The markets opened much weaker only to bounce off of the lows into the close with stocks closing in positive territory.

Demand for U.S. Treasury bonds pulled back a little as stocks climbed; demand still remains strong, however, especially considering the wave of new supply expected this week.

The U.S. dollar closed at 1.37 against the Euro and Gold gave up further ground closing at $1,817 an ounce.

What sparked the morning panic?

Lower tier European bank debt was trading as much as 10 points lower at one point.

There was nothing new really; just more of the same headlines out of Europe.

Uncertainty over Juergen Stark's resignation from the ECB (European Central Bank) did not help either.

While there were no meaningful headlines with real substance that pulled the markets off of the lows, the move made sense from a technical standpoint; we were simply overdue for a bounce.

We may continue with that bounce in the very short term.

Corporate credit continued to trade relatively heavy in anticipation of a deluge of primary new issues with the yield on the 10 year Treasury bond well below 2%.

We will likely see heavy new issue volumes this week if stocks manage to hold in positive territory.

Funding costs considerations are beginning to weigh in for some European and Asian investors, but the funding issue is relatively stable in the U.S.

On the political front, we will continue to see support for Governor Perry coalesce much as it did for President Reagan after the Bohemian Grove.

There is chatter about the need for sound economic policies to prevent strategic drift.

The world economy is at an inflection point, one with ramifications that are just as important as Bretton Woods or the Monroe Doctrine.

While the mastery of maritime sea lanes is a given per NATO doctrine, economic supremacy is key.

One is reminded of the words of the philosopher Ibn Khaldun: "At the beginning of the empire, the tax rates were low and the revenues were high...At the end of the empire, the tax rates were high and the revenues were low."

The NFIB Small Business Optimism survey is out tomorrow; this is an important indicator of the health of small and medium sized business enterprises.