Investors were faced with an abundance of economic news this past week, some of which caused them to do some rebalancing of their portfolios. While the news was not all of the same magnitude, economic indicators showed consistency in their direction -- a moderation in the pace of economic activity.

The combination of weaker economic data coupled with warnings about fourth quarter earnings caused near panic in the financial markets as stock prices (particularly tech stocks) dropped sharply and bond prices rose (in flight to quality).

Slower economic growth should bring smaller revenue gains going forward. However, revenues should still be positive as long as economic activity continues to grow at a moderately healthy clip. But investors will need to realign expectations to a slower path.

At the same time, bond market players are beginning to mention monetary ease more readily these days. It would be premature to expect the Fed to ease (reduce the federal funds rate target) at the Dec. 19 FOMC meeting. However, it is certainly plausible that Fed officials could remove the restrictive inflation risk bias at that time. Ease could come early in the year if inflationary pressures remain in check and labor markets become less tight (which is certainly possible given recent increases in new jobless claims). Equity investors might benefit from lower interest rates even if corporate profit growth moderates in the next several months.