Abdullah Karatash

All day long as stocks were up more than 2% the curious kept messaging this player asking:

Is this rally real? Have we turned a corner? Why are stocks up?

As noted yesterday, stocks have a habit of getting ahead of themselves.

Given easy credit and Central Bank intervention, stocks have plenty of room to rally.

But there is little clarity as to when that intervention will come.

Time and again over the past year, the ECB (European Central Bank) has come out with tantalizing rhetoric that got the markets all bulled up, only for disappointment to set in after the initial excitement.

The problem with all this EFSF (European Financial Stability Facility) / Euro TARP (Troubled Asset Relief Program) banter is when does it actually happen?

And what is the time lag between announcement and implementation?

And will it be coordinated and large enough to impact the markets?

It is probably not wise to be short the markets here but that being said is this where one adds risk?

Aside from the financial woes besetting the European continent we have not even delved into the mountain of structural issues (labor market rigidity, high taxes etc.) confounding Europe's economies.

As one player put it, "There may be no light at the end of the tunnel."

Not in the short term at least.

With interest rates so low and today being the second consecutive day of positive equities, the corporate bond new issue pipeline kicked into high gear including a deal carried over from last week.

In general, we have seen strong and "safe" investment grade credits out-perform relative to everything else in the market.

This out-performance will continue.

The $1 billion Sanofi 3 year bond deal that came at +83 (spread over Treasury bonds) demonstrated the strong bid for high-quality paper with the order book several times over-subscribed.

Durable goods order numbers are out tomorrow and GDP is out on Thursday.