2015 has started with all the volatility you might have expected.
Today the Swiss Franc leapt 30% in just 13 minutes. Madness. I could hardly get the scale small enough on my computer to keep the constant rises on the screen. The FTSE100 went the opposite way and my £5 down bet made £700 while I had a chat with a client. Unbelievable.
Gold joined in too sensing that things weren’t right. As I write the precious metal is up £21.18 an ounce to a little over £829. What caused all the fuss?
The Swiss decided to abandon the capon the Swiss Franc’s value against the Euro and the Euro – a move absolutely no one saw coming. Even the IMF’s head honcho, Christine Lagarde described the move as “a bit of a surprise”.
Jees, if she didn’t know about it the rest of us have no chance. So much for central banks all working as a team eh? What worries me most about this decision is that only three days earlier the Swiss National Bank were saying THE EXACT OPPOSITE which proves what I have been saying for a very long time – you can’t trust a Central Bank.
Most stock markets fell sharply on the news with the BBC reporting investors were buying gold and German bonds as fear took hold. Expect more of this to follow.
No doubt your personal choice of paper will have it’s own explanation for the move. My guess is the Swiss are pre-empting a move by the ECB to follow in the footsteps of the US Fed and start printing money out of thin air in attempt to keep the Euro economy alive. Watch this space – quantitative easing by the ECB can only be days away now.
Or maybe the Swiss have dialled in a default by the Greeks and a rush for the Eurozone exit. Is that possible? ANYTHING is possible in 2015. My take is that the Swiss simply can’t afford to keep fighting the Euro and if the ECB get jiggy with QE you can expect the Euro and the stock markets to soar even higher. It has cost the Swiss an absolute fortune to try and defend the Swiss Franc and their export markets against the rising Euro. Time to call it a day.
The list of so called “surprise events” just keeps getting longer. Who saw the oil falling to half it’s price? Certainly the Scots didn’t when they did their economic forecasts only a few months back.
The Greek vote this Sunday is a BIG event. So too is QE for the ECB. These are the events that affect us all in 2015.
Stay tuned …… 2015 is going to be a year to remember.