'Big Short' investor Danny Moses warns a US recession looks inevitable - and predicts more pain for Tesla and crypto

• A US recession may be unavoidable, "The Big Short" investor Danny Moses has warned.

• Moses expects a slowdown in consumer spending to hit company profits and weigh on the S&P 500.

• He slammed Tesla as overvalued, and warned the fallout from the FTX fiasco may not be over yet.

A US recession appears inevitable, Tesla stock will tumble further, and the cryptocurrency market's meltdown is far from over, Danny Moses has warned.

The trader of "The Big Short" fame was asked by Yahoo Finance on Tuesday whether he thinks America can escape an economic downturn.

"I don't think so," the Moses Ventures boss replied, pointing to the inverted yield curve for 2-year and 10-year Treasury bonds. When short-term bonds offer higher yields than long-term ones, it signals that investors expect interest rates to decline over time — a reliable indicator that a recession is looming.

US inflation soared to 40-year highs this year, leading the Federal Reserve to raise interest rates from nearly zero in March to about 4% today, and signal borrowing costs could peak above 5% next year. Higher rates deter spending, borrowing, and hiring, which helps to relieve upward pressure on prices. But they can also weaken economic growth and increase unemployment, raising the risk of a recession.

Moses also issued bleak outlooks for the S&P 500 and household demand during the interview, echoing a warning this week by Michael Burry, another investor profiled in "The Big Short."

"I think we'll have flat to negative earnings next year, and I just think that consumer spending is going to start to really slow here," he said. Weaker demand and pressure on corporate profits bode poorly for stocks, which are typically valued relative to company earnings.

Moses is best known as Steve Eisman's former head trader at FrontPoint Partners, and was portrayed by Steve Carell in the movie adaptation of "The Big Short." He was one of the few people to predict and profit from the collapse of the mid-2000s housing bubble.