Geoffrey Smith 

Investing.com – The fear of Russia invading Ukraine has caused global stock markets and commodity prices to fall. Stocks from the United States are set to increase their losses at the open. Esther George, the Fed’s chief economist, reiterates her call for central banks to reduce its bond portfolio. James Bullard, an uber-hawk will also speak shortly. Global buyers are looking for alternatives to energy and agricultural products, so commodities seem to be the only exception. This is what you should know about financial markets Monday 14 February.

1. Russia prepares a St. Valentine’s Day massacre in markets

The fear that Russia might invade Ukraine continues to shake global markets. European stocks fell heavily after warnings from the White House, other governments and a threat by Moscow.

In the face of last-ditch diplomatic attempts to avoid war, benchmark European stock indexes suffered a loss of 3.2% during the opening half of trading.

German Chancellor Olaf Scholz will visit both Kyiv and Moscow Monday for talks, but the tone was set on Saturday after a phone call between U.S. President Joe Biden and his Russian counterpart Vladimir Putin, after which Biden again threatened “swift and severe costs” on Russia if it invades.

A White House readout after the call said that while the U.S. was eager to continue diplomatic engagement “in full coordination with our Allies and partners, we are equally prepared for other scenarios.”

2. George continues to drum for QT. Bullard, Lagarde speech ideas

Following the negative U.S. inflation data, there is a fresh round of central bank talk.

Kansas City Federal Reserve President Esther George repeated her view in an interview with The Wall Street Journal that the Fed should start selling bonds out of the $9 trillion portfolio it has amassed through previous bouts of ‘quantitative easing’. George argued that the Fed’s huge portfolio makes it more difficult to carry out monetary policy, and that asset sales would keep the yield curve from flattening – a nod to those afraid that the recent yield curve flattening presages a recession.

Later in the day, St. Louis Fed President James Bullard – who has already nailed his inflation hawk colors to the mast – will speak. Christine Lagarde from the European Central Bank will also speak. She spent much of her last week trying reverse the hawkish turn that she signaled at her press conference. The data calendar, however, is relatively empty.

3. Stocks set to extend post-Michigan declines; Lockheed Martin in focus

U.S. stock markets are set to open markedly lower due to war fears, which are further souring a mood that had already turned negative at the end of last week in response to the University of Michigan’s consumer sentiment index for February.

The NASDAQ had fallen 273 points (or 0.8%) by 6:20 AM ET (1120 GMT) and was also down 0.8% (0.8%) and down 1.1% (2.20 GMT). On Friday, the NASDAQ also performed poorly as traders considered a combination of lower consumer activity and tighter monetary policies to reduce inflation.

These stocks are likely to come into focus in the future Lockheed Martin (NYSE:), who conceded to the inevitable this weekend, and ended its agreement to acquire Aerojet Rocketdyne citing antitrust concerns. That development is the latest sign of the Biden administration clamping down on industry concentration, after its resistance to Nvidia’s bid for ARM and multiple Canadian bids for Kansas City Southern (NYSE:).

4. Trade flows resume as U.S.-Canada bridge reopens

There was brighter news from the U.S.-Canadian border, where the Ambassador Bridge in Windsor reopened after an Ontario court allowed the forcible removal of truckers protesting against the Trudeau government’s Covid-19 policies.

With the virus’ dominant strain, Omicron, now causing a much reduced incidence of serious illness in many countries, it is getting harder to maintain the public health policies that have disrupted so much of social and economic life in the last two years.

The pandemic is still alive. In Hong Kong, authorities said that the city’s hospitals had been overwhelmed with Covid-19 cases, in a reflection of how the highly-contagious Omicron is still capable of spreading like wildfire through populations with inadequate vaccination.

5. Russia’s fears have pushed oil and commodities higher

Overnight, crude oil prices reached new seven-year highs due to concerns over the availability of Russian oil exports in case of Western sanctions.

At 6:30 AM ET (1330 GMT), futures had fallen 0.2% from the previous session to $92.88/barrel, and were 0.2% lower at $94.22/barrel by noon ET. WTI rose to $94.81 a bar overnight due to concerns that US and EU would block Russian banks accessing the SWIFT Financial Messaging System, which is used by almost all foreign buyers for their payment transactions for Russian oil exports.

International buyers would be forced to seek alternative energy sources in the near future if SWIFT is not available. This comes at a time where the market for oil has very little reserve capacity. Other products that Russia exports a lot of goods were affected by the squeezes, including, and.