Coming Week: Upside Down

"I'm skeptical that the benefit of economic stimulus will be much more than demonstrating that people are willing to do something rather than just sit by and watch the economy go down the drain," says Ken Goldstein, economist with the Conference Board.

The tone of the stock market next week is likely to be negative, given that more fourth-quarter earnings reports are due out from the staggering financial industry. Ambac, Bank of America(BAC) and Wachovia (WB) will report on Tuesday, along with a handful of regional banks like Sun Bancorp (SNBC) and Southwest Bancorp (OKSB).

Capital One Financial (COF) will report Wednesday, promising a snapshot of the troubled credit card industry, and E*Trade Financial(ETFC) will give an update on its travails on Thursday.

Consumer spending will be in focus with airlines like Delta Airlines (DAL) reporting Wednesday and US Airways (LCC) on Thursday. High-end retailer Coach (COH) weighs in on Wednesday and Ford (F) will show how its massive restructuring effort is faring on Thursday.

Also, tech will be in the spotlight with Apple (AAPL) reporting results on Tuesday and Microsoft (MSFT) and Sun Microsystems (JAVA) on tap for Thursday.

Economists will get their fix on Friday when Caterpillar (CAT) reports, with analysts expecting the industrial bellwether to log operating profits of $1.50 a share.

Caterpillar, along with many other U.S.-based multinationals, has been supported by strong growth in overseas markets. Many investors are looking abroad to places like China for healthy investments in light of the troubles at home, but Shilling calls this idea "nonsense." He says the next shoe to drop in the downturn he's predicting could be a major sell-off in China.

"China really relies on U.S. consumers to buy their exports and those exports are absolutely critical for their continued growth," says Shilling. "They don't have a big enough middle-class yet to be able to sustain the economy with domestic spending."

1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting

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