Thursday, February 01, 2007

Combined post Friday

Hi All, apparently some regions couldn't see the thursday post for some reason. So I'm leading with a Tech File entry and following up with economic analysis including expanding on some of thursdays concepts as well as some new notes. Make sure to scroll down for the market surprise.

== The Polaroid Returns ==

Possibly the only downside to the digital camera revolution has been the descent of the instant-print camera. They are still for sale, but as most stores eliminate the old film cameras they tend to eliminate the Polaroid type as well. Well, the Polaroid company has created a spinoff called "Zink" that is coming to market with the gadget shown above. It's a bluetooth gadget the size of a fairly flat but large cell-phone that can accept pictures from your phone or camera (via cable or bluetooth) and then print color glossies on the spot.

A few months ago I would have thought there was no market for this. Then I was at an event where someone brought the amazing HP A432 portable (no kidding, this thing is pretty small and cheap yet makes fairly good pictures). It was the complete hit of the party. Everyone was taking and printing pictures and playing with the multiprint settings. It even kept the kids busy while the adults talked. Now I'm convinced there is a large market for cheap, portable photo printers.

The Zink device also has another neat feature: no ink! The paper is the picture-in waiting and while the paper is sure to be pricey, at least you will know the price per image up front and you won't have to worry about the logistics of keeping both paper and ink packages handy. The Zink product could be the purse or backpack equivalent of the HP product linked above. Someone will throw it on the table at a coffee meet and people can send cute pictures to it. Sounds crazy, but unwrap an HP A432 at a party with some digital cameras and you'll be a believer.


The Jobs Surprise for Friday

Tomorrow mornings jobs report probably won't be a big shock, but the thing that news outlets are likely to pick up on will be the Labor Department's benchmark revisions, a wonky statistical revision that comes out only every year or so. It will attempt to show how many jobs were created between April 2005 and March 2006 that were NOT in the BLS jobs reports.

Follow that?

This is the report of jobs that were previously missed. And it should be HUGE. I'm guessing in the 750,000 to 1 million range. To put that in perspective that's about 6 months worth of jobs creation.

If you want to know why exactly the payroll surveys miss so many jobs you can review this article of mine from 2006, where I pointed out this was happening. As pointed out in the article even people like me (who do QUITE well, but who have their own business instead of working as an employee) are technically unemployed as far as the usual job reports are concerned.

Wait a minute? I wrote about this surprise back in mid 2006? Am I frustrated that it went unrecognized for so long? Not at all. Having a better grasp on the economy has made me, and anyone who bought into my portfolio calls, some nice money.

Back on topic, the market will probably be reading headlines tomorrow that some huge extra number of jobs was created. Unfortunately that isn't really good news for the market. The job growth happened through 2006, so the economic growth from those jobs has already shown up in earnings. The bad side of jobs growth, however, is wage inflation and then price inflation. The market will probably see the massive jobs boost as a dangerous sign of inflation, and recently inflation is one of the few things that can discourage the market.

  • For anyone thinking of an analyst position on Wall Street, read here for an all-to-true brief rundown of a typical work day for a Street analyst.
  • John Ogg, writing on 24/7 Wall Street, muses about a trade that could work — going long Dell and short Hewlett-Packard. “Your premise would hinge on the fact that the best part of a run has been seen in HPQ and most of the worst has been seen in DELL,” he writes. “So this is not without risk, but it looks much different compared to trying to do this a year ago or 6 months ago.” (via
  • Nouriel Roubini notes the effects of an effective peg on the dollar maintained by Chinese banking authorities is having on that country’s assets. “With deposit rates so low and capital controls, the 50% of GDP savings of the Chinese needs to go somewhere. And increasingly, the liquidity created by the fixed exchange rate is now going into the stock market,” he writes. “So the fixed rate regime is an indirect cause, through liquidity and credit creation, of the equity market frenzy and bubble. And with deposits rates and sterilization bond rates being so low, increasingly the hot money — that is flowing into China because of the leaky capital controls on inflows — is going directly into the stock market, thus feeding the bubble frenzy.” (via
Invest Well,

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