U.S. Economy Begins to Flex Its Muscle - Harris Private Bank's March Outlook for Financial Markets

-- Household debt paid down to 2000 levels (when gauged against GDP)

-- Housing is stabilizing

-- Equity markets kicked off 2012 with one of best Januarys in 18 years

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Feb 09, 2012, 03:40 ET

CHICAGO, Feb. 9, 2012 /PRNewswire/ -- The U.S. economy is beginning to flex its muscle; with the addition of jobs, and the aid of zero interest rates, unprecedented monetary creation and a $1.2 trillion annual budget, according to the Outlook for Financial Markets March 2012 edition.

Equity markets kicked off 2012 with one of their best Januarys in 18 years as the U.S. economy expanded and fourth quarter earnings reports encourages investors. The MSCI All-Country World Index surged 5.8%, according to Bloomberg. January's gain represents the best start of the year since 1994's 6.5% gain. The S&P 500 was up 4.4%, the best January since 1997. Over the last 102 years, the median annual Dow return was 20% in years when it gained 4-6%.

"If investors just focused on the fundamentals and discounted the daunting headlines, stock market values would be substantially higher," advised Jack Ablin, Chief Investment Officer, Harris Private Bank, and the author of the monthly report.

Other promising signs are appearing. Zero percent overnight rates have gone a long way toward boosting demand, reducing private debt and improving asset values. Consumers have paid down their household debt to 2000 levels when gauged against GDP. Housing is stabilizing and we suspect a "normal" spring selling season will bloom in 2013.

Additional key factors discussed in the March 2012 Outlook for Financial Markets include:

While European leaders will eventually navigate their way toward fiscal balance, many of their countries are simply not flexible enough to compete globally.
Investors clutching bonds for a certainty of return are overlooking the risk that their income will not keep pace with future spending needs.
Over the last 102 years, the median annual Dow return was 20% in years when it gained 4-6% in January.
The implications of two Americas are profound. Education is currency in a knowledge economy. The divergence in educational backgrounds has shunted social mobility.
Remarkably, bonds have outpaced cumulative stock market returns over the last 30 years. The notion that bonds can outperform stocks for such an extended period runs counter to preconceived notions and is a slap in the face to equity investors who have had to endure such financial uncertainty over the last decade.

The monthly report, which can be downloaded by clicking on the following url: http://bit.ly/xqCEdj is created by Jack Ablin, Chief Investment Officer for Harris Private Bank. Ablin is responsible for establishing investment policy and strategy within the Personal Investment Management Group of HPB. He also chairs the HPB Asset Allocation Committee, which determines the strategy for investment portfolios for Harris Private Bank.

For more information on how Harris Private Bank can assist you in finding solutions that will help you meet your financial needs, please visit www.HarrisBank.com.

About Harris Private Bank, A part of BMO Financial Group

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Harris Private Bank is a trade name used by various subsidiary financial service providers of BMO Financial Corp. Banking product and services offered through Harris Private Bank are provided by BMO Harris Bank N.A. and their bank affiliates. Member FDIC. Not all products and services are available in every state and/or location.

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SOURCE BMO Financial Group