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Economist Henrik Zeberg Expects History To Repeat Itself In The Worst Stock Market Crash

Companies including Morgan Stanley are making job cuts as the economy is feared to go into a recession in an unknown period.

Macroeconomist Henrik Zeberg expects a massive blow-off top for equities in the coming months, saying recently that the stock market could likely head to one of the biggest crashes in history.

In a Twitter post on Saturday, Zeberg said that stocks are likely on their way up, while the dollar index (DXY) — which pits the USD against a basket of foreign currencies — is likely on its way down.

Financial news is seen on a television as traders work on the floor of the New York Stock Exchange on April 26, 2023, in New York City. The stock market opened up slightly high as investors respond to earnings reports from tech companies’ after losses on Tuesday following rough economic data and earnings earlier in the day. MICHAEL M. SANTIAGO/BENZINGA

The macroeconomist also shared a chart that included his prediction for the iShares MSCI Emerging Index Fund, an exchange-traded fund (ETF) that aims to track an index of large and mid-cap emerging market equities. 

“We have the Largest Crash in Equities / Risk Assets since 1929 coming! Deep Recession,” Zeberg said of the possible market crash. “First the inconceivable and very hated blow off top which will pull investors in on the wrong side before crash”

The 1929 stock market crash led to the Dow Jones Industrial Average decline to 13%. Because of the international gold standard, the Federal Reserve increased rates where it forced the foreign central banks to increase their own interest rates.

Zeberg tweeted that he sees the equities markets collapsing as the dollar index goes on a parabolic surge.

“This is not the look of a market, which is about to crash— no matter how much you swear,” Zeberg said of the markets. 

Last week, Zeberg predicted that Bitcoin would skyrocket this summer as worries over an impending recession gradually fade. The macroeconomist said that a “blow-off top” scenario is unfolding for both stocks and crypto, caused mostly by a drop in fixed-income yields. 

Zeberg added that he believes that a significant decline in yields would drive a market rally while the economy would remain in a comfortable “Goldilocks zone.” 

Meanwhile, Morgan Stanley’s Managing Director and Chief Currency Economist Stephen Jen told the Financial Times last week that the U.S. dollar has “suffered a stunning collapse as a reserve currency, which has seemingly quickened after Washington decided to wield its control over the dollar-based international financial system against Russia.”

Morgan Stanley is considering job cuts by 3,000 worldwide as other corporate institutions are considering the preparation of possible recession in the coming months. In December 2022, the company had cute 1,600 jobs as it had paid $133 million in severance pay.

“Like every institution, you make some adjustments around the capacity, but we’re playing the long game in investment banking,” Citigroup CEO Jane Fraser said in a Bloomberg Television interview.

The Federal Reserve is expected to make another increase in the interest rates. As of March, the Fed had increased the interested rate by .25% making it worrisome for consumers to purchase cars involving loans.

“We think a June hike is back on the table if inflation progress stalls along with continued strong employment gains in May,” Barclays said in a statement regarding the interest hikes.

Produced in association with Benzinga

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