Sell America is the new US Market disruptor
A new investment thesis has emerged in global markets at the beginning of 2026, as trading strategies that have long relied on the dominance of the United States now adopt a different strategy: Sell America. The sentiment began to permeate financial circles following the unexpected surge in tariffs that caused stocks and bonds to plummet last April. However, it has gained momentum recently as the Trump administration has implemented policies such as undermining the Federal Reserve’s independence and issuing threats of a new trade war with Europe, raising fresh concerns among investors. Lauren Goodwin remarked that the “ex-America” trade was a strikingly common theme at the company’s global investment meeting earlier this month. “Our European colleagues were frankly stunned by the openness that U.S. investors have to diversify away from the U.S.,” she said. Ms. Goodwin and other investors emphasize that the sell America trade primarily focuses on hedging current U.S. exposure, diversifying into alternative assets, and determining where to allocate new investments, rather than an effort to exit the country altogether. However, in the last month, that trading has contributed to the declining value of the dollar, hindered the stock market’s ascent, raised government borrowing costs, and caused prices for precious metals such as gold to surge. The nomination of Kevin Warsh as the next chair of the Federal Reserve, coupled with a last-minute agreement to finance the majority of the government, bolstered the dollar on Friday. Nevertheless, the currency concluded the month 1.2 percent lower following its second consecutive week of losses, as assessed against a basket of currencies that includes the euro, British pound, and Japanese yen. By that same measure, the dollar has experienced a 10 percent decline over the past 12 months, marking a significant drop for the typically robust currency.
Gold and silver, recognized as safe haven investments during periods of turmoil, have both reached record highs recently. Despite a significant decline on Friday, the precious metals remain elevated, showing increases of 24 and 19 percent for January, while gold has surged 75 percent over the past year. Following an intense rally, the U.S. stock market has stabilized since the beginning of the year and has begun to decline when assessed in other currencies. “It’s been almost a paradigm shift in the dollar,” remarked Adam Turnquist, chief technical strategist at LPL Financial. The shift is especially pronounced for international investors. “U.S. equities were working as the dollar moved higher,” stated Mr. Turnquist. “That’s unraveled.” On Tuesday, President Trump praised the ongoing weakness of the dollar for its role in making U.S. products more affordable for international buyers. The remarks unsettled investors who had grown accustomed to a longstanding U.S. policy that bolstered the strength of the nation’s currency. The following day, Scott Bessent, the Treasury secretary, aimed to reassure the markets by stating that, despite the president’s remarks, the government remains committed to a strong dollar and that the enduring period of U.S. exceptionalism, which has shaped investment strategies for over a decade, continues to be upheld. “If we have sound policies, the money will flow in,” he stated.
The U.S. economy has served as the backbone of global growth, and American markets stand unmatched in size, possessing the capability to transact swiftly and effortlessly. The dollar continues to be central to global trade. The shift away from the United States is propelled by deeper issues: apprehension regarding the safety of U.S. markets amid geopolitical turmoil, threats to the nation’s central bank, escalating government debt, and concerns about the essential rule of law. Some investors also feel caught off guard by the White House’s pattern of erratic policymaking. “I’m not trying to be political. It’s just incredibly frustrating,” said Ms. Goodwin. “Key aspects of this administration’s economic agenda conflict with each other.” Other market observers reflected Ms. Goodwin’s sentiment. “It’s challenging for a strategist at this moment with the conflicting dynamics of the administration’s actions,” Mr. Turnquist stated. Despite the administration’s rhetoric on tackling affordability, analysts and even some policymakers assert that trade tariffs and the failure to address government spending have exacerbated the situation. The 10-year U.S. Treasury yield, which moves inversely to its price and reflects the government’s borrowing cost over 10 years, has increased to 4.25 percent from below 4 percent in October — a change comparable to a standard rate hike from the Federal Reserve, contrary to the president’s desires.
According to the administration, part of the increase in yields was driven by a significant sell-off in Japanese bond markets that affected U.S. Treasuries. Nonetheless, investors express concern over the increased political influence. “You might like a weaker dollar, but you don’t like higher interest rates,” stated Steve Englander. “And if it shows up as weaker demand for U.S. equities, that’s also not a good thing.” In the last decade, an investment of one dollar in the S&P 500 would have increased fourfold in value. Investing that dollar in European stocks would have yielded only half that gain, according to the performance of the Stoxx 600 index. The consistent and steady outperformance has led to an increased weighting toward market in widely tracked global benchmarks. U.S. stocks constitute approximately 70 percent of the MSCI All World index, an increase from nearly 50 percent ten years prior, leading to a gradual rise in global investors’ reliance on the performance of the U.S. market. That alone has caused some investors to exercise caution, particularly as U.S. stocks have surged to impressive levels based on the potential — yet to be realized — of what artificial intelligence may deliver. The decline of the dollar has been impacting foreign investors’ returns in the U.S. stock market. Foreign stocks are becoming increasingly appealing to U.S. investors, which further encourages capital to flow overseas. In the last year, the European index known as the Stoxx 600 has experienced a remarkable increase of nearly 30 percent in dollar terms, which is double the performance of the S&P 500. This surge can be attributed to the decline of the American currency, which has effectively doubled the investment returns in Europe. The two indexes have exhibited a more comparable performance when expressed in their respective local currencies.
Previous versions of the sell America trade were limited to major central banks aiming to reduce their reliance on the United States following Russia’s invasion of Ukraine and the subsequent seizure of its dollar assets by American authorities. Those asset seizures raised alarms that sovereign assets, previously considered secure, might become entangled in geopolitical conflicts. “The safety of U.S. assets started to get reassessed,” said Ryan McIntyre, president of Sprott Inc, a large gold investor. China’s holdings of U.S. Treasuries have been on a downward trajectory for almost ten years, a trend that began with the Trump administration’s initial trade actions against the nation. However, this decline intensified after February 2021, plummeting from $1.1 trillion to under $700 billion by the end of the previous year, as reported. Brazil initiated a reduction of its Treasury holdings in 2019, with the decline intensifying over the past year. India has significantly reduced its holdings over the past year. Purchasing Treasuries necessitates the use of dollars, while divesting from Treasuries diminishes the requirement to retain dollars, thereby undermining the currency. Analysts noted, “There isn’t one fiat currency that has been the standout beneficiary as the dollar has fallen.” Instead, funds have predominantly directed towards gold and other precious metals. The price of gold has approximately doubled over the last year.
According to data, central bank purchases have approximately doubled following the seizure of Russia’s assets, with a notable acceleration occurring at the end of the previous year. Recently, there has been a significant influx of cash into exchange traded funds that enable private investors, who are often restricted from purchasing physical commodities, to speculate on the price of gold, as they search for a refuge from U.S. assets. “The world looks to the U.S. as a beacon of democracy and rule of law and I think that is starting to change a little bit, clearly,” stated Mr. McIntyre. “This is not about risk-seeking. It’s about diversification and the reassessment of risk.” Joe Rennison covers financial markets, a field that encompasses documenting the fluctuations of the stock market and elucidating the frequently enigmatic trading choices of market insiders.
