Jim Cramer's Best Blogs

Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:

• commodities and stagflation,
• more woes for the automakers and
• potential bank mergers.

Click here for information on RealMoney, where you can see all the blogs, including Jim Cramer's -- and reader comments -- in real time.

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Commodities Move Diminishes Stagflation Woes

Originally published on Wednesday, July 30, at 10:18 a.m. EDT

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 Quote) -- 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 Quote) and Apple (AAPL Quote) and Google (GOOG Quote).

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 Quote), JPMorgan (JPM Quote), Bank of America (BAC Quote) and Wells Fargo (WFC Quote), 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 Quote) and Pepsis (PEP Quote).

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

At the time of publication, Cramer was long Pepsi.