Should you downgrade the US in your portfolio?

In this episode, the discussion kicks off with Moody’s downgrade of the U.S. sovereign rating from AAA to AA1 and examines the implications of the so‐called “Sell America” trade. Despite symbolic effects, the downgrade highlights concerns over deteriorating fiscal metrics that no longer balance America’s economic strengths. The podcast delves into a portfolio strategy that maintains long positions in U.S. equities and corporate credit while shorting the dollar and Treasurys, set against a backdrop of fiscal expansion, deregulation, and tariffs—a framework dubbed Paradigm C. Quantitative signals including a bullish macro weather model, an inflation regime per the GRID Model, and a risk-on Reflation environment are discussed alongside tactical positioning models. The host also addresses common client queries regarding potential Fed or Treasury reactions, ultimately noting that past downgrades have not led to immediate policy shifts, with market reactions more closely tied to dovish pivots in financing approaches.