Economist Henrik Zeberg is sounding the alarm on the state of the U.S. stock market, arguing that equities are approaching what he considers the largest financial bubble in history.
The technical analyst, who has been bearish on the economy over the long term, stressed that these conditions are building toward a severe economic downturn and market collapse, Zeberg said in an X post on May 10.
He issued the warning based on the Buffett Indicator, which compares total U.S. stock market capitalization to GDP, climbed to historically extreme levels. The latest chart places the indicator near 230% by the end of 2025, around 75% above its long-term trend.
The data shows valuations moving well beyond the upper historical bands, including the +2 standard deviation zone typically associated with speculative excess and overheated markets. Current levels also exceed those seen during the Dot-com bubble and the post-pandemic rally.
Historically, the Buffett Indicator spent decades fluctuating near or below its long-term trend line before surging sharply higher from the mid-2010s onward, pushing the market deeper into territory linked to elevated downside risk.
Zeberg argued that investors ignoring the bubble are overlooking clear warning signs across financial markets, maintaining that the current cycle is no different from previous speculative booms.
Although he believes markets may still climb further before peaking, Zeberg warned that conditions are nearing a breaking point.
Zeberg’s persistent economic warnings
Overall, Zeberg has maintained that global markets are nearing the euphoric final stage of a multi-year bull cycle, setting up what he believes could become one of the sharpest downturns in decades.
As of early May 2026, the expert described the rally in equities and cryptocurrencies as a classic “blow-off top,” driven by excess liquidity and investor optimism despite weakening economic fundamentals.
He has projected the S&P 500 could climb toward the 8,000–8,200 range before reversing sharply.
Zeberg pointed to weakening consumer finances, rising delinquencies, and slowing private-sector job growth as signs that the economy is already deteriorating.
Under his business cycle model, the current parabolic advance, fueled by credit expansion and investor FOMO, could peak around the first or second quarter of 2026 before giving way to a major crash, potentially worse than the 2008 financial crisis.
His warning comes as investor optimism remains driven by artificial intelligence enthusiasm, strong corporate earnings, and expectations for future interest-rate cuts, despite growing concerns over stretched market valuations.
