Change, a Four Step Process, and the Big Beneficiary
Broad reform, reform that wrings the excesses out of the democratic process, takes time. It started with Health Care, now it is Financial structure, next it will be Climate Change, and lastly it will be Immigration, all to be completed before the election.
The financial reform going on at the moment is a big second step, especially if derivatives are moved to a transparent exchange market. We have been advocating this change since the bubble bursting started, it is probably bigger than health care reform in terms of wringing excess out of the economy.
Climate Change and Immigration Reform will then tie up the loose ends and create a basis for relative strength in the U.S. dollar and the big loser will be gold, the popular measure of excess.
In the current market, the numbers to watch continue to be Goldman Sachs (GS) and the financial ETF (XLF). On Friday the XLF closed at 16.78, one point above the 16.77 critical level, but today it is fading away again. Goldman continues to decline to my 117 objective.
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