As traders, investors, and farmers look ahead to 2019, many of their concerns remain the same as they had been throughout 2018.
Trade disputes with China, Mexico, and Canada still hang over all markets, especially major U.S. exports like grains, livestock, and machinery. The United States seems to have won some battles in the ongoing trade wars, but the long-term damage suffered by both sides may exceed any gains notched so far.
Similarly, government dysfunction in Washington is an ongoing cloud over markets. With a divided Congress beginning in 2019, most people expect increasing fights and less action. The current government shutdown is a prime example of this threat; nearly a million government employees are going without pay for almost a week now, which could have a significant economic impact.
Finally, there continues to be uncertainty about the Federal Reserve’s interest rate policy. The Fed has been raising rates at a rapid pace, while most of the other major economies are keeping interest rates low. Rising interest rates make borrowing more expensive, which can slow consumer demand and economic growth.
All these concerns weighed on markets as the New Year approached. Jitters on Christmas Eve collapsed stock markets to the lowest level of the year, a metaphorical lump of coal for investors. Markets rebounded sharply during the last week, but stocks are still down on the year, a disappointment after years of rising markets.