NEW YORK ( TheStreet) -- 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:
  • the prospects for a market facing global tightening and a possible debt downgrade.

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The State of Play, Part 1

Posted at 11:17 a.m. EDT on Thursday, July 28.

Which is worse, Washington vs. business confidence or emerging markets' central bankers vs. business? What happens if they both combine? And what happens if you throw in a European debt crisis?

You get a hard patch. You get a bone-cruncher.

You get this market. Sure, we can get breathers, relief rallies. The kind of action you are seeing now.

Still, we have to face some facts here about short-, intermediate- and long-term problems, both temporal and structural.

There are short-term considerations that seem to grow by the hour: Greek default, soft default in America -- no checks to certain suppliers but Social Security and interest/principal payments not stopped -- and the debt downgrade, which would most likely cause the selling of lower-rated bonds to bring an average debt portfolio a little higher to offset the declining U.S. ratings.

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Those are causing some turmoil throughout all markets. They are putting a lid on the financials and are now being trotted out as reasons why the next quarter won't be so hot, a la the statements from Scott Davis, the chairman and CEO of United Parcel Service ( UPS). These are major reasons to stretch a soft patch into a hard stretch. Undeniable. Because when so many leaders say that we are on the verge of an economic calamity, you can't say, "No calamity, the water's fine." You look like an irresponsible joker.

The closer we come to both a soft default on select payments and then an unthinkable hard default on our bonds, the more this talk can hurt us.

It's the longer-term considerations that are now affecting us, the ones that say, OK, the markets we have relied upon to save us from our U.S. sins, notably emerging markets, are beginning to slow, because the central banks around the world from these markets want to cool things off to prevent inflation. They are using the only tool they know how, rising rates, and their methods are working.

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That's what we see behind the weakness in companies like Honeywell ( HON - Get Report), Emerson Electric ( EMR) or 3M ( MMM). That's what's troubling about the autos, Ford ( F), Daimler and Volkswagen too. Presumably General Motors ( GM).

All of these companies have become dependent on these fast-growing markets for extra oomph, and they are ground zero in the emerging-market central bank tightening scenario. That's what's decking the steel companies, where the slowdown is so palpable it went beyond the steel makers, almost all of which reported not-so-hot earnings and then went on to offer nastily negative projections. Now it is decking the companies that make coking coal and iron ore. Just check in the action in Cliffs Natural Resources ( CLF - Get Report) if you want to see it in action. Horrid action.

Those emerging-market central bankers are doing their job to cool things off just when our central bank is trying to get things going, but we have too many structural problems to get things going. The banks are the best barometers of the pain, but the lack of demand coupled with the more pernicious uncertainties from Washington produce a market where the U.S. can't tighten and the export-oriented companies, again think Emerson, are seeing a decline in the rate of new orders. (Notice rate, not absolute, but who cares when markets are in free fall?)

Of course there are the ridiculous central bankers in Europe who are tightening just when they should be loosening or staying the course. That's not helping either. Not by a long shot.

Now why is this worldwide pain and impediment to profits not more clear? Because there are secular growth stories within cyclical downturns and there are costs that can't seem to be reined in despite the anemic recovery we have and the urge to slow that the emerging-markets' central banks seem to be achieving.

First, there is aerospace, which is part of an emerging market long-term thesis that more fuel-efficient planes are needed, the deferrals are over -- witness the huge AMR ( AMR - Get Report) orders --and there is more plane and cargo traffic than there has been in the last couple of years, as the emerging markets do have heavy population growth and a growing middle class. This thesis is why Boeing ( BA - Get Report) could buck yesterday's horrible market even as its 787 is still not in the mix because of structural problems. It is also why Honeywell is probably now a buy.

Second, there's oil and gas, specifically the scarcity of it, and the need to find more as pressured by rising prices. We can't just add capacity overnight. The easy oil has been found. Only tremendous leaps in technology have allowed us to find more oil, and both nations and oil companies are putting through budgets to address this shortage. National oil companies in Mexico, Saudi Arabia and Brazil are all stepping up their budgets at the same time that the majors and the independents are embracing the new technologies to find oil that had hitherto been though out of reach.

That's the message on the Baker Hughes ( BHI), Schlumberger ( SLB), Weatherford ( WFT) and Halliburton ( HAL) calls. We just got great numbers from shale explorer Noble Energy ( NE) today with a large boost in forecast and a sweet increase in drilling expenditures.

Same with EQT ( EQT), the Marcellus king. Exxon Mobil ( XOM), no growth, overpaid for XTO, does not fit this picture other than a gigantic increase in spending in part to replace oil. It spends too much money buying back stock and not enough exploring, if you ask me.

These are secular trends, part of the massive transformation, as National Oilwell Varco ( NOV) described in its call, to get at giant finds. It's part of the recognition that both Bakken in North Dakota and Eagle Ford in Texas are the two biggest oil finds in this country in 40 years and could, arguably, be bigger than Prudhoe Bay. Keep in mind that we haven't even begun to stretch the California surface of these technology aided finds.

Of course, needless to say, because of raw demand for oil and because of low margin rates for speculators and the endless bid from ETFs you don't get the decline you are seeing for, say, steel.

At the time of publication, Cramer was long UPS, EMR and GM.


The State of Play, Part 2

Posted at 1:03 p.m. EDT on Thursday, July 28.

Third, trucks. Because of tremendous deferrals on new trucks from the 2008-2009 period and because of new environmental rules, we have tremendous pent-up demand, something that we saw with Cummins ( CMI - Get Report) that was obfuscated by Paccar ( PCAR). We got more of that with Federal-Mogul's ( FDML) terrific quarter this morning.

Fourth is a real Dustin Hoffman -- a la The Graduate -- story: plastics. A combination of a lack of new construction of facilities and in increase in the non-natural-gas portion of the feedstock has led to much higher prices, as Dow Chemical ( DOW) pointed out and I think LyondellBasell Industries ( LYB) will be about to say tomorrow, and those prices are sticking, because there are no real alternatives to plastic for most uses.

That's what I heard in a microcosm by David Wenner, the excellent CEO from B&G Foods ( BGS), who pointed out that a bottle of Vermont Maid syrup has had a 25% increase in cost because of the plastic it uses. That's real hard to pass on, and that is why B&G made the number and didn't blow it away last night. Wenner will put through price increases in the second half, and because these increases are not noticeable to the consumer and the brand names are strong I think they will pass through, and that is why he didn't take numbers down for the second half. He's in better shape than, say, TreeHouse Foods ( THS), which makes the squeezed private-label brands.

Colgate-Palmolive ( CL) is talking about raw costs, too. Consider it related to plastics and titanium dioxide, a key whitener. It does have 44% of the toothpaste market. And on the other side were the aforementioned Dow, PPG ( PPG) and this morning's terrific Airgas ( ARG) report.

And high-end retail seems to be working because the rich are staying richer. Tiffany ( TIF), Coach ( COH), Neiman Marcus, VF Corp. ( VFC) and Phillips Van Heusen's ( PVH) more expensive brands, aided by a collapse in cotton, throw us off the consumer weakness scent.

Agriculture is looking up as farmers plant more -- listen to Dow's call -- buy more fertilizer, as we can see from Potash's ( POT) call, and get more equipment, where there is a weird disconnect between Deere's ( DE) stock price and the secular trends. It's a buy. So is DuPont ( DD) which has terrific ag numbers and a very upbeat view of the future.

Finally, technology companies that have the cloud or social media or mobile strategies if they are linked to Apple ( AAPL), all are working. Amazon ( AMZN) and Google ( GOOG) are prime examples. Away from these portions of tech, it's pretty ugly, especially personal computers and anything optical

The safe havens are struggling. The drugs are part of the struggling cohort. Governments want to pay them less. The food and beverage companies all have the B&G problem.

There are just not enough places to hide or go, and a relief rally on a U.S. debt deal can occur, but all of these trends are going to be with us for some time even after a deal, and that is why any rally might be ephemeral.

The soft patch is morphing to hard stretch. Right here. Right now. Just ask Emerson Electric ( EMR), which reported only a decline in the rate of increase of orders, but it was enough to put the kibosh the whole company, and it got crushed.

So we deal with the pain. It can be cured, only by lower prices and the successes of central banks. We're getting both. But boy is it painful. Enjoy the respites. They give you a great chance to reposition from what's not in secular bull market and therefore can't transcend these headwinds, and get into, slowly, gingerly, the secular bull market names, as they are more immunized -- not totally, but more immunized than most other companies at this crucial and critical juncture.

At the time of publication, Cramer was long CMI, DE, DD, EMR and AAPL.