How to play the "sell U.S." trade
Summary
- The "Sell U.S." trade is gaining momentum, driven by a massive performance gap where international markets (Israel +43%, Brazil +41%, Japan +26%) significantly outperformed the S&P 500 (+16.5%) last year.
- Major institutional players are pivoting: BlackRock is favoring Emerging Markets over U.S. credit, PIMCO is diversifying away from U.S. assets due to "unpredictable policies," and Amundi is cutting U.S. dollar exposure.
- The thesis is not necessarily to "Short America" but to "Buy Everything Else," as global markets (specifically Japan) implement corporate reforms (buybacks, book value focus) to compete with U.S. capital market sophistication.
Trade Ideas
Amundi, Europe's largest asset manager, said it would "cut US dollar assets over the coming year and expects the dollar to weaken further." The "Sell U.S." trade is fundamentally a currency trade. If global institutions diversify away from U.S. assets due to policy unpredictability and rate cuts (mentioned by Kevin Warsh/Trump), selling pressure on the USD will increase relative to foreign currencies. SHORT US Dollar (or unhedged international exposure). Flight to safety strengthens USD; other central banks cut rates faster than the Fed.
Scott Wapner cites data showing international markets (Israel, Brazil, Japan, UK) "trounced" the U.S. trade last year. He notes that PIMCO and Amundi are explicitly pivoting away from U.S. assets due to "unpredictable policies" and valuation gaps. The U.S. market's dominance has forced global competitors to adopt shareholder-friendly reforms (like Japan's corporate governance changes). As major asset managers reallocate capital to these cheaper, reforming markets to diversify political risk, international indices will capture the flow. LONG International/EM indices to capture the rotation. U.S. exceptionalism continues; global geopolitical instability.
The guest states, "We're on this international trade very heavily... IDB [sic], the iShares International Select Dividend Fund." (Note: Ticker for this fund is IDV). This fund targets "old economy" international companies paying dividends. It is the specific vehicle the guest's firm is using to play the rotation where investors stop sending "80% of their money to the S&P" and look for value abroad. LONG IDV as a direct play on international value and yield. Dividend cuts in foreign markets; global recession affecting "old economy" sectors.
