TOP STORY
🏦 Canadian Banks Soar After Strong Earnings

✨ The top story this week was Nvidia’s earnings, but since I already covered that on Thursday (read my breakdown here), there are two other major stories I’ll cover today that may have gotten buried as Nvidia dominated the headlines:

1. 🏦 Canadian Banks reported stellar earnings, with all the big 5 banks except TD soaring ~5% or higher this week

2. ❌ In a surprising turn of events, the Federal Appeals court upheld the May ruling by the Court of International Trade that President Trump’s tariffs issued under emergency law are illegal.

🫥 Despite the shake-up from the Court decision, the S&P 500 and the Nasdaq-100 stayed flat this week, with S&P rising a measly 0.04% and Nasdaq-100 falling -0.17%.

📈 But while the US markets stayed flat, the Canadian TSX-index jumped +1%, pulled up by the Canadian banks, which make up ~31% of the index.

🏦 And while I know in the US, Canadian banks may not be a hot topic, as the S&P 500 becomes increasingly tech-heavy with PE ratios nearing 30x (a number last seen in the dot-com bubble), it’s worth taking a look at some of the ‘unsexy sectors’ to add some more diversification to your portfolio, so let’s take a short break from the US market to explore what’s going on north of the border!

⭐️ Canadian Banks Beat Q3 Expectations

📈 Canadian Bank stocks were flying high this week after earnings, continuing the trend of a strong year of performance:

• Scotiabank ($BNS) soared +7.6% this week, now up +27% over the past year

• BMO jumped +5.1% this week, now up +47% over the past year

• RBC ($RY) jumped 4.8% this week, now up +24% over the past year

• CIBC ($CM) jumped 5.1% this week, now up +40% over the past year

• TD was the only bank of the Big 5 that stayed relatively flat this week - up only +0.5%, but is up +26% over the past year

✨ All the banks beat earnings estimates, with a few common themes emerging for the Canadian banking sector as a whole:

🤝 Lower Credit-Loss Provisions As Canada-US Tensions Improve

As Canada-US trade relations deteriorated between Trump’s election and ‘Liberation Day’ in April, Canadian banks took a dive, falling as much as -20% as banks made higher ‘provisions for credit losses’ to prepare for a trade-war driven recession.

These provisions are essentially excess money set aside to account for potential losses from unpaid loans. The more provisions, the less money that’s being put to work.

As uncertainty lessens, fewer provisions need to be made, with BMO setting aside only $797M compared to estimates of $948M, with CEO Darryl White saying:

💰 Capital Markets & Wealth Management Soar As Trading and Investment Banking Ramp

Another big theme of bank earnings this week was strong growth in the Capital Markets and Wealth divisions, which generate revenue from trading fees, AUM-based advisory fees, and underwriting/advisory for mergers and acquisitions (M&A).

As the markets have rebounded since April, the banks directly benefit as investment portfolios increase and dealmaking ramps back up.

RBC, for example, saw a 37% surge in trading revenues and a 11% rebound in investment banking fees as M&A activity increased amid the soaring markets.

⚠️ Executives Still Call For Caution As Trade Deals Are Negotiated

While it was a strong quarter, many of the bank executives issued words of caution, saying that US-Canada trade relations were still driving considerable uncertainty as a trade deal hasn’t yet been reached.

⭐️ Overall, it was a great week for the banks, and as Tech P/E ratios soar to new highs, I’ll definitely be taking a closer look at the bank stocks to consider adding some more Financials exposure to my portfolio (currently I hold 6% of my portfolio in TD).

🤔 Speaking of the uncertainty driven by the trade deals, let’s talk about the other major story this week - the Federal Appeals court ruling Trump’s tariffs illegal - and what that means for the market…

But first, a quick word about our upcoming events in the US!

UPCOMING EVENTS
🌼 Meet Fellow Investors IRL at the Blossom Investor Tour!

🤩 This week, we had an amazing start to the Blossom Investor Tour in Calgary and Vancouver, with over 450 investors joining us for an incredible evening of food, drinks, and panels with some of the largest finance educators in North America!

✈️ In October, we’ll be bringing the tour to the US and expect all the events to sell out, so make sure to grab a ticket while they’re still available!

• 🗽 New York Blossom Investor Social @ the Nasdaq (Oct 3)

• 💨 Chicago Blossom Investor Social @ the Chicago Board of Options (Oct 7)

• 🎥 LA Blossom Investor Social (Oct 15)

😎 Can’t wait to see you there!

INTERNATIONAL TRADE
❌ Trump’s Tariffs Ruled Illegal by the Federal Appeals Court

🚨 Back in May, the Court of International Trade ruled that Trump’s tariffs were illegal, arguing that Trump invoking emergency law to issue executive orders on tariffs in response to “large and persistent” annual trade deficits crossed the line and that “trade deficits aren’t an emergency.”

👨‍⚖️ Trump’s administration quickly appealed the ruling, sending it to the Federal Appeals Court, but this week, in a 7-4 decision by a panel of judges Friday night, the Federal Appeals Court upheld the ruling.

🫤 The markets haven’t had time to react yet to the ruling (as it happened after market close), but the ruling is a big blow to Trump’s negotiating power, with Wendy Cutler - a veteran US trade negotiator - saying America’s trading partners must be “dazed and confused.”

💰 If Trump’s tariffs are deemed illegal, the government could have to pay back hundreds of billions of dollars in refunds on levies already paid. However, Trump will almost certainly appeal the decision to the Supreme Court, where 6 of the judges are Republican-appointed (3 by Trump himself), so while it’s a big headline, to me, it seems unlikely that the Supreme Court would actually block the tariffs.

😰 In any case, the ruling just adds more uncertainty to the mix in an already roller-coaster of a year and could delay the clarity on trade policy that investors so desperately crave.

PARTNERSHIP WITH PUBLIC
🎁 Sign up for Public and Get Free Blossom PRO Access!

🔥 Did you know that through our partnership with Public, if you sign up for a Public account and connect it to Blossom, you unlock Blossom Pro for free?

💸 On top of that Public also has some of the best yields in the market, with a high-yield cash account of 4.1%, a Bond Account of 5.6%, and a 1% IRA match!

⭐️ The app is also jam-packed with useful features like ‘Key Moments’ which share AI-generated summaries on the reasons behind every major stock price movement

😎 If you haven’t signed up already, definitely check them out!

FROM THE BLOSSOM COMMUNITY
⭐️ Featured Discussions this Week

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