Enjoy the Europe-driven rally as long as you can, because once reality sets in there's likely to be more trouble ahead for financial markets.
The U.S. stock marketrallied nearly 2 percent Friday on yet another round of hopes that the latest European bailout program would rescue the debt-plagued euro zone.
Just beneath the bold headlines, though, was a spate of bad news from both the U.S. and around the world that all is not as well as it looked.
Four things to consider:
1. Europe Isn't Fixed Yet
While the moves to recapitalize European banks and buy euro zone bonds to cut borrowing costs are a help, the conditions were so vague as to leave many wondering whether anything had really progressed from previous rescue efforts.
"Just what lasting impact the measures have will hang crucially on whether anything substantial is perceived to have changed," said Jonathan Loynes, chief European economist at Capital Economics in London. "And on this front, we are not hugely confident."
Mohamed El-Erian, CEO at bond giant Pimco, was even more direct about his skepticism, cautioning investors not to get too excited about a deal in which "the road map to fiscal union, political union and banking union lacks details and lacks precommitment."
"It's an important step but there's risk that it's not enough, and we worry that investors are going to use this to exit rather than crowd in more capital," El-Erian told CNBC.
2. U.S. Economy Is Slowing
The lackluster 1.9 percent growth in gross domestic product product in the first quarter is just one problem. Throw in declining consumer confidence, weakening job growth and a slowdown in spending and it's clear that even if Europe stabilizes there's plenty to worry about closer to home.
Not helping: Ford said its overseas losses would triple in this quarter, adding fuel to suspicions that the surge in auto saleshas been illusory and will fade.
Elsewhere, more than 46 million Americans are on food stamps — better than 15 percent of the population — reflecting a 27 percent drop in net worth between 2001 and 2010, according to recent Federal Reserve data.
"Judging by changes in house and equity prices since 2010, it probably has not improved much," said JPMorgan economist Robert Mellman. "After all the ups and downs of the past 15 years, there was no major region for which 2010 median real net worth per family was substantially higher than it had been in 1995."
Even Joseph LaVorgna, the perpetually bullish Deutsche Bank Advisors economist, took down his GDP estimates recently as "the result of deterioration in European economic and financial conditions which we believe have the potential to weigh further on U.S. corporation decision making."
Bank of America Merrill Lynch has a 1.0 percent U.S. GDP target this year, though the firm thinks the equity markets can fight their way through and end the year higher, in part because highly negative sentiment will prove to be a contrarian positive for the market.
"Sentiment has gotten to levels that suggest equities could surprise to the upside rather than the downside," Savita Subramanian, head of U.S. equity and quantitative strategy, said at a media briefing earlier this week.
3. Emerging Markets Aren't Emerging Much
China, India, Russia — the nucleus of those emerging marketcountries once expected to drive global demand — are fading and dampening hopes that the struggles of the U.S. and European economic superpowers can be overcome.
"Global growth prospects are worsening, reflecting the (European) crisis and (emerging market) slowdown," said Citigroup economist Willem Buiter. "This month, we are cutting our global growth forecasts for both 2012 and 2013, and remain well below consensus and (International Monetary Fund) forecasts for both years."
Global growth could slow to 2.6 percent this year and 2.7 percent in 2013 — about as good as negative in global growth terms — with Buiter offering "substantial downgrades" in China, India, Indonesia, Korea, Hungary, South Africa and Brazil.
"The emerging market slowdown is quite broad-based," he said. "The causes of these downgrades vary, but the common pattern is a mix of past tightening, softer economic data, adverse spillovers from the EMU crisis, and the gradual pace of policy stimulus."
4. One Word: Debt
At its core, the global economic crisis is about debt. The balance sheet-driven slowdown has thwarted the efforts of central bankers who have tried to resuscitate the economy by levitating equity markets.
But with wealth shrinking and public debt expanding, the calculus becomes even trickier. Homeowners in the U.S., for instance, have lost $6.7 trillion in property valuesince the fourth quarter of 2007 while shrinking debt only by $900 billion, according to an analysis Friday from Nomura Securities economists David Resler and Ellen Zentner.
The study drew on research by economists Carmen M. Reinhart and Kenneth Rogoff, authors of This Time Is Different: Eight Centuries of Financial Folly, a Bible for many of those studying financial crises.
"Household net worth will not return to its pre-crisis peak until late 2014," the Nomura report said. "Part of any recovery in net worth will likely require a substantial further reduction in household debt and we believe that the imperative to pare that debt further is likely to continue limiting the growth in spending by the household sector."
In short: One day's headlines will not cure years' worth of economic damage inflicted by soaring global debt.
"The debt-financed real estate bubble has left a legacy of balance-sheet constrained economic growth," Resler and Zentner said. "As Reinhart and Rogoff have observed, the eventual recovery to more normal conditions following similar financial crises can be measured in years if not decades."
(Clarification: The euro zone rescue package includes a provision to buy bonds of euro-zone countries. An earlier version mischaracterized the plan.)