Trade wars, QT and 'unsustainable tech stocks': The outlook for the US in 2019

Is a recession on the horizon?

US stocks were generally buoyant throughout 2018, with the S&P 500 up 15% until 31 September. However, a double hit to markets from 'Red October' and just before the New Year provided major blows to the year's track record. As a result, the index returned just 0.96%, closing at 3487.5 on 31 December.

‘Red October' saw major losses across equity markets following concerns over quantitative tightening and FAANG valuations, with the S&P 500 suffering a loss of 6.9%, its worst month since September 2011. Meanwhile the MSCI All Country World index recorded its worst month since May 2012, dropping 7.6%. Looking forward, investors have mixed views on the outlook for the US with some indicating the prospects remain strong despite high valuations, while others see the current business cycle coming to an end alongside the region's bull run and even the possibility of a recession. Nick Musto...