The Iran War Just Shredded the ‘Sell America’ Trade

As the Wall Street aphorism goes, narrative follows price. An asset moves, a story emerges to explain it, and investors pretend that they knew this would happen all along — as if financial markets made sense in this neat-and-tidy fashion. Case in point: the “sell America” trade, the flimsy argument that foreign capital was fleeing the US.

“Sell America” emerged as a byproduct of the coordinated crash in stocks, bonds and the dollar near the start of Donald Trump’s second presidency. He had, of course, attacked the independence of the Federal Reserve and was setting economic and trade policy in an alarmingly haphazard fashion based on personal whims. “Sell America” got a second wind later in the year when other developed market stocks, especially in Europe and Japan, entered a rare period of outperformance.