News Releases

BMO and Harris Private Bank CIOs host media conference call to discuss North American equity markets and economies and the implications for investors

What:
Join Canadian and U.S. Chief Investment Officers from BMO Harris Private Banking and Harris Private Bank to hear their thoughts on the difference between slowing growth and an all out recession and the implications for Canadian and U.S. equity markets.

According to Paul Taylor and Jack Ablin, as the likelihood of a U.S. recession increases, so does the probability of further downside in the Canadian and U.S. equity markets, particularly in the first half of 2008. However, the CIOs say any downside should be limited due to the current moderate valuations on both sides of the border.

During the call they will discuss:

Will this slowdown be contained to the U.S. market?

According to the CIOs, export oriented companies should outperform in the U.S., while domestically focused companies should outperform elsewhere. Continued growth is still expected in China and India despite potential slower growth in the U.S.

Historically, U.S. recessions have had a greater impact on Canadian equities than their U.S. counterparts. This was even the case when Canada's economy was able to avoid falling into recession itself, when the U.S. economy fell into recession in 2001. “When the U.S. economy has sneezed, Canadian equities have caught cold,” said Taylor.

Currency outlook
The currency outlook is difficult to pinpoint with accuracy, particularly with so many factors at play. Two potential scenarios include:

• U.S. dollar could rally against developed market currencies, including the Canadian dollar, near-term.

• Canadian dollar could also continue to strengthen against the greenback for a variety of reasons. Strong fundamentals, including Canadian trade and fiscal surpluses, could contribute to this strength.

Impact of the housing slump
The fallout from the housing slump is beginning to be felt in the manufacturing sector. Consumers are also retreating slightly, amidst housing concerns.

Money making opportunities
Even in a more challenging environment, money making opportunities exist. Examples include fertilizer stocks, gold and consumer staples.

According to the CIOs, broadly diversified Canadian equity strategies that hold larger companies with strong balance sheets and more predictable earnings and higher dividend yields continue to be favoured in the current market environment.

For more commentary and analysis on the Canadian and U.S. markets and what this means for investors, media are invited to call in for an interactive briefing at 11:30 a.m. on Thursday, January 24, 2008.

Media conference call details:

The call will be archived at www.bmoharrisprivatebanking.com for seven days and a print transcript of the conference call will be available upon request.

BMO Harris Private Banking and Harris Private Bank are part of BMO Financial Group's Private Client Group. The Private Client Group provides integrated wealth management services in Canada and the United States and had total assets under administration and term investments of $275 billion as at October 31, 2007. BMO Financial Group (NYSE, TSX: BMO) provides individual, corporate and investment banking services across North America.

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