Global Financial Markets and Recession 2025: Henrik Zeberg's Analysis
According to Henrik Zeberg, head macroeconomist at Swiss Block, we stand at the precipice of a significant economic transformation, but contrary to some forecasts, we have not yet reached the market apex that typically precedes a major crash. This analysis explores Zeberg's predictions for global financial markets and recession 2025 and beyond, offering insights into potential investment strategies during this volatile period.
What Are the Current Market Indicators Suggesting?
Despite widespread bearish sentiment among investors, Zeberg identifies several key indicators suggesting we remain firmly in a bull market phase:
The real economy continues to demonstrate resilience, with no significant rollover in core economic metrics. European markets, particularly Germany's DAX, are achieving new all-time highs rather than showing weakness expected before a recession.
Bond yields remain elevated, with the 10-year Treasury hovering around 4%. As Zeberg notes, "Historically, yields collapse before a recession—we're not seeing that pattern yet."
The NASDAQ and other tech-heavy indices haven't displayed typical topping patterns characterized by lower highs and declining breadth. Instead, market breadth continues expanding.
Perhaps most tellingly, initial jobless claims remain at historically low levels—typically one of the first indicators to deteriorate before economic contraction.
"There's simply no way that the current market structure fits the pattern of a major top," Zeberg emphasizes. "The puzzle pieces don't align with what we'd expect to see at the end of a bull market cycle."
When Will the Market Crash Occur?
Zeberg's forecast presents a timeline that contradicts many mainstream analyses, predicting a significant market crash will begin in 2025 following these distinctive phases:
A dramatic "blow-off top" phase in global markets occurring through the remainder of 2024, characterized by increasingly vertical price action and widespread retail participation.
European and Asian markets likely reaching their peaks before U.S. markets, creating a sequential domino effect of market tops.
The final rally demonstrating exceptional steepness—potentially 20-30% gains in major indices over a compressed timeframe—before the reversal.
"I think the last part of this rally will resemble what we've seen in the DAX, where we witnessed nearly vertical price action since August 5th," Zeberg projects. "When this final phase concludes, we're likely facing the worst recession since the 1930s."
Unlike many analysts focusing solely on U.S. markets, Zeberg emphasizes the importance of monitoring global commodities market insights, particularly noting how European market behavior often presages movements in American indices by several weeks.
What Role Will Housing Play in the Coming Recession?
Zeberg identifies concerning parallels to the 2007-2008 housing crisis that few mainstream economists are discussing:
Housing market transaction activity has plummeted to "very, very low" levels despite relative price stability—a warning sign that typically precedes price declines.
The U.S. faces a significant oversupply of homes relative to population, with approximately 140-142 million housing units for a population of about 330 million people.
Homeowners with mortgage rates below 3.5% are essentially "locked in" to their current homes, creating a "mortgage prisoner" phenomenon that severely restricts market liquidity.
"We're witnessing the early stages of a housing market malfunction," Zeberg observes. "When layoffs accelerate, the housing market could deteriorate rapidly, creating a 'dead weight' that will drag the broader economy downward."
Notably, Zeberg highlights a little-discussed structural issue: "The worst recessions historically coincide with housing market downturns. The current housing market dynamics suggest we could be facing an unusually severe contraction."
How Will Gold Perform During This Market Cycle?
Despite gold recently surpassing $3,000 per ounce, Zeberg maintains a nuanced view on precious metals that differs from typical gold bug perspectives:
Gold miners (GDX), silver, and platinum aren't confirming gold's strength—a divergence that typically indicates gold's rally may be premature or unsustainable.
"The real rally in gold will emerge when the Federal Reserve pivots to prevent economic recession," Zeberg predicts. "Current strength represents anticipatory positioning rather than the main event."
Gold could reach $3,100-3,200 before experiencing a significant correction during the initial deflationary phase of the coming crash.
After Federal Reserve intervention, gold will likely enter what Zeberg describes as "the most significant bull market in precious metals we've seen in generations," potentially surpassing $5,000 per ounce.
This analysis challenges both gold bears and perma-bulls, suggesting a more complex trajectory for precious metals through the economic cycle than commonly perceived. Furthermore, understanding Macquarie's 2025 gold price forecast provides additional context for investors considering precious metals.
What Will the "Monetary Reset" Look Like?
Zeberg's most provocative forecast involves what he terms a "monetary reset"—a fundamental restructuring of the global financial system following the crisis:
Global debt levels have reached proportions comparable to post-World War II levels, necessitating systemic debt restructuring.
The U.S. dollar's position as the world's reserve currency will face unprecedented challenges, potentially leading to a new monetary paradigm.
"I believe we'll see the emergence of a basket currency backed by gold—essentially a new world reserve currency comprising multiple national currencies with precious metals underpinning," Zeberg projects.
This reset will likely involve substantial debt forgiveness for both individuals and nations, creating a pathway to reestablish sound money principles.
"We're approaching the end of a long-term debt cycle," Zeberg explains. "These cycles typically conclude with some form of systemic reset that realigns monetary structures with economic reality."
How Will Inflation Impact Recovery Efforts?
Unlike previous crises, Zeberg believes we've entered a new inflationary regime that will fundamentally alter the efficacy of traditional monetary interventions:
Conventional monetary stimulus will trigger inflation more rapidly than during the 2008-2020 period, when deflationary forces dominated.
When the Federal Reserve implements crisis measures after the crash, inflation will follow within 12-24 months—a significantly compressed timeline compared to previous cycles.
This dynamic creates a stagflationary scenario where monetary stimulus generates price inflation without corresponding economic activity.
"The era of costless money printing has ended," Zeberg states. "This time, policymakers will discover that stimulus triggers inflation within 12-24 months rather than the multi-year lag we've grown accustomed to."
This perspective challenges the prevailing assumption that central banks can indefinitely expand balance sheets without inflationary consequences—a foundation of modern monetary policy that Zeberg believes will be thoroughly disproven.
What Are the Implications of Rising Tariffs?
Zeberg offers a critique of increasing tariff policies that cuts across conventional political divisions:
Tariffs function primarily as a tax on domestic consumers rather than foreign producers, contradicting popular narratives.
Historical precedent from the 1930s—particularly the Smoot-Hawley Tariff Act—demonstrates that broad tariffs ultimately reduced federal revenue and exacerbated economic contraction.
"Protection of vital technologies makes strategic sense, but broad tariffs represent economic self-harm," Zeberg contends. "Free trade between aligned nations benefits consumers through lower prices and greater choice."
"Tariffs will function as a tax on U.S. consumers—there's no realistic scenario where exporters absorb these costs rather than passing them to buyers," he emphasizes, challenging both progressive and conservative orthodoxies on trade policy. The impact of Trump's tariff policies on gold prices demonstrates the complex interplay between trade policies and asset values.
Where Would Zeberg Invest $100,000 Today?
Surprisingly, given his long-term bearish outlook, Zeberg's current investment recommendation contradicts what many might expect:
"Right now, today, I would establish a leveraged long position on the NASDAQ," Zeberg advises. "I anticipate a powerful upward movement over the coming months, though I'd monitor market conditions vigilantly."
He suggests approximately 50% allocation to select cryptocurrencies, focusing on Bitcoin and potentially Ethereum, based on their behavior during monetary expansion cycles.
Zeberg emphasizes the importance of maintaining tactical flexibility, watching for signs of the market top expected within 2-6 months.
This investment approach highlights a crucial distinction between strategic outlook (bearish beyond 2025) and tactical positioning (bullish for the remainder of 2024)—a nuance often lost in financial commentary. Investors considering this approach might benefit from mastering stock market strategies for long-term success.
FAQ: Key Questions About the Coming Market Crash
How will this recession compare to previous downturns?
While Zeberg expects this to represent the most severe economic contraction since the 1930s, he doesn't project conditions worse than the Great Depression itself. However, he notes that current stock market valuations stand at approximately double those seen in 1929 (as measured by price-to-sales ratios), suggesting the percentage decline could potentially exceed historical precedents. According to a recent CNBC survey, corporate CFOs are increasingly pessimistic about avoiding recession in 2025.
What signals should investors watch for to identify the market top?
Investors should monitor declining short-term yields, rising initial jobless claims (particularly sustained readings above 300,000), and technical indicators like lower highs in major indices. Zeberg particularly emphasizes sentiment metrics: "When taxi drivers and barbers begin offering stock tips with absolute certainty, we're approaching the final stages."
How will different assets perform during the crash?
Zeberg projects that equities will decline significantly (potentially 60-80% for major indices), while gold will initially fall before staging a dramatic recovery. Commodities, particularly agricultural products and industrial metals, will eventually present "extraordinary investment opportunities" after Federal Reserve intervention, though timing this precise moment will prove challenging. Investors looking to capitalize on these shifts should consider navigating commodity cycle shifts to position their portfolios appropriately.
Will there be social unrest following the crash?
While Zeberg primarily focuses on economic rather than social implications, he acknowledges the potential for significant societal strain. The severity of economic contraction will necessitate novel policy approaches beyond those employed in previous crises, potentially including universal basic income or similar mechanisms to maintain social stability during the transition period. The World Bank's Global Economic Prospects report further details potential societal impacts of global financial markets and recession 2025.
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