With Apex/Sitka out of the way we are now clear for what will be a net profit for the 2008 year of $2+ billion. Like last year 2007 with so called "bad" results BMO still cleared $2.1 billion net profit after tax. The market has massively overdone the downside for this stock. A market cap of $35 billion was written down by $15 billion to accomodate total losses of less than $2 billion pre-tax over two years performance. A quick back up to $72 is not going to happen quickly with the structural changes that have taken place in the market but a quick back to $60 is very possible and when the structural differences between the Canadian and US mortgage and corporate credit markets are better understood $70 and even $80 is in range. For the deversified retail banks like BMO the loss of the secuitization markets as an alternative for corporate bowrowers will within immediately fatten commercial lending spreads by double. Very good for the 1 to three year outlook. P.S. A 6% + dividend from a firm that has paid dividends since 1823 ain't bad either while you wait.
Since many, including me, think we are heading into a recession, I feel you are far too optimistic. Still I appreciate your posts which are very informative.
Outlook for US treasuries is unclear, but this week brought higher rates with the curve looking inflationary. Considering the huge deficit the country is running and the need for many financial institutions to obtain capital anyway they can, I am very pessimistic.