CNNfn: In The Money
Deborah Marchini

DEBORAH MARCHINI, CNNfn anchor, IN THE MONEY: Good morning, and welcome to IN THE MONEY. I’m Deborah Marchini.

Drug and utility stocks in the news a lot lately. We will check in with our markets guest: Greg Warr, of Gregory D. Warr and Company.

Labor troubles could affect two of the country’s biggest airlines. And we will take a look at whether artistic expression in the workplace can lead to a happier and more efficient work environment. First, I’m going to do something no one should ever forget to do, put a microphone on.

My next guest thinks investors are standing on the sidelines, waiting for Congress to approve some kind of tax cut plan. Joining me is Greg Warr, CEO of Gregory D. Warr and Company. And good morning, good to have you with us.

GREG WARR, CEO, GREGORY D. WARR & CO.: Good morning.

MARCHINI: We’re not just waiting for Mr. Greenspan tomorrow, are we?

WARR: No, we’re not. Really, the problem with the economy right now is a consumption problem. We need people to start going in and buying products. We really saw a drop off when the market came down in April. And it really hasn’t picked up. You have production, which is increasing, surprisingly.

MARCHINI: All right, basically the consumer is the biggest chunk of the U.S. economy. So we’ll forget about the business sector for just a moment. But we’re seeing production cutbacks, as you said. And they’re - the scaling back of capital spending plans. But what about that consumer spending, do you need a tax cut to bring it back?

WARR: Instantaneously, I think you need the tax cut. Because what you need is a way of getting money into the economy and the market very, very quickly. And the tax cut will do that because it`s supposed to be retroactive from January. So that will help people in taxes this year if they file April 15, take it to the very end. What Mr. Greenspan can do, though, is, if he gives a bias on further decreasing, what he then does is if you have a tax cut, he then shows that there is a greater ability for people to make money and bring in money into the economy farther down the road instead of just having it look like it’s going to stop after the tax cut.

MARCHINI: Yes, but if it sounds - if you make it sound like the economy might still be headed downhill, he`s going to scare a lot of consumers even more, right?

WARR: Well, that could be true. But at this point in time he may not do that farther down the road. But if he looks out and says if I need to, I’m going to keep cutting interest rates, then at least that shows that you have the Federal government behind us, right?

MARCHINI: All right, take a look at this and tell me how you’d play it from the perspective of a short-term trader versus how you’d play it from the perspective a long-term trader?

WARR: OK, the tax cut?

MARCHINI: No, the market overall.

WARR: The market overall, I think we’re still in a downward scenario. It looks as though the market probably bottoming out until the beginning of next year. A lot of people had said second quarter and even third quarter. But I don’t really see that. What’s going to happen is as we go into the second, third quarter there, people are going to have to be paying taxes. So you’re not going to have that inflow of cash. You do have an inflow of cash coming in now from the beginning of the year as far as rollover and bonuses that people have. But we’re seeing minor rallies as far as money managers going in and trying to scoop up stocks. But there’s really no support. You don’t have the kind of support we had a year-and-a-half ago as far as people really pumping in their money into the economy.

MARCHINI: That cash on the sidelines may stay on the sidelines.

WARR: It may stay on the sidelines, yes.

MARCHINI: All right, Greg Warr, of Gregory D. Warr and Company, thanks for being with us this morning.

WARR: Thank you, Deborah.