Experts Break Down What To Expect From Politics In 2019

Investors thinking that 2018 was a wild year on the political stage may want to brace for an "even more intense" 2019, CNBC's Eamon Javers said.

The Main Points

The political landscape next year will be characterized by four factors, Javers said:

• Democrats gain power of the House, which gives them the ability to block President Donald Trump's agenda.
• Infrastructure could be a "bright spot" as it typically has support from all sides.
• House Democrats are likely to launch investigations into Trump's finances and Russian connections. 
• The 2020 presidential election race will intensify as the "very long list" of potential Democrats candidates make their case.

Trump Meets With Powell

Federal Reserve head Jerome Powell is likely to sit down with Trump in early 2019 at a time when the president's displeasure with Fed policy is well-known, Javers said.

The biggest potential problem from such a meeting is that Trump's interpretation of the meeting differs from Powell's, Jim Pethokoukis, an AEI Economic policy analyst, said during CNBC's "Squawk Box" segment Friday. 

Nevertheless, a meeting between Powell and Trump needs to happen, and Powell has to succeed in making "strong defense" of Fed policy, he said. On the White House's end, the administration needs to "build confidence," with the ideal ultimate outcome being Trump supporting Fed policy in a video, Pethokoukis said. 

Looking Across The Pond

Political turbulence will likely be felt across Europe. In the United Kingdom, the likelihood of a "no-deal Brexit" appears to be rising by the day.

CNBC's Wilfred Frost said some models are suggesting that by the U.K. GDP could be 7.75-percent lower by the end of 2023 than it would have otherwise been with a deal on the table. The British pound could be 25 percent lower and home prices 30 percent lower, Frost said. 

Goldman Sachs analysts are more optimistic and think a "no-deal Brexit" would impact U.K. GDP by just 3 percent over 10 years, Frost said.

Outside of the U.K., the political landscape for most of Europe will be "troublesome" for 2019, Simon Tormey of the University of Sydney told CNBC. "Really significant" protests are ongoing in France, while President Emmanuel Macron's popularity remains low.

The people of France and other countries like Italy and Sweden will be looking tothe U.K. and "become fired up" if the Brexit transition winds up smooth, Tormey said. This would present a new set of challenges and problems for the European Union in 2019 and beyond.

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