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  Thursday, 30 Dec 2010 | 10:44 AM ET

Why Apple Will Be The First Company to Reach a Trillion Dollar Market Cap

Posted By: James Altucher

Various members of the NetNet crew are in and out this vacation and snow-filled week, so we've asked a few friends to fill in. The following is from hedge fund manager and financial columnist James Altucher ...

Apple is the dream company we always wished for when we were children. The messiah of companies that we never thought would come to Earth in our lifetimes.

Steve Jobs
Getty Images
Steve Jobs

When I was a kid the only thing I wanted in life was an Apple II+. When I finally got one, (my dad took one from his work and gave it to me for about six months) I did everything a young boy does with his computer.

I programmed \(in BASIC\) the computer to type my name over and over again. I then went to the local computer store and shoplifted Ultima III. My friends and I then copied each others games so we had a whole set of games to play with. I then skipped school incessantly in order to play games all day, my friends and I calling each other throughout the day \(we all skipped school every day\) in order to share the latest secrets we found while hacking our way through Castle Wolfenstein.

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  Thursday, 30 Dec 2010 | 9:08 AM ET

Global Stocks Near Two Year High

Posted By: Ash Bennington

The Rise of Covered Bonds (CNBC via Financial Times) "Banks have sold a record amount of covered bonds this year, as jittery investors backed the ultra-safe forms of debt, in a trend expected to continue in 2011. Worldwide issuance of the bonds has reached $356.5 billion this year – up nearly 20 percent from 2009, according to data from Dealogic. Unlike regular securitisations, where investors have no recourse to the issuing bank, the loans backing covered bonds remain on a bank’s books and are ring-fenced, protecting bondholders even in bankruptcy. Issuance has been heavily dominated by European banks – the format was developed in 18th-century Germany — but countries elsewhere are beginning to alter laws to give investors the protection the bonds require."

PIMCO: Dollar to Remain World's Reserve Currency \(Bloomberg\) "The dollar will keep its reserve status in 2011 because China and Europe aren’t developed enough for their currencies to replace it, said Pacific Investment Management Co., which runs the world’s biggest bond fund. 'Rising powers such as China are not yet ready to absorb the $9 trillion in reserve assets the world holds, particularly because their bond markets are immature,' Anthony Crescenzi, a money manager at Pimco in Newport Beach, California, wrote in a report yesterday. 'Europe, amid all of its financial woes, isn’t even close to ready to take the mantle.'"

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  Wednesday, 29 Dec 2010 | 4:53 PM ET

Rogue Miners, Chinese Gangsters, and Rare Earth Elements

Posted By: Ash Bennington

New Arrest in Ongoing Insider Trading Investigation \(Dealbook\) "Federal authorities charged Winifred Jiau of Fremont, Calif., with conspiracy and securities fraud on Wednesday — the latest arrest in the ever-widening insider trading investigation. Prosecutors say that Ms. Jiau, a 43-year-old consultant for expert-network firm Primary Global Research, leaked confidential information about Marvell Technology Group and Nvidia to two money managers at different hedge funds. Until roughly a year ago, she worked as a contractor at Nvidia, according to a Nvidia spokesman."

Treasuries Rally on Buying by Foreign Central Banks \(Bloomberg\) Apparently, yesterday's weak treasuries auction was only a blip--perhaps the after affect of a blizzard and a holiday hangover:

"Treasuries gained after the government’s $29 billion auction of seven-year notes produced the highest demand from a group of investors including foreign central banks since June 2009. The yield on the benchmark 10-year security dropped the most since the Labor Department’s payrolls report on June 4 as the last U.S. note sale of 2010 spurred buying. Treasuries tumbled yesterday after the $35 billion five-year auction attracted the lowest demand in six months."

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  Wednesday, 29 Dec 2010 | 3:23 PM ET

Another Bank of America Horror Story?

Posted By: Ash Bennington
Bank of America flag
Getty Images
Bank of America flag

Bank of America threatened a Connecticut couple with foreclosure proceedings on their home — scheduled to begin on Christmas Eve — if they didn't agree to a forced sale. The kicker is this: The husband and wife had never missed a payment on their mortgage.

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  Wednesday, 29 Dec 2010 | 1:08 PM ET

Wall Street and Suicide

Posted By: James Altucher, author of "Trade Like Warren Buffett"

Various members of the NetNet crew are in and out this vacation and snow-filled week, so we've asked a few friends to fill in. The following is from hedge fund manager and financial columnist James Altucher ...

Here’s a question: What does Main Street care more about: The stock market? Real estate? Unemployment?

Answer: The stock market.

When Wall Street and the financial system collapsed in October, 2008 a big question was, “Where are the suicides?” Where were the people flinging themselves out of windows onto Wall Street, as supposedly happened in the last Great Crash, in October, 1929. At that time, right after the crash that caused the Great Depression of the 1930s, Will Rogers said, “When Wall Street took that tailspin, you had to stand in line to get a window to drop out of.”

It turns out that the worry was accurate. But the suicides didn’t happen on Wall Street. Most likely they occurred on Main Street.

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  Wednesday, 29 Dec 2010 | 10:42 AM ET

The House That the Housing Bubble Bought

Posted By: Ash Bennington
Photo credit: Google Maps

Is this the house that the housing bubble bought?

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  Wednesday, 29 Dec 2010 | 9:05 AM ET

The Muni CDS Sitdown

Posted By: Joshua Brown|author of "The Reformed Broker"

Various members of the NetNet crew are in and out this vacation and snow-filled week, so we've asked a few friends to fill in. The following is from New York City-based investment advisor Joshua Brown ...

Music: Cue strains of a mournful mandolin.

Exterior: An out-of-the-way red sauce Italian joint in the Arthur Avenue section of the Bronx.

Cut to Interior: The heads of the Five Families hunched over a checkered tablecloth (with attorneys behind them) agreeing to split the municipal bond credit default swaps pie five ways in 2011. "There's more than enough profit here for all of us, boys."

***

This actually happened, you guys (but probably in a not so Mafia-ish way). My flair for the dramatic notwithstanding, the heads of the biggest Wall Street investment banks did in fact get together for a conversation about standardizing muni CDS contracts. This is happening as a prelude to a coming firestorm of activity for 2011 in the muni bond space.

From theWall Street Journal :

Separately, five large derivatives dealers—Bank of America Corp.'s Bank of America Merrill Lynch, Citigroup Inc., Goldman Sachs Group Inc., J.P. Morgan Chase & Co., and Morgan Stanley—met last month in New York to discuss standardizing the paperwork for "muni CDSs" in an effort to attract more buyers and sellers.

The entire muni bond market is under increasing strain heading into the new year. Investors have pulled $9 billion from muni bond funds since Thanksgiving. In the meantime, analyst Meredith Whitney is leading a chorus of bears who are looking for a raft of defaults across the country.

Credit default swaps allow for the hedging of exposure to defaults on bonds. They are used by holders of these bonds as a sort of insurance. They are more notoriously used by hedge funds and high-flying bank traders as a means of speculation. The entire muni bond market is about $2.8 trillion in size — yet there are only $50 billion in outstanding CDS contracts written against it. As holders get nervous and hedge funds come in to the trade betting on drama in the space, more CDS will be written by all the major banks.

The merchant mentality of the banks is always and above all else to give the "cutomers" what they want. And what they want is a more liquid and transparent way to get exposure to the coming pain for states like Illinois and California. This agreement to standardize products is coming just ahead of a massive surge of interest in the products.

***

Interior: "It's agreed then," said one of the Dons as he raised his glass. "In 2011, we feast together! Salute!"

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  Wednesday, 29 Dec 2010 | 8:57 AM ET

10 Fun Reads for Wednesday

Posted By: James Altucher|author of "Trade Like Warren Buffett"

Various members of the NetNet crew are in and out this vacation and snow-filled week, so we've asked a few friends to fill in. The following is from hedge fund manager and financial columnist James Altucher ...

1. The Wrongologist, Kathryn Schulz, gives her top 10 things that went wrong in 2010 .

2. How I learned to BREAKDANCE, and then master the universe .

3. How 2010 changed the future of cars forever.

4. Whatever happened to the Gulf Oil spill .

5. The Daily Beast celebrates the 25th Anniversary of MSFT Excel .

6. Apple prepares three new versions of the ipad for 2011 .

7. Doug Kass's 15 surprises for 2011 .

8. Great blast from the past. I wish I had applied for that job in 1995. A classified ad from Amazon, pre-launch of theirwebsite .

9. I didn't know that Galileo's greatest achievements came after he was 46 years old. Gives me hope.

10. Applicable more than ever for the boom i think is coming in 2011: 8 reasons not to daytrade.

Read more from Altucher on his blog The Altucher Confidential

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  Wednesday, 29 Dec 2010 | 8:45 AM ET

M&A Deal Volume Flirts With All-Time Highs—In India

Posted By: Ash Bennington

Blackrock Develops Internal Trading Platform (CNBC via Financial Times) "BlackRock, the world’s largest money manager, expects to launch an internal trading platform next year in a move that would strike at the heart of the profit centers of many Wall Street firms. BlackRock is hiring programmers and other high-tech workers to build the platform, expected to be one of the world’s largest." The article continues to explain: "The plan is that if some BlackRock clients are selling a security and others are buying, the group can “cross” those trades internally without going through a Wall Street bank. But BlackRock insists that the plan is not meant to marginalize Wall Street. Mr Kapito emphasized the important role played by investment banks in trading and the provision of liquidity."

Concerns on Chinese Rare Earth Exports (Reuters) "China has raised fresh international trade concerns after slashing export quotas on rare earths minerals, risking action from the United States at the World Trade Organization. China, which produces about 97 percent of the global supply of rare earth minerals, cut its export quotas by 35 percent for the first half of 2011 versus a year ago, saying it wanted to preserve ample reserves, but warned against basing its total 2011 export quota on the first half figures. The U.S. Trade Representative's office was 'very concerned' about China's export restraints on rare earths and had raised its concerns with China, a spokeswoman said on Tuesday."

"Chinese missile shifts power in Pacific" (Financial Times) "A new Chinese anti-ship missile that will significantly alter the balance of military power in the Pacific is now operational, according to a senior US commander.

Admiral Robert Willard, the top US commander in the Pacific, said the Chinese ballistic missile, which was designed to threaten US aircraft carriers in the region, had reached 'initial operational capability'. His remarks signal that China is challenging the US ability to project military power in Asia much sooner than many had expected."

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  Tuesday, 28 Dec 2010 | 5:24 PM ET

Wall Street on GM: It's a Buy

Posted By: Ash Bennington

Allstate sues Bank of America—and Mozilo (Reuters) "Allstate Corp has sued Bank of America Corp, its Countrywide lending unit and 17 other defendants for allegedly misrepresenting the risks on more than $700 million of mortgage securities it bought from Countrywide. Allstate, the largest publicly traded U.S. home and auto insurer, alleged it suffered 'significant losses' after Countrywide misled it into believing the securities were safe, and the quality of home loans backing them was high. The lawsuit also names several former Countrywide officials as defendants, including longtime Chief Executive Angelo Mozilo. Countrywide was the largest U.S. mortgage lender before Bank of America bought it in July 2008."

PIMCO's Bill Gross Bullish on the Muni Market (CNBC) CNBC's Jeff Cox tells the story of Bill Gross's 'strong buy' on municipal bonds. Said Gross: ''Despite the risk there's always the reward function, and you can get 6.65 percent in New York City Build America bonds, and 7 percent-plus in California,' he said. 'That's decent return relative to the admittedly higher risk these days.'"

European Companies Pay the Price for Eurozone Sovereign Woes \(Financial Times\) "European companies’ relative cost of borrowing has risen above that of US groups for the first time since the financial crisis as the worries about sovereign debt in the eurozone hit businesses. Debt issued by European companies has historically traded lower compared with government benchmark rates than that of their US rivals. But since the end of November, European companies have started paying a higher premium, according to Bank of America Merrill Lynch corporate debt indices. The data suggest European companies are starting to pay the price for the sovereign debt crisis that has hit countries such as Greece, Ireland and Spain. It comes at the same time as growth prospects in the US have improved."

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About NetNet

  • NetNet is where you'll find the low-down and the high jinks of Wall Street. It's the place for insider stories, trader gossip, and tales of the foibles of the moneyed crowd and the culture of finance.Wall Street news and commentary served fresh all day long.

 

  • Jeff Cox is finance editor for CNBC.com.

  • Lawrence Develingne

    Lawrence Delevingne is the ‘Big Money’ enterprise reporter for CNBC.com and NetNet.

  • Stephanie Landsman is one of the producers of "Fast Money."

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