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Wednesday, 26 October 2022

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Housing is on the verge of a correction and Americans are feeling less and less upbeat about the economy

Happy hump day, readers. I'm Phil Rosen, writing to you from Manhattan. I haven't seen any lions or tigers this week, but there's no shortage of bears.

And no wonder — the economy is giving Americans less and less reason for optimism.

Let's take it step-by-step.

Inflation's out of hand, so the Fed's been forced to be extra aggressive with hiking interest rates.
That makes home mortgages (and any type of borrowing) less affordable.
That creates increasing pressure for people's wallets, which then impacts how people feel about the economy.

I hate to say it, but a lot of the chatter across Wall Street says things will get worse before they get better.

Scroll down and buckle up.

If this was forwarded to you, sign up here. Download Insider's app here.

shopping — Shoppers carrying bags cross Fifth Avenue on Black Friday November 27, 2009 in New York City.
David Goldman/Getty

1. The US housing market isn't just slowing down, it's in the early stages of a major correction. With mortgage rates nearing a blistering 7% and home inventories still tight, there's trouble ahead, according to a Tuesday note from Comerica.

The firm's chief economist forecasted that real residential investment will plunge 18% in 2023, and sales of new single-family homes will drop 25%.

Rhys Williams, chief strategist at Spouting Rock, told me yesterday he, too, thinks a correction is likely, given the red-hot rally the market saw when the COVID-19 pandemic hit.

"People don't buy a house for $500,000. They buy a monthly payment that works for their income," Williams said. "So a lot of housing decisions aren't driven by what something's worth, but what people can afford."

And what people can afford today is far different from two years ago, when government stimmy checks flushed consumers with spare cash while mortgages cratered to historic lows.

More and more Americans are getting priced out of the market as rates now rise and inflation eats into peoples' savings, Williams explained, so eventually housing prices have to fall further to match weak demand.

The latest S&P Case-Shiller data showed home prices are already on the decline, and some strategists expect them to tumble another 20%.

But the dismal outlook extends beyond just housing. According to the latest consumer confidence report, Americans are feeling downbeat across the board.

Between stubborn inflation, dwindling pandemic savings, and a looming recession, optimism has dropped.

"It's actually surprising to see consumer confidence stayed as high as it has been," Williams said. "It's one more leg to give the doves at the Fed a reason to pause after they raise rates at the next meeting."

Lynn Franco, senior director of economic indicators at the Conference Board, said in the latest report that consumers' expectations for the near-term remain dismal.

At the next Fed meeting, traders expect policymakers to announce another 75 basis point rate hike, likely resulting in further increases in borrowing costs for everything from mortgages to auto loans.

In Franco's words: "The Expectations Index is still lingering below a reading of 80 — a level associated with recession — suggesting recession risks appear to be rising."

How are you feeling about the trajectory of the economy? What comes next for American consumers? Let me know on Twitter (@philrosenn) or email me (prosen@insider.com).

In other news:

stock market — Getty Images / Kiyoshi Ota

2. US tech stock futures fall early Wednesday, after disappointing third-quarter results from Alphabet ignited worries about digital ad sales. Here are the latest market moves.

3. On the docket: Meta, Boeing Co., and Ford Motor Co., all reporting.

4. Goldman Sachs shared an investing playbook to follow right now for a strong portfolio. As a make-or-break earnings season gets underway amid high inflation and a weakening economy, the bank put together it's recommendations for outperformance. See the rundown for yourself.

5. The pound jumped to a six-week high Tuesday and British bond yields moved lower. New Prime Minister Rishi Sunak pledged to "fix mistakes" made by the Truss administration — but added that the UK is facing a profound economic crisis.

6. If oil prices continue to trend higher, it's extremely unlikely that the S&P 500 makes meaningful gains over the next decade, according to Stifel. While one of the firm's top equity strategists expects some upside for stocks in the coming months, there are plenty of risks left for investors with a longer time horizon. Get the full details on a potential "lost decade."

7. A recession is a sure bet now that the Fed took the punch bowl away after the party was already "pissed drunk." Veteran economist David Rosenberg had some choice words this week in likening policymakers to an irresponsible evening host, blaming the Fed for its tardiness in its response to inflation. "It's basically a policy of damn the torpedos, full steam ahead."

8. This investment chief managing $9 billion said buying bonds right now provides a rare "win-win scenario." With rates elevated, traders can reallocate back into bonds, according to Richard Saperstein. Here's his strategy for locking in up to 6% in income — and which assets he likes most.

9. "Run, don't walk" away from index funds. That's according to a hedge fund manager who ran one of the best-performing mutual funds around. He broke down why most funds aren't ready for a two-stage bear market that could last for over a decade.

Brent crude price, October 26, 2022 — Markets Insider

10. Saudi Arabia's energy chief slammed nations for using emergency oil reserves to manipulate prices. He said there's more trouble ahead for energy markets in the event of future shortages. President Joe Biden has signed off on a historic use of the US Strategic Petroleum Reserve this year — with another release of 14 million barrels announced this month.

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.

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How Much Salaries Are Expected to Rise Around the World in 2023

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I sailed on Norwegian Cruise Line's new $1.1 billion Prima ship as a cruise hater — see why it was the first time I've ever enjoyed a cruise

The amenities inside Norwegian Cruise Line's Norwegian Prima cruise ship. — Brittany Chang/Insider

I was invited to attend the inaugural sailing of Norwegian Cruise Line's newest Prima cruise ship.
I'm a cruise travel cynic, but I'm shocked to say I genuinely enjoyed my time aboard the Norwegian Prima.
The great food, family friendly activities, and impressive live entertainment kept me amused all four nights.

Norwegian Cruise Line invited me to sail on its newest cruise ship — the Norwegian Prima — during its roundtrip four-night inaugural sailing from New York City to Halifax, Nova Scotia in early October.

And despite being an cruise cynic, I'm humbly shocked to say I actually enjoyed sailing on the Norwegian Prima.

I make a living out of writing about travel, which includes taking cruise ships. But ironically, I've never been a fan of cruises.

I understand why some travelers gravitate toward the slow, relaxing form of vacationing.

But as someone who prefers more thrilling forms of travel, the idea of being seasick, bored, and stuck on a cruise ship for several days is far from appealing. And I've been fairly public about this.

In December 2021, I announced the cruise lifestyle was not for me after I was invited to attend the two-night naming ceremony of Celebrity Cruises' then-new Celebrity Apex, which was built to target an older demographic.

the Celebrity Apex cruise ship at sea as photographed through the window of a tender — The Celebrity Apex.
Brittany Chang/Insider

Source: Insider

Five months later, I said I probably wouldn't sail on Margaritaville at Sea's Paradise cruise ship again after attending its one-night inaugural sailing.

The Margaritaville Paradise sailing at sea — The Margaritaville Paradise.
The McBride Company

Source: Insider

Now, I'm shocked to report I actually found myself enjoying my extended weekend aboard the Norwegian Prima.

And this came despite the unsteady internet that kept me away from what could have been my main source of entertainment: my phone and laptop.

Norwegian Cruise Line's ships are designed to appeal to multi-generational travelers and families.

To do this, many of the Norwegian Prima's onboard activities were age-inclusive.

There were still sections of the cruise ship dedicated to travelers of specific ages …

… like the children's water park and adults only outdoor lounge.

But for the most part, I believe Norwegian did a great job of creating spaces for families to enjoy together.

Activities like the waterslide, freefall dry slides, and go-karts stereotypically appeal to children.

Norwegian Prima — Brittany Chang/Insider

But as I walked around the cruise ship, I found plenty of adults leisurely enjoying these activities …

Prima mini golf — Brittany Chang/Insider

… although it should be noted most of the passengers on the inaugural sailing were already adults. (I attended as a member of the press at no cost, as the cruise was not available to the public.)

The amenities inside Norwegian Cruise Line's Norwegian Prima cruise ship.The amenities inside Norwegian Cruise Line's Norwegian Prima cruise ship. — Brittany Chang/Insider

Tech evolves quickly: The "Galaxy Pavilion" indoor virtual reality arcade felt more advanced than the first VR arcade I visited in New York City just three years ago.

Wearing a VR headset turned an otherwise simple shooter game into a fully immersive heart-pounding fight for my life …

… while a virtual walk through a haunted mansion quickly became a frightening experience that left me nauseous.

Some games, like the multiplayer racing game, didn't require a headset. In retrospect, these options are best for people who are easily nauseated (me).

Back outside, several holes at the flashy mini-golf course weren't working as promised.

But that didn't stop me from having a fun time attempting to navigate each round.

Despite the heavy wind, I was still able to get a few rounds of darts in. If anyone was wondering, I did manage to pull off one shocking bulls-eye.

I played alone, but the stylized darts "court" made the experience — bolstered by dart-tracking technology — almost as fun as playing with someone else.

Of all the activities, I was most looking forward to trying the go-kart course.

But when I attempted to sign up on our third day at sea, the ride operators told me the only times that were still available would overlap with my dinner reservation.

And the following day, the go-kart track would only be operating dual-passenger vehicles. I was out of luck.

I left defeated. But at least I could stand on the viewing deck and watch all the other drivers joyously taking their rounds on the track.

And at least I also was able to try the "Drop," a freefall dry slide that plummeted me down ten decks in just a few seconds.

The flip in my stomach and urge to scream made the slide feel like an exhilarating seconds-long rollercoaster.

Was it the best idea to go on this after lunch? No.

Did I want to go again? Yes.

Because I traveled alone I couldn't take advantage of the "Stadium," a large outdoor space with activities like shuffleboard, pickle ball, and ping pong.

But for revenue cruise goers, this area is one of the only complimentary entertainment sections aboard the cruise ship. Activities like mini golf and the VR arcade come at an additional cost.

I expected all of these onboard activities to be fun.

I mean, who wouldn't want to throw darts in a high-wind environment just for most of them to land on the ground instead of sticking to the board?

But what I didn't expect was for the onboard shows to be just as robust and well-planned.

For many cruise goers, attending the live shows are a must-do.

But as a resident cruise ship cynic, I had yet to be entertained by any cruise ship show.

Yet somehow, once again, Norwegian Prima's nighttime entertainment was shockingly spectacular.

The Prima Theater — Brittany Chang/Insider

The Prima's rendition of "Summer: The Donna Summer Musical" — which ended its stint on Broadway in 2018 — performed like a true high-production musical with nostalgic throwbacks that had audience members singing along. Unfortunately, photos weren't allowed.

Source: Playbill

And "Noise Boys" was a surprisingly cohesive contemporary tap dancing and beat boxing mashup unlike any show I've seen before.

Even the familiar "The Price Is Right Live" game show was well-executed.

And unlike the previous two shows, “The Price Is Right” was as much a show as it was an interactive audience experience with a splash of comedy.

According to Peter Grant, Norwegian's director of entertainment operations, the set pieces in this live game show are the same as the ones on television.

I'm not used to being wowed by the often kitschy live shows aboard cruise ships.

But these three high-caliber productions were so entertaining, I only found myself checking the time once or twice during "Donna" and "Noise Boys."

I know I'll sound like a stereotypical cruise goer when I say this, but the live shows were the perfect way to end my long days at sea.

And what would be a cruise review without mentioning the Prima's food and beverage offerings?

Like any cruise ship, there was a wide variety of bars and lounges.

I skipped out on the cover band bar, cigar lounge, whiskey bar, and comedy club …

… although the bartender at the whiskey bar did get a good jab at me for ordering a very exciting water. Let's not forget I was on this cruise for work.

In my opinion, the Metropolitan bar was the ship's most interesting concept.

Here, the cocktail and wine bar used some of the ship's food scraps — like banana peels and imperfect croissants — to make liqueurs and syrups.

The bar prides itself on having zero-waste cocktails.

But let's be honest with ourselves: Cruise ships aren't known for being sustainable and low-waste.

Source: Insider

And Wesley Cort — Norwegian's vice president of food and beverage operations — was unable to tell me just how much food waste was saved by implementing the Metropolitan bar, although he did say it was "not a large percentage."

Having one bar that uses a small quantity of food waste doesn't mask just how wasteful cruise ships can be.

But at least the bartenders made solid drinks.

Alcohol aside, Norwegian Prima also had several new-to-brand dining options like the Indulge Food Hall, a Mediterranean restaurant, and a teppanyaki concept. The latter two come at an additional cost.

Of all the dining options, I found the indoor-outdoor food hall with 11 restaurants and a touchpad ordering system the most impressive concept.

I was able to try several small dishes from multiple "restaurants" by ordering on the touchpad …

… allowing me to eat iberico and pad thai at the same time. Unfortunately, the pad thai wasn't great.

The multiple kitchens and two food trucks made Indulge Food Hall Prima's most expensive and difficult dining concept to pull off, Cort told Insider during a media panel.

But in my opinion, it was worth the effort. The food hall was so popular during peak hours, I had a hard time finding a seat. It put the ship's all-day buffet to shame.

indulge starbucks — Brittany Chang/Insider

Indulge Food Hall's chicken korma was better than any meal I had at Prima's specialty restaurants …

… but who am I to disparage the rich pappardelle bolognese I ordered at Onda by Scarpetta?

After consistently nose diving into back-to-back food comas, I tried to revive myself in the ship's small gym.

The Prima's gym had great views of the water and I never struggled to find an open treadmill, even when the fitness center was busy.

Prima's large spa was located just down the hall from the gym.

Here, there were a variety of saunas, two types of pools, an ice room, and heated chairs. It was the perfect retreat from the crowded cruise ship.

There were also plenty of outdoor relaxation spaces, including four hot tubs, the primary outdoor pool, and a 0.33-mile strip of pools, lounge chairs, and daybeds.

But our chilly cruise to Canada meant it was too cold to take advantage of these outdoor lounges.

I'll keep my complaints about the weather to a minimum. At least I could relax with views of the ocean on my own balcony.

Inside the family balcony stateroom on Norwegian Cruise Line's Norwegian Prima — Brittany Chang/Insider

I stayed in the ship's family balcony stateroom during my time aboard the inaugural sailing.

Like I noted in my review of the stateroom, I was pleasantly surprised by the well-designed 230-square-foot stateroom.

Source: Insider

From the touchscreen that replaced the "do not disturb" door hanger …

… to the conveniently designed storage spaces that kept me clutter-free…

… to the clothes line in the shower that helped dry off my bathing suit …

… my family balcony stateroom was the perfect retreat from the activity-packed cruise ship.

However, this hotel room at sea comes at a steep price.

In 2023, the Norwegian Prima will at $780 per person for seven-day roundtrip sailings from Orlando, Florida to the Caribbean.

Compared to Norwegian's cheaper 2023 itineraries sailing for under $80 daily, a nearly $800 cruise trip may seem like an unreasonable investment.

Source: Cruise Sheet

But in a massive turn of events, I'm going to argue that sailing on the Norwegian Prima is worth this price …

… so long as you have the budget to pay for the speciality dining and additional onboard activities like the virtual reality arcade and go-kart track.

Unfortunately, the onboard Starbucks isn't complimentary either.

But the exceptional food, fun activities, and plethora of outdoor lounges could make this cruise worth the price, especially if you plan on traveling to a warm weathered destination.

And while I won't jump at the opportunity to go on a cruise, if my cruise-loving mother decided to plan a family trip on the Norwegian Prima, I won't say no.

And that would be a first.

The pool on Norwegian Cruise Line's Norwegian Prima cruise ship. — Brittany Chang/Insider

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Get Latest Business News from All Over the World 24/7 throughout the Year

Wednesday, 26 October 2022

Some States Push to Limit Health Coverage for Poor Children

Housing is on the verge of a correction and Americans are feeling less and less upbeat about the economy

How Much Salaries Are Expected to Rise Around the World in 2023

I sailed on Norwegian Cruise Line's new $1.1 billion Prima ship as a cruise hater — see why it was the first time I've ever enjoyed a cruise

What happens when you tell Jensen Huang you're quitting Nvidia

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