Illustration: Rocco Fazzari.

Illustration: Rocco Fazzari.

Just as the US seems to be getting somewhere with its recovery, Wall Street develops the wobbles.

At least our shaky market has the excuse of a weakening economy.

It's remarkable how corporate America has thrived since the GFC - including the banks after their bailouts - despite an insipid economy.

A weak currency and disappearing inflation have bumped up profitability. Oh, did I mention dirt-cheap interest rates as well as nobody hiring anybody?

Relative to bond yields, Wall Street is still the bargain of the century, a situation the Federal Reserve has promised will last another three years.

It's underwriting share prices by pumping up the money supply. In debt-defying Europe, the Central Bank is belatedly on the case as well.

Anyway, a pick-up in housing in the US has come in the nick of time, just as earnings were finally starting to crack as the contraction in Europe hit spending around the world.

Even so, Wall Street fears the US might be going over the edge - or a fiscal cliff, as the untimely combination of legislated tax increases and spending cuts that happen on January 1 has become known. They'd fix the deficit but tip the US into recession on the day.

But the smart money, as distinct from Wall Street, says the budget bungee jump will be postponed. The leading US betting site Intrade, which correctly forecast the recent elections, puts the chance of a recession in the US next year at just 23 per cent. What's more, China's economy appears to have bottomed, happily at a rate most countries only dream about. Even iron-ore prices, the cause of such angst a few months ago, are rising.

So the two global economic powerhouses, one of which is our biggest trading partner, are picking up steam.

But if their direction is up, ours is down. The Reserve Bank forecasts a dip in growth next year because commodity prices and mining investment have peaked.

The question for the sharemarket is which way the dollar jumps when global growth is higher but the mining investment boom is unwinding. The Reserve is counting on it falling, but would it? While exports would rise as all that mining investment pays off, there'd be fewer imports of equipment and machinery.

Besides, our AAA credit rating makes the dollar a safe haven even for other central banks.

Guess it'll come down to whether the volume of exports outweighs the lower prices from China re-engineering its economy from resource-intensive infrastructure to pampering households. That's why the Reserve has good reason to wait before cutting rates again, especially when there's no guarantee they'd take the fizz off the currency.

Sorry, but that isn't going to please the market.

Follow David on Twitter @moneypotts.