This is what could stop The Fed dead in its tracks in 2016

The Federal Reserve closed 2015 by doing something it hasn't done since 2006: It hiked interest rates, initiating a phase of tighter monetary policy.

Since then, Wall Street analysts have been asking themselves when the next hike is coming and how many hikes there will be before the world gets back to a "normal" monetary policy (whatever that means).

There are others in the market, however, who believe that something could stop the Federal Reserve's tightening phase dead in its tracks.

They believe that weakening credit in massive economies around the world will make it impossible for the Fed to continue to hike rates through 2016.

Veto

Larry McDonald, head of US macro strategy at Societe Generale, is one such person. To illustrate his point he sent us a chart from Brazil, the world's 7th largest economy.

The chart shows the country's 1o-year bonds versus its five year credit default swaps (CDS). CDS are basically bond default insurance.

"Brazil's 10-year bonds are five points below September stress levels," McDonald wrote to Business Insider in an e-mail. "The $64 trillion question for 2016 is, will credit risk VETO the current Fed policy path? I say yes."

Brazil - like many emerging market economies - is under intense strain right now. Part of that is due to a collapse in the price of commodities like oil and iron ore.

Deflation

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