Speaking of roses. Guy from Quicken Loans on CNBC: “Don’t call them interest-only, they’re principal optional”. ROFLOL.

“HONG KONG: Steel mills in China, the world’s top steel producer, are deferring shipments of iron ore as profits are squeezed by overcapacity, Beijing’s fresh measures to cool the economy and a global economic slowdown.”

China defers iron ore shipments as surplus hurts

ECRI was down again on Friday. ISM services was down and, of course, the jobs number was poor. However, the jobs number, like most government numbers, is so mangled I don’t think it means anything anymore. For example, the birth-death model injected 207K jobs based on GDP growth. The problem is GDP growth is probably overstated due to understated inflation (those hedonic and substitution adjustments). So these adjustments interact and render the end result pretty meaningless, IMO.

What was pretty clear is that cracks are showing in some of the housing bubble locations, such as Las Vegas. Mortgage originations were down despite a continuing drop in mortgage rates. Layoff announcements were way up and the Big Three automakers are not doing well. If there is a slowdown in housing, as I’ve said before, it really is over. The grand experiment in managing the economy will move to its next stage. Will Al lower rates to reflate the housing bubble and risk runaway commodity inflation as a side-effect? Who knows…

Runaway debt growth, government and trade deficits, where does it end? Soon, please.

Anyway, yet another rally in progress. Indexes still down for the year, but only slightly so. Today’s rally was apparently based on the prospect of lower interest rates as US manufacturing growth is negligible, per the ISM index. This was underlined by all the big three automakers reporting lower sales. ECRI’s leading index is down year-over-year. So the economy sucks but Big Al will lower rates and another bubble will be blown, so goes the theory.

Well we’ll see. I think (hope?) this stupid game is about over, but if it is not I’m prepared to wait. I see that the chief of the Bank of Canada went so far as to publicly express concern about the huge imbalances resulting from US spending of the world’s savings. A bit late, chum, in my opinion, the outcome is baked in the cake it is just how long and how bad that is yet to be seen.

Anyway, oil is back at $54 and the oil stocks and trusts are really cheap because the momentum players have gone back to playing with the tech stocks, believe it or not. Now the analysts (huh1) are competing to see who can raise their price target on Google the highest and fastest. $300. $350. Who’ll say $400? Come on? Haven’t we seen this before? Jerks.

Of course the main bubble is now the real estate bubble. Apparently it is not enough to let people ruin their retirement with tech stocks and Enrons, they are going to get to ruin their whole lives with mortgage debt.