U.S. the "biggest risk" to global markets

I think one of the places, to be a little bit more specific, that investors do want to look in China and Brazil and this probably holds for most emerging markets is consider that small cap exposure. Most of the times when people buy stock in emerging markets, they buy mutual fund or an ETF, they generally lever to the larger companies. And I think that's fine and those companies are still likely to do very well. But if the theme you want to capture is a growing emerging market consumer- and I do think that's one of the faster-growing segments of that space- a better way to capture that is with smaller cap companies. And the reason being, they tend to be more levered to domestic consumption. While the large caps are often multinationals, they're always dependent on global growth. So one of the parts of the emerging markets we like the best is the small cap sector which again will be the biggest beneficiary when you see a rise in the emerging market consumer.Question: What's the biggest risk to your bullish scenario?

RUSS KOESTERICH, GLOBAL CHIEF INVESTMENT STRATEGIST, BLACKROCK:

I think it actually is the US, which is interesting because for most of the last few years, the US has been, as many have put it, the best house on a bad block. And the problem is we have all of these unresolved fiscal issues that are long-term challenges with the budget. And then perhaps the most importantly in the short term, you've got a lot of fiscal drag in the form of higher taxes and potentially lower spending that could hurt the economy particularly in the front half of the year. And why I don't think we're going back into recession, it does mean that growth is likely to be slower than economic and earnings expectations assume. So to me, one of the risks we're likely to see during the first three or four months is, one, how does the US fiscal drama play out, and second of all, how much of a drag do we see from these tax hikes and spending cuts that are part of the new budget deal.