US and European markets picked through the rubble of Friday’s sharp decline. Major equity indices were little changed. For the most part, stocks that were badly beaten up last week (retailers and automakers, for example) did somewhat better.

Tech stocks underperformed. The yield curve remained inverted between the 3-month bill and the 10-year note. But there was no sense of direction to a market which has no way to answer the two critical questions investors are asking:

1) Will the US and China reach a deal to avoid a trade war?

2) Will US households continue to act as the marginal buyer in the world economy?

It’s clear that the US economy is slowing sharply from last year’s 3% growth rate and that the major exporting economies are at or close to recession. But we don’t know whether the slowdown will turn into a global contraction this year or next. That’s the difference between having one nostril underwater or two.

Just-released data on world trade volume through January show a contraction, but the contraction isn’t much worse than that of late 2015-early 2016—yet.

The widely-followed Chicago National Activity Index for February came in at -0.29 after February’s revised -.25. The three-month average stands at -0.18. But the Chicago Fed considers -0.7 as the threshold for a recession forecast.

Germany’s IFO Business Survey came in slightly better than expected after last week’s disturbingly weak purchasing managers’ report.

The rebound occurred from very low levels, although the expectations component of the index did somewhat better.

In short, the data suggest a weakening economy but not a contracting one. We don’t know what the ongoing negotiations between the Trump Administration and China will bring. A sticking point is enforcement of intellectual property protection, which is not something that can be monitored by an intra-governmental commission, but rather enforced over time by the courts.

Washington made Beijing an offer that it didn’t understand, and Beijing simply doesn’t know how to respond. Assuming that this problem can be damage-controlled, some recovery in global CapEx and trade should begin during the second half of the year.

The most intractable among the unknowns is US household behavior. With the sudden stop in employment growth in February, households may retrench. I argued that the disappointing February jobs report wasn’t a fluke but an indication that US businesses couldn’t pass on the rising cost of wages in labor-intensive industries. Americans stopped buying and saved during December, perhaps because their expectations about future employment are far less enthusiastic than their evaluation of the present labor market.

For the moment, the stock market’s inability to find ground after a sharp decline on Friday and the continued fall in US bond yields keep me very cautious about equity markets.

In other markets, the Turkish lira – the currency I love to hate – clawed back half of its 6% loss of last Friday after the Turkish central bank pushed the overnight rate to 95%. Turkey has municipal elections March 31 and the Erdogan government desperately wants to avoid further devaluation before the vote. Shutting off all liquidity to the market is the equivalent of holding your breath in order to avoid inhaling poison gas. It works perfectly well, for a limited period of time. I still think the Turkish lira is going to 7 to the dollar.