Trade Deficit Widens; Eurozone Out of Recession

This morning’s trade report showed that our trade deficit widened in September as a result of higher oil prices. The good news is that exports rose for the fifth straight month, but it was overwhelmed by the rally in oil. Still, this year’s trade deficit is on track to be about half of last year’s deficit.

The Commerce Department said that the trade deficit grew by 18.2% to $36.5 billion making it the largest deficit since January. Exports rose 2.9% but imports rose by 5.8%. Within the imports number, oil shipments rose by over 20%.

Trade is a key component of our investment strategy. In my Global Growth service, I focused a lot of attention on stocks based in China. The trade deficit shows that China continues to be a major trading with the U.S. In September, the trade deficit with Chine grew 9.2% to $22.1 billion. Some of my favorite China-based stocks include KongZhong (KONG) and China Green Agriculture (CGA).

The other big economic report that came out this morning is that the Eurozone is now officially out of a recession. Eurostat, which is their numbers agency, said that third-quarter economic growth for the 16 countries that use the euro increased by 0.4%. It may not sound like much, but this comes after five straight quarters of declines.

The powerhouse seems to be Germany where economic growth rose by 4.7%. In France, GDP rose by just 0.3%. Two of top-rated European stocks are Portugal Telecom (PT) and Germany’sAixtron (AIXG).

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