If I had just read the headlines and not looked at levels, I would have incorrectly assumed that spreads are wider this morning; however, they are not and are following stocks tighter.

My evidence:

Obama to increase taxes on insurers

WalMart will beef up it's offering of electronics (think - bad idea jeans)

Sandler O'Neil is ringing the alarm bell on smaller banks capital positions

Japan's credit rating was cut by Moody's (more on this story later)

The European Central Bank is giving out mixed signals and not a uniform response  

If I have to dig deeper in search of positives (beside equities being stronger), I'd once again cite the technical demand.  JPMorgan notes that ~$800B was put into money market funds in Q4 and is now 'languishing' at minuscule yields.  It's funny how last quarters 'safe' investment is now considered a 'languishing' one.  Also, at some point, the ~$200B invested in the FDIC guaranteed debt will find it's way back into the traditional corporate market.  

It's a good thing there's strong demand as BEC, COP, K, AFL and STT are all in the market today with new issues.  Please remember that the bond market closes early on Friday so one should consider this a short week.   

This story about private equity being allowed to buy a bank is sure to get more attention soon.  In the near term it's a positive as it 'creates' a new class of buyers for struggling banks.  In the long term, it could present a problem as their modus operandi is typically to lever up.

Moody's took action on Japan's sovereign debt rating last night.  They cut the foreign currency rating from AAA to Aa2.  They raised the local yen denominated rating to Aa2.  As we all know, perception often matters more than reality; which is why it is interesting to note that the LA Times headline read "Moody's Raises" while Reuters headline read "Moody's Loses Top Rating."  Bloomberg news had it most accurately when it said "Ratings Unified."  In actuality, the cut of the foreign currency rating matters more.  

The talking heads have recently increased their volume about buying gold.  How about this idea which my wife has long espoused.....buy diamonds as a safe haven.  This 'idea' was brought to you by the folks that own and control most of those very same diamonds....DeBeers.