Weekly viewpoints

21 August 2026, 10:00 UTC Chief Investment Office GWM Investment Research

Reflections from the summit – “The great bull market” Weekly viewpoints Burkhard Varnholt, Senior Financial Market Adviser, UBS Switzerland AG

There are places so beautiful that you would rather not tell anyone about them. We name one—at the end of this article. First, we report on a “small” and a “large” financial summit: our recent UBS Outlook event, followed by the annual Jackson Hole summit. The most important gathering of the world’s central bankers provides a counterweight to the noise of our times—a forum for monetary policy reflection and nonpolitical exchange.

1. UBS Outlook event: What investors are focused on now It was that time again: This year’s UBS Outlook event took place last week at the Kongresshaus Zurich before a capacity audience. The focus was on geopolitical change and the question of where international financial markets may go next. Some view the seemingly weightless bull market with suspicion, and many fear that a speculative bubble is forming. At the same time, we once again explained our long-standing assessment that we are currently experiencing one of the most significant bull markets in history.

We briefly reiterate five reasons:

Sign of the times: FEMO, not FOMO, is driving markets FEMO—an acronym for “Fabulous Earnings Momentum”—is currently driving global stock markets, not FOMO, or “Fear of Missing Out,” as in the late 1990s.

Earnings growth is outpacing revenue growth beyond the technology sector, as Figures 1a-1d clearly show.

Even at the Federal Palace in Bern, the NZZ1 reported this week, officials are surprised by an unexpected budget surplus of around CHF 2 billion, driven by higher corporate income tax receipts. In the eurozone, corporate earnings are also currently growing by more than 20% annually. Above-average growth in earnings and margins reflects rising productivity—a key element of our multiyear bull-market scenario.

1 NZZ (18 August 2026): “Suddenly two billion more—corporations deliver significantly more

tax revenue to the federal government than expected”

This report has been prepared by UBS Switzerland AG. Please see important disclaimers and disclosures at the end of the document.

Figures 1a-1d: “Hidden in plain sight”—a major earnings wave is lifting many stock markets Revenue and earnings per share, indexed (30 September 2025 = 100)

Source: Bloomberg, UBS, as of August 2026

A few illustrative figures2: • Corporate earnings are now growing in most stock markets worldwide. South Korea’s forward earnings have quadrupled this year. It is no surprise that the relatively small country again leads the global performance ranking, up 85% year-to-date.

• In the European Monetary Union, expected earnings per share rose 22% in 1H26. For 2026 and 2027, we expect annualized earnings growth of 25% in the European Monetary Union.

• Globally, earnings, revenue, and profit margins in the MSCI All Country World ex-US Index have also surged year-to-date: forward earnings are up 36.9%, forward revenue is up 9.2%, and profit margins have reached 12.3%. All are record highs.

• The US currently accounts for 53.9% of all earnings in the MSCI All Country World Index but 64.3% of its total market capitalization.

• Emerging markets, by contrast, account for 19.6% of global earnings but only 11.5% of global market capitalization.

Are these global movements merely coincidental, as some skeptics argue? We do not think so. We see tectonic shifts—in the economy, society, and geopolitics.

A world out of joint, yet energized: The new world disorder is stimulating economies and markets Whether one likes it or not, as the world becomes more unsettled, governments and the private sector are investing more in critical infrastructure. Sectors such as energy, data and communications, cybersecurity, mobility, water, and climate resilience are benefiting. Many specialized companies in these areas have growing order books, revenue, and earnings. For example, year-to-date corporate earnings in the S&P 500 Energy Index rose 55.2%, while its price-to-earnings ratio fell 11.2%. The S&P 500 Oil & Gas sector surged 102% year-to-date.

2 Sources: Bloomberg…