Good morning, team. I'm Phil Rosen, reporting from New York. I'm extra glad to see you here today, as I'm sharing what I learned from talking to one of the nation's top economists.
In a wide-ranging conversation, Moody's Analytics' Mark Zandi broke down his US recession forecast and how a looming housing correction differs from 2008.
Meanwhile, Twitter has locked its staff out of the company's office buildings until next week, as hundreds of employees refused to continue working under Elon Musk's new vision for the platform.
Without further ado…
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1. Commentators for months have been sharing bleak outlooks for the economy. The way Mark Zandi sees it, the US is facing a 50% chance of a recession next year, but his baseline forecast actually sounds more optimistic than those odds.
"It's a very close call. But at the end of the day, if you're saying, pick a side, the side I pick is no recession," he told me in a video call last night.
He clarified that he wouldn't argue with someone who's betting on a downturn, as that's also a fair forecast. But for now, even though policymakers were initially late in their bid to tame inflation, Zandi said a soft-landing still remains within reach — with a little bit of luck.
He shared, too, a nuanced prognosis on the housing market. Because home-buying had gotten so hot during the pandemic, that tempers the potential downside.
Now that mortgage rates have climbed to about 7%, compared to the roughly 3% of a year ago, demand is tumbling because fewer Americans can afford to buy.
To see a similar crash in demand you'd have to look back to 2008, Zandi maintained.
"I expect prices to be down 10% peak to trough, with no recession," he said. "That's my baseline. I view that as a correction, it's not a crash. It's not circa 2008, 2009, when prices fell 25%-30% nationwide."
But that 10% drop in home prices could be closer to 20% if a downturn does indeed arrive, Zandi said.
You can read the full story about my conversation with Moody's chief economist here.
What do you think the recession odds are for 2023?
A) More than 50%
B) Less than 50%
C) We are already in a recession
Let me know on Twitter (@philrosenn) or email me (prosen@insider.com).
In other news:
2. US stock futures trade mixed early Friday, as the Federal Reserve shows no sign of pausing its rate-hiking cycles any time soon. Meanwhile, billionaire investor David Rubenstein says people should treat investing in crypto like a trip to Las Vegas after FTX's collapse. Here are the latest market moves.
3. Earnings on deck: Estée Lauder, Sysco Corp., and Foot Locker Inc., all reporting.
4. Bank of America analysts shared one area of the bond market that's set to deliver 13% returns in 2023. Bonds, like stocks, are having a terrible 2022, but that's going to change next year. These are the "big reversal" drivers to watch out for.
5. A bankruptcy filing revealed the fair value of FTX's crypto holdings is just $659,000. That revelation comes after Sam Bankman-Fried had claimed the exchange held $5.5 billion in less liquid tokens. The firm's new CEO, John Ray III, said he's never "seen such a complete failure of corporate controls."
6. The UK has laid out a $65 billion package of tax increases and spending cuts. It's a bid to restore faith in the British government following recent political upheaval and market turmoil. Finance minister Jeremy Hunt unveiled the package as part of the UK's plans to rebuild economic credibility and cool down inflation.
7. Russia's war in Ukraine is the biggest culprit pulling the global economy into a downturn. That's according to Kristalina Georgieva, the chief of the International Monetary Fund. Regarding the world's economic trajectory, she sees the fallout from the conflict is the "single most important negative factor."
8. Depending on price range and city, your property could see anywhere from no change in value to a 20% correction. That's according to a 17-year Wall Street veteran — he shared his major predictions for real estate next year, and listed 10 cities that could see the most and least price changes in 2023.
9. This real estate investor owns more than 100 rental units, and said investors should be "a lot more excited to buy this year than last." A recession presents an opportunity to build wealth as a real estate investor, Mike Zuber explained. He shared his four-step process for finding a great deal.
10. Coinbase shares plunged as much as 6% on Thursday. The stock was down even more before the bell, but pared losses as the day went on. The firm's CEO said it is insulated from the FTX fallout, but it still hasn't been able to escape waning investor confidence in the broader crypto sector. This year, Coinbase stock has dropped roughly 80%.
Keep up with the latest markets news throughout your day by checking out The Refresh from Insider, a dynamic audio news brief from the Insider newsroom. Listen here.
Curated by Phil Rosen in New York. Feedback or tips? Tweet @philrosenn or email prosen@insider.com
Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.