"I notice that there has been since the start of the year weakness in some developing markets notably China and India and strength in others (Russia) with some stability in many developed markets. Do you think that this is setting the tone for the rest of the year and what factors do you think that investors are considering with these markets at present."

Eoin Treacy's view Thank you for this interesting question. Inflation has become a pervasive theme across global markets of late. Fullermoney has long predicted this would be a result of the excessive liquidity creation that formed part of the policy response to the credit crisis. Food and energy prices have largely been excised from CPI measures in much of North America and Europe. For instance, the Fed's favourite measure of inflation is the PCE Deflator. The clue is the name. In much of Asia and Latin America, food and energy prices occupy substantially higher weightings in relevant inflation measures not least because so much of the respective populations' expenditure is spent on these commodities. It is therefore not surprising that inflationary pressures are felt most acutely in those countries.

The concurrence of rising inflationary pressures in tandem with overextensions relative to the 200-day MA, following an impressive advance in 2010, is probably contributing to a loss of relative strength for ASEAN markets in particular. Indices such as Indonesia, Philippines and India performed spectacularly well in 2010 and are in varying stages of reversions towards their trend means, represented by the 200-day MA. Elsewhere in Asia, Taiwan, Singapore and Hong Kong are sustaining breakouts from relatively lengthy trading ranges. The financial sectors of Taiwan and Singapore are leading their respective markets higher.

A number of export-led, core Eurozone countries are extending either medium-term uptrends or breaking out of year long ranges. Germany, Austria, Finland and Netherlands are all in this category. Outside the Eurozone, the UK, Norway, Sweden and Denmark are all extending impressive medium-term uptrends.

On Wall Street, the Nasdaq remains a leader and the Dow Jones Industrials, Transports and S&P500 are all extending breaks above their April highs.

Surging commodity prices that stoke inflationary pressures further may force a policy response and is a threat to all of these stock markets. However, clear breaks of progressions of rising major reaction lows would be required to question medium-term upside potential.

Central banks are still reluctant to raise short-term interest rates and inflation is still confined to commodity prices. A more elegant solution for policy makers might therefore be to combat commodity speculation rather than attempt to tamper with interest rates. This could take the form of much higher margin requirements, increased regulation through the CFTC or SEC or measures to limit the size of commodity futures ETFs position. Inflation can quickly become a political issue so measures along the lines of any of these potential outcomes will need to be monitored from the perspective of the commodity trader and stock market investor.