Deutsche Bank trashed Ford and GM, causing their debt to tank. “Based on our outlook for worse than widely expected U.S. market share, severe profit deterioration from adverse mix, and limited near-term progress on fixed costs, we believe that the deterioration that we are likely to see in GM profitability and its balance sheet will be alarming to both equity and bond investors,” analyst Rod Lache told clients.

Ford is not far behind GM as regards its battle to maintain market share, its strong reliance on traditional SUVs and large pickup trucks “and the resulting headwinds that the company faces from a mix perspective,” said Lache.”

CBS Marketwatch

This is not bullish.

In Fort Lauderdale today. This is our second visit in as many months after perhaps twenty years since our last visits. During that time, huge condo towers have been built, both along the beach and inland on the rivers. However, they appear to be largely empty. No cars, few lights at night. Reports from Miami have said that 85% of recent condo sales have been to speculators - oh, sorry, “investors”. The physical evidence here in Fort Lauderdale would seem to corroborate those reports.

A letter from Bill Fleckenstein’s “Ask Fleck” column begs to be remembered.

“Hi Bill,
My husband came home from work yesterday with this story from Phoenix for the Realestate Mania Chronicles. He had lunch with a coworker, whose realtor showed up to discuss the home she had just purchased. Because the housing market is so hot in Phoenix, the 30ish woman and her husband purchased a home they are not very excited about. The realtor advised the young couple to put no money down on the new house, take out an interest only loan, and use their cash to purchase another lot they like much better. In a year, the realtor told them their new house will go up in value so they can sell it and build on the nicer lot. That is not the worst part of his advise [sic] though. The realtor then announced that he just flipped a house in “one” day. He bought a house for $500,000 and the very next day (while the house was in escrow), he sold the house to a client for $600,000. Apparantly, he will simply sign the house over to his clients at closing. To top it all off, the realtor then turned to my husband’s coworker and said, “Stick with me and I will make you $200,000 a year flipping houses.” When the realtor left, the woman asked my husband what he thought of what just transpired. He simply replied, “I would never let my realtor be my financial advisor.” We hope she listened.”

I couldn’t resist. Such a name. Redolent of east-coast upper-class. White shoes and croquet. But this man is the Chairman and CEO of Mentor Graphics, and what he had to say today was a telling indictment of the spurious strength in the chip biz. Mentor, of course, is a leading vendor of chip design software.

“This quarter saw significant year-over-year weakness in all notable product lines and in all regions. Book-to-bill was extremely weak and the company consumed substantial backlog.”

The crazy mo-mo chasing in the chip stocks is one of the most bizarre features of the bubble market. What will cause reality to set in?