Even as the US market hits a new all-time high, all the little niggling worries that kept investors on their toes last year are starting to rear their ugly heads again.
Italy's election results have resurrected the threat of a messy eurozone crisis. The inability of US politicians to agree on the nation's finances are raising fears of another argument over the debt ceiling later this year.
And now China is back in the spotlight. It seems a "hard landing" isn't as out-of-the-question as everyone had hoped.
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Can markets keep climbing the wall of worry'? Or will gravity reassert itself?
China's big problem
China has quite a serious dilemma.
At the moment, the country's growth is overly dependent on building stuff (that's the technical term). Indeed, no country in history has ever been this dependent on building infrastructure, without suffering some sort of horrible crash.
So China wants to get more of its growth from its citizens trading goods and services with one another. Consumption, in other words.
This is what everyone means when they talk about China rebalancing'. Trouble is, it's easier said than done.
That's because China also has to try to keep the population happy while it manages this rebalancing act. And that's not straightforward.
According to Bloomberg, China's Gini coefficient, which measure the gap between the rich and the poor, came in at 0.474 last year. That's "higher than the 0.4 level that analysts say signals the potential for social unrest."
Meanwhile, inflation rose more rapidly than expected last month, driven mainly by food prices. In a nation where many people still spend a large chunk of their income on food, that's another potential trigger for social problems.
So at the same time as China is trying to encourage consumption, it's having to crack down on many of its key drivers. For example, in the first two months of this year, retail sales growth slowed sharply. This is down to the government's "anti-extravagance drive", notes China Weekly.
My colleague Merryn Somerset Webb has blogged about this a number of times, but in short, China is trying to have a visible crack down on corruption. One way to do that is to stamp on high-rolling party officials. As a result, luxury' businesses are feeling the pain. "Upscale restaurants in cities such as Beijing, Shanghai and Ningbo saw revenues fall by 35%, 20% and 30% respectively, year on year in January," reports the site.
With inflation higher than is comfortable, meanwhile, the government has to be more cautious about monetary policy. It can't just pump more money into the economy for fear of driving prices higher.
A third front in the battle against inequality is the property market. House prices are rebounding from last year's slowdown. But that's the last thing the government wants. As we in Britain know only too well, property bubbles merely widen the gap between the haves and the have-nots. And they're very destructive when they eventually blow up.
So many of the traditional drivers of consumption (in the West, at least) - property booms, conspicuous consumption, loose monetary policy are not easily available to China's leadership.
As a result, as Louis Kujis of Royal Bank of Scotland tells Bloomberg, growth so far this year is still showing "an old-fashioned pattern, relying especially on exports and investment, with consumption lagging."
The impact of a Chinese slowdown
But why should you care what happens in China?
For a start, it's the world's second-biggest economy. Trouble there can't fail to have an impact on the rest of us. Around half of global GDP growth is expected to come from China this year. If that doesn't happen, then sales growth from companies around the world, all trying to expand in emerging markets, will disappoint.
Any such disappointment may be felt most keenly in the US market. Why? Because it's one of the most expensive. The US economy is already showing more than a few signs of life. Friday's employment data soared past expectations. But the stock market is priced for it.
As the Wall Street Journal points out, the S&P 500's price/earnings multiple is nearly 18, based on earnings over the last 12 months. "That multiple would rise into the low-20s if [profit] margins reverted to past form." So it's vulnerable to nasty surprises.
There will also of course, be a big impact on commodities markets. In short, the supercycle' is still over. Beyond dash for trash' rallies, we wouldn't make any big bets on the mining sector coming back.
A potentially bigger worry is if fears over the economy make China more belligerent. It's very tempting to appeal to nationalism by ramping up rhetoric against foreigners when your domestic economy is ailing. The most obvious flashpoint is Japan and China's dispute over the uninhabited Senkaku/Diaoyu islands. Hopefully the two countries will work out a way to sort out their differences peaceably, but it's worth monitoring. (For more on the cyberwarfare story, see my colleague Matthew Partridge's recent piece on the topic).
There is, however, at least one very interesting, more positive, opportunity in China, which my colleague James McKeigue investigated in a recent MoneyWeek magazine cover story pollution. Problems with toxic smog and other forms of pollution are becoming one of the single biggest causes of social unrest.
That means we can expect the government to prioritise dealing with it. And that's good news from the companies providing the equipment needed to help China tackle pollution. If you're not already a subscriber, subscribe to MoneyWeek magazine.
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John is the executive editor of MoneyWeek and writes our daily investment email, Money Morning. John graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.
He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news. John joined MoneyWeek in 2005.
His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.
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