Steve Mandel's hedge fund Lone Pine Capital says there are major concerns for global financial markets going forward. In their second quarter letter to investors, Lone Pine identifies two major concerns: the Euro and China's bad debt:

"The European Union (EU) is a structurally flawed concept and the euro is therefore doomed. This is a trickier issue because of the absence of a currency depreciation "escape valve", the vastly different fiscal condition of individual EU members (the structural flaws), the scale of public and private sector indebtedness and therefore even more convoluted politics. The consequences of failure are so high for all concerned, though, that compromises most likely will be made to preserve the EU and the euro. These will almost certainly involve financial pain on the part of France and, particularly, Germany (and, of course, the countries with shaky credit). In addition, a long and protracted road to financial health will require patience from the electorates in both creditor and debtor nations.

China has massive amounts of unrecognized bad debt that will ultimately lead to a crisis. While Chinese banks (and non-bank lending) are opaque, the high level of central government reserves and the absence of external sovereign debt make the odds of a financial crisis very low. There will undoubtedly be high profile frauds, scandals and bankruptcies, but for these to snowball into a systemic problem is unlikely. In a country with a closed capital account, though, one side effect is inflation. This has the potential to harm the "social contract" with the populace, an outcome which must be closely monitored."

Their point on China is not the first time we've heard this cautious approach. Grandmaster Capital's Patrick Wolff has called China a debt-fueled investment bubble. Kleinheinz Capital also believes that inflation is the biggest threat to emerging markets. And lastly, hedge fund manager Jonathan Ruffer also put out commentary that he'sworried about China.

But at the same time, there are other prominent investment managers that take the other side of the argument. We've covered previously how Maverick Capital is focused on China's importance and how Warren Buffett has said China will be a big driver of growth for the next 10-20 years. At the Delivering Alpha Conference, Xerion fund's Dan Arbess debated against Kynikos Associates' Jim Chanos as to whether China is a bubble or bonanza.

While big names stand on either side of the argument, only time will tell who is ultimately proven correct.