Why the US is entering a stagflation environment

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New York (CNN Business)People are selling stocks, selling bonds, selling crypto, selling their failed hedge funds … and putting cash in Under the Mattress Savings and Loan Corp.

It’s getting hairy out there. Typically, when the market has a day like it did Wednesday, you’d expect to see an immediate bounce-back, a sign that stocks got a little too expensive but they still have underlying value that the market has faith in — albeit at a lower price.
Not today. After kicking the crap out of the Dow on Wednesday — sending it 1,100 points lower, Wall Street woke up Thursday and chose violence once again. Futures pointed to another day of losses ahead, trading between 1% lower in early morning trading.

    Stocks have sold off in essentially a straight, downward trajectory since January, for all the reasons you’d expect: inflation hovering at 40-year-highs and whispers of a looming recession. Oh, plus a war in Eastern Europe, the continued spread of Covid-19 and the whole gloomy vibe that seems to be taking root. We’ve even got — and we can’t make this up — monkeypox to worry about.

      Investors are grumpy. The S&P 500, the broadest measure of Wall Street, is on the precipice of a bear market, falling 20% from the all-time high it hit in January.

      What’s up

      But we have some good-ish news: As with any market implosion, there’s some stuff to buy.

        The bad news: A peek at this year’s top gainers essentially gives you a list of everyone’s least-favorite companies.
        The best of the best in the S&P 500 this year looks like the guest list of a party hosted by Rex Tillerson and Dick Cheney: Occidental Petroleum (OXY), Valero (VLO), Marathon Oil (MRO), Halliburton, Hess, ExxonMobil, ConocoPhillips, Baker Hughes, Chevron, Schlumberger, Phillips 66.
        If you’re not into fossil fuels, how about the next tier of top performers in 2022: Big Pharma! Merck (MKGAF) and Bristol Meyers Squibb are up a bunch this year.
        Still nothing that interests you? OK…. *checks list* Oh! Could we interest you in some Altria or Philip Morris? (Honestly, who couldn’t use a cigarette right about now?)
        Insurance companies are all up. And defense contractors. Also AT&T (T) and T-Mobile (TMUS).
        There aren’t a lot of ways to make money in 2022 without some facing down some serious Faustian bargains. Maybe Google would have fared better if it tried some evil.

        What to do

        So, what should investors do?
        Students of Burton Malkiel would rather let blindfolded monkeys pick stocks by throwing darts at a board than try to time the market peak, buy the dip, or put it all into some crypto scheme.
        Trying to outsmart Wall Street means you’re going to risk selling at the bottom, buying at the top or making some other mistake that will cost you money. 
        So, as always, keep calm. Buy a little of everything. Wait it out.

          Or just put it all in the world’s most hated, Earth-polluting, drug-pushing megacorporations. That seems like a winning strategy for everyone.
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