Why the US remains exceptional and three opportunities investors shouldn't ignore

In a recent roundtable with Scott Helfstein, Global X’s US head of investment strategy, quoted American rock band, REO Speedwagon: “you can tune a piano but you can’t tuna fish,” - and then wryly added - you can tune a piano but not if you take a sledgehammer to it.

I must admit, I hadn’t heard the phrase before, but I understood the thrust of the case Helfstein was making - with everything that is going on, with market psychology, volatility and a rapidly changing world economy, you just gotta roll with the changes.

That’s the message from Helfstein, who, during his visit to Australia, shared his insights on how the nature of thematic investing is shifting in response to all of these changes, and how the US economy has proven time and again that it's dynamic enough to weather these storms. 

Helfstein laid out his contrarian case for continued US exceptionalism and the investment themes of the future he is watching.

The three pillars of the US economy: labour, leverage, liquidity

At the start of 2025, Helfstein argues, the US economy entered the year in better shape across almost every major metric compared to the previous year. Unemployment may have ticked up slightly to 4.2%, but it remains historically low. 

Meanwhile, American household debt is in better shape than one would expect; thanks to widespread refinancing during the pandemic, around 90% of homeowners locked in mortgage rates at 5% or lower, insulating them from the Fed’s rate hikes.

And while the Fed maintains that US financial conditions are now “sufficiently restrictive,” Helfstein says that, on the contrary, monetary conditions remain quite loose by historical standards, helped along by ongoing fiscal stimulus and steady consumer spending. 

“In the United States, we love to consume… and we will continue to consume provided people feel like they can get a job and they're not already overextended,” he says.

Corporate resilience

While the recent tariff headlines have stirred concerns, Helfstein believes the worst-case scenarios just aren’t coming to fruition. The switcheroo on the proposed tariffs meant that for many companies, they were back to the base case scenario, pricing in the possibility of tax cuts worth 1% of GDP to offset the potential economic drag.

More importantly, companies have historically shown they can remain profitable even with higher cost structures. Helfstein points to 2022, when inflation soared to 8%, yet S&P 500 profit margins stayed above 12%, even though they were absorbing half of the increased costs before passing the rest on to consumers.

“I would argue that if you are the CFO of a S&P 500 company, you probably didn't wake up on April 2nd to say, "You know what, I should really start preparing for tariffs". This is something that was brewing almost irrespective of which political party was elected."

Consumption and innovation will ensure US exceptionalism

Helfstein pushed back against the current narrative of capital outflows from the US: 

“Let's also remember why there is so much capital in the United States in the first place. It's because everybody wanted access to our consumer.”

While global producers and exporters put their money into the US to access investment opportunities and returns, “we wound up with a whole lot more money on shore than I think anybody had planned on," which helped to drive continued innovation within the economy.

If anything, Helfstein argues that the international flows are a rebalancing that is healthy and necessary: "It's not about an underweight to the US and if it is, it's going to be pretty short-lived. It's about going back towards something that's more balanced... people were overpaying significantly for a dollar of US revenue relative to the rest of the world."

The information age is over

We are now in the automation age, where technology isn’t just informing decisions, but making them.

That shift is driving record-high S&P 500 profit margins - consistently above 12% since 2020, with signs already of potential to go higher.

This, Helfstein argues, is key. 

"We can focus on the short-term dynamics of volatility. But first and foremost, consumption and innovation are continually going to be the drivers both of the US and, quite frankly, the global economy and China's innovation story also."

Low-volatility themes are rising

Once upon a time (five years ago) thematic investing was all about go-go growth. This has changed. Despite US markets hovering near all-time highs, Helfstein points out that investor sentiment remains bearish. As a result, many investors are favouring low beta, lower volatility opportunities, but without sacrificing growth. They are looking for growth with resilience. 

Here are three key themes Helfstein is watching:

1. Defence technology

Defence technology is increasingly delivering steady growth at a much lower beta and "has no choice but to be on the cutting edge of automation", Helfstein says.

As military conflicts evolve - like $20,000 drones taking down $20 million warplanes - defence companies are doubling down on this major technological shift and investment in automation, AI, and lightweight, low-cost, intelligence-based platforms becomes ever more important.

With the US on the cusp of passing its first-ever trillion-dollar defence budget, and Europe considering lifting NATO spending to 3% of GDP, Helfstein sees structural tailwinds supporting this theme for years.

2. Cybersecurity

Another standout,  low-volatility theme is cybersecurity. Once closely tied to tech upgrade cycles, the sector has matured into a software-as-a-service (SaaS) model, with recurring revenue streams and less sensitivity to tariffs or economic cycles. 

And as Helfstein points out - bringing it back to his contrarian positioning - the United States is still the leader in global service provision.

3. Digital Infrastructure

Why are Microsoft, Meta, Amazon and Google pouring billions into new data centres and network capacity? 

While these companies may not dominate every aspect of AI’s future or even be the technology leaders of our future, controlling the infrastructure that powers smart factories or AI-led businesses ensures they’ll still capture some value share as automation scales.

“Growth is more profitable than value”

Helfstein highlights how the old growth vs value debate has changed. Historically, investors would pay up for fast-growing companies that had mediocre profitability, versus those who chose to focus on value stocks to get more stable cash flows.

Today, “we are now living in a unique time where growth is more profitable than value. We have never been able to buy growth that is this profitable before.”

Helfstein argues that, relative to the broader S&P 500, leading AI companies offer superior revenue growth and higher margins, yet trade at similar multiples.

"People say, well, did we miss AI?...Probably not,” Helfstein says. “If anything, it is probably on sale.”

Just as the dot-com boom ushered in a wave of IT spending in the early information era, we’re now seeing another surge in tech investment - physical automation, i.e., robots, is becoming critical to the US push towards onshore production. 

While China is currently the largest single buyer of robots, the US is going to have to come up that curve fast. Helfstein concludes:

"Think about it this way, your AI is the automation of the cognitive, your robot is the automation of the physical. The more those things come together, the more efficient business gets."