Housing starts edged past estimates in May, falling to 261K on a slowdown in multi-unit activity…

… and down on a Y/Y basis, with continued weakness in Alberta and a drawdown in Quebec offsetting modest gains in Saskatchewan and the Atlantic provinces.

Unabsorbed inventory reached a new high on the back of a continued multi-unit build, and with the time it takes to move those units remaining elevated…

… there’s no incentive for builders to step on the gas, pushing construction activity lower during the month.

On a net basis security flows were up huge in April, with $47B of foreign investment and $11B of Canadian divestment abroad…

… driven mainly by $6B of selling in non-US foreign bonds and $3B in treasuries, which have seen nearly $21B of outflows YTD.

Equity outflows contributed to a lesser degree, with $3B of profit taking split evenly between US and other international markets…

… while foreign demand for Canadian equities rebounded in April, with $6B of buying concentrated in the resources sector.

As has been the case all year, foreign appetite for Canadian paper drove the print - with nearly $50B of buying and a record $28B tied to GoC bonds.

Andrew Peller (ADW-A) was up 40% Monday after announcing Fairfax will take it private in a $580M deal, which represents 8-9x NTM EBITDA - below its pre-pandemic multiple…

… much like the Blackline and Gamehost takeouts earlier in the year, despite meaningful fundamental improvement…

… which likely has more runway, with domestic wine penetration creating an organic growth lever in an otherwise challenging backdrop for alcohol.

The tough environment has likely created stress among the smaller peers, and with the balance sheet in great shape…

… Fairfax likely views Peller as a vehicle to capitalize on industry consolidation.

A couple of landmines went off in consumer discretionary today, with Groupe Dynamite (GRGD) dropping over 35% on its Q1 - which beat estimates but showed decelerating same-store growth…

… of 9% so far in Q2, which sits below full-year guidance of 11-14% - prompting nearly four turns of multiple compression as investors front-run estimates revisions.

In parallel, Gildan (GIL) fell nearly 20% on a short report…

… from the same group that called the goeasy blow up. The main accusation in this one is channel stuffing, which is being masked by the company financing a portion (~40%) of its receivables off balance sheet…

… creating an artificially low days sales outstanding and signalling a demand environment that’s softer than reported revenue growth might suggest.

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