Michael doesn't suspect Fredo. As someone above pointed out, when he does hear Fredo reference Roth and Ola, he is visibly devastated and only then gives his bodyguard the okay to proceed with Roth's assassination. Thus, Fredo broke his heart.

When Michael refers to Fredo as weak and stupid, he is really expressing a certain contempt not so much for those characteristics of Fredo's in particular, but for those characteristics generally as manifested by anybody. Remember, in the phrase before that he says of Fredo that he has a good heart. That is also why in the boathouse scene Michael becomes enraged because Fredo is manifesting his weak and stupid characteristics.