Commodities Move Diminishes Stagflation Woes

Now that gold has taken out $900, there will be a flurry of stories about how the commodities are just collapsing, and at the same time, if we get an employment number that is not a totally chaotic decline -- as indicated by ADP (ADP - commentary - Cramer's Take) -- we will get the continuation of this rally.

Gold has gone down pretty much relentlessly, which is what is supposed to happen in the slowdown, and it eliminates something you haven't heard a lot about lately: Stagflation.

One of the reasons I am growing more and more bullish is that the "stagflation" scenario that was so in our faces just a few weeks ago is banished when you see natural gas at $8, oil at $120 and gold below $900. The case for stagflation is diminished, which allows you to buy so many stocks that you have to think: Wait a second, I can even go back to the high-multiple plays like Research In Motion (RIMM - commentary - Cramer's Take) and Apple (AAPL - commentary - Cramer's Take) and Google (GOOG - commentary - Cramer's Take).

Of course, any end to stagflation makes people bullish on the financials although we know that until the CDO medicine is taken, that's a tough sell for all but a handful of banks including the fortress four of US Bancorp (USB - commentary - Cramer's Take), JPMorgan (JPM - commentary - Cramer's Take), Bank of America (BAC - commentary - Cramer's Take) and Wells Fargo (WFC - commentary - Cramer's Take), with the last two having the wherewithal to be able to withstand the big writedowns ahead because of their deposit base.

I think that yesterday's rally in the Nasdaq is a function of the breaking of the commodity grasp and a return to the high multiples that dominate there. I reiterate that biotech is excellent here, but what is most encouraging is anything with a plus-20 multiple that has momentum. It also is a better environment for the Cokes (KO - commentary - Cramer's Take) and Pepsis (PEP - commentary - Cramer's Take).

Watch the stagflation strangulation. It's heading off the radar screen: Bullish!

ALL JIM CRAMER BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.