Macro strategist Henrik Zeberg has warned that the stock market is entering its “end phase,” arguing that weakening economic fundamentals are being masked by a powerful late-cycle rally in risk assets.
In an analysis following the June U.S. employment report, Zeberg pointed to a growing disconnect between the economy and financial markets, as he said in an X post on July 5.
While headline payroll data showed modest job growth, household survey figures indicated that more than 500,000 full-time jobs were lost during the month, suggesting underlying labor market conditions are deteriorating.
According to Zeberg, investors continue to push equities higher despite signs that the economy is slowing, creating conditions typically associated with the final stage of a bull market.
Despite his bearish long-term outlook, Zeberg does not expect the rally to end immediately.
Instead, he believes markets could continue climbing as abundant liquidity and investor optimism drive a final surge in asset prices.
Upcoming blow-off top
He described the current environment as a classic late-cycle “blow-off top,” where valuations continue rising even as economic conditions weaken.
His broader market framework projects the S&P 500 could climb to between 6,800 and 8,200 before a significant reversal.
With the index currently trading around 7,500, Zeberg argues there may still be room for additional gains before the cycle peaks.
Zeberg said several economic indicators point to increasing fragility beneath the market rally.
Among the risks he highlighted are slowing private-sector hiring, rising consumer delinquencies, weakening labor force participation, and the sharp decline in full-time employment reported in the household survey.
He believes these indicators suggest the U.S. economy is already rolling over, even as stock prices remain near record highs.
According to Zeberg, central bank support may extend the rally but is unlikely to prevent an eventual downturn if economic conditions continue to deteriorate.
Beyond equities, Zeberg has also warned that cryptocurrencies and other risk assets could face substantial declines once market sentiment shifts.
His longer-term outlook calls for recession risks to increase through late 2026 as leading and lagging economic indicators align.
He has previously suggested the eventual downturn could rival or exceed the severity of the 2008 financial crisis if tightening financial conditions trigger a broader credit contraction.
