The “sell America” trade has reached levels not seen since the 1980s

Traders are dumping US assets like mullets are back in style and “Endless Love” is topping the Billboard Hot 100.

Rising recession risks thanks to onerous tariffs have catalyzed a global downgrade of US stocks, with valuations falling relative to global equities by the most on record. Even Bitcoin has managed to divorce from US tech stocks, in part because it’s not an American asset.

Levies on imports (and lower consumption, in the event of exports) may help in reducing imports and America’s trade deficit, but the flip side of that equation is that the rest of the world has less need to invest in American assets. The improvement in the current account is a “maybe,” but US stocks and bonds falling out of favor is happening in the here and now.

Over the past month, the US Dollar Spot Index (which tracks the greenback relative to major developed market currencies) has fallen by more than 5%, as has the S&P 500. Along the way, 10-year Treasury yields are up more than 10 basis points. This combination is exceedingly rare.

In fact, the last time this happened was September 1981, when the US economy was in the second leg lower of its double-dip recession.