The market is going lower

The Canadian market has held up really well and given the troubles we are facing, I would expect it will go down 5% quickly. The problems the market is facing are
1. High inflation will limit the options of central banks. Emerging market will slow down to limit the inflation
2. Uncertainty in Japan on the nuclear issue is a short term concern, my sense is the worst case is not likely.
3. Middle East troubles are getting worse and no good solution is on sight. It will keep oil price high.
4. No stimulus from U.S. government and the Fed can not do a QE3 given the high inflation
5. The profit margin is being squeezed given the high PPI and relative flat CPI.

tsunami and earthquake in Japan

The earthquake and tsunami in Japan has caused confusion in the market. The rebuilding will boost short term economic activities in Japan but the fiscal situation in Japan is terrible. It may cause the rating of Japanese bond to drop.