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Stock market slumps as economy stuck in low growth

Traders on the floor of the New York Stock Exchange.
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Traders on the floor of the New York Stock Exchange.

Modest, or accelerating? The economy is stuck in low-growth.

Is it modest, or it accelerating? That's been the big debate about the economy as we wait for the country to emerge from a frigid winter.

Today's numbers are one more sign that the recovery is "modest" and that has big implications for stock prices.

To put it simply: You can't support asset prices at all-time highs with "modest" growth. If 2.0-2.5 percent GDP growth is all we are going to get this year, that is NOT priced into equities.

April Industrial Production, down 0.6 percent, was a big disappointment since it was only expected to be down 0.2 percent.

That joins April Retail Sales, out Tuesday, which were also disappointing.

What about bond yields? They are dropping in the U.S. and most of Europe, but importantly bond yields are higher in the periphery in Europe...in Italy, in Greece and in Spain.

Wait a minute...aren't they talking about CUTTING rates in Europe? Yes, but things are changing. This may suggest that this is not just about cutting rates...it's now about risk being re-introduced into the equation, which is different than the love affair with rate cuts. That big rally in peripheral debt may be over.

The final number we are looking for is April Housing Starts, out tomorrow. Starts are expected at 984,000, the best since December, but some are expecting more than 1.0 million Permits.

The numbers so far have not been optimistic for housing. Just this morning, the NAHB Housing Market Index, an indicator of sentiment among home builders was also a disappointment, at 45, below expectations of 48.

If we get Starts and Permits disappointing, that will be the nail in the coffin for a robust housing recovery this spring.

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    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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