LIVE MARKETS-All bubble pre-conditions now met, but we're still not in one - UBS
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com.
All PRE-CONDITIONS FOR A BUBBLE NOW MET, BUT WE'RE STILL NOT IN ONE - UBS
UBS's seven pre-conditions required for the stock market to be in a bubble have now been met, but we're still not yet in one, says the bank's global equity strategist Andrew Garthwaite.
"Historically, the P/E at a bubble peak has been 45x-72x on 12-month trailing earnings for 30-43% of global market cap versus Mag 6 today on 33x," explains Garthwaite.
In a 2026 outlook piece his teams said they see a further 11% upside for the MSCI AC world by the end of next year - a fresh record for the index that is currently just off all-time highs.
They also flag that market trading patterns look more like 1998, and that we seem far from catalysts that would mark a bubble peak.
Even so, UBS sees more of a chance of a bubble forming from Gen-AI than it has for other bubbly parts of the market in recent years.
That's owing to the "uniquely quick adoption rate of Gen AI and the threat of monetisation of government debt (which would lead to a move from nominal to real assets.)"
In fact they see a 35% chance of a bubble forming, which would justify the MSCI International World index .MIWO00000PUS rising to 1090.
"If AI increases productivity from 2028 half as much as TMT was temporarily perceived to have done, then we can easily justify 7000 on the S&P 500," they say, which is their first supportive factor for stocks.
The S&P 500 closed Tuesday at 6765.88.
But UBS thinks Gen AI - which they dub "the steam engine of the mind" - could actually increase productivity more than TMT did back in the late 1990s.
(Lucy Raitano)
EARLIER LIVE MARKETS POSTS:
DEFENCE SHARES COOL; BOFA SEES A BUYING WINDOW CLICK HERE
CALMER THAN IT COULD HAVE BEEN CLICK HERE
EUROPE BEFORE THE BELL: DRUGS, FED, UKRAINE CHINA, BUDGET CLICK HERE
MORNING BID: REEVES TAKES CENTRE STAGE CLICK HERE
Related Articles
Elon Musk’s SpaceX Poised for Record-Breaking IPO: How Can Retail Investors Get In on the Action of Starlink Stock?
TradingKey - Elon Musk's rocket manufacturer SpaceX is expected to launch an IPO in 2026, with a target IPO valuation projected to reach $1.5 trillion. However, prior to its listing, the stock can only be traded in the private market, characterized by low information transparency and high capital ba
Cathie Wood Predicts Bitcoin Has Bottomed. Is Now The Best Time to Buy? How to Buy BTC?
Purchasing Bitcoin is generally divided into three stages: pre-transaction, during transaction, and post-transaction. Each stage requires careful attention, as losses can easily arise from operational errors, pitfalls, and other factors.
Japan Central Bank Rate Hike To Three-Decade High Imminent, How Will The Market Go? Which Assets Most Affected?
As global monetary policy divergence enters a critical phase, the Bank of Japan (BoJ) is anticipated to raise its benchmark interest rate at the monetary policy meeting on December 19, 2025, by 25 basis points to 0.75% , marking its highest level in nearly 30 years.
SpaceX and Tesla’s Strategic Convergence: Why Musk Must Push for a SpaceX IPO Now
Discover why the SpaceX IPO is a strategic booster for Tesla rather than a financial threat. This analysis explores how Elon Musk’s $1.5 trillion valuation goal funds the Mars Plan while empowering Tesla’s AI, FSD, and Optimus robots through Starlink and orbital computing.
