Need to Know: Warren Buffett says never to hold money during a war. Here’s a stagflation playbook for stocks.

“The one thing you can be quite sure of is if we went into some very major war, the value of money would go down — that’s happened in virtually every war that I’m aware of. The last thing you’d want to do is hold money during a war,” he said.

Buffett bought his first stock in 1942, when “macro factors were not looking good,” but insisted investors would frankly “be a lot better owning productive assets over the next 50 years” than pieces of paper.

Read: BCA analysts say a nuclear apocalypse may take us all out, but bet on stocks anyway

His words might seem to find little takers this morning, but for those unafraid to put a few dollars to work, our call of the day from the Stuck in the Middle blogger “Mr. Blonde” offers up a stagflation playbook.

Fears of rising of inflation and slowing growth, partly driven by the COVID-19 pandemic, were weighing on some investors’ minds before a war in Europe drove a spike in commodity prices. Even if the fighting resolves, “there’s a risk the damage is already done. Stay defensive and lightly risked,” Mr. Blonde advised.

The blogger looked at past stagflation episodes as measured by U.S. manufacturing purchasing managers indexes and year-over-year OECD G-7 core consumer prices dating between 2019 and 1960. He found markets were in this situation 31% of the time.

Mr. Blonde deduced the best relative performances during stagflation were from defensives, such as pharmaceutical healthcare equipment and services, utilities, food and tobacco, and even defensive tech, such as software.

And if we’re talking reflation, healthcare equipment and services, food and tobacco, energy and software do well in both those regimes, while automobiles and diversified financials don’t. Consumer services, meanwhile, do better than consumer cyclicals during stagflation.

As for stocks, the blogger screened for “large cap, high profitability, no extreme balance sheet leverage, good growth/momentum with focus on both estimate revisions and price momentum, and reasonable valuations with focus on FCF [free cash flow] yield.”

The aim is idea generation and a starter for investors looking for longs, he said, but cautioned that some stocks on his list will have “other issues and idiosyncratic drivers that overwhelm whatever macro regime resilience they may have.”

The top five are Alphabet
GOOGL,
-1.49%,
Meta Platforms
FB,
-1.43%,
D.R. Horton
DHI,
-1.28%,
NVR
NVR,
-0.19%
and Genuine Parts
GPC,
-1.00%.
You can see the whole list and blog here.

The buzz

Comments from Secretary of State Antony Blinken were driving a massive oil-price surge that began late Sunday. Blinken said U.S. and European officials are discussing a potential ban of Russian oil. Some point out how there might have been missteps here:

An estimated 1.5 million people have fled the fighting in Ukraine, as Russia offered a third cease-fire for Monday following two failed attempts over the weekend. But Ukraine has rejected that, as some of those routes lead to Russia and Belarus. Meanwhile, delegates are headed for fresh talks on Monday.

American Express
AXP,
-3.86%,
Visa
V,
-3.35%,
Mastercard
MA,
-3.00%,
Netflix
NFLX,
-1.72%,
TikTok and KPMG add to the list of companies halting operations in Russia over its invasion of Ukraine and crackdown on the media.

Bed Bath & Beyond
BBBY,
-3.40%
shares are up 38%, on news Chewy
CHWY,
+2.91%
co-founder Ryan Cohen was taking a big stake and pushing for changes.

Global COVID-19 deaths have hit six million, with remote islands now suffering infection waves and a war-driven refugee crisis in Europe also posing risks.

The markets

Stock futures
YM00,
-0.82%

ES00,
-0.75%

NQ00,
-0.83%
are slumping, with European
SXXP,
-0.98%
and Asian markets deep in the red, as oil prices
CL00,
+4.56%

BRN00,
+5.23%
at 2008 highs. The entire commodity sector is climbing, including natural gas
NG00,
+1.63%
on both sides of the Atlantic, and all-time highs for wheat
W00,
+7.03%
and palladium
PA00,
+7.83%.
On the haven front, gold
GC00,
+1.15%
is above $2,000 an ounce, the dollar
DXY,
+0.28%
and Swiss franc
USDCHF,
+0.84%
are climbing and the euro
EURUSD,
-0.39%
is tumbling.

The chart

The tickers

These were the top searched stock tickers on MarketWatch as of 6 a.m. Eastern.

Random reads

Along with a plea for peace, singer Sting revives an 80s hit he hardly ever played.

A trucker “freedom convoy” hit the U.S. capital over the weekend. Not everyone was impressed.

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