We got some trade give and take on Friday, with China dropping canola seed tariffs to 15% in exchange for a mere 6% import tax on the first 49K EVs sent into Canada. That number represents under 3% of vehicles sold annually…

… but nearly 20% of electric vehicles sold in 2024, before trade tensions and incentive reductions pushed volumes lower.

Given they’re responsible for nearly all canola production, the western provinces have the most to gain from the deal…

… and auto-heavy provinces like Ontario have the most to lose, especially if vehicle exports to the U.S. are disrupted as a result of the agreement.

While that seems unlikely for now, with Trump seeming relatively indifferent to the news - the USMCA review in July could tell a different story.

Housing starts beat estimates in December, rising to 280K on continued momentum in multi-unit activity…

… which carried the 25% Y/Y gain. On a provincial basis roles reversed, with strength in Ontario and Quebec more than offsetting weakness in the prairies.

While new unit construction and multi-unit absorption stabilized during the month…

… unsold inventory continues to build, making the prospects of a construction boom tough to square with current fundamentals.

On a net basis security flows were flat in November, with $16.3B of foreign investment and $16.5B of Canadian investment abroad…

… carried by $9B of buying in mostly European equities, the largest non-U.S. print since April of 2022.

Canadian equities didn’t have the same demand, losing $8B during the month - driven by secondary market transactions in the resource sector. The selling reversed course from October’s $13B inflow…

… while demand for Canadian paper remains strong, led by nearly $20B in purchases of private-sector issues.

Constellation Software (CSU) continued its slide - falling 3% Friday, 14% YTD, and 35% over the past year. That trajectory is shared by most Canadian software names excluding Shopify, Open Text, and Coveo…

… who’ve seen modest multiple expansion over the past year, while peer multiples have nearly been cut in half. While “AI risk” is the easy answer, this diverging performance tells you how the market actually perceives it…

The risk isn’t AI by itself, but that strong technical teams will out-compete legacy players - impairing terminal value. With the average company in this analysis started in 1997, that concern might be valid.

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