Monday, May 11, 2009

Microsoft Bonds

Why is Microsoft issuing bonds?

Is it because they believe that the Credit Markets will freeze up again and $27 billion of cash isn't enough for them?

Maybe it is because they want to borrow money cheap, before it gets more expensive as Inflation shows up and Interest Rates spike higher...

Point and Figure Charts on Interest Rates
30-Year US Treasury ($TYX) is targeting 6.2%

10-Year US Treasury ($TNX)is targeting 5.0%

What I really worry about is that over 93% of all of the $220 trllion of deverivatives are bets on Interest Rates. You know that if rates rise several percentage points from here that a lot of people who have bet the wrong way on Interest Rates will blow up and come begging for still more taxpayer money to save them (TARP 3.0)...

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