Stocks rallied with the S&P stock index closing more than 1% higher as the IMF (International Monetary Fund) made noise about expanding the size of funds available to help fiscally stricken European countries.

The irony was not lost on the markets, long accustomed to seeing the IMF step in to help emerging market economies as opposed to Europe's developed countries.

The Euro climbed, closing above 1.28 versus the U.S. dollar.

The firm tone in the markets extended to credit as well with bond spreads tightening as most new issue bond books were significantly over-subscribed in an indication of investor demand.

For example, the Republic of Turkey issued $1.5 billion of 10 year bonds yielding 6.35%; the final price talk was tightened significantly from the initial chatter as the order book was oversubscribed multiple times.

While the primary bond market felt strong, secondary trading volumes have been very light with many taking a wait-and-see approach to see whether the rally will have legs past January and new bond issues.

In the United States, there was much focus on Republican Presidential hopeful Mitt Romney's taxes.

Private equity and hedge fund managers typically enjoy a much lower effective tax rate due to the treatment of their carried interest as "capital gains."

The reality is that the tax code is far too complicated and needs to be simplified one way or another.

To be fair, it is somewhat difficult to make a convincing argument that capital gains exemptions for carried interest stimulate the real economy.

Tax exemptions should encourage investments in the real economy as opposed to financial engineering-driven profits.

Thursday's Market Color will be a Weekly (although Friday is a regular trading day) due to travel plans.