This week was a bit interesting from the political, trade, and security issues. Major news broke that will ultimately have major implications in days to come.
From the political side, the Mueller investigation continued with the president considering firing the deputy attorney general. The consensus among most Trump supporters is that the investigation is a witch hunt started solely because he won the election. By firing the deputy Attorney General, they expect that the new deputy AG will help reduce the scope of the investigation. Meanwhile, a bipartisan group of legislators have created legislations intended to protect the special counsel.
Yesterday, it emerged that the cooperation that has existed between the president and the special counsel was coming to an end. This was attributed to the raid to Trump’s lawyer’s office, hotel, and room. As such, there are signs that the investigation on obstruction of justice could soon come to an end.
On trade, the rhetoric that existed a week ago between the United States and China narrowed down. In a speech earlier this week, Xi Jinping, the president of China promised to help open up the Chinese economy to outside investors. He also promised to do everything Trump cited when he announced the tariffs. At the same time, Donald Trump tweeted about his support for President Xi and his hope for a better and fair trade relationship.
Yesterday, the new Governor of the PBOC said that he would fast track the policy of opening up the economy to more international financial companies by the end of the year. If all this is done, it will be a boon to American firms, who will now be able to operate in China without having the fear of their trade secrets being stolen.
Another big news this week was on security. As you recall, during the weekend, a Syrian village was attacked using chemical weapons leading to the death of many residents. The West blamed the Syrian regime for the attack. As a result, the United States and several allies talked about retaliating. In response, Russia threatened to attack any country that attacked the region.
So far, no one knows about who carried the attack. As you recall, when Trump won the election, he talked about exiting Syria. A few weeks into the administration a chemical attack happened. Last week, he asked his defense people to plan an exit from Syria and then during the weekend, an attack happened. Why would Assad want the US to stay in the country?
As a result, crude oil had one of the best week in years. Brent rose to $73 while WTI soared to above $68. These were the three-year highs. The surge came as investors anticipated that the new tensions could potentially lead to war that would in turn lead to potential oil disruption.
From an economic data standpoint, there was no major economic news during the week. The only data worth talking about was the Fed minutes that showed increasingly hawkish officials. At the end, global stocks were in the positive territory with the S&P, DAX, and Nikkei up by 6, 78, and 6 basis points respectively.