This week, politics in the United States and in Europe dominated the markets. In the UK, Theresa May’s government entered into a conflict with Russia following the poisoning of a former Russian spy. Theresa and the West believe that Russia’s government is responsible for the assassination. As a result, the country expelled Russian diplomats and in response, Putin expelled UK officials. At the same time, the United States issued its sanctions against Russia.

In the United States, the Trump administration continued to experience challenges. This week, after a trip from Africa, the Secretary of the State, Rex Tillerson was fired through Twitter, a platform the president uses to share his thoughts. His place will now be taken by Mike Pompeo, who has developed a close relationship with the president. More such chaos is expected as reports indicate that several senior officials including Ben Carson and H.R. McMaster would soon be next. Recently, he has lost many senior professionals such as Hope Hicks and his former executive assistant McEntee.

At the same time, Trump appointed Larry Kudlow, a television personality as his senior economic advisor. Larry will replace Gary Cohn, who served in that capacity for 14 months. Larry is a dollar hawk who believes that the country is much better with a stronger currency. At the same time, he differs with the president on various issues such as trade where he is opposed to mass tariffs.

From the data side, this was the week of inflation. On Tuesday, the US released its inflation data that showed unmoved inflation. The core CPI dropped to 0.2% from last month’s 0.3% in line with the expectations. On an annual basis, the core CPI remained unchanged at 1.8%. In general, the CPI reduced from last month’s 0.5% to 0.1%. However, this will not change the views from the Fed about raising interest rates.

In the United Kingdom, Chancellor Hammond released his spring statement. In the statement, he signaled that the country will ease its austerity measures, reduce the budget deficit, and the debt to GDP ratio. This will happen as the country’s economy continues to grow, even with the challenges of Brexit.

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