Warsh who? – Strong economic data drove the market higher

• Eco data crushes any doubt of a slowdown.
• Early weakness turned to closing highs!.
• PLTR crushes it, and SpaceX is buying xAI!.
• Oil down, Gold stabilizes, bonds down, yields up.
• Try the Swordfish ‘Palermo Style’.

From Fed Fear to Economic Firepower — The U.S. Economy Just Silenced the Doubters.

So, I guess we’re no longer losing sleep over Kevy Warsh, the Fed, rates, or timing — because the focus has shifted back to the hard data. And the data screamed strength. The ISM Manufacturing PMI surged to 52.6, firmly in expansion territory and miles above the 48.5 expectation, which implied contraction. Even more impressive, new orders jumped nearly 19%, rising to 57.1 from 47.7 — a clear signal that demand is accelerating, not slowing. Meanwhile, Prices Paid actually eased to 59 from 59.3, suggesting inflation pressures are not re-accelerating alongside growth. Add that to an already robust services sector, and it becomes very difficult to argue that the U.S. economy is in trouble.

This is a true Goldilocks economy — just right. Growth is strong enough to support hiring, investment, and rising corporate earnings, but not so strong that it sparks runaway inflation. In fact, inflation pressures remain contained — as evidenced by last week’s PCE report and yesterday’s Prices Paid data — which means the Fed doesn’t need to raise rates, NOR does it need to rush to cut them to rescue a weakening economy. In this environment, businesses can plan with confidence, consumers keep spending, and investors put money to work without the overhang of policy panic or recession risk.

As the bell rang – it was very clear…stocks ended higher and the mood was great. The Dow gained 515 pts or 1.05%, the S&P up 37 pts or 0.5%, the Nasdaq added 130 pts or 0.6%, the Russell took back 26 pts or 1%, the Transports surged by 576 pts or 3.15% (and that speaks volumes about expectations), the Equal Weight S&P gained 41 pts or 0.5% while the Mag 7 bucked the trend and lost 32 pts or 0.1%. (Here you can blame NVDA -2.9%, META -1.4%, TSLA – 2% & MSFT -1.6% for the loss).

Here is how the 11 broad sectors performed. Industrials +1.25%, Consumer Staples +1.2%, Financials +1.1%, Tech +1%, Basic Materials + 0.8%, Consumer Discretionary + 0.7%, Healthcare +0.6%. Energy lost 2%, Utilities – 1.5%, Real Estate lost 1.1% and Communications lost 0.4%.

Down the list – Homebuilders + 0.7%, Retailers + 1.9%, Airlines +3%, Disruptive Tech lost 0.7%, the Value trade + 0.9%, the Growth trade gained 0.4%, Metals and Miners gave back 1.1%, Cyber + 0.8%, Semi’s up 1.9%, Aerospace & Defense gave up 1%, Exploration & Production down 3.2% while Big Pharma added 1.25%.

And as you would expect – all of the contra trades lost ground.

Gold, silver, and the broader precious-metals complex — which suffered a swift and violent repricing on Friday and Monday — are now attempting to stabilize as investors have had time to digest the Kevy Warsh news and its policy implications. This morning, gold is up 5.4% at $4,910, while silver is higher by 12.5% at $86.20. Recall that both metals sold off hard and tested short-term support levels — they briefly failed those levels but quickly recovered — and are now trying to stabilize above their respective trendlines. That said, this looks more like a technical bounce following a vicious sell-off, rather than the start of a sustained rally. I do not expect either metal to snap right back to recent highs in the near term – but that’s me, you do you.

Now, this morning we woke up to the news that Lonnie has officially confirmed the takeover of xAI by SpaceX. How great is that? One of Elon Musk’s companies is taking over… another one of his companies. Very on brand.

The price tag? $1.25 trillion. And here’s how it shakes out: xAI shareholders will receive 0.1433 shares of SpaceX for every share of xAI they own. And if you’re one of the lucky executives who opts for cash instead? You’re walking away with $75.46 per share.

What makes this deal so fascinating isn’t just the eye-popping $1.25 trillion headline — it’s what it represents. By having Elon Musk fold xAI into SpaceX, he’s essentially collapsing the distance between AI, data, compute, and real-world deployment into a single corporate ecosystem. This isn’t financial engineering for the sake of optics — it’s strategic consolidation.

SpaceX generates enormous amounts of proprietary data from launches, satellites, telemetry, Starlink traffic, and real-time global communications. xAI brings the intelligence layer — the models, learning systems, and decision engines that can digest, interpret, and optimize that data at scale. Put them together, and you’re no longer talking about AI as a software tool — you’re talking about AI embedded directly into physical infrastructure, operating in space, communications, defense, and global networks.

The structure of the deal reinforces that point. xAI shareholders rolling into SpaceX equity tells you this is about long-term value creation, not a quick liquidity event. Musk is effectively saying: the future isn’t siloed companies — it’s vertically integrated systems.

Now if you zoom out, you’ll see a bigger takeaway here. Private-market valuations are no longer being driven by revenue multiples alone — they’re being driven by strategic control of platforms, data, and intelligence. This deal blurs the line between aerospace, AI, communications, and national infrastructure, and it sends a clear message: the next phase of technological dominance won’t come from standalone apps or models — it will come from who controls the full stack. (And we are seeing just who that is – Lizzy and Bernie’s heads must be exploding!). TSLA is quoted up $6 or 1.2%.

Oh, and PLTR – yes ma’am, they reported last night after the bell and they ‘blew it up’ too! Sales jumped 70% y/y – he can’t keep up with demand! EPS of 25 ct. vs the 23 cts estimate. Revenues of $1.4 billion vs the $1.33 billion estimate. Alex Karp is suggesting that 2026 Revenues will be $7.18 - $7.2 billion – this vs. the prior estimate of $6.27 billion. First Qtr. 2026 revenue of $1.53 billion vs. the consensus estimate of $1.35 billion. The stocks is quoted up $16 or 11.3% at $164.41 – Do I need to keep going?

Bonds ended lower…. the TLT and TLH were down 0.7% and 0.6% respectively. The 10-yr yield is now 4.28% while the 30 yr is yielding 4.91%. The 30 yr is creeping closer to the ‘red line’ – 5%...so, proceed with caution.

OIL lost $2.90 or 4.4% yesterday…. on the back of those reduced tensions between the US and Iran. It traded in a range of $64.72/$61.39 before settling at $62.14. This morning it is up small – trading at $62.24. The latest news says that OPEC+ expects a pickup in demand in the spring, Kuwait is opening up its oil fields to foreign firms and leasing parts of their pipeline network (that’s more supply) and US crude inventories are expected to increase by 1.9 million barrels for the week ended January 30^th.

The dollar is holding steady at 97.62 – up off the lows of 95.50 and below the trendines at 98.50. A continued push up should see precious metals retreat a bit.

Bitcoin is trading at $78,500, Ethereum is at $2,280 and Solana is at $103 – all at levels that many analysts are calling a bottom.

European markets are mixed. The UK is down 0.4%, while Italy is up 0.8%.

Futures are mixed as well. Dow -44, S&P +10, Nasdaq +110, Russell +2.

Eco data today includes – nothing. Tomorrow brings ADP Employment for January and is expected to show an increase of 45k new jobs created. We will also get the January ISM Services PMI and that is expected to remain in the expansion zone at 53.5. Thursday brings us the Challenger Job Cuts and Friday give us the U of Michigan sentiment surveys.

We will hear from PYPL, MRK, ADM, IT, PEP, MPC and more…so far 7 companies have reported and beaten the estimates…. only 2 (so far) has disappointed – GPK & PYPL – not names that are going to create any drama for the broader market. GPK quoted down 6% and PYPL quoted down 12%.

The S&P closed at 6,976 —up 37 pts. Investors, traders and algo’s pushed it to a high of 6,991 yesterday before exhausting itself. The xAI news and the PLTR news along with strong eco data could push us up and thru 7,000…. We’ve tried it 3 times already – so get ready……because it’s coming…..Trendline support remains down at 6,860.

Swordfish ‘Palermo style’

Raisins, green olives, capers, pignoli nuts (pine nuts), tomatoes, garlic, onion, s&p, olive oil and swordfish. This dish is easy to make - it will tease your senses - and tickle your pallet - only takes about 15 or 20 min’s to prepare and 20 min’s to cook....enough time to set the table, pour the wine, light the candles, put on the music and dim the lights.....

**Preheat oven to 400 degrees (f).

Season the swordfish with s&p.

Next, soak the raisins in warm water for about 1/2 hr... drain and set aside.

Heat the olive oil in a sauté pan on med high heat.... sauté the diced onion and crushed garlic until soft. Do Not Burn. Maybe like 5 / 8 min’s.... add raisins, diced tomatoes, chopped olives (no pits!), and capers - like 1 tblspn. (If you like capers feel free to add a bit more - but not too much as the taste will overpower the dish).

Reduce heat to simmer and cover...stirring occasionally.... for about 15 min’s or so...

Place the swordfish in a baking dish and cover the fish with the raisin/olive/caper/tomato mixture - bake for 15 min’s or until the steaks are firm.....

Present the fish on a warmed plate with steamed green beans and a large mixed green salad with red onions, cucumbers, grape tomatoes, maybe some fresh mozzarella.... dress with s&p, oregano, a splash of fresh lemon juice, balsamic vinegar and olive oil.