Cypress Semiconductor warned on Q3 for the second time today, citing “sustained weakness in turns across multiple markets”. Earnings, originally guided up to 26¢, have now been taken down to 2-4¢. Revenue has gone from an original 280MM down to 220MM. Oops. If this is an indication of the chip market, then we will be hearing from others soon.

Fannie Mae announced that it would only take direction from the SEC as to its accounting. Basically telling its congressionally appointed regulator to stick it where the sun doesn’t shine. Mr. Potato Head is counting on his team of lobbyists and beautiful Russian escorts to do what they’ve always done in the past, whatever is necessary to get the problem swept under the rug. He may get away with it - Fannie has frequently been described as a lobbyist company with a finance business on the side.

You can tell that Fannie Mae is a government agency. If it were a private company, after evidence of wrongdoing such as OFHEO has released, the senior executive team would be gone. An interim CEO would have been appointed over the weekend by the board. Instead, they’re going to try to brazen it out. If necessary they will release a public statement “taking responsibility”. But not consequences (or truth, for that matter).

Bizarre and pathetic.

Crash coming.

Texas light crude for November traded over $50 per barrel tonight. $50.12 as I write. Just another round number, I guess.

The Wall Street Journal’s lead story is that, as of the end of 2003, Fannie Mae was probably below its minimum required capital by $4.6 billion. I didn’t say undercapitalized by that because it is undercapitalized by way more than that, with a asset to capital ratio of about 40:1 compared to about 10:1 for a class A commercial bank. On top of which it is not diversified.

Monday morning update: OFHEO announced that Fannie had agreed to increase its minimum capital by 30% while the accounting problems were sorted out.

“Production began here last week for a show tentatively titled “Property Ladder” that will follow 12 people as they fix up places they have recently bought with the idea of selling them quickly. The drama lies in whether the “flip” is a flop or a success.” (NYT).

It is so over.