BMO Investment Strategy Group Overview

Transcription

1 BMO Investment Strategy Group Overview Brian G. Belski Chief Investment Strategist BMO Capital Markets Corp. (212) (416) Refer to pages 22 to 25 for Important Disclosures, including Analyst's Certification. ~15:56 ET

2 US Strategy Publications US Strategy Comment Weekly commentary on relevant market topics and associated investment implications. US Chartbook Our GO-TO Report that delineates our investment process, with monthly analysis of the S&P 500 Index, sectors and Industries. US Strategy US Factor Profiles Monthly analysis, stock lists, and performance history of key fundamental investment factors within the S&P 500. US Snapshot Ad Hoc pictorial of important investment related topics and relationships as it relates to our investment PROCESS and models. 1

3 Canadian Strategy Publications Canadian Snapshot Ad Hoc pictorial of important investment related topics and relationships as it relates to our investment process and models. Canadian Chartbook Our GO-TO Report that delineates our investment PROCESS, with monthly analysis of the S&P/TSX Index, sectors and Industries. Canadian Strategy Canadian Factor Profiles Monthly analysis, stock lists, and performance history of key fundamental investment factors within the S&P/TSX. Small Cap Research Daily report measuring performance of the BMO Small Cap Index, which is a widely used benchmark for small cap stocks in Canada. 2

4 Portfolio Strategy Publications BMO Research Portfolio Changes Summary of changes to the BMO Research Top 15 Fundamental Lists and Model Portfolios. Investment Strategy Portfolios Portfolios designed to encapsulate our current investment opinions. We have four actively traded portfolios: 1. US Equity PLUS designed to encapsulate our current US and Canadian Strategy opinions regarding the S&P 500 and S&P/TSX indices, sectors, and industries. 2. US Large Cap Disciplined Value designed to encapsulate our current Large Cap Strategy opinions regarding fundamental themes and sector recommendations, with a focus on attractive relative value. 3. Large Cap Canadian Plus a portfolio ranging from 30 to upwards of 35 stocks, in which roughly two-thirds are invested in the Canadian Market and the remaining one-third invested in US Equities. 4. North American Dividend Growth designed to balance core dividend holdings with an actively managed tactical style component around our dividend growth methodologies and higher yielding strategies. Portfolio Strategy Top 15 Fundamental Lists BMO Capital Markets top 15 fundamental lists are designed to provide investors with BMO Equity Research best investment ideas based on the strength of our fundamental analysis within five specific categories: 1. Canadian Large Cap 2. Canadian Small Cap 3. US Large Cap 4. US Small Cap 5. North American Income BMO Equity Research Model Portfolios The BMO Research Model Portfolios are designed to provide investors with a well-diversified portfolio of BMO Equity Research best investment ideas based on the strength of our fundamental analysis. We have three core portfolios: 1. Large Cap Canadian PLUS 2. Large Cap Canadian 3. Small Cap Canadian 3

5 Recent Investment Strategy Publications US Strategy Commentary October 2, 2017: There is Still Time to Own Financials and Trade Energy (Snapshot) September 21, 2017: Positioning Within Our Market Weight Sectors September 14, 2017: An Interpretation of Sector Seasonal Trends (Snapshot) September 6, 2017: Raising Base Case 2017 Year-End S&P Forecast to 2,600 (Snapshot) August 16, 2017: The Pain Trade Likely Remains Higher (Snapshot) August 9, 2017: Low Risk Factors Pacing US Stock Leadership (Snapshot) July 26, 2017: Time to Add to Energy July 20, 2017: Selection Model Update July 13, 2017: 2Q17 Earnings Preview June 22, 2017: 2017 Half Time Check Up June 1, 2017: Consumer Discretionary Indifference May 18, 2017: Roadmap for Rangebound Markets May 10, 2017: Remaining Patient With Technology Apr 27, 2017: Focus on Large Cap Apr 20, 2017: Our Style Preference Remains Value Mar 30, 2017: Control What You Can, Prepare for What You Cannot Mar 16, 2017: Leaving Crisis Rates Behind Mar 9, 2017: Realities of Our S&P 500 Price Target Special Reports Nov 18, 2016: 2017 Market Outlook US Strategy Monthly September 6, 2017: US Chartbook September 6, 2017: US Factor Profiles Canadian Strategy Monthly September 6, 2017: Canadian Chartbook September 6, 2017: Canadian Factor Profiles Portfolio Strategy October 2, 2017: Top 15 Fundamental Lists/Changes October 2, 2017: BMO Research Model Portfolios October 2, 2017: Investment Strategy Portfolios July 10, 2017: Investment Strategy Portfolios - 2Q Review Investment Strategy Snapshots September 28, 2017: Discretionary Deviations Between the US & Canada September 14, 2017: CDN Strategy: Time for Canadian Stocks to Wake Up August 16, 2017: CDN Strategy: TSX Valuation Reversion August 9, 2017: CDN Strategy: Highlights From Canadian Chartbook - August July 26, 2017: CDN Strategy: Canadian Selection Model Update 4

6 US Strategy Overview Overweight Analysis > Underweight Rhetoric S&P 500 Targets: Best Case: 2,800; $140 Base Case: 2,600; $134 Bear Case: 2,200; $120 Overview: We remain steadfast and consistent in our call that has been in place since 2009 that US stocks are in the midst of a 20- to 25-year bull market Given the hatred, distrust, discord, and fear associated with equity investing, Corporate America, and especially anything to do with financial services, this remains the most doubted and hated bull market IN HISTORY = investors are so afraid to be wrong, they DO NOT want to be right. Granted, assets are rarely linear for long and stocks are aching for a pullback. However, corrections rarely occur when EVERYONE is looking for one. As such, we do not envision any sort of protracted downturn. Therefore, stock prices are likely to bounce back-and-forth in the coming months as investors work through the potential negatives associated with policy rhetoric and the positives of the improving macro and earnings growth environment. Increased Dispersion = Investors should focus on fundamentals and stock picking rather than market rhetoric. Styles/Themes = Large Cap > Small Cap; Value > Growth; Dividend Growth Overall Sector Opinions OVERWEIGHT Financials Health Care Industrials Materials MARKET WEIGHT Consumer Discretionary Consumer Staples Energy Information Technology UNDERWEIGHT Real Estate Telecom Services Utilities 5

7 Canadian Strategy Overview FAIR TO PARTLY CLOUDY, BUT STILL POSITIVE S&P/TSX Targets: Best Case: 17,000; $970 Base Case: 16,000; $900 Bear Case: 13,000; $700 Overview: Although Canada is likely to continue to underperform its US neighbors in 2017, ultimately as America goes, so goes Canada. Regardless of the shortcomings of a traditionally concentrated index and stock market, many ideas in Canada can, will, and should continue to outperform. Canadian investors should focus on the potential positives of the new administration and the long-run growth prospects of the US economy, instead of being led by their emotions and allowing rhetoric (NAFTA and BAT noise) to dictate their investment philosophy. Canada s INCREASING CORRELATION to the US is very positive led by the strengthening cross-border relationship between Financials and Industrials in both nations. Sector investing in 2017 should remain all about identifying areas that should benefit from the stimulative initiatives occurring in the US, while maintaining core positions within high-quality dividend and earnings growth companies and industries. Increased Dispersion = Investors should focus on fundamentals and stock picking rather than market rhetoric. Sector Opinions OVERWEIGHT Financials Industrials Materials MARKET WEIGHT Consumer Discretionary Consumer Staples Energy Telecom Services UNDERWEIGHT Real Estate Information Technology Utilities Health Care 6

8 US Charts 7

9 We Remain Steadfast With Our Secular Bull Market Thesis S&P 500 Annualized 10-Year Holding Period Price Returns 20% 15%? 10% 5% 0% -5% Secular Bull Markets -10% Source: BMO Capital Markets Investment Strategy, Bloomberg, FactSet. 8

10 Dividend Growth OUTPERFORMS in a Rising Rate Environment Average Compounded Total Return During Periods of Rising Interest Rates beginning Jan % 26% 24% 22% 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 24.4% Dividend Growth Stocks 8.0% Top 25 Dividend Yield Stocks 18.8% S&P 500 Source: BMO Capital Markets Investment Strategy, Bloomberg, FactSet. 9

11 Time for Value to Outperform 7% 6% 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% Russell 1000 Value vs. Growth Average Annualized Relative Total Return based on S&P 500 EPS growth stage; monthly data beginning % 1.8% Improving EPS Growth -3.1% Trough to 0% 0% to Peak Peak to 0% 0% to Trough S&P 500 Trailling 4-Quarter EPS Growth Stage Deteriorating EPS Growth -0.5% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% Value vs. Growth difference of rolling 3-Year annualized returns 7-years 3-years 7-years Source: BMO Capital Markets Investment Strategy, Bloomberg. 10

12 Increased Dispersion = Increased Stock Picking Day Intra-Stock Correlation: S&P 500 trading days; daily price changes day correlation pre-financial crisis average 3-year moving average post-financial crisis average Source: BMO Capital Markets Investment Strategy, Bloomberg, FactSet. 11

13 The Great Rotation Has NOT Begun $350,000 Cumulative Net Fund Flows trailing 1-year, mutual funds + ETFs $ millions $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 Stocks Bonds $0 -$50,000 -$100,000 -$150, Source: BMO Capital Markets Investment Strategy, Haver, ICI. 12

14 Canadian Charts 13

15 After a Strong 2016, Canada Has Significantly Underperformed YTD Year-to-Date Price Performance by Market S&P/TSX $CAD GoC 10y GoC 5y GoC 3M 0.7% 0.38% 0.66% 0.57% 9.5% Local Currency GLOBAL MARKETS: S&P 500 STOXX Europe 50 FTSE 100 France CAC 40 Germany DAX Swiss SMI Japan Nikkei Korea KOSPI 100 MSCI World MSCI EAFE MSCI Emerging Markets 3.4% 1.8% 6.3% 7.6% 12.0% 7.8% 9.5% 10.7% 10.1% 23.9% 23.5% -5% 0% 5% 10% 15% 20% 25% Source: BMO Capital Markets Investment Strategy Group, FactSet. Price as of 21 Sep

16 Canadian Dollar Strength Suggests Back Half Recovery S&P/TSX Performance After Periods of Strong C$ From Dec 31 to Aug 31 (since 1970 excluding 2008, sorted by strongest C$ start to the year) 60% 40% 20% 0% S&P/TSX 6-Month Rolling Correlation to C$ Year C$ Dec-Aug Dec 31-Aug 31 Aug 31-Dec 31 6m Forward 12m Forward % 13.5% 9.5% 17.0% 11.5% % 20.9% 8.1% 7.0% 9.6% % 5.8% 1.3% -0.6% 0.8% % -0.5%??? % 12.2% 4.7% 5.5% 4.2% % 7.1% 6.9% 8.0% 13.1% % -14.7% 8.9% 12.0% 12.2% % 4.0% 3.2% 8.7% 22.0% % 7.2% 4.4% 9.2% 13.9% % 9.9% -3.5% -3.8% -4.3% % -0.05% 4.1% 7.3% 5.9% Avg (C$ appreciated Dec-Aug) 7.6% 1.7% 4.3% 7.5% Avg (C$ appreciate > 3%) 6.0% 4.7% 7.0% 8.9% Avg (C$ appreciate > 5%) 6.3% 6.6% 8.2% 8.6% -20% -40% Forward Performance During TSX vs C$ Correlation Regimes - Correlation + Correlation 6-Month Forward 2.4% 0.4% 12-Month Forward 8.5% 3.5% -60% Source: BMO Capital Markets Investment Strategy Group, Factset, Statistics Canada. 15

17 Rising Rates Suggests Back Half Recovery S&P/TSX Price Performance (%y/y) vs GoC 10-year Yield Change S&P/TSX %y/y GoC 10y (yoy) Average S&P/TSX Return %y/y -0.4 GoC 10y Declining 5.6% GoC 10y Increase 9.1% Source: BMO Capital Markets Investment Strategy Group, FactSet, Statistics Canada S&P/TSX Performance After Periods of Rising 10-Year Rates From Dec 31 to Aug 31 (since 1990, sorted by Change in GoC 10-year rates) Year GoC 10Y Dec-Aug Dec 31- Aug 31 Aug 31- Dec 31 6m Forward 12m Forward % -3.1% -5.2% 3.8% % -20.9% -19.8% -17.7% % -2.7% 3.5% 5.1% % 20.7% 31.0% 61.4% % 7.6% 12.3% 23.5% % 0.5% 8.6% 18.0% % 1.3% -0.6% 0.8% % 8.1% 7.0% 9.6% % 3.9% 3.2% -10.6% % 3.2% 8.7% 22.0% % 2.8% -2.5% -3.8% % 6.9% 8.0% 13.1% % 15.2% 19.7% 28.5% %??? Avg 5.3% 3.3% 5.7% 11.8% Avg (GoC10Y up 0 to 25bps) 9.3% 7.0% 8.5% 15.0% Avg (GoC 10Y up over 25bps) 3.1% 1.7% 4.5% 10.4% 16

18 Range-Bound Oil Prices Can Last Decades 160 Domestic Spot Market Price: West Texas Intermediate, Cushing ($/Barrel) Source: BMO Capital Markets Investment Strategy Group, Haver, EIA. 17

19 6/14 9/14 12/14 3/15 6/15 9/15 12/15 3/16 6/16 9/16 12/16 3/17 6/17 Embrace the RANGE Energy Prices Remain Firmly Within The Range WTI Prices Spot Dec 2020 Contract Average Annualized Performance During Commodity Booms vs. Non- Commodity Booms S&P/TSX excluding Big 3 Sectors S&P/TSX WTI CRB % 3.8% 1.2% 2.2% % 7.5% 30.7% 14.1% % 6.9% -6.4% -2.3% % 6.3% 20.9% 14.5% 11-current 10.2% 1.7% -10.6% -3.3% Source: BMO Capital Markets Investment Strategy Group, FactSet, Haver, CRB. 18

20 Financials = Yield, Value, and Profitability Financials Among Highest Yielding Sectors Financials Among Lowest Valuation Sectors 6.0% Dividend Yield by Sector 25.0 NTM PE by Sector 5.0% % 3.0% 2.0% % % 0.0 Financials Among Most Profitable Sectors ROE by Sector 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% Source: BMO Capital Markets Investment Strategy Group, FactSet, IBES. 19

21 BMO Investment Strategy Group Brian G. Belski Chief Investment Strategist US, Canadian & Portfolio Strategy Brian, Chief Investment Strategist and leader of the Investment Strategy Group, provides strategic investment and portfolio management advice to both institutional and private clients. Brian s group produces several investment strategy publications on a regular basis, with particular focus on both the U.S. and Canadian equity markets. In his more than 27 years in the investment industry, Brian has held various senior strategy and research roles, including positions at Oppenheimer & Company, Merrill Lynch, and Piper Jaffray. Brian is frequently quoted in the financial press, including regular appearances on CNBC, Bloomberg, and BNN. Renowned for his accuracy as a strategist, Brian's 2016 forecast for the Canadian stock market fell within 13 points. For the U.S. stock market, his 2014 forecast was within nine points, while his 2012 forecast was out by an incredible single point. Brian holds a B.Sc. degree from St. Cloud State University and splits his time between the BMO offices in New York and Toronto. Nick Roccanova, CFA Sr. Investment Strategist US & Portfolio Strategy nicholas.roccanova@bmo.com Nick is the senior US Investment Strategist and is responsible for all facets of developing and providing research and analysis within the Investment Strategy Group. His analysis focuses on traditional macroeconomic and fundamental methods, but he has also developed expertise in econometric and quantitative modeling. In his nearly 20 years in the investment industry, Nick has held various senior research roles, including positions at Merrill Lynch and Oppenheimer & Company. He has been a Senior Investment Strategist advising institutional and private clients since Nick holds B.S. and MBA degrees from St. John s University and is a CFA charterholder. Ryan Bohren, CFA Investment Strategist Canadian & Portfolio Strategy ryan.bohren@bmo.com Ryan is the Canadian Investment Strategist, provides strategic and analytical support within the Investment Strategy Group, with a focus on Canadian equity markets. Ryan has over 10-years of investment industry experience, including various research roles at TD Securities, Connor Clark and Lunn Investment Management and Merrill Lynch. He is a CFA charterholder and has a master s in financial economics from the University of Toronto. 20

22 Investment Strategy & Research Group Brian G. Belski Nick Roccanova, CFA Chief Investment Strategist Sr. Investment Strategist BMO Capital Markets BMO Capital Markets (212) (416) (212) Ryan Bohren, CFA Andrew Birstingl Investment Strategist Assoc. Investment Strategist BMO Nesbitt Burns Inc. BMO Capital Markets (416) (212) Peter Ly Assoc. Investment Strategist BMO Nesbitt Burns Inc. (416) Refer to pages for Important Disclosures, including Analyst s Certification. For Important Disclosures on the stocks discussed in this report, please go to 21

23 IMPORTANT DISCLOSURES Analyst s Certification I, Brian Belski, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients. Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 and 2242 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Company Specific Disclosures For Important Disclosures on the stocks discussed in this report, please go to Distribution of Ratings (August 31, 2017) Rating Category BMO Rating BMOCM US Universe* BMOCM US IB Clients** BMOCM US IB Clients*** BMOCM Universe**** BMOCM IB Clients***** StarMine Universe Buy Outperform 45.4% 22.5% 59.2% 47.7% 59.6% 53.9% Hold Market Perform 51.6% 13.3% 39.8% 49.4% 39.2% 41.1% Sell Underperform 3.0% 5.9% 1.0% 2.9% 1.2% 5.0% * Reflects rating distribution of all companies covered by BMO Capital Markets Corp. equity research analysts. ** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services as percentage within ratings category. *** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services as percentage of Investment Banking clients. **** Reflects rating distribution of all companies covered by BMO Capital Markets equity research analysts. ***** Reflects rating distribution of all companies from which BMO Capital Markets has received compensation for Investment Banking services as percentage of Investment Banking clients. 22

24 Ratings Key (as of October 2016) We use the following ratings system definitions: OP = Outperform - Forecast to outperform the analyst s coverage universe on a total return basis; Mkt = Market Perform - Forecast to perform roughly in line with the analyst s coverage universe on a total return basis; Und = Underperform - Forecast to underperform the analyst s coverage universe on a total return basis; (S) = Speculative investment; Spd = Suspended - Coverage and rating suspended until coverage is reinstated; NR = No Rated - No rating at this time; and R = Restricted - Dissemination of research is currently restricted. BMO Capital Markets seven Top 15 lists guide investors to our best ideas according to different objectives (CDN Large Cap, CDN Small Cap, US Large Cap, US Small Cap, Income, CDN Quant, and US Quant have replaced the Top Pick rating). Prior BMO Capital Markets Rating System (April 2013 October 2016) (January 2010 April 2013) Other Important Disclosures For Important Disclosures on the stocks discussed in this report, please go to or write to Editorial Department, BMO Capital Markets, 3 Times Square, New York, NY or Editorial Department, BMO Capital Markets, 1 First Canadian Place, Toronto, Ontario, M5X 1H3. Dissemination of Research BMO Capital Markets Equity Research is available via our website Institutional clients may also receive our research via Thomson Reuters, Bloomberg, FactSet, and Capital IQ. Research reports and other commentary are required to be simultaneously disseminated internally and externally to our clients. ~ Research distribution and approval times are provided on the cover of each report. Times are approximations as system and distribution processes are not exact and can vary based on the sender and recipients services. Unless otherwise noted, times are Eastern Standard and when two times are provided, the approval time precedes the distribution time. BMO Capital Markets may use proprietary models in the preparation of reports. Material information about such models may be obtained by contacting the research analyst directly. There is no planned frequency of updates to this report. For recommendations disseminated during the preceding 12-month period, please visit: 23

25 General Disclaimer "BMO Capital Markets" is a trade name used by the BMO Investment Banking Group, which includes the wholesale arm of Bank of Montreal and its subsidiaries BMO Nesbitt Burns Inc., BMO Capital Markets Limited in the U.K. and BMO Capital Markets Corp. in the U.S. BMO Nesbitt Burns Inc., BMO Capital Markets Limited and BMO Capital Markets Corp are affiliates. Bank of Montreal or its subsidiaries ("BMO Financial Group") has lending arrangements with, or provide other remunerated services to, many issuers covered by BMO Capital Markets. The opinions, estimates and projections contained in this report are those of BMO Capital Markets as of the date of this report and are subject to change without notice. BMO Capital Markets endeavours to ensure that the contents have been compiled or derived from sources that we believe are reliable and contain information and opinions that are accurate and complete. However, BMO Capital Markets makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this report or its contents. Information may be available to BMO Capital Markets or its affiliates that is not reflected in this report. The information in this report is not intended to be used as the primary basis of investment decisions, and because of individual client objectives, should not be construed as advice designed to meet the particular investment needs of any investor. Nothing herein constitutes any investment, legal, tax or other advice nor is it to be relied on in any investment or decision. If you are in doubt about any of the contents of this document, the reader should obtain independent professional advice. This material is for information purposes only and is not an offer to sell or the solicitation of an offer to buy any security. BMO Capital Markets or its affiliates will buy from or sell to customers the securities of issuers mentioned in this report on a principal basis. BMO Capital Markets or its affiliates, officers, directors or employees have a long or short position in many of the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. The reader should assume that BMO Capital Markets or its affiliates may have a conflict of interest and should not rely solely on this report in evaluating whether or not to buy or sell securities of issuers discussed herein. Additional Matters To Canadian Residents: BMO Nesbitt Burns Inc. furnishes this report to Canadian residents and accepts responsibility for the contents herein subject to the terms set out above. Any Canadian person wishing to effect transactions in any of the securities included in this report should do so through BMO Nesbitt Burns Inc. The following applies if this research was prepared in whole or in part by Andrew Breichmanas, Alexander Pearce, David Round, Edward Sterck or Brendan Warn: This research is not prepared subject to Canadian disclosure requirements. This research is prepared by BMO Capital Markets Limited and subject to the regulations of the Financial Conduct Authority (FCA) in the United Kingdom. FCA regulations require that a firm providing research disclose its ownership interest in the issuer that is the subject of the research if it and its affiliates own 5% or more of the equity of the issuer. Canadian regulations require that a firm providing research disclose its ownership interest in the issuer that is the subject of the research if it and its affiliates own 1% or more of the equity of the issuer that is the subject of the research. Therefore BMO Capital Markets Limited will disclose its and its affiliates ownership interest in the subject issuer only if such ownership exceeds 5% of the equity of the issuer. To E.U. Residents: In an E.U. Member State this document is issued and distributed by BMO Capital Markets Limited which is authorised and regulated in the UK and operates in the E.U. on a passported basis. This document is only intended for Professional Clients, as defined in Annex II to Markets in Financial Instruments Directive 2004/39/EC ( MiFID ). To U.S. Residents: BMO Capital Markets Corp. furnishes this report to U.S. residents and accepts responsibility for the contents herein, except to the extent that it refers to securities of Bank of Montreal. Any U.S. person wishing to effect transactions in any security discussed herein should do so through BMO Capital Markets Corp. To U.K. Residents: In the UK this document is published by BMO Capital Markets Limited which is authorised and regulated by the Financial Conduct Authority. The contents hereof are intended solely for the use of, and may only be issued or passed on to, (I) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (II) high net worth entities falling within Article 49(2)(a) to (d) of the Order (all such persons together referred to as "relevant persons"). The contents hereof are not intended for the use of and may not be issued or passed on to retail clients. 24

26 These documents are provided to you on the express understanding that they must be held in complete confidence and not republished, retransmitted, distributed, disclosed, or otherwise made available, in whole or in part, directly or indirectly, in hard or soft copy, through any means, to any person, except with the prior written consent of BMO Capital Markets. Click here for data vendor disclosures when referenced within a BMO Capital Markets research document. ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST BMO Financial Group (NYSE, TSX: BMO) is an integrated financial services provider offering a range of retail banking, wealth management, and investment and corporate banking products. BMO serves Canadian retail clients through BMO Bank of Montreal and BMO Nesbitt Burns. In the United States, personal and commercial banking clients are served by BMO Harris Bank N.A., (Member FDIC). Investment and corporate banking services are provided in Canada and the US through BMO Capital Markets. BMO Capital Markets is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, BMO Harris Bank N.A, (Member FDIC), BMO Ireland Plc, and Bank of Montreal (China) Co. Ltd. and the institutional broker dealer businesses of BMO Capital Markets Corp. (Member SIPC) in the U.S., BMO Nesbitt Burns Inc. (Member Canadian Investor Protection Fund) in Canada, Europe and Asia, BMO Capital Markets Limited in Europe and Australia and BMO Advisors Private Limited in India. Nesbitt Burns is a registered trademark of BMO Nesbitt Burns Corporation Limited, used under license. BMO Capital Markets is a trademark of Bank of Montreal, used under license. "BMO (M-Bar roundel symbol)" is a registered trademark of Bank of Montreal, used under license. Registered trademark of Bank of Montreal in the United States, Canada and elsewhere. TM Trademark Bank of Montreal COPYRIGHT 2017 BMO CAPITAL MARKETS CORP. 25