It seems that investors have become complacent regarding the health of the economy. Changes occur at the margin as things go from great to less great. We are a very late cycle economy with a global slowdown in growth combined with dis-inflation. This is what the markets are now dis-counting. Lower interest rates, bonds, the US dollar, commodities, gold, and emerging markets have been forecasting this all year. It seems that many haven’t been paying attention. Things always look the best at the end. 2007 was the same way. Everything looked great until all of a sudden it wasn’t. The market swoon the last two weeks is the market’s first step in making the downward adjustment. Don’t be surprised to see the S&P 500 make a last gasp rally to the former highs…maybe even new highs. It’s the historical pattern all the way back to 1929. People always seem to think Bear Markets come out of nowhere—they don’t. The signs are visible if you’re looking for them.