Barron’s Streetwise – “Sell America?” Careful there.

Host: Jack Hough, Barron's columnist
Guest: Lori Calvacena, Head of US Equity Strategy, RBC
Date: January 23, 2026

Episode Theme & Overview

This episode explores the provocative idea circulating in financial circles: the “Sell America” trade. With the S&P 500 coming off strong years and investors riding high on U.S. equities, host Jack Hough invites Lori Calvacena from RBC to discuss what’s prompting some investors to consider reducing U.S. exposure, the merits and risks of reallocating internationally, and whether macroeconomic or political risks really warrant hitting the “sell” button on America. Along the way, the podcast touches on earnings, policy backdrops, investor psychology, and practical frameworks for thinking about market drawdowns.

Key Discussion Points & Insights

1. Defining the "Sell America" Trade

[03:07] Lori Calvacena:

• The “Sell America” phrase is gaining buzz, but it’s often misunderstood.
• It doesn’t mean dumping all U.S. assets—often it means trimming an overweight U.S. position to increase international exposure.

"Sell America could...be a question of whether or not do you want to be as overweight the US as you've been in the past. That doesn't mean you're taking your US allocation to zero. It may mean it's just not as high as it's been in the past." — Lori Calvacena [03:07]

• Many global equity managers are re-examining whether to maintain heavy U.S. allocations in light of elevated U.S. valuations versus fairly priced European markets.

2. Valuation Concerns and Global Rotation

[04:31] Lori Calvacena:

• U.S. stocks and other developed markets (like Canada, Australia) look expensive based on 20-year averages (Z-scores).
• Europe appears only slightly overvalued, despite local perceptions after last year’s big rally.
• The historic relationship between U.S. growth/value and U.S./Europe outperformance has broken down, but Lori notes:

  “If you believe in this rotation from growth to value, from Mag7 to everything else, you should be thinking a little bit more constructively about Europe on a relative basis. It seems a little odd that you're not.” [06:18]

3. Politics, Geopolitics & Market Patience

[07:06] Jack Hough & Lori Calvacena:

• Political headlines (e.g., about Greenland or Federal Reserve independence) are sparking anxiety.
• Lori sees U.S. institutional investors mostly focused on economic and sentiment models, with less time spent on geopolitical risk compared to global clients.
• She recounts how markets tend to be slow to price in geopolitical risks, using World War II and COVID as examples:

"Markets can be patient in parsing geopolitical risk...sometimes markets just take a wait and see approach." — Lori Calvacena [09:18]

4. Policymaker Sensitivity to Markets: The “Put” Concept

[12:56] Jack Hough:

• Jack postulates an “S&P 500-ocracy”—that officials watch markets and adjust policies if stocks sell off sharply, citing tariff scares as an example.
• Lori reframes this empirically, reflecting on how both U.S. and European investors differed in their interpretations and expectations around 2025 tariff risks.
• She introduces the “Four Tiers of Fear” framework for drawdowns:

Four Tiers of Fear Explained

[15:08] Lori Calvacena:

1. Tier 1 – Garden variety pullback: 5–10% drawdowns, routine and recoverable.
2. Tier 2 – Growth scare: 14–20%+ declines, marked by policy error fears or broader unknowns; seen 2010-2018, 2025 tariff event.
3. Tier 3 – Recession/Major war: 27–33% (Covid example)—brings aggressive policy response as markets drop.
4. Tier 4 – Systemic collapse (e.g., tech bubble, GFC): ~50% declines, rare and deeply traumatic.

"We call it our four tiers of fear. ...The market losing half of its value is what we saw in those two episodes." — Lori Calvacena [19:22]

5. Practical Implications: Portfolio Adjustments

[19:48] Jack Hough & Lori Calvacena:

• Jack asks how an S&P-500-centric investor should “dress up” their portfolio now.
• Lori recommends more geographical diversification—noting that global rotation out of the U.S. typically impacts the “growthier, AI-driven” megacap tech stocks first.

"If you're, you know, kind of pulling some US exposure off the table, I do think it hits...that growthier AI-driven part of the market a bit more." — Lori Calvacena [21:47]

• She prefers to call this the “geographical diversification trade” rather than “Sell America.”
• While developed markets ex-U.S. outperformed the U.S. last year, Lori emphasizes that “underperform” doesn’t necessarily mean the U.S. market goes down:

"Underperform doesn't necessarily mean go down." — Lori Calvacena [23:01]

6. Outlook for 2026 & The Role of Earnings

[23:35] Lori Calvacena:

• U.S. economic and earnings expectations for 2026 remain optimistic.
• Early bank earnings signal resilience under the surface, despite mixed reactions, geopolitical headlines, and regulatory worries.

"...The banks were still pointing a picture, you know, of a very, very resilient economy underneath the surface." — Lori Calvacena [24:36]

Notable Quotes & Memorable Moments (w/ Timestamps)

• On Valuation & Europe:
  "When we tested that empirically, you know, we saw basically valuations that were pretty darn close to average." — Lori Calvacena [05:00]

• On market patience with geopolitics:
  “Markets can be patient in parsing geopolitical risk.” — Lori Calvacena [09:06]

• On investor psychology in downturns:
  “When you got into the teens, there was a real whiff of panic that something systemic was unfolding that couldn't be stopped easily or that we were going to have a recession or a major crisis.” — Lori Calvacena [17:08]

• On practical portfolio adjustment:
  “When you de-risk, right, you sell what you own.” — Lori Calvacena [20:29]

• Jack on the phrase “Sell America”:
  “It just occurs to me the phrase sell America is just too jarring to my ears. But if we call it the take profits in America rotation, it sounds a little more pleasing.” — Jack Hough [22:08]

Important Segment Timestamps

• Definition & context of “Sell America” – [03:07]
• Valuation comparisons & global rotation logic – [04:31–07:06]
• Investor/market reactions to politics, geopolitics – [07:44–10:22]
• Market ‘Put’ theory & four tiers of fear – [13:35–19:48]
• Portfolio advice: rotation, diversification, risk – [19:48–22:47]
• Bank earnings & economic outlook for 2026 – [23:35–24:58]

Tone & Style

• The episode maintains an accessible, lightly humorous, and conversational tone.
• Jokes about “Davos” pronunciation and personal anecdotes about business attire and market psychology keep the conversation relatable.
• Lori Calvacena provides clear, data-driven commentary, using concrete frameworks and historic examples.
• Jack Hough’s questions anticipate listener skepticism, often poking fun at industry jargon (e.g., “take profits in America rotation”).
• The overall feel is grounded but optimistic, with an emphasis on not panicking and making thoughtful incremental adjustments rather than taking drastic actions.

Summary for Non-Listeners

This Barron's Streetwise episode offers a nuanced perspective for investors considering whether now is truly the time to “Sell America.” Guest Lori Calvacena, drawing on her experience with global clients and thorough market modeling, cautions that most of the “Sell America” talk is really about trimming outsized U.S. bets and seeking broader international balance. With U.S. valuations high but economic and earnings prospects strong, she advocates for geographic diversification rather than outright pessimism on America.

The episode provides practical frameworks (like the “four tiers of fear” for drawdowns), and clear-eyed advice to not overreact to alarming headlines or catchy market slogans. The hosts point out that markets are often resilient—slow to price in even serious risks—and that portfolio changes should be measured, focusing on value and diversification for the long-term rather than bold bets on imminent collapse.

Bottom line:
Don’t be spooked by the “Sell America” chatter. Make smart, measured adjustments, keep an eye on global opportunities, and remember—the U.S. economic machine is still running hot, but a little international diversification never hurts.