RE:Recession and Bombardier Why do you think there's a recession ahead? There's a slowing consumer, but we're a few months away from one of the largest set of North American infra spending bills ever (CHIPS, IRA) + real consumer spending has been negative basically 2x in last 30 years (early 90s and GFC). What would cause a recession is some widescale industrial slowdown which could always pop up out of nowhere, but seems unlikely, looking at manufacturing and SMB surveys, GDP growth, inventory cycles, freight transport, and most other KPIs of note. As Ed Hyman of Evercore said in his note earlier today where he flipped from a hard to soft-landing outlook, "To be sure, there are cracks, i.e. Ally Financial, and GDP is slowing. But not recession-like"
Simultaneously, we're entering possibly the first ever rate easing cycle that doesn't precede a recession. In 6-9 months US rates will be 150-300bps beneath where they are today. This will dramatically improve business confidence. The fact that BBD is extending backlogs and winning orders under a 5.5% interest rate environment makes me only wonder how many HNWIs were delaying a bizjet purchase until rates eased and now could be transacting in a way we haven't anticipated.
In short, it increasingly seems like we are cutting rates ahead of an early-cycle movement in the economy, as opposed to the historical norm for it to be done during late-cycle into a recession. In that instance you want to own cyclicals (like Bombardier) and avoid defensives, like the Mag7