When the Federal Reserve puts out FOMC minutes, people listen. April 3rd was only the beginning of what some expect to be a very large pullback in U.S. equities. While the dollar  finally rose after months and years of depreciation, stocks all sold off heavily. Treasuries remain in high demand with the 10-year note yield dropping below 2%.

The selling continued on Tuesday, marking the worst drop in stocks of 2012 as the buyside becomes increasingly worried about holding long-term equity positions. Adding to the sell off were renewed concerns over the stability of the Eurozone as a whole. A weak debt auction in Spain showed indications that Ireland, Greece and Portugal aren’t the only bad apples on the table. Italy and Spain appear to be next in the cross hairs of credit investors.

Topping this off, the first quarter of the year has come and gone and as the market enters earnings season, the Street is preparing for some large cap companies to miss EPS expectations, which will put the hurt on stocks.

In addition to the trouble in Spain, the European Central Bank has essentially admitted to having no formal plan for an exit strategy in place for its massive liquidity operation and debt buybacks. Unlike the Federal Reserve, however, there is still a bit of room for lending rate cuts, which currently stand at 1%.

This doesn’t matter. Because the ECB is ready to buy anything thrown at it. The result has been a jump in debt issuance in both corporate and sovereign bonds. “Debt capital markets were very active in 1Q12, led by record high yield debt issuance,” noted KBW Research.

“Greece has been addressed as has Ireland but clearly other countries are going to come to the forefront. Every two to three months, more months are going to keep having their problems come public,” said one equities trader based in New York. “Eventually, it’s going to hit France and maybe even Germany. At that point, the European Union will be broken up which should have happened a year ago.”