BJK Financial Group Blog

I understand the concerns many of you have regarding the escalating trade tensions between the United States and its key trading partners, including Canada. President Donald Trump's recent implementation of significant tariffs has sparked a global trade war, leading to market volatility and economic uncertainty. In this post, I'll break down the current situation, its implications for investors, and strategies to navigate these turbulent times.

Understanding the Current Trade War

On February 1, 2025, President Trump imposed a 25% tariff on all imports from Canada, citing national security concerns related to drug trafficking and illegal immigration. This move was part of a broader strategy that also targeted Mexico and China with similar tariffs. Canada responded swiftly, implementing retaliatory tariffs on $30 billion worth of U.S. goods, with plans to expand this to $85 billion.

These actions have led to significant disruptions in global markets. The S&P 500, for instance, entered bear market territory, reflecting widespread investor anxiety. Investor's Business Daily+1The Guardian+1

Economic Impact on Canada

The imposition of tariffs has profound implications for the Canadian economy:Latest news & breaking headlines

• Employment: Industries heavily reliant on exports to the U.S., such as automotive and manufacturing, face potential job losses. Estimates suggest that up to one million Canadian jobs could be at risk. New York Post
• Consumer Prices: Retaliatory tariffs mean higher prices for imported goods, leading to increased costs for everyday items.
• Economic Growth: The Bank of Canada has expressed concerns that prolonged trade tensions could slow down economic growth, potentially leading to a recession.

Political Landscape and the Upcoming Election

The trade war adds complexity to Canada's political environment, especially with federal elections on the horizon. Economic issues, particularly those affecting affordability and employment, are likely to dominate campaign discussions. Voters will be keenly observing how different parties plan to navigate the challenges posed by the trade war. CTV News

Implications for Investors

For investors, it's essential to understand the potential impacts across different time horizons:

• Short-Term: Expect increased market volatility. Sectors directly affected by tariffs, such as manufacturing and agriculture, may experience stock price fluctuations.
• Mid-Term: Companies may adjust supply chains and explore new markets to mitigate tariff impacts, leading to shifts in corporate strategies and potential investment opportunities.
• Long-Term: The global trade landscape may undergo significant changes, influencing long-term investment trends and economic alliances.

Strategies for Investors

Given the current environment, consider the following approaches:

1. Diversification: Ensure your investment portfolio is diversified across various sectors and geographies to mitigate risks associated with any single market or industry.
2. Focus on Domestic Markets: Investing in companies with a strong domestic focus can reduce exposure to international trade uncertainties.
3. Defensive Stocks: Consider allocating funds to sectors that are less sensitive to economic cycles, such as utilities and consumer staples, which may offer more stability during market turbulence.
4. Stay Informed: Regularly monitor developments in trade policies and economic indicators to make informed investment decisions.
5. Consult a Financial Advisor: Personalized advice can help tailor your investment strategy to your risk tolerance and financial goals.

Market Recovery Prospects

Market recoveries depend on various factors, including policy resolutions and economic adjustments. Historically, markets have shown resilience, rebounding once uncertainties are addressed and trade relationships are stabilized. However, the timeline for recovery can vary, emphasizing the importance of a well-considered investment approach during such periods. The Guardian

Conclusion

The current U.S.-led trade war presents challenges for the Canadian economy and investors alike. By understanding the implications and adopting strategic investment practices, you can navigate this period of uncertainty more effectively. Remember, market fluctuations are a natural part of the economic cycle, and with careful planning, you can position yourself to weather the storm and capitalize on future opportunities.

Note: This post is for informational purposes only and should not be considered as financial advice. Always consult with a qualified financial advisor before making investment decisions.

As we step into 2025, it's a good time to pause and reflect on the major events of 2024 and how they shaped the world of investing. Whether you’re a seasoned investor or someone new to the market, understanding these developments can help us make informed decisions moving forward.

2024 was a year filled with both challenges and opportunities, from political shifts to significant economic events. In this blog, I’ll recap the key moments of the year and share analysts' projections for 2025, providing you with a clear and relatable perspective on what lies ahead.

Major Events in 2024

1. Global Economic Conditions

2024 started on a cautious note as central banks worldwide continued their efforts to tame inflation. While the U.S. Federal Reserve and the Bank of Canada paused rate hikes early in the year, the effects of previous increases were still rippling through economies.

In the U.S., GDP growth slowed to 2.1%, reflecting tighter monetary policies and weaker consumer spending. Similarly, Canada’s economy faced challenges, with growth hovering around 1.5%. The energy sector, however, provided some relief, as oil prices stabilized at an average of $85 per barrel after volatility in 2023.

In Europe, the energy crisis caused by the ongoing conflict in Ukraine eased slightly as countries diversified their energy sources. However, the region’s growth remained sluggish, at 0.9%, with Germany narrowly avoiding a recession (source).

2. Geopolitical Shifts

The war in Ukraine entered its third year, continuing to impact global energy markets and trade routes. Despite diplomatic efforts, a resolution remained elusive, keeping commodity markets on edge.

In the Middle East, tensions between Israel and its neighboring countries escalated briefly in mid-2024, sending oil prices higher for a short period. Meanwhile, China’s slower-than-expected recovery from COVID-related lockdowns led to reduced demand for global commodities, adding to the uncertainty in the markets.

3. Market Performance

The stock markets had a mixed year. In the U.S., the S&P 500 ended 2024 up by 9%, driven by a late-year rally in technology and healthcare stocks. Canada’s TSX Composite Index performed modestly, gaining 6%, supported by strong performances in energy and materials sectors.

Cryptocurrencies made headlines again, with Bitcoin climbing 40% as institutional investors showed renewed interest. However, volatility remained a key characteristic of the crypto market, making it a challenging space for retail investors.

4. Political Landscape

In the U.S., the 2024 presidential election dominated headlines. President-Elect Donald Trump secured a narrow victory, which brought some stability to markets, reacting favorably to his potential tax cuts.  Debates over debt ceilings, fiscal policies and immigration continued to create uncertainty. (source).

Canada held no federal election in 2024, but provincial politics, particularly in Alberta and Ontario, shaped local economies. Alberta saw a surge in investment in renewable energy projects, while Ontario’s housing affordability crisis persisted, sparking policy debates (source).

5. Natural Disasters and Climate Initiatives

Severe weather events, including wildfires in Canada’s west and hurricanes in the U.S., reminded the world of the urgent need for climate action. These events also impacted insurance and utility companies, with analysts predicting a shift in investment strategies toward renewable energy and climate-resilient infrastructure (source).

Projections for 2025

1. Economic Outlook

Economists predict that 2025 will be a year of moderate recovery as inflationary pressures ease. In Canada, GDP growth is expected to rebound to 2.3%, while the U.S. is projected to grow at 2.6%. The global economy, driven by improving conditions in emerging markets, could see growth of 3.5% (source).

Central banks are likely to maintain their current interest rate levels, with potential rate cuts in the latter half of the year if inflation continues to decline. This stable monetary environment should support businesses and consumer spending.

2. Stock Market Predictions

Analysts are cautiously optimistic about stock markets in 2025. Technology, healthcare, and renewable energy sectors are expected to lead gains. Companies investing in artificial intelligence (AI) and clean energy solutions are likely to be at the forefront of growth (source).

In Canada, the TSX Composite Index is projected to grow by 7-9%, driven by continued strength in natural resources and an expected rebound in the financial sector. Meanwhile, the U.S. S&P 500 could see gains of 8-10%, assuming no major geopolitical shocks.

3. Key Risks to Watch

While the outlook is positive, several risks remain:

• Geopolitical Tensions: Ongoing conflicts in Ukraine and the Middle East could disrupt energy markets and trade (source).
• Climate Change: Extreme weather events may continue to strain economies and industries (source).
• China’s Economy: A slower recovery in China could affect global demand for goods and commodities (source).
• Debt Levels: High public and private debt levels in many countries remain a potential drag on growth (source).

4. Investment Opportunities

For investors, 2025 offers several areas of opportunity:

• Green Energy: Investments in renewable energy and sustainability-focused companies are expected to grow (source).
• AI and Technology: Companies leveraging AI and automation to improve efficiency could see significant gains (source).
• Dividend Stocks: With interest rates stabilizing, dividend-paying stocks may become attractive for income-focused investors.
• Emerging Markets: Economies in Asia, Latin America, and Africa could deliver strong returns as they recover from pandemic-related setbacks (source).

5. Tips for Investors

As always, it’s important to stay diversified. Don’t put all your eggs in one basket—spread your investments across sectors and geographies. Consider your risk tolerance and time horizon before making any major investment decisions. If you’re unsure where to start, working with a financial advisor can help you build a portfolio tailored to your goals.

Closing Thoughts

2024 was a year that tested the resilience of economies and investors alike. From inflation and geopolitical tensions to promising advances in technology and sustainability, it reminded us of the importance of staying informed and adaptable.

Looking ahead, 2025 offers a mix of opportunities and risks. By staying focused on long-term goals and being mindful of market dynamics, we can navigate the path ahead with confidence.

If you have questions about your investment strategy or want to explore new opportunities, feel free to reach out. Together, we can make 2025 a successful year for your financial journey.

Sources:

• U.S. Federal Reserve Economic Data (2024 GDP and inflation reports)
• Bank of Canada Monetary Policy Reports (2024 trends and 2025 projections)
• World Bank Global Economic Prospects (Emerging market outlook for 2025)
• Bloomberg Markets (2024 stock market performance and 2025 forecasts)
• Reuters (Ukraine conflict and energy market updates)
• Climate Action Tracker (2024 climate initiatives and impact on industries)

As we ring in 2025, it’s the perfect time to evaluate your financial goals and make the most of your registered accounts. Here’s what you need to know to stay on track:

RRSP Contributions

The 2025 contribution limit for a Registered Retirement Savings Plan (RRSP) is $32,490 or 18% of your 2024 earned income, whichever is lower. This is an increase from the 2024 limit of $31,560.

Mark your calendar! The deadline to contribute for the 2024 tax year is Monday, March 3, 2025.

Why contribute? RRSPs offer immediate tax benefits by reducing your taxable income while helping you build a secure retirement.

TFSA Contributions

For 2025, the annual Tax-Free Savings Account (TFSA) contribution limit is $7,000. If you’ve never contributed before, the cumulative room by the end of 2025 will total $102,000.

TFSAs are a versatile option for tax-free growth, whether you're saving for short-term goals or long-term investments.

Take Action Today

If you’re unsure about your available contribution room or how to optimize these accounts, let’s connect! Together, we can ensure your RRSP and TFSA contributions align with your financial goals for 2025 and beyond.

Let’s make this year a success—financially and otherwise.

Contact me today to start the conversation!

The Canada Post strike, unfolding during a planned but inconvenient time—the holiday season,  is more than a labour issue, it’s a pivotal moment that could affect how businesses approach shipping logistics in the future, consumers and the Canadian economy at large. As strikes continue to disrupt mail and parcel deliveries, businesses are adapting by switching to other carriers, this is the main cause of economic consequences. 

Situation Break Down: 

For those unfamiliar with the cause of the strike, Canada Post is facing labour action from the Canadian Union of Postal Workers (CUPW), which is advocating for better wages and working conditions. This ongoing strike, now in its fourth week (at the time of writing), has disrupted businesses in their most crucial season, forcing many to rely on more expensive carriers like FedEx, Purolator or UPS.  As businesses invest in these alternatives to keep their operations going, they risk permanently shifting away from Canada Post to avoid future inconveniences and uncertainty to support their customer satisfaction rate. This is especially true for smaller businesses that don’t have the capacity to absorb the costs brought by the strike. Moreover, the strike timing couldn’t be worse. As online shopping grows in popularity holiday shopping businesses and consumers are more adamant to navigate these delays, using the alternative shipping solutions. 

Why this happened:

This Postal Strike isn’t the first one for Canada Post, back in 2018 this also happened because of similar unresolved issues regarding wages, benefits and working conditions. Now the main dilemma is the wage increases for the workers to keep up with rising inflation also including but not limited to : better group benefits such as more paid medical leave, improved protections against technological changes, paid meal/ rest periods and higher short-term disability payments. Global News tells us that “The Canadian Union of Postal Workers (CUPW) described the decision to strike as a “difficult” one, made after more than a year of negotiations with the employer.” On the other hand, Canada Post is navigating significant financial challenges, having incurred losses of $3 billion since 2018, with $490 million reported in the first half of 2024 alone. The corporation has proposed wage increases of 11.5% over four years, additional paid leave, and a shift to a seven-day delivery model as part of its strategy to grow its parcel business and address operational inefficiencies. However, CUPW argues that these proposals do not adequately address workers’ concerns or the risks of potential layoffs. 

Canada Post’s Role in the Economy: 

The Canada Post strike has cost the small- and medium-sized business sector at least $765 million or $76.6 million each business day. At this rate, if the strike is not immediately resolved, it will have cost the sector over $1 billion as of December the 4th, warns the Canadian Federation of Independent Business (CFIB). With companies switching to other corporations this would also up the costs for consumers. This postal service supports major economic functions like delivering government payments, business invoices alongside online retail shipments. In addition to financial losses, rural and remote communities often lack alternative shipping options making Canada Post’s availability essential. 

What’s Next? 

As seen previously, a solution for this issue in 2018 has been to get back the to work legislation. This is when the government passes a law to stop a strike and forces workers to return to their jobs while negotiations continue. It’s usually done to avoid big disruptions, like in mail delivery or public services, but some people think it’s unfair since it weakens the union’s power. This option has always been only used as a last resort and as of right now this has not been one of the main considered solutions. Canada Post has also threatened lockouts to push government intervention which could lead to binding arbitration, this is where unlike previous negotiation the decisions made through negotiation are legally enforceable and can’t be appealed. Enforced solutions were used during the 2011 strike and during the one in 2018 by Prime Minister Justin Trudeau. This time however the Liberal minority government might not be able to impose the back to work legislation as they did with the railway shut down this past august. As a minority they would need the support of at least another party to pass any legislation. The New Democratic Party, specifically Matthew Green (NDP’s labour critic) said: “There is not a scenario where we’ll be supporting the back-to-work- legislation.” Finally, the progress of negotiations can change on a day-to-day basis and these decisions will determine the final consequences for Canada Post, its workers, businesses and consumers. 

As the holiday season approaches people around the world prepare to celebrate in all special ways. Whether it’s lighting a menorah for Hanukkah, decorating a Christmas tree, gathering for Kwanzaa or simply enjoying time off with loved ones it’s all a time of togetherness we need to cherish. However, with all the excitement this season many will tend to overspend getting carried away in the holiday fun. While treating yourself and loved ones is great, overspending as a result of this can lead to financial headaches including credit card debt. The good news? Paying off credit card debt and being more mindful with holiday spendings can set you up for long term financial health. In this blog we’ll discuss the benefits of paying off that debt and a few tips and tricks to help you spend less. 

The Benefits of Paying Off Credit Card Debt

1. Save On Interest: The less debt you carry, the less you’ll pay in interest
2. Boost Your Credit Score: Lower balances and on time payments as well as your spending history are some of the key factors used to calculate your credit score. Having a good credit score will help you get approved for better interest rates and other loans such as mortgages. 
3. Investing In Your Future: The money you save from cutting down debt first can later be redirected towards something in the future such as finally being able to save for the vacation you've been wanting to take.

 How To Pay Off Credit Card Debt 

Now that we’ve presented the benefits of paying off that credit card debt, here are a few strategies on how we can do so. Before coming up with a plan to get rid of accumulated debt or figuring out how to avoid it, it’s important to understand how it came about. First you can start by going over credit card statements and find spending patterns and see if you can cut down on these expenses. Are there areas where you could cut back? Maybe cancel that rarely used gym membership or trade dining out for cooking at home. 

Choosing a Debt Repayment Method: Here are two ways to plan out your debt payments

• Avalanche Method: Focus on paying off the debt with the highest interest rate first while making minimum payments on other debts. Once that’s paid, tackle the next highest interest debt. This approach saves money on interest.
• Snowball Method: Start with the smallest debt first. Once it’s paid, roll the money you were using into paying off the next smallest debt. This strategy builds momentum and motivation.

Pay More Than the Minimum

Making only the minimum payment keeps you in debt longer and costs more in interest. Even small extra payments can make a big difference over time.

Cut Back on Spending

Create a budget to understand your income and expenses. By reducing unnecessary spending, you can free up more money to pay down debt. Try:

• Setting a Goal: Know how much debt you have and set a timeline to pay it off. A clear goal can keep you motivated.
• Tracking Spendings: Writing down how much you spend or even using an app or a simple spreadsheet could help keep you accountable and show you what your areas in need of improvement are.  
• Involving Others: By sharing your goals with either family members or friends they might also be interested in cutting back their spendings or just help you stay accountable and could be interested in trying more budget friendly outings. 

Debt consolidation

 If you're juggling multiple credit card balances at a time, consolidating them into one account could simplify things. There are different options like balance transfer cards or debt consolidation loans that often have lower interest rates, helping you save money in the long run. For example: if you transfer $5000 to a card with 0% interest for 18 months, paying $278 a month could eliminate debt before the promotion ends. It’s equally important to check whether the card has transfer fees and to check all other card terms and conditions before you apply.

Tips for Avoiding Debt in the Future

Once you’ve made progress on paying down debt, it’s important to maintain healthy financial habits. Here’s how:

• Plan for Seasonal Expenses: Set aside money throughout the year for holidays, birthdays, and other special occasions. This reduces the temptation to rely on credit cards.
• Build an Emergency Fund: Unexpected expenses like car/house repairs or medical bills can push you back into debt if you’re not prepared. Aim to save at least three to six months of living expenses as a cushion.
• Re-evaluate Wants vs. Needs: Before making a purchase, ask yourself if it’s something you truly need or if it can wait. 

Final Thoughts…

The holidays should be a time of celebration, not stress. By focusing on paying off that credit card debt and practicing smarter financial habits, you can enjoy the season guilt-free and set yourself up for success in the new year. It’s important to remember that small, consistent changes can lead to big results and can give you the freedom to focus on what really matters.