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Two Ways To Play: No Respect for Port Authority


Strengthen your portfolio in good times and bad.


Just how bad are the credit markets? The New Jersey/ New York Port Authority made a bond offering today and received not a single bid.

According to Bloomberg, $300 million of 3-year notes backed by revenue from the agency went on sale at 11:00 a.m., but no investment banks wanted in. The deal even carried the highest possible short-term ratings from Moody's, Standard & Poor's and Fitch Ratings - and would have been the largest since the Port Authority's $350 million offering last March.

Port Authority, which operates airports, river crossings and transit in the New York City area, said the lack of bids will have "no impact" on any current projects because the deal came "well in advance" of its needs. In a statement, it said: "We are confident that the markets will recover in the upcoming year when we plan to return with another sale. Our credit ratings and our financial health remain strong."

For context on the financial sector, see Paulson Rolling Out Rest of TARP? by Professor Andrew Jeffery.

From the Bull Pen: The ability for the equity markets to recover from this news is a sign that the tape is headed higher. Consider the Ultra S&P 500 (SSO) for a play; sell stops can be set 2 points from entry.

From the Bear Cave: The tape is volatile, but bulls currently have the advantage. Bears may be content to stand aside and wait until a stock like General Electric (GE) can rally to the $20-22 level.

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Position in SSO

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