Macro strategist Henrik Zeberg thinks the economy is currently in the middle of an “everything bubble” that is ready to get even bigger.
The economist tells his 143,400 followers on the social media platform
“Bubble – where?
Below is the market capitalization in relation to GDP (gross domestic product):
1929 was a big bubble: 105%
2000 was a big bubble: 138%
2007 was a big bubble: 105%
What do you think the current level of 188% represents? Then add Crypto Bubble and Private Equity Bubble. When the recession starts, the ‘Everything bubble’ will burst!”
Private markets have been witnessing a “remarkable” period of growth for more than a decade, rising from $9.7 trillion in assets under management (AUM) in 2012 to an estimated $24.4 trillion in assets under management at the end of last year, the report said. analysis from Big Four accounting firm Ernst & Young (EY).
Earlier this week, Zeberg said that central banks such as the US Federal Reserve and the European Central Bank (ECB) tend to cut interest rates shortly before a recession.
“Economic expansion coming – or late cycle and therefore recession coming?
Let me make it easy for people who find it difficult to understand where we are in the business cycle.
On Thursday the ECB decided to lower the fund rate.
The ECB and the FED will always try to cut rates late in the cycle to prevent the economy from entering a recession.
Now look at the graph.
Are we ‘Late Cycle’ – or are we facing ‘new economic expansion’?
THINK!”
The Federal Reserve will likely issue its next statement on the Federal Funds Rate at the Federal Open Market Committee (FOMC) meeting on June 12. The central bank does expected to keep rates the same.
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Generated image: DALLE3