Financial markets are bracing for what could be a dramatic upward acceleration, according to macro strategist Henrik Zeberg.

In a September 17 post on X, Zeberg said he expects sharp pullbacks in the immediate reaction to the Federal Reserve’s latest policy decision, but believes the broader trend will soon enter a “ballistic phase.” To this end, he warned that the coming days will bring heightened volatility.

Notably, the Federal Open Market Committee (FOMC) is widely expected to deliver its first rate cut of this cycle, a move aimed at easing pressure on consumers and businesses. 

For investors, this pivot signals a potential wave of liquidity that could push equity markets even higher.

“Lot of volatility incoming today! But,  the first move may not be the correct one. My view: Markets will accelerate higher soon after this FOMC – but the day may deliver strong pullbacks,” Zeberg said. 

Financial markets detached 

Still, Zeberg cautioned that financial markets are increasingly detached from the real economy. Stock indices, led by the S&P 500, have surged in recent months on themes such as artificial intelligence and cryptocurrency enthusiasm. 

Beneath the surface, however, the labor market is showing strain: job openings are declining, unemployment is edging higher, and consumer stress is mounting as the cost of living continues to bite.

Zeberg argued that many analysts, especially those at large financial institutions, misread the moment by focusing too narrowly on asset prices and monetary policy signals instead of the health of ordinary households.

Ultimately, he sees a recession as inevitable despite the short-term market exuberance that may follow the Fed’s rate cut. The disconnect between Wall Street’s optimism and Main Street’s struggles, he warned, cannot last. 

As markets enter a speculative phase, investors may cheer soaring prices, but the looming economic downturn could bring the rally to an abrupt end.

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