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00:00When you look into 2016 what is the single biggest risk biggest risk. Biggest risk. Biggest single risk that you see the biggest risk in the economy is further deflation. In much of the world economy we have this thing called divergence. We are diverging policy and that in my opinion is the biggest risk . It's that convergence between geopolitical risks and the socio economic risks that I most worry about because that will be difficult for leaders to deal with a significant turn of U.S. inflation that's much higher than anyone expected. There is a very large number of companies that have used low interest rates United States to fund themselves and some of that funding has not gone to the right places. The big game changer for us in 2016 is really rates. I mean if the Fed actually achieves liftoff I think you do get to a point where like I was saying investors pay a little bit more attention to balance sheets. I think the biggest risk really come from the United States. If the Fed started raising rates and fatties act recklessly if if we have a daughter overshoot then that's going to bring up the Chinese R and B simultaneously. What if the U.S. economy does really weaken then fed to the Fed that can't raise interest rates and raise rates as much as they would like to. And we don't have the political will I think to to have fiscal fiscal stimulus or to go back to QE. I think the biggest risk really falls into the category of lack of cooperation. Iraq is probably the biggest risk once more. I mean if you look at the political infighting in the government there it's huge. Even in Kurdistan which we thought was relatively stable and it's being underappreciated by the market that just assumes Iraqi production to keep on going up. You look at what China's done with me say from a quasi pegged exchange rates say dollar China around six point two to now quasi pegged exchange rate around six point four. But a lot of noise in between right in August and September and that's not a natural equilibrium no growth slowdown in growth where it's happening and no growth continuing where it's not. I think that we understand how important it is that we as an international community cooperate. So I'm worried that this time hopefully the engine of the car is turned over we caught but if it doesn't I don't think we'd be prepared for the downside. It's a challenging environment for investors that you know over the last six years really enjoyed rising tide lifts all boats. Now it's really more pick your spots carefully .

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The Biggest Risks of 2016

Bloomberg's Joe Weisenthal, Alix Steel and Scarlet Fu talk to guests about what they think are the biggest risks facing investors in 2016. They speak on Bloomberg's "What'd You Miss?" (Source: Bloomberg)

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