The Market Looks Frightening, Says Well-Known Strategist. You Have a Last Chance to Prepare

Originally published in Forbes Slovakia, August 25, 2025

A macroeconomist who has correctly predicted both market crashes and rallies says the business cycle is now turning. He advises investors on what they should do before everything changes.

Markets may still rise for a little while, but a massive crash is only a few months away, believes Henrik Zeberg, chief macroeconomist of the private investment company Swissblock.

“The argument of liquidity advocates is that sufficient money will protect the economy from falling into recession. But just look at their chart,” he writes in a post on X. “When the economic cycle turned in 2001 and 2007, the Purchasing Managers’ Index fell and liquidity followed it downward. Liquidity cannot withstand when the business cycle turns – and that is precisely what is happening right now,” he adds.

Zeberg directly challenges the popular view that central banks and government interventions can indefinitely keep the economy afloat through constant liquidity injections. But while expecting the greatest crash of the century, he also offers a solution.

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ARE WE HEADING INTO RECESSION?

As long as central banks pump money into the economy, it will prevent a credit crisis and sustain demand, thereby averting recession. That’s what liquidity advocates believe, convinced that the key tool for avoiding collapses is ensuring enough money circulates in the economy.

Zeberg fundamentally disagrees. He argues that the relationship between liquidity and the business cycle is exactly the opposite. According to him, the latter drives the former – not the other way around. His counterarguments are based on historical examples from 2001 and 2007.

In both cases – after the bursting of the dot-com bubble in 2001 and before the financial crisis of 2007 – the business cycle first turned from expansion to contraction, i.e. economic activity began to decline.

The Purchasing Managers’ Index (PMI), which measures business activity in industry and services, fell in both cases, signaling an economic slowdown.

Zeberg stresses that liquidity in the economy did not fall first, thereby causing a recession. Rather, it only began to decline after the business cycle had already turned and the index had fallen.

This suggests that liquidity is more of a lagging indicator, not a leading one. The macroeconomist sees it as merely a symptom, not a cause.

When the fundamental economic forces – consumption, production, and employment – reach the end of the expansionary phase and the business cycle naturally turns, no amount of money can prevent it.

Zeberg claims that just like in 2001 and 2007, he now sees signals that the business cycle is turning. This means that regardless of central bank measures, a recession should follow – because liquidity cannot withstand the pressure of underlying market forces.

He also points out the unsuitability of using the PMI as a guide for the business cycle since it has significant lag – being based on surveys.

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HENRIK ZEBERG

Chief macroeconomist at the private investment company Swissblock, specializing in business cycle analysis and technical analysis of financial markets.

He is best known for his controversial predictions, particularly warnings of an impending market collapse and financial crisis.

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THE GREATEST OF CRISES

Zeberg has warned investors in the past as well. “I feel like the boy in The Emperor’s New Clothes – pointing out an uncomfortable truth that others deliberately ignore,” he wrote in his June newsletter.

“At the end of 2021 and 2022 practically every economist and expert predicted an imminent recession. I did not. I looked at my models and data, and instead I predicted a strong market rally – and that’s exactly what we got in 2023 to 2025. With this contrarian view, I stood almost alone – and I was proven right. The S&P 500 indeed exploded to new all-time highs, defying the skeptics,” he adds.

He also went against expert consensus this April. While many analysts expected a decline, Zeberg predicted the market would reach new highs.

At the moment, according to the technical specialist, we are in the process of breaking through those highs. But he does not see this as a victory lap – rather as the final warning.

“History does not repeat itself, but it rhymes – and today’s rhyme looks frightening, like in 2007 or even 1929. We are approaching a financial and debt crisis greater than 2008 – potentially the largest since the Great Depression of the 1930s. I hope I am wrong. But the data – and my business cycle model – are screaming otherwise,” the macroeconomist insists.

On the online platform Wealthion, focused on financial education and advice, he warns that “the global economy has already hit the iceberg, and a massive crash may be only a few months away.”

But first, he believes, markets could surge sharply in one last liquidity-driven rally – creating a final chance to prepare before everything changes.

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THE WAY OUT OF THE CYCLE

Zeberg does not stop at merely stating that the economy is on the verge of a significant downturn. He also has recommendations for investors. He divides his strategy into short-term and long-term.

He speaks of the final phase of growth, driven by excessive liquidity. For investors who want to profit in the short term, he recommends a very cautious and tactically flexible approach.

Specifically, he suggests buying only assets with strong upward momentum, such as cryptocurrencies and technology stocks. At the same time, he urges investors to be ready to exit positions quickly before the expected reversal.

He also suggests gradually taking profits if the market indeed enters the final phase of euphoria.

From a long-term perspective, Zeberg is very cautious and predicts that after a sharp collapse, a deflationary crisis will follow – and then stagflation.

Although gold is traditionally considered a safe haven, Zeberg warns that during the deflationary phase its price could fall – and only later, when central banks intervene, might it become a true opportunity.

The analyst recommends portfolio diversification, noting that commodities may withstand the initial correction relatively well and then start to rise. His message encourages investors to exercise extraordinary discipline in trading and to prepare for a painful crisis.