2018 was a busy year. Divisive partisanship in Washington DC, turmoil across Europe, brewing trade wars and volatile equity markets all made this a memorable year. However, as tumultuous as this past year has been, the real action will be in 2019.
Putting aside possible unforeseen events (terror attacks, natural disasters, large scale accidents, epidemic outbreaks, etc.), there are so many matters that will come to head in the upcoming year.
United States
Gridlock in Washington: 2019 has not yet commenced and the U.S. government is already shutdown because of a dispute over funding of the border wall with Mexico. This is an ominous sign of how things will be in 2019 between a Republican President and a Democratic Congress. The political stakes for both sides are high and the shutdown is expected to be a protracted one. Both sides understand that the border wall issue will become central to the 2020 presidential race.
However, this is just a taste of things to come. Expect gridlock on everything from healthcare to immigration reform, infrastructure, taxation, government spending and environmental policies. Basically, there is little evidence that either Republicans or Democrats will treat 2019 as anything but a springboard for the 2020 election. The Democrats especially have very little incentive to hand president Trump any legislative victories.
The Mueller Investigation: By most accounts, Independent Counsel Robert Mueller should wrap up his investigations into alleged Russian interference in U.S. elections during the upcoming year. Mueller is also investigating possible wrongdoing by the Trump campaign with regards to apparent campaign finance violations related to the alleged payoff of two adult movie stars (Stormy Daniels and Karen McDougal) as a form of hush money to keep them quiet about alleged extramarital affairs with the president nearly a decade ago. Several prominent Democrats are already calling for possible impeachment proceedings next year.
Economic Slowdown: The U.S. economy has been one of the few bright spots of the past few years. However, concerns over escalating trade wars with China and Europe, rising interest rates, high asset valuations and anticipated turmoil in Washington DC is giving rise to concerns of a possible economic slowdown. After reaching a high of 26,828 on October 3, 2018 the benchmark Dow Jones Industrial Average Index dropped to 23,062 this week, a drop of 14 percent from its peak. For the year, the DJIA is down 6.7 percent as of December 29, 2018. The housing market also appears to have peaked in terms of price. President Trump’s unprecedented attacks against his own selected Fed Chairman Jerome Powell is further causing unease both domestically and internationally.
Europe
Brexit: Over the past couple of years, British Prime Minister Theresa May has been grappling with a way to exit the European Union (EU) while at the same time trying to minimize the impact to the British economy. It’s been a rocky road with almost everyone unsatisfied with how Brexit is going. The conservatives want a better and quicker deal, while labor is pushing for a second referendum in hopes of remaining in the EU. Either way, expect a Brexit deal or a new British prime minister in the next few months. The outcome of either scenario is yet to be seen, but it probably won’t be good for the UK economy.
France – The Yellow Vests: In response to government policies assessing new taxes on fuel consumption, a grassroots movement of French citizens wearing yellow vests swept across the nation demanding a rescission of said policies and even the removal of French president Emanuel Macron. After several weeks of stubborn protests, Macron had no choice but to acquiesce to the demands of the protestors and scrap his policies. The French president also instituted different measures to help pensioners and low-income citizens in hopes of bringing an end to the populist protests. However, the Yellow Vests have indicated that they will continue with their protests and form a new opposition bloc in French politics.
The Middle East
Syria: The sudden exit of U.S. forces from Syria is creating a political and military vacuum in an important part of the war-torn nation. Already, conflict is brewing between the Syrian regime of Bashar Al-Assad and Turkish leader Recep Tayyip Erdogan to fill the void that will be left by the exit of U.S. forces. The Turks want to send forces into northern Syria to squash the U.S.-backed (now U.S.-abandoned) Kurds. There is a strong possibility of another protracted military conflict in northern Syria between the Russian-back regime on the one hand, and Turkey on the other.
Israeli-Palestinian Conflict: Matters are as tense as ever between Israel and Iranian-back Hezbollah as well as between Israel and Palestinian militant group Hamas. Further complicating matters is the fact that each side is vying for a better position domestically. Hamas is locked in a political battle with the more moderate Palestinian leader Mahmoud Abbas (Abu Mazen), while Israeli prime minister Benjamin Netanyahu was forced to call for early elections in April 2019. Expect each side to harden their position and even push for an armed confrontation as a way to better their standing with their own citizens.
Saudi Arabia: Saudi King Salman is aging and in frail health. In the event of his passing, the throne would normally go to Crown Prince Mohamed Bin Salman (MBS). However, it light of the controversial policies of MBS, including the extra-judicial detaining of prominent Saudi businessmen, including several members of the royal family, as well as policies alienating religious hardliners, a rocky succession can be expected in the world’s largest oil producer. MBS is also being blamed for directly ordering the brutal assassination of Washington Post journalist Jamal Khashoggi in the Saudi consulate in Istanbul, Turkey, which has drawn widespread international condemnation and a sharp rebuke from the U.S. Congress, further diminishing his international standing.
Elections
Several countries are scheduled to have presidential elections in 2019, including Afghanistan, Algeria, Senegal, Tunisia, Croatia, Latvia, Lithonia, Romania, Ukraine and El-Salvador.
Conclusion
The outlook for 2019 is very turbulent. The Democrats will almost surely make life difficult for president Trump, whose tweets, outbursts, firings and abrupt policy decisions are making him an easy target for his opponents and even alienating many of his supporters.
Economically, years of solid economic growth seem to be coming to an end, driven by growing concerns over inflated asset valuations, trade wars, rising interest rates and political gridlock.
Globally, there are too many hotspots that may erupt at anytime, including several conflicts in the Middle East, Ukraine, the South China Sea, as well as popular discontent throughout Europe.
Brace yourselves.