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How the financial experts see 2009
Posted in the Calgary Herald
December 31, 2008
Jack ablin, chief investment officer, harris Private Bank - deflation forces could give way to monetary and fiscal stimulus sooner than expected; - high-quality bonds offer a relatively attractive yield as a conservative play, but investors should stay in shorter maturities; - Stocks are cheap on a multi-year basis, but investors need to focus on price-to-sales, not price-to-earnings; - The reflation trade should benefit stocks, real estate investment trusts and commodities, and high-yield bonds; - High-yield, fixed-income is the only asset class that pays you handsomely while you wait; - attractive sectors: health care, staples, utilities, energy, telecom; - Unattractive sectors: materials, industrials.
Andrew Busch, BMO Capital markets, global FX market strategist - the u.s. Federal re-serve will move away from cutting interest rates to a serious quantitative easing program by continuing to expand their balance sheet. the Fed's first big steps down this path has been the announced program to purchase up to $500 billion us in mortgage-backed securities; - Congress will extend loans to the private sector by forcing banks receiving new relief funds to lend; - unfortunately, the white house providing $17.4 billion us in bailout funds to the auto industry won't resolve their problems and the markets are very likely to force the issue by pushing their stocks to new lows. this will necessitate another round of loans amid restructuring that will see layoffs rise; - the incoming obama administration will propose and Congress will pass a massive stimulus program. the total program will certainly be over $500 billion us and may eventually reach $800 billion to $1 trillion us; - thehousing sector will stabilize and this will stabilize the credit markets. already, housing starts and building permits have fallen to levels that should sharply reduce the inventory of unsold homes which drives the number of foreclosures. we should see dramatic improvement in housing inventories by mid-2009.
Bart melek, Bmo Capital markets, global commodity strategist - sharp global slowdown and the quest for cash derail commodities. the onset of a recession in the world's highly industrialized nations and a material slowdown in the developing world is projected to erode demand for commodities ranging from copper to metallurgical coal to oil, keeping prices depressed for over a year; - gold should remain relatively healthy, but a full, sustainable rally is unlikely in the near term due to considerable global disinflationary pressures and possible additional aggressive interest rate cuts by central banks; - Beyond 2009, low interest rates and aggressive government spending (coming from China and the g-7) are projected to place demand growth on a firmer footing. difficult credit conditions and the unsustainably low-price environment for commodities such as copper and oil is expected to reduce current supply, eventually causing tight markets and higher prices; - in the long term, Bmo projects gold, base metals and energy are likely to get significant support from a weakening u. s. trade-weighted dollar and higher-trend inflation.
douglas Porter, deputy chief economist, Bmo nesbitt Burns - the global recession will extend through the first half of 2009 as the credit crisis runs its course, before growth recovers
modestly in the second half of the year; - the u. s. faces its worst recession in the postwar era as consumers strive to rebuild savings amid unprecedented wealth destruction. an expected modest recovery starting late in the year depends on an expected sizable fiscal stimulus plan; - Canada will suffer its first recession in 17 years as a result of falling exports to the u. s. and declining investment in the resource sector amid plunging commodity prices. a modest recovery should begin in the second half of the year; - the Fed is expected to keep overnight rates near zero in 2009. meanwhile, the Bank of Canada is expected to reduce overnight rates to new half-century lows; - the Canadian dollar could weaken a bit further to below 80 cents us in the first half of 2009 as commodity prices remain under pressure, but is expected to rebound above 85 cents us later in the year; - the global economy may grow by just one per cent in 2009, marking the slowest year for global growth since the early 1980s; - oil to average $45 us a barrel in 2009.
Paul taylor, chief investment officer, Bmo harris Private Banking - the subprime credit crisis of the fall of 2008 will continue to exert pressure on corporate balance sheets, both within and outside of the financial-services industry; - Policy-makers worldwide will remain vigilant in taking steps to reflate the global economy to stimulate consumers and investors to spend and invest rather than to hoard assets; - stocks will rally meaningfully in advance of a turn in the economic outlook. although the visibility on the duration of this down cycle is not high, an economic recovery is expected to be apparent by the latter part of 2009; - Canadian companies in the commodity sectors will register double-digit earnings declines. the Canadian dollar will struggle to firm against the u. s. dollar and against other major currencies as long as commodity prices remain weak.
Posted in the Calgary Herald
December 31, 2008
Jack ablin, chief investment officer, harris Private Bank - deflation forces could give way to monetary and fiscal stimulus sooner than expected; - high-quality bonds offer a relatively attractive yield as a conservative play, but investors should stay in shorter maturities; - Stocks are cheap on a multi-year basis, but investors need to focus on price-to-sales, not price-to-earnings; - The reflation trade should benefit stocks, real estate investment trusts and commodities, and high-yield bonds; - High-yield, fixed-income is the only asset class that pays you handsomely while you wait; - attractive sectors: health care, staples, utilities, energy, telecom; - Unattractive sectors: materials, industrials.
Andrew Busch, BMO Capital markets, global FX market strategist - the u.s. Federal re-serve will move away from cutting interest rates to a serious quantitative easing program by continuing to expand their balance sheet. the Fed's first big steps down this path has been the announced program to purchase up to $500 billion us in mortgage-backed securities; - Congress will extend loans to the private sector by forcing banks receiving new relief funds to lend; - unfortunately, the white house providing $17.4 billion us in bailout funds to the auto industry won't resolve their problems and the markets are very likely to force the issue by pushing their stocks to new lows. this will necessitate another round of loans amid restructuring that will see layoffs rise; - the incoming obama administration will propose and Congress will pass a massive stimulus program. the total program will certainly be over $500 billion us and may eventually reach $800 billion to $1 trillion us; - thehousing sector will stabilize and this will stabilize the credit markets. already, housing starts and building permits have fallen to levels that should sharply reduce the inventory of unsold homes which drives the number of foreclosures. we should see dramatic improvement in housing inventories by mid-2009.
Bart melek, Bmo Capital markets, global commodity strategist - sharp global slowdown and the quest for cash derail commodities. the onset of a recession in the world's highly industrialized nations and a material slowdown in the developing world is projected to erode demand for commodities ranging from copper to metallurgical coal to oil, keeping prices depressed for over a year; - gold should remain relatively healthy, but a full, sustainable rally is unlikely in the near term due to considerable global disinflationary pressures and possible additional aggressive interest rate cuts by central banks; - Beyond 2009, low interest rates and aggressive government spending (coming from China and the g-7) are projected to place demand growth on a firmer footing. difficult credit conditions and the unsustainably low-price environment for commodities such as copper and oil is expected to reduce current supply, eventually causing tight markets and higher prices; - in the long term, Bmo projects gold, base metals and energy are likely to get significant support from a weakening u. s. trade-weighted dollar and higher-trend inflation.
douglas Porter, deputy chief economist, Bmo nesbitt Burns - the global recession will extend through the first half of 2009 as the credit crisis runs its course, before growth recovers
modestly in the second half of the year; - the u. s. faces its worst recession in the postwar era as consumers strive to rebuild savings amid unprecedented wealth destruction. an expected modest recovery starting late in the year depends on an expected sizable fiscal stimulus plan; - Canada will suffer its first recession in 17 years as a result of falling exports to the u. s. and declining investment in the resource sector amid plunging commodity prices. a modest recovery should begin in the second half of the year; - the Fed is expected to keep overnight rates near zero in 2009. meanwhile, the Bank of Canada is expected to reduce overnight rates to new half-century lows; - the Canadian dollar could weaken a bit further to below 80 cents us in the first half of 2009 as commodity prices remain under pressure, but is expected to rebound above 85 cents us later in the year; - the global economy may grow by just one per cent in 2009, marking the slowest year for global growth since the early 1980s; - oil to average $45 us a barrel in 2009.
Paul taylor, chief investment officer, Bmo harris Private Banking - the subprime credit crisis of the fall of 2008 will continue to exert pressure on corporate balance sheets, both within and outside of the financial-services industry; - Policy-makers worldwide will remain vigilant in taking steps to reflate the global economy to stimulate consumers and investors to spend and invest rather than to hoard assets; - stocks will rally meaningfully in advance of a turn in the economic outlook. although the visibility on the duration of this down cycle is not high, an economic recovery is expected to be apparent by the latter part of 2009; - Canadian companies in the commodity sectors will register double-digit earnings declines. the Canadian dollar will struggle to firm against the u. s. dollar and against other major currencies as long as commodity prices remain weak.
