Market Outlook: CIO Jack Ablin Discusses Post-Super Committee Market Sentiment and Economic Projections

Strategic Insights -

As the US Super Committee's failure to reach a budget agreement looms, Jack Ablin, CIO of BMO Harris Private Bank, shares his insights on the implications for the market and the economy. In a recent interview on Bloomberg TV, Ablin expressed his optimism about the market's potential, citing the current low valuations and the likelihood of the Super Committee's fail-safe mechanism being circumvented.

Key Takeaways:

  • Ablin believes the stock market's reaction to the Super Committee's failure is a buying opportunity, with the S&P 500 potentially reaching 1,050-1,500 as a catalyst for investment.
  • The CIO argues that the bond market is signaling that US Treasuries and the yen are the only reliable credits, with gold being overvalued due to its rapid appreciation relative to other commodities.
  • Ablin suggests that policymakers should allow the European Central Bank to expand its balance sheet, giving it authority to print euros, to provide a shock absorber for the European banking system.
  • The CIO expects positive economic data from the US, citing the Philly Fed survey's accuracy in predicting employment reports. A 200,000+ new job number in the upcoming employment report would be a significant indicator of the economy's recovery.
  • Ablin emphasizes the importance of printing consecutive 200,000+ job reports, which would lead to a decrease in the unemployment rate.

Statistics:

  • The Super Committee's fail-safe mechanism would require $1.2 trillion in cuts, with potential impacts on defense spending and discretionary spending.
  • The Philly Fed survey has accurately predicted employment reports for the last three consecutive months.
  • The S&P 500 may reach 1,050-1,500 as a catalyst for investment, according to Ablin.
  • The bond market is signaling that US Treasuries and the yen are the only reliable credits.
  • Gold is overvalued due to its rapid appreciation relative to other commodities, with a potential 15% decrease in value over the next two years.

Sources:

  • Bloomberg TV interview with Jack Ablin on November 21, 2011.
  • Philly Fed survey data.
  • S&P 500 index data.
  • Bond market data.
  • European Central Bank data.