The Sell America trade, pronounced dead more times than Mark Twain, has returned with renewed conviction. As 2026 unfolds, investors are once again trimming exposure to the world’s largest economy, not out of ideology or panic, but because a cluster of risks has begun to overwhelm the old assumptions that US assets are the default safe choice. What was once a specialist concern has become a mainstream portfolio adjustment.
This shift is not about abandoning the United States. It is about repricing it. Markets, unsentimental as ever, are reacting to mounting evidence that American political, legal and strategic stability can no longer be taken for granted. Five forces in particular are driving the renewed impulse to sell.
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#1. Pressure on the Fed
First, pressure on the Federal Reserve has rattled confidence in institutional independence. The recent legal escalation involving the Department of Justice and the Fed has crossed a line investors hoped would remain theoretical. When the credibility of the central bank is questioned, the entire pricing mechanism for risk-free assets begins to wobble.
Markets responded in textbook fashion: precious metals surged to record highs, the dollar weakened, and equities became more volatile. This is not an emotional reaction but a rational one. If monetary policy is perceived as politically vulnerable, investors must price in higher inflation risk, less predictable rate decisions and a weaker currency. That recalibration has already begun.
#2. Geopolitical risk
Second, geopolitical risk has returned to the balance sheet. The US intervention in Venezuela and the capture of Nicolás Maduro have injected fresh uncertainty into Latin America, while renewed tension around Iran has unsettled energy markets and global shipping routes. These events are not isolated headlines; they feed directly into sovereign risk calculations. Military assertiveness, however justified, complicates capital allocation. Investors have been reminded that geopolitical ambition carries economic costs, and those costs are increasingly being priced into US assets.
#3. Friction with US allies
Third, strategic friction with allies is no longer background noise. Renewed debate in Washington about Greenland’s strategic importance has unsettled European partners and highlighted fragility in transatlantic cooperation. Markets care deeply about alliances because alliances underpin trade, resource access and regulatory alignment. When strategic intent appears contested or erratic, capital looks for jurisdictions where diplomacy feels steadier and policy signals clearer. This is less about Greenland itself than what the debate represents: uncertainty in long-standing economic relationships.
#4. Legal ambiguity over trade powers
Fourth, legal ambiguity over trade powers has become a material risk. The Supreme Court’s indecision over the legality of sweeping tariffs imposed last year has left companies and investors in limbo. Trade policy that can be upended or invalidated by judicial review is trade policy that cannot be confidently planned around. Legal silence, in this context, is not neutral; it is destabilising. When the rules of international commerce appear provisional, long-term exposure to US markets becomes harder to justify at current valuations.
#5. Earnings reality is sinking in
Fifth, earnings reality is catching up with valuation optimism. Early 2026 results have exposed cracks in parts of Corporate America, particularly in banking, where performance has lagged international peers. This comes at a time when other regions are delivering improving growth from lower starting valuations. Back-to-back declines in major US indices reflect a market that is no longer willing to ignore underwhelming fundamentals. Earnings once again matter, and they are not uniformly impressive.
Taken together, these forces explain why gold is soaring, the dollar is sagging and equities are being treated with greater scepticism. This is not a dramatic exit from the US economy, but a disciplined rebalance away from concentration risk. Investors are rediscovering diversification, not as a slogan but as a necessity.
The Sell America trade is therefore not an act of defiance but of prudence. Markets are signalling discomfort with policy risk, legal uncertainty and geopolitical ambition colliding at once. The United States remains a central pillar of global finance, but it is no longer assumed to be uniquely insulated from stress. That recognition, rather than any single shock, will shape global portfolio allocation through the rest of 2026.
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