Investors have had to digest a lot of economic data in the last ten days and most of it has pointed toward slower growth worldwide. The most important signals of slowing growth have been in the United States, and there are no signs that another region will pick up the slack. The United States has been the growth engine for the world, and any slowdown here affects everyone. (Remember the old adage - when the United States sneezes the rest of the world catches cold?)

Slower U.S. growth means, among other things, that it will import less, hurting most those countries that have been relying on exports for growth. They are worried in Asia, where recovery from the financial crisis of a few years ago has relied heavily on chip and computer parts exports to feed seemingly insatiable U.S. demand. This demand has eased creating problems for South Korea, Japan, and others. And domestic demand in these countries still shows little evidence of being able to pick up the slack. In Europe growth is also export driven thanks to the cheap euro. As the dollar weakens (i.e. the euro strengthens) these exports will be more expensive and will accordingly lose some of their appeal.

Investors will have to adjust to slower earnings growth. Earnings had been extraordinary. Now they are slowing to very good.

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