MacroVoices #553 Brent Johnson: Disparate Housewives

Brent Johnson (0:00)

I've been doing this for 26 years now, and for 25 of the 26 years, I've been hearing that the Fed is out of bullets. And my point to people is that they have a lot more bullets than you can possibly imagine.

Erik Townsend (0:12)

That was Santiago Capital founder Brent Johnson. I'm Erik Townsend, and this is Macro Voices, the free weekly podcast targeting professional finance and sophisticated private investors. Episode 553 was produced on October 8th, 2026

Brent Johnson has been the lone voice calling for a higher dollar index, while most of his peers were dollar bears. With the Dixie closing above 102 on Wednesday afternoon, we were long overdue to get Brent back on the program. And Brent just released a paywalled research report titled Disparate Housewives, an analogy to the apparent marriage of the Fed and Treasury Department. That is behind a paywall, but we were able to persuade Brent to let us share at least the executive summary with you, and that's linked in your Research Roundup email. We'll discuss all of that plus Gold, the formative Cold War with China, and much more in this week's feature interview.

Patrick Ceresna (1:07)

And I'm Patrick Ceresna. Let's dive into this interview.

Erik Townsend (1:11)

Brent prepared a slide deck to accompany this week's interview, and I strongly encourage you to download it. Registered users will find it in your Research Roundup email, or you can just go to our homepage, macrovoices.com. Look for the red button above Brent's picture that says, looking for the downloads.

Brent, it's great to get you back on. I want to start with the reason I brought you back on, which is, boy, all of us smart guys don't listen to that crazy nutcase, Brent Johnson. We know the dollar index can't possibly break out above 100 here. Oops, just did.

You're the man who called it. So what's going on here? Why is the dollar breaking out now? For me, it was an unexpected move, although I think you've been anticipating it.

Brent Johnson (1:50)

Yeah. Well, we're at a pretty interesting time right now. I think over the summer, a lot of people were expecting, now that we've got Warsh in power at the Fed, and they're going to coordinate perfectly with Trump, and they're just going to cut rates, and the dollar is going to fall, and that's kind of it.

It just once again shows you just never know with markets, right? There is no certainty. And I think to a certain extent, markets are demanding higher rates, and in order to establish at least some credibility early on, Warsh went the other way and has raised rates. So I think raising rates is a big part of it, but I think there's other parts of it as well. I think there's kind of three other parts. Number one is where else are you going to go, right? Do you really want to go to Europe that has a war raging on its border, very little economic growth, and a political union without a fiscal union? That doesn't seem too attractive to me. Japan still has a number of problems. I don't see a lot of global capital flowing to Japan, maybe a little bit, but again, that's not necessarily a safe haven. China's got a closed market. It's possible to get in there, but not in a big way. And do you really want to go there when there's a trade war going on between the United States and China? And so in some ways, the world still needs dollars to operate. The world still sells things to the United States in dollars, therefore they earn dollars, therefore they have borrowed in dollars. And in order to match liabilities to expenses or revenues and not have to be a currency trader, they store their money in dollars. So that creates a bid for dollars.

The other part of it that I think is a little bit less appreciated, and this is not necessarily my base case, but I can't rule it out, is that rates, I think, are also higher because to a certain extent, this AI ecosystem is perhaps saying, maybe we're not going to go into this great reset, maybe we're not going to have this great depression, maybe we're actually coming into something that's going to provide some growth, and perhaps they can kick this down the road further than we think, and because of the growth associated with the AI trade, we need to get paid more to sit in bonds, etc.

So I think there's that part of it, and I think all of that feeds into owning the dollar, because again, to take advantage of any of those three different things I've talked about so far, you first need to have dollars. Now, what you do with those dollars, whether you buy a T-bill, whether you buy some US real estate, whether you buy stocks, or maybe you just sit in cash, that's another decision you've made. But the first decision to be made is to buy dollars.