Geoffrey Smith 

Investing.com – The Federal Reserve begins a two day meeting. This is expected to conclude in an accelerated tightening of monetary policy. U.S. producer prices data November could help explain why. The end of the free-money era is fast approaching, and Meme stocks as well as crypto are being under threat. In Latin America, emerging Europe and Latin America, central bank rates will rise while the crazy European energy markets make it difficult for the ECB keep its cool when it meets this Thursday. According to the International Energy Agency, there is a significant drop in world oil demand for the first quarter of 2019. What you need to know for financial markets on Tuesday the 14th of December.

1. Fed begins meeting; Due PPI

Two-day Federal Reserve meeting begins, one week after Jerome Powell indicated that he was changing his mind on the current inflation surge. He suggested that central bank would increase its end to bond purchases.

In the backdrop of rising consumer inflation, the Federal Open Market Committee meets. But base effects only suggest that November may be the peak. At 8:30 AM ET (1330 GMT), producer price inflation data are due.

On Wednesday, the FOMC will publish its decisions. The trend towards higher interest rates in the world will likely be strengthened by hikes in Hungary or Chile later.

2. In the face of possible tightening policy, diamond hands fall apart

Some of the most speculative markets plays in the year are feeling the pinch of ending the Fed’s era of no-interest money.

Meme stocks, such as GameStop and AMC Entertainment (NYSE :), have fallen heavily Monday and continue to lose in premarket.

Cryptocurrencies were also under stress. The overnight session saw cryptocurrencies fall to $46,104, and it is down 2.8% since Monday. However, some of its gains have been retraced. DogeCoin was the exception, rising 15% after Elon Musk said Tesla (NASDAQ:) would start accepting payment in the digital currency “and see how it goes.” Doge is still down 74% from its peak earlier in the year.

3. Stocks will open at a lower level; me stocks come into focus

U.S. stocks will open mostly lower because investors are taking money off the table before the Fed meeting.

Although market participants are confident the Omicron Ovidia variant of Covid-19 is less harmful than previous versions, they remain concerned about its spread and the potential for more restrictions on sectors that deal with consumers.

At 6:20 AM ET (1220 GMT), the Dow was down 7.5 points and essentially flat while they were down 0.2%, 0.6%, and 0.2%.

Terminix (UK-based Rentokil) agreed to buy it for $6.7billion in cash and stock transactions. Coinbase (NASDAQ:) is also likely to be in the spotlight due to volatility in cryptocurrency markets.

4. Europe’s power and gas markets are booming again after Germany rejects Nord Stream 2 approval.

European gas and electricity prices hit fresh record highs for a second day in a row, after Germany’s new Foreign Minister Annalena Baerbock warned that there would be no quick certification of the new Nord Stream 2 pipeline.

Spot gas prices rose to 122.92 euro per megawatt hour in the Netherlands. This is the norm for northern-west Europe. French year-ahead power prices reached 300 EUR/MWh while German year ahead futures reached EUR200/MWh.

The prospect of a sustained squeeze on energy prices in the Eurozone, which raises the risk of a prolonged period of above-target inflation, is an awkward backdrop to the European Central Bank’s policy meeting on Thursday. There was some good news elsewhere in Europe. The U.K. labor markets performed well in October and November. However, it didn’t change expectations that this week the Bank of England won’t raise its key interest rate.

5. Omicron reaches China as IEA reduces oil demand forecast. Oil falls

Crude oil prices fell after the International Energy Agency reduced its projection for oil demand for the first quarter next year by 600,000. This pushed the global market into an enviable surplus.

The futures had fallen 0.2% by 6:30 am ET to $71.14/barrel, while the global benchmark was 0.2% lower at $74.23/barrel

The confirmation in China of Omicron’s first case also impacted sentiment. The high transmissibility of Omicron is likely to pose a serious challenge to China’s zero-tolerance policy for Covid-19, risking fresh closures of factories that could prolong the problems with global supply chains.

American Petroleum Institute data about U.S. crude stockspiles is expected at 4:30 PM ET.