Brent Johnson, founder and CEO of Santiago Capital and creator of the Dollar Milkshake Theory, joins The Julia La Roche Show in-studio for a wide-ranging conversation on why the world most investors grew up in is over. Johnson argues that power now matters more than economics — that the old framework of spreadsheets and cash flows is no longer sufficient when supply chains, national security, and geopolitical competition determine outcomes. He breaks down the US-China power competition, the implications of the Iran conflict for energy, food prices, and portfolios, and why he remains in US equities despite the consensus rotation into emerging markets. He also updates his Dollar Milkshake Theory, makes a provocative case that what comes after the American Republic is the American Empire, and explains why stablecoins may be the most underappreciated geopolitical tool the US has right now.

Links:

Twitter/X: https://x.com/SantiagoAuFund

YouTube: https://www.youtube.com/@milkshakespod

Substack: https://research.santiagocapital.com/

0:00 Intro & welcome Brent Johnson

1:05 Current macro picture: the world has changed & power matters more than economics

4:37 Signposts reinforcing the thesis — Trump as symptom, not cause

5:42 What the paradigm shift means for investors — the law of one price is gone

8:25 The high angst/low drawdown paradox — markets only down 10% but everyone's acting like it's 30%

9:43 Conviction vs. confliction — investing for what will happen vs. what you want to happen

13:23 Iran: thinking through the probabilities without the certainty

16:27 The US is still the most powerful country in the world — what that means for portfolios

18:01 Portfolio implications of the Iran scenarios — energy, food prices, the Strait of Hormuz

21:23 It's all about US-China — the prisoner exchange and the technology race

29:16 Where Brent is putting money right now — capital preservation, cash, gold, US equities

31:12 Why he's NOT rotating into emerging markets — the four scenarios framework

34:09 The Dollar Milkshake Theory explained — and how it's held up in 2025-26

39:29 Stablecoins: what Brent got wrong and why they matter more than he thought

46:26 CBDCs vs stablecoins — and the coming conflict between the Fed and the Treasury

50:05 The Fed: cut, hike or hold?

52:48 Japan: the yen trap, JGBs, and why it matters for everyone

54:46 What question nobody asks Brent but should

56:33 What keeps him up at night and what makes him optimistic

57:44 The Roman Republic vs the Roman Empire — is America heading toward empire not collapse

1:01:40 Parting thoughts: find a community of people you trust who disagree with you

New York Times’ bestselling author Larry McDonald, founder of The Bear Traps Report, returns to The Julia La Roche Show for an in-person episode discussing the risks in the markets today. McDonald makes the case that private credit is this cycle's subprime — opaque, over-leveraged, and already cracking — and warns that the retail investors who were sold quarterly liquidity on an inherently illiquid asset class are about to find out the hard way. He also breaks down why stagflation is the defining macro theme of 2026, why the 60/40 portfolio is broken, and why the great migration out of financial assets and into hard assets — energy, copper, gold, and commodities — is only in the second or third inning. Plus: a surprising first-ever Bitcoin buy, why natural gas is his top multi-year trade, and the under-the-radar risk nobody is talking about.

Links:

How To Listen When Markets Speak: https://www.amazon.com/Listen-When-Markets-Speak-Opportunities-ebook/dp/B0C4DFVFNR

Colossal Failure of Common Sense: https://www.amazon.com/Colossal-Failure-Common-Sense-Collapse/dp/B002IFLWMK

Twitter/X: https://twitter.com/Convertbond

Bear Traps Report: https://www.thebeartrapsreport.com/

0:00 Intro: Welcome back Larry McDonald, founder of The Bear Traps Report & author of "How to Listen When Markets Speak"

1:21 Private credit: is this cycle's subprime already here?

7:30 The Trump off ramp: 2025 vs. 2026 and what's different this time

9:43 Stagflation: sticky energy prices, slowing growth, and the TACO trade

13:14 The Fed's next move — hike or cut?

15:30 The great migration: from financial assets to hard assets

16:58 Mag7 double-digit drawdowns and the rotation playing out now

19:36 Is there a relationship between energy costs and the private credit crisis?

22:41 Gold, silver and precious metals — tourists flushed out, time to buy

26:13 First ever Bitcoin buy — the gold-to-Bitcoin ratio and why now

30:10 The under-the-radar risk: UK fiscal crisis and bond vigilantes

32:30 US fiscal picture: $39 trillion in debt and the dollar's secular decline

36:48 Why anyone still owns long-term bonds — and why that's changing

39:21 Lehman lessons

43:09 Is private credit already a crisis?

48:00 Parting thoughts and how to find The Bear Traps Report

In this episode of The Wrap, Chris Whalen says stagflation is now the base case — the Iran war has already cost American investors trillions in reduced investment value, Treasury auctions are weak, and mortgage rates are heading toward 7% if the 10-year hits 5%. Despite all of this, he still calls for a Fed cut in April, arguing the inflation is caused by war not monetary policy, and the Fed's real mandate is employment. He says we're heading toward a medium to long-term reset in risk premia, equities are out and debt is in, and that a recession by 2028 — "misery on the eights" — is becoming a near certainty. He's adding to gold and silver on the dip and if Annaly goes down he's buying more.

Thank you to our partners at Goldco. Get your free 2026 Gold & Silver Kit at https://goldco.com/thewrap

Links:

The Institutional Risk Analyst: https://www.theinstitutionalriskanalyst.com/

The Wrap: https://www.theinstitutionalriskanalyst.com/post/theira826

Inflated book (2nd edition): https://www.barnesandnoble.com/w/inflated-r-christopher-whalen/1146303673

Twitter/X: https://twitter.com/rcwhalen

Website: https://www.rcwhalen.com/

Use the code TheWrap2026 for 25% off your first year of The Institutional Risk Analyst https://www.theinstitutionalriskanalyst.com/plans-pricing

Timestamps:

0:00 - Intro and welcome Chris

0:47 - The Iran war and long-term damage to the global economy

2:18 - Are we headed toward more inflation?

2:41 - The term structure of interest rates is blowing out — here's why

4:02 - Making the case for a Fed cut despite $100 oil

4:26 - Stagflation is ahead

5:30 - The Fed's real mandate is employment — that's what forces the cut

6:40 - Whalen calls for a rate cut in April

7:51 - What difference would a cut actually make?

8:19 - Bonds are behaving like equities

9:08 - The $5.12 trillion cost of the Iran war to American investors

11:11 - Where Whalen is putting his own money right now

13:03 - Why the market has stayed resilient despite all the headlines

13:53 - Private credit - Is Apollo facing a Lehman moment?

18:53 - Weak Treasury auctions — what that means for mortgage rates

20:06 - People don't want to understand what the war is doing to the economy

21:03 - This year is the opposite of last year — no easy trades

21:58 - Bob Elliott's world where long rates are closer to 4% than 2% — is that the new normal?

23:11 - If the 10-year hits 5% has the bond market lost trust in the Fed?

24:16 - Gold at $4,500 today — volatile but Whalen is staying long

25:26 - Viewer question: crypto-backed mortgages with Fannie and Freddie?

27:20 - Is recession now a near certainty?

28:07 - Viewer Mail: What are the downside risks to Annaly?

30:00 - Viewer Mail: Should you invest in Canadian banks?

31:49 - What Whalen is watching next week