Below is a brief transcript of a conversation between Hedgeye CEO Keith McCullough and renowned economist, portfolio manager and author Daniel Lacalle. It is from the Q&A portion of their “Real Conversation” in mid-March.

Since this interview was recorded (on 3/9/17), the U.S. Dollar index is up +5% and Emerging Markets (EEM) are down -13.6%. As you will soon see, these two were clearly on to something.

CLICK HERE to watch the entire 36-minute conversation.

Keith McCullough: Of course we’re going to get asked this question. What is the biggest risk?

To me, the biggest risk is that the Dollar is like the new VIX. I mean, it’s not the new VIX—it always does this, at this point. But if the Dollar were to go up meaningfully, I think a lot of people are offsides, in a lot of asset allocations and exposures.

What do you think the biggest risk is in global macro right now?

Daniel Lacalle: I think that the biggest risk is that in general, what we have a big bet on synchronized growth.

McCullough: Right.

Lacalle: But synchronized growth has been driven by synchronized debt. And debt is the key factor here. So, the moment we have an uptick in the perception of risk of fixed income, in Emerging Markets and in growth economies, you can see that reverse that we mentioned before.

So to me, that’s the biggest risk. It could be obviously driven by a slowdown in China, it could be a combination of factors. That is the biggest risk.

And as you were saying before, the unwinding of that trade—this is what people tend to forget—doesn’t happen slowly. It happens super quickly.

Flashback: The Biggest Market Risk Right Now - the macro show