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Is a 1929-Style Market Crash Looming? Analysts ‘Agree to Disagree’
- Macro Economist and Crypto Analyst Henrik Zeberg has issued a stark warning of a major impending market crash, likening its potential impact to the catastrophic 1929 crash that led to the Great Depression.
- Zeberg foresees the significant economic downturn due to rising consumer stress, particularly in the housing market.
- He anticipates this will lead to a recession by mid-year, followed by a deflationary bust and speculative bubble, despite potential Federal Reserve interventions.
- Raoul Pal, a former Goldman Sachs executive, counters Henrik Zeberg’s grim market outlook, arguing for economic resilience with a stabilising housing market and minimised impact of interest rates, and predicting an upcoming economic recovery rather than a downturn.
A Big Crash Is Coming!?
Macro Economist and Crypto Analyst Henrik Zeberg has warned investors about a huge incoming market crash. He compared the crash to what happened in 1929 – and although not many of our readers may have been around – many will have heard about that significant crisis.
The 1929 stock market crash, marked by Black Thursday and the catastrophic Black Tuesday, led to a dramatic plunge in stock prices, extensive financial losses, and the Great Depression. This ultimately resulted in major US financial regulatory reforms, including the establishment of the now much loved Securities and Exchange Commission (SEC).
So, when a well-known analyst warns of a similar scenario, or at least one not seen since then, we ought to at least consider the possibilities.
You may not like it. You may not understand it. But the Economy is going to fall into a deep Recession in 2024 – and Markets will Crash.
Henrik Zeberg Zeberg’s Chilly Prediction
Zeberg believes the next few months will remain bullish, bringing huge returns for investors, before the inevitable crash. He spoke to Ran Neuner and Raoul Pal on Crypto Banter about this a couple of days ago, saying:
So actually, the Titanic hitting the iceberg here is actually the consumer getting depressed by the interest payments they have now on mortgages and what else – and this is what needs to get its way through the business cycle.
Henrik Zeberg Zeberg suggests that rising interest rates and personal interest payments are impacting consumers negatively, leading to an economic slowdown. He particularly points to the role of the housing market as a key indicator, noting that deterioration in this sector typically precedes a recession. His analysis also suggests that despite potential liquidity injections by the Federal Reserve, the business cycle cannot be overcome, predicting a recession by Q2 or Q3, followed by a deflationary bust and speculative bubble.
Raoul Pal Disagrees
Raoul Pal, CEO of Macro Vision and former Goldman Sachs Executive doesn’t share Zeberg’s views. Not believing in a downturn he explained his core thesis is that economic slowdowns are influenced by rising interest rates and high debt levels – and posits that these economic changes are strategically aligned with political election cycles.
He argues that the housing market is stabilising and the impact of interest payments, particularly mortgages, is not as significant due to fixed rates. His analysis uses the ISM Survey and other economic indicators to suggest that the worst of the economic slowdown has been priced into growth assets, and the business cycle is expected to strengthen.
Pal also implies a connection between these economic and political cycles and significant events in cryptocurrency, specifically the Bitcoin halving cycle. Finally, he hints at policymakers’ efforts to counteract economic slowdowns by lowering interest rates and utilising central bank balance sheets, very likely through measures like quantitative easing.
The economy slows down because rates have gone up and there’s so much debt. So fine, the economy slows down a bit. And they use it at the same time as the election cycle as well. It’s all the same cycle. Bitcoin halving cycle all the same time. They get interest rates down. And they engineer some way of using the balance sheet.
Raoul Pal 
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
