Kass: Sideways Glance

This blog post originally appeared on RealMoney Silver on June 26 at 8:02 a.m. EDT.

Thursday's market ramp was a thriller and seemed to have been based on a reaction to several factors:

• a relief that Ben Bernanke's testimony went better than expected;
• a strong auction of $27 billion of seven-year U.S. notes;
• Lennar's (LEN Quote) reduced cancellation rates (from 21% to 15%) and an improving California home sales and a reduction in that state's inventory of unsold homes;
• a high-profile retail merger and a better-than-expected earnings release from Bed Bath & Beyond (BBBY Quote); and
• an announced extension of a number of government liquidity programs (AMLF, CPFF, PDCF and TSLF) until February 2010.

Nevertheless, there were also negative developments that were ignored:

• rising continuous unemployment claims (627,000) and a revision higher of the previous week's statistics; and
• Fitch's late-day downgrading of California General Obligation bonds.

Also ignored were what appeared to be more sober (even dire) economic remarks from the Oracle of Omaha.

"You can't produce a baby in one month by getting nine women pregnant, or, in other words, the economy will be in shambles this year and well beyond."

-- Warren Buffett

All in all, I would not make too much of yesterday's market advance, which, as my friend/buddy/pal, Bill Fleckenstein, stated on CNBC's "The Kudlow Report" last night, simply "earned back" Monday's market drubbing and occurred in front of a large Russell rebalance and quarter-end mark-ups! By contrast, Dr. Jeremy "The Sunshine Boy" Siegel, who seems to have never met a stock or stock market that he disliked, continued to cheerlead on the same CNBC program.

While recognized worldwide for his musical legacy, Michael Jackson also left a financial morass behind (as did Ed McMahon, who also passed away this week).

Much like the U.S. consumer and banking system, both of which are now laden with debt and beholden to the U.S. government and "the kindness of strangers" to finance our growth, the pop icon was reportedly awash in at least $200 million of debt. Billionaire Thomas Barrack, chairman and CEO of Los Angeles-based real estate investment firm Colony Capital, served as Jackson's Treasury Department and Federal Reserve by agreeing to bail out the singer and set up a joint venture with Jackson that took ownership of his vast estate.

And much like the U.S. consumer, Michael Jackson experienced his own consumption binge by spending money much faster than he earned it.