The tone started out weak in the early morning with a combination of European unease and North Korean uncertainty weighing down on the markets.

By the afternoon (after European traders went home to sleep) the market tone improved somewhat.

Bank of America shares popped almost 9% higher intra-day on rumors that President Obama may take advantage of the Congressional recess to appoint a new head for the FHFA (Federal Housing Finance Agency).

Why is this relevant for Bank of America shares?

The FHFA move would likely usher in a major mortgage re-financing plan and with Bank of America's massive exposure to the housing market (through its acquisition of Countrywide a few years ago) the bank would stand to benefit.

One thing is certain and that is that the housing market will play a role in any sustainable economic recovery in the U.S.

President Obama should direct efforts at helping low and middle-income families that were run over by the foreclosure debacle.

When Federal bail-out dollars were handed over to banks with few questions asked, it is morally untenable to argue that the Federal government should not be helping homeowners that are underwater.

ADP employment numbers came out much better than expected and traders will be watching Friday's payroll and unemployment statistics closely to see whether the seeming improvement will filter through to official government figures.

The Euro continues to come under pressure, closing under 1.28 versus the U.S. dollar as market chatter picked up around Hungary.

In Asia, there were rumors of North Korean troop movements and a military coup floating through the blogosphere.

There is more going on than meets the eye.

North Korea's giant of a neighbor China may be mulling an opportunity to flex some muscle and increase its influence, both direct and indirect, in its immediate vicinity.

China is likely looking to push the boundary in the context of a new U.S. national security doctrine that envisions a more muscular presence in the Pacific theater (as opposed to the old one that focused on fighting two simultaneous land wars).

Despite impending defense budget cuts the U.S. will not shift attention away from the Middle East; efforts will focus more on intelligence-based and special forces-driven activities, not to mention cybersecurity.

It is in this context that the Saudis are purchasing more than $60 billion dollars worth of arms.

In an election year, defense industry jobs will be created (or preserved) in swing states such as Missouri (Boeing), Ohio (General Electric), and Arizona (Raytheon).

Stay tuned for Friday's payroll and unemployment numbers.