The Financial Post reports in its Tuesday edition that Canada's economy is stalling, the unemployment rate is rising and housing costs are crushing some households. A Bloomberg dispatch to the Post says that the country's banks are exposed to all of that, yet their shares are surging. A major index of Canadian bank stocks is up 11 per cent since the beginning of November, erasing most of the year's earlier losses. Including dividends, investors have made a small profit so far in 2023, in contrast to the KBW bank index of U.S. lenders, which is still in the red. The rally is a bet on a softer economic landing in 2024, one in which bank profits will not be badly damaged by the financial squeeze that is hitting Canadian households because of mortgage-rate resets and higher rents. For the Big Six banks, earnings per share dropped more than 6 per cent, on an adjusted basis, in the fiscal year that ended Oct. 31. "The earnings are going to struggle to grow over the next year or two," said Murray Leith, director of investment research at Odlum Brown Ltd., a Vancouver-based firm that manages about $18-billion. "But they're very profitable businesses, so there's a lot of things they can do to add shareholder value."