Start with a few speculative stocks. Add a distressed-debt corporate bond portfolio, and two quantitative-based hedge funds, and a momentum-based hedge fund for the British pound/Japanese yen currency pairing.

Sounds like a typical, assertive portfolio for a wealth management group or, perhaps, for an accredited investor.

But a public pension fund?

Public pension funds in the United States are increasing bets on high-risk hedge funds and real estate in an attempt to fill deficits in retirement plans and recover ground, due to the worst performance by pension funds in six years, Bloomberg News reported Thursday.

Public funds, which manage more than $2.45 trillion in assets, are trying to reverse losses averaging 5.5% for the year ended June 30, according to Merrill Lynch data, and stem the tide of deficits, Bloomberg News reported. The State of New York's comptroller is asking its Legislature to increase its alternative investment spending cap; in February, the State of South Carolina upped its alternate investment / private equity / real estate cap to 45% from 0%.

'Investment distortions of the very worst sort'

Economist Glen Langan told BloggingStocks Thursday he doesn't like the sound of the new stance by state / local governments, if the aforementioned represents a trend.

"I view it as another manifestation of the U.S. stock market slump," Langan said. "The underperformance of stocks and the drive for outsized return on equity is leading to investment distortions of the very worst sort. We saw this in the mortgage market with their securities. It got to a point that if the interest rate was high enough, banks made the loan. We've seen it in oil, where the unattractiveness of stocks led institutions to dive into oil futures, driving up prices well above historic gains. And now it looks like public pension funds are catching the bug or flu."

Memphis-based FedEx Corp. (NYSE:FDX) is not only the world's #1 express courier, but has been called a bellwether of the U.S. economy. So it will be interesting to see what happens when FedEx reports quarterly earnings on March 21.

• Did you know that FedEx once delivered a pair of giant pandas from Beijing, China, to Memphis, Tennessee?

According to Thomson Financial, the consensus estimate is for FedEx to announce Q3 2007 revenue of $8.7 billion, with earnings per share of $1.33. In the previous quarter, actual revenue was $8.9 billion, with EPS of $1.89. However, the early consensus estimate for Q4 2007 (the quarter ending in May) has EPS at $2.04.

The consensus recommendation for FedEx is buy (seven analysts say strong buy, six say buy, and seven say hold), with a price target of $125.15 (individual targets ranging from 100 to 144). Shares opened Wednesday at $112.20; the 52-week high was $121.42 in November, and the 52-week low was $97.79 in August.

• FedEx has the second largest fleet of planes in the world, and its planes are named after the children of employees.

On the minds of FedEx investors and watchers in these days leading up to the Q3 2007 report has to be the lackluster Q2 report back in December. Also, that FedEx announced recently a somewhat controversial plan to cap pensions, and that a judge has allowed a discrimination lawsuit brought by independent contractors to proceed.