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So, there's a lot of unknown, we do know that even if things stay status quo, that the growth because of the fiscal policies, now I like to bash the Fed as much  as anybody else, I know Jim just kind of bashed them, I love the bashing if you read me, I've been bashing them for years, but it's not all on them, fiscal policy is rather irresponsible, and I'm a conservative so you can take that as an honest assessment, and I think it's gonna dry us up, even if things stay status quo going out you know 6, 8, 12 months, somewhere around there we're gonna run into something we don't want to see.
Robert Powell: Kristina.
Kristina Hooper: So I'd say my base case is solid economic growth, solid earnings growth through next quarter, but I would argue  that the risks are growing, and quite significantly, and my first risk of course is that the Fed could potentially choke off growth. I think Jim is absolutely right in that, that the Fed has that potential. Now, the problem is that the United States is an enormous country, and its really a mosaic of a number of different economies, so you try to do your best with what you're getting, and certainly the conditions are quite different in different regions.
I think Janet Yellen certainly had a more cautious approach, but I also recognize that the Fed has competing interests, we're seeing signs that costs are going up. They may be caused by factors like tariffs, but the Fed doesn't have many tools at its disposal, so it may feel forced to raise rates. I'm still of the opinion that the Fed may not raise rates one more time in December, I know that's certainly a minority opinion, but I think it's possible just given that there are some risks to the economic environment, and they're largely caused by the tariff situation, which I think is going to get worse, and so that would be my second risk, is tariff, well let me go back to my first risk.
The other issue is the Fed isn't just using one tool, it isn't just hiking rates in the background, but a very powerful tool of course is balance sheet normalization. Now, I can't stress enough that this is an experiment, I mean we're unwinding an experiment, and so that's an experiment in and of itself. Using QE was pulling something out of a tool box that was just essentially an academic theory applied once by a central bank, and so now we're sort of whole-hogging this experiment, and we're operating that lever at the same time we're operating rate hikes. So it can be quite dangerous, and in fact we're already seeing disruption, emerging markets are saying that it's creating a liquidity suck, in fact the governor of the Reserve Bank of India wrote an op-ed piece in The Financial Times in early June, where he essentially wrote an open letter to the Fed saying, "Hey balance sheet normalization is causing problems in the emerging market space, it's sucking liquidity out."
That combined with the fact that the US is running a larger deficit, so it's issuing more bonds, so the number one risk is the Fed, but of course it's not easy, I don't envy J. Powell, and I think he's got a difficult role, so he's trying to navigate it as best he can I think. Number two of course is tariffs, the trade war situation isn't getting better, it's getting worse. Now, I think there was this sigh of relief because we got to an agreement that essentially renegotiated NAFTA, but the reality is that while the US made concessions to make that agreement happen, what it's doing is clearing the way for the US to focus more and more completely on its trade war with China, and that one it's taking a very different approach too, it doesn't want to compromise, it doesn't want to make concessions, nor does China.
I would argue, I can't think of a compelling reason why China would want to capitulate in this trade war, and it has a much larger arsenal at its disposal to fight a trade war. So that's a very significant risk, and so those two combined make me hesitant and cautious, even though I recognize that we still need to have exposure to risk assets.

Investors know that the good times don't last forever, and the current bull market run is bound to end eventually. 

Speaking to the audience at TheStreet's free October Trading Strategies round table, Kristina Hooper, chief global market strategist at Invesco, believes that the Federal Reserve poses the biggest threat to the now nine-year old bull market. 

"I'd say my base case is solid economic growth, solid earnings growth through the next quarter, but I would argue that the risks are growing, and quite significantly, and my first risk of course is that the Fed could potentially choke off growth," Hooper said. 

Hooper noted that former Fed Chairwoman Janet Yellen had a more cautious approach than her successor Jerome Powell does, and that fact makes the Fed an even bigger wild card.

"Im still of the opinion that the Fed may not raise rates one more time in December, I know that's certainly a minority opinion, but I think it's possible just given that there are some risks to the economic environment," Hooper said. "The other issue is the Fed isn't just using one tool, it isn't just hiking rates in the background, but a very powerful tool of course is balance sheet normalization."

To stave off a full-blown depression, back in 2008 the Fed began increasing its balance sheet to unprecedented levels. The Fed's balance sheet grew from $869 billion on August 8, 2007 to over $4.5 trillion last year. However, the central bank has been slowly unwinding its balance sheet, which is currently down to just over $4 trillion. 

Hooper noted that quantitative easing was itself an experiment. So unwinding that experiment carries a certain level of risk that may be unprecedented. 

"So it can be quite dangerous, and in fact, we're already seeing disruption, emerging markets are saying that it's creating a liquidity suck," Hooper said. "In fact the governor of the Reserve Bank of India wrote an op-ed piece in The Financial Times in early June, where he essentially wrote an open letter to the Fed saying, 'Hey, balance sheet normalization is causing problems in the emerging market space, it's sucking liquidity out."

Outside of the Fed, Hooper identified tariffs as the next biggest economic threat. She even sees the recent NAFTA agreement that the U.S. was able to cobble together as being bad for global trade relations in the long run. 

"What it's doing is clearing the way for the U.S. to focus more and more completely on its trade war with China, and that one it's taking a very different approach to. It doesn't want to compromise, it doesn't want to make concessions, nor does China," Hooper said. 

Watch the full roundtable here, presented by Charles Schwab: