The 'Sell America' trade strategy, which suggests investors should question US assets, gained traction in April 2025 when President Donald Trump introduced "Liberation Day" tariffs targeting numerous countries. This sentiment was further fueled in early January 2026 by the president's campaign to take control of Greenland, a move that particularly angered European allies. Despite the US boasting the world's most liquid financial markets, the dollar's dominant position, and Treasuries being a premier safe-haven asset, this narrative has prompted investors to reconsider their allocation to American assets.
While some analysts argue that US companies are too large to ignore, comprising about half of the world's publicly traded stock market capitalization, a marginal shift is occurring. This shift could weaken US equities relative to their global counterparts. However, the 'Sell America' narrative has faced challenges, particularly with the Iran War, which initially emerged as a byproduct of a coordinated crash in stocks, bonds, and the dollar early in Trump's second presidency due to his unconventional economic and trade policies. Other developed markets, especially in Europe and Japan, experienced a period of outperformance, giving the 'Sell America' idea a second wind.
The Iran War has significantly impacted the 'Sell America' strategy, particularly the "Sell America, Buy Asia" trade. Recent market movements show a reversal, with the MSCI Asia Pacific Index tumbling approximately 6% in one week, contrasting with a marginal 0.1% slide in the S&P 500. This indicates a shift back towards the US as a safe haven and a stronger dollar, suggesting that the initial premise of foreign capital fleeing the US might be a "flimsy argument."
