Why one firm says the market's 'Sell America' narrative is way overblown

• Trump's policies have fueled "Sell America" sentiment in markets recently.
• Alpine Macro argues that fears of investors fleeing US assets are overblown.
• "There's a large gap between headlines and structural incentives," the firm wrote.

This year has seen a revival of the "Sell America" narrative amid new trade war tensions and Donald Trump's aggressive posturing toward allies.

Yet, according to one research firm, investors shouldn't get too worked up about the latest bearish sentiment on America's ties to key trading partners.

As Trump's tariff policies have weighed on some relationships this year—most notably with the European Union—investors have, in some instances, sold off dollar assets such as stocks, bonds, and the greenback itself. The president's bombastic rhetoric regarding taking over Greenland only gave fresh fuel to Sell America fears earlier this year.

The events have fueled speculation that the EU could distance itself fro the US, but according to Dan Alamariu, chief geopolitical strategist at investment research firm Alpine Macro, this is unlikely, and "Sell America" sentiment is overdone.

"Markets cite Trump's unconventional domestic and foreign policies, upending of established political norms, rising debt, and ally antagonism as reasons," he stated. "Yet there's a large gap between headlines and structural incentives."

The strategist highlighted the impracticality of coordinated sell-offs, even in times of high uncertainty. Alamariu maintains that a split between the US and the EU, whether in trade or with investors fleeing either market, doesn't make sense.

"Europe-wide sell-off of U.S. assets is unlikely," he stated. "First, geopolitical tensions are self-limiting and not in either side's interest. Second, investors don't keep long-term geopolitical grudges—especially if tensions trend lower."

In his view, the "Sell America" narrative hasn't spread across Europe so far, and there is no evidence that investors are dumping US assets en masse. European investors were still among the leading buyers of US Treasurys last year, government data shows.

China's recent move urging its banks to scale back US Treasury investments is likely to fuel more talk of "Sell America." Yet, Alamariu argues that positive investor sentiment will continue to outweigh any bearishness on US markets.

"The Trump administration will try to stimulate the economy in 2026 ahead of the midterms," he predicts. "U.S. dominance of critical fields like high tech and higher innovation propensity means it remains attractive to foreign investors despite policy misgivings."

Alamariu believes there is one scenario in which the "Sell America" could become a concern for investors. He said that if the US market continues to underperform in the coming year amid major geopolitical disturbances, more investors could pivot to other markets.