Ways to Profit in a Stagflationary World

2 years ago 815 views 4 min read

Michele “Mish” Schneider

Director of Trading and Education

MarketGauge.com

Ways to Profit in a Stagflationary World

Investing in an inflationary environment can be challenging. The markets have been volatile, but stocks have trended steadily higher with corporate earnings.

In stagflation, cash and bonds are usually below the rate of inflation, while certain stocks might not fare much better.

It is important to invest into assets that will keep up with the rate of inflation.

The US economy is in a state of stagflation and it’s been that way for quite some time now.

The recent rise in interest rates won’t bring us out any sooner either. We can debate about the merits of recession or no recession, but we are facing slow growth with elevated inflation levels for the forseeable future.

The Federal Reserve has been trying to bring down inflation, but their efforts can only address demand driven inflation.

It will be interesting to see how the Fed navigates tightening in this stagflationary environment, particularly now that the yield curve is inverted which is normally a predictor of future recessions.

What we like in Time of Stagflation

* We are long precious metals but using no loss stops as the volatility is such where anything can happen. Risk management and actively trading gold, silver, copper, soft commodities, and energy
* EVs like Ford and TSLA. The EV market hill hit $2.5 Trillion In 2026.
* The EV revolution is upon us. Governments are supporting the transition to EVs. Critical minerals are essential for electrifying cars and these minerals are the backbone of the electric vehicle revolution to come.
* Rising demand from China will drive the electric vehicle (EV) global industry growth.
* We are long solar energy stocks, but valuations are running rich and many of same themes towards renewable energy are attractive.
* Watching consumer staples, energy, biotech, and genomics

Investor expectations of slowing economic growth world-wide have led to a decline in commodity prices in recent weeks, including oil, copper, wheat and corn, after those prices rose sharply following the Russian invasion of Ukraine.

Almost all economic indicators are weakening. We had two consecutive quarters of negative GDP growth, and elevated inflation will be the norm, or stagflation should be considered the “new’ normal.

Core inflation will be sticky and will stay us much longer than people think.

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Mish in the Media

Bloomberg TV on Yields 08-02-22

Business First AM on ARKK 8-02-22

Cheddar TV on Big Tech 07-29-22

Mish’s midweek update:
A Trendsetting Week in the Markets,07-27-22

ETF Summary

S&P 500 (SPY) 403 now closest support with 417 resistance

Russell 2000 (IWM) 182.50-183.50 support-maybe move to 190 next

Dow (DIA) 322-323 support now 331 next resistance

Nasdaq (QQQ) 308.55 support with resistance 319

KRE (Regional Banks) 60 key support-65 resistance