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Written by: Greg Valliere | Chief U.S. Policy Strategist, AGF Investments WE’VE BEEN RELENTLESSLY BULLISH this year — “no recession” has been our mantra — so now what? The consensus has turned very bullish, even frothy, so it’s time to play contrarian and ask what could go wrong in the coming year. There’s plenty:The Impeachment nightmare could drag on and on. Nancy Pelosi is in no rush; until she receives assurances that the Senate will hear from witnesses, she may hold on to the impeachment case, refusing to hand it to the Senate. An acquittal is still likely; a speedy acquittal is less likely.The trade wars are hardly over. Despite an agreement in principle with China last week, the details still aren’t available. Sound familiar? The very modest Phase One deal avoids heavy lifting; the big issues are nowhere close to resolution. And other trade fights loom — including a battle over European wine and other luxury goods. Trump is a self-proclaimed “tariff man,” and that will not change.Beware the first quarter blahs. A decent fourth quarter GDP increase — perhaps around 2-1/4% — may be followed by the usual first quarter bummer. Maybe it’s because consumers are tapped out after the holidays, or weather is inclement, or people have to kick in higher health care payments until deductibles are hit. But for whatever reason, the first quarter is consistently sluggish.Inflation may be warming up. Recent data show that just about every inflation indicator is growing by around 2% — except for the Fed’s arcane PCE deflator, which is slightly lower. The labor market is so tight — the unemployment rate is 3.5% — that there’s a bidding war for workers in much of America; it’s simply a matter of time before this shows up in compensation costs.A tidal wave of debt. A deficit of over $1 trillion for years to come is insane in a climate of full employment, yet there’s virtually no sentiment in either party to address the mounting red ink. Trump wants to spend more ahead of the election, and Congress will comply.The repo market is still a concern. No one is sure why the overnight repo market is struggling — maybe it’s the enormity of Treasury borrowing, or regulatory policies, or the timing of tax payments — but this will require massive cash infusions from the Fed, which seemed to be caught off-guard when this crisis erupted in the fall.Retail investors are increasingly bullish. It’s finally dawning on high net worth investors that the stock market is red hot, likely to rise by over 25% this year. For the first time in years, we’ve detected signs of retail froth — a signal that this over-bought market could be ready for a correction.The election is a political risk. The pandering to leftist activists seemingly has no limits in Iowa and New Hampshire; Elizabeth Warren’s great sin is that she moderated her health care proposal. Every candidate wants much higher taxes, and they seem to be ripe targets for Trump — even though his Electoral College prospects aren’t as good as you’d think. Trump may be the favorite against this sorry pack of Democrats, but he’s not a shoo-in, as the markets apparently believe.North Korea and Iran are ready to provoke. The North Korean butcher, Kim Jong-un, may seek headlines during the upcoming holiday news lull, and the threat to Saudi oil fields from Iran has not subsided. The common theme — a desire by both countries to wiggle out of harsh sanctions — will prompt them to ramp up the threats. Other geopolitical concerns, from Hong Kong to Brexit, will persist.DESPITE THESE AND OTHER ISSUES, we’re still relatively bullish because the economic fundamentals are solid; we still don’t anticipate an imminent recession. But there’s no shortage of things to worry about; at the top of our list is the near-certainty that the markets can’t count on the Fed to provide a life preserver, as it did this year. It’s not just Jay Powell — it’s the vast majority of Fed officials, who are prepared to sit on the sidelines, perhaps for the entire year.Related: New Bull Market, Or Is The ‘Snow’ About To Hit The Fan?