he UBStargesfocat UBS targets imply very similar returns by end-2026 for Europe, EM and the US (with the TOPIX giving much lower returns). Equity markets overall: we target 1090 for MSCI AC World end-2026 (+11%). The key supports are: i) 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, yet we think Gen AI - 'the steam engine of the mind' - will increase productivity more than TMT did back in the late 1990s. We ...

Core Insights - The start of the earnings season is crucial, with indications of strong loan growth and confidence among households to borrow, suggesting a healthy economic environment [1] - Bankruptcies are normalizing from multi-decade lows due to COVID-19, and the current levels appear stable, indicating a recovery rather than a crisis [2] - Concerns about credit events are overshadowing fears of an equity bubble, with elevated valuations in certain sectors like AI and gold being noted [3] Economic Indicators - The U.S. economic growth is under scrutiny due to various concerns including tariffs, inflation, and political issues, which are creating a volatile trading environment [4] - Regional banks are reporting better-than-expected loan loss provisions, which may signal a turnaround in the sector [5] - A significant market cap loss of $1 billion was triggered by a relatively small $50 million breakdown, highlighting the sensitivity of the market to isolated events [6]