Interactive Brokers Traders Insight

Short-term interest rates and the dollar are continuing their rapid advances today, but it appears that equity traders are torn between nervousness and the recent rekindling of their love affair with buying dips.

The "January Effect" is a well-known market phenomenon with a reasonable amount of logic behind it.

We have now come to recognize that inflation - the first derivative of prices - may be above the Federal Reserve's 2% target for some time. Hoping for a quick reversion to stable prices is largely futile, so instead we are focusing more on whether inflation is slowing.

As we look back at our best and worst calls of 2022, it seems like an opportune time to reassess the market's behavior and our own understanding of it. Despite some predictions being correct, we wish we were more emphatic about others.

Homebuilders curtail their operations with weakening earnings prospects

Monetary policy tightening is continuing to erode demand

Prices are unlikely to decline substantially in the near future

Sentiment regarding purchasing conditions and inflation worsened

Higher industrial production is positive on the inflationary front

Markets were blindsided from recent political events in the UK and China

The rate of overall inflation is slowing with tighter financial conditions