After a false start in an empty market activity last week we should be able to nicely resume the upside trend both in Europe and US for good with fundamental players back hopefully

  Fed Vice Chairman Kohn agreed with our bullish comments and did look at his Bloom (!) when coming back from holidays : "Economic growth will be moderate but sustainable, and inflation will be lower than in 2006" he said, just what would anyone say when looking back at the last month figures (Mortgages Applications, Existing Home Sales & New Home Sales, ISM rebound, strong employment report, nice CPI & PCE indexe while PPI rebound should be fine next time seen the energy prices collapse from last week)  

Although predictable, Kohn's comments on inflation left the door open for rate cuts / indeed his view of a declining inflation this year was welcome and against the only possible bear view left which was to consider no rate cut would be in the pipe as the economy remain strong  

The more we head toward the end of the week the more important the data will be : Alcoa tonight will be a bit specific but still the earliest big cap earning to be release, the ECB and Bank of England meeting on Thursday and the Retail Sales on Friday important to measure the US consumer spending so important to the GDP  

U.S. consumer debt increased a seasonally adjusted $12.3 billion, or a 6.2% annual rate, during November, after falling $1.3 billion, or 0.6% annualized, in October, the Federal Reserve reported last night / It was the strongest growth in three months  

The tech sector received an extra boost as the International Consumer Electronics Show kicked off in Las Vegas / With slowing growth reducing energy prices, consumers and businesses would have more to spend on tech which explains the reason why portfolio managers rotated out of energy and into tech shares even more  

Some M&A rumours once more did help with GAP Retailer not commenting that its troubled parent Old Navy and Banana Republic would have hired Goldman to find a buyer / in the oil and gas industry two deals of respectively 1,9 and 1,5 bn dol were signed / anyway this is part of our theory that the bullish trend remains as liquidity access is very convenient still and the only way for equity to be down would be some really clear bad news given the heavy buybacks and M&A activity

 Again and again the 2007 year will be nice, and fit the historical pattern whereby stock rise and multiple expand, profitability peaks but large cap will take up the running / history suggests that even after a peak in the profit share of GDP, stocks have continued to produce better-than-average returns / This has little to do with either valuation or interest rate movements, but a lot to do with multiple expansion / Atypically, the one or two years after a peak in profit share tend to be characterised by an outperformance of large-cap stocks and low-yielding stocks.

 This outperformance of the stocks this year should be even greater that the per are not even exuberant regarding history, since the 11th Sept events made equity live with a day-to-day geopolitical risk which should fade along the year