2) This past week I spent a lot of time with a contractor and a developer, they both told me that the real estate market is dead. In fact, I received confirmation Monday on what the U.S. jobs data revealed today.

On Monday, my contractor and developer friends told me that they had laid-off some of their workers due to the slowdown in real estate. Today, the July jobs report said that the unemployment rate for July was 4.8%, and the economy created 113,000 new jobs, 22,000 less than expected.

I am expecting this number to climb in the months ahead. The real estate market in Florida and along the coast is on the edge of getting trampled. Hot shot real estate speculators are fighting over life jackets because insurance companies have fled the waterfront condo and home market.

Even homeowners who are not on the water are seeing their policies getting cancelled. This is not going to end nicely. No need to worry though, I warned you about this several months ago.

3) The “soft-landing” crowd is trying to convince us that there will be no pain involved in the upcoming economic slowdown. Well, that depends on how high up you are on the overextending ladder.

For the 7 million homeowners who were suckered in to an adjustable rate mortgage, falling from the top rung of the ladder can be pretty painful.

For the 25%-35% that speculated in the real estate market, they are on the top rung of an extension ladder.

What bothers me the most about the real estate situation is the issue that no one is talking about; that issue is oversupply. Along the beachfront, it is very obvious that contractors have overbuilt. High-rise condos along the beach now stretch as far as the eye can see. This being said, how many consumers do you know that can afford $750,000-$2,500,000 for a beach front condo that you cannot insure?

So, for me the math is simple.

a) Already, many contractors have filed for bankruptcy.
b) Real Estate speculators are forfeiting their deposits, tucking tail and running.
c) Those that did close have to ask astronomical rents to make the mortgage payments. Some may throw in the towel in the months ahead and file for bankruptcy.
d) The economy is slowing and the average family is not going to pay $200-$400 a night when gas prices are over $3 bucks a gallon.
e) The stock market will eventually get it and financial institutions holding these notes will have to write off some pretty big losses.

4) Don't discount the energy crisis or inflation.

As you can already see, the stock market has become incredibly narrow. Only a few sectors are performing.

Once the fed stops raising rates, we will probably get a shrap rally from the beaten down consumer cyclicals. While I don't mind doing a little nibbling, I think its too early to call a bottom.

I would also be careful of the commodity market. I have been saying for quite sometime that our current environment is errily similar to the 1970's.

Some would like us to believe that inflation today is nothing like we what we experienced in the 1970's. Well, after removing everything inflationary from the CPI, they are right. But, when you compare apples to apples, we probably need to contact President Gerald Ford and see if he has any of his Whip Inflation Now (WIN) buttons left.

5) Finally, I did watch the stock market all week, and you were probably as bored as I was. During times like these I think it is wise to have a boat load of cash,and to sit on your hands and wait.

I did watch a little of Jim Cramer, and even he is struggling to find something interesting to talk about. He is the kind of guy who could lay on a bed of rusty nails and never get lock jaw. At this critical juncture,I think it is wise to wait.