Don’t tie your fortune to a rising market – and I mean any kind of market anywhere on the globe. This is a time to think strategically, stay hedged and diversified, and avoid big directional bets. I think active and hedged management will be the place to be in the coming period. To quote the motto of House Stark in Game of Thrones, winter is coming… Below is my 2016 forecast.

In general, recent data has been trending down (with the obvious exception of the employment numbers). I am concerned that the U.S. will be much closer to 1% growth than 2% for 2016. I know plenty of folks who expect the U.S. to go into recession this year. They may be right, but, if so, that downturn will be due to some kind of external shock but at a 1% growth rate, which is close to economic stall speed, it wouldn’t take much of an external shock.

I can see three real possibilities that we will need to keep an eye on.

Up until recently I believed that you could get a majority of Eurozone voters to go along with the pro-euro elite politicians’ extraordinary intentions to actually mutualize debts under the balance sheet of the European Central Bank (or another organization that would be created in the midst of crisis). Now I think that a political solution is at serious risk because of the immigration crisis. You can almost feel whatever sense of political unity existed in Europe disintegrating right in front of us. The recent tragic events in France and Germany are exacerbating the problem. I think getting a majority of voters to go along with the idea of giving up national sovereignty over their own budgets (which is what a fiscal union and the mutualization of debt would require) is becoming increasingly unlikely. As more and more people begin to demand that their countries control their own borders, the entire Schengen agreement is in jeopardy and without that agreement, the next national debt crisis (beyond that of Greece – Italy? France? Spain?) will call into question the unity of Europe.

As country after country in Europe begins to close its borders, the flow of refugees will not slow but will actually increase. If you are in a failed state in the Middle East or North Africa and you think the doors to Europe are closing, you’re going to go now rather than wait. The refugees will find ways into Europe through those countries that don’t have the resources to control their borders (think Greece). Europe’s ad hoc approach to border control simply won’t work. It will only serve to demonstrate the true impotence and incompetence of Brussels and EU bureaucracy and it will provide political fodder to nationalist groups that are beginning to hold sway in a number of major European countries.