The Economic Cup: U.S.A vs EUROPE

Inflation. Growth. Job creation. Monetary policy. No matter what variable you choose, you find that the U.S. is well ahead of Europe – and that has significant investment implications for all of us.

Look at prices for starters. Euro-zone inflation was running at a paltry 0.5 percent in June. That's a fourth of the 2 percent target that policymakers over there are striving for. It's also the lowest inflation rate since the 2009 recession.

Here in the U.S., food prices alone rose that much in a single month in May. The "core" inflation rate closely followed by the Federal Reserve is now running at a 2 percent rate, hitting the Fed's target well before the Fed ever expected it to! Everything from medical care to rent to apparel to airfares is surging at even-faster rates, putting the real life inflation rate you and I are experiencing much, much higher.

Prices on everything we buy from medical care to apparel to airfares are surging.

Or how about employment? The unemployment rate across the 18 euro-zone countries was a sky-high 11.6 percent in May, down just a couple tenths of a percentage point from the peak a couple quarters ago. Many countries are even worse off, with Greece at 26.8 percent

, Spain at 25.1 percent, Portugal at 14.3 percent, and so on.

Here in the U.S., unemployment has dropped sharply to 6.3 percent in May from a peak of 10 percent in October 2009. That's also the lowest level in 68 months. Even the "all in" unemployment rate that includes underemployed and discouraged workers has declined steadily.

What about growth? Well, first-quarter GDP figures may have been disappointing here. But other than that report, things have generally been improving here. A U.S. manufacturing index compiled by Markit surged to 57.5 in June, the highest since May 2010, while Europe's comparable reading slumped to a worse-than-expected 52.8 from 53.5 in May. That was the lowest since November.

"I also believe a significant policy shift toward tighter money is gradually underway, in part because inflation is finally turning up again."

I could go on. But I think you get the picture. We may not win the World Cup. We may be out of the contest entirely by the time you read this.

When it comes to investing your hard-earned dollars, though, you would be better served by investing in companies sensitive to U.S. economic growth over those tied to Europe's economy. I also believe the U.S. dollar is going to continue to advance against the euro, and that U.S. policymakers will tighten long before the European Central Bank does.

That means interest rates are likely to rise here in the U.S. along with inflation. So I would continue to avoid long-term Treasury bonds, and I would consider ETFs that rise in value along with the dollar.

How about you? Are you pulling for the economic Team USA ... or do you think Europe is a better bet? Are you a dollar bull or bear, and if so, why? How about monetary policy – is this Fed going to pull ahead of the ECB, and what do you believe that means for interest rates and growth? Go ahead and use the comment section to discuss with your fellow investors!