‘Fire’ is now the greater threat to investors than ‘ice’
For readers looking for specific recommendations, I continue to like MLP pipelines with their high tax-deferred dividends (7–9%) and future infrastructure prospects due to AI, AI information centers, electricity demand, and the natural gas needed to generate it. PAA, WES are my favorites.
Becoming intrigued with food stocks. They’re going nowhere pricewise but a 6.2% yield on KHC (Kraft Heinz) is attractive for income. It’s breaking the company into two parts which may push price a little higher.
Today’s rumor on the firing of Fed chair is typical of our president and extremely disruptive of financial markets — higher 2/30 yield spreads, weaker dollar, crypto friendly, and earthshaking in its implications for what lies ahead. Investors beware — BG July 16, 2025
Financial markets will be closer in the future to a singe from inflation than a freeze in growth and prices
Some say the world will end in fire,
Some say in ice.
The American poet Robert Frost once wrote of the world’s potential destruction by fire (desire) or ice (hate). While obviously not meant as a reference to markets and economies, it could describe the opposing menaces of inflation (fire) and deflation (ice) that have loomed over them in the past century.
The 1930s Great Depression showed the economic devastation wrought by deflationary ice, produced in this case by a combination of misguided fiscal and monetary policies. Franklin D Roosevelt fought it with the New Deal until the second world war finally brought a resurgence of inflationary fire.
A host of battles followed between the menaces and attempts to counter them, the next being the early 1970s after the elimination of the gold standard. This made monetary policy a much more significant weapon to control the firestarter of Opec’s oil price shock, and Paul Volcker became the first monetary policy iceman as Federal Reserve chair. But economic breakdowns during the 2008-9 Great Financial Crisis and the pandemic years of the early 2020s required policymakers to instead fight the spread of ice.
My point from this history is that our finance-based economy has been in a long term fight to produce stability in the midst of destructive forces, some brought about by Keynesian attempts by governments to stimulate demand, others more influenced by the fragility of credit creation first explained by Hyman Minsky in the early 1980s.