Macro strategist Henrik Zeberg has indicated that the stock market may be entering its final phase, as weakening economic fundamentals are being concealed by a significant rally in risk assets.

In a post on social media dated July 5, following the June employment report in the U.S., Zeberg expressed concerns over the disconnect between the economy and financial markets. He highlighted that, despite modest job growth according to the headline payroll data, more than 500,000 full-time jobs were lost in June, depicting a deterioration in underlying labor market conditions.

Labor Market Weakness

Zeberg remarked that investors are still pushing stock prices higher, even amid indications of a slowing economy. This trend is typically associated with the latter stages of a bull market. He stated, “The Economy is unbelievably WEAK. 514K Full Time jobs were lost in June. But… NOBODY LOOKS! Markets will defy gravity for a little longer. They will even sky-rocket. But this is not strength. It is the End Phase.”

Despite his pessimistic long-term view, he does not foresee an immediate end to the current rally. Instead, he believes markets could continue to rise, propelled by abundant liquidity and investor enthusiasm, setting the stage for a potential final surge in asset prices.

Potential Market Dynamics

Zeberg characterized the current market environment as a classic late-cycle “blow-off top,” where asset valuations continue to surge while economic conditions deteriorate. He anticipates that the S&P 500 could advance to a range between 6,800 and 8,200 prior to experiencing a notable downturn. With the index presently trading near 7,500, he suggests there may still be potential for additional gains.

Several economic signals indicate increasing fragility beneath the market rally. Among the risks he pointed out are slowing private-sector hiring, rising consumer delinquencies, a drop in labor force participation, and the significant decline in full-time employment as reflected in the household survey.

Long-term Forecast

According to Zeberg, central bank interventions might prolong the rally but will likely be ineffective in preventing a future downturn should economic conditions continue to worsen. Beyond equities, he warned that cryptocurrencies and other risky assets could also see substantial drops following a shift in market sentiment.

Zeberg's long-term outlook anticipates a rise in recession risks extending into late 2026, as leading and lagging economic indicators align. He has commented in the past that the potential downturn could rival or surpass the severity of the 2008 financial crisis if tighter financial conditions provoke a broader credit contraction.