Something strange happened in the US financial system earlier this week: the stock market, the bond market, and the value of the dollar all slumped. This volatility andrecent threats to fire Fed chief Jerome Powell are unnerving foreign investors, who are flocking to a new phenomenon called the Sell America trade. WSJ’s Chelsey Dulaney explains what Sell America means for decades of American finance primacy. Jessica Mendoza hosts. Further Listening: -Trump’s Tariffs Force a New Era in Global Trade -Trump Allies Draft Plans to Rein in the Fed Sign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What is the 'Sell America' trade and why is it gaining attention?
There's a new term that's been making the rounds in the business world this week.
The sell America trade caused whiplash on Wall Street. The quote sell America trade. Sell America. Sell America trade continuing to gain momentum.
Have you heard the term sell America?
Chapter 2: Who is Mark Dowding and what is his perspective on US investments?
We're familiar with the sell America story. Sell it all. Sell the bonds, sell the stocks, sell the currency. Look, I think it's less about selling it. It's more a question about stop buying it. And if people stop buying, effectively it has the same effect, doesn't it?
The sell America trade refers to a new market phenomenon where investors overseas are pulling back from U.S. assets.
The business I'm overseeing is managing funds which invest in government bonds and other sorts of bonds for investors located worldwide.
Mark Dowding has quite the title. He's the chief investment officer of Blue Bay Fixed Income at RBC Global Asset Management. Mark is based in London, and he manages over $130 billion in assets.
Within all of the assets that we manage, the bulk of the assets, you would say, are actually allocated to US dollar securities.
And why is that?
Well, I guess, of course, it goes without saying that the US is the world's largest economy. It's the economic superpower. Obviously, the US has got the world's largest and deepest and most sophisticated financial markets. And sometimes we use the abbreviation TINA, which stands for there is no alternative.
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Chapter 3: Why have foreign investors traditionally favored US assets?
Investors end up investing in the US almost because there's not enough choice to go shopping in elsewhere in the world.
For foreign investors, the U.S. stock market and the U.S. bond market have long been considered great places to invest. But just a few months into Trump's second term, those markets have seen dramatic swings brought on by threats of a trade war and government infighting.
Some of the policy announcements that we have witnessed have led investors to question whether the US economy will continue to grow as strongly as it has been growing in the past. And that's actually led us to adjust our view and actually turn more away from being one-time dollar bulls towards being dollar bears.
For Mark and many investors around the world, the uncertainty in the US financial system is starting to feel like an inflection point.
All of a sudden, there's a bit of a rethinking about how much can you rely on the U.S. if you're located overseas. And all of a sudden, the U.S. is looking like a less attractive destination for your capital. It's no longer looking as safe as it once was.
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, April 24th. Coming up on the show, why foreign investors are selling America. Before there was sell America, there was buy America. You might know it as the U.S. exceptionalism trade.
by America became a trade that was embraced all over the world. That's been the trade for basically over a decade. So everybody was sort of pouring in to these U.S. bets.
Our colleague Chelsea Delaney reports on markets.
Investors have just been pouring in from abroad to American stocks. They've been buying American bonds. Part of that is the fact that the dollar, the US dollar, is the world's reserve currency. It means that central banks around the world, they want to hold dollars.
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Chapter 4: How has American exceptionalism influenced global investment trends?
This relative stability in both markets continued for decades.
Coming out of the 2008 financial crisis, the U.S. economy recovered a lot faster than the rest of the world. Europe has been stuck in this stagnation. Japan has been battling deflation. China has been really struggling for several years now. And so the U.S. economy was just growing much faster than anybody else's.
That growth spurred foreign investors to invest in all sorts of assets in the U.S. The stock market thrived. And it was given even more of a boost recently by the rise of artificial intelligence.
America has this very fast-growing tech industry. It's been the leader in a lot of sort of high-growing industries. And so that's attracted all sorts of investors.
How much of a stronghold has the U.S. had on the world economy recently? Is that a quantifiable number?
So foreigners own now about almost $19 trillion worth of U.S. equities. And if you were to go back to 2011, that's only $4 trillion.
Coming into this year, U.S. stocks had grown to make up more than 70% of the MSCI world, one of the most popular global stock market indexes. And as of February, foreign investors and governments owned almost $9 trillion in U.S. treasuries.
And so just stepping back, big picture, the way that this idea of American exceptionalism and the way that it's sort of taken hold of global markets, what has that meant for the U.S.? What's sort of the upshot?
The upshot of American exceptionalism for the U.S. is that it's led to a lot of money coming into America. And for the U.S. government, that means that it's been cheaper to borrow money. And the U.S. has an ever-growing budget and trade deficit. So that has helped fill that gap, this demand for American assets. The demand from abroad for American stocks has been a huge reason why, you know, U.S.
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Chapter 5: What impact did Trump's policies have on the US financial markets?
For years, that was the status quo. Investors saw the American stock market as a reliable place to get rich. And after Trump's election in November, U.S. markets looked even stronger.
We saw the American exceptionalism trade turbocharged. People called it the Trump trade. People thought that Trump was going to cut taxes. He was going to deregulate and the American economy was going to do even better. And so there was this big rally in stocks. The dollar went up.
But soon after Trump took office, he started doing something he didn't do in his first term — aggressively implementing steep tariffs. That started to worry investors.
It became clearer and clearer to investors that he might mean it this time, that he might actually do it, he might impose these really steep tariffs on global trading partners. And that led to a lot of volatility in the first quarter of the year. And then we had Liberation Day.
April 2nd, 2025 will forever be remembered as the day American industry was reborn.
The tariffs that they introduced were much, much deeper than investors had expected. And that's when you start to really see the sell-off take hold. The announcement could affect trillions of dollars of U.S. imports. That's when we start to see markets getting a little funky.
The market's reaction, clear and jarring. The S&P 500 plunging 10%...
Since Trump's inauguration, the S&P 500 is down roughly 10%. That's the index's worst performance in the first 94 days of any presidential term on record. Then, just this past Monday, something surprising happened. The stock market, the bond market, and the value of the U.S. dollar were all down.
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Chapter 6: What was the market reaction to the steep tariffs introduced in 2025?
It's very unusual. Yeah, it's definitely unusual. So typically, when you see stocks selling off, you would see treasuries and the dollar rising. And then after Liberation Day, we didn't see that. We started to see all three of these things selling at once. And that was really a sign that investors were losing confidence in American assets and American policies.
Lost confidence can have real consequences. Less investment in the U.S. bond market makes it more expensive for the government to borrow. And a weak dollar means U.S. companies pay more for imports, and Americans have less buying power on trips abroad. What is the Trump administration saying about all of these market issues?
The Trump administration has downplayed how serious this is. And I think Trump himself has said, like, this can be painful, but, you know, in the end, it'll be worth it.
I don't want anything to go down. But sometimes you have to take medicine to fix something.
Chapter 7: Why did the stock market, bond market, and dollar all slump simultaneously?
Is there anything else that's been worrying investors besides the administration's trade policy?
For investors, global investors, U.S. investors, threatening to fire the Fed chair is, I think, a bit of a red line. The pressure that Trump has been putting on Jerome Pelt has definitely added another layer to investors' anxiety about the fact that, you know, we're potentially dealing with a less predictable America.
That's coming up next.
Chapter 8: What are the potential economic consequences of investors losing confidence in US assets?
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Thank you and good afternoon. It's great to be back in Chicago.
Last week, Federal Reserve Chair Jerome Powell delivered an address on the economic outlook of the United States.
He was talking in a kind of low-key way, as Powell is known to do, about the economic outlook.
Tariffs are highly likely to generate at least a temporary rise in inflation.
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