Ukraine - bye, bye Vlad?

Markets reading all this as turning point to de-escalation.

Russia 5Y CDS which hit 280bps on Monday is back around 190bps - but in the autumn it was sub 100. Lower is better/lower risk for non financial followers.

Ukraine GDP warrants hit mid 60s price on Monday, and are mid 70s now, albeit they are down from 108 still from November.

I remain a bit sceptical TBH.

My read of the Putin - Lavrov - Shoigu drama production on Monday, is Moscow is prepared to give talks a bit more time, but not that long. Putin made the point of saying he expects Minsk 2 to be implemented NOW. And we are not seeing a major military pull back.

What we have seen is lip service given to military de-escalation, minor troop pull backs/redeployment still close to Ukraine, just hinting to the West what Moscow can do if the West/Ukraine complies, but the cyberattack and the DPR/LPR vote in the State Duma suggests that Moscow still has plenty of options to screw Ukraine around, and there is still a spectrum of malign actions, including military.

For me, the date to signal relief is early April and the annual Russian military conscription cycle. After that date, new recruits will need retraining, which will stall the level of military preparedness. So this high risk scenario still lasts a couple of months yet, pending some major, defining resolution.

And the core issue here is still is has Putin won anything here? Struggle to see him being a net winner, actually he looks like a net loser: a) Ukrainian sovereignty has been re-affirmed/strengthened, with the nation rallying behind the cause, not panicking and showing real resolve to stand up for itself. b) Ukraine has been better armed as a result - better able to defend itself. c) Russian has lost the PR war, look at opinion polls now in the West, showing increased support for Ukraine, Russia seen as the malign actor, and more willingness there to support Ukraine and pushback on Russia. Therein interestingly I was listening to a former US Ambassador wax that DC now views Russia, not China, as the main near term threat. d) And NATO has rallied to the cause, and it now has a new vision and vigour, with the biggest perceived threat now seen as coming from Russia. e) Russia is seen as an unreliable energy partner, and the West will accelerate its energy diversification away from Russia - sure it won’t happen next week, but it will accelerate over the medium term.

f) No concessions on NATO prospects for Ukraine or on Minsk 2.

What has he won is agreement from the US and NATO to speak about missile restrictions, security enhancing measures, stuff that he could have got anyway. He has affirmed his strong man status, but this is bordering on a perception of him as a bully. He has shown the Russian military strengths, but also perhaps an unwillingness to use it to full force.

And on Minsk 2? Well the Germans and French might love Zelensky to roll over and implement as per the Russian understanding of a Federal solution, in effect for Ukraine, with DPR and LPR having vetoes on foreign policy. But there is zero chance that Zelensky can win approval for this in Kyiv - he would never get the two thirds majority in the Rada. And actually there is even less appetite now in Kyiv to roll over to Putin’s demands. Indeed, the read from Kyiv is that they have stood up to Putin’s bluffing and showed the world that they are no push overs. They called Putin out and won. Zelensky’s position has been strengthened. He showed calm almost under fire. And Ukraine will continue, even accelerate, it’s push West. Bye, bye Vlad!

Minsk 2 is just not implementable. So what is Putin going to do now? Go back to writing essays about Ukraine?