Making financial news make sense
Welcome to the Carillon’s “Finance with Pall,” a news finance column covering important economic and financial news from Canada and around the world, focusing on explaining what that news means for students. From tuition costs to job markets, we’ll break down how these changes affect you, making finance easy to understand and relevant to your life. If you have any topic requests or want me to highlight a stock price – shoot me an email at pall@carillonregina.com.
Disclaimer: The information in this column is intended for educational purposes and is not financial advice. For personalized financial guidance, please consult a licensed professional.
News of the week
GST/HST and Rebate: For all the folks who are looking for some financial relief during the Christmas season, the Canadian government announced a GST/HST exemption for certain goods, which include prepared foods (vegetable trays, pre-made meals), restaurant meals, snacks, alcoholic beverages under 7% ABV (alcohol by volume), children’s clothing, footwear, car seats, and diapers, children’s toys, books and print newspapers, and finally Christmas trees. The rebate is set to start on December 14, 2024, and continue until February 15, 2025. This is a temporary exemption
Alongside the rebate announcement, it was revealed that Canadians who have worked in 2023 and have earned up to $150,000 will receive a $250 rebate starting in early spring 2025.
These measures aim to make life more affordable by reducing costs on essentials during the holiday season and beyond while also providing direct financial support to middle-class Canadians.
Big Banks in spotlight:
Toronto Dominion (TD) bank and BMO (Bank of Montreal)’s Q4 earnings reports are coming soon, meaning they are in the spotlight, with analysts keeping a close eye on the reports. With both the banks set to release an earnings report on Dec 4, analysts have speculated on the content of those reports.
According to the Financial Post, “the amount of money the Big Six lenders keep aside for loans that might go bad…has been on the rise this year as high interest rates pinched the finances of indebted consumers and businesses.” Analysts at the Financial Post also suggested that, “considering [BMO’s] poor performance in the previous quarters, BMO has the ‘most at stake’ when it comes to credit performance in the upcoming quarter.”
Furthermore, Trump’s re-election and changes to immigration mean that uncertainty is beginning to settle into Canada’s economy.
Banks like TD and BMO that, according to the Financial Post, “rely heavily on their U.S. subsidiaries” may look forward to a variety of Trump-instituted corporate tax cuts and focus on reshoring. At the same time, the imposition of a 25% tariff could negatively affect Canada’s economy and have major impacts on trading relationships.
Terms of the week:
In this week’s news, we’ve introduced a variety of new terms. Treat this like a simple glossary to help understand terms with examples and explanations.
GST/HST Exemption: A GST/HST exemption is a temporary rule that removes sales tax on specific items like prepared foods (vegetable trays, pre-made meals), restaurant meals, snacks, alcoholic beverages under 7% ABV (alcohol by volume), children’s clothing, footwear, car seats, and diapers, children’s toys, books and print newspapers, and finally Christmas trees (as per news mentioned above). This is done only for a certain period. An exemption means that these products are not subjected to typical taxes, effectively lowering the cost for consumers and making goods more affordable for consumers. In theory, this encourages consumers to purchase more goods and services thereby fostering reinvestment in the economy and helping it grow.
Rebate: A rebate is a partial refund to eligible individuals who have paid too much money for tax, rent, utilities, and/or other expenses. The working Canadians rebate is a direct payment to help relieve living costs based on their income levels.
Earnings report: An earnings report is a summary of a company’s financial performance over a period, showing much they made in revenue or lost overall. It is usually a quarter or year which basically ensures to include revenue, profit or loss, expenses, and performance metrics. It also highlights loan growth, customer deposits and other aspects of a company that showcases how they are managing risks. These reports help investors understand how good or bad a company is doing and re-value their investment in that company. The day earning reports are released, changes are typically seen in the stock markets. This is a reflection of investors’ sentiments on how confident they feel about the company.
Capital markets: Capital markets are a section of the financial markets where businesses and governments raise money by selling financial products like stocks or bonds. Banks help companies access these markets and are often investors in them as well. Banks like TD or BMO reflect how well they would be doing in capital markets. If these capital markets are strong, banks might report higher profits from their investments. However, weak markets can mean lower earnings and fewer business opportunities.
Credit performance: Credit performance refers to how well banks are managing loans. Credit performance includes the ability of borrowers to pay back their debt. These analyses help understand the bank’s risk. An understanding of risk is essential to value how banks look for investments and capital growth overall. A strong credit performance reflects fewer defaults (unpaid loans) and healthier bank operations and finances.
Reshoring: Reshoring occurs when a business previously operating overseas brings back manufacturing operations to their home country. An example of this might be moving production from overseas back to Canada. This can be driven by factors like reducing supply chain risks and other trade policies. Reshoring can truly benefit the local landscape by creating jobs, increasing domestic production and reducing reliance on imports.
