Global investors have recently been reducing exposure to US assets - what's behind the trend?
"This trend is driven by concerns over US tariff threats, unpredictable and constantly changing foreign policies, and a desire to reduce exposure to potential US economic instability," Paul Goncharoff tells Sputnik.
The phenomenon that gained traction in financial circles after last April’s tariff shock is called 'Sell America'.
'Sell America' has its roots as far back as 2008 and has gradually become "the serious elephant in the room throughout the markets," the pundit notes.
Investors shifted to buying silver and gold – traditional safe havens. Even after Friday’s sharp drop, precious metals are still up 24% and 19% for January, with gold 75% higher over the past year, according to the New York Times.
"Investors, particularly foreign entities, are now openly dumping US treasuries and stocks while the dollar weakens," Goncharoff explains. "This increased market volatility results in higher US Treasury yields, while at the same time bond prices are noticeably falling due to ever-decreasing demand."
What’s happening now is a clear reassessment of US risk, with many seeing the country as a less reliable place to invest and a highly politicized manager of money and assets, according to the expert.
The consequences of the erosion of trust in the US market policy, which translated into a Sell America trend "are surfacing on an almost daily basis, from diplomatic gaffes, unapproved (by Congress) military adventures and intentions, [and] the ever-more-rapid de-dollarization the markets are living through," according to the pundit.
"This perfect storm of dissonances and unpredictability from the world’s hegemon underlines what BRICS was created to avoid and, to a large extent (not painlessly), is overcoming, first through the use of national currencies and not the hitherto mandated US dollar."
"This inevitably leads to new power blocs politically and economically," Goncharoff concludes, suggesting that the world is at a "historic inflection point of global realignment."