Part 2
Victoria Murphy: Look, I want to vote for Bush. But I feel like I've been lied to. And all I want is a sign that he's maybe mislead us a little bit. But he's been totally unwilling to do that. And loyalty is not necessarily a good thing.. keeping business as usual.
David Asman: Victoria do you really believe that even if the President did believe he was lying, he would admit that in public?
Victoria Murphy: Well, no apparently not judging by his speech this week. He's not willing to admit it.
Jim Michaels: Victoria all this criticism says is Bush failed because we didn't get the other countries in. We begged the other countries to come. They were afraid to come in or they didn't have the military force. As far as the U.N. is concerned, a quarter of them are little Saddam Husseins anyhow. And another quarter of them got their hands dirty doing business with him. Unfortunately, we'd love to have their support, but they're not going to give it just because you fire the secretary of defense.
Elizabeth MacDonald: You talk to people in the markets, they see a major spin job. They're kind of jaded, they always expect politicians to be spinning everything, but Bush has been spinning like crazy on this. But the thing is, I wonder if this focus is displaced. The terrorists have been killing innocent people. They're focused on innocent people, and they've been burning women alive and mutilating women in these countries where they operate.
Quentin Hardy: Jim, you talk about the hazards of bringing in Europeans, you're not paying attention to current events. This week, they brought in the Iranians to help us out. The Iranians are who Bush is dealing with instead. And you worry about the UN, they've agreed to bring in the UN for the handover of goverment at the end of June. He's just going into it backwards with no clear sight.
Jim Michaels: So what are you complaining about? Now they're finally coming around to giving us some help. But when we first went in there, everyone washed their hands of it. And the administration just said, if they don't like the provisional government, we'll do it differently.
Dennis Kneale: I think there's a big flaw with the argument our west coast colleagues are making. They really blame Bush for the problems, and now they want Bush to fire lieutenants. That's cowardly. If you blame Bush, don't vote for him.
Victoria Murphy: I don't want to vote for Kerry, but I may have to. Bush's mistake was taking on two wars at once, and he's run the risk of losing both of them and suffering severe casualties along the way.
The Flipside
Why does John Kerry want you to be miserable, even if you're not? Is Kerry actually trying to bring down the economy?
David Asman: John Kerry has created a new "Misery Index" that's supposed to measure how bad the economy is. The old Misery Index simply combined inflation with unemployment and is actually lower than its been in decades. But Kerry's found a new formula that makes everyone seem worse off than they've ever been.
Jim Michaels: The new formula is "Kerry-enomics." And if this is an example of "Kerry-enomics," spare us from the guy. If you spit in the wind you're going to get a big glob back in your face. And this guy is spitting into the wind. The economy's strong as I've seen it in years, and yet this guy's trying to talk it down. I think he'd like a dip in the economy, but it isn't going to happen.
Dennis Kneale: This index thing that Kerry came up with is the worst kind of data-dredging. But, he does not mean with this index to take down the economy. If Americans thought Kerry was trying to take down the economy by making us feel more pessimistic, they wouldn't vote for him at all. That's suicidal. That's not what he's doing at all. But he's gotta have something to market, he's gotta have something to talk about.
David Asman: Elizabeth, where do these numbers that Kerry is using come from?
Elizabeth MacDonald: I spent some time looking at his numbers. And he's right to highlight that health care costs are going up, tuition costs are going up, But if you look closer, I felt like I was reading an Enron annual report, because the disclosures are pretty bad. He uses college tuition costs from public universities which rose 13 percent, he doesn't include private universities, which only rose 5 percent. He also uses pre-tax income for median family income. Of course, that doesn't take into account the Bush tax cuts. And most important, he says this is the worst record of any president ever. He uses stats going back to '76. That's a problem. He's faking it. You can hear Herbert Hoover cheering in his grave.
David Asman: So Quentin, what's happening here is that we've got a guy who's just cherrypicking the bad stuff?
Quentin Hardy: Well, what's happening here is John Kerry's a politician. But the misery index never made sense anyway. Inflation and unemployment aren't really linked. Jimmy Carter used it as kind of a buzz-phrase. It blew back at him in the 80's. It hasn't really made sense since (former Fed Chairman) Paul Volcker nailed bad inflation 20 years ago.
Bruce Upbin, senior editor: The economy isn't perfect. But its much better than Kerry says it is with his jerryrigged index. If he were smart, he would use the actual misery index, which has only gotten worse since Bush has come to office. Its better than it was in the Clinton years, but Bush inherited low inflation and low employment. He should just point to that and say Bush made it worse.
Jim Michaels: The evidence is becoming overwhelming that the economy is gaining strength, the unemployment figures are getting better. Look, it would be very convenient for the Democrats. I'm not saying they're wishing for it, but it would be very convenient to have this economy slow down. But it hasn't slowed down. Its a freight train coming at us.
David Asman: Dennis, what happens gas prices come down -- which is likely -- before the election. If unemployment comes down. Kerry's misery index will show that things are getting better.
Dennis Kneale: Right now, Kerry's got the groundswell with the ABB crowd: the Anybody But Bush crowd. But he's split between two things: the war in Iraq, which if you rail against that too much you look unpatriotic. Things are not screwed up at all with the economy, but that's the only thing left to go after.
Makes & Breakers
This week our guest stock picker is Tony Dong, senior portfolio manager at Munder Capital. He likes Regis and International Game Technology. Tony's firm owns them both, and Tony personally owns IGT.
• Regis (RGS)
Tony Dong: They own 10,000 hair salons in the U.S. & Canada. Dominates the market. Supercuts is one of their salons. They're 8 times larger than their largest competitor. Tremendous growth potential. We think the stock can go to $50.
Jim Michaels: BREAKER
You've got two of the greatest companies I can think of. that capitalize on two of our greatest weaknesses, gambling and vanity. However, everything comes at a price. Regis is an interesting company. Its had a huge run-up, its too expensive for my taste.
Elizabeth Macdonald: BREAKER
It is too expensive, and I don't know about the product. You go in there, and they sort of spritz your hair with whatever they water ferns with. They don't even wash your hair.
Tony Dong: It sells at 20 times earnings. And its going to grow faster. There's 15 percent growth I think.
• International Game Technology (IGT)
Tony Dong: They make slot machines. Dominating the market space. 70 percent market share. And they make the wide area networks which means you can put a quarter in the slot but have a payout of $100,000+. Fantastic drivers for growth. New jurisdictions like the UK, New York, California. Also there's cashless slot machines -- they don't take money, you just use a card. Less maintenance on the machines. We think the stock can go to $55.
Elizabeth MacDonald: MAKER
I think this is a great stock. Profits are coming in solid, cash flow looks good and the debt looks pretty manageable.
Jim Michaels: BREAKER
Gambling is a great business, but the stock has more than doubled. Its selling at a very high multiple. All that good stuff is factored in, I'm a breaker.
The Informer
Forbes.com's list of the fastest growing big companies!
Chana Schoenberger, staff writer: Caremark Rx (CMX). Its a pharmacy-benefits manager. On this list, we've ranked it #19 in sales growth. They provide a middle-man service between a company's health plan and the drug company. I think there's more room to grow. Medicare drug benefits are about to be launched and its not clear how big the pharmacy-benefits companies' role will play in all this. Caremark also just bought Advanced PCS. It was a $6 billion merger. And they're just taking over the market. Their only real competition is Medco, which was spun-off from Merck.
Penelope Patsuris, Forbes.com senior editor: I don't like this stock. I think their role in Medicare is going to be in peril because of all the lawsuits and all the allegations its facing about price gauging. I think when you're trying to reign in Medicare costs and you're going to use a company accused of price gauging you're going to have a problem.
David Asman: Penelope what stock do you like.
Penelope Patsuris: I'm for Nextel (NXTL). The stock's doubled in price, but I can tell you that telecomm's re-emerged, its re-awakened. Nextel has the best price to earnings ratio and it has the best business.
Chana Schoenberger: The problem is, "push-to talk" which is Nextel's walkie-talkie service -- its been their huge thing. but now Verizon and Spring are rolling it out and eventually everyone will have it, and it won't be an advantage for Nextel anymore.
Penelope Patsuris: Nextel's business is proprietary, which is attracting a lot of customers from government and security. And that's business that the Verizons and Sprints of the world can't get. And that business is just starting to grow for Nextel.
Lea Goldman, staff writer: Pulte Homes (PHM). Its already enjoyed a nice gain from the housing market, which is on a tear. And its not going to stop any time soon, even if interest rates rise. That's really driven down the price, its incredibly cheap now. So even if interest rates rise, its offset by low inflation, by consumer confidence, by the growing job market. I really like this stock.
Bruce Upbin: I'm a bear on this stock. Interest rates are going to go up and that will hurt this stock. But look, 7 of the companies on this list are energy companies. And the best one is Valero Energy (VLO). Big refiner. Its the place to be right now in energy because their right in the middle of it. And they're enjoying terrific margins, and will for the future.
Bulls & Bears | Cavuto on Business | Forbes on Fox | Cashin' In
Cashin' In
StockSmarts: More Troops, Less Bull?
How will the market react to more U.S. troops in Iraq?
Stuart Varney of Fox Business News says the market has not reacted at all to the deteriorating conditions in Iraq throughout April, but he thinks it will react positively to adding more U.S. troops there because the market wants America to win in Iraq; it does not want America to be chased out. He says stocks will go up if the latest insurgency is defeated, and they will go down if the insurgency grows stronger.
Bob Bevelacqua, Fox News Military contributor and former Green Beret, believes the market will react positively to more troops, but only if those troops are Iraqis. He says we are about 400,000 troops short of stabilizing the situation there, but adding American troops will only reinforce the idea that the United States is an occupier, and we need to avoid that appearance.
Wayne Rogers of Wayne Rogers & Co. agrees with Bob. He says the market will react negatively if America is forced to place more troops in Iraq, but would welcome more Iraqi troops to help stabilize the country. He believes the United States needs to extract its troops from Iraq quickly and as efficiently as it can while still keeping the peace there.
Jonathan Hoenig of Capitalistpig Asset Management says he’s concerned that the United Nations may get some hand in running Iraq, and he says if that happens, it would be a disaster, and the market would react negatively. He says the market looks weak right now and interest rates are on the rise.
Bob Olstein of The Olstein Funds does not believe the market is reacting to Iraq at all. He says it will react to terrorism, but right now stocks are reacting to interest rates and earnings, and unless interest rates rise unexpectedly because we enter into a protracted war that raises the deficit, then the market won’t react to Iraq.
Jonas Ferris of MAXfunds.com says America could end up having to double its spending if the war escalates and it has to send more troops, and that would have a very negative effect on the market because it would cause interest rates to rise.
Best Bets: Bulls, Bears & Pigs!
Three great stock pickers; three different ways to pick stocks!
Wayne, the ”Bull” likes to buy fast-growing companies that demonstrate earnings acceleration. He likes Chicago Mercantile Exchange Holdings (CME), which closed Friday at $109.98. Wayne says earnings are up about 30 percent in the last year, and he owns shares in the stock. Jonathan says he used to work at the Chicago Merc as a clerk, and he says this exchange is doing everything right at a time when all of these commodities exchanges are consolidating, making this a very attractive stock to own right now. Bob agrees this is great company, but he thinks the stock is fully priced right now and wouldn’t buy it.
Bob the “Bear” likes to buy companies when everyone else is bearish on them so that he can get them cheap and make money on their recovery. Right now he likes Interpublic Group (IPG), which closed Friday at $16.03. He owns shares in the company. Bob says this advertising agency, which is the second largest in the world, ran into some problems because it ran afoul of its basic business and had some accounting issues, but he says the company is back to basics with new management and he expects the stock to recover to the low $20’s in the next 12 to 18 months. Wayne doesn’t like to buy companies that are in decline. He thinks this stock will get cheaper before it recovers. Jonathan says Bob’s a great value stock buyer, but, like Wayne, he doesn’t like to buy stocks that are under pressure.
Jonathan, the “Pig” likes to buy stocks that are in hot sectors and are showing strong price momentum and hitting new highs. He thinks if a stock’s price is rising it has a tendency to keep rising. He likes ING Prime Rate Fund (PPR), which closed Friday at $8.08. He owns shares in this floating rate fund, which he says will go up with rising interest rates -- a trend he says is heating up right now. Bob says this is a relatively safe bet, and he agrees with Jonathan that now is a good time to make it. Wayne says it is a very safe bet, but a slow grower, and he doesn’t find it very exciting.
Stock of The Week
Lori Wachs of Delaware Investments says she believes Coach (COH), which closed Friday at $39.85, will report a quarterly earnings rise of at least 50 percent over the same period last year when it opens its books next week -- continuing a strong growth trend. She thinks that once investors see that the trend is still strong they will buy more stock, and send the price higher. She has put her money where her mouth is – her firm is among the top ten shareholders of Coach.
Jonas says Coach’s momentum is what worries him because at some point it will slow, and when it does, the stock will collapse. He also says insiders have been selling shares, and that always concerns him.
Bob says Coach is a great company with a great balance sheet, but he doesn’t think you can predict how a stock will react in any given week, and he wouldn’t bet on a huge gain given Coach’s current price.
Last week’s Stock of the Week: Linear Technology (LLTC), picked by Adam Lashinsky of Fortune Magazine, fell 2.6 percent.
MoneyMail
To find out who’s ahead in the Cashin’ In Challenge go to www.foxnews.com/challenge
Question: “Who is more responsible for creating jobs: The president or Congress?”
Wayne points out that the President’s administration sends a budget to Congress and then Congress beats up on that budget, and eventually a budget is passed, but he says, ultimately, it’s a good strong economy that creates jobs. Jonathan says it’s the “producers” who produce jobs, not the government. But it’s the government’s job to create legislation that offers producers -- like small business owners -- lower taxes and less regulation so that they can continue to grow and produce more jobs, and he and Wayne both think President Bush understands this better than presidential hopeful, John Kerry. Bob says President Bush’s tax cuts set jobs growth in motion two years ago, and we are seeing the effects of that now. He gives the President credit for the recent growth in jobs.
Question: “Which companies will benefit from maximizing cell phone technology?”
Jonathan says this sector is weak right now, and he doesn’t recommend investing in it. Bob says to play the infrastructure, not the cell phones. He says buy Nortel (NT) and Lucent (LU). He owns shares in both.
Question: “What do you think of Home Depot (HD) stock right now?”
Bob thinks the stock is worth about $40, but he’d like to buy it a little cheaper. It closed Friday at $36.20. Wayne likes the company, but he says the stock doesn’t interest him right now. Jonathan says he won’t be interested in this stock until he sees it moving higher.
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