As the TACO trade goes viral, another is gaining traction: 'Anywhere But The USA'

Published Mon, Jun 2 20255:54 AM EDTUpdated Tue, Jun 3 20255:03 AM EDT

Key Points

Concerns over the health of the U.S. economy and Donald Trump's trade policies have born a new trade: "Anywhere But the USA."
"The 'Anywhere But USA' trade isn't contrarian — it's a recalibration toward global balance, cyclical recovery, and multi-polar growth," said Alan Siow of Ninety One.
"It's become quite emotive," Rami Cassis, founder of London's Parabellum Investments, said. "Nobody wants to invest in an environment where the government might change its mind overnight."

Seesawing trade policies , proposed foreign capital taxes and concerns over U.S. fiscal spending have propelled some investors to "Sell America" and given rise to a new trade: "Anywhere But the USA." Market participants have been scrambling to keep up with flip-flopping White House tariffs policy, a dollar selloff , a sharp rise in U.S. Treasury yields and volatile Wall Street stocks . It comes after the TACO — or "Trump Always Chickens Out" — trade ruffled feathers last week, as investors bet that U.S. President Donald Trump will ease or postpone steep tariffs despite threats to the contrary. Now, market participants say the hot trade is "Anywhere But the USA" — or ABUSA — amid what investment manager Ninety One's Alan Siow signaled was a "comfortable consensus" that U.S. exceptionalism was beginning to fade. "The 'Anywhere But USA' trade isn't contrarian — it's a recalibration toward global balance, cyclical recovery, and multi-polar growth," Siow, co-head of emerging market corporate debt, told CNBC. Over the past decade, he added, a widespread preference for U.S. assets had been "underpinned by secular strength in the [U.S. dollar] as a base currency." But confidence in the greenback has wavered in recent weeks. The U.S. dollar index has shed more than 8% since the beginning of the year, with the dollar now on course for its fifth consecutive month of losses . "Against a backdrop of mounting fiscal imbalances, the recent spike in policy volatility and resulting geopolitical polarization have caused U.S. market dominance to lose some of its luster," Siow explained. "At the same time, other global market destinations — [like emerging markets], Europe, Japan — offer improving fundamentals, attractive risk/reward profiles and are broadly under-owned." He added that he was advising investors to consider whether index-beating returns are now more likely to come from global diversification than from continued U.S. concentration. The shift away from U.S. assets has been growing this year, as Trump's tariffs jolted markets. BofA fund flows data showed investors fleeing U.S. equities and piling into Europe and Japan. During the week to April 30, for example, U.S. equities saw an $8.9 billion outflow — compared to a $3.4 billion inflow into European stock and a $4.4 billion inflow to Japan. "We still recommend asset allocation to BIG (Bonds, International, Gold) in 2025," BofA analysts wrote in a note on May 29. "Think International stocks likely to outperform US in '25." Meanwhile, JPMorgan noted a resumption of the U.S.-to-international rotation in ETF flows in a note from May 27. "The US recorded weak inflows ... while international flows were strong, primarily in International [Developed Markets]," the strategists wrote. Rami Cassis, founder of London's Parabellum Investments, told CNBC by phone that he was seeing a shift in attitude toward investing in the U.S. — but that this went deeper than simply seeking out the biggest returns. "I'm seeing a lot of, not quite animosity, but I can't think of a better word for it," he explained. "I think it's quite specific to the current administration. I think the capital flows out of the U.S. are driven by the apparent unpredictability of the current administration, [but] I think it's supported by ideology." Tariffs, Trump's approach to the war in Ukraine war , perceptions around the administration's stance on LGBT rights and other controversial policies were influencing some people's decisions about putting money in America, Cassis told CNBC. "It's become quite emotive," he added. "Nobody wants to invest in an environment where the government might change its mind overnight. [And] what would ordinarily be a purely objective and rational commercial decision, is now being supported by a level of emotion that's been introduced by some of the behaviors and policies that have come out of the current administration." Trump's policies have sparked international consumer boycotts of American products and a fall in global travelers to the United States. David Rosenstrock, director of financial planning and investments at New York-based Wharton Wealth Planning, told CNBC by email that he was seeing demand from clients to allocate their assets beyond the United States. The shift is "partly driven by concerns over market volatility in the U.S., uncertainty regarding trade and other policies, interest rates, and relatively weaker performance compared to global counterparts," he added. Where are the opportunities beyond Wall Street? Rosenstrock said his clients were considering diversifying to markets including Europe, emerging markets, and specific countries such as Japan and India. But he cautioned that the trend could stall or reverse in the future. "U.S. stocks have become more attractive to international investors as the U.S. dollar has weakened," he said. "As a result, for international investors, the cost of purchasing U.S. stocks in their local currency has decreased in some instances by as much as 10%." Parabellum's Cassis told CNBC that, "Europe, for the first time in a long time, might be a proper destination" for investment. European stocks have seen broad gains this year, amid broadly falling inflation , a historic shift on fiscal spending in Germany, and a commitment to ramp up defense spending across the region. The pan-European Stoxx 600 index has gained around 7.7% since the beginning of the year, while the euro has so far gained over 10% against the dollar in 2025. Meanwhile, the European Stoxx Aerospace and Defense index has soared by almost 50% this year, with bullish sentiment rising after the EU pledged to mobilize as much as 800 billion euros to invest in regional security. Chris Clement, senior portfolio manager at BRI Wealth Management, agreed that Europe-based investment alternatives to the U.S. were now looking more attractive. "European and U.K. equity markets trade at significant discounts to the U.S. and are now having the spotlight shone upon them," he said. "Another alternative for safe-haven assets might be the gilt market." Long-dated U.K. government bonds, known as gilts, logged major sell-offs earlier this year, which some traders labeled as a "nice opportunity ." Emerging markets Beyond Europe, the spotlight is back on emerging markets. Parabellum's Cassis noted that, for those considering allocating funds to the region, India looked attractive. "There's been a lot of economic activity and policies around trying to encourage foreign capital," Cassis told CNBC. "I think India is very likely a destination of some of the [diversifying] funds, depending on the investor's risk [tolerance]." The world's fifth-largest economy expanded by a hotter-than-expected 7.4% in the March quarter. Brian Mangwiro, managing director at Barings, also noted the increasing strength of emerging market investments. "We particularly see value in EM debt, sovereigns and corporates, and flows are starting to reflect this view," he said."The asset class also tends to perform well in a weak U.S. dollar environment." Mangwiro echoed the view that demand from the global investment manager's clients has begun to diversify away from the United States. "Within ETFs, flows into the 'Global ex-US' segment picked up post 'Liberation Day', both for equities and fixed income. US flows have flatlined," he said, citing policy uncertainty, an unsustainable fiscal trajectory and fears of significant dollar weakness as driving the moves. However, he emphasized that Barings was not seeing wholesale de-risking from U.S. assets, but a diversification away from positions that were heavily U.S.-leaning over the past five years.

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