Paul L.
Macroeconomist Henrik Zeberg has reiterated his call for a recession, predicting it will be preceded by peak performance in key market segments.
Speaking during an interview with Soar Financially published on YouTube on July 7, Zeberg highlighted the S&P 500 index, noting that it is likely to continue soaring before the worst crash since 1929.
Notably, in January, he had predicted the index would rally to 6,100. In line with this projection, the index has seen significant gains in recent months, hitting new all-time highs above 5,500.
Zeberg pointed out that the economy is starting to show early signs of the expected deterioration as July unfolds. He emphasized that the business cycle is slowly turning over, and leading indicators have been signaling an impending recession for some time.
According to the economist, the market has experienced a spike, but the peak has not yet been reached, and the significant blowoff top is still ahead.
“I had a recession call that I called in January and I still stick to it. We were just in early July, and we started to see some of the fallouts of that deterioration that I was expecting as I said back then.<… >I called for the S&P 500 to move up, I think we are 1,000 points since January. We’re still not at the top as I see it and we haven’t had the really big blowoff top yet,” he said.
The next market top
He remained confident that a recession would occur by the end of this year, with the market at its top, likely in September or October. While acknowledging that the economy and labor market have been stronger than anticipated, the expert insisted that the eventual downturn is inevitable.
He advised that being long, the market and risk-on has been the correct stance, but warned that this will change soon.
With a big section of the market looking out for the Federal Reserve’s next monetary policy, Zeberg in an earlier Finbold report indicated that the institution is late in trying to salvage the situation.
The economist noted that although the Fed will step in, its efforts will not be sufficient as the damage has already been done.
In this context, market observers are awaiting the next Federal Reserve interest rate decisions and how they might affect the economy’s trajectory.
Amid this uncertainty, new analyses indicate that the correlation between Federal Reserve rate hikes could hint at when the recession might hit. Particularly, according to a Finbold report, as the U.S. approaches 12 months after the last rate hike, historical trends suggest that a recession could be imminent.
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