Bulls And Bears Weekly Wrap Up
By Tobin Smith
Did President Bush Just Decide the Election?
The battle to see who will be the next president rages on, but this week our current president unveiled a $145 billion economic stimulus package that some say could decide the next election before it ever takes place.
Eric Bolling of the Independent Trader says that President Bush's proposal to stimulate the economy will be a big boost to his party because it "injects stimulation right into the consumer." Eric also says that the plan stimulates investment spending. Put the two together, he says, and you get a big boost for the economy and a big boost for the GOP.
I say no way, Eric. History shows that when you give people tax rebates, the majority of that money actually stays in the bank and doesn't get spent by the consumer. But the real difference here is that the last time we had a stimulus package, the whole economic landscape was different. I think the president's package is like a Hail Mary play in football, when you just throw up a long pass and pray that it is going to work. The stimulus plan isn't likely to have much of an effect on the economy, and it certainly won't help the GOP.
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Gary B. Smith of Exemplar Capital says the president is basically drawing attention to the poor economy under a Republican administration. That isn't good for the GOP, and even though the president isn't really responsible for the economy's fortunes, the spin will be that we drifted into hard times under George W. Bush.
Democratic strategist Sascha Burns claims it was the Democrats who were first to push for a stimulus package, not the Republicans. She thinks that the reason we need a stimulus package in the first place is because the president has "trashed" the economy during the past seven years. She added that this plan definitely will remind voters that the GOP was in charge when things were tough.
Scott Bleier of Hybrid Investors argues that it is not the government's job to hand out money to people. He says a better stimulus package would be to cut spending and trim pork barrel projects. Scott doesn't think the proposed stimulus plan, in its current form, will have much of an impact on the economy.
The battle to see who will be the next president rages on, but this week our current president unveiled a $145 billion economic stimulus package that some say could decide the next election before it ever takes place.
Eric Bolling of the Independent Trader says that President Bush's proposal to stimulate the economy will be a big boost to his party because it "injects stimulation right into the consumer." Eric also says that the plan stimulates investment spending. Put the two together, he says, and you get a big boost for the economy and a big boost for the GOP.
I say no way, Eric. History shows that when you give people tax rebates, the majority of that money actually stays in the bank and doesn't get spent by the consumer. But the real difference here is that the last time we had a stimulus package, the whole economic landscape was different. I think the president's package is like a Hail Mary play in football, when you just throw up a long pass and pray that it is going to work. The stimulus plan isn't likely to have much of an effect on the economy, and it certainly won't help the GOP.
Who wouldn't want to earn a decade's worth of wealth in the next two years? Find out how you can ... click here to learn more.
Gary B. Smith of Exemplar Capital says the president is basically drawing attention to the poor economy under a Republican administration. That isn't good for the GOP, and even though the president isn't really responsible for the economy's fortunes, the spin will be that we drifted into hard times under George W. Bush.
Democratic strategist Sascha Burns claims it was the Democrats who were first to push for a stimulus package, not the Republicans. She thinks that the reason we need a stimulus package in the first place is because the president has "trashed" the economy during the past seven years. She added that this plan definitely will remind voters that the GOP was in charge when things were tough.
Scott Bleier of Hybrid Investors argues that it is not the government's job to hand out money to people. He says a better stimulus package would be to cut spending and trim pork barrel projects. Scott doesn't think the proposed stimulus plan, in its current form, will have much of an impact on the economy.
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Pat Dorsey of Morningstar doesn't think the plan helps either political party. He says that given the current economic environment, it's in both parties' interest to get something done in the form of a stimulus. Both sides can play the blame game if nothing gets done, and Pat says being on the receiving end of that blame is actually more harmful to each side than anything else.
I think the ironic thing here is this stimulus plan has Republicans out in front of Democrats to see who can hand out the most money. I thought the GOP was the party of fiscal responsibility and small government, but I guess those days are long gone.
Worry-Free Stocks
Times are tight, and the economy and the stock market are fraught with worry. But never fear, the gang has its list of "worry-free" stocks every investor should own in order to sleep well at night. Here's a quick rundown of our each of our favorites:
Gary B. -- Exxon Mobil (XOM). He says this one just keeps going up, up, up. "When we stop using oil, then you can sell it."
Pat -- Realty Income (O). He likes this retail property owner with a great track record of picking properties and increasing its dividend.
Eric -- Procter & Gamble (PG). Eric pulled out the props for this segment, including toothpaste, toilet paper and coffee, all made by Procter & Gamble. He thinks this is a good time to buy consumer staples.
Scott -- Wal-Mart (WMT). He thinks the retail giant's shares are holding up even in the face of broad weakness, and that deep discount stores are big beneficiaries in a slowing economy.
Toby -- Direxion 10- Year Note Bull (DXKLX). This fund moves 2.5 times the direction of 10-Year Treasury notes, and bonds are going to be big during this market downturn.
Sleep tight.
McCain's "Wage Insurance" Plan: Good or Bad for Markets?
Presidential hopeful Sen. John McCain has proposed a beefed-up unemployment insurance plan that essentially has the government paying laid-off workers while they retrain for new jobs. But is this new "wage insurance" plan good for the job market and the economy?
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Gary B. says this is "horrible" for the economy and the job market. He argues that the whole reason companies grow and thrive is because of competition. Some industries grow and some die off and, unfortunately, workers get caught up in this. There is no way to always guarantee full employment, and trying to do so is just bad all around.
Sascha disagrees with Gary, saying that although capitalism and free trade are good, one of the consequences is that workers sometimes lose their jobs. She argues that you can't just say "sorry" to these people. We have to help them get through tough times, and ideas like the wage insurance plan are one way of helping.
Eric weighed in on Gary's side, saying that this plan is a really bad idea and would lead to fewer incentives for workers to do better. He added that it would be bad for productivity, and bad for America.
And … Predictions
I know it's tough to take, but the time to tap out has arrived. Yes, the final take is here, and we've arrived at the last exit before toll we lovingly label, Predictions.
Gary B. was in the hot seat this week, and his prediction is that the Fed will step in with a big interest rate cut. That, says Gary, will mark the bottom of this current downtrend, and that means stocks will likely be up 20% or more for the rest of 2008.
Pat says technology spending is still with us, particularly on IT services. He likes IT services firm Accenture (ACN), and he thinks its shares will be up 50% during the next two years.
Scott predicts that Barry Diller's Internet conglomerate IAC/InterActiveCorp (IACI) will be the big beneficiary of more and more business taking place online. Scott thinks the shares will see a 50% move higher in 2008.
Eric says platinum is the precious metal destined to shine this year, and one reason why is catalytic converters. The world is buying more cars, thanks in large part to huge growth in China, and that means more demand for platinum, which is used in catalytic converters.
I predict that this ludicrous popcorn lawsuit -- the one where some silly person says eating bags of popcorn is the reason for his bad health -- will fall by the wayside and amount to nothing. The big winner here is ConAgra Foods (CAG), and I think its stock will go up 25% from here.
Pass the butter,
Toby
Tobin Smith is the founder of ChangeWave Research, the editor of ChangeWave Investing and a regular panelist on Fox News Channel's investment roundtable, "Bulls & Bears," which airs Saturdays at 10 a.m. Eastern/7 a.m. Pacific. His market commentary can be found in the ChangeWave WaveWire and he provides more specific recommendations and advice through his ChangeWave Investing service. Click here to sign up for a RISK-FREE trial subscription.
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