THEME: CHINA: THE PHANTOM MENACE
Ron Insana of CNBC

Ron Insana is here for today for “Insana's Insights.” The focus today, the dollar and commodities and commodities have been going up a lot.

Yeah and they've been moving of course Tyler, an inverse lock step and that Tony Creszenci from Miller Taybak gave five reasons this morning in a missive to clients as to why the dollar fell so sharply today intraday. One of which was that there was new data from the Treasury Department showing that foreign investors have been slowing their purchases of U.S. securities, something that could conceivably pressure the dollar and you see that the index is down sharply today by more then a point to 90.33. He pointed out that in September foreign investors bought just 5 1/2 billion dollars of treasuries compared to an average of about 39 billion dollars a month in the previous four months, they've also slowed their pace of equity purchases. He said there's also been this – and this is rumor not necessarily fact, a so-called bid list circulated on Wall Street of corporate securities that are presumed foreign investor wants to sell, agency securities and the like, and also terrorist activity on the rise, that's hurting the dollar. Technical selling and the dollar exacerbated the down side and then this morning, at 10:34 am the Bush administration invoked a so-called safeguard on China's textile trade in response to a request from U.S. firms that asked for temporary quotas on Chinese goods. So then the specter potentially --

THEME: MARKET TOP

Investment Executives Polled at Annual Paulson Investment Conference

NEW YORK, Nov. 18 /PRNewswire-FirstCall/ -- Last week, Paulson Investment
Company, Inc. (Paulson Investment) polled executives at the 26th Annual
Westergaard SmallCap Conference regarding their outlook on small-cap markets
in 2004. 98 percent of respondents expect growth in small-caps in 2004, with
56 percent anticipating significant growth and 42 percent moderate growth,
rather than negative or no growth.
"Our goal for the survey was to identify what the investment community
anticipates in small-cap market activity in 2004, including growth in industry
segments and investment banking," said Chet Paulson, chairman and founder of
Paulson Investment Company.

and this quote...

Surprising as recent gains have been, they're borne out by fundamentals that are improving the cost of capital for riskier businesses, said Satya Pradhuman, director of small-cap research for Merrill Lynch.

"Small-cap returns, now that they're twice that of the overall market, have become sexy," Pradhuman said. "So while we believe investors must be prepared for a world of lower absolute returns, we also believe smaller stocks will continue to outperform."

Will the last bear please turn out the lights?

THEME: FREE TRADE

Dan DiMicco, president of U.S. steel producer Nucor, said Tuesday, however, that the administration had notified him of no compromise proposal. Nucor began running newspaper ads Tuesday in the Washington area urging the administration not to back down under the threat of EU retaliation. "The president made a promise; we're counting on him to keep it," the Nucor ad said.

THEME: BABY-BOOMERS
USA TODAY

If you're counting on them to finance your retirement, you could be in for a big disappointment.

A new study by AARP suggests that most boomers will receive a small inheritance, if they get anything at all. As of 2001, only about 17% of boomers had received any inheritance. Those that did receive money didn't get much, AARP says. The median inheritance was $47,909.

This wasn't supposed to happen. A few years ago, studies predicted that boomers would inherit trillions of dollars from their parents, a comforting thought for people who hadn't saved much for retirement. But those studies failed to take into account longer life expectancies, soaring health care bills and long-term care, AARP says. All those factors can erode retirees' savings, reducing the size of their children's inheritances.

In addition, a large chunk of retirees' assets aren't transferable. Pensions and Social Security (news - web sites), which can't be left to heirs, account for about half the wealth held by people age 50 and older, AARP says.

For baby boomers, the results point to an inescapable conclusion, says John Gist of AARP Public Policy Institute: "It means they're going to have to save more."

Yet, several other recent studies suggest boomers aren't getting the message. Hewitt Associates, a human resources consulting firm, recently reported that more than 40% of workers who switched jobs last year cashed out their 401(k) plans instead of rolling the money into another retirement savings account. Another survey by Plansponsor.com found that the average participation rate in 401(k) plans fell 3.6 percentage points this year to 72.6%.

The Hewitt study is particularly troubling because a cash-out will leave permanent scars on your retirement portfolio. You'll have to pay income taxes on the withdrawal, plus a 10% penalty if you're under age 591/2. As if forking over a third of your savings to the government isn't bad enough, you'll also give up years of tax-deferred compounding.

Unfortunately, the cash-out trend isn't limited to the young and the restless. While cash-outs were highest among workers ages 20 to 29, about a third of job changers ages 50 to 59 took their 401(k) distributions in cash.

While the greatest percentage of cash-outs involved plans valued at less than $10,000, 20% of job changers with a balance of between $40,000 and $49,000 opted to take cash and enrich the federal government.

The basis of the Bear Market Cycle that we are in is that Boomers do not have enough savings for the future. Drugs will extend their lives and they will live longer. They will also need to work longer. Eventually though, they will need to cash in on the final asset that is supporting them: rising housing prices. This effect will be permanent and you can bet that the 401K system will not have any money for them when they rush en masse to the exits

MEME: PRESIDENTIAL CYCLE
More confidence in this meme...

Delving further into the subject of investment manias, money manager Jeremy Grantham said that he has identified 27 investment bubbles in financial history.

In all 27 cases, he said, prices came back to the trend line that prevailed before the bubble started.

Grantham also talked about the effect of the U.S. presidential election cycle on the stock market. Years one and two in a president's term show stock performance 4 percent and 4.6 percent below the long-term trend, he said.

Year three shows performance 8.7 percent above trend, and ``this is a classic year three'' with strong gains by small stocks, growth stocks, and low-quality stocks.