Marketwatch: Correction could be coming

The title is the headline on the front page. The article is titled differently.

There are warning messages in the financial media. Hold onto your hats.

www.marketwatch.com...

Jan. 23, 2010, 10:02 a.m. EST
Bears come out of hibernation
FOMC, Bernanke, State of Union and more earnings could provide fresh bait

SAN FRANCISCO (MarketWatch) -- U.S. stocks face a lengthy lineup of political and corporate events in the coming week that could reinforce -- or derail -- a recent bout of selling some analysts are calling a correction.

A Federal Reserve rate meeting, President Barack Obama's state of the union address and the possibility that Fed Chairman Ben Bernanke won't get his confirmation vote may take center stage.

Plus, 12 members of the Dow Jones Industrial Average (INDU 10,173, -216.90, -2.09%) and 130 companies in the S&P 500 (SPX 1,092, -24.72, -2.21%) report results. And China may again spook markets if data or policymaker comments signal Beijing is getting closer to raising rates.

Global monetary policy, U.S. politics and corporate results can take much of the credit for stocks' sorry performance in the past week.

"This is a correction precipitated by fear about a Chinese slowdown, uncertainty at the Fed and populist rhetoric by Mr. Obama on banks," said John Praveen, chief investment strategist at Prudential International Investments Advisers.

The Dow average suffered its worst weekly point loss since February 2009, losing 437 points, and closed 5.5% off its recent 52-week high. The S&P 500 closed 3.9% lower for the week and 5% from a recent high. The Nasdaq Composite (COMP 2,205, -60.41, -2.67%) tumbled 3.6% last week.

"Correction time again," Michael Hartnett, chief global equity strategist at Bank of America-Merrill Lynch wrote in a note made public Friday.

He cited "excess New Year optimism," for the pullback, plus concern over monetary policy tightening in China and worries over U.S. financial policies that could impact the creation of credit.

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I think it's coming as well. Way too many things scheduled in the coming days and weeks to things to continue to plod along while being artificially propped up. February should be a VERY interesting month, to say the very least...

If it does not happen in February, it is almost certain in March and absolutely certain by 3rd June 2010.

Looking at the US is a mug's game...the market always discounts ahead of time.

That's why the big accident that took place in 1987 was actually triggered in the UK.

Same this time around... Britain is a real disaster zone waiting to happen. The UK is way ahead of the US on the curve regarding hyper-inflation, debt default and total economic collapse.

By law, there must be a General Electyion by 3rd June 2010 if not before. Gordon Brown has less chance of being re-elected than Vladimir Putin becoming Pope. In late March, he will have one last chance at a budget, an economic statement which would allow him to pull in the voters.

In the last 15 months, Gordy has more than doubled the national debt in the UK and the economy is still slumping. After severe deflation, inflation is roaring ahead as the British pound slams through the floor. Furthermore, Gordy is marking himself out as condemning the opposition parties calling for cuts in public spending. A spend, spend, spend budget in the March would risk a Bond re-evaluation as AA instead of AAA, causing a bind market and sterling crash. Following this, the Governement would have difficulty in raising new money to finance its interest payments and probably bring down half the banking system. Worse, Gordy has made it clear that he will intervene to save any bank in difficulty, massively increasing the gushing of cahs out of the UK treasury and causing a further flight from Bonds and sterling. Result? UK stock market being totalled in late March triggering a worldwide sell off.

My guess is that Gordy is on target to take the DOw Jones down to about 4,500 single-handedly by May.