Introduction to the ‘Sell America’ Trade
The year 2026 is shaping up to be a pivotal moment for investors as they reassess their exposures to the US market. According to Nigel Green, CEO of a UK advisory group, the ‘Sell America’ trade is making a comeback, driven by a perfect storm of factors that are altering the risk and return profiles of US assets. This phenomenon is not just a fleeting trend, but a significant shift in investor sentiment that is likely to persist throughout the year.
Underlying Factors Driving the ‘Sell America’ Trade
Several key events have converged to force investors to rethink their US positions. These include the unprecedented legal challenges facing the Federal Reserve, geopolitical developments in Venezuela and Iran, rising strategic tensions involving Greenland, uncertainty over US trade policy, and earnings misses in key sectors. Each of these factors has contributed to a decline in investor confidence in the US market, leading to a broader rotation away from concentrated US risk.
Evaluating the Impact of the Federal Reserve and Institutional Pressure
One of the primary triggers for the ‘Sell America’ trade has been the legal escalation involving the Federal Reserve. The Department of Justice’s decision to issue subpoenas to the Federal Reserve has raised concerns about the independence of the central bank and its ability to set monetary policy. This has led to a revaluation of sovereign risk premia tied to monetary policy credibility, with investors seeking safe-haven assets such as gold and silver. The US dollar index has also weakened against other major currencies, while stock futures have experienced significant swings.
Geopolitical Risk Pricing: The Cases of Venezuela and Iran
The monetary confidence shock has intersected with geopolitical developments in Venezuela and Iran, adding another layer of uncertainty for investors. The US military intervention in Venezuela and the capture of President Nicolás Maduro have drawn international debate and raised concerns about regional stability. Meanwhile, escalating tensions around Iran, including renewed sanctions pressure and domestic unrest, have introduced new complexities for energy markets and global risk assets. These events have demonstrated how innovation in military or strategic ventures can impact capital allocation decisions, leading to a shift in global allocation changes.
Strategic Tensions and Trade Uncertainty
Rising strategic tensions involving Greenland have also contributed to the ‘Sell America’ trade. Discussions in Washington about Greenland’s strategic importance have increased tensions with European allies, underscoring uncertainty in transatlantic economic cooperation. Furthermore, legal uncertainty around US trade policy, particularly the forthcoming decisions by the Supreme Court on the legality of Trump’s sweeping tariffs, has added to the sense of unease among investors. This judicial review has introduced another vector of uncertainty for corporate planning and cross-border commerce, prompting investors to reassess their long-term exposure to US markets.
Earnings Misses and Valuation Pressure
Earnings trends in early 2026 have reinforced reallocations away from the US market. While the US remains a critical engine of global earnings, some major sectors, including banking, have reported performance that falls short relative to international peers. Market data show that some major US averages have experienced back-to-back declines recently as traders position ahead of key earnings releases. The link between earnings and capital allocation has returned as a driver of price, with key players in Corporate America coming in below expectations.
Conclusion: The ‘Sell America’ Trade and Its Implications
The ‘Sell America’ trade is not a recommendation to abandon the US market entirely, but rather a disciplined adjustment to the changing risk and return profiles of US assets. Investors are seeking to balance their portfolios by diversifying away from concentrated US risk and allocating to other regions and asset classes. As Nigel Green notes, “Markets aren’t walking away from the US economy, but they’re appearing to make a disciplined adjustment.” The pricing of this balance will help define global portfolio allocation through the rest of 2026, as investors navigate the complex and interconnected landscape of geopolitical risk, monetary policy, and trade uncertainty.
