This blog post originally appeared on RealMoney Silver on May 9 at 7:35 a.m. EDT.

I am less preoccupied than most with the chaotic downside to precious metals prices last week, as, to me, it's little more than a speculative sideshow.

And it's a circus I prefer not to be entertained by or purchase tickets to.

Rather, other key factors are guiding me toward expecting a near-term slowdown in the rate of domestic economic growth and for a limited upside to the U.S. stock market.
  • A low in bond yields: The continued drop in the yield on the 10-year U.S. note to 3.15%.
  • A double dip in housing: A still-large shadow inventory of badly delinquent and foreclosed homes continue to weigh on home prices, which resumed their fall in first quarter 2011.
  • Worrisome group rotation: The continued improvement (absolutely and relatively) of the consumer nondurable sector.
  • Weakening commodities: We have witnessed a decline in the price of copper (to below its 200-day moving average), oil and other major industrial commodities.
  • Economic indicators flash caution: A multiyear low in the Baltic Dry Index, a weak household jobs survey, the ISM nonmanufacturing Index falls to the lowest level in nine months and, for the fourth straight week, we get an initial jobless claim print above 400,000.
  • Emerging weakness in non-U.S. markets: A break is developing in the natural-resource-based regional markets of Australia, Mexico, Canada and Brazil.
From my perch, the body of the evidence is that the rally off of the generational low of March 2009 is now growing long in the tooth.

It is not likely the end of our investment world as we know it, but, on market rallies (which we might have after last week's market weakness), I would continue to yell and roar but sell some more.

At best, the upside to equities seems restricted, and, at worst, we could see apocalypse soon, as the outlooks for both the economy and for corporate profits grow more ambiguous.

For nearly a year now, I have cautioned that a period of lumpy, uneven and inconsistent economic growth is the most likely outcome, and all the data points I see encourage me to maintain that forecast.

This is a setting in which corporate managers and investment managers will find hard to navigate.

Err on the side of conservatism as the market's waters look increasingly choppy.

Doug Kass writes daily for RealMoney Silver , a premium bundle service from For a free trial to RealMoney Silver and exclusive access to Mr. Kass's daily trading diary, please click here.
Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.

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