Economist Henrik Zeberg has cautioned that the current state of the financial market might be the beginning of a blow-off top phase.
His April 11 comments follow a market rebound following President Donald Trump’s decision to pause most tariffs, which had previously rattled investors and contributed to market volatility.
Indeed, the stock market reacted positively, with the benchmark S&P 500 ending the last session up almost 2%. On the weekly timeline, the index has surged over 8%.
A blow-off top is a market pattern marked by a sharp, parabolic price surge fueled by extreme optimism and speculation. It usually signals the final stage of a bull market before a sharp reversal and potential crash.
Zeberg’s latest comments align with his earlier warnings, where he has cautioned that markets should be wary of an impending blow-off top. He believes it will impact both the cryptocurrency and equities markets, predicting that prices will “run much, much higher” despite potential pullbacks and consolidations.
Impact of liquidity on financial markets
The economist attributes the ongoing market rally to incoming liquidity, which he believes will propel risk assets into the blow-off top phase before the “real top” is reached. His analysis suggests that while the market is poised for gains in the near term, investors should brace for a sharp downturn once the speculative frenzy peaks.
Despite his bullish short-term outlook, Zeberg remains cautious about the longer-term implications. He has previously warned of an impending recession, noting that it will be the worst in history when the downturn hits. As reported by Finbold, the expert noted that a market downturn is inevitable despite any interventions.
“When you realize that the economy is not in a recession – and the Markets are going to rally to new ATHs <…> We will have the worst recessions since the 1930s – and similar bear market,” he said.
It’s worth noting that following the uncertainty around tariffs, a section of Wall Street increasingly warned of the economy heading toward a recession. However, Zeberg has since dismissed current recession fears, arguing that economic indicators like Initial Jobless Claims, which remain at historically low levels, do not yet signal an immediate downturn.
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