Markets keep on rallying while we (as trained economists) see risks all around us:
- The US reflationary effort could easily run into capacity constraints and set off higher inflation and interest rates.
- This could set off an even higher dollar, which could run rampant through corporate emerging market debt and/or put further pressure on the yuan.
- Italy's decade long stagnation, its huge public debt, banking problems and political instability.
- China's ever increasing reliance on credit which is ever less effective finally runs into trouble (diminishing returns have long ago set in).
- The higher dollar widens the US current account deficit and President Trump reacts by slapping on tariffs on Chinese and/or Mexican imports and/or designating China as a currency manipulator, setting off a trade war.
- Some geopolitical event disrupting oil supply and setting off a spike in the oil price.
- Marie LePen and/or Beppe Grillo winning the French or Italian
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