/R E P E A T -- Media Advisory - BMO Financial Group's Market Strategists
Unveil Their Predictions for 2010/

TORONTO and CHICAGO , Dec. 23 /CNW/ - BMO Financial Group's economists, market and commodity strategists in Canada and the United States give their predictions for 2010.

    
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    1)  Douglas Porter, Deputy Chief Economist, BMO Capital Markets
        -  We look for both Canada and the U.S. to post GDP growth of roughly
           2.5 per cent in 2010, essentially reversing similar declines in
           the prior year.
        -  The era of zero interest rates will come to an end just after mid-
           year in Canada and not soon afterwards in the U.S. However,
           borrowing costs will remain exceptionally low by historical
           standards, as major central banks will wait until it is absolutely
           certain that recovery has taken root before hiking aggressively.
        -  The Canadian dollar is likely to strengthen further and could
           average close to parity in 2010, bolstered by Canada's relatively
           favourable fundamentals, underlying uncertainty on the U.S.
           dollar, and firming commodity prices.
        -  The housing market will continue to thrive in Canada, while the
           U.S. market will see the first inklings of recovery. The spring
           selling season could be exceptionally hot in Canada ahead of the
           new HST in B.C. and Ontario, and in anticipation of interest rate
           increases later in the year.
        -  Despite the unfolding recovery, the scars from the deep global
           recession will linger in many areas, including a still-high
           jobless rate (averaging 10 per cent in the U.S. and 8.5 per cent
           in Canada next year), still-wide budget deficits almost
           everywhere, and a lack of pricing power for businesses. The good
           news is that despite widespread concerns on this front, inflation
           is expected to remain quite subdued, averaging 1.5 per cent in
           Canada and about 2 per cent in the U.S. in 2010.

    2)  Paul Taylor, Chief Investment Officer, BMO Harris Private Banking
        -  After the roller-coaster years of 2008 and 2009, where our
           financial system teetered on the edge of ruin and equity markets
           imploded, the "story" of 2010 may well be that volatility and
           systemic risk fade while the economy and capital markets churn out
           modest, steady progress.
        -  Global economic growth is likely to return to a rate of around 3
           per cent, driven by strong growth rates of 8 to 10 per cent in
           China and India and held back by weak growth in Core Europe of no
           more than 1.5 per cent and moderate growth of 2.5 per cent in
           North America.
        -  Equity returns will likely moderate versus the heady pace of 2009,
           but will most likely easily out-pace the alternative returns
           available from cash and bonds.
        -  The S&P/TSX is likely to trade in line with the expected growth
           rate of earnings rather than on the back of an expansion in the
           earnings multiple; after a drawdown from the low $900 level in
           2008 to about $630 in calendar 2009, the S&P/TSX EPS should expand
           to approximately $720 - $750 in 2010.
        -  Stocks in the BMO Harris portfolios that are likely to be big
           movers in 2010 are: Potash, RIM, Sino Forest, Dragonwave, Petro
           Rubiales, Biox, Enablence Technologies and Mercator Minerals.

    3)  Jack Ablin, Chief Investment Officer, Harris Private Bank
        -  The massive government stimulus has pulled the global economy off
           the mat.
        -  Unemployment in the U.S. may have peaked at 10.2 per cent,
           starting the countdown to monetary tightening.
        -  Equity valuation is full; however the market can continue to
           advance on technicals. History suggests that the market could
           advance another 15 per cent from here on favourable momentum.
        -  The U.S. dollar is undervalued against the Yen and Euro and has
           the potential to advance in the first half of the year.
        -  Emerging market equities are expensive relative to the U.S. and
           could underperform.
        -  International Small Caps are relatively cheap and have valuation
           cushion as the rally slows.
        -  High yield bonds should continue to enjoy improving fundamentals.
        -  Our favourite sectors are: Materials, Discretionary, Finance and
           Technology.

    4)  Andrew Busch, Global Currency and Public Policy Strategist, BMO
        Capital Markets
        -  The Federal Reserve will begin to raise interest rates in the
           second half of the year. But the question is: by how much?
           Currently, the 12 month overnight index swaps (OIS) are showing
           almost no chance of the Federal Reserve raising rates for the next
           year, but I think growth returns are enough to make the Fed raise
           rates 25 basis points three times by the end of the year.
        -  We will see more Congressmen and Congresswomen elected in the 2010
           midterm elections that want more control over Federal Reserve
           policy decisions.
        -  There is a growing possibility of the White House and Congress
           imposing a value-added tax or national sales tax to presumably
           reduce the deficit. It will be precisely the wrong thing at the
           wrong time for the US economy as it heads into 2011.

    5)  Bart Melek, Global Commodity Strategist, BMO Capital Markets
        -  Rising global economic tides are on track to buoy most industrial
           commodity markets in 2010. Recovery in the Western world and a
           strengthening China are likely to propel demand growth for
           commodities ranging from copper to iron ore to energy into
           positive territory.
        -  After reaching new highs and a relatively modest correction
           recently, gold is expected to remain firm well into 2010, as
           investors continue to show considerable interest in the metal in
           order to protect against US dollar weakness and rising inflation
           risk.
        -  BMO Research considers copper and iron ore to be the preferred
           industrial commodities and oil and US thermal coal the preferred
           energy commodities.
        -  The combination of rising exports from China and restocking in the
           Western world will likely materially tighten the commodity market,
           providing support for prices broadly in 2010.
        -  The Federal Reserve keeps rates near record lows for most of 2010;
           given less-than-robust credit creation in the U.S. and a very
           fragile consumer, low rates are required to assure that the U.S.
           economy does not fall back into contraction.
    

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