Geoffrey Smith 

Investing.com — Joe Biden acknowledged that his economic agenda has stalled but stated that he still supports the Federal Reserve’s intention to reduce inflation. However, Biden was not clear as to what he will do in case Russia invades Ukraine again for the second consecutive time after eight years. This scenario he said is probable. German producer prices rose by 5% in Dec and 24% in 2013, but Christine Lagarde (ECB President) still believes the inflation dynamic within the Eurozone doesn’t pose as much threat as it does in the U.S. China lowered its one-year prime rate while the U.S. released jobless claims data and information on oil inventories. Netflix (NASDAQ) is the leader in reporting earnings. This is what you should know about financial markets Thursday 20 January.

1. Biden recognizes the policy deadlock

President Joe Biden admitted that his attempts to pass the ‘Build Back Better’ bill, the heart of his economic agenda, have effectively stalled.

In his first major news conference of the year, Biden also acknowledged that his plans to resist Republican driven changes to voting laws were unlikely to succeed, after two Democratic Senators refused plans to weaken the Senate’s filibuster powers.

Biden also indicated support for the Federal Reserve’s broadly-signalled intentions to raise interest rates sharply this year in order to bring down inflation.

2. Russia is likely to invade Ukraine. No clarity from the West on its response 

Biden did not provide any clear answers when asked what possible response he would give to Russia’s invasion of Ukraine.

Biden said he expects Russia to “move in” on Ukraine but gave no clear answers as to what the U.S.’s response would be. Biden suggested that Russian banks might be unable to accept dollars from the United States, which is a move previously considered too shock-inducing for the dollar-led global financial market.

Biden made repeated threats to Russia that there would be serious consequences. However, he was still unable say whether those would include stopping operation of the Russian gas pipeline to Germany. European leaders are also unable to renounce Nord Stream 2 due to energy security concerns.

3. Stocks will open higher, Netflix and railroad earnings are in the sights

U.S. stock markets are set to open with a modest bounce – as they had done before the open on Wednesday too, before being overtaken by fears of inflation and higher interest rates.

By 6.20 AM ET, they had risen 151 points (or. 0.4% while they were up 0.6%, and were up 0.9%.

Stocks to watch include Amazon (NASDAQ:), who announced that it will open its first bricks-and-mortar clothing store in California. United Airlines also admitted on Wednesday night that it will need another year to reach 2019 capacity.

Netflix earnings were the main highlight of the session. Railroad operators are also noteworthy. Union Pacific (NYSE.) and CSX(NASDAQ.:) reported earlier than Travelers, Baker Hughes, American Airlines (NASDAQ.)

4. Omicron impacts on jobless Lagarde glosses over German price surge

The U.S. will release initial jobless claims data for last week at 8:30 AM ET, which will be of more interest than usual after last week’s report showed signs of the latest wave of Covid-19 finally hitting employers.

Due to rising energy prices, and other disruptions in supply chains, the data calendar already caused shocks abroad. German producer prices rose 5% for the month. They also increased by 24.2% for the entire year.  Christine Lagarde, President of the ECB, reiterated the fact that inflation dynamics within the Eurozone differ from the U.S.

China’s central banks cut their one-year Prime loan rate to 3.7% in China, which was anticipated, and they promised more support over the coming months.

5. Oil stalls after U.S. inventory build

Crude oil prices were little changed as the latest inventory report from the U.S. took the steam out of this week’s rally.

According to the American Petroleum Institute, crude inventories increased by 1.40million barrels last week as opposed to falling by 1.4million barrels. After two weeks with unusually high gasoline inventories, this indicates a decline in final demand. The government’s data are due at 10:30 AM ET.

Futures had risen 0.15 to $85.87/barrel by 6:30 am ET. By $88.28/barrel, they were down 0.2%.