Does M&A activity follow or lead stock market action?

With yesterday’s roaring stock market rally on the heels of the deal announcements, the action begs the question, is M&A activity a precursor to a good market or does it follow an already buoyant one. I believe its the latter but a good market can last a while as can the M&A deals, particularly strategic ones where growth is tough to come by. The US$ is getting a lift for a 2nd day after some help from some major trading partners. The Japanese Finance Minister, backtracking on recent comments, said they would intervene in the FX market if “currency markets move abnormally.” Also, a top EU official said they welcome the US government to insist on a strong $ and yesterday Trichet said it’s “extremely important that we can have a strong $” in terms of helping the global economy. Euro Zone economic confidence and Retail PMI both rose to the highest since ’08. Case-Shiller HPI and Consumer Confidence are key data points today.

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