During the summer months the markets have climbed a wall of worry and in such a market volatility has been relatively low. Market volatility measures a level of fear or complacency in equity markets, with low volatility defined as lack of fear. The last time volatility peaked was in October 2011 and has been steadily decreasing ever since. We don’t expect this to continue much longer as this marks the beginning of a season of decisions that will affect many markets and investments here and abroad.

First, the Fed met last week to discuss the current status of our economy. There was general expectation for the Fed to announce QE3, based upon the most recent spate of weak economic data. Yes, another round of bond buying by the Fed to increase money supply to the U.S. After the Fed announced an unending QE3, the markets as expected fluffed up a bit more of its sugar high.

This may help markets in the short run but its effect of weakening the dollar will have so many side effects I don’t see the true benefit. They also said they will be accommodative until employment starts to improve but I do not see how that policy will get anyone to hire employees.

Also last week, the German courts decided they can participate in the bailout fund for Europe but capped the amount allowable. At first blush this is good news but the meeting this weekend to centralize the Eurozone banking system ended in failure so we are back to square one.

October brings us another jobs report and our third quarter GDP, which will have people on edge. This is followed by a presidential election where the repercussions could be dramatic. We also have a debt-ceiling problem. We topped the $16-trillion mark last week and have only $400 billion before we need to raise our debt ceiling again.

At the end of this year we have a fiscal cliff coming. The so-called Bush tax cuts are set to expire at the end of the year, and if nothing is done we will all face real economic problems. This cliff also includes an end to the payroll tax cuts, among other things that must be resolved within the next few months to avoid a major lowering of our GDP for the upcoming year as well as increase the chances of another recession. Washington usually does nothing until the last minute so this will definitely create fear.

The bottom line is that there is no denying the road ahead will be problematic. We are coming off slowing job growth, slowing of corporate earnings and a slowing economy, so we could have a rough couple of months in the global equity markets. Good luck out there and have a wonderful fall season.

Richard Zipkis is chief investment officer of Granite Group Advisors on 187 Danbury Road, granitegroupadvisors.com. Contact him at RZipkis@granitegroupadvisors.com.