How both sides of the 'Sell America' debate can be right as dollar falls and stocks climb

By Steve Goldstein

A protester holds flag outside the U.S. consulate in Nuuk, Greenland, on January 20, 2026.

There are two opposing views of whether the so-called "sell America" trade is happening.

The first is that the trade is underway, as the dollar has dropped and as long-end U.S. Treasury yields remained sticky. The opposing view is there no substitute for U.S. markets which are the largest and deepest.

Wei Yao, Societe Generale's global chief economist for corporate and investment banking, presents another view - they're both right.

"There is no viable replacement for the dollar or dollar assets as the global portfolio anchor, yet diversification is feasible. A review of global portfolio-flow data since Trump's second term supports this," said Wei, who added the global chief economist title to her existing role as head of Asia-Pacific research last week.

The U.S., she notes, still absorbs half of the world's non-resident investment. But its share of foreign debt flows is falling - due to Asian and European investors - as the U.S. share of foreign equity flows has been rising broadly.

SocGen's look at cross-border flows and whether the 'sell America' trade is happening or not.

The analysis is based on $2.6 trillion of flows from 27 large economies, through the first three quarters of 2025. That would by definition exclude the more recent ructions as President Donald Trump threatened to follow up the apprehension of Venezuelan President Nicolas Maduro with a seizure of Greenland.

One point Wei made was that a small diversification away from the U.S. can be big gains for others. For example, Poland, Mexico and the Phillipines saw a meaningful market share increase in debt allocations.

Without trade rebalancing, however, Wei says that capital rewriting has a limit.

"Those with big current-account surpluses-namely Europe and North Asia-continued to be the biggest capital exporters to the rest of the world and to the U.S. Their resident outflows increased further post Trump 2.0. Meanwhile, American investors invested much less in foreign securities," she said.

The comments were reinforced by analysis from Barclays' team of strategists, who call it a "Hedge America" trade. They say global equity flows are increasingly gravitating toward the rest of the world but that there's little evidence that either Japanese or European investors are selling their American equities, thanks to strong tech-sector earnings.

The dollar debasement trade, they say, still leaves more room for rotation toward rest-of-the-world equities.

The U.S. dollar index DXY fell to a new four-year low on Wednesday and has dropped 11% over the last year.

The 10-year Treasury BX:TMUBMUSD10Y was steady at 4.25%, having risen 8 basis points this year.

The iShares MSCI all-country ex-U.S. ETF ACWX has gained 34% over the last 52 weeks.

-Steve Goldstein

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01-28-26 0611ET