BMO Financial Group's market and investment strategists in Canada and the U.S. offer their views on what lies ahead following last night's historic U.S. Presidential election:

Donald Coxe, Global Portfolio Strategist, BMO Financial Group

- Obama's victory will lead to a "feel-good" attitude within America at a time when gloom and sourness have become excessive. That favours financial assets generally at a time that fall is moving into winter.

- Obama's spending plans will be seen as economy-favourable with the nation in recession. Stocks should benefit near-term.

      -  Obama is fully committed to continuation of all the ethanol
         subsidies and tariffs that McCain opposed. That is good news for the
         reeling ethanol stocks that have been buffeted by falling oil prices
         and still-high corn prices.

      -  Obama has threatened to impose carbon taxes on coal-fired electrical
         generating plants.

      -  None of the candidates promised significant revisions to the
         extremely favourable royalty structure for mining on federally-owned
         properties, mostly in the West. That is important for Canadian gold
         miners operating in Nevada.

      -  He famously said that on his first day in the White House he would
         "call up the President of Canada to announce he was tearing up
         NAFTA." We believe he won't do that.

      -  Worldwide, the election of a new U.S. President with a change agenda
         will be greeted favourably. This should facilitate America's
         dealings with other nations on such hot topics as Russian
         expansionism and response to Iranian nuclear weapons development.

    Andrew Busch, BMO Capital Markets, Global FX Market Strategist

      -  Expect a U.S. stimulus package of $150 billion to be enacted and
         checks out the door by March with an impact on consumer spending by
         late April and May.

      -  Expect very expensive bond deals issuance to be done over the next
         three months with those issuing likely to only be high quality to
         get done and with high spreads to Treasuries. This should mean they
         get snapped up.

      -  There is going to be massive government bond issuance in 2009 across
         the globe to pay for bailouts, stimulus packages, and social
         spending. This means we should see a further steepening of the yield
         curve in 2009, but it won't necessarily point to a big economic
         recovery like it has in the past.

    Jack Ablin, Chief Investment Officer, Harris Private Bank

      -  Both an Obama victory and a Democrat-controlled Congress are
         currently factored into markets.

      -  When looking at Europe vs. U.S. price-to-sales comparisons, one can
         see the U.S. is beginning to trade like a "nationalized" country.

      -  Tax rates are expected to increase which will give an edge to
         municipal bonds.

      -  A move towards socialized medicine appears to be already discounted.
         In examining the valuation of U.S. vs. European pharmaceutical
         stocks, the U.S. valuation already incorporates nationalized health
         care.

      -  Large cap is set to outperform as small cap moves back to normal
         valuation.

    Paul Taylor, Chief Investment Officer, BMO Harris Private Banking

      -  We are a long way away from a sustainable equity market rally. A
         sustainable equity market rally will only occur when it is clear
         that the spectre of a protracted, significant U.S. economic
         recession is not in sight.

      -  Leading economic indicators signal a meaningful U.S. and global
         economic recession. This will cause policymakers in Washington to
         focus attention on the economy as the number one priority.

      -  Investors should have a defensive strategy, with an overweight in
         Consumer Staples, Telecom, Utilities and underweight in Energy,
         Materials and Technology. This will be more appropriate until the
         spectre of recession is past.

      -  With Fed Funds at 1.0%, monetary policy will be impotent moving
         forward.

      -  A global economic recession is bearish for commodity based
         currencies (Canadian and Australian dollars) and is bullish for
         other currencies. The current "crisis of confidence" is bullish for
         the U.S. dollar due to its position of reserve currency.

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SOURCE: BMO Bank of Montreal

SOURCE: BMO Financial Group

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