5 MINS AGO! Henrik Zeberg Shared Some Horrible News
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The US economy is somehow diving headfirst into a recession that could be coming whether Americans like it or not. Probably, the Biden administration somehow brought this phenomenon on themselves, based on their various economic policies, and if things do not take the right course towards the end of the year, the future of the US economy could be in a rather dark zone. The August 2024 employment report showed that the US labor market had cooled more than expected. Bond yields show that traders are bracing for a recession. Even the New York Fed's probability model suggests a 61.8% chance of a recession in the next 12 months. That's the highest since the 1980s.
Analyst Henrik Zeberg dismisses the notion of an ongoing recession. He argues that while there is reason to be skeptical of some economic data, certain indicators remain reliable. Zeberg tracks around 20 key metrics to anticipate a recession, some of which have been highly accurate in signaling previous downturns. He explains that one crucial indicator, the momentum of the two-year yield, will begin to spiral downward with significant force when a recession is imminent. However, according to Zeberg, we have not reached that point yet.
Furthermore, High inflation rates, which are now cooling down gradually, has until now created severe troubles for the American household, and if it were to spike up once again, retail sales would again see massive hit, that too amid massive concerns about the US economy pertaining to the upcoming US elections, set for November.
Zeberg compares the current situation to 2007 when inflation persisted even into the recession before crashing down in a severe deflationary bust. He predicts that we are heading toward a significant deflationary collapse, after which the Fed will react, leading to a bounce and eventually a period of stagflation.
With the stock market rebounding after a difficult start to September, historical trends suggest investors could face another setback in the latter half of the month.
Since 1950, the second half of September has historically been the worst-performing period for the S&P 500, as highlighted by an analysis from Goldman Sachs (NYSE: GS) Research. The data shows that median two-week returns during this time frequently underperform compared to other months, often dipping into negative territory.
Henrik Zeberg believes that markets are heading toward a new all-time high for both the S&P 500 and the NASDAQ. He suggests that after this peak, there will be a pullback, potentially triggered by the upcoming non-farm payroll (NFP) numbers, which could be negative. He likens the current situation to a massive bubble, predicting that in the future, people will look back and question how such overvaluation was allowed to persist.
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