An American Revival

All I remember is the black soot.

It was on my clothes. It was in my ears. It was in my nose. It was everywhere. 

Back in late 2004, I was fresh out of college. My degree in construction engineering in hand, I joined the family construction business ready to make my mark.

It wasn’t my first time working for my dad. I spent summers from an early age at the office. Most of the time, I worked around the shop, organizing tools, cleaning up and other odds and ends jobs.

But nothing prepared me for what I would experience that day at the mill.

You see, my father’s construction business specializes in commercial and industrial projects. That includes working in steel mills like U.S. Steel, ArcelorMittal and others.

And on this particular day, I was at U.S. Steel’s Gary Works plant. It’s a massive complex. In fact, it’s the largest integrated steel mill in North America.

It has capacity to make up to 8.2 million tons of steel each year.

Steel is no less important today than it was when Henry Bessemer revolutionized steelmaking through his widely used system in the 1850’s. And the process is much the same.

You need coal, iron ore and limestone. You combine them at high heat to make iron. Then add oxygen to remove impurities to make steel.

But more than that, it’s part of the backbone of American industry.

We need it to build our roads and bridges. We need it to build our factories. We need it to make sure the latest skyscraper won’t topple to the ground.

And maybe even more important, it’s a key part of the next American Manufacturing Revival. A revolution that’s in full swing today.

Back in December, I took you through our 2026 prediction series. In it, I covered interest rates, the U.S. dollar, commodities and the overall market.

Only time will tell if those predictions pan out.

However, as part of those predictions, I said that this year, the stock market won’t look the same as it has for the past decade. Yesterday’s leaders look set to pass the torch to a new set of leaders. (I said much the same in my book, The New Market Regime, where I talk about the changing landscape of the overall market and where to invest in the coming years.)

I even expanded on that prediction in “The Changing of the Guard” on February 26. In that article, I showed you how different market sectors are performing so far this year. And the shift is clearly happening with growth stocks – think tech and the Magnificent 7 – giving way to more industrial focused companies, as you can see below from the different sector returns of the S&P 500 so far this year.

The types of business that are leading the way this year are the ones that are paving the way for the American Manufacturing Revival.

A single data point doesn’t necessarily point to a conclusion, especially when it comes to the economy. But taking multiple data sets and putting them together can help you draw a map. A map that can even lead to where you should be focusing your portfolio.

And today, that map is saying to bet on the American Manufacturing Revival.

First, take a look at the chart below. It shows manufacturing labor productivity over the past several years.

According to the Office of the U.S. Trade Representative, this is the highest level of manufacturing labor productivity in fifteen years.

Now, it can be easy to dismiss this as just a fluke. Or something that isn’t telling us the whole story.

After all, look at the headlines from the mainstream financial press and you would think the U.S. economy is heading for a complete collapse.

But when you start putting more pieces together, the picture starts to change.

For example, last month, U. S. non-farm payrolls – a picture of the employment situation across the country – increased by 178,000 jobs. Well above expectations of a rise of 65,000 jobs.

Private payrolls rose 186,000 versus an expectation of 78,000. Manufacturing jobs increased by 12,000 versus an expectation of a decline of 5,000 jobs.

And the unemployment rate declined to 4.3%.

If that’s not enough, add in even more data points from the freight market. (A good source to follow on this is Craig Fuller, founder of freight market intelligence service Freight Waves.)

For example, carloads of railroads – one of the surest signs of industrial manufacturing – recently reported March volumes. Carloads excluding coal averaged 171,338 per week. That’s the strongest level since 2008.

Year-to-date rail volumes are up 4.5% and at the highest level in 10 years. Chemical shipments are up 5.5% year-over-year to their highest level ever. And grain shipments are seeing their highest volumes since 1993.

It’s a similar story in flatbed trucking.

Plus, the Institute for Supply Management’s (ISM) manufacturing index – a measure of economic activity in the manufacturing sector – is picking up steam. For March the ISM PMI was 52.7. That’s up from 48.9 a year ago and the highest reading in nearly four years.

For context, any ISM PMI reading above 50 indicates manufacturing activity is expanding.

And the recent Logistics Manager’s Index (LMI) in the U.S. is confirming all of this. It’s a leading survey of logistics managers across the U.S. and shows how they view forward demand.

At 65.7, it’s the strongest reading since May of 2022.

When you put all of this data together, it’s hard to deny that the American Manufacturing Revival is in full swing. So it’s no surprise to see funds like the iShares U.S. Manufacturing ETF (MADE) trending higher.

It’s the same story with the Tema American Reshoring ETF (RSHO).

This trend still looks like it’s in its early stages. Most investors haven’t recognized it yet. Which usually means there’s still more room to run.

Something we’re already betting on here at Strategic Trader using warrants. (And if you’re new to warrants, you can learn more about what they are on our Warrants 101 page.)

Invest accordingly. 

Regards,

Editor, Strategic Trader