The three big global macro questions for 2016

Computers are boring. They only give answers.
- Pablo Picasso

Predictions for the new year are about the same. They only give answers for what may be the wrong questions. I think there are only three questions for the year. I keep it three to ensure it is very simple. One policy, one environmental, and one behavioral.

The policy question is the follow-through question from 2015. In 2015, the issue was when would the Fed raise rates. The 2016 question is how will they further raise rates. The behavioral question is also simple. The last few years was determining how investors would reach for yield in a zero rate environment. The 2016 question is determining how investors will react to a rising rate environment. The reach for yield may actually be more like the RORO (risk-on/risk-off) environment of 2010-2011. The third question is focused on the macro-environmental. How will the emerging market slowdown spill-over to developed markets? China trade is bigger than the US. EM economies are a bigger percentage of the world total. How will a slowdown feedback on the the US and EU through trade, capital flows, and risk-taking? 

Forget the broad predictions. Answer these three questions.