The biggest risks that could derail this bull market

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Wall Street has been rallying in anticipation of full-bore fiscal stimulus likely emanating form the in-coming Trump Administration.

The stock market is banking on massive tax cuts, de-regulation, infrastructure building and increased defense spending, all of which could, or should, give a sharp boost to an already accelerating economy.

That appears to be the message the market is sending as it jumps to record levels and as Dow 20,000 is fast becoming a reality.

However, there is a need to examine what could derail another big leg in what I have long-described as a "secular," or long-term bull market in stocks.

There are a variety of risks to this aging bull market run, from economic to political to geo-political issues that could suddenly appear on the event horizon.

The least likely, and most hoped for by opponents of President-elect Trump, is the possibility that the president, unconcerned by a wide variety of conflicts, somehow, violates the "Emoluments Clause" of the Constitution.

That clause prohibits government officials, and presumably the president, from accepting gifts from foreign governments that would compromise his oath to put the good of the American people before their, or his, own interests.

It is a risk to a Trump presidency, but at the moment, it appears to be the smallest among the many risks going forward.

Former House Speaker, and Trump supporter, Newt Gingrich, has gone so far as to suggest Congress exempt the first billionaire president from any conflict of interest rules.

With a GOP majority in the House and Senate, it would appear their first order of business would NOT be to drive a Republican president from office.

"If the economy accelerates and inflation moves above the Fed's 2 percent target, the central bank could move rates up farther and faster than currently anticipated by the stock market."

The second risk is one that involves a little inside DC baseball in which the president and conservative Republicans fail to find common ground on a massive, and unfunded, tax cut program that, at the moment, is at least partially reflected in current stock prices.

House Speaker, Paul Ryan, a known deficit hawk, may want to slash spending to finance the tax cuts, while President Trump unexpectedly takes a "deficits-be-damned" approach to fiscal stimulus.

Given that the White House and Congress both want tax cuts, comprehensive tax reform, deregulation, the repeal and replacement of the Affordable Care Act and immigration reform, it appears that this apparent rift can be easily healed for a greater goal.

However, if the White House and Congress do reach a broad consensus on massive fiscal stimulus, the Fed must be watched as closely as ever, despite some suggestions that Fed policy will be a less important policy driver in the months ahead.

I disagree.

If the economy accelerates and inflation moves above the Fed's 2 percent target, the central bank could move rates up farther and faster than currently anticipated by the stock market.

That is the risk I am most concerned about going into 2017.

Other developments that could most likely undo the market's recent gains include a trade war with either Mexico or China, or both at the same time.

A two-front trade war would most certainly lead to a major disruption of global economic activity, a devastating hit to corporate bottom lines and, as we have seen in the past, a potentially devastating recession.

President-elect Trump reportedly recently met with Mexico's richest man, Carlos Slim, which some said was an effort to calm the nerves of businessmen and politicians south of our border. We'll see.

The tensions with China are rising much more quickly and could be the real threat to future global growth.

Add to the trade tensions, the attempts by China to exert military power through much of Asia, and international waters in the South China Sea Asia and an accidental shooting match, thought not an all-out war, have to be considered as an event with a greater than zero probability, or risk.

Russia, of course, remains a true wild card, despite the seeming budding "bromance" between President-elect Trump and Vladimir Putin.

Should he move on Ukraine, or the Baltic States, the resolve of US to protect Eastern Europe and the continuity of its foreign policy, not to mention long-standing alliances, (NATO), could be threatened and re-create a world we have not dealt with since before the fall of the Berlin Wall.

Finally, given the populist wave that has manifested itself in Brexit, Trump's victory, movements to the right, or even far right, in Europe and other parts of the world, we must look to history to guide us as to the potential outcome.

Periods of popular discontent, whether in 1776, 1789, 1848, 1914, 1917 or 1933, have, with one notable exception, led to heightened economic turbulence and, ultimately, military tensions within individual countries and also among them.

It is hard to make a macro call that suggests the world is on the precipice of such a tumultuous period. But we must remain alert that the current "era of good feeling" I wrote about last week can change quickly.

For now, the markets are forecasting a financial utopia. They deserve the benefit of the doubt for the foreseeable future, unless, and until, the specter of a more dystopian environment is reflected in the prices of stocks, bond and commodities. In this brave new world, that is simply not the case right now.

Commentary by Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street. Follow him on Twitter @rinsana.

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