The Industrial Engine Roars Back

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Hello Peter Anthony Hovis,

The Industrial Engine Roars Back

Wall Street shook off its recent jitters to stage a confident rebound on Monday, driven by a manufacturing surprise that was too loud to ignore.

Indeed, the American factory floor is buzzing again.

The S&P 500 Index climbed 0.6%, putting the benchmark within striking distance of a fresh record close, while the tech-heavy Nasdaq 100 added 0.8%. The rally was sparked by data that shattered forecasts and suggested the industrial economy is finally thawing out.

For months, manufacturing has been the weak link in the economic chain, but Monday’s data from the Institute for Supply Management (ISM) flipped the script.

(Photo: Getty Images)

The manufacturing index surged to 52.6 in January—up from a contractionary 47.9—marking the fastest pace of expansion since 2022.

The data offered a shot of adrenaline to a market hungry for growth signals. José Torres, senior economist at Interactive Brokers, captured the mood:

“The strongest ISM-manufacturing figure in 41 months is bolstering confidence in the health of the domestic economy, lifting stocks, rates, and the greenback.”

The unexpected jump has traders asking if this is a false dawn or the real deal. Brian Jacobsen, chief economic strategist at Annex Wealth Management, remains cautiously optimistic about the sudden thaw:

“Manufacturing activity seems to be emerging from a cold winter, regardless of what Punxsutawney Phil says. We’ve seen signs of life before, only for manufacturing to dip again, but with new orders growing, maybe this revival is real.”

While the economic data provided the fuel, the political backdrop provided the friction.

President Donald Trump’s nomination of Kevin Warsh to succeed Jerome Powell as Fed Chair continues to ripple through asset classes. Warsh, a former Fed governor, is a complex figure for Wall Street to digest.

Despite Trump’s vocal demand for deeper rate cuts, Warsh’s track record is distinctively hawkish. He is known for his past criticism of “easy money” and quantitative easing—a history that has some investors worrying he might not be the pliable dove the White House expects.

Darrell Cronk, chief investment officer at Wells Fargo, noted that the market is still trying to price in this new reality:

“Hawkish perceptions on the Warsh appointment still linger this morning. We expect Warsh to support a more dovish stance with difficulty shrinking the Fed balance sheet to any materiality. We still believe two FOMC interest rate cuts for 2026 are in the offing.”

Darrell Cronk, chief investment officer at Wells Fargo (Photo: Bloomberg / Getty Images)

The ambivalence was palpable.

Tom Essaye of the Sevens Report explained that while the market doesn’t “hate” the choice, the uncertainty is a mood killer. He noted that the Fed has been a “major ingredient” of the decade-long bull market, so any call for “regime change” at the central bank naturally makes investors sweat.

The “Warsh trade” was perhaps most visible in the commodities market.

Gold and silver extended their sharp selloffs from Friday. Analysts like Russ Mould at AJ Bell suggest the metals were “ripe for a pull-back” after record rallies, though the swift retreat hints that investors are betting a Warsh-led Fed might keep real yields higher than previously thought.

In equities, the rising tide didn’t lift every boat. Walt Disney Co. stumbled after issuing an outlook that analysts tagged as mixed. Meanwhile, the energy sector dragged, with giants like Exxon Mobil and Chevron slipping alongside oil prices. The geopolitical risk premium that had propped up crude evaporated after President Trump signaled that diplomatic talks with Iran were underway.

Even the crypto sector felt the chill.

Bitcoin slid to its lowest level since April over the weekend, pulling related stocks like MicroStrategy down with it, as speculative fervor cooled in the face of shifting monetary tides.

Just as the closing bell rang on Monday, Palantir Technologies stormed the stage with a quarterly report that didn’t just beat Wall Street targets—it demolished them. The data analytics firm delivered what CEO Alex Karp boldly described as “indisputably the best results that I’m aware of in tech in the last decade,” sending shares rallying approximately 7% in extended trading.

The numbers tell a story of explosive demand.

Palantir generated $1.41 billion in revenue for the fourth quarter, easily clearing the $1.33 billion hurdle analysts had set, while adjusted earnings per share landed at 25 cents, edging out the expected 23 cents. The top-line growth was staggering, with revenue swelling 70% from the year-ago period.

(Photo: Denis Balibouse | Reuters)

“If you’re not spending it on this, you’re not spending on something that is part of keeping up with momentum,” Karp told CNBC, underscoring the frantic pace at which clients are adopting their AI systems.

In general, investors are excited about the accelerating economy. The factory data confirmed that the anticipation was real. Palantir confirmed that the AI play remains powerful. The momentum may build up as more companies report their earnings that show strong growth.

Could This Be The Best Value Stock Right Now?

Today’s Stock Pick: Tenet Healthcare Corporation (THC)

When you look at Tenet Healthcare today, you’re looking at a company that has spent the last few years completely reinventing itself.

It used to be a traditional, sprawling hospital chain.

Not anymore.

It’s evolved into a much leaner, more diversified healthcare machine.

The most important part of the business now is a subsidiary called United Surgical Partners International, or USPI.

This is the “secret sauce” for investors because it’s the largest operator of ambulatory surgery centers in the country.

Instead of patients going to a massive, expensive hospital for a routine surgery, they go to these smaller, outpatient centers. For Tenet, these centers are great because they have higher profit margins and don’t require the massive overhead of a 24-hour hospital.

That said, the company still runs a powerhouse hospital division.

They own about 50 acute care and specialty hospitals, mostly in growing suburban and urban markets. They’ve been selling off some of their less profitable hospitals to focus on “high-acuity” care, which is just a fancy way of saying they want to be the best at the complicated, high-paying stuff like heart surgeries and neurosurgery.

Most importantly, the company has a strong overall patient experience score of 96.6.

(Source: Tenet Healthcare)

Then there’s the third leg of the stool: Conifer Health Solutions.

This part of the company doesn’t actually see patients; it handles the “paperwork” side of medicine. They provide revenue cycle management (basically billing and collections) for Tenet and other outside health systems. While they’ve recently been restructuring some of their partnerships in this space, it remains a steady service-based revenue stream.

While most people may agree that the healthcare industry is broken, the stock looks attractive based on the fundamentals.

Right now, the healthcare sector is doing very well. Tenet’s revenue has soared since 2021, going from $2.7 billion to $5.1 billion.

(Source: Tenet Healthcare)

The business has been good for the company lately. The third-quarter results saw a 26% adjusted diluted EPS growth. It also raises the FY25 guidance for adjusted EBITDA.

(Source: Tenet Healthcare)

Tenet has a strong track record of delivering same-facility revenue growth annually. It grew in all years except the pandemic year since 2016:

(Source: Tenet Healthcare)

Thanks to recent growth, Tenet has a strong balance sheet. Its leverage ratio plunged to 2.3x currently versus 5.86x in 2017. Meaning? The company has better access to capital markets to pursue a growth strategy (such as acquisitions) while still returning capital to shareholders.

(Source: Tenet Healthcare)

Speaking of acquisitions, Tenet has a good track record of delivering results from acquisitions. The average multiple for initial acquisition is 8x to 10x, and the company exceeded the targeted multiple of 5x to 7x.

Its total number of facilities grew from 267 to 556 since 2017.

(Source: Tenet Healthcare)

With its ability to grow through acquisitions, Tenet Health has a bright future with its access to capital markets to fund future projects.

Bottom line: Tenet Healthcare is trading at a good P/E of 12 after the recent decline in the healthcare sector. With its solid growth prospects, it may be a good value play in an elevated market.

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