The US' greatest weakness is that it is unmatched

Five charts to start your day

I took my family to New York in April. Walking alongside the towering skyscrapers, craning our necks upwards in awe and just marvelling at the sheer scale of everything. The city's energy was intoxicating – a constant hum of activity that seemed to echo in the grandeur of our surroundings.

"Wow, Dad, America is big!" my eight year old son exclaimed. He’s right, it is. For decades, New York has been the go-to place for companies wanting to list their shares, no matter where they're based.

Why? The US offers the biggest, most liquid equity market in the world. It's a place where firms can tap into a huge range of investors, from everyday savers to massive pension funds.

But it's the sheer size of the US market that really catches the eye. It's home to tech giants worth over a trillion dollars each – companies so large they outweigh entire stock markets in some European countries.

This chart from Goldman Sachs gives us a peek at how it got here. While the US market has long been on top, it really took off after the 2008 financial crisis. Rock-bottom interest rates and huge cash injections of stimulus from the US Federal Reserve – which lasted well into the Covid pandemic – saw US shares balloon far faster than those in Europe or Asia.

Not everyone's thrilled about this growth. Warren Buffett, the famous investor, now grumbles that everything is expensive. The market's packed with fast-growing tech firms that have kept rising up until the recent market volatility. And this has been going on even as interest rates and inflation have picked up after years of calm.

So, what should we make of all this? Is the US simply a better place to do business, invest and trade than anywhere else? Or does this chart hint at problems that many investors might be overlooking? Value!

Source: Markets & Mayhem

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