News item
16 Jun 10
The sandwich dilemma
In the second half of May on the London Metal Exchange (LME), nickel prices stabilised within a tight range of USD 21,000.00/mt on the downside and USD 22,000.00/mt on the upside after the expected correction set in to counteract the totally oversold move. This consolidation was more than overdue to let the previous dynamic move in prices be put into perspective. Towards the end of the month the imbalanced state of affairs had normalised sufficiently enough for some technical indicators to even show some pointers for a short term break out of the trading range.
On Friday, the 28th may 2010 prices were moving more clearly towards the USD 22,000.00/mt level, until an abrupt break in the upwards move occurred in the late afternoon. The rating agency, Fitch, whose holding company Fimalac is 60% owned by the French businessman Marc Ladreit de Lacharrière, lowered the rating of Spain by one notch. The reason behind this was that the savings package to overhaul the national budget, which the rating agencies had suggested and needed to avoid a downgrade, was seen as having a possible negative influence on further economic development. The downgrade was therefore inevitable. But by going round in circles like this, it is all too obvious that the structure and conduct of rating agencies urgently need a make-over.