How to Prepare for a Post-Dollar World with Inigo Fraser Jenkins

Inigo Fraser-Jenkins (0:02)

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Joe Weisenthal (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:22)

And I'm Tracy Alloway.

Joe Weisenthal (0:24)

Tracy, we can't go too long without talking about the role of the dollar in the United States, the pillar of the global financial system, whether there is some threat to it or not. We are recording this July 17th. It has been a fresh week of headlines about say, independence of the Federal Reserve, and all of the things that we talk about all of the time. So we sort of need to return to this central question.

Tracy Alloway (0:48)

Yeah, the interesting thing about the Fed Chair drama is when the initial headlines came out about Trump possibly firing Powell, the big reaction wasn't the dollar, right? It wasn't in markets, it wasn't even the bonds, it was the currency.

Joe Weisenthal (1:02)

Totally, and I think this is one of those things where, I don't know, we don't know what's gonna happen, whether Trump will actually try to find cause to fire Powell, who knows what will even happen by the time people are listening to this episode. But, you know, I think people get the sense that with the Fed chair, with many other things, there is this sort of like erosion of an existing set of norms or expectations, etc. And so, you know, I think arguably some damage, for better or worse, has already been done to the existing institutional arrangement. Everyone around the world is paying attention, not to mention the sort of arbitrariness or volatility of tariff policy, ongoing wars, and so forth. Much is in change. We live in interesting times.

Tracy Alloway (1:50)

Here's what I think.

Joe Weisenthal (1:51)

Go on.

Tracy Alloway (1:52)

So, it's a cliche in financial market commentary to talk about a major turning point.

Joe Weisenthal (1:57)

Yes.

Tracy Alloway (1:58)

Because we've seen people talk about the death of the dollar for decades. Yeah, exactly. But that said, I think what's different about now is the number of long-term secular trends that appear to be reversing.

Joe Weisenthal (2:12)

On the move.

Tracy Alloway (2:13)

Yeah. So, there's globalization going from deglobalization. There's population growth going to shrinking populations. There's higher inflation instead of years and years of deflation.

The interesting thing about that is, of course, how are people going to react to that? How are markets going to react to that, especially when they've grown very, very used to the previous situation through back testing and all of that stuff?

Joe Weisenthal (2:41)

Totally. I'll just say one thing, which makes this very interesting timing-wise from the perspective of investors, because there are a lot of trends that seem to be, if not going in reverse, at least a new direction, etc. One trend that hasn't really gone in reverse, however, is you are still getting paid a lot to own US tech. And US markets, they're up solidly on the year. They are underperforming, which that is new. Global equities have outperformed US equities in large part this year. But this basic idea that where all the money to be made is as an investor is still in a handful of US companies, that in a way surprisingly is still kind of intact. And the question is, will that be the last sort of, the shoe to drop or the end of US exceptionalism from just the perspective of a globally oriented portfolio manager?

Tracy Alloway (3:34)

I think that's a good thing to watch. I'm going to pull a page out of Bob Brackett's Commodities Energy Transition book and say that these types of transitions often take longer than people expect. And you shouldn't expect everything to happen all at once. It's going to happen in stages. So there's a lot to look out for, a lot to discuss.

Joe Weisenthal (3:52)

Well, I'm really excited to say we have the perfect guest. Someone we haven't spoken to in several years, but always one of the most interesting guys around. We're going to be speaking with Inigo Fraser Jenkins. He is a market strategist at Alliance Bernstein. He has recently published a new quote book that's public online about the sort of like the big trends of the year, including a big focus on the sort of like question about the stability of the dollar or a post dollar universe and what that could look like. So, Inigo, thank you so much for coming back on Odd Lots.

Inigo Fraser-Jenkins (4:26)

Thank you very much. It would be good to be back on the show.

Joe Weisenthal (4:28)

Tell me about your books. What are your books and what is the theme of this year's book?