Everything was going along just fine for markets even absorbing Tunisia and Egypt well. But then the contagion continued to Libya, Bahrain, Yemen, Kuwait and so forth. This pushed energy prices higher. Further, even though these MENA Middle East and North Africa events may ease, you can rest assured they'll resurface and overhang markets for awhile.

The next punch was delivered by Japan's earthquake, tsunami and nuclear reactor issues. Japan, being the world's third largest economy, may be in trouble for some unknown period. There will be massive infrastructure spending down the road (emphasis added) which should provide strong demand for building materials (lumber, base metals and so forth). For now, the economy will get a heavy dose of cash from Japan's central bank and this will require enormous debt sales driving yields higher theoretically.

Since Japan is a large exporter of stuff to the world, prices for finished products may rise causing more inflation.

Commodity prices remained mixed with softs and base metals weak while energy, gold and rice were higher overall. Bonds rallied while the dollar fell.

The Fed is busy is POMO activities oblivious to external conditions. Here's their schedule for March and April.

Stocks were sold with some late day buying lifting major averages off their lows.

Volume continues to rise on selling but with an afternoon "stick save" much of this was positive. Breadth per the WSJ was once again negative.

Continue to U.S. Sectors, Stocks & Bonds

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