All the Big Market Trends of 2022 Are Now Reversing Course

The Dollar's Recent Surge Has Been Described as a Wrecking Ball, Ruining Everything in its Path. However, the Bloomberg Dollar Index is Now Back to a Level Last Seen in June 2022.

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After a tough few years, tech stocks are once again outperforming the S&P 500. While many investors wrote off the sector, those who stuck with it are now being rewarded. With the industry continuing to innovate and grow, there may be more upside ahead for these stocks. Cryptocurrency trading is similar to tech trading, and so naturally the coins are bouncing. Solana, the one big coin that is most associated with the SBF universe, has roughly doubled from its December lows.

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Gold prices have risen by almost 5% so far this year, thanks in part to a weaker dollar. This is a marked improvement from last year, which was dubbed "the year of the horrible."

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The market's expectations for inflation, as measured by breakeven rates, have also been ticking down, though much of that trend started late last year.
In early 2021, meme stocks were a huge story. However, they were smashed by higher interest rates in 2022. In the first two months of 2023, however, they’re showing some signs of reviving. Shares of poster meme stocks like GameStop Corp., Bed Bath & Beyond Inc. and AMC Entertainment Holdings Ltd. have been rallying in recent days.

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Chinese assets have not performed particularly well during the global pandemic, with the country's authorities cracking down on everything from real estate to internet stocks. However, all of that is quickly reversing as China eases Covid-19 restrictions and stimulates its economy.

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Copper has long been seen as a barometer of the global economy, with some even calling it "Dr. Copper." However, its rally took a breather in 2022 before picking up again in the second half of the year. Now, with the Chinese economy reopening and positive momentum in the US and elsewhere, copper is once again breaking out.
Investors are once again diving into the frothiest parts of the market, with a hypothetical bubble portfolio full of Chinese real estate, Bitcoin, Tesla and other tech stocks up more than 10% in 2023. This comes after the portfolio got absolutely crushed last year.

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It is still early days and a big question is the degree to which all these reversals will lead to a material loosening of financial conditions at a time when Federal Reserve officials are still ostensibly fighting inflation.

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So far, 2023 is looking a lot like the reverse of 2022. Last year was characterized by a surge in interest rates in response to stubbornly high inflation, a stronger dollar, and the destruction of frothy meme stocks and the like. But two weeks into 2023, the story is pretty much the opposite.