Economist warns stock market's ‘end phase' is brewing

• Zeberg 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
• Key warning signs include over 514,000 full-time jobs lost in June, rising consumer delinquencies, weakening labor force participation, and slowing private-sector hiring
• The strategist predicts recession risks will increase through late 2026, with a potential downturn that could rival or exceed the severity of previous major market crashes

Market Summary: Warning of Stock Market "End Phase"

Key Warning:

Macro strategist Henrik Zeberg has issued a warning that the stock market is entering a dangerous "end phase," characterized by a disconnect between weakening economic fundamentals and rising asset prices. While cautioning about eventual risks, Zeberg believes markets could continue climbing in the near term.

Economic Data Points:

• June employment report showed over 500,000 full-time jobs lost according to household survey data, despite modest headline payroll growth
• S&P 500 currently trading around 7,500
• Zeberg projects the index could reach between 6,800 and 8,200 before a significant reversal

Market Dynamics:

Zeberg characterizes the current environment as a classic late-cycle "blow-off top," where abundant liquidity and investor optimism drive asset prices higher even as underlying economic conditions deteriorate. He does not expect the rally to end immediately.

Economic Warning Signs:

Multiple indicators suggest fragility beneath the rally:

• Slowing private-sector hiring
• Rising consumer delinquencies
• Weakening labor force participation
• Sharp decline in full-time employment

Long-term Outlook:

Zeberg warns that cryptocurrencies and other risk assets face substantial decline risks once sentiment shifts. His longer-term forecast anticipates increasing recession risks through late 2026, with potential severity rivaling or exceeding previous major downturns if tightening financial conditions trigger broader credit contraction.

Investment Implication:

While central bank support may temporarily extend the rally, Zeberg argues it cannot prevent an eventual downturn if economic deterioration continues, creating a high-risk environment for investors despite near-record stock prices.