The base-case scenario in the US is still that of a slowdown in growth momentum in the second half, accompanied by deceleration in earnings growth - following good performance on both counts in the first six months of the year.

There are a number of leading indicators pointing in that direction.

However, the economy does not function like clockwork, and we can't rule out the possibility of a growth spurt before the slowdown finally takes hold.

Pimco's Bill Gross said, last week, that there is an unusual degree of uncertainty in the air. He is right, and we need only mention a few contributing factors in support of his contention: the oil market, Middle East problems and China's economic slowdown.

We also have monetary policy excess in a host of countries, with plenty of liquidity still sloshing around the system, as tightening moves are in the offing by a number of central banks.

And all this is happening in a world economy characterised by major imbalances between surplus and deficit countries - over-savers in the first and over-consumers in the second.

Meanwhile, significant structural changes are taking place regarding allocation of resources and patterns of activity, across the global economic landscape, even as we are witnessing slow shifts in regional political power balances.

Frankly, it is tough to carry out analysis in these circumstances, and because people do not have a good fix on how things will pan out they tend to focus on shorter-term events and form impressions based on consensus or “expert” opinion.

Consequently, during those times when they are not being bombarded with lots of rapidly-changing data about the economy they may see little reason to change their behaviour - a sort of inertia of the uncommitted.

At other times, they may swing into optimistic or pessimistic action as the newsflow is supplemented by directional statements from officials or “experts”. Nor is it always the case that the latter are deliberately manipulative. Often, these worthies aren't quite sure about how things are developing either, but given their status, they have to sound confident and authoritative.

So, putting all this together, it is not surprising that, in the markets, we can get periods of calm followed by choppiness and even volatility.

Right now, there is a degree of tranquillity in the US equity market, though it would be a mistake to think that investors have gone to sleep.

Those traders and hedge funds that depend on volatility to turn in a decent profit aren't too pleased - relative stillness or choppy action is unprofitable, and you need some good swings to do well.

As for trend followers, this is not a game for them either.

The upward trend petered out in the first quarter.

Technical indicators of the US stock market are broadly neutral, though low volume on the NYSE is still showing a lack of commitment.

Meanwhile, investors' risk appetite appears to be edging up and there are now steady, if relatively modest, net inflows into equity mutual funds. In the current circumstances, it is possible that a confluence of good news on the oil market and Iraq, supplemented with positive economic data, could fire up sentiment and lead to a market rally.

But the sustainability of such a rebound is open to question. Looking past second-quarter earnings performance, operating leverage will start to fade - a normal cyclical phenomenon.

So we will experience a deceleration in earnings growth.

And the stock market will have to face up to rising interest rates and decelerating earnings, sporting valuations that aren't cheap on any measure.

*Iraj Pouyandeh is a strategist and senior portfolio manager for LOM Asset Management.