Apple Inc., the Bank

Apple is now tapping the debt market, borrowing tens of billions of dollars, with very low yields to finance dividend payout and share repurchase.

Early chatter on the Apple (AAPL) debt offering has 3-year paper priced around 35 basis points over comparable-maturity Treasurys and 10-years priced 90-95 bps above (Microsoft priced at +70). The 3-year Treasury currently yields 0.31%. Borrowing at 0.66%, Apple can buy back shares yielding nearly 3% (with free cash flow yield far higher than that).

Capturing that yield differential and upside potential using borrowed funds with low funding costs is how banks make profits.

Additionally, with tens of millions of installed loyal users, Apple can do a lot more in electronic payments and financial services. Just like building out the retail stores, it's perhaps time for Apple to build a new kind of banking services in and out of the stores.

 

Oh, my GOLD!

On this tax day, everything seems to conspire against gold.

Panic !

But please, don't just blame it on some hedge funds. Everyday on the radio, you hear some nice sounding woman imploring the listeners to put money in gold, gold, gold, the surest asset of all assets. This has been several years in running.

It has been pure speculation on fear and explosive inflation. Perhaps this is the beginning of the end? Time will tell, just don't get near it.