For Phil Orlando, the chief equity market strategist for Federated Investors Inc., which manages $223 billion, it's the potential for a recession in the U.S. For David Mouser, who helps manage $350 million at Driehaus Capital Management, it's the buildup of debt to finance mergers and acquisitions.

``The single biggest risk facing global financial markets is a change in the benign credit-market conditions prevailing the last three years,'' said Mouser. ``We've had record liquidity in global markets the last few years that has driven all asset classes to continued new highs.''

Analyzing Risk

Morgan Stanley Capital International's World Index, tracking stocks in 23 developed countries, has risen 87 percent in the past four years. The firm's Emerging Markets Index has soared 212 percent. The U.S. Dow closed at a record high on Dec. 27, while Europe's Dow Jones Stoxx 600 Index last week reached the highest since December 2000.

In the U.S., strategists at 12 of the biggest Wall Street firms forecast a rally this year. European stocks will rise, according to the median of 35 forecasts, though at the slowest pace in five years. Japan's Topix index will reach its highest year-end level since 1989, according to the median estimate of eight strategists.

So somebody's got to question the euphoria.

``Analyzing risk is part of your fiduciary responsibility,'' said Adam Levinson, co-chief investment officer of Drawbridge Global Macro Advisors, a New York hedge fund with $5 billion under management. ``If you invest without consideration of potential risks, that's representative of a dangerous complacency.''

`Massive Default'

Sedacca and Mouser point out that higher interest rates may curtail the supply of cash and credit that brought yields on 10- year notes in the U.S. and Europe below those of shorter-term securities last year. The European Central Bank and the Bank of Japan are likely to raise borrowing costs further this year from the current 3.5 percent and 0.25 percent, respectively, according to the median forecasts in economist surveys by Bloomberg News.

At the same time, the $643.4 billion U.S. trade deficit through October, on pace to set a record, threatens to further depress the dollar, fueling inflation and pushing interest rates higher, they said.

Given the ease of borrowing now, acquirers may be taking on too much debt, said Chicago-based Mouser. That in turn could lead to another possible cause of a market collapse, a bond-market blowup.

U.S. Slowdown

Mergers and acquisitions reached a record $3.68 trillion in 2006, according to data compiled by Bloomberg. Yields on junk bonds used to finance buyouts are near 10-year lows relative to U.S. Treasury securities, according to Merrill Lynch & Co.

``Our concern is the excessive leverage many of these firms are taking on will eventually lead to a massive default, similar to the collapse of hedge fund Long-Term Capital Management in 1998,'' said Mouser.

Another source of tension is the slowing $12.5 trillion U.S. economy, the world's biggest. Gross domestic product expansion cooled to a 2 percent annual rate in the third quarter from 5.6 percent in the first.

The risk is that the slowdown ``actually becomes a hard landing, or recession,'' said Orlando of Federated Investors in New York. Investors can hedge those risks by buying health-care, consumer-staples, utility and telecommunication-service stocks, he said.

`More Vigilance'

Even the fact that 20 years have passed since the 1987 crash doesn't mean disaster is coming, said economist Tai Hui at Standard Chartered Bank Plc in Hong Kong. The ``curse of seven,'' as he called it in a report last month, means only that investors should pay attention. In 1997, financial markets and currencies in Asia collapsed as Western investors withdrew their capital from the region.

This time around, ``it will be a year that needs more vigilance and less complacency, but we do not see the justification for crisis,'' Hui wrote.

Alfred Goldman, chief market strategist at A.G. Edwards Inc. in St. Louis, Missouri, also noted the two-decade mark, but chalked it up to coincidence.

``I don't see any similarity except in the coincidence of the end number seven being the same, and that means nothing,'' said Goldman. He said the U.S. economy should slow yet avoid falling into recession. He also noted that the 1987 crash ``turned out to be a great buying opportunity.''

The Dow industrials rallied 25 percent from the crash on Oct. 19, 1987, to the end of 1988.

Still, terrorism and other geopolitical risks could undermine any optimistic scenario. Goldman said he is especially concerned about Iran.

``Iran either voluntarily must stop its nuclear program, or else it will be done for them,'' said Goldman, predicting that the latter outcome could send oil prices to $100 a barrel from the current $56.31.

``If you find somebody that isn't worried about Iran, see if they have a pulse,'' said Goldman.

Last Updated: January 7, 2007 19:19 EST

Während viele Analysten und Marktbeobachter bereits klare Signale aussenden gemäß der Devise ``The worst of the drag on the economy from construction is behind us,'' ist Fed – Vize Kohn hingegen unsicher, ob die Housing - Märkte, die zusammen mit der Automobilindustrieschwäche zum langsameren Wirtschaftswachstum 2006 in den USA beitrugen, überhaupt den Boden schon erreicht haben.Die Abwärtsrisiken sieht er diesbezüglich als weiterhin groß an.