scarlet: u.s. stocks finished lower on the last day of 2015. the s&p 500 in the red for the year. the question is, "what'd you miss?" we show you the detail that missing,len might be and what that could mean for interest rates. and, how much will residential investment increase in 2016? 2016.he biggest risks in you will hear from experts in the business about what they fear the most as we ring in the new year. there you have it, a live shot of moscow as they get ready to ring in the new year right there. that is, i don't know the name of the river -- that is red square in moscow. new year's day in much of the rest of the world, we are still waiting for it as we get ready

to ring in the new year here on the east coast. let's get to julie hyman, with a year-end market wrap. we were on tenterhooks until today. julie: if you are a bull, it is a loss for the year. the s&p today, it looks like we are closing below the session. maybe some people were pushing the sell button as the day closed out. we are in a little up and down, than a leg downward at the end of the day. going back to the year-to-date board we just had up, that means we are more solidly in the red for the year. 0.75%, 500, down about the worst annual performance since 2008. it waspoint today, within a few hundredths of a

percent of turning positive. it fluctuated very tightly in that range of positive and negative for the year. i mentioned we are now negative for this year, the most negative year we have had in several. i want to call up my bloomberg terminal again to show you the past few years of performance. this column is a percentage change over the past few years. we were almost unchanged in 2011, but before this year we had three years of rally. before that, unchanged, two years up, so the worst year since 2008, when there was a 38% decline in the s&p 500. what has driven up fear? commodities. energy, materials, the worst performing groups, by far. consumer discretionary higher, thanks in some part to amazon and netflix. let's look at commodities, since they played such a big role this year. oil prices down 30%, gold down 10.5%.

this was the big market story of the year, the big selloff we see in commodities. at the same time, the dollar was rallying. that did not help commodities. look at the euro-dollar for the year, losses on the euro of about 10%. finally, the 10-year, i want to take a look. the federal reserve finally raises interest rates. we saw again in yields, but not a huge one. 2.27% is where we are closing of the year. we have a number of strategists who say we could get to 3% by the end of next year in a bond market where yields remained stubbornly low, even in the face of raising rates. scarlet: consistently surprising people. julie hyman, thank you so much. happy new year. one other market we are keeping an eye on his germany. let's take a deep dive into the bloomberg terminal. i'm talking about the dax. it may 27 new highs this year, the first around mid-january.

consistently throughout the first quarter. april beforeked in falling into a bear market in august, than revisiting it in september. since this low, the dax has recouped half of its losses. during this stretch, volatility more than doubled as well. when you add it all up at the end of the year, ending up 9.6%, almost 10%, beating the stoxx 600, the broader gauge for european stocks, and the msci all country world index. a lot of optimism over what the european central bank's quantitative easing means for risky assets like equities, even as people price in damage done by volkswagen's emissions cheating scandal and what that means for german manufacturing overall. as we close the books on 2016, let's set the scene for the u.s. economy with john herman, at mitsubishi

securities. the debate really centers on whether the data supports the fed's trajectory. does it? john: the guidance for next year and the year after is about four rate hikes per year. from everything we looked at, it seems overly aggressive. suggested that the terminal funds rate will be around 3.5%. when we look at the economy, labor markets, capital spending, housing markets, exports, the whole list of macro factors, week, in somewhere around 1.75% for the terminal fed fund, much lower. scarlet: that's for you see the difference between the doves and what the markets are pricing in. john: in the next year, we are with the market for 2016. then we begin pricing in a much slower trajectory. scarlet: let's start with the labor market.

the jobs report is due out on friday, and the consensus is for 200,000 jobs added. you are worried about seasonal hiring, and that will be a drag later on. why would this december be any different? there's always a seasonal hiring effect. john: i just ran through it yesterday, and we are at 201, close to where the market is. we had been above the street the last few payroll reports, but now we are just a touch above the street on this one. we areare pointing out, looking for about 124,000 people added in the month of december in the courier business, all the ups, fedex type guys. scarlet: then there's a payback later on. john: it is brutal. what happens between january through september, there's all this job shedding, job rationalizations, we call it, leading to declines. then you get the fourth quarter ramp.

unfortunately, we have a lot of that kind of hiring and labor practices, not just in the courier business,, but in retail and so on. it's a little misleading, as to how strong this job growth is and where the income is going. scarlet: is this enough to change the overall trajectory of job growth? john: i don't think so. it is more systematic of the environment we are in. if you look at the next couple we had ast year, 2014, spectacular year for payroll growth. this year, we are really tracking close to about 200-7000. will slow we think we --n to about 180, midi 178 maybe 178. so we are looking for a rapid slowing of hiring. scarlet: so deceleration. that's why you say that the characterization of consumer and business spending as being solid

by janet yellen is flawed. you have charts that show otherwise. let's start with business acquit meant spending, which in your estimation -- equipment spending, which in your estimation has been anemic. john: business spending, long-term planning and equipment, is the weakest we have seen since the 1950's. scarlet: it is the purple line at the bottom. john: exactly. it'syou actually see it, even worse than what it looks like on that. scarlet: here's my question. and, the blue line on top, 1960, the yellow line right after, what if those were outliers and we are actually more in trend than we realize? john: in comparison, the really strong decades, obviously the 1960's. when you look at a bunch of metrics -- income, spending, exports, business spending,, these were all the strongest in

the 1960's and 1990's. the 1980's were fabulous as well. and his lastre ok, decade was as well, but this is now underperforming. on a host of metrics, this is the weakest decade for growth. the question is, what's really going on here? there are structural problems in the labor market on the one hand, but on the other hand is questions, what factors are influencing businesses to basically be so adverse to risk and pursue financial engineering? scarlet: so basically hoarding their cash. we see that in consumer spending as well. john, let's put this all together and look at the yield curve going out. you noticed it has been flattening. that is certainly the case looking at the 530 spread or the 10 spread. there is the 530's. john: we had a call in the end of 2013, november 2013, arguing the yield curve will flatten. we did not see inflation picking

up, and the fed gradually coming into the game, that is the flattener. we took this off the table in spring, then reengaged in october. so basically, the fact that our forecast for the 30-year bond yield for this year was that we would and at 2.89%, and we are ending at 3.00%. we think there's a 20 basis point selloff in the back end. , thank: john herrmann you so much. director of interest rate strategy at mitsubishi securities. happy new year to you. coming up -- in other the federal reserve is in a tightening cycle, what does it mean for the dollar? speaking of happy new year, moscow's red square, ringing in 2015 already, a spectacular display of fireworks in moscow. ♪

scarlet: let's get to ramy inocencio with first word news. ramy: in dubai, firefighters are on the scene of a huge fire that started just before the stroke of 2016. the flames have engulfed at least 20 stories of a luxury hotel. at least 14 people are known to have minor injuries. thousands had gathered in that. area for a new year's eve fireworks show. another suspect in the paris terrorist attacks has been arrested, described as a belgian national born in 1993. about 10 cell phones were seized during a search and are now being examined.

there's a major shift in strategy for jeb bush's white house run. the former florida governor canceled planned advertising in the key state of south carolina and iowa, saving his campaign about $3 million. instead, he is sending staff members from his headquarters in miami to those states. he is heading further behind in the polls, and the nominating season is just weeks away. the state department is scaling back the number of hillary clinton e-mails coming out today, saying another batch will be released next week. the final batch is supposed to be released by the end of january. global news 24 hours a day, powered by our 2400 journalists and more than 150 news bureaus around the world. scarlett? scarlet: thank you so much. was marked by a strong dollar, a collapse of commodities, and a never-ending search for inflation. what does history tell us about how much more the dollar can strengthen? capitalus is the rbc

markets head of fx strategy. a chart thatowed kind of goes in every which direction after the federal reserve increase. is there no standard reaction to a said tightening cycle -- fed tightening cycle? daniel: correct. there is preparation ahead of the lift off, a currency 2013.nt that started in the dollar has strengthened against the euro, the yen, not really against the chinese renminbi. so we do see the chinese renminbi weakness going forward, but not as much as the others. scarlet: what are the conditions that are unique to this cycle? in every cycle, there is preemptive strengthening going on. what is different this time? all, there is a lot importance to global trade. second, there is the impact on the other central banks. the ecb is very dovish.

the doj is very dovish. on the other hand -- the boj is very dovish. on the other hand, there's a lot of divergence in terms of monetary policy stances. scarlet: we will get to mexico in a moment. when it comes down to it, you are pretty confident in g-10 growth and inflation. you see that improving. emerging markets, though, a very different picture, isn't it? daniel: it will be a tricky year for emerging markets. the backdrop is two-fold. first, there is a lot of uncertainty around supervision, regulation in emerging markets. we are seeing this coming across in brazil. we are seeing this even coming across in china as well. investors would like to stay close to home. as a result, g-10 might be a better place to be. scarlet: will the relative strength of the g 10 prop up emerging markets, or drag down the emerging economy? daniel: at some point, we will

see currencies overshooting. mexico is a good example of that. russia has overshot already. south africa is overshooting. we are seeing currencies that have already been set up for a better environment going forward. scarlet: as we know, currencies and securities can overshoot for a long time before they snap back. what will be the catalyst for that? daniel: in my view, the catalyst will be transparency in those countries. let's take exposure. the u.s. will be the fastest growth story in the g-10. mexico is a weak currency that is tightening. mexico is hiking, a nature to the u.s. the u.s. growing. that's a good story. scarlet: sound like a lot is in the control of those economies. daniel: yes and no. [laughter] again, we still seeing an environment where the u.s. is hiking interest rates, right?

so environments where global liquidity has been tightening, and you need to be careful. just look at some of the headlines coming from brazil. they don't look really pretty. scarlet: when we talk about north america, the week canadian kollar is boosting -- wea canadian dollar is boosting a sporting of goods. it is not boosting energy product, because demand has lessened due to oversupply. you can see the two crossed around 2013-2014. what happens in the next six to 12 months? daniel: this is a great story to illustrate an undervalued currency already triggering some reaction in the exports breakdown, with manufacturing improving and the energy sector continuing to deteriorate. this is a year will we will start -- where we will see more similar stories to canada. we do believe canada is going to manage to benefit from the

undervalued currency going forward. scarlet: what can canada learn from mexico, which has diversified its economy after the last oil slump? daniel: first of all, tried to look into, beyond energy and beyond commodities, first of all. second, try to think about opening up for foreign investors, which has been the case to some extent in canada, but we believe mexico is a very easy place to do business these days. scarlet: you mentioned brazil. lots of turmoil, politically and economically. south africa is starting to look really ugly as well. will it be the next brazil? that's something people are wondering. changing twice in the same week is not good news. scarlet: to put it lightly. daniel: the other problem in south africa is that the regime will probably persist at least until 2019.

investors hope that perhaps the impeachment process might trigger a transition earlier than that in brazil. clearly, south africa is a tricky place to be over the next few months. scarlet: do you want to avoid it? daniel: i would not be in south africa right now. scarlet: if south africa is going to be the new brazil, for brazil you see duplications in capital and labor markets. what will it take for the economy to rebalance? is it something within dilma rousseff's control? daniel: yes. first of all, union to somehow implement flexibility in the labor market. point number two, you need to adjust the way you set interest rates as well. so there's a lot of work to do in brazil going forward, and again, 2016 will still be very compensated. scarlet: daniel, thank you so much for joining us. capital markets head of global ethic strategy. have a happy new year. rico will puerto

default on a portion of bond payments tomorrow. areinvestors surprised -- investor surprised? we will discuss, next. ♪

scarlet: i am scarlet fu. "what'd you miss?" -- it will be a mixed start to the year for puerto rico. they will default on bond payments tomorrow. a fraction of the almost $1 billion in interest that is due.

smith,e, we have kate bloomberg' is missable bond reporter. everyone -- bloomberg's municipal bond reporter. everyone saw this coming. what was not completely price and? -- priced in? investorscipal bond were not surprised. look at the bellwether bonds for puerto rico. not too much fluctuation. investors were surprised about this, and the bond insurers. the insurers of the general obligation bonds on the island, bonds that are backed by the general fund of the island, they took a tumble yesterday, about 3% and 4%. people were kind of surprised by that. scarlet: is that justified? puerto rico is going to make good on the general obligation bonds. kate: i spoke to one of the bond insurers. they explained it to me like

this. if it is not paid in full. , it is a problem. it is like a red light or green light here. if there is any default on the horizon, that is a red light. it doesn't matter how small it might be. the fact they are already starting to announce slowly, little by little these defaults, it means there is something larger on the horizon. scarlet: i want to play for you summing that wilbur ross told us about puerto rican debt. it pushes back against the convention. look at this. --bur: most of the news holders of the bonds are not speculators. they are mutual funds, private investors in the united states who like to that they were triple tax-exempt and paid a higher coupon. so the idea that it's a bunch of gravediggers owning the paper is really not very accurate. it just is not. but in any event, nobody forced

that money on puerto rico. puerto rico invented all sorts of schemes to borrow it. scarlet: so wilbur ross was pushing some blame back onto puerto rico it self. are hedge funds being maligned unnecessarily? kate: i think they are. he hits on a great point. hedge funds are not really the majority holders. it really is mom-and-pop investors. we can be carried away with this being a distress situation, a problem, but this is a municipal bond, and they are largely held by mom-and-pop investors and mutual funds. so there is a hedge fund presents, about 30%, but the rest are retirees, high net income people, not those speculators you think about. scarlet: not the litigious types. kate: exactly. scarlet: this default is not massive, but it is still significant. what is a signal to you about puerto rico's strategy?

they do have other payments due later on in the year. kate: investors said how this is really in line with how puerto rico handled the news, how it slowly tells the marketplace about what it will be doing. puerto rico became a problem -- this has been going on for two years -- they slowly release news can be a technical default here, over the summer. this is really in line with what everyone is expecting. you will not see a massive default of $1 billion. scarlet: when those pieces come together, we will bring you back on. kate, thank you so much. coming up, we will be discussing the housing market. will it continue to be a bright spot for the u.s. economy? the fed thinks so. we will have the 2016 outlook on housing, next. ♪

scarlet: "what'd you miss?" -- let's get to ramy inocencio with first word news. in dubai, a huge fire broke out at a luxury hotel moments before the stroke of midnight. the address hotel is down the street from the location of the new year's fireworks show. the blaze ran up at least 20 stories, near the burj khalifa, the world'ss talles skies -- world's tallest skyscraper. iraqi tubes are working to restore order to ramadi after driving out most islamic state forces. they rescued citizens who had

been used by the militants as human shields. they are removing weapons from the city as rain slows the operation. islamic state still controls some pockets of the city. the fbi arrested a man for allegedly planning a islamic state-style attack in upstate new york. he has been charged with providing material support to the terror group. more than 8.5 million people signed up for individual health plans for the affordable care act government-run shopping market this year or had coverage renewed. that's according to a u.s. report that tallies enrolees for 2016 coverage. it's estimated 10 million people will be enrolled in aca plans by the end of 2016. a shakeup in the campaign of ben carson. his campaign manager and commission -- communications

director have resigned. other staffers are leaving. the departures, amid turbulence for carson, the former iowa front runner who has fallen in recent polls. a friend of one of the shooters san for needy in massacre has been indicted on gun and terror charges. enrique marquez is charged with lying about when he got the guns used in that attack. by 2400ews, powered journalists. back to you. have a happy new year. scarlet: you, too. ramy inocencio with headlines. this is how stocks ended. loss00, down 19 points, a on the year. say goodbye to a fourth consecutive annual gain. the first annual drop since

2011. the nasdaq also closing down 1.02%. how commodities have done -- here is the year to date. the nasdaq finished higher, up 5.7%. a lot of the big cap names, especially in the tech sector, facebook, amazon, google, netflix doing fairly well, helping to those that index. the story of the year was the collapse of commodity prices. double-digit declines for crude oil. you might expect gold to do well in an environment where investors are fleeing risk, but that did not happen. you see gold, $1060 announce -- an ounce. into my bloomberg terminal for 80 died here. when it comes -- for a deep dive here. our guestmes to 2015,

called china's currency devaluation in august the defining moment of the year, and investors had to reassess every asset class. since then, you have seen stability at a steady grind higher, surprising a lot of people. this is after the. august devaluation. small-caps, the white line, measured by an index dominated by tech and consumer names, have outperformed the shanghai composite index, the blue line. the shanghai composite is up 25% since late august. the question here is whether this recovery in both the canl-caps and large caps continue when the government share sale ban expires. in the summer, beijing tried to ban major shareholders, those owning more than 5% stakes, from selling stakes for six months.

that ban expires on monday. we will see what happens to the recovery after that. let's move on to our next guest. the federal reserve highlighted housing is a bright spot in the u.s. economy, but recent data calls that into question. what is the story for 2016? blogter for the financial talk elated risk joins us from california -- calculated risk joins us from california. bill: thanks for having me. scarlet: i mentioned how we had some mixed data. existing home sales, pending home sales trailing estimates, yet has prices according to case schiller are holding up. why should we overlook the negative reads? bill: the first thing to realize is that new home sales are far more important for the economy. new home sales and housing starts, than existing home sales.

a new home takes a lot of work to build, so it adds a lot more to gdp. the focus is always on new homes that housing starts, not existing home sales. go ahead -- scarlet: does it give a broad picture of the housing market? doesn't existing home sales make up 85% of the housing market? bill: existing home sales, though, can vary and bounce around. at the level we are at, 5 million to 5.5 million a year, that's a fine level. i don't expect us to go back to 7 million the year. it just moves sideways, that would be fine. scarlet: there were some mortgage law changes, which may have contributed to the weaker sales. new forms for applications, the three-day review period. a lot more scrutiny. has the pendulum swung too far from the no-job loans to taking everything to the extreme?

phil: first of all, i think some of that -- bill: first of all, i think of some of that reading, some of that was related to the new regulations. but that will all go away over the next few months. those regulations are not really restrictive. theust adds a few days to closing time. i'd don't see it as swinging too far at all. if anything, we are starting to see some loosening of lending. scarlet: is that in selected pockets, or across the board nationally? bill: i think it is national. how slight changes in who, people qualify. i don't think it's a big deal. it's nothing to really be worried about. scarlet: you are inclined to look past the bad readings we got. let's talk about housing prices. there's several ways to measure it.

there is the case schiller. you have looked at zillow. if you look across the board, they rose roughly 5%,. how did that compare historically? i wonder whether that 5% is sustainable. bill: well, housing prices when you look back, they fling fairly substantially sometimes. you also have to look at real prices. if you go back to the late 1970's, housing prices were going up very fast, but that was because inflation was going up 7%, 8%, 10%. you have to look at real prices. 5% is what we saw the last couple years after a couple of 10% gains. is 5% sustainable? i don't think so, not with 1% or 2% inflation. i think we will probably see something on the order of 3% or 4% this year, something like that. scarlet: in other words, not much inflation if any, putting a cap on housing prices. bill: in some areas, we have

definitely run a little too far. it doesn't mean prices will fall. it just means prices will stabilize a little, or not wise very much the next two years. scarlet: you had a great chart, residential investment as a portion of the economy, as a percentage of gdp. right now, it is somewhere in the neighborhood below 4%. we know institutional investors played a big role in helping the house market recover -- housing market recover, but they have since fact away from buying property because prices are no longer distressed. is that a good thing or a bad thing when it comes to the health of the overall economy, and country should of housing? bill -- contribution of housing? bill: the institutional investors helped to put in a bottom for housing. but i don't think they are very relevant going forward. investors as a portion of gdp is still very low.

i think we will see it go up over the next few years. housing starts this year have been about 1.1 million. sense to seees those up to 1.5 million in a few years. new home sales will come in around 500,000. we will probably see up to 800,000 in the next several years. we're talking 2016. i am a little more pessimistic than others on 2016, let's put it not as optimistic. scarlet: what is the biggest risk for you? bill: well, i think is a few areas. houston has been a boom area for housing, and that's, they are having severe problems because of the oil price drops. so houston will be slowed down. i think that to get the numbers back up, new home sales up to 800,000 a year, unique as to see builders focus more on some lower price points. they are starting to do that, but it takes time to shift. they have focused on high price points, because that's where the

money is. they had a limited number of lots, so they are trying to get the lot number up, and then focus on lower price points. volumes will rise. scarlet: i like how you explain how new home sales and housing starts are a better way to gauge the economy, because they can to be more to the economy that existing home sales. that said, we know there is a tight construction labor market. does that get freed up a little in 2016? what will contribute to that no longer being such an obstacle? bill: you know, everybody i talked to in the housing market talks about that. they are having trouble giving qualified people, trying to wrap up. one side of that, they have lots of business. there's lots of demand. all the subs i talked to, they have enough work to do. if they could hire more people, they would have more work. over time, they will find people, train new people. some of the people will come back. obviously there were a lot more

people in housing construction 10 years ago. scarlet: bill mcbride, thank you so much. happy new year to you. bill: thanks for having me. happy new year to you, too. scarlet: bill mcbride, joining us from california. coming up, one analyst says the u.s. is at the start of an economic recession, defying what janet yellen characterize as a robust economy. we will be back with more. ♪

scarlet: it is time for the bloomberg business flash, a look of the biggest business stories in the news right now. warren buffett purchased yet another newspaper. berkshire hathaway's newest acquisitions are both located in fredericksburg, virginia. the terms of the deal were not disclosed. the department of justice is launching a criminal investigation into the handling of a list. out by blue bell creamery, trying to determine -- listeria outbreak by blue bell creamery, trying to determine if the executives were aware of it. it caused three deaths and dozens of illnesses. microsoft will warn users of e-mail and cloud services if a government-backed hacker attacked them. they already tell users if they believe an account was compromised by third parties. microsoft says there is evidence that state-sponsored attacks can be more sophisticated than those of ordinary sever criminals. just crossing the bloomberg terminal, pershing square, bill

company is selling 5.5 million shares of valeant pharmaceuticals. we interviewed the editor and publisher of the doom, gloom, and boom report. joe weisenthal and i asked him where he thinks interest rates are headed. >> i don't think the u.s. will continue to increase interest rates. in fact, given the weakness in the global economy and the deceleration of growth in the u.s., i would imagine that by next year the fed will cut rates qe4.again and launch so i don't think rates will go up a lot. i would just like to mention, basically u.s. treasuries in

2015 did not perform particularly well, but they did not lose any money, because the bond market, the government bond market was relatively steady. so you had a total return that was actually satisfactory, particularly if you measured it in euro terms. joe: i want to look ahead at what investors should look for in 2016. where should investors place their money next year? day: i just read the other onerron'ss cover, and not strategist was negative about the stock market in 2016. i think the u.s. stock market will go down in 2016. treasuriesyear u.s. are quite attractive because of my outlook for a weakening economy. actually, i believe we already

are entering a recession in the united states. emerging markets, as you know, has grossly underperformed the u.s.'s 2011. -- since 2011. it still might be slightly premature to make a major commitment into emerging markets, but they are moving into the buying range. i like real estate in the countryside in portugal, spain, italy, and indochina. indochina being essentially aos, cambodia, myanmar, and thailand. i think the vietnamese stock market is very attractive, as the economy continues to perform exceedingly well. called out the persistent optimism of barron's .

but stocks go up most years throughout history, whereas people who are perpetually negative are usually on the wrong side of things. but even if stocks to go down, and of course that happens, isn't general optimism the right way to think about things? marc: the right-wing think that any investment is to think realistically. equities are, u.s. expensive. the median p/e is high. the market this year has not performed well. it has been driven by just a few " stocks,he "fang facebook, netflix, amazon, and google were particularly strong, but the median stocks did not perform well. scarlet: that was marc faber, editor and publisher of the doom report,

speaking to us earlier this week. take a look at this chart. it shows how half a million bag obs disappeared since the financial crisis. deutsche bank plans to cut 26,000 more positions by 2018, so deutsche bank's bar will get a lot longer. they held employment close to the 2010 p, even as they made -- 2010 peak, even as they made a lot of changes and shied away from admissions to be a global investment banking they might want to sell the retail arm, so that's maybe -- that may be where a lot of job losses will be. total job cuts for the quarter following 52,000 lost jobs in the first nine months of 2015. the first quarter was especially painful for the bankers out there. what else poses a risk to the global economy? you don't want to miss what our

s had to say, coming up next.

scarlet: i am scarlet fu. "what'd you miss? -- 2015 was a year full of headlines. oil prices tanked to levels not seen since 2004, and the fed raise interest rates for the first time in almost a decade. what does that mean for the new year? we asked our guests what they think the biggest risks are heading into 2016. >> when you look at 2016, what's the 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 diverting policy, and policy,-- diverging and that in my mind is the biggest risk. >> a convergence between geopolitical risk and social economic risk is what i most worry about, because that will be difficult for leaders to deal with. >> a significant upturn of u.s. inflation. >> there's a large number of companies that have used low interest rates in the u.s. to find themselves. some of that funding has not gone to the right places. >> the big game changer for us is rates. liftoff,ed achieves you get to a point where investors pay more attention to balance sheets. >> the biggest risk comes from the united states. if the fed raises rates and acts recklessly, we

have a dollar overshoot and that will bring up the chinese rmb simultaneously. >> what if the u.s. economy really does weekend? -- weaken? we don't have the political will to have fiscal stimulus or go back to qe. >> the biggest risk falls under the category of lack of cooperation. >> iraq is probably the biggest risk once more. if you look at infighting in the government, it is huge. it is being underappreciated by the market. >> if you look at what china has quasi-peggedfrom a a rate aroundto 6.4, with a lot of noise in between in august and september -- and september, that is not natural. no growth continuing. >> i think we understand how nmportant it is that we as a international community

cooperate. >> i'm worried -- hopefully the engine of the car has turned over. but if it doesn't, i don't think we are prepared for the downside. > it is a challenging environment for investors who over the last years enjoyed the rising tide lifting all boats. now, pick your stocks carefully. scarlet: speaking of picking stocks -- coming up, what you need to know to kick off trading in 2016. ♪

scarlet: we have a big week next week. everybody comes back to work, but also a lot of manufacturing -- a lot of economic data. manufacturing, then factory orders. both are unlikely to be upbeat. manufacturing is estimated to

still be below 50. on friday, the jobs report. right now, economists estimate 51%, or i should say traders do,

♪ >> all right, welcome to our special new year's eve edition of "with all due respect." it is over, sports fans. you can finally start talking just a fewbecause in hours, it will be 2016. before we do, let's talk about 2015. what a year -- we laughed, we cried, we saw the rise of donald trump. let's kick things off with this question -- what do you think