Is this a delayed correction?

 

 

  

 

DEI Doctors and Nuclear Engineers

 

In recent newsletters, we’ve been critical of aspects of President Trump’s foreign policy.

But he does deserve significant credit here at home. We’ve already covered his important work in streamlining the permitting process for drilling and mining projects.

Today we’re going to discuss another area where the President has made good progress. Reversing the negative effects of DEI, and putting America back on track towards a merit-based system.

A few years back I remember seeing the chart below, and being absolutely blown away. I had no idea it had gotten this bad.

The chart shows the U.S. medical school acceptance rate by race. It is broken into groups by scores on the MCAT (med school acceptance test) and GPA.

Source: AEI

In the first group, we see that only 6% of Asians and 8% of White people who score 24-26 on their MCAT are accepted into med school. Meanwhile 31% of Hispanic and 56% of Black applicants with those same scores are admitted.

And even in the highest-scoring bracket, only 58% of Asians and 63% of Whites get in, while 83% and 94% of Hispanics and Blacks gain acceptance.

Is this the kind of society we want? One where race matters more than merit? Especially when it comes to life and death careers?

This is no small issue. It affects the very incentives that make our economy and society work. If we don’t fix this issue, and re-orient towards a merit-based system, the outlook is bleak.

DEI Nuclear Workers

Over in the U.K., DEI is also wreaking havoc.

For example, the country is attempting to build small modular nuclear reactors (SMRs) to meet growing power demand.

But DEI requirements are mucking up the process. From The Times:

Previously hailed as the fastest plan of its kind in the world, the bidding process to develop small modular reactors (SMR) took two years and saw firms face extra requirements to prove their “social value”.

Companies were told to fill out up to 350 pages solely dedicated to how they would give jobs to groups of disadvantaged people — including asylum seekers, who generally cannot work while their claim is being processed.

…Companies were asked how they would create jobs for those “who face barriers to employment”, which included “refugees, people who have recently immigrated or are seeking asylum”.

The British government is forcing companies building nuclear reactors to hire people “who face barriers to employment”?! These dolts never even considered how dangerous their little social experiment could prove to be.

Companies were also instructed to outline plans to maintain a 50% female workforce, which is completely unrealistic. Women are not as naturally drawn to industries like construction and nuclear as men are. These DEI campaigners refuse to recognize that there are inherent differences between the sexes and their differing interests in careers.

If there was a nuclear plant being built upwind of your house, would you want anyone but the most qualified and motivated people building it? Of course not.

And can you imagine hiring asylum seekers (refugees with little screening and questionable skills) to build a nuclear plant? It’s absolute madness.

Due to all this red tape, just the bidding process for a few SMRs took 2 years and cost £22 million.

Here in the U.S., nuclear firms were also committed to DEI goals before Trump came into office. Thankfully they have mostly closed their DEI offices since. As we enter this nuclear renaissance, I want absolutely zero DEI involved in the process.

I use the examples of medical and nuclear careers because they show how dangerous DEI can be. But realistically, this applies to the entire economy.

Trump’s Efforts to Fix It

DEI may have started out as a good-natured attempt to remove prejudice in hiring. But as it stands today, it’s a disaster.

A society that isn’t based on merit loses its moral compass. It becomes a nepotistic mess. Of course our society shouldn’t discriminate based on race, but these nutjobs have taken it way too far.

I don’t believe DEI is doing the people who are “benefitting” any favors, either. The incentive structures get all mixed up. If certain groups feel like they have a free pass, they’ll be less motivated to work hard and expect to get by anyway. So while DEI might “help” in the short-term, in the long run it creates a nightmare of incentive structures. And bad outcomes.

Thankfully DEI is one of the first items Trump addressed once in office. He instructed all government offices to dismantle their diversity, equity, and inclusion infrastructure.

He essentially required the same of any institution or company that gets significant funding from the government (which is most universities, non-profits, and companies).

This is a huge development. It will take time to show up, but the effects of re-instituting a merit-based system will be extremely positive.

There’s more work to be done, but this is a good start.

So whenever I get frustrated with something the Trump administration does, I have to remind myself that they’re doing important work in certain areas. And that is something to be thankful for.

 

 

 

What will happen next week?

 

Next week, we will have the last FOMC for the year, when nearly everyone is expecting a rate cut of 25 base points. So what will happen for the market for this important week? Here is an analysis I have seen that outlines two possible scenarios for the S&P 500 Index with December and January in focus based on the famed Elliott Wave theory...

Notice I've marked the next set of important dates with the red vertical lines – this week, the Federal Reserve meeting next Wednesday, and into/around Christmas.

With the red swing line, there wouldn't be much of a pullback, and the index would drift higher over the next four to six weeks (maybe longer). It would be a low-volatility environment, which wouldn't be a big surprise considering how the bull market has acted since the April lows.

The blue swing line is the preferred setup for call options... It would be a wave (1) high this week with a drop into a wave (2) that holds the recent lows and explodes higher into a wave (3) into January.

It's worth mentioning that the recent lows must hold for either of these scenarios to remain intact.
 

  

 You probably can already guess which one I will vote for. Yes, the blue scenario. While I still expect a decent year-end Santa Claus Rally, I do believe we will likely see a decent selloff first. At DW Family, we have taken too nice gains today and is opening a short trade to bet on some weakness next week. Will be interesting to see what is coming next week😀😇

 

 

America's upper-income earners are struggling to pay their debts...

 

 

 Now the status of Americans' debt 

Credit-scoring firm VantageScore reports that Americans who make over $150,000 per year are falling behind on their credit-card and auto-loan payments faster than anyone else.

Their delinquency rate has surged nearly 20% over the past two years.

Take a look...

The labor market seems to be cooling off as hiring freezes sweep the jobs market. Planned job cuts were just above 54,000 through September. And total hiring plans for the year are just above 200,000.

Three-month average wage growth was just 4.1% in August, lower than 2022's high of 6.7%.

AI is hitting white-collar positions in the tech sector and elsewhere. Just last week, Amazon (AMZN) made headlines for plans to slash as many as 30,000 jobs.

In other words, debt is rising... and the money used to pay off those debts is getting harder to come by.

That's concerning for an economy that traditionally relies on spending from high-income earners. These mounting pressures are taking a toll on all sides of the consumer-driven economy.

   

 

 Finally, information for fun.....

 

  

 

A Deja-Vu Friday Turnaround

 

 What a turnaround today! But that was not a surprise for us as we discussed the possibility at my pre-opening note to my DW Family. 

  

  

There is a strong possibility that we may see a good year-end rally, or Santa Claus Rally. So the current gyration is setting up the stage for this to happen. Having said that, what is coming after that in 2026 is still a big question. Here is an interesting chart posted by Charlie Bilello.

  

 

 

 

 

 

 

What can "妈妈打你“ bring to you?

 First of all, what a turnaround Friday! S&P declined over 80 points during the day, down all the way to around 6630ish then rebounded later of the day. It has actually closed in green, comfortably above the 6700 level. If it can still manage to maintain the bullish turnaround next Monday, then I believe the current mini-correction is likely done and it is poised for the year-end rally. 

   

New Yorkers have "bravely" chosen a communist to run their city for the next 4 years. Sure, the guy sounded like "妈妈打你“ has made numerous empty promises but all just slogans than anything doable. Here is a great write-up about what is coming to the New Yorkers. It is certainly not beautiful but that's what the NY residents want to have. However brutal the prospect may be, those who have chosen him deserve it!! Good luck, New Yorkers😏

The Socialist Sandbox

Mamdani’s campaign rests on a single, seductive promise: to make New York “affordable again.” It’s a lovely slogan—until you realize he plans to achieve it through rent freezes, free services, and taxes that would make even Lenin check his calculator. His plan is a greatest-hits album of progressive wishful thinking.

He’s called for a citywide rent freeze—no more rent hikes for stabilized units, and the construction of 200,000 new “affordable” apartments in ten years. He wants to rezone affluent neighborhoods to require inclusionary housing, strengthen tenant protections, and impose new restrictions on landlords.

But as anyone who has studied housing economics knows, rent control doesn’t solve shortages—it causes them. From Stockholm to Paris, from Berlin to NYC, every experiment in price-fixing has led to fewer new developments, deteriorating buildings, and black markets for apartments. Economists can’t agree on much, but on this they do: rent control is a disaster dressed as compassion.

Mamdani also wants to make buses entirely free of charge. In his world, the MTA’s hemorrhaging budget will somehow balance itself. Kansas City tried this. Ridership increased, but service quality declined. Tallinn, Estonia, flirted with it and quietly walked away when the math no longer worked. There’s no such thing as a free ride—someone always pays, and in this case, it’s the taxpayer.

Mamdani has promised universal childcare and pre-K, funded by his new taxes on “the rich.” The idea sounds noble—who doesn’t want parents to catch a break?—but the track record is grim. Quebec’s “universal childcare” system was overwhelmed by demand, plagued by waitlists, and chronically underfunded. Stockholm’s version became a bureaucratic maze. Even New York’s existing pre-K expansion under Bill de Blasio nearly bankrupted parts of the education budget.

Then there’s the pièce de résistance: city-owned grocery stores. One in every borough, operated by the government, to “bring down food prices.” The phrase alone is a red flag—literally. When cities dabble in retail, the results are predictable: theft, inefficiency, politics, and loss. Chicago’s 2023 attempt collapsed under the weight of its good intentions. The state-run supermarkets of Venezuela, Cuba, and the Soviet Union ended up with empty shelves and long lines. Bureaucrats make poor grocers.

And of course, someone has to pay for all this. Mamdani’s answer is simple: millionaires and corporations. He wants to soak the rich, hike business taxes, and wring Wall Street for cash. The problem is that golden geese can fly. New York has already lost about ten percent of its millionaire households since 2020. If Mamdani wins, Florida’s real-estate agents may send him flowers.

Mamdani wants to replace portions of the NYPD with a “Department of Community Safety,” staffed by social workers and therapists. In theory, this might work for minor calls. In practice, we’ve seen it fail from Portland to Minneapolis. Crime rises, response times worsen, and the same citizens who demanded reform end up begging for the old system to be reinstated.

Lastly, there’s his climate justice agenda, which includes green schoolyards, electrified buildings, and sustainable retrofits. Admirable goals, but they cost money—and New York City already has a $13 billion capital backlog. The city can’t fill potholes fast enough as it is.

 

Where It’s All Failed Before

Berlin’s rent controls collapsed under their own contradictions; the government reversed them after construction froze.

Free public transportation in Tallinn fizzled when subsidies outpaced revenue. 

Venezuela’s “Bolivarian supermarkets” went bare within months.

France’s millionaire tax has driven its wealthiest citizens to London and Brussels; this year, London’s inheritance tax grab has prompted nearly 10,000 millionaires to relocate to places like Milan, Dubai, and the United States.

Minneapolis’s “defund the police” experiment ended with a surge in violent crime and a quiet refunding of the department.

Mamdani insists New York can do it better. But the laws of economics aren’t suspended at the Hudson River.

Why I Want Him to Win Anyway

Here’s the paradox: I want him to win precisely because I think he’ll fail. The problem with ideology is that it thrives in the abstract. When the slogans meet the spreadsheets, reality does the grading. If Mamdani loses, his ideas remain myths—untested, unblemished, endlessly romantic. But if he wins, he’ll face the one test socialists always dread: implementation.

That’s the real value here. Let Mamdani try. If he shows us whether a city already drowning in debt and bureaucracy can somehow afford free transit, childcare, and groceries without driving the rich and productive to flee for warmer, freer shores, I’ll be the first to applaud. But if he doesn’t, his loss will be educational—not just for New York, but for every American city tempted by the siren song of socialism.

Mr. Market’s Judgment

Before Mamdani finishes his experiment, the markets will move… at the speed of capital flight.

If he wins, commercial property values are likely to drop as investors hedge against higher levies and increased regulation. Upper-income households will emigrate, whether they’re blue or red voters. Municipal bond spreads will widen as risk premiums rise. Private investment will follow the same path it has for years—out of New York, and into Florida, Texas, and Tennessee.

The silver lining is that Mr. Market is a ruthless teacher. He’ll administer the lesson faster and more brutally than any election cycle ever could.

 Sean Ring

 

 

 

 

 

 

 

 

 

A crazy market with zero-Risk Illusion

 

   

 

Share a few interesting data points that speak loudly about the crazy complacency of the market.  

 

Markets don’t punish greed; they punish complacency. The most dangerous words in investing are still “this time is different,” and the illusion of a risk-free market is just another version of that fallacy. 

 

  

   

 

 

  

 

  

 

Stablecoins are the backbone of the next crypto bull run

 

 What a bloody day! For those who have ignored numerous warning signs and kept chasing highs regardless, I'm sure they should have felt the max pain today with a 2% sudden mini-crash for the market. Of course, one day move does not make a trend and we will have to see what is coming next. For the immediate future, meaning early next week, I feel the chance is high for a quick bounce. If so, we will probably see the same group of people starting to chase again. So the following quote is a very nice reminder for them.

 

 

 But by no means I imply that the current bull market has already done. We are probably just entering the enthusiasm phase of the Sentiment Cycle at the grand scale of things. An eventual blow-up and melt-up top may still be many months away. Having said that, I still believe that a sizable correction is due for the weeks ahead before we see the more sustainable next leg up.