's not going to gas companies. It's now going to retail. The lower prices are both economic and psychological.
Adam Lashinsky: When oil prices were going up, companies like Exxon and Chevron were contributing to the stock market moving higher. It was a great thing. The economy did fine when gas prices were way up. These low prices do make us feel better, but it's not a great thing for the stock market all by itself.
Joe Battipaglia: Another important consumer item affecting the market is falling mortgage rates. This has done nothing for the housing market, which suggests there's a lot of pain to be had as real estate reverses itself. In the last five years, we've also seen an addition $5 trillion of consumer debt. It just doesn't go away with the price of gas. That's the weight that is holding consumers down.
Joe "The Bull" Battipaglia picks his top three stocks.
Joe Battipaglia: First on my list is Microsoft (MSFT). It's releasing a new product, Vista, next year. Plus, the company is paying out more cash to shareholders. This is an attractive stock and I own it. (Microsoft closed on Friday at $26.66.)
Tracy Byrnes: I like it. Microsoft went from a risky tech to a growth stock and is now a value play. I also like that it has a lot of cash coming in.
Gary B. Smith: I'm bearish on this one. The stock has moved straight up and has gone about as far as it's going to go. Now is the time to sell and wait to buy when it pulls back.
Joe Battipaglia: Next up, Pfizer (PFE), the world's largest pharmaceutical company. The company had a hard time getting the earnings expectations right. It was just disappointment after disappointment. Now, the company is getting out of the consumer business and rationalizing its products. Expectations have been lowered. I also own Pfizer and think it will do very well. (Pfizer closed on Friday at $28.16.)
Adam Lashinsky: I don't like anything about big pharma. The pipeline is difficult and the industry is sick.
Gary B. Smith: I like it! My chart shows that the stock has been in a nice steady uptrend and is showing no sign of weakness.
Joe Battipaglia: Another one I really like is Federated Investors (FII), which is a very nice mutual fund play. It has a big bond portfolio and I think interest rates are going to work in the company's favor. I own this stock as well. (Federated Investors closed on Friday at $33.61.
Charles Payne: I don't like mutual funds. Joe, why would you go for this one? Go for the stocks like Goldman Sachs (GS) or Merrill Lynch (MER). You should buy the big names that are doing well because they can do well both in bad and good markets.
Tobin Smith: I understand where Joe is going. If you are a bull over the next 5-6 months, Federated is going to get higher earnings, with a fixed-cost basis. This means the earnings per share go up and that in turn makes stocks go up.
Charles' prediction: Americans boycott CITGO; buy gas companies like Valero (VLO)
Gary B's prediction: Gas falls to $2/gallon by the end of the year
Joe's prediction: Fed cuts rates but housing market keeps falling
Tracy's prediction: Great Christmas for up$cale retailers! Buy Tiffany (TIF)
Tobin's prediction: Flat screens not blue boxes! Buy Silicon Image (SIMG)
Adam's prediction: Starbucks' (SBUX) price hike fails; falls 15 percent in 2 months
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Cavuto on Business
Neil Cavuto was joined by Jack Welch, author of "Winning"; Jim Rogers, author of "Hot Commodities"; Gregg Hymowitz, founder of Entrust Capital; Rebecca Gomez, Fox News Business Contributor; Bob Froehlich, Vice Chairman of Scudder Investments
Neil Cavuto: War or peace with Iran: how is Wall Street betting the nuclear face-off will end?
Jack Welch: Wall Street is betting on the status quo. Iran introduces volatility to the issue — when it looks like negotiations are going on, the market comes up a bit and oil comes down, and vice versa. I think Wall Street's betting on a stalemate, or just the status quo.
Gregg Hymowitz: I think Jack is right. The market is at least betting on the status quo, if not ultimately peace. And I think it is best reflected in oil prices. Oil has come down pretty hard. The fear premium is being eroded, and commodity prices in general have come down a fair amount recently.
Jim Rogers: There's no question, the markets are saying – the natural gas market, the oil market, all the markets are saying – it's going to be status quo or peace. If there is war, the market is going to cave in.
Rebecca Gomez: That's true. The market will cave in initially, but it's amazing how we survived 9/11 and we can survive a potential war with Iran. How much worse can something be for our economy than 9/11 and we still recovered. We are doing extremely well. I'm not advocating war with Iran, but I am saying we will survive if we get to that extreme.
Neil Cavuto: I don't know about in the beginning. It would be a little tough.
Jim Rogers: Rebecca, Iran is three times the size of Iraq. It's full of mountains. It's got three times the population. Our military is already overextended. We don't have enough troops to take care of a second front if we have to. How are we going to have a war with Iran?
Gregg Hymowitz: Iran and the rest of the world know that we cannot afford to go to war here. We've already blown our money, blown our troops in Iraq, which we should never have been in at all.
Neil Cavuto: Bob Froehlich, on the threat of war, is Wall Street better off if it remains just a threat?
Bob Froehlich: I think Wall Street is assuming this will play out closer to peace. Gregg made a great point. Look at how the price of oil has come down, and also look at gold. If you look at those two commodities, they are telling you that the market doesn't see Iran as the risk everyone thinks it is. But if the markets are wrong, and it doesn't play out to the status quo, I think the market could really be under a lot of pressure.
Neil Cavuto: Jack Welch, all of this turns on a dime if the talk gets more bellicose. Do you see that happening?
Jack Welch: No, I see all the arguments that have been stated here today to be leading us towards some sort of resolution, or at least a quiet time.
Head to Head
Neil Cavuto: Who wins now that Wal-Mart has pledged to help its 1.3 million workers get out and vote in November?
Jack Welch: I think in general the public wins – the country wins. I think Wal-Mart is such a great force for positive impact in this country. Look at what they did with generic drugs – dropping the price. Who needs that more than anybody? The weakest among us need that. Wal-Mart continues to improve productivity. It's the inflation fighter for the country. Wal-Mart is a force for good.
Neil Cavuto: So they get those 1.3 million voters out there. Which way are they going to go: Republican or Democrat?
Jim Rogers: It's certainly good for the country. Normally, you would think they would vote for the Democrats, but Wal-Mart is a lot smarter than all of us put together, and I'm sure they've figured this out – it's going to be good for Wal-Mart first of all; it's going to be good for the country second, and it's going to be good for the Republicans third.
Neil Cavuto: Why the Republicans and not the Democrats?
Jim Rogers: Because the Republicans are friendly to Wal-Mart.
Neil Cavuto: But would the workers care that the Republicans are friendly to Wal-Mart? Aren't a lot of the workers ticked off at Wal-Mart?
Jim Rogers: No, no, no! The workers are happy to be working for Wal-Mart. Nobody's making them work for Wal-Mart.
Rebecca Gomez: The easy answer would be that the Democrats would win the Wal-Mart worker vote, because they are low-income people who would be more apt to vote Democrat, but I don't think it will have much impact because even though you get 1.3 million people registered to vote, that doesn't mean they will vote. This particular group has a low voter turnout.
Gregg Hymowitz: Jack and Jim are both wrong here. Yes, Wal-Mart has done a very good job at the retail level, but it's done a very poor job vis a vie its employees. Many of its employees don't make wages high enough to take them out of the poverty level. There are a number of employees who don't get health insurance. There have been so many lawsuits against Wal-Mart by its workers – sexual discrimination suits, race discrimination suits, but the most troubling thing about this whole ‘get-out-the-vote' thing is: Why should a public corporation spend money to get out a vote when it has potential political ramifications? Shouldn't the shareholders be upset at this?
Jack Welch: The shareowners want to get Wal-Mart's beliefs and what Wal-Mart is doing in front of the public. The Democrats have jumped on the ‘Bash Wal-Mart' gang led by the unions, who started all this. Take a look at Chicago: three hundred Wal-Mart jobs up for grabs, and twenty-five thousand applicants – more than eighty applicants for every job. Wal-Mart's a bad place to work?
Gregg Hymowitz: Are you telling me that shareholders want companies to spend shareholder money to get out their view on politics?
Jack Welch: If Wal-Mart is being bashed in the marketplace, it's potential for disaster in terms of sales; it can be impacted. These employees would lose jobs, and there would be a negative impact on the company.
Jim Rogers: Listen to Jack. Twenty-five thousand people applied to work for Wal-Mart. Nobody made them go there. They didn't have a gun at their head. They wanted to work at Wal-Mart.
Neil Cavuto: Bob, to the bigger issue here: the net gain from the $4 drugs that Wal-Mart introduced this week – is the greater good served by the greater population getting these good deals?
Bob Froehlich: Absolutely it is. And Wal-Mart is making a move to do things like that. As for getting out the vote, we are assuming it's going to work. Wal-Mart is a great company. I think Lee Scott is a phenomenal CEO, but the fact of the matter is there are great political organizations that can't keep people registered and get out the vote.
Inside Jack's Head
Neil Cavuto: Scandal, corruption, waste! Is the United Nations so messed up that even the world's greatest business leader can't straighten it out? Jack what do you think: too big a mess?
Jack Welch: Well it's too big for me I'll tell you that! You have 192 nations, each with a vote, each equal in their vote in the General Assembly. Then you have the Security Council – five nations that never agree on anything. And when they do agree, and they put in peacekeeping missions like in Bosnia – look what happens. The Serbs start killing Muslims, and they standby so we have to bring in NATO. In Rwanda they haven't done anything. In Lebanon the peacekeeping mission didn't work.
Neil Cavuto: Well if you came in there and said: ‘Alright, there's something wrong with the way this is managed.' What would you do?
Jack Welch: The secretary-general works full-time to keep his job. He's got to keep 192 people relatively happy. They have corruption everywhere you look — the Oil-for-Food scandal, for example. Who got arrested there? Who got indicted? Billions of dollars unaccounted for! A couple of guys resigned, but nothing like what would happen in corporate America if a billion dollars had been lost. We would have guys in jail! Look at the Human Rights Commission. Initially the Commission had Libya, Sudan – people like that on the Human Rights Commission! They changed it to a Council to try and get rid of some of those guys, and now they have 47 players on there – many of them with no human rights record at all.
Neil Cavuto: I talk to so many – even U.S. Senators – who say: ‘You know, for all its warts, better that we have a body like the U.N. than not to have it at all.' What do you say to that?
Jack Welch: I agree, but I think we ought to be pushing the U.N. towards humanitarian efforts. We ought to be talking about it in terms of more transparency, and we ought to be more rigorous about its performance and execution, not have this big fat bureaucracy where everybody can do what they want, enjoy the good life.
Neil Cavuto: What about Hugo Chavez's suggestion: 'Get the U.N. out of the U.S., bring it to my country?'
Jack Welch: I wouldn't put a laundry in his country?
Neil Cavuto: Do you think that the perception that the United Nations is so anti-U.S. is what has most Americans ticked off, and if it were more friendly to the U.S., suddenly we would be more friendly to the U.N.?
Jack Welch: It's still an ineffective body. It doesn't work. Look at the record.
Neil Cavuto: So, the bottom line: if Jack Welch were asked to take over the U.N.?
Jack Welch: Take over the U.N.? Are you kidding me? See you later!
FOX on the Spot
Rebecca: Chavez's "cheap" oil will cost America dearly!
Jack: Republicans will keep the House & the Senate!
Gregg: Jack is wrong! Dems sweep three houses by '08
Bob: D.C. "gridlock" lifts markets 10 percent by year end
Jim: Nat Gas cheaper than oil for home heat this winter
Neil: Beware foreign leaders bearing gifts and kind words!
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Forbes on FOX
In Focus: Protests Against Pope: Good for War on Terror and Economy?
Lea Goldman, associate editor: I think in the end these protests against the pope strengthen a group of people who might have been on the fence on how they feel about radical Islam. This includes moderate Muslims who might have been holding their tongues. I think people are getting fed-up by this knee jerk reaction from radical Muslims to head to the mattresses at every slightest offense. A peaceful religion does not require those kinds of defenses. This helps the market because it rallies the troops against the radicals and it might bolster support for what is going on in the Middle East and the President's actions.
Quentin Hardy, Silicon Valley bureau chief: Maybe the pope is trying to follow his predecessor. The previous pope knocked out Eastern Europe and Communism by his actions. But he went there and talked to the people and he was direct. This pope did a nasty aside in a speech that was totally unnecessary. Then he comes up with these half-baked apologies.
Elizabeth MacDonald, senior editor: It wasn't a nasty aside. It was a very important speech and he needed to do it. I disagree with a lot of what the pope says, but he is dead right about this one. We need more religious leaders standing up to these religious fanatics who have hijacked a great religion and think it's in their best interest to get to heaven by incinerating people on their way to work. They are wrong and they have to stop.
Mike Maiello, associate editor: The pope is a head of state and he gives opinions and people protest him all the time. It's a legitimate thing to do. I don't think people should make such a big deal about it.
Jim Michaels, editorial vice president: You don't think that killing nuns and burning churches and driving the Christian community out of the Middle East is a radical reaction? What do you think is radical?
Elizabeth MacDonald: The pope said "not to act reasonably with logos is contrary to the nature of God". I think the pope is absolutely right to stand up and say this stuff has to stop. And when it does, the global economy will roar.
Flipside: Best Way to End Iran Threat: Start Doing Business With Iran!
Victoria Barret, associate editor: I say iPods not bombs. There is no question that the Mullahs in Iran are bad guys doing bad things. But lets talk about what works and what doesn't work. What doesn't work are sanctions against North Korea, Cuba and some would say Iraq. What does work? Look at China and Russia. We kept the dialog open and we flooded them with capitalism and now these countries are really turning around and we are in a good relationship with them internationally.
Jim Michaels: A lot of the Iranian people are already on our side. They are ruled by a gang who seized power and a suppressed democracy. It is that government who is our enemy. It is that government who we shouldn't help.
John Rutledge, Forbes contributor: There's not an Iran. There are 70 million people and a government. The government is evil. But the people in Iran have more positive feelings about America than any other state in the Middle East. We should encourage that. You can't do foreign policy on the television.
Elizabeth MacDonald: Countries and companies have been trading with Iran for years. Trade with the EU has tripled since 2000. What's happened? The mullahs have become entrenched further. Thousands of political dissidents have been executed or jailed. They are insisting on enriching uranium and threatening Israel at the same time. That's a real problem.
Quentin Hardy: We did a lot of violence in Iraq and a crazy man got elected in Iran. There is a link. If we do violence and subject them to sanctions, the people will like us less.
Mike Ozanian, senior editor: We know what they want to do with uranium. They want to kill us! We should find out where it is, where they are trying to build these bombs and annihilate those areas right now! I don't care what they buy. These people have come out and said they want to kill us and eliminate Israel. If we don't tackle this now, it's going to be a much more dangerous problem down the road.
Informer: Forbes 400 Rich List Stocks
John Rutledge: I like Irwin Jacobs from the Forbes 400 list and Qualcomm (QCOM). He's a genuine genius. I like to invest in companies where I know the CEO. Irwin is terrific. They have a revenue model that makes money both from renting I.P. and from selling products. They are also big in Asia, a growing market.
Elizabeth MacDonald: This sounds like a great stock but this stock hasn't really moved since late 2004. I'm waiting for this stock to move before I buy it. I like Sheldon Adelson and Las Vegas Sands (LVS). It's a gambling company. They've got a toehold on Macau, which is 30 minutes outside of Hong Kong. They also have a gambling license for Singapore. This is a stock that could pop. It's a little rich at 55 times earnings, but I still think it's a good play.
John Rutledge: I don't like Las Vegas real-estate risks for a near term thing. And, there is a lot of ways to make money and I don't like to make money in gambling.
Lea Goldman: I like the hit maker Steven Spielberg and his DreamWorks Animation (DWA). It's a bargain, at about 23 bucks a share. This company has become the Disney of animated films.
Mike Ozanian: I'm hesitant because Paul Allen who is the largest shareholder has the right to issue a lot more shares of this company. I like Sumner Redstone and Viacom (VIA.B). It's a great collection of assets.
Lea Goldman: Redstone has fired his two biggest guys, Tom Cruise and Tom Freston. Talk about risky. I don't know where this guy is going?
Maker & Breakers
• Citigroup (C)
Neil Hennessy, president of Hennessy Funds: MAKER
If you believe, like I do, that the Dow Index is going to head through 12,000 this year and 13,000 next year, then Citigroup and the financial companies are going to do really well. There's a lot of underwriting business out there and there's a lot of assets that are going to continue to grow. Citigroup is positioned very well to take advantage of that. I think that this company will head to $60 in one year. (Friday's close: $49.50)
Mike Ozanian: BREAKER
I think that this stock is near its 10-year high and its balance sheet is a bit too debt heavy.
Victoria Barret: MAKER
It looks like the Fed is going to be easing up on interest rates and that's great news for a company like Citigroup.
• Dupont (DD)
Neil Hennessy: MAKER
This stock is also a part of the Dow Jones Industrials, so if you believe this Dow 13,000 story, this stock wins too. Commodity prices are coming down. Dupont is into everything, so if you believe the economy is going to do well, Dupont will do well too. I think it can head to $52 in one year. (Friday's close: $42.32)
Victoria Barret: MAKER
What I like about Dupont is that you get good profits at a cheap price. They are also betting on the future with some great technology.
Mike Ozanian: MAKER
They've been beating earnings estimates and they've been passing along price increases to their customers.
David Asman, host: But these guys have a lot of business in Thailand. With the coup there is that going to be a problem?
Neil Hennessy: No. I don't even think that Thailand shows up on their balance sheet.
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Our "Cashin' In" crew this week: Wayne Rogers, Wayne Rogers and Company; Jonathan Hoenig, Capitalistpig Asset Management; Jonas Max Ferris, MAXfunds.com; Dagen McDowell, FOX Business News; John "Bradshaw" Layfield, Northeast Securities, and Paul McGuire, "The Paul McGuire Show."
Stock Smarts: Chavez's Cla$$ War!
One of America's archenemies is taking his message of hate to the United Nations and then out onto the streets of New York. Is Wall Street worried? First he used the U.N. as a stage to call President Bush the Devil. Then he took his message of hate to the streets of New York, all the while promising cheaper oil for low income Americans. Hugo Chavez playing the class warfare card this week, Wayne, is this something we should be worried about?
Wayne Rogers, Wayne Rogers and Company: The guy is a maniac. I mean, he is a clown and a maniac. The whole thing he said about Bush being there and he smelled sulfur… The sulfur he smells is the bad oil he is producing or he's just smoking funny cigarettes. It's terrible that we allow this to happen. That's what I think is embarrassing. And the fact that they invited Ahmadinejad to the Council on Foreign Relations and let him speak? I mean, would you invite Hitler to lunch? Would you invite Charles Manson to sit down and tell you how to run things? It's insane.
Terry Keenan: Jonathan, what did you make of this whole spectacle this week?
Jonathan Hoenig, Capitalistpig Asset Management: Wayne says he is a maniac, but he is a socialist. That's what he is.
Terry Keenan: That's even worse than a maniac for you, Jonathan.
Jonathan Hoenig: Absolutely. This man doesn't respect private property or capitalism or individual rights. And he should take the U.N. back to Venezuela and that traitor Danny Glover. Take him back with you because we don't want him. We should withdraw from such corrupt worthless organizations, like the U.N., that gives this man such a platform. Get him out of here.
Dagen McDowell, FOX Business News: The problem is we need his oil. His country is the fourth largest foreign supplier to the United States. It's a tough relationship we have with Venezuela but it is mutually beneficial. He needs our money, we need the oil and it's right off the coast.
John "Bradshaw" Layfield, Northeast Securities: He's an economic terrorist. I don't know why we don't allow bin Laden to have stump speech here in New York. And I'm sure Danny Glover would support him as well. Wayne and Jonathan are exactly right. This is pathetic. This guy is trying to align all of our people that supply oil in the world, Nigeria, Russia, Iran, to form an embargo against us. He wants to cripple the viability of the United States. He is an economic terrorist; he should be thrown out of our country.
Terry Keenan: Instead, he was up in Harlem using his oil as a carrot and stick to low-income Americans.
Paul McGuire, "The Paul McGuire Show": I think this is part of a secret plan from Howard Dean and the D.N.C. I think that Hugo Chavez is going to be the democratic frontrunner for the Democratic party. He is giving all the talking points of the D.N.C. So he is going to be the darling of the Democratic Party. Maybe the next president.
Terry Keenan: They might want to take something from his playbook because cheap oil does resonate in the polls and we have seen the president's poll numbers come up as oil prices come down.
Jonas Max Ferris, MAXfunds.com: I think you are touching on the real issue, which is the total number of people outraged by this. It seems like a lot here, but in reality it's pretty low, especially internationally. I think if he tried this three or four years ago, Americans in the world would be outraged. But today, we are losing, to some extent, the public perception; this leftist, socialist, nationalism thing is gaining traction around the world and in South America.
Jonathan Hoenig: If you were Venezuelan…
Jonas Max Ferris: If I was a Venezuelan, I'd be mad that he is giving away to our poor. His barrios are far poorer than the neighborhoods in America. But that's another story. The reality is that people are buying it. People in America are even buying it. Bush's ratings are not high around the world. I think Wall Street has to worry about a shift to the left and a shift to more nationalist countries as we're screwing around.
Wayne Rogers: Maybe that's saying something about the intelligence of the public. Maybe we are not informed. Maybe we are morons, if we believe this kind of stuff. I'm serious and Jonas is right. Would he be able to say these things, would they invite our leaders down there to say the same kinds of things he is saying in this country? Why don't people just think about that?
Dagen McDowell: Wayne, maybe this week's spectacle will wake everybody up in this country and maybe we will actually do something hardcore to get us off foreign oil. That has got to mean paying more. The American people have got to realize that.
John "Bradshaw" Layfield: But Jonathan is right, Chavez is using Socialism 101 by trying to appeal to the masses. He is appealing to the poor. He hates the free markets. He sends Citgo over here to make millions of dollars, then they give a few pennies to a few poor neighborhoods, but they bring all the cash back to him. Chavez is worried about oil prices falling, because his oil production is falling in Venezuela. If oil prices do fall, which they are, he could be out. And if he is out, I'm buying drinks.
Terry Keenan: And he is worried about that. We saw that in the last OPEC meeting. He wanted to cut production. Paul, Americans are taking Chavez's cheap oil. Should we refuse to take it?
Paul McGuire: As you know, Chavez is a disciple of Fidel Castro. I think there is going to be a certain appeal to lower-income demographics, maybe some of the demographics of the Democratic Party. But I don't think the average American is going to buy this cheap oil trick. I think there's going to be a backlash toward the Democratic Party and towards Hugo Chavez. I think the American people can see right through it.
Dagen McDowell: But Paul, is there going to be a big enough backlash in this country that we stop buying all that oil from Venezuela? We are the biggest customer in this country for Venezuelan oil. Is that going to stop? Probably not.
Paul McGuire: I certainly hope you are wrong. I hope Americans do wake up and I hope we stop buying Venezuelan oil.
Terry Keenan: Jonathan, are they going to wake up in time by January when this guy wants to be on the U.N. Security Council and he might get on?
Jonathan Hoenig: To be honest I hope we are long out of the U.N. and Wayne is putting up his townhouse on the Upper East Side before he gets on the Security Council. Chavez, the big man, it's so easy for him to give away somebody else's wealth. At least when Richard Branson gives away billions of dollars, or Bill Gates, it's their money. Chavez is giving away the people of Venezuela's money. I just don't understand why we send a billion dollars a year, talk about a waste of money, to the U.N., which legitimizes these crackpots.
Jonas Max Ferris: I think you are all underestimating how popular giving out oil is when prices are higher. They don't analyze it the way you do. That this guy single-handedly almost destroyed his own oil infrastructure when he did more nationalization recently. People don't think that way. They think, ‘oil's high, Bush isn't doing anything about it, Chavez is giving out oil to our own people and our own government and oil companies don't do it.' That's how voters think.
Terry Keenan: That goes to Wayne's point that Americans need to wake up.
Wayne Rogers: I agree. Of course you can't educate the public overnight but they should be reading, they should be listening to this, they should see this guy. All you've got to do is see that and you've got to walk away.
Jonathan Hoenig: You don't think that he would love to put his best friend, Ahmadinejad's, missiles somewhere there in Venezuela? That's what you really have to worry about.
John "Bradshaw" Layfield: To go to Dagen's point, we'd better get away from Venezuelan oil anyway, because they are making a deal with China right now where they are not going to shift their oil somewhere else. They are having a tough time, it's going to cost them a fortune of money. But we better get away from it because they are going to take it away from us as soon as they can.
Paul McGuire: I think the American people can see through it. When you spend money at Citgo, you are giving money to Al Qaeda. Americans can see that.
Cashin' In: Build the Wall Now?
Building a wall to protect America; for many it's the key component to immigration reform and the Senate could take up the issue as early as next week with one final push before Election Day. John, is it time to figure out what to do about this problem and build a wall?
John "Bradshaw" Layfield, Northeast Securities: Absolutely. Everything with immigration reform starts with a wall or some form of border security. Illegal aliens cost us $67-87 billion per year. Immigration reform does not make any difference unless we know who is in our country. And that starts with a secure border.
Terry Keenan: But Paul, people don't even use fences for their dogs anymore. They use electronic fences. Why can't we have some sort of electronic security system? Do we really need a wall?
Paul McGuire, "The Paul McGuire Show": Well Terry, you're absolutely right. I think the wall is theater. It's acting. I don't think that there's any real intention in immigration reform, because Wall Street and the investors behind both parties want open borders. They want to see the increased flow of good services and people. The whole border wall thing in immigration is a farce.
Jonathan Hoenig, Capitalistpig Asset Management: Why does that scare so many people, though? More trade, more immigrants. I mean, immigrants built this country.
Paul McGuire: You are talking about the demise of the American middle-class.
Jonathan Hoenig: I'm talking about the demise of America. Everyone is so quick to cut off immigrants. Where did their great-grandparents come from? When they came in the 20's, there was no such thing as an illegal immigrant. We should open up the borders.
Paul McGuire: We are talking about 100 million immigrants over 20 years who are dependent on social services. We are not talking about the Italians and the Irish and the Portuguese.
Terry Keenan: Well, there are not 100 million illegal immigrants in this country by even the most aggressive measures.
Paul McGuire: Not now, but over the next 20 years.
Wayne Rogers, Wayne Rogers and Company: We are not living in our grandfathers' time. You know, the times have changed enormously and the balance of population in the United States has changed dramatically. And, for example, Southern California has a huge Asian population as well as a Latino population. You are now in the minority there.
Terry Keenan: But we are not going to be able to get immigrants from France or Ireland or wherever because those populations are not growing.
Wayne Rogers: Well, I'm not suggesting you should, either. I'm just saying it's a fact and you have to deal with it.
Jonas Max Ferris, MAXfunds.com: And they have free healthcare and we don't. Why would they come here.
Dagen McDowell, FOX Business News: The disappointing thing about this wall bill is that it's just a wall. It's just enforcement the senate could not get through, congress could not get through a broad immigration bill. They couldn't get it signed into law and we need a guest worker program so businesses can bring in workers legally.
Jonas Max Ferris: That's exactly the issue. Any tunneling legislation or wall bill are just things to get people to show up for the election. This isn't a solution because corporations actually like having low-cost labor. They like having more consumers for their products.
John "Bradshaw" Layfield: But you're talking about what Wall Street likes. Wall Street was very close to 9/11. If you don't secure a border, you don't know who's in here. You don't know if child molesters are in here and you don't know if al Qaeda is in here.
Terry Keenan: What about a national identity card? Then you know who is here.
John "Bradshaw" Layfield: We have to secure the border first.
Dagen McDowell: However, enforcement, like a wall without a guest worker program, without some sort of way to legally bring people in, just hurts businesses in this country and you are seeing it in the farm business.
John "Bradshaw" Layfield: If you have a hole in a boat, you can't deal with the water in the boat until you plug the hole first.
Jonathan Hoenig: Let's say we keep out the known criminals and the lepers with infectious diseases. They are a threat so there is no question. You are saying you are ready to let everyone else in? Because you seem like the kind of guy who is saying ‘legally.' What does that mean? That means they get in line for six years. What makes a foreigner a criminal? Because they don't want to rent an apartment?
Terry Keenan: Because we have laws in place that they are violating.
John "Bradshaw" Layfield" They are called illegal aliens. The adjective means that they are not legal.
Terry Keenan: Maybe the laws need to be changed. Paul?
Paul McGuire: Look, I live in California. We have had about 84 hospitals closed, our social services are overwhelmed. We have an annual deficit of $1.8 billion.
Terry Keenan: But if they were paying into the system, wouldn't that solve a lot of problems if they started to pay taxes and Social Security and get healthcare?
Paul McGuire But Terry, unfortunately they are not paying into the system.
Terry Keenan: Because they are here illegal, that's the problem.
Paul McGuire: But they are low-skilled workers and they are dependent upon social services. We're not talking about medium-skilled or high skilled workers. We are talking about letting people in who have to be dependent upon government. Basically what this is all about is big business getting a free, cheap source of labor and we subsidize it.
Best Bets: Fall Risers!
Stocks that could rise up as we head into the fall? Let's get our groups best bets!
John's pick: American Tower (AMT)
John "Bradshaw" Layfield, Northeast Securities: All the downloads, all the cell phones that are getting music and downloading music videos and music to listen to are going to increase American Tower.
Terry Keenan: How is that going to help them?
John "Bradshaw" Layfield: American Tower is the largest infrastructure of cell phone towers; the extra data transfers make the cell phone people pay them more for the towers and their existing structure.
Jonas Max Ferris, MAXfunds.com: That's all true, but their customer base are all consolidating. It's like having one giant customer, like a Wal-Mart, which makes it very hard to be in business.
Wayne Rogers, Wayne Rogers and Company: I own the stock, I bought the stock 3-4 months ago. Now I'm finding out why I bought it.
John "Bradshaw" Layfield: And I own it as well.
Terry Keenan: Wayne, are going to hold on to it.
Wayne Rogers: Yes, I have a stop/loss under it, but it's moving.
Wayne's pick: NASDAQ (NDAQ)
Wayne Rogers: I like the NASDAQ. All of the exchanges that have gone public have done very well and this one had a big rise, came down, and is starting back again.
Terry Keenan: John, you have been on this trend for a while. What do you think?
John "Bradshaw" Layfield: I think he's got a great trend. I think the trend is going to go up and the NASDAQ is one place that is a great stock to own right now.
Terry Keenan: It hasn't done so well lately.
Jonas Max Ferris: No, but it's cheap. I like it better than the commodity exchanges.
Jonas' pick: Microsoft (MSFT)
Jonas Max Ferris: This fall, I see a lot of money going into the big cap techs like Microsoft, Oracle (ORCL) or Intel (INTC). Go down the line. They're going to seem really safe going into a slowing economy. The money is coming out of commodities. Microsoft is where you want to be. It's been hot recently. It's going to stay strong.
John "Bradshaw" Layfield: It's a one-horse pony with Microsoft Word. They gave $26 billion back to the share shoulders, because they couldn't find anything to do with that money. They could have bought a small country for that. It's dead money right now. It's a great company, but dead money.
Wayne Rogers: I agree with John. The stock has been flat for what, four or five years?
Terry Keenan: Five, six, maybe.
Wayne Rogers: I don't see how you get a bump out of this thing, it's too big.
Jonas Max Ferris: It's been bumping.
John "Bradshaw" Layfield: Bumping what?
Question: "I own shares of Starbucks (SBUX) and saw they are raising coffee prices. What's that mean to the stock?" – Doug, Los Angeles, CA
Dagen McDowell, FOX Business News: If this java juggernaut can raise prices and not crimp sales at all, then it's a great thing for Starbucks. So frankly, if you own the stock, hold onto it. I wouldn't buy it here. It has made a big pop in just the last month, but hang onto it because this company has proven the naysayers wrong time and again, which Jonathan can attest to.
Jonathan Hoenig, Capitalistpig Asset Management: I should have held on. But Terry, talk about drug control in this country. A cup of Starbucks coffee is like a big joint and a can is like crack cocaine. They could charge $20 a glass for this stuff. I'm going to buy it no matter what. McDonald's (MCD), Jack in the Box (JBX), others have gotten a bump. So I wouldn't fight it. I should have held on.
Terry Keenan: There seems to be no price sensitivity in terms of what people pay.
Wayne Rogers, Wayne Rogers and Company: I agree, I like it.
John "Bradshaw" Layfield: I think they have a great opportunity in China but that they are reaching a saturation point here. I really think they are. This is a coffee house with a 40-something P.E.
Terry Keenan: But if a billion Chinese start drinking this stuff, we had better watch out.
Question: "I love shopping at Whole Foods (WFMI), even though it is so expensive. How does the stock look?" – Chris, Missoula, MT
Jonathan Hoenig: Look what it has going for it. They have the olive bar, the almond butter, the cheese bar, and the tuna jerky. This is a terrific store. I think it is kind of a weak stock right now. I want to see it hit $70 before I put new money into Whole Foods. Great store, but not such a great stock.
Wayne Rogers: I owned it at one time and I like it. I think it's a terrific company. I'm not sure if this is the price where I would buy it. But it's a terrific company with a great long-term potential.
Terry Keenan: So if it came down, you might be a buyer.
Wayne Rogers: Oh, yes.
John "Bradshaw" Layfield: If you want organic food, go to Amish country in Pennsylvania. They have more per acre than most commercial farms.
Dagen McDowell: Or Wal-Mart (WMT).
John "Bradshaw" Layfield: Wal-Mart is getting into organic foods. They are going to kill the margins of Whole Foods.
Terry Keenan: And does the spinach scare hurt them at all?
Dagen McDowell: No, people are going to go there anyway. Actually, it might help them because they go there for organic foods, but I wouldn't buy the stock. The groceries are expensive and so are the shares.
John "Bradshaw" Layfield: I own Wal-Mart. Buy Wal-Mart if you want to get into organic foods.
Terry Keenan: And now they are getting into generic drugs as well.
John "Bradshaw" Layfield: And they'll get into banking by the end of next year.