The budgetary deficit hit $5B YTD in July, improving roughly $3B versus last year…

… on a 7% increase in revenue - led by higher personal taxes, penalties, and contribution from Crown corporations…

… which offset the 37% decline in import duties. With recent trade escalations, tariff revenue could pick back up…

… potentially softening any impact to unemployment, with EI claims currently up 6% versus last year.

That contributed to overall expense growth of 6% alongside other transfers to persons (old age, child benefits), direct program expenses (bad debt treatment)…

… and public debt charges, which increased 7% on the back of higher interest rates and record issuance…

… which should continue as long as the bid remains, with a $65B hole needing to be plugged this year to fund capital investment activity.

Air Canada (AC) fell 6% Friday after wrapping up its $800M SIB, with 41% of tendered shares purchased at an average price of $29. With the wall of support gone…

… focus shifts back to the fundamentals, with street estimates near the midpoint of guidance given by management in Q2…

… but jet fuel prices rising another 14% since that guidance was given.

Any sustained elevation could put further pressure on fuel margins…

… representing a potential risk to company targets and to valuation, which currently sits above its long-term average.

Slate Grocery REIT (SGR-UN) has fallen 30% since suspending its distribution, which does appear to be stretched on an AFFO basis…

… with a pretty heavy refinancing obligation coming over the next two years…

… though the debt should be rollable, given the portfolio has high occupancy and generates consistent income. With its external manager making a bid for the REIT in May, the timing is odd for a complete suspension…

… so we’ll see if it influences where the bid ends up (the H&R deal sets a good precedent). Retail remains an attractive asset class, with valuations across the group expanding after Choice’s $5B deal…

… and with the group still trading at a sizeable discount to reported NAV, we could see more consolidation in the future.

Was this forwarded to you? Join 10,000+ investors reading The Morning Meeting by clicking the button below.