Economist Henrik Zeberg has issued a warning about a possible financial sector collapse, citing the start of gradual deterioration.
According to Zeberg, who has been warning of an impending economic collapse, the deterioration could lead to a catastrophic Black Swan event in 2025, he said in an X post on January 7.
Drawing on his analysis of the Financial Select Sector SPDR Fund (XLF), Zeberg highlighted a “massive rising wedge” pattern accompanied by bearish divergence on the weekly chart as clear signs that the market has reached a critical top.
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While Zeberg cautioned that the impact may not be felt immediately, he predicted that the financial sector would steadily weaken over time.
This slow decline, he argued, would eventually give way to an unprecedented financial crisis. He cautioned that the collapse of what he termed the “everything bubble” could result in a crisis far more severe than the 2007–2009 recession.
“I give it High Probability that XLF (The US Financial Sector) has topped in a massive Rising Wedge. <…> But it means, that Financial Sector now begins to deteriorate until we see a Black Swan somewhere – and in 2025,” he said.
Additionally, Zeberg referred to U.S. Treasury Secretary Janet Yellen’s 2017 assertion that another financial crisis would not occur in her lifetime. He fears the unfolding events will challenge that optimism.
More signs of a recession
The economist stated that the magnitude of the predicted crisis would surpass anything the financial world has experienced in recent decades, leaving a notable impact on global markets.
Despite the recent optimism following Donald Trump’s election, Zeberg has remained a vocal critic, issuing warnings about an impending downturn. Part of his projection is based on his analysis of the Business Cycle Model.
Notably, the model has a track record of accurately predicting recessions over the past 80 years. Zeberg noted that the model shows leading indicators crashing beneath their equilibrium line, in this case, signaling a possible recession. Some of these indicators include unemployment and industrial production.
To highlight the significant impact of the anticipated crash, Zeberg stated that even with Federal Reserve intervention through interest rate cuts, the institution would likely be too late. However, he has stressed that the stock market and cryptocurrencies could soar to historical highs before crashing.
A similar grim outlook was shared by a Global Markets Investor, which warned that, based on the Conference Board Leading Economic Index (LEI), the probability of a U.S. recession has risen steadily.
Similar gloomy forecasts have been echoed by author and investor Robert Kiyosaki, who has stressed that a “giant economic crash is here.” Interestingly, Kiyosaki’s track record of predicting economic crashes has been scrutinized, with critics accusing him of being overly dramatic.
Minimal recession chances
On the other hand, some dissenting voices have suggested that the chances of an economic downturn have significantly diminished. For instance, as reported by Finbold, after the September 2024 employment data exceeded analysts’ estimates, Goldman Sachs’ (NYSE: GS) chief U.S. economist, Jan Hatzius, lowered the recession probability to 15% from 20%.
Similarly, the Bank of America (BofA) Global Fund Manager Survey stated that global investors do not anticipate a recession, maintaining that they expect central banks to step in and steer the economic ship toward stability.
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