Recep Tayyip Erdogan himself presided over the latest round of peace talks between Ukraine and Russia in Istanbul on Tuesday. Erdogan the levelheaded peacekeeper, apparently.
“[I expect] good news,” he said, speaking from a podium positioned at the head of a long table where delegates were seated. “We are at a time when concrete results are required,” Erdogan added. “An immediate ceasefire is in everyone’s interest.”
By most indications, the two sides remained far apart on key issues, and Russia continued to strike targets in Ukraine. A missile hit an oil terminal near Lviv, for example. The aim, according to local officials, was to disrupt farmers’ planting plans.
At the same time, there was more evidence to suggest Russia may be pivoting strategically after failing to seize Kyiv in the early days of campaign. IFX cited Sergei Shoigu in reporting that Russia’s main goal is now the “liberation” of Donbas.
The bottom line (and I don’t think this is particularly controversial at this point) is that Vladimir Putin either overestimated his own military, underestimated the resolve of the Ukrainian resistance or both. I suppose what I’d venture is that Putin likely views Russia’s inability to seize Kyiv quickly as inexcusable. That’s someone’s “fault,” and Putin isn’t the type to look inward.
Six years ago this month, an impatient Putin visited Crimea to survey the progress on a key construction project. “There should be a specific person who can be hanged if it’s not done,” he said, during the trip, frustrated at what he described as a lack of accountability among local officials. That was a road construction project. One shudders to imagine what kind of rhetoric he’s employing inside the Kremlin while assigning blame for the military’s slow progress in Ukraine.
In any case, it was notable that German equities erased their war losses, rising some 2% through midday Tuesday. You might recall the conflict sent the DAX on a wild ride. At one juncture, daily swings bordered on farce. Note that the left y-axis (below) is in five percentage point increments.
Even if the war ended tomorrow, it wouldn’t be enough to prevent a significant further spike in euro-area inflation. The ECB’s Pablo Hernandez De Cos on Tuesday warned of “an additional increase in inflationary tensions” tied to energy volatility. “The data for March are going to be particularly negative,” he said, adding that energy prices may stay elevated.
Former Bundesbank head (and current UBS big man), Axel Weber, told Bloomberg the ECB should hike now. “I really don’t see why it needs to wait till December,” Weber said. “[Moving] earlier can avoid dramatic action later.”
Speaking of “dramatic action,” there was some in bunds. 10-year German yields rose 10bps near 0.7% — and do note that’s positive 70bps (figure below). We’re used to thinking of bund yields as perpetually negative.
On Tuesday, two-year yields approached positive territory.
For more “dramatic action” you can look to the roller coaster in crude, which is, in some respects anyway, becoming untradable. The world’s most financialized commodity is illiquid and fragmented. It’s too expensive to trade and that can become a self-fulfilling prophecy.
Meanwhile, the Kremlin continued to insist on ruble payments for gas exports, despite i) the G-7 delivering a flat “No” to Putin, and ii) Russia still lacking a concrete plan on how, exactly, such a scheme would work even if Europe were to agree.
One assumes Moscow will unveil the relevant terms and facilities within the next 36 hours, because Putin gave Gazprom and Elvira Nabiullina a Thursday deadline to make all the necessary preparations and… well, “a specific person who can be hanged if it’s not done.”
“‘Peace in our time’ will continue to see wild market swings,” Rabobank’s Michael Every said Tuesday. “Russia is pressing ahead with plans to insist on a switch to RUB payment for its gas [and] has underlined it won’t export it for free, while the EU says it won’t pay in RUB,” he added, calling that “as binary a trade as you can get.”
“If you know neither the enemy nor yourself, you will succumb in every battle.”
? Sun Tzu, The Art of War
“If you only hear what you want to hear, and you only believe what you want to believe; your ass is grass on the battlefield”. Where karate or whatever discipline this Muddy Butcher portends to ascribe to, gets you nowhere. No belt for you, coward.
-TB, School of Hard Knocks -1991
Along these lines, I’m wondering how to interpret the disappearance and reappearance of Defense Minister Shoigu. I had assumed his disappearance indicated Putin had fired him or worse. So does his reappearance indicate that the military has, in effect, taken control of the war, reinstated Shoigu, and curtailed Putin’s power until the mess can be sorted out (i.e. Putin becomes the military’s scapegoat)? Or does it indicate more the reverse, that to serve as Putin’s “somebody to hang”, it would be more convincing if Shoigu was still in his post for now? Putin and the military leadership both desperately need someone to blame.
Where’s Tom Clancy when you need him? We need a 300 page novel explaining all this, stat! I’ll bet the novel would be far more believable than the actual reality of this insane war.
Putin likes to make ‘losers’ disappear. Like Hitler, he probably blames his generals for the mess in the Ukraine. Fortunately for Putin, the Ukrainians are taking care of his stupid generals for him, having killed five generals and a meddlesome colonel already.
World On Fire graphic is very nuanced commentary on supply chains and damage being done to the World’s economy by the Russian war of aggression against Ukraine! Good one. 😉
arstechnica.com/gadgets/2022/03/low-on-gas-ukraine-invasion-chokes-supply-of-neon-needed-for-chipmaking/