26.06.2023 – After the bizarre one-day coup by Wagner leader Yevgeny Prigozhin, the first thing to do is relax in politics and on the stock market. But the march could have been only a small foreshock.
The stock market players are still cool. But if the nuclear power Russia drifts into a civil war, this will also concern the financial world. Traders should consider putting some of their money into the VIX as a hedge – it will jump up if the situation escalates. Here is the daily chart.
Source: Bernstein Bank GmbH
Back in September last year, we wrote that Russia’s President Vladimir Putin must respond with an escalation in the face of the successful Ukrainian offensive around Kharkiv and Kherson – he needs successes, otherwise there is a threat of implosion of the Russian Federation. The successes have failed to materialize, and now the Wagner coup marks a turning point.
Patriot or traitor?
Yevgeny Prigozhin acted as a patriot and front-line fighter against a corrupt state apparatus. Even if he apparently lacked the support of the army during his march on Moscow and even if many see him as a traitor who shot down his own helicopters, the matter could develop explosive power.
For the mercenary chief has raised some interesting things in recent weeks, which have been circulated thousands of times on his Telegram channel: There are no Nazis in Ukraine, he said; the war was instigated by vain Russian generals; the army leadership is completely incompetent; the rich have taken their children to safety while the poor die on the front lines.
The cheering in Rostov-on-Don shows that many Russians think alike. They love Russia – but hate the elites who bunker billions abroad and treat themselves to ostentatious palaces. In the army, for example, it is a bad custom for generals to have their recruits build them nice houses. Feudalism at its finest.
Under pressure to move
The question is how Putin will act now. He has allowed Prigozhin to criticize him for a long time and has miscalculated. Now the Kremlin leader must demonstrate strength; he needs successes – perhaps the talk of a nuclear strike will be followed by action. Or perhaps the Russians will scale back by blowing up the mined Zaporizhia nuclear power plant to stop a Ukrainian advance across contaminated land in the south.
In addition, the tsar must show toughness or the internal decomposition will continue. But if Putin breaks his exile deal with Prigozhin and has him eliminated, the Wagner mercenaries in Russia could revolt. Putin can feel secure only if he wins a convincing victory in Ukraine. And if he keeps a better leash on all dangerous factions in the country in the future. So keep an eye on the real-time news!
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