BMO Experts Look Back at 2012, Announce Predictions for 2013
TORONTO, ONTARIO and NEW YORK, NEW YORK -- (Marketwire) -- 12/31/12
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Top economic and market strategists from BMO Financial Group released
their economic and market analysis of 2012 and made their predictions
for 2013 and beyond.
Brian Belski, Chief Investment Strategist, BMO Capital Markets:
-- North American stocks are set to deliver another positive performance in
2013 with the U.S. setting the tone.
-- BMO Capital Markets models indicate the S&P 500 will attain a price
target of 1,575 for 2013, up 9.38 per cent from its current level, with
earnings of $106; the S&P/TSX will reach 12,900, up 4.11 per cent from
its current level, with earnings of $900.
-- Sector preferences are based on balance sheet strength, consistent
growth, and improved operating metrics versus the overall markets, given
our earnings forecast and uncertainty related to the global macro
backdrop. Sectors in U.S. to watch include Industrials, Energy and
Information Technology; sectors in Canada to watch include Financials
-- Given the still extremely low global interest rate environment,
investors should be looking for stocks with strong dividend
characteristics - both dividend yield and consistent dividend growth.
Douglas Porter, Deputy Chief Economist, BMO Capital Markets:
-- The U.S. economy grew faster than Canada's in 2012 for the first time
since 2004. We look for the gap to widen in 2013, as the U.S. housing
sector continues to recover - growing at its fastest pace in 30 years
next year - while Canada's housing market continues to lose altitude.
-- China's growth rate should pick up slightly in 2013, thanks to firmer
U.S. demand as well as domestic stimulus measures. More broadly, we look
for many emerging markets to regain some strength next year, as the
aggressive interest rate cuts by many economies begin to pay dividends
-- It looks like the Bank of Canada will preside over a third consecutive
year of no change in interest rates. We also doubt that his successor at
the Bank of Canada w
ill move on rates either, as the next rate hike in
Canada will likely not come until 2014. Similarly, we expect yet another
year of no change in U.S. interest rates, as the Fed will continue to
run an ultra-loose policy stance until the jobless rate drops below 6.5
per cent (versus 7.7 now).
-- Firmer commodities should keep the Canadian dollar above parity with the
greenback on average in 2013, after it averaged almost precisely par in
Paul Taylor, Chief Investment Officer, Fundamental Equities, BMO
Asset Management Inc.:
-- Throughout 2012 Europe faced various challenges; however the European
Union's commitments to keeping the Euro intact helped them muddle
through. This pronounced commitment will continue to help Euroland in
its uphill recovery in the next few years.
-- At a similar rate during the 2012 fiscal year, the U.S. economy will
continue its path of moderate growth in 2013.
-- Closing out 2012, the U.S. government should come to an agreement on how
to address the fiscal cliff.
-- A big surprise in 2012 was investors flocking to bonds as a safe
investment choice during a volatile market environment.
-- The equity market will deliver better returns in 2013 driven by
continued economic growth and investor confidence.
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