I guess it's time to bury some of our certainties and humbly remember that the events that make history are often those that were unlikely to happen in the collective imagination. I don't know if Vladimir Putin has gone mad - his nightly speech contains some lunar passages - or if he has just become certain that the West does not really have the means to oppose his designs. Either way, he has launched a major operation in Ukraine, beyond the covert annexation of pro-Russian areas.

Financial markets have and will react strongly to this offensive. Only yesterday, most of us considered that Russia would confine itself to a diffuse support to the secessionist regions of the country while being softly sanctioned financially by the rest of the world. The Russian stock market did not open at normal time: when it did, it fell heavily (-28% for the MOEX, the Russian ruble index). Wall Street lost a lot of ground and should continue to do so, given the state of futures this morning. As for the VIX volatility index, the fear index, it is back above 30 points to approach its highest level of tension of the beginning of the year.

Brent crude oil passed the symbolic USD 100 mark. This is obviously bad for economies for a whole host of reasons and once again brings us back to inflation.

Agricultural commodities are also soaring since Russia and Ukraine are big producers of grain. This is also bad for a lot of things, and of course again and again prices are rising. Industrial metals, such as aluminum, which is soaring above its 2008 records.

Gold is rising strongly to USD 1969 per ounce and is playing its role as a safe haven.

Cryptocurrencies are plunging. The masks are coming off and the safe haven status that people have been trying to portray them as lately has not held up.

On the sovereign debt side, risk aversion is driving up the price of US government bonds and lowering their yield by 12 points to 1.87%.

Beyond the epidermal reactions of financial markets, the Russian offensive obviously raises the question of the real expansionist aims of Vladimir Putin, at the border of the European Union. The weak reaction of Western chancelleries is probably also an excellent indication for other authoritarian regimes, like China regarding Taiwan.

 

Economic highlights of the day:

Initial claims for state unemployment benefits dropped by 17,000 to a seasonally adjusted 232,000 for the week ended Feb. 19, the Labor Department said. The Reuters consensus was calling for 235,000 applications. Gross domestic product increased at a 7.0% annualized rate last quarter, slightly up from the previously reported 6.9% pace. The economy grew 2.3% in Q3.

 The dollar is up to EUR 0.8957. The ounce of gold reaches USD 1958. Oil surges to USD 104.2 for Brent and USD 98.9 for WTI. The yield on 10-year U.S. debt falls to 1.88%. Bitcoin falls to USD 35,000.

 

On markets:

* Tesla - The electric carmaker plans to expand production capacity at its Shanghai facility to meet growing export demand, according to a document filed with city officials.

* Lowe’s Companies - The U.S. home improvement retailer raised its full-year revenue and profit forecast Wednesday on strong demand for its tools and building materials. Lowe's shares are up 3.4% in premarket trading.

* Wells Fargo announced Tuesday that U.S. government agencies, including the Department of Labor, are reviewing certain of the bank's 401(k) retirement savings plan transactions.

* JPMorgan Chase - Nigeria is suing JP Morgan Chase in a London court on Wednesday, seeking more than $1.7 billion from the bank for its role in the 2011 deal for Shell and Eni to buy Nigeria's OPL 245 offshore oil field.

* Virgin Galactic Holdings reported a smaller-than-expected quarterly net loss on Tuesday and announced an improvement in its cash position, helping the stock gain 5% in after-market trading.

* Palo Alto Networks - The cybersecurity company's stock is up 7.2% in pre-market trading after it reported a better-than-expected revenue forecast for this year. JP Morgan also raised its recommendation on the stock to "neutral" from "underweight".

* Kodiak Sciences - The laboratory's share price fell by 60.6% before the stock market after the failure of clinical trials of its experimental treatment KSI-301 for macular degeneration.

 

Analyst recommendations:

  • Agilent Technologies: Stifel Nicolaus lowers the price target to $145 from $169, maintains hold rating
  • Caesars Entertainment: Stifel lowers the price target to $120 from $138, maintains buy rating.
  • Charter Communications: BNP Paribas Exane downgrades to underperform from neutral, adjusts price target to $570 from $650
  • Coca-Cola HBC: Societe Generale upgrades from sell to hold targeting GBp 2255.
  • Coinbase: JPMorgan adjusts the price target to $345 from $447, maintains overweight rating.
  • Comcast: BNP Paribas Exane downgrades to neutral from outperform, adjusts price target to $52 from $56.
  • CoStar: JPMorgan trims price target to $97 from $102, maintains overweight rating
  • Exxon Mobil: Jefferies raises the price target to $66 from $62, maintains hold rating
  • HollyFrontier: Wells Fargo Securities upgrades to overweight from equal-weight. PT up 34% to $41.
  • Intel: DZ Bank downgrades to hold from buy. PT up 7.5% to $48.
  • Macy's: Citi raised the recommendation to neutral from sell. PT up 8% to $25.
  • Mattel: Stifel upgrades to buy from hold. PT up 38% to $33.
  • Mosaic: Berenberg downgrades to hold from buy. PT up 11% to $50.
  • Palantir Technologies: Citigroup adjusts the price target to $10 from $13, maintains sell rating.
  • Rio Tinto: Jefferies remains "Hold" with a price target raised from GBp 5100 to GBp 5700.
  • The Travelers Companies: Morgan Stanley adjusts the price target to $185 from $177, maintains equalweight rating.
  • Wolverine World Wide: Piper Sandler adjusts the price target to $28 from $34, maintains neutral rating.