Europe is hot, if you don't look too far over your shoulder. The Dow Jones Stoxx 600 Index played well through the stock market recovery of 2009, ticking up 28% (60% from its March 2009 low). This was the index's best annual performance in a decade.

Basic resources and banks gained 100% and 46%, respectively, this year, after having turned in dismal performances the year before. China helped, as well, with its elevated economic growth forecast good for another 0.5% gain during the shortened week of Christmas.

The hype around China is seductive, especially when we're mired in a recession. Any ray of hope is worth a few minutes of our time. Even a turning economy isn't enough ... it hasn't turned yet! So, we have the promise of China.

Well, China is about to learn about the downside of capitalism. A bear market could be threatening the country, driving home the notion that free markets (even if only slightly free) involve some risk, and proving to the American public that inside every sure thing is a hefty dose of "flavor of the month." The bears are circling Shanghai, even as the U.S. equity market appears to be coming back.

In the financial world, "contagion" is a Wall Street term that describes marketwide selling in one region of the world, for example in Tokyo or Berlin, that leads to selling in another region of the world, for example, in New York.

But contagion can take place within a market (or intramarket) as well, and that appears to be the case with private equity firm Kohlberg Kravis Roberts (KKR) and its initial public offering.

A repricing of risk sparked by renewed concerns regarding subprime mortgage defaults, as well as a moderate stance regarding the deployment of new capital, has produced more-conservative capital market conditions -- conditions that may prompt KKR to postpone its IPO.

KKR filed to go public on July 3 and planned to raise $1.25 billion. KKR had sought to follow in private equity firm Blackstone's (NYSE: BX) footsteps: in June Blackstone priced 133.33 million shares at $31 in a $4.13 billion IPO. BX's shares have since slipped to around the $26 mark.

More importantly, a new conservative tone has gripped the debt markets, and that mood has spilled into the initial stage equity market -- conditions that will make it harder for KKR to attract an adequate price for its shares, and quite possibly, prevent the company from moving forward with the IPO at this time.

Wall Street's equity market offers a wide variety of deals this week, including 6 IPOs and 6 Secondaries. Those deals tentatively scheduled to price include:

IPOs:

Possible

Response Genetics (RGDX), a 3M-share IPO for this genetic lab equipment company. Maxim Group is the lead manager. Filing range: $7.00-$8.00.

Tuesday

FBR Capital Markets (FBCM), a 12.1M-share IPO for this investment bank. Freidman Billings Ramsey and Lehman Brothers are the lead managers. Filing range: $16.00-$18.00.

Wednesday

Starent Networks (STAR), a 10.535M-share IPO for this wireless multimedia networks company. Goldman Sachs and Lehman Brothers are the lead managers. Filing range: $9.00-$11.00.

Wall Street's equity market shifts into summer mode -- historically a lighter season -- with just three IPOs on the docket this week.

Those deals tentatively scheduled to price include:

IPOs:

Thursday

Amicus Therapeutics (FOLD), a 5M-share IPO for this gene-based medicine company. Morgan Stanley and Merrill Lynch are the lead managers. Filing range: $14.00-$16.00.

Friday

Jazz Pharmaceuticals (JAZZ), a 6M-share IPO for this pharmaceutical company. Morgan Stanley and Lehman Brothers are the lead managers. Filing range: $24.00-$26.00.

LDK Solar (LDK), a 17.384M-share IPO for this solar cells company. Morgan Stanley and UBS Investment are the lead managers. Filing range: $25.00-$27.00.

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