Welcome To 2019... Fasten Your Seatbelts... It's Going To Be A Bumpy Ride

The coming year is likely to be even more turbulent than 2018.  A host of factors are set to converge in 2019….factors that will generate dramatic news headlines and produce challenging markets for investors.  We live in an era where investors no longer have the luxury of ignoring geopolitical influences. The combination of a fragile global economy and multiple geopolitical stresses has produced an investment environment that will require attention and skill to navigate in the years ahead.

The United States deserves pride of place for first consideration given its role as the world’s largest economy. The Trump administration enters 2019 facing a variety of challenges. The new Democratic majority in Congress cannot be counted on to rubber stamp Trump’s policies as the previous Republican dominated Congress did. The United States enters 2019 with a partial government shutdown over the allocation of some $5 billion demanded by President Trump to build a portion of his promised border wall with Mexico.  The shutdown could last some time as the promise of a wall was a key pledge by Trump to his electoral base.  A Democratic Congress is unlikely to agree to funding for a wall.  At the same time, the Republican U.S. Senate is unlikely to produce a bipartisan bill that does not include provisions for a wall as Trump will veto it.  Thus, this government shutdown could last far longer than its predecessors. The issue will eventually be resolved, probably with a solution that allows Trump to claim he has been successful in securing funding for his wall while the  Democrats refer to it as funding for border security.  Still, the highly polarized nature of American politics will likely extend the duration of a shutdown before a resolution can be finessed.

The Mueller probe is expected to report its findings in the first half of 2019. It remains to be seen what conclusions are drawn from the probe, but whatever the result, they will be surprising to some faction of the populace. The Mueller report can be expected to have an effect on markets regardless of its conclusions. A benign outcome for the Trump administration would be positive for markets. A report concluding that serious wrongdoing occurred, and its ensuing consequences, would likely weigh on investor sentiment until a resolution is reached.

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Disclaimer: The article is an excerpt from the Global Investment Letter issue published on January 4, 2019. This article was written for informational purposes only and should not be considered ...

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