Russia-Ukraine Flash Report - 3/21/22 09:45 PDT

Here are the stories we are monitoring this morning.

1) The attack on the chemical plant on the southern edge of Sumy was caused by Russian artillery. A couple of storage tanks for ammonia were hit. The tanks vented and were brought under control. It appears it was a smaller leak. Winds were strong and blowing away from the city. There was one injury.

2) There are reports that a training base for volunteer forces in Ukraine was struck by a cruise missile, but all the reports are from Russian disinformation accounts and unreliable news sources. We feel these reports have weight but need better confirmation.

3) The deadline for Mariupol to surrender came and went. There are reports of very intense fighting and graphic videos coming from the city. Off the record, a military leader of the DPR said they don't believe Mariupol will fall this week.

ASSESSMENT: It appears, for now, the ultimatum was a bluff.

4) We now know why the news out of Mariupol evaporated after the 15th of March, shortly after the airstrike on the drama theater. The Ukrainian military did a rescue operation of the two Associated Press reporters working in the city. They were on a capture/kill list by Russian forces and Ukrainian military intelligence believed that they were close to being captured. The AP journalists were not targeted to be killed, but to be forced to state on video they produced only lies. They were the last two international journalists in the city.

5) One of our sources that we deeply trust believes there is a Ukrainian offensive going on from Mykolaiv to push towards Kherson. We aren't as convinced as they are, however, their track record is somewhere between 96% to 98% accurate.

ASSESSMENT: We don't see it, so if there is one, it's small.

OPINION: We could see Ukrainian forces trying to convince DPR and Russian commanders that Kherson is at risk, to provide potential relief on Mariupol.

6) We are seeing strong indications that the NATO meeting on Thursday will include discussions on establishing an international peacekeeping force in Ukraine. We believe this has significant weight, and the discussion is much further along than, "let's talk about this." We have no information on the composition, resources, member nations, or charter. We have no information on if that would include armed troops on the ground.

OPINION: With the prospects of a standoff that could last for months or years, keeping all of Europe, part of Asia, part of the Middle East, and all of North America on a Luke Warm War footing is untenable for all sides. Public opinion will eventually turn against intervention and the situation in Ukraine will get lost in the news cycle. It is our view we are stuck in the Mutually Assured Destruction Instability Paradox, and the only person that can bring this under control is Russian President Vladimir Putin. 

6) We saw a report this morning that Slovakia is ready to give up its S300 air defense systems to Ukraine, and that is why the Patriot Missile batteries are there. We would advise caution based on the Mig-29 swap debacle on reaching conclusions. However, the Patriots on the ground and active indicates to us a deal is close or has been made.

The Pentagon said it would not stand in the way of any nation that wants to provide 3rd party air support or aircraft to Ukraine.

OPINION: We don't believe any European nation will take up this offer without NATO and 100% assurance that Article 5 will be adhered to.

The Pentagon also indicated that Russia still has more than half of its cruise missile inventory. Many are seeing this as a plus for the Russian Ministry of Defense and its capabilities.

OPINION We're shocked that Russia has used 40% to 45% of its inventory in Ukraine in 25 days. We interpret "more than half" to mean less than 66%.

7) Russian State Media ran a story of armored vehicles being unloaded at the port of Berdansyk, close to Mariupol. The analysts we talked to this morning told us these are old, low-performing vehicles - one person called them post-Cold War era "junk." We noted they are painted in desert camouflage, indicating they are being rushed into service. 

8) A Russian drone that crashed in Poland is believed to have malfunctioned and was not an intentional act. This is the third wayward drone to crash across international borders during the war - two Russian and one Ukrainian.

9) Russian forces have increased the shelling and missile attacks on Chernihiv, targeting civilians and civilian infrastructure. Without the control of Chernihiv, Russia cannot mount an offensive against Kyiv along the eastern flank.

ASSESSMENT: We are growing concerned that without a Ukrainian offensive to push artillery back further, Chernihiv will become the next Mariupol.

10) The Russian stock market technically opened at 1 PM Moscow time, but only the trading of OFZ bonds was allowed. Yields were as high as 20% at one point but settled at 13%. Russian supermarkets have started to ration more staples such as sugar, cooking oil, and salt. The rouble appears to have settled around 0.0095~ to the US dollar - down 25% since the war started.

ASSESSMENT: We believe the spot shortages have been driven by panic buying caused by sanctions and internally directed messaging by the Russian government. The supply of staples should stabilize unless the geopolitical situation deteriorates. 

11) According to the UN, ten million Ukrainians have been disrupted from their homes in 25 days. It is the biggest war caused refugee crisis on the planet since World War II.

ASSESSMENT: There is a lot of qualifiers to that statement, specifically that this has happened in just 25 days.

12) This morning, TikTok legal got a love letter from our retained attorney. We love you, Jenny!