The Kremlin on Thursday said reports of major progress in peace talks with Ukraine were “wrong.”
So, to the extent any of Wednesday’s gains on Wall Street were based on speculation that negotiations are progressing rapidly behind the scenes, some of that optimism may need to be unwound.
It was questionable, at best, whether the rollicking two-day rally in US shares had much at all to do with Ukraine optimism. Equally dubious was the idea that the Fed’s hawkish hike was somehow “well received” by risk assets due, some suggested, to Jerome Powell’s comments about the resiliency of the US recovery. Rather, the setup is such that any directional move has the potential to accelerate violently given dealer positioning and myriad related dynamics. I’ve said it again and again over the past two months: You can’t divine much from the day-to-day price action in US equities. It’s in no small part a function of options positioning and associated flows.
I eschewed coverage of the Financial Times‘s “significant progress” story on Wednesday, because irrespective of whether it had merit, it came as Volodymyr Zelenskiy implored US lawmakers to “remember Pearl Harbor” and 9/11 while exhorting the US to establish a no-fly zone and facilitate the transfer of warplanes. Not exactly the kind of message one delivers when a ceasefire is imminent.
Hours later, Joe Biden announced the US would provide $800 million in new military aid, including more Stinger antiaircraft missiles, nearly 10,000 antitank weapons, machine guns, grenade launchers and so-called “kamikaze drones,” which The New York Times helpfully noted “can be flown directly at a tank or a group of troops, and is destroyed when it hits the target and explodes.” “These are exactly the type of weapons systems that can have an immediate impact on the battlefield,” Mick Mulroy, a former deputy assistant secretary of defense, told the Times.
Speaking of the battlefield, it’s (still) not going especially well for Russia, although Vladimir Putin, who Biden branded a “war criminal” on Wednesday, insisted his “operation” has been a success and is proceeding “according to plan.” The Pentagon stated the obvious on Thursday: Ukraine has “essentially stalled” the Russian advance, an embarrassing scenario for the Kremlin which is likely to become more humiliating still in the event new weapons systems do indeed “have an immediate impact,” as the former defense official quoted above put it.
One area where Putin has had “success” is in facilitating a humanitarian crisis. More people are displaced by the day and Russian forces persist in targeting key infrastructure and densely populated areas, where the potential for civilian casualties is high. Dmitry Peskov on Thursday called Biden’s “war criminal” remark “unforgivable.”
“What we got by the end of the day was further escalation,” Rabobank’s Michael Every wrote, of Wednesday’s developments. “Russia bombed a theatre in Mariupol, likely killing hundreds sheltering there [and] Putin gave a national speech which I share snippets of in order to convey its tone and message,” he added, before excerpting Putin’s remarks as follows:
[Putin] claimed Russia was ‘being cancelled’ and spoke of “fifth columns” and “national traitors” who “cannot do without oysters, foie gras and gender freedoms,” who “by their very nature are located exactly there, not here, not with our people, not with Russia. This is, in their opinion, a sign of belonging to a higher caste, a higher race. Such people are ready to sell their own mother… The collective West is trying to split our society, speculating on the combat losses, on the socio-economic sanctions… and there is only one goal… the destruction of Russia. But I am convinced that… the Russian people will be able to distinguish true patriots from scum and traitors and simply spit them out like a midge that accidentally flew into their mouths. Spit them out on the pavement. I am convinced that such a natural and necessary self-purification of society will only strengthen our country, our solidarity, cohesion and readiness to respond to any challenges.”
“Does this sound like a man looking to de-escalate, or one who is going to double down to get better terms?”, Rabo’s Every wondered.
Bloomberg called Putin’s speech “chilling,” and noted that his “outburst” came 48 hours after a producer at one of Russia’s state-run television channels took it upon herself to hold up a sign behind the anchor that read: “They’re lying to you.”
The AP detailed the aftermath of the Mariupol theater attack. “Ukrainian authorities struggled to determine the fate of hundreds of civilians who had been sheltering… in the building’s basement,” Andrea Rose wrote, adding that “at least as recently as Monday, the pavement in front of and behind the once-elegant theater was marked with huge white letters spelling out ‘CHILDREN’ in Russian.”
Meanwhile, China blamed NATO, calling the expansion of the alliance “directly linked” to the war. Foreign Ministry spokesperson Zhao Lijian said the US, not Putin, is the “culprit.” Beijing also promised to “never attack” Ukraine, a nice sentiment, but one that perhaps raised more questions than it answered.
For his part, Zelenskiy was set to address Germany’s Bundestag a day after pleading with US lawmakers to wake up.
Russia, which is on the brink of default, said Thursday it made $117 million in coupon payments to its foreign correspondent bank, but there was no immediate word on whether payment was credited to London, Moscow’s payment agent, or what currency was used. One imagines the payment will be credited, but likely in rubles.
Watching the video of Putin was telling. Yes, his words were insane and detached from reality, this is typical. But Putin is normally: ice cold, composed, in control, calculating. He was trumpian in this video: rambling, disjointed. He is not his usual self. He is losing control of the narrative and he’s freaked out.
He is in an ugly stalemate and he is no longer sure that time is his friend or enemy. If he continues to kill civilians a no fly zone or safe harbor area of Ukraine is in the cards. He knows this. A more stable leader would try to make a face saving deal and get out.
I agree, Ria. Putin is cornered. His ugliness and weird arguments betray his affection for “the old days” of the Soviet Union. But we have only a limited perspective of Putin’s mental state. He is seeing the world around him crumble. And I doubt he places any blame on the idiot in the mirror when he gets out of bed in the morning. He lashes out verbally, expressing his resentment of the “west.”
I doubt anyone in the Russian military who has watched their officers dying in the war has the guts or the wherewithal to save Russia from their demented leader. I hope I am incorrect.
He has Ukraine in the crosshairs – for now. But a rabid dog does not discriminate. The outcome for “the west” is not assured.
Ironically the words Putin spoke mirror the rhetoric my parents addictively watch every single day on Fox News. I wonder if they could possibly be connected? he said sarcastically
They must both be Tucker Carlson viewers 🙂
While he’s the most aggressive, he’s far from the only host that mirrors that debasing “my political opponent is my literal enemy” content that pervades that entertainment news channel.
China and Russia both agree we should not be protecting Ukraine Putin is using the argument that Stalin made for the Iron curtin to exist because Germany had twice tried to conquer Russia and failed going through those eastern European countries, so Russia needed those countries in front of it to protect it against another land invasion. The West allowed it because what Stalin believed was true. Now fast forward 80+ years and we have a much different situation that Putin cant accept. That is given a choice most people would want to live in a democracy not a totalitarian regime. So Putin can call Ukranians Nazi’s all he wants, it doesnt make it so (unless you watch Russian TV). I don’t have any idea how long this war will take, but I don’t see the Ukranian’s giving up and it seems as long as we keep supplying Ukraine with arms they will be able to eventually beat Russia back to it’s borders. I am hoping that they will be able to get Crimea and Donbas back.
“necessary self-purification of society will only strengthen our country”, hellooooo Stalin! Spoken like a frightened and cornered man-rat. Maybe the Switchblades Pigtootin fears aren’t just the ones Ukrainians will be wielding soon. The Switchblade 600 will rain some pain, but, I’ll bet they’ll be 600+n models aplenty once they start getting tweaked for massed Russian conventional forces. The unfolding mayhem this tech will likely cause the 19th century Man’s imperialist forces when combined with other technologies will be something to behold. To bad technology always winds up getting used on it’s developers eventually. Sigh.
I not sure I really appreciated just how 19th Century Putin and his system of Rulership was until I listened to a bit of war propaganda (not meant in a disparaging manner, I’m using “propaganda” in the European way, which is to imply it is neither good or evil but more like a multipurpose tool, rather than the American way which assumes propaganda is decidedly evil or deceitful and therefor we have to invent endless new phrases for our Departments of Whatever that handle propaganda and censorship…) in the time honored, and proven effective in clashes up to the civilization level, classic British style (consisting of truthful statements with lies of omission rather than commission whenever possible) this AM on BBC. The story went, when the convoy drivers, basically very young man-boys with maybe ‘8th grade’ educations and possibly a few years of additional vocational school, were finally lined up and ordered to drive over the Ukraine border they had their phones and watches taken away. Keep in mind these ‘kids’ are driving dilapidated old military transport trucks, not, Freightliners or Macks fresh off the dealer lot. The mind implodes! These ‘kids’ are supposed to coordinate a massive military maneuver without comms (their phones) and without chronographic gear (watches). At best, I’m guessing they maybe had extremely low powered (so incoming are less likely to be able to hone in on keying mikes) “CB radios” for short-range unencrypted comms. As for marking time, they’d have to pull over and ask hostile civilians for the time (probably for directions too)! Then, the mind explodes! … But, it’s war, so for now, be careful what and how much you believe if your life depends on it.
China? Pretty sure apparatchiks, or the new Chinese equivalents, don’t usually like losing face by being forced to back down on polices they’ve already begun to implement. The knives may be going back in the drawer, but, not until they’ve been sharpened and made ready for next time. Of course, you have to wonder, if after getting jerked around like this for the nineteenth time, whether or not this a cynical manipulation of the Market process? Guess we’ll see when the 13F’s are filed by the inner circle(s).