Crude's remarkable run resumed Friday as "black gold" surged above $126 per barrel at its intraday peak. Not coincidentally, crude's rise has been accompanied by a falling dollar, which saw its recent rally halted this week by some tough anti-inflation rhetoric from European central bankers.

Specifically, European Central Bank chief Jean-Claude Trichet warned that Europe may be in for a "rather protracted period of high inflation."

The ECB, which left rates unchanged at its policy meeting this week, has always been more focused on fighting inflation than the Fed, which has a dual mandate of price stability and full employment.

Partially as a result, Ben Bernanke now finds himself in the bind of having to fight the inflationary ramifications of his aggressive moves to ease the credit crunch. The big problem is that the crisis itself shows little signs of abating, as AIG's results demonstrate, and the U.S. economy/consumer can ill afford a more hawkish Fed.

In other words, the Fed may continue to talk tough about inflation, but don't expect them to take any action anytime soon.

The stock market is taking it on the chin Friday as AIG's gaping loss has put the financial sector back in a harsh spotlight. But beneath the gloomy surface some tech stocks are shining, most notably Priceline.com and Activision.

Priceline.com reported first-quarter earnings of 76 cents per share vs. the consensus estimate of 60 cents. The company said it expects full-year 2008 EPS of $5.25 to $5.65 per share vs. the analysts' consensus of $5.12.

Priceline shares are soaring Friday as the online travel firm continues its long comeback from the depths of the post-2000 tech bust.

Separately, Activision reported fiscal fourth-quarter earnings of 14 cents per share vs. the consensus forecast of just 5 cents as its "Guitar Hero" and "Call of Duty" franchises continued to perform well.

Cowen & Co. and Kaufman Brothers upgraded Activision in the wake of their results, and the shares were responding accordingly.

Take-Two shares, meanwhile, have barely budged this week despite huge first-week sales for Grand Theft Auto IV, suggesting Electronic Arts may not need to raise its bid after all.

Is Microsoft giving Yahoo a face-saving way to come back to the negotiating table? That's one interpretation of Microsoft's latest statements and decision to dismantle is proxy board slate. It's also a plausible explanation for why Yahoo shares have been so surprisingly strong this week.

Overnight, Bill Gates reiterated his prior comments about how Microsoft is now " focused on its independent strategy," but he didn't totally rule out a deal. Neither did chief strategy officer Craig Mundie, whose comments yesterday included plenty of wiggle room, as Henry Blodget writes.

"Yahoo could always come back again and say please buy us for $33 (a share) and I'm sure we might reconsider it, but we're not assuming that's going to happen," Mundie said.

The bottom line is the ball is in Yahoo's court, as Henry and I discussed earlier this week -- and Microsoft is signaling it would be receptive to negotiations.

Also, Microsoft's decision to release members of the proxy board slate from their obligations could be viewed as a sign the company isn't planning a hostile offering -- not that it's totally ruled out doing a deal (period).

Meanwhile, Sergey Brin made some effusive comments about Yahoo yesterday, saying Google remains open to doing an outsourcing deal, refuting rumors to the contrary. On another level, Brin is helping Tech Ticker's parent maintain some leverage on the chance Yahoo chooses to revive negotiations with Google's archenemy, Microsoft.

Wall Street titans keep saying the credit crisis is ending, but the headlines from financial firms say otherwise.

Thursday evening, AIG became the latest firm to produce shockingly bad results, posting a first-quarter loss of $7.81 billion and saying it will seek to raise $12.5 billion to shore up its balance sheet.

"While we anticipated a difficult trading environment, the severity of the unrealized valuation losses and decline in value of our investments were beyond our expectations," AIG CEO Martin Sullivan said in a statement.

Meanwhile, Citigroup announced plans to sell $400 billion of "non-core" assets at its analyst meeting this morning.

AIG's Sullivan and Citi's CEO Vikram Pandit are relatively new in their jobs and appear to be following the classic script: Take big losses early in your tenure, blame the prior regime, and set yourself up to look like a hero if/when the cycle turns.

The playbook also calls for slashing jobs, which is part of Wall Street's normal "boom-bust" cycle. The problem is the financial services industry has become a much bigger part of the U.S. economy in recent decades, meaning what's bad for Wall Street is also bad for Main Street.

In another sign it has "moved on" from Yahoo (at least for now), Microsoft has released members of its potential proxy board slate from their obligations, The Wall Street Journal reports.

The action follows a string of comments from Microsoft executives indicating Saturday's decision to walk away wasn't a negotiating tactic, including these Thursday from Microsoft's Chief Research and Strategy Officer Craig Mundie: "The market may wish that the Yahoo deal may come back together, but Microsoft at least at this point assumes it's over," Reuters reports.

Mundie did leave the door open a crack, adding: "Yahoo could always come back again and say please buy us for $33 (a share) and I'm sure we might reconsider it but we're not assuming that's going to happen."

Despite speculation big shareholders like Capital Research & Management and/or Legg Mason would push Yahoo to go back to the negotiating table, Wall Street is also moving on.

After suspending coverage during the negotiations -- to avoid conflicts of interest -- Yahoo M&A advisors Goldman Sachs and Lehman Brothers have reinstated coverage on Tech Ticker's parent, Dealbook reports.

Then again, Yahoo shares were up another 2.3% to $26.22 Thursday, meaning optimistic traders either smell another deal or are whistling past the graveyard.

Peter Burrows wrote a popular and, as always with Apple, controversial BusinessWeek cover story about Apple's gains in the corporate world. Never mind, its utter lack of trying. He joined me to talk about the story, how this plays in the Mac's overall market share gains and what it could mean for Apple's already strong financials.

When the credit crunch put an end to the private equity buyout binge, the bulls pinned their hopes on more deals by strategic buyers.

But the M&A boom appears to be heading in reverse, which is a big reason to "sell in May and go away," according to Todd Harrison, founder and CEO of Minyanville.com.

The (apparent) failure of the Microsoft-Yahoo deal has captured the media's attention, but traders like Harrison are really focused on the Bank of America-Countrywide merger.

Bank of America triggered a storm of speculation last week when it said it might not absorb all of Countrywide's debt. Standard & Poor's quickly followed by downgrading Countrywide's debt to junk analysts; on Monday, sell-side analysts began to speculate that Bank of America would either renegotiate or abandon its bid, sending Countrywide tumbling below the $7-per-share offer price.

Publicly, Bank of America says the deal is still on. But Harrison wonders if the company isn't privately lobbying for the same kind of federal backstop JPMorgan got when it took over Bear Stearns in March.

The press is abuzz with speculation that Microsoft may be making a bid for Facebook, a deal Henry Blodget loves. And it's easy to see why Microsoft would, too. But my money says Facebook still doesn't sell.

The wild card for future negotiations will be Facebook's board. Right now, the board consists of just Facebook CEO Mark Zuckerberg and investors Peter Thiel and Jim Breyer, and Zuckerberg controls three seats. The fourth member could have a pivotal vote in any future acquisitions. And if you're a Facebook bull, rumors that Marc Andreessen may be joining the board are good news.

Grand Theft Auto IV's huge first week sales are making headlines, but there's a much bigger story afoot in videogames, says Todd Harrison, founder and CEO of Minyanville.com.

With DVRs killing television advertising and social networking sites struggling to monetize those eyeballs, videogames are looking like the next great frontier for marketing, says the former trader at Cramer Berkowitz, Morgan Stanley, and Galleon Group.

Gamers spending hours looking at screens make for "captive eyeballs" advertisers can't resist, especially in massive multiplayer online games, Harrison says.

As a result, the entire videogame sector arguably deserves a premium, and Electronic Arts may yet have to up its bid for Take-Two.