MCM Macro Morning, 1/7/08... 'Just Macro'

ASIA: traded constructively last night, all things considered...
1. China led the region trading +60bps, and India was +61bps = MCM Trend on both China and India remains positive
2. Hong Kong down 1.2%, but could have been worse given what happened in the US on friday = MCM Trend here is neutral
3. Japan continues to act horribly, down another 1.3% to 14,500, breaking the 11/21 lows with conviction = MCM Trend in Japan remains negative

EUROPE: trading positively; buoying our immediate term positive MCM Trade call...
1. FTSE trading up modestly, but a close above 6410 gets me interested on the long side, particularly ahead of a potential BOE rate cut on Thursday = MCM Trend on the UK is neutral
2. Poland down another 1.4%, and Czech stocks down another 2% = negative divergence; Global Industrial Production Growth is slowing in Eastern Europe; my concerns here remain...

Other MCM Country Callouts:
1. Middle Eastern Equities continue outperform Global equities; Kuwait, Israel, Bahrain, Qatar all trading up overnight = MCM Trend in the Middle East remains positive
2. Mexico down another -1.9% on friday, taking the index down -13.8% from the levels we got negative on country fundamentals in late October = MCM Trend in Mexico remains negative

Commodities/Rates/Currencies:
1. CRB Commodities index closed down 50bps on friday at 366 = MCM inflation theme remains, but a commodity correction from the highs should help equities bounce off their lows...
2. US 2yr yields got smoked last week, trading down to the 2.76% level; 10yr rates down to 3.88% = positive for US Equities, on a relative basis to Bonds; MCM Trade is positive
3. US$ Index showing a bid this morning, up at $76.17 = also positive for the MCM Trade being positive
4. Chinese Yuan continues to make new highs, 7.26 last = inflationary

Capital Markets: Hedge Funds, Private Equity, Banks, etc...
1. NY Post article considering the headbutting between Blackstone and the investment banks re the PHH deal breaking down... "Sources say that in the past week Blackstone CEO Schwarzman has personally visited JPM's Jaime Dimon and Lehman's Dick Fuld to offer a hand in friendship... sources saying that Schwarzman made the first move because he needs the banks more than they need him..."... remember the MCM Theme of Fed Centric/Fed Cut bull case is the Tree; Access to Credit/Capital the Forest... -November07' ? ? How interesting times have become since all of Wall Street became enamoured with these Private Equity players coming public. Long Term Macro cycle tops are processes, not points.

2. Fed Funds futures are rising again. Odds of a 50 basis point cut at the January meeting have risen to 66%, and like clockwork, CNBC is carting all the Bull Market Strategists from the October highs back onto the squawk box this morning. Fed Centrists Fritz Meyer (AIM's Chief Strategist), and Jason Trennert (Strategas) have no where to hide at this point - they have been 'You Tubed' by MCM, and are now accountable to their clients for their ignorance of global risk management. They, of course, remain perpetually bullish.

Good luck out there today,
KM
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MCM Themes
Fed Centric/Fed Cut bull case is the Tree; Access to Credit/Capital the Forest... -Nov07' Rebalancing to the Left; look for Socialism to regain her footing, Globally, in 2008... -Nov07' Bonds, Banks, and Bailouts; Blue Magic is bad, in the end... -Nov07'
'US$ Bottoming is a Process, not a Point' -Nov07'
'YouTubing America' - Transparency/Accountability will transform Washington to Wall Street -Dec07'
'Paulson & the Fed Centrists want you to call 1-888-995-HOPE' -Dec07'
'The Double Edged Fear Sword: Fear is now the dominating market factor, not Credit - Fear for Fed Centric Bulls & Consensus Bears alike'-Dec07'
'Global Basic Food Consumption Growth will takeover from the consensus "Its Global this time" Industrial Production Growth story in 2008'-Dec07'
'Litigations & Redemptions' - The Tide has rolled out on the Levered Long Community'-Dec07' 'Long Term Macro Cycle tops are processes, not points'...-Jan08'
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MCM Disclosure/Disclaimer: This email and/or blog is for a select group of my friends, and represents a beta test of an idea that i am incubating. My email and blog writings are prepared without regard to the unique circumstances or goals of those who read them. They do not provide investment advice that should be specifically acted upon without considering the all encompassing range of investment information and/or considerations available in the public domain and/or without considering all appropriate professional advice. This should not be considered a solicitation to buy or sell any security or to participate in any investment strategy. The information and editorials in these writings are not necessarily complete or perfectly accurate and are not guaranteed by Keith McCullough or MCM. This information is protected from disclosure and constitute opinions only as of the date of their issuance. Opinions are subject to change without notice, and Keith McCullough or MCM do not accept any liability whatsoever for any losses estimated to be attributable to any use of this content. Keith McCullough and/or McCullough Capital Management, Inc. likely owns and/or is currently trading in all of the securities cited in these emails and/or blogs.