UBS has published its annual house price report. Here are the most valued markets.

The housing market is in its slump as mortgage rates rise. If the economist consensus is correct about the current home sales report due in the morning, sales will have fallen 28% from their peak.

That’s why the arrival of the seventh annual UBS global real estate bubble report sounds different, coming not during a wave of excess but at the start of a recession.

“Willingness to pay for owner-occupied homes is likely to take a hit. In cities with strong population growth, such a correction may manifest itself as a long-term stagnation in nominal purchase prices. However, this is not the most likely outcome as real estate markets rarely show a sideways trend,” the report said.

Because the UBS report is global, only five US markets are analyzed: Miami, Los Angeles, San Francisco, Boston and New York. The bad news is that all five are overrated. The good news is that none of it is called bubble risk. Save for Miami, price growth in other cities has not been as strong as the national average, UBS notes. The report warns that income growth has been quite strong, although difficult affordability will start to take its toll.

Globally, the market that appears to be the most bubbling is Toronto, closely followed by Frankfurt, UBS says. Adjusted for inflation, price levels in Vancouver and Toronto have more than tripled in the past 25 years.

“In such overheated markets, with housing prices stretched too far, the Bank of Canada’s recent rate hike may be the last straw. During mortgage renegotiations, new buyers and owners must not only pay higher interest rates, but also provide more income to qualify for the mortgage,” UBS said.

The UBS ranking is based on five factors: price-to-income, price-to-rent, mortgage-to-GDP change, construction-to-GDP change and the city’s price relative to the country.


US stock futures ES00

Even as Treasury yields rose and Tesla’s results disappointed, it began to slide to lower levels. The yield on the 10-year Treasury note: TMUBMUSD10Y
It reached the highest level since 2007. Crude oil futures CL
exceeded 86 dollars per barrel.


Tesla TSLA
fell 6% in premarket trading after the electric carmaker’s third-quarter margin and revenue came in shy of estimates. The miss didn’t dampen the confidence of CEO Elon Musk, who says there’s a way for Tesla to be worth more than Apple and Saudi Aramco combined, as he also says he’s considering a share buyback of up to $10 billion.

Musk also said Twitter overpaid for TWTR
but is excited about the potential of the social media service.

shares rose after the telecom giant beat analysts’ earnings expectations.

Allstate ALL
Shares slipped after the insurer said it expected a loss in the third quarter due to catastrophe losses from Hurricane Ian, as well as increased bodily injury and physical damage coverage. IBM IBM
but it rose after the tech giant upgraded its sales growth outlook for the year.

European telecommunications equipment manufacturers Ericsson ERIC
and Nokia NOK
each collapsed after its consequences.

The economic paper includes weekly jobless claims, the Philadelphia Fed manufacturing index and both existing home sales and leading indicators after the open.

Philip Morris Prime Minister
Swedish Match has raised its bid for SE:SWMA
For $15.7 billion, and separately, Altria agreed to pay $2.7 billion for US rights to MO’s IQOS heated tobacco products..

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Oakmark Funds

In his third-quarter letter to shareholders, Bill Nygren of Oakmark Funds produced this chart showing the P-to-E ratio of the 50th highest in the S&P 500 versus the P-to-E ratio of the 450th. This dispersion is 40% wider than normal. “As is often the case, unusually high volatility leads to high spreads in valuations, which we believe has been a good environment for adding value through stock picking.”

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