Most fundamental news on the day was mixed. In Germany, Investor Confidence rose sharply to 48.2 vs 31.5 previously, allowing eurozone stocks to rise. China stocks fell sharply as investors worried about The People’s Bank of China (PBOC) taking away the punchbowl (liquidity) as the government frets about inflation and housing speculation.

The G-20, amusingly and not surprisingly, gave member countries engaged in the so-called “currency war” (a trade war really) a pass. It’s a version of “don’t ask, don’t tell” via currency manipulation. It’s okay to manipulate your currency, just don’t tell anyone that’s what you’re doing. The very next day the Swiss National Bank emerged defending publicly their intent to keep manipulating the franc to “enforce euro/franc floor with utmost determination”.  And, currency manipulation and Goldman Sachs (the vampire squid) has per this clever expose rigged the eurozone with its people running the show.

But, U.S. stocks jumped early out of the gate encouraged by M&A activity currently from Office Max and Office Depot potential merger and residual fervor for previous actions from GE and Berkshire Hathaway (BRK/A). Of S&P companies reporting, earnings have beaten lowered estimates by 70%, while historically the average has been around 65%. What this may tell you about the earnings estimates game should bother you frankly  since beating estimates has been widely promoted as bullish. Things calmed down after the Housing Index fell (46 from 47) for the first time in 10 months.

Elsewhere, the Obama administration is on the campaign trail disparaging its own conceived sequester plan. Not to be outdone, the Simpson-Bowles duo released another plan to deal with deficits, which will probably go as far as its last effort. It’s all quite strange frankly.

Believe it or not, after the fiasco Friday with Wal-Mart (WMT), today the retail sector (XRT) was one of the market leaders, up 1.81%, while WMT continued to decline 0.78%. Other market leaders were small caps (IWM), semiconductor (SOXX) and transports (IYT). Underperforming market sectors were especially prominent in commodities (DBC), which included gold (GLD), base metals (DBB) and agriculture (DBA).

The Fed was modestly busy Tuesday with POMO buying the long end of the Treasury curve. Nevertheless, in the face of such activity bond prices have fallen meaning fighting the Fed has been a bold trade.

Volume once again was ultra-light and is creating a new normal. Breadth per the WSJ was positive.

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