The ‘perfect Eiffel Tower blow-off top’ in stocks is building up, says economist 

With the stock market roaring to new record highs, led by the S&P 500, economist Henrik Zeberg has reiterated that U.S. equities are laying the groundwork for a historic collapse.

In his latest commentary, Zeberg noted that stocks are experiencing a final euphoric rally. While he acknowledged that equities could climb even higher than previously expected, this does not mean a crisis has been avoided, he said in an X post on July 26.

According to Zeberg, the surge in liquidity is inflating valuations to unsustainable levels, creating the conditions for a sharp reversal. 

He described this setup as the “perfect Eiffel Tower blow-off top,” a pattern where markets rise steeply before crashing just as dramatically.

Despite the ongoing bullish momentum, Zeberg warned that extreme euphoria, FOMO, and blind faith in Federal Reserve support are often signs of an imminent market shift.

Notably, the economist has previously argued that the top of the market will only form once even the most bearish investors turn bullish, a signal, in his view, that the cycle is about to end.

Worst recession in history 

Zeberg warned that markets should brace for the worst recession since the Great Depression of the 1930s. He believes that early signs of this collapse are already evident, citing weakness in the labor market and broader economic stress as warning signs.

Overall, his long-term bearish outlook comes as the S&P 500 closed at 6,388 on Friday, after hitting five consecutive record highs, and ended the last session up 0.4%.

While recession fears had accelerated earlier this year, particularly in April amid rising trade tensions triggered by the U.S., recent months have seen a temporary slowdown in those concerns.

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