While none of us really want to circle back and explore the euro crisis again, we may not have any choice. We are back to Ital-eave which, by the way, is my personal favorite portmanteau created since the dawn of the GFC. Italy is the third largest sovereign borrower in the world and has large structural, demographic and cultural issues holding back its economy much like Greece only multiple times larger. This brings us to the question of how could their debt, prior to this crisis reawakening, trade at negative interest rates. Negative interest rates are quite possibly the world's biggest bubble ever and it has been blown by central banks intentionally. Years from now people will scratch their heads in disbelief at this crisis. Italy's debt was just a bonfire searching for a match.

This week saw new highs on the Russell which has served to fill the bulls with enthusiasm. And why not? (Sarcasm alert.) This week we saw a new anti-establishment government in Italy, the third largest sovereign debtor and a new anti-establishment party gain power in Spain. We also saw a trade war heat up between the US and the rest of the developed world while the world's most dangerous bank saw its stock price sink into the single digits. Of all of the above, the one we most fear is Deutsche Bank (NYSE:DB). This week it became known publicly that the Federal Reserve had put Deutsche Bank on its troubled watch list. This news led to S&P downgrading the company's debt to BBB+. Why is this important?

Further counterparty aversion could follow in the event of a downgrade, especially with those clients that have 'automatic rating triggers' within their risk policies," according to the Goldman Sachs report. That in turn may hurt Deutsche Bank's market share further and weaken the company's ability to generate revenue, the analysts argued. - Bloomberg

One thing we have learned over the years. When Wall Street smells blood in the water and sees weakness it will exploit it. Look for pressure to come to bear on Deutsche Bank. It is not another Lehman but it is systemically important. Ripples will be felt.

We have been telling you to keep an eye on bitcoin. It bounced slightly this week to close on Friday at $7500. Not much of a bounce considering the currency fluctuations in emerging market should be supportive of bitcoin. It still has our attention. $6777 is important support for bitcoin. Lumber has been on our radar as it has flown higher in the last 24 months. It appears that a peak may have been hit last month as lumber closed limit down for several trading days in a row. Could this be the canary in the coal mine for housing which has been red hot?

The S&P closed the week at 2734 or up about one half of one percent on the week but still near our fulcrum of 2666. The Russell is holding its recent new highs and mid-cap and small-cap stocks are looking to break out of their range. That makes sense as small and mid-caps are not as vulnerable to trade wars and fluctuations in the US Dollar. That is giving new power to the bulls. The Russell may drag its large cap brethren up with them. The first of the month almost always helps the bulls with new money to the market. Let's see how they perform next week as they stare at another rate hike from the Fed but, for now, the bulls are in charge.