Five for Friday – June 26, 2026
U.S. Market, U.S. Innovation, U.S. Dollar, U.S. Shifts, and U.S. Bar Codes
1. U.S.
Since the Civil War, the U.S. has had the top-performing stock market in the world and since World War I it has also had the largest stock market in the world. What are the drivers? Among many things: 1) The U.S. is big, with a large productive labor force and deep consumer markets. 2) The U.S. is entrepreneurial and innovative, tending to lead in high growth, high margin industries. 3) The U.S. has the world’s most developed financial infrastructure, with deep and liquid financial markets that funnel capital to winners, support growth, and foster productive “creative destruction.” 4) The U.S. has a strong rule of law, institutional stability (e.g., property rights, transparent accounting frameworks, etc.), and a lighter regulatory touch, all of which helps attract global capital and lower the cost of capital. 5) The U.S. is shareholder friendly, with an outsized focus on corporate governance and shareholder return (e.g., buybacks, dividends). Altogether, while the U.S. stock market may not repeat its best-performing status over the next 150+ years, it’s hard to imagine it ceding much leadership given its time-tested and structural drivers of success.
2. Innovation
I believe the marriage of dynamic capital markets and an innovative/entrepreneurial culture is what most sets the U.S. apart. Other countries have smart people, great ideas, and money but don’t put those ingredients together quite like the U.S does. Take the startup ecosystem as an example: of the nearly 1,400 unicorns (private companies with a valuation over $1 billion), 58% are in the U.S (and the San Francisco Bay Area has more than China and India combined). A 2024 E.U. report noted that Europe has ideas and ambition but is “failing to translate innovation into commercialization, and innovative companies that want to scale up in Europe are hindered […] by inconsistent and restrictive regulations. As a result, many European entrepreneurs prefer to seek financing from U.S. venture capitalists and scale up in the U.S. market. Between 2008 and 2021, close to 30% of the ‘unicorns’ founded in Europe relocated their headquarters abroad, with the vast majority moving to the U.S.”
3. Dollar
For many of the reasons laid out above, the U.S. dollar has been the global reserve currency since WWII. In recent years, many have predicted an end to that paradigm – and doom for U.S. assets as a result. We continuously push back against this narrative, and this week the dollar hit a new 52-week high. That isn’t necessarily a good thing for stocks, but it highlights how flawed the de-dollarization fearmongering of early 2025 was.
4. Shifts
The U.S. is not without faults nor challenges. Our partners at Strategas (a Baird company) recently spoke to the rising cost of servicing the U.S. national debt and the changing global trade environment. Taking these two big shifts together, it is not hard to see a world in which both inflation and interest rates remain higher for longer. The U.S. has navigated these conditions before, but if the road ahead is bumpier – marked by higher volatility and fewer macro tailwinds than last cycle – diversification should take on more importance.
5. On This Day
in 1974, the first bar code was scanned. This was a quintessentially American invention, driven by capitalism and need (not policy) and leveraging multiple smaller technologies into a system that solved a real-world, middle-class problem. Not the Silicon Valley sci-fi we’re used to, but no less impactful. That the first purchase was a pack of Wrigley’s gum in an Ohio supermarket only amplifies its American-ness.
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This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. The information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. Market and economic statistics, unless otherwise cited, are from data provider FactSet.
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