It has been a relatively quiet week on the financial markets. With fewer disruptions in oil supply, oil prices have steadily decreased. The US dollar remained strong based on the Federal Reserve’s confidence in the American economy, with other major currencies losing positions against the greenback. Right now it seems that political factors are the biggest decider that can sway the opinion of investors. Even the hottest topic of the past months, the global trade war, was outshadowed this week by one thing: America’s relationship with Russia.
Historically the two countries have not seen eye to eye, as one might remember a little thing from history known as the Cold War. Even until recently the countries were not on the best of terms, with Russia usually vetoing important decisions at the UN Security Council to the disapproval of the United States. Just months ago Russia and the United States were in a stand-off over Syria: Russia has shown consistent support for Assad’s regime, while the US bombed Syrian state facilities.
Despite the huge difference between the political stances of the two countries, Donald Trump has actually been repeatedly criticized for his fondness of Russia. So much so that ever since he was elected President there has been an on-going special investigation led by Robert Mueller to find out whether Russia was involved in the elections and helped Trump secure his victory. The US President continues to deny collusion (which is not what the investigation is about, per se), but one can easily see how this becomes problematic when Trump praises President Putin over and over again.
This is why media showed an overwhelming amount of interest towards the meeting between Putin and Trump in Helsinki this week. The two of them met in private for a couple of hours before giving joint statements in front of the press. President Trump rambled quite a bit about this and that, lavished praise on Putin for the FIFA World Cup, and once again reiterated that there was no collusion with Russia during the elections. He also mentioned Hillary Clinton’s “emails” – one of his favorite topics from the election campaign. Interestingly enough, just days before the summit in Helsinki, Mueller indicted several Russian hackers regarding Clinton’s servers. There is footage of Trump (back then as just a candidate) inviting Russian hackers directly to attack Hillary Clinton, and as proven by Mueller’s investigation, they did just that. Trump also received much criticism because he seemed oblivious of the political disagreements between Russia and the United States and did not push the Russian president regarding any of those topics (e.g. Syria, Ukraine, suppression of the free press), which would usually be the duty of the President.
During the summit President Putin actually proposed that Russia be allowed to handle the prosecution of the indicted Russian hackers and question several American citizens who are known to be critical of Putin’s regime. Trump praised the offer initially, but after a major backlash from even his own political party, the White House ended up declining it. Trump was also criticized for apparently reaching several agreements with Putin during their private conversation that no one else in the White House knows about.
Instead of taking a harder stance against Russia in light of how the United States have reacted to the summit in Helsinki, yesterday Trump surprised media and politicians alike by inviting Putin for a visit to Washington, D.C. this autumn.
It is not clear yet what impact this relationship will have on the markets, but it is certainly a topic to watch. If the President continues with his unpredictable policies, he might lose public support, which would shake the situation in the United States further. Although the Federal Reserve has shrugged off possible insecurities regarding the trade war with China, political instability within the United States is another factor unaccounted for.
