MoneyWeek

The Fed raises interest rates until something breaks, says an old Wall Street adage. In the past few days dearer money has been the underlying cause of a nasty breakage in the banking sector. Bank failures are fairly common: there have been 564 in the US since 2001, but last week saw America’s second-biggest after Washington Mutual in 2008 when Silicon Valley Bank (SVB) collapsed (see page 16) with $209bn of overall assets and $175bn of deposits. That prompted a panic at Signature Bank, a key institution for the cryptocurrency sector, which rapidly become the third-largest failure. Herds of nerds Given that group-think is so prevalent in the technology sector, as MoneyWeek witnessed first-hand in the dotcom bubble (and chronicled in our “dotcom disaster of the week” column once it…

Egypt has lowered the price of its passport. Wealthy foreigners can buy citizenship by paying $500,000 directly into a bank, reduced from $750,000 – or alternatively by buying $300,000 of state-owned property or investing $350,000 in projects, alongside a $100,000 deposit in the state treasury. The initiative to attract foreign capital is in line with reforms demanded by the International Monetary Fund in return for a $3bn bailout, says Abbie Cheeseman in The Times. Egypt is also suffering from an acute currency crisis. The central bank has been burning through its foreign currency reserves in its bid to buttress the plummeting Egyptian pound. Across the Levant, however, Turkey, a leading “golden passport” destination, has raised the cost of citizenship through property investment from $250,000 to $400,000, says Louise Callaghan in…

We’ve had enough of experts. Just about every forecast made by economic and market experts six months ago has been proved wrong. Developed economies have not plunged into recession. Despite a cold winter, UK and European gas prices as well as oil prices have fallen to levels last seen before Russia’s invasion of Ukraine. Budget deficits are significantly undershooting expectations. Corporate earnings have not collapsed, but gently deflated. Equity markets are not heading for new lows, but rallied over the year-end. Annualised inflation remains high for now, but looks likely to fall back towards the 2% target in the UK and US later this year. Interest rates have not peaked yet, but a peak looks imminent. Government bond yields have not risen nearly as far as confidently predicted, while defaults…

“The oil industry believes it is under-investing in future production capacity, creating the risk of future shortages and higher prices. Yet long-dated oil prices keep falling, sitting now at $65 a barrel… investors appear convinced that the future balance between supply and demand [will] not be as tight as the industry is warning. First, investment recovered significantly in 2022… Second, Russian oil production hasn’t collapsed as feared due to Western sanctions… Third, many investors believe that demand for oil will slow over the next two to three years… Yet, those factors alone don’t appear to fully justify the five-year forward for Brent trading at 20% discount to spot prices… [a] concentrated wave of hedging [by shale-oil companies] has pushed down prices, particularly for 2024 and 2025, depressing longer-dated prices even…

Cobalt prices have hit a 32-month low as production surges, says the Financial Times. Output of the metal – which is a key component of many batteries – rose 23% last year, helped by a ramp-up at Mutanda, the largest mine in the Democratic Republic of Congo (DRC), and the arrival of Indonesia as a major producer. In the longer term, cobalt demand is expected to quadruple by 2030. However, short-term demand was hit by weaker sales of electronics such as smartphones, lockdowns in China and a shift in the Chinese EV market towards shorter-range batteries that don’t use cobalt. Production has been slow to fall in response to lower prices, partly because cobalt is often a by-product of copper and nickel mining and demand for these metals has remained…

WANdisco, a British software company, has asked for its shares to be suspended from Aim, says Joanna Partridge in The Guardian. The firm said its bosses had uncovered “significant, sophisticated and potentially fraudulent irregularities with regard to received purchase orders and related revenue and bookings, as represented by one senior sales employee”. WANdisco now has “no confidence in its previously announced revenue forecasts for the past year”. Sales in 2022 could have been as low as $9m (£7.6m), compared with a previously forecast $24m. The news and consequent investigation come shortly after WANdisco became the latest UK firm to announce plans to seek a US listing, say Ian Johnston and Maxine Kelly in the Financial Times. A dual listing has been a “long-stated” ambition. The Anglo-American company, a specialist in…