“China has surpassed America” is a headline that didn't make the front page of many US newspapers, but the IMF made it official that an economic output in China this year will be $17.6 trillion and $17.4 trillion for us.

Even if we stick to old-fashioned GDP measures, China is only a few years away from the top spot.

By 2020, they will have erected so many amazing skyscrapers, many which will surpass the new Freedom Tower, knocking it off the top-ten list.

I realize China posted some ugly economic data overnight, and recently launched into a money printing scheme to pump up its economy, but they have been on a 30-year mission, and it is remarkable.

If America thinks resting on its laurels or guessing China will derail, then it is a gigantic mistake. I like being number one and it is not about being egoistic.

There are amazing benefits, including the world's reserve currency.

Let's Get our Act Together

Politically, I am not a fan of Lawrence Summers, but his op-ed in the Financial Times yesterday was spot- on. It was not just about the crumbling infrastructure, but how it has led to "lost collective faith."

His examples are of an escalator at LaGuardia Airport will not be fixed until next spring, and a bridge spanning 100 yards that separates downtown Boston and Cambridge, which has been under repair for two years and traffic is not scheduled to resume until 2016.

December 7, 2014 7:10 pm Crumbling infrastructure is a sign of lost collective faith

A couple weeks ago, the 50^th anniversary of the opening of the Verrazano-Narrows Bridge in New York was celebrated; an architectural marvel that still holds records and is a wonder to behold...although at $15.00, it is not a cheap thrill or toll.

Then, there is the 48^th Street Water project scheduled to go on through 2017. I drive up this street each working morning and its going to run over time by years. There are numerous problems, including some Larry Summers would approve.

Take a look at this photo:

There are times when there are as many as four vested-traffic guards, who are there to reiterate what the traffic light is saying. On this particular morning, a city traffic cop was in the mix, too. Those other guys, who are usually black or Hispanic, (I am sure politicians take credit for giving them jobs) with their backs to the construction going on, will not learn anything about construction or earn the kind of money needed to change their lives.

It seems fine for most since it is an easy job, other than standing for long hours, and you can always smoke a cigarette and listen to your Beats. Of course, even if they were facing the action with clipboards, they would learn little since the construction guys do a lot more milling around than earth moving.

Your taxpayer dollars are being wasted and our “collective faith lost.”

Today’s Session

US equity futures were under pressure all morning-long, mostly from bad news out of Japan and China (ironically those markets are holding up well). Overall there there’s a sense that the economy is coming on strong, sending bond yields to their highest level since 2009.

Bond Yields	Before Jobs Report	This Morning
Two Year	0.551	.65
Ten Year	2.27	2.30

This morning McDonald’s posted disappointing same store sales sending the stock lower.  Some use the company as a proxy on the US economy but most recent pressure slower overseas growth.

• US -1.0%
• Europe -0.7%
• APAC -4.2%

I’ve come to the conclusion McDonald’s has been crushed by the PC police and they should draw a line in the sand. No more salads or sliced apples. Take a look at a couple of rivals that layer it on thick with fat, calories and taste. If the CEO wants to keep his job he should stop appeasing those that seek to gain access to his balance sheet and go long on the income statement and focus on making money by making people fat.

“Phat” Burgers	Nov 2011	Change
JACK	$18.67	$75.60
SONC	$6.53	$27.72
WEN	$4.87	$8.78
MCD	$92.00	$93.00

McDonald’s is going to pressure the market even more so let’s watch the action from the sidelines.

We are taking profits on Cubist (CBST) which looks like the number one winner in the entire market this morning.

Comments

We have freedom to do almost anything we want to do. We have unlimited upside potential to succeed and prosper. John Rust on 12/8/2014 10:18:24 AM

China is a strong competitor for cheap manufacturing, but what about quality or creativity? Forty years ago, we watched as Japan made cheap cars and consumer electronics. The USA industry responded by cutting costs (and quality) to compete with a virtual non-competitor. Meanwhile Japan focused on quality. Within a short time, they had replaced the US consumer electronics industry and severely damaged the US auto industry. But where is Japan now that their standard of living has jumped up? They can;t compete any more. We need to watch China to see whether they can make a similar strategic shift to compete beyond the manufacturing level. Can they develop the leading edge technologies? Do they have engineers that can match US engineers? Certainly, they have the intelligence and work ethic to be competitive, but do they have an economic system which will draw those best people back from foreign universities to produce at home? I don't think they are willing to make the changes to standard of living that will attract those highly skilled workers back to their shores. If they do, can they maintain their low cost of manufacturing to keep from losing the low end while they try to compete on the top end. I believe the advantage of the US is partly that we have the lead, and partly that we still are a people that believes, for the most part, in individual freedom and individual responsibility for success. Our disadvantage is a few "leaders" who are more about whining about losses than about doing anything to succeed. Bob G on 12/8/2014 11:33:27 AM

The American foundation of faith in God, our fellow man and our Constitution is what makes America great. Dave on 12/8/2014 11:51:10 AM

As long as the inmates are running the White House, especially Valerrie Jarrett, we haven't got a chance. I sincerely believe there is something wrong with our prsident, I say that most respectfully, something is just not right. tom wayne on 12/8/2014 11:51:21 AM

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness." The answer is God - He is the motivating force that has propelled man into the scientific explosion which makes even typing this response possible. Specifically, Christianity which posited a Creator who designed a universe open to our discovery. No other system, no other culture, no other faith has produced this self-evident reality. J Bryan McReynolds on 12/8/2014 11:58:00 AM

America will always be great because Americans stand for freedom, free-markets and free speech through our Constitution. And with Jesus Christ as our Savior we all should be singing Onward Christian Soldiers. We are great because we will fight for our faith, the Christian faith on which our country was founded and which is under attack today. Americans showed themselves as being a lot smarter than Gruber proclaimed when they voted against the Governments Marxist leanings by voting out those who were betraying the American people and our Constitution. The American people are why we are great. Americans will fight hard to keep America American. Dee Rowland on 12/8/2014 12:22:34 PM

I know it is our love of FREEDOM. Our willingness to give, even sometimes it could be our life, so others can be free. Even in a small country like Afghanistan. God Bless American Bob Medkeff on 12/8/2014 1:21:02 PM

We brought into a clean slate continent knowledge from all corners of the earth, diverse traditions which enhanced but did not swamp our view towards a future over an uncharted landscape with ridiculously abundant resources. Patricia Flynn on 12/8/2014 2:44:11 PM

Despite the claims of Government intervention into businesses here in the USA, the China central government has much more control. An example was when YHOO was forced to sell half of their position in BABA at a prescribed price else the Government would take all of their stock. 1) I believe that large central governments eventually blow it when they direct private businesses 2) political change can happen quickly here in the USA. IE a total change of direction within 2 years at the next presidential election here in the USA. The ideology of China can not move that quickly. Bob Podd on 12/8/2014 3:18:09 PM

America's economic output per capita distinguishes it from China by a long shot. China's population is about four times that of America. If the world judges America's carbon footprint per capita to other countries then it only stands to reason that America's economic output or GDP should be compared to China's on a per capita basis. Sorry, China has NOT surpassed America. Frank Dalene on 12/8/2014 3:30:44 PM

China passing the US in GDP. Can you find the Sun in Beijing on most days? NO! Its a quality of life thing. We may pick on the greenies, but most people would rather live and work in NYC than Beijing. In the long run I think you will see more companies moving work back to the US in the coming years, given the fracking revolution and lower cost of energy happening now. Thanks for CBST, have it in 3 accts. Keep up the good work. 2nd biotech takeout this year, Yea! Ken Gervais on 12/8/2014 3:35:05 PM

Why not change the measurement to "per capita share of total economic output"? That would make our 330 million almost 4 times as productive as their 1.2 billion....:) Jim B. on 12/9/2014 5:53:35 PM

When comparing China to the US, in the final analysis, nothing compares to a truly free sociey and capitalism. Doug Jonsen on 12/11/2014 10:24:26 AM

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