It was a slow day with stocks relatively flat but credit spreads continue to tighten as bond traders catch up to Wednesday's 4% equity rally.

Manufacturing figures in the United States point to a growing divergence compared to figures coming out of Europe.

With more chatter of follow-up action from the ECB (European Central Bank) next week and chatter of the Federal Reserve cutting the discount window rate, players are afraid to be short.

Given the traditionally lighter trading volumes associated with year-end and this time of year (is it really December already?), spreads could very well tighten into the end of the year.

What happens after January is a different story.

The markets will remain volatile but the European Union will manage to muddle its way through this crisis.

The cost, geopolitical and financial, of allowing the Euro to flounder is simply too prohibitive.

Bailing out peripheral Europe (and implicitly German and French banks), while expensive for taxpayers, may prove to be cheaper than a break-up.

And before one knows it, the market may shift focus to the next crisis (not necessarily a financial crisis).

As the past year has demonstrated the market is incapable of focusing on more than one major theme at a time.

This lack of focus might explain the relative strength of the U.S. dollar (still stronger than 1.35 versus the Euro) even as the Federal Reserve prints more money.

Then again, as this letter has consistently pointed out, the U.S. is still a relative safe harbor, warts and all.

Players will be watching Friday's employment and payroll numbers closely.