Investing in the U.S. isn't really about the U.S. anymore. Instead, it's more about trying to parse out the daily news coming out of Europe and figuring out whether the pernicious debt crisis there is fixed yet.
Of course, it will take more than one day's proposed solution to come up with a remedy for what ultimately is likely to be a multi-trillion-dollar problem.
But it seems that every time some incremental piece of news comes out of the crisis—be it positive or negative—it creates a cascading level of reaction that has made investing in US markets a death trap for investors who have anything resembling a long-term horizon.
"Unless something dramatic happens in the US, Europe is going to continue to be the focus," says Brad Sorensen, director of market and sector analysis at the Schwab Center for Financial Research. "Investors get tired of hearing this, but this reiterates that focusing on the day-to-day news is virtually impossible for individual investors."
The trend was as prevalent this week as it has been throughout the gut-wrenching twists and turns of the past three months in particular and the past year and a half in general.
Seemingly benign news Tuesday that talks had energized over a recapitalization plan for European banks sparked a blinding 400-point rally on the Dow industrials in the last hour of trading.
Conversely, a modestly improved jobs report Fridaythat showed a fairly substantial beat against expectations did little in either direction. Indeed, a gain for stocks turned around quickly after Moody's downgraded debt ratings in Spain and Italy, two nations that under normal circumstances wouldn't register a blip on the screens of most U.S.-based investors.
Such has been the pattern, in particular since the Dow has tumbled 12 percent off its late-July highs and the specter has become more evidence of euro debt contagionnot only there but also in the U.S.
For investors not used to having to worry about issues like sovereign debt—and the mushrooming debt and deficits problem in the U.S.—the calculus starts getting pretty tricky.
"We're used to evaluating companies, economies, industries. Now we're being forced to evaluate politics," says Gary Flam, portfolio manager at Bel Air Investment Advisors in Los Angeles. "That's a very uneasy proposition for most investors because it's not what our background is."
Ironically, many market advisors are telling clients to ignore the daily gyrations and stick with a long-term view.
But when that horizon is so blurred by European debt clouds, the strategy is a hard sell.
"It makes it very difficult if you want to try to trade this market," Flam says. "But investing is difficult also just because of the range of outcomes. The tail risk seems to grow, making you have to constantly re-evaluate your potential outcomes."
About those jobs numbers, which generated huge attention ahead of their release but not much after: They presented a mixed bag, with job growth of 103,000 but no change in an ugly 9.2 percent unemployment rate .
While the numbers did give rise to hopes that the US may yet avoid a recession , they also pointed out just how important it is to get the Europe situation settled so confidence can return to the US.
Headlines driven by policymaker indecision aren't helping, says Kurt Karl, chief US economist at Swiss Re in New York.
"So it's just a very difficult time for people to make a decision," Karl says. "What we have now, which is very unfortunate, is we're not going to get a lot of help out of Washington from policies. We seem to be in an ad hoc spending and taxing mode."
Investors may not get a lot of help from Europe, either.
Former Federal Reserve Chairman Alan Greenspan told CNBC earlier in the daythat anyone who thinks the U.S. investing climate isn't substantially affected by Europe hasn't been paying very close attention.
So even if the U.S. economy does avoid recession—Karl foresees a "very mild recession" while Flam says a stalemate in Europe likely will cause a recession here—it may not matter anyway if Europe isn't fixed.
Combine that with rumblings in other parts of the world, particularly China and its struggle with housing and growth worries, and it adds up to more headaches.
"The U.S. economy is especially vulnerable to adverse events in Europe and China," says Steve Blitz, senior economist at ITG Investment Research. "I don't see policy in either of those places in line with growth. So given that, I think we're sort of on the edge here."