Oil prices and the U.S. dollar are rallying in tandem—a dynamic that has only occurred 11 times since 1983, and it’s drawing the attention of market participants attempting to assess its significance. West Texas Intermediate crude oil traded on the New York Mercantile Exchange CLM8, -0.11% which is up 12.2% in the past month, according to FactSet data, has shaken off a 3.6% rally in the previously battered dollar, as measured by the ICE U.S. Dollar Index DXY, -0.02% according to FactSet data. Check out the recent chart below depicting the dollar gauge’s move and WTI’s climbs from Bespoke Investment Group:

Oil and the dollar are doing something they have only done 11 times in the past 35 years - MarketWatch

That tandem rally is unusual, what gives?

After an economic expansion this long, the US should run a surplus, not a 4.1% public sector deficit..

Jan Hatzius, chief economist at Goldman Sachs, sees the deficit ballooning to $2.05 trillion (7 percent of GDP) by 2028. "Lawmakers might hesitate to approve fiscal stimulus in the next downturn in light of the already substantial budget deficit," the economist said. The Congressional Budget Office projects that debt could equal GDP within a decade, a level not seen since World War II.

Goldman Sachs: The fiscal outlook for the US 'is not good'

Useful background about the trade conflict between the US and China:

This post includes a very helpful timeline of trade tit for tat so far. There are also four diagrams that show trade flow impacts of various proposed tariff measures. You might want to go to the Bruegel post proper and view them there because they are interactive and I could not pull an interactive version over.

Trade War: How Tensions Have Risen Between China, the EU and the US | naked capitalism

Peak interest rates near?

The Federal Reserve’s tightening cycle might be closer to its peak than policy makers —and stock-market investors — think, says one analyst. “While the Fed pronounces its monetary tightening as being at early stage and gradual, the facts on the ground beg the question of whether we could be much closer to the peak of the rate tightening phase,” wrote Andrew Lapthorne, head of quantitative research at Société Générale, in a note earlier this week. Currently, the Fed funds rates is at 1.50% to 1.75% after six quarter-percentage point rates hikes, with the central bank expecting the gradual tightening path continue beyond 2020.

Here’s how stock-market investors could be surprised by a peak in rates - MarketWatch

This looks very solid advice to us..

The perfect is the enemy of the good. Jack Schannep, editor of TheDowTheory.com, one of the country’s leading Dow Theorists, agrees: “The genius of investing is recognizing the direction of the trend — not catching the highs or the lows.” The key, Hamzei stresses, is to follow “prudent money management rules” that prevent losses from becoming intolerably large.

Here’s the stock trading secret that market timers won’t tell you - MarketWatch

Is shareholder capitalism bad for the economy?

ExxonMobil, unlike most of its peers and competitors, has decided to ramp up spending and drilling on large-scale projects, to the dismay of its shareholders and Wall Street. The oil supermajor has been struggling with flat production for several years and it has also had trouble finding new reserves to replace the oil it extracts each year. Earlier this year, ExxonMobil outlined plans to right the ship, but it has faced its share of skeptics. Wall Street has demanded that oil companies stop spending recklessly on growth, and instead redirect profits back to shareholders in the form of dividends and share buybacks.

The Oil Major Wall Street Won’t Back

We need investments, they increase demand and future supply and labor productivity, increasing economic growth and growth potential..

A new round for dollar bulls?

The Federal Reserve’s preferred gauge of inflation, payrolls figures for May, first-quarter growth and personal spending are all among economic reports due next week. Should they support expectations for three more Fed interest-rate increases this year, then the dollar could extend its climb to levels that would force bears to throw in the towel on a technical basis.

Dollar Bears Risk Another Knock-Down If U.S. Data Remain Buoyant - Bloomberg

Fasten your seatbelts..

A recent study by the Bank for International Settlementsshows Italian government debt represents nearly 20% of Italian banks’ assets — one of the highest levels in the world. In total there are ten banks with Italian sovereign-debt holdings that represent over 100% of their tier-1 capital (which is used to measure bank solvency), according to research by Eric Dor, the director of Economic Studies at IESEG School of Management.

Which Banks Are Most Exposed to Italy’s Sovereign Debt? (Other than the Horribly Exposed Italian Banks) | Wolf Street

Italian 10-year bond yields TMBMKIT-10Y, +4.60%  marched higher, and the spread over German bonds of the same duration was at the highest level since 2014, according to The Wall Street Journal. Italian 10-year bonds reached 2.63%, while Spanish borrowing costs also rose Monday.

Italian stocks weigh down Europe as political worries fester - MarketWatch

While oil is falling..

The world’s top oil trader said it will be near impossible to avoid U.S. sanctions on Iran, suggesting Donald Trump’s attack on OPEC’s third-largest producer may have a bigger impact on the global crude market than many anticipate. “For us it’s a real challenge,” Vitol Group Chairman Ian Taylor said on Friday at the St. Petersburg Economic forum, adding there are unanswered questions about Europe’s response, and whether the European Central Bank will “stand up” to Trump’s measures. "I personally think none of us will be able to get around it.”

World's top oil trader says no one will avoid Iran sanctions

Amid political uncertainty investors demanded a higher return to take on Italian debt and the yield on 10-year government bonds rose to 3%, the highest level since 2014. However, there was healthy demand for the bonds and the Italian government raised €5.57bn ($6.5bn; £4.9bn). Elsewhere, European stock markets made a modest recovery and the euro rose after a turbulent session on Tuesday. The benchmark index in Milan rose 1% and London and Frankfurt were trading higher. Paris was dragged lower by a sell-off in French banks' shares amid concerns about their exposure to Italy. Seema Shah at Principal Global Investors said: "Demand at today's auction was very encouraging, and clearly indicates that investors still have faith in the Italian economy, if not the government. Italy is unlikely to face major refinancing problems in the near term." Barclays investment strategist Hao Ran Wee said: "No investor would lend to the Italian government if they deem it as being unable to pay back its debt."

Italy pays higher price in government debt sale - BBC News