SEPTEMBER: REVIEW OF THE MAIN EVENTS

September is gone leaving most   investors with a bitter taste since most of the assets fall amid extreme volatility and fear over the continuing EU sovereigns debt issues.  During last month there were several issues that made investor reluctant and forced them to reduce their exposure to stocks and other high risky assets.

However, the most important event( in my opinion) was the decision of SNB (Swiss National Bank) to intervene in the FX market and set a minimum rate target for EURCHF at 1.20 promising in the following days that it will defend it no matter what! This is not the first time that a central bank set a specific rate and decides to defend it (remember Bank of England and Bank of Thailand during late 80s and 90) and neither is for SNB itself. It had to take the same kind of measures against deutche mark in 1978. However contrary to the examples of BoE and BoT  , SNB then  managed to defend its floor successfully and   weakened the    Franc,stabilizing it eventually to  more appropriate levels. Of course there was   also a drawback. Swiss inflation rose from 0.45% to 7.8% in just three years!

The second most important event was the disagreement between the Greek government and Troika during their meeting in first week of the month which made   Troika to stop the negotiations and postpone the September‘s   aid disbursement. After further negotiations, meetings of the Greek Prime Minister Papandreou( with Merkel and Sarkozy) and new austerity measures, Troika eventually came back at the end of the month and Europeans announced that the disbursement will be delivered in October. All the above, they have created uncertainty in the markets making stocks, commodities and gold tumble.

Furthermore, Jean Claude Trichet  in his monthly conference after leaving rates unchanged   have announced that risk to economic growth are on the downsize and uncertainty is high making ECB staff to downgrade forecasts. Rating agencies were active for another month leaving unchanged the rating of Germany but downgrading New Zealand from AA+ to AA which came as a surprise. Moreover American, French Italian and Greek banks were downgraded further adding to the anxiety of investors.