Navigating Multiple Liftoffs

By: Tony Genua, Jonathan Lo • April 4, 2022

“We have lift-off!”

“The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.”
- William Arthur Ward

“We have liftoff.” Those words were immortalized by Jack King on the Apollo 11 program in 1969 which landed the first humans on the Moon. In the years since, it has become standard lingo associated with rocket launches, and even making its way into the financial industry, where liftoff most commonly refers to the first interest rate hike by the U.S. Federal Reserve (Fed).

In today’s environment, we see simultaneous “liftoffs” occurring – interest rates have begun moving higher, in response to higher inflationary pressures, and amidst an environment with higher geopolitical uncertainty. However despite these multiple liftoffs resulting in greater uncertainty for investors, our belief is that the stock market, whose liftoff occurred in the depths of the pandemic in 2020, will likely continue in the uptrend that began that year. In this note, we will explore these aspects and their implications on the stock market, as well as the growing discussion around the inversion of the yield curve, which has historically been a recession predictor.

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Publication date: April 4, 2022

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