Since I already provided 5 reasons to remain cyclically bullish I figured I’d offer the other side of the coin as well. Here’s 6 downside risks via Deutsche Bank:
1. US – failure to raise debt ceiling: political deadlock, government shutdown, weak confidence hurts growth.
2. Europe – political breakdown raises tensions: e.g., antireform government in Italy, political unrest in Greece, antieuro sentiment in core countries amid recession.
3. Global growth weakens on spill over from a shock in one economic region: e.g., EM lags amid failure to reform, Europe fails to return to growth, slowdown in the US.
4. Disorderly sell-off in core rates: concern over excess money printing leads to a bond and risk asset sell-off .
5. China – non-performing loans: rising NPL’s on bank balance sheets constrain credit availability and growth.
6. Middle East tensions escalate and push up oil prices.