Bernanke Burns the Bulls

Monday, the Commerce Department reported that personal income grew 0.8% and spending 0.6%, beating expectations for 0.4% growth on both measures. Core prices, which exclude food and energy, climbed 0.3%, the biggest gain since October. In addition, Wal-Mart(WMT Quote) reported April sales figures that beat expectations. While many attribute the increase to a late Easter, sales are sales. The company's stock was up 2.8% to close at $46.29.

Another gainer amid the drama were shares of Boeing(BA Quote), which said it plans to buy parts maker Aviall(AVL Quote) for $1.7 billion. Its stock was up 0.5%. In other M&A news, Level 3's(LVLT Quote) plans to buy TelCove for $1.2 billion sent Level 3's stock up 7.1% to close at $5.78.

As evidenced by all the M&A, corporate spending is hardly a soft spot. Durable goods orders surpassed expectations last week, and the Institute for Supply Management reported that its factory index rose to 57.3 in March, beating expectations of 55.1.

With corporate profits expected to grow about 16% in the first quarter, corporate credit spreads tightened against a declining U.S. Treasuries market over the past couple of weeks. Why shouldn't they? Companies have a record $1.42 trillion of cash on their balance sheets through the end of December, according to Moody's Investors Service. Corporate credit volatility has been extremely low too, said Ed Marrinan, chief credit strategist at JPMorgan.

In other signs of voracious risk appetite, the private equity industry has so much cash it doesn't know what to do with it. Food services company Aramark(RMK Quote) is the latest LBO target, for about $6 billion, according to news reports Monday. Kohlberg Kravis Roberts' is launching a retail buyout fund via the Amsterdam Euronext exchange, and it is has garnered over $2 billion worth of interest, according to several reports. The average price of a triple-C-rated junk bond is currently 92 cents on the dollar, according to Merrill Lynch -- a level not seen since 1997, when high-yield credit spreads reached all-time lows.