The International Trade deficit increased to 40.7 billion in August as exports increased .8% to go positive on a year ago basis for the first time since late 2014, imports gained 1.2% during the same period, this report will subtract from Gross Domestic Product in the 3rd quarter. That didn’t stop the Wall Street Journal from running a piece figuring that 3rd quarter GDP would hit 4% thanks to impressive Soybean exports of all things. The latest Atlanta Fed GDP Now model expects 3rd quarter growth of just 2.2%. Mike Shedlock over at the Blog Mish Talk broke down the numbers and concluded that the Wall Street Journal didn’t know what it was talking about and they wonder why I’m not subscriber. I’ll post the whole thing on the Blog later today.
That said the top you have got to be kidding me story today goes to the Alaska State pension proposal to borrow at 4% from Asia to invest in the stock market and reduce pension underfunding with the proceeds. Despite an 8% assumed rate of return, near or record margin debt and valuations, 5 consecutive quarterly declines in earnings for the Standard and Poors 500 companies, junk bond default rates hitting a 6-year high and poor economic and business fundamentals what could possibly go wrong? Good luck trying to explain that trade when it fails spectacularly. As an FYI CalPERS achieved a return of just .6% last year.