text: Good morning. Here’s your Early Warning for Thursday, 17 November 2022.TODAY’S BRIEFING:READ TIME: 8 mins 51 secondsInFocus: Weekly Economic OutlookInside the BeltwayDomestic INTSUMGeostrategic INTSUMLow-Intensity Conflict Activity Rollup & OutlookInFocus: Weekly Economic OutlookThere are four overarching themes this week: 1) inflation is finally peaking (for now), 2) a Fed pivot here risks another bout of rising inflation, 3) intense debate over next year’s recession, and 4) housing will continue to correct.1. Inflation Peaking: We’ll start with inflation – is it peaking? Goldman Sachs and Morgan Stanley continue to tell clients that inflation is peaking, and expect receding inflation next year. Morgan Stanley analysts expect the Fed will stop raising rates in January 2023 and then start to cut rates in December 2023. In their latest inflation outlook, Goldman is very explicit about inflation: get ready for falling prices. I would not be a buyer of large purchases here, especially with recession risks to the downside.This week, Federal Reserve officials continued signaling they’ll slow down future interest rate hikes, which is an indicator that they, too, believe inflation is peaking. This decision, however, is the opposite of what numerous regional Fed bank presidents have said, which is that they want to see inflation recede for several months before saying that inflation is, in fact, receding for good. There is still some expectation that inflation does not recede from here, and the Fed will re-accelerate on raising interest rates, ensuring the U.S. enters an official recession.2. Risk of Another Inflationary Spike?: There’s concern that the Fed’s decision to slow the rate of interest rate hikes is repeating previous mistakes; namely, not doing enough earlier to tame inflation. It’s an outside case, but some analysts are leaving open the possibility that a rate hike slowdown by the Fed is inflationary as banks see an “all clear” to begin lending.3. To Have or Not to Have: Let’s start off with a basic fact: the “bull case” for investment banks is a soft landing. Eeking out GDP growth barely above 0.0% is their best possible outcome. With that, Morgan Stanley this week outlined expectations for a substantial slowdown in 2023 but says the U.S. will avoid a recession. “The US economy barely skirts a recession in 2023, but the landing doesn’t feel soft,” reads one headline. Morgan Stanley expects both 2023 and 2024 to be weak. JPMorgan still expects about a 50-50 chance of recession. The Bank of America Fund Manager Survey for October found that 77% expect recession in 2023.One of the most dangerous pernicious narratives I’ve seen is how well Americans are “capitalized” with “excess savings” to weather a recession. According to estimates, 70% of “excess savings” belongs to the top 20% highest income earners. In other words, the average American has no “excess savings” cushion. This leads me to believe that a recession is more likely to be particularly bad – think evictions and mortgage defaults – than “mild,” especially since stimulus will threaten another bout of inflation. 4. Housing Correction: Morgan Stanley analysts say their base case scenario is that the housing market continues to correct into next year and possibly into 2024 for some markets. – MS.INSIDE THE BELTWAYWHITE HOUSE: Nothing Significant To Report (NSTR)CONGRESS: The Senate Homeland Security and Governmental Affairs Committee will hold a hearing on Threats to the Homeland. The House Foreign Affairs Committee will hold a hearing on Strategy Toward Sub-Saharan Africa.STATE: Secretary Blinken will attend the Asia-Pacific Economic Cooperation Ministerial Meeting in Bangkok, Thailand.DOMESTIC INTSUM