Being market leaders, I believe the stock action in AAPL and GOOG last week, notwithstanding management uncertainty but with great quarterly results, is a sign that the Bernanke driven rally since Aug is done for now with the only question being will a consolidation follow or will there be something more. The question of something more I believe will be driven by inflation trends and interest rates. The FOMC, newly constituted with some more hawks, will likely continue on Tues their easy money path but almost all other central banks around the world won’t be. According to the WSJ, ECB’s Trichet over the weekend said “all central banks, in periods like this where you have inflationary threats that are coming from commodities, have to…be very careful that there are no 2nd round effects” on domestic prices and unlike the Fed, he thinks “core inflation is not necessarily a good predicator…for future headline inflation.”
---Peter Boockvar
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