It was an interesting day with the S&P stock index closing +0.6% higher as housing start numbers came out strong.

There was a brief intra-day halt to the rally as rumors circulated that two Iranian gunboats were preparing to cross the Suez Canal.

Credit remains strong, however, and a ton of Federal liquidity continues to slosh around the markets, with or without gunboat headlines (not to mention the limited capabilities of said Iranian vessels).

Corporations are issuing debt, and will continue to do so, because of historically low interest rates.

Many companies are issuing debt for the sole purpose of keeping cash on their balance sheets, to be used at a later date to potentially buy back stock if the markets get more volatile.

The low interest-rate environment has allowed corporate America to morph into one giant hedge fund.

So-called bond vigilantes are scarce and loath to fight the trend (there is a mark-to-market cost and risk of unemployment for doing so).

A friend visiting from San Francisco pointed out the absurdity of subway rides that cost $2.25.

There is a day of reckoning, but the credit party can last for longer before the chickens come home to roost.

The IG CDS (credit default swap) index tightened and briefly breached the 80-threshold intra-day but closed back out wider.

If a strong catalyst pushes the index tighter below 80, the mid 70's are not unthinkable.

Single-name bonds and CDS closed tighter across most sectors

Bernie Madoff, the fraudster who swindled well North of $60 billion, mentioned in an interview that some of the large shops that dealt with him had to have known about his scheme; it is hard to see how some of the bigger players missed the scheme not to mention the regulators who slept at the wheel.

Pharmaceutical giant Sanofi Aventis sealed its $20 billion acquisition of Genzyme to build an even bigger giant.

Bookstore chain Borders filed for bankruptcy protection as the chain's publishers and vendors refused to voluntarily reorganize the company's debt.

Across the Atlantic, Vodafone and some state-backed Polish companies are getting ready to sell Polkomtel.

Commodity tycoon Oleg Deripaska drew interest as he said that there is a price for Norilsk, the world's largest producer of nickel and palladium.

This comes on the heels of the Russian government's sale of a 10% stake in VTB bank to investors including China Investment Corp, Harvard's endowment, Italian insurer Assicurazioni Generali and private equity shop TPG Capital.

Mongolia is preparing for a $3 billion IPO (initial public offering) of Erdenes Tavan Tolgoi, a state-owned company that owns a vast untapped coal deposit.

CPI (Consumer Price Index) inflation data, initial jobless claims, and leading indicators are out tomorrow.