Economist warns stock markets end phase is brewing

Published: Monday, July 6, 2026 at 12:35 pm

Macro strategist Henrik Zeberg is sounding the alarm on the stock market, suggesting it is entering its final phase. Zeberg argues that a powerful late-cycle rally in risk assets is currently masking underlying economic weaknesses. He highlighted a growing divergence between the real economy and financial markets, particularly after the release of the June U.S. employment report.

While the headline payroll data indicated modest job growth, Zeberg pointed to figures from the household survey that showed a significant loss of over 500,000 full-time jobs in the same month. This discrepancy, he contends, suggests a deterioration in the labor market's fundamental health. Despite these warning signs of an economic slowdown, investors are reportedly continuing to drive equities higher, a behavior often seen in the concluding stages of a bull market.

Zeberg anticipates that this rally may not end abruptly. Instead, he believes that ample liquidity and persistent investor optimism could fuel a final surge in asset prices. He characterizes the current market environment as a "blow-off top," a phenomenon where asset valuations continue to ascend even as economic conditions weaken. His projections suggest the S&P 500 could reach between 6,800 and 8,200 before a substantial reversal occurs. With the index currently trading around 7,500, Zeberg sees potential for further gains before the cycle reaches its peak.

Several economic indicators, according to Zeberg, point to increasing fragility beneath the surface of the market rally. These include a slowdown in private-sector hiring, a rise in consumer delinquencies, a weakening labor force participation rate, and the sharp decline in full-time employment revealed by the household survey. He interprets these signals as evidence that the U.S. economy is already beginning to contract, even as stock prices remain near record highs. Zeberg suggests that while central bank support might prolong the rally, it is unlikely to avert an eventual downturn if economic conditions continue to worsen.

Beyond equities, Zeberg has also cautioned that cryptocurrencies and other risk assets could experience significant declines once market sentiment shifts. His longer-term outlook anticipates an increase in recession risks through late 2026, as various economic indicators converge. He has previously indicated that the eventual downturn could be as severe as, or even exceed, the 2008 financial crisis, particularly if tightening financial conditions trigger a widespread credit contraction.

BNN's Perspective:
The concerns raised by Henrik Zeberg about the stock market's end phase warrant careful consideration. While market rallies can sometimes extend beyond what economic fundamentals might suggest, the divergence between headline job numbers and household survey data, coupled with other weakening economic indicators, presents a plausible scenario for caution. Investors should remain vigilant, balancing the potential for continued upside with the increasing risks of a significant market correction. A moderate approach, focusing on diversification and risk management, appears prudent in the current environment.

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