The SPUTNIK MOMENT is nearly upon U.S.

To coin the phrase used recently by the reputable US bond expert at PIMCO their CEO Mohamed El-Erian (whose colleague Bill Gross is perhaps more familiar to most of us)when he described the US AAA downgrade (to AA+ by S&P in case anyone has forgotten as S&P have received unprecedented stick for their rating change sometimes from their peers such as Moodys and Fitch, unbelievably) as the 'Sputnik Moment' for markets and the US dollar I was reminded of the fact that it was Obama himself who coined the phrase originally during his 2010 State of the Union address whilst describing how China had possibly overtaken the good ol' USA in many departments. Nevertheless the knee jerk bounce from the lows earlier this August suggest that even PIMCO got the timing of the Sputnik Moment wrong as the thrusters possibly got closed down before launch. THE SPUTNIK MOMENT IS NEARLY UPON U.S. though!

The bounce from FTSE100 which had declined from under 4,800 within the last few weeks to the current maddening 5,336 is clear proof that casino markets need curbing as prescribed by William 'Bill' Cohan at Bloomberg who this week appeared on his channel suggesting 3 areas of major concern, They were namely 1.taking the publicly quoted brokers back to partnerships allowing for proper capital investing 2. closing the casino by relooking at Glass Steagall Act and splitting the firms investment banking operations away from their principal trading operations (High Frequency Trading in essence needs to be curbed) & 3. cutting the reward culture (salaries & bonuses) by at least 50%. Unfortunately it's unlikely that any of these ideas will succeed as the power of the culture as imbibed by the likes of Morgan Stanley, Goldman Sachs, BofA Merrill Lynch, JPMorgan, Citibank & countless others is just too entrenched. But Cohan is 100% correct of course. In UK market the 1986 Financial Services Act is largely responsible for the dissection of the UK economy by investment banks working in cahoots with hedge funds & PE houses often financed from within the commercial areas of these banks. Regrettably profit is getting in the way of fair and just capitalism which is why I'm so concerned about crass M&A as has occurred by example in the takeover of Cadbury Schweppes and countless other business some of whom have got caught up in Private Equity deals that look almost too good to be true (EMI, Boots, etc, etc).

So with the Sarkozy Merkel meeting this week having gone down a treat with the neo-socialists who believe that the way to fix the EU is to subscribe a transaction tax on anything that moves it would appear that capital markets especially here in Europe are playing catch up with reality. I've seen just about every type of INVESTMENT EXPERT appear on B'berg, CNBC, BBC etc to suggest that "EQUITIES ARE CHEAP" that I'm half expecting Mr Blobby himself to leave the Oval Cricket Ground this Thursday to do a market commentary along the same lines. Custard on his face of course. Single digit p/e blue chips are just around the corner Gentlemen!

It seems to me that with chartists making stark warnings about the directions of bonds, currencies and equities I think the only way ahead is to purchase the odd krugerrand and buy the occasional gold share for the eventual gold share frenzy that will ultimately prevail here. Unlike dot.com which imploded spectacularly on promises of airhead valuations the gold boom around the corner could make the old Poseidion stories look rather unimpressive. Of course there will likely be the occasional Bre-X debacle along the way BUT I doubt our friends at North Collonade could even spot a pigeon across the River Thames at the moment as they focus on extinguishing independence.

Stand by Canaveral with your binoculars Ladies & Gentlemen please! Get your tickets for the Sputnik moment.....