The Next Big Risks

It's an investor's job to prepare for what's around the corner. And in a year where geopolitical tensions have been flaring, and where Wall Street has been left to navigate the most aggressive central bank tightening in a generation, we asked some of the top voices in the industry on what they're most concerned about over the next five to 10 years.

Social Unrest

For Oaktree Capital Management's Armen Panossian , the co-chief executive officer of the asset management giant, the worry is largely around the consequences of an artificial intelligence boom.

"AI clearly has the potential for very large economic gains," he said. "But it’s easy to disregard the societal impacts of those efficiency gains. What happens to normal jobs that become obsolete because of AI? Think of cashiers or drivers as AI becomes a real alternative to physical labor in some of those areas. Millions of people could be out of jobs. So who’s going to retrain those people?"

Legacy of Crisis

Angel Ubide , the head of economic research for fixed income and macro at hedge fund giant Citadel, is most concerned about what could happen if Europe weakens further.

"In some sense it’s the legacy of the European crisis," he said. "It was very scary to see the default in Greece. It was very scary to see the sudden stop of capital inflows in some of these countries. There was a bit of a decision to self-insure, how do you self-insure you have your own bank, your own telecom, your own energy. And I think that’s the issue that’s blocking the thinking about moving forward."

The consequence of a weaker Europe? A world that's more bi-polar between US and China. It could threaten the stability of multi-lateral organizations like the IMF and NATO.

Bifurcated Economy

Anne Walsh , the chief investment officer of Guggenheim Partners Investment Management, said there's a "Covid echo" in the economy -- in which there's still a hangover from the policies put in place during the pandemic era. What's more is that the inflation that's been spurred by such policies have been met with a blunt tool from the Federal Reserve: A historic interest rate hiking cycle.

"The bifurcated economy that exists is made worse by the two policies that the Fed has: higher rates and quantitative tightening," she said. "It’s going to continue as long as the yield curve remains inverted and the policies of the Fed are not yet to the point of lowering rates."

She believes interest rates should have come down faster. "I don’t think the Fed really appreciates the quantitative tightening tool as much as I do and I think as much as the markets do, relatively speaking to their adherence to rates as almost the only tool."

Read More

To find the full story, you can find it here on Bloomberg. Find the full video of all of our guests here as well. You can also go back and see all the previous episodes of "The Next Big Risk," we are reaching our fifth year of the project soon. I'm looking forward to hearing what you think.