The Best of Kass

NEW YORK (TheStreet) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.

Among his posts this past week, Kass examined a divergence in the monthly jobs data, highlighted a key question about Apple's iPhone, and opined about market "certainties."

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Data Review
Originally published on Friday, Oct. 5 at 11:01 a.m. EDT.

The divergent message from the private-sector payroll data for September and the household survey of employment is confusing.

Unlike a lot of the pundits, I thought the September payroll report was, as American Idol's Randy Jackson would say, "just a'right."

I am surprised in the strength of equities.

Let me explain why.

The September change in nonfarm payrolls was 114,000 vs. an expectation of 115,000 and 142,000 in August. The positives were 46,000 and 40,000 upward revisions to August and July, respectively, but virtually all of the revisions were in the government sector. (There seems to have been some difficulty in seasonally adjusting hiring of teachers.)

The September private payroll increase was disappointing at 104,000 compared to consensus expectations of 130,000. Meanwhile, August private-sector payrolls were reduced by 6,000.

The large increase in the household survey in September (873,000) was the largest increase in a decade, but here, too, most of the increase was in government jobs. So, the divergent message from the private-sector payroll data for September and the household survey of employment is confusing.

For this reason and others, I have slightly expanded my short book.

At the time of publication, Kass had no positions in stocks mentioned.

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Questioning iPhone Upgrade Cycle
Originally published on Friday, Oct. 5 at 11:12 a.m. EDT.

The question is how the valuation will react to the shift in mix.

Apple's (AAPL) shares continue to underperform.

As I pointed out earlier this week, I questioned the upgrade cycle for the new iPhone. And Bernstein must be reading my diary as the firm writes:

Surprisingly our analysis indicates that only about 30% of iPhones sold in fiscal year 2012 will be from customers upgrading from an older iPhone. The remaining 70% will come from new customers, most of whom have never owned a smartphone. Over the last two years, the majority of new iPhone subscribers have come from existing carriers.

Bernstein's report is a good one, and anyone involved should get a copy. In it, Bernstein addressed one of the major longer-term issues with Apple's stock -- namely, slowing top-line growth. Given iPhone is Apple's most profitable and important product, as the mix of annual sales shifts more from new customer or exiting (or upgrades), annual growth will slow given the upgrade cycle is about two years for current customers.

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