Ibexx, I'd appreciate your thoughts on the following ramblings...
Our ultimate concern is, of course, the effect interest rate rises would have on Intel stock price. We can identify three discrete effects:
1) investors have been conditioned to think "interest rate rise means bad stock market," and thus a rise would immediately cause a few days of downside mayhem on the markets. can't do anything about this, other than maybe stock up on puts and make a quickie profit.
2) higher interest rates make bonds / savings accts / etc more attractive compared with stocks. i would say that this is even more relevant, with all the foreign investors in the market -- especially japanese ones, who can get at the most 2-3% yield on their savings at home.
3) most interestingly, higher borrowing costs for individual corporations. i'm not quite sure where intel is here; they do have big capital projects on one hand, but on the other hand, they supposedly have huge cash reserves, right? so i wonder if, in the language of economics primers, intel is a "net lender" or a "net borrower."
ahem. excuse that pedantry. back to work. |
