Personal income increased $40.2 billion (0.2 percent) in November according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $37.8 billion (0.2 percent) and personal consumption expenditures (PCE) increased $54.4 billion (0.4 percent).

Real DPI increased 0.2 percent in November and real PCE increased 0.3 percent. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent.

U.S. stock-index futures traded flat on Friday, as revised 3Q GDP data, which confirmed a strong pace of economic growth, offset worries of slowing global growth and the threat of a U.S. government shutdown.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

New orders for manufactured durable goods in November increased $1.9 billion or 0.8 percent to $250.8 billion, the U.S. Census Bureau announced today.  This increase, up following two consecutive monthly decreases, followed a 4.3 percent October decrease. Excluding transportation, new orders decreased 0.3 percent.  Excluding defense, new orders decreased 0.1 percent. Transportation equipment, up three of the last four months, drove the increase, $2.5 billion or 2.9 percent to $87.0 billion.

Altria (MO) downgraded to Sell from Neutral at Citigroup

There was growth in 15 of 20 industrial sectors, led by increases in manufacturing, finance and insurance and wholesale trade.

The rise in manufacturing was the main reason for the 0.3% increase in goods-producing industries after two monthly declines. Services-producing industries grew 0.3%, their strongest increase since May 2018, on widespread growth across sectors.

The manufacturing sector expanded 0.7% in October, almost fully offsetting the declines in August and September. Both durable (+0.9%) and non-durable (+0.4%) manufacturing increased. The increased output in October partly reflected increased inventories.

NIKE (NKE) upgraded to Overweight from Neutral at JP Morgan

NIKE (NKE) upgraded to Buy from Hold at Pivotal Research Group

Higher sales at motor vehicle and parts dealers and gasoline stations were the main contributors to the gain. Excluding these two subsectors, retail sales declined 0.4%. Sales were up in 5 of 11 subsectors, representing 69% of retail trade.

After removing the effects of price changes, retail sales in volume terms were unchanged in October. Sales at motor vehicle and parts dealers (+1.3%) increased for the third month in a row. All store types within this subsector posted gains, led by higher sales at new car dealers (+1.1%) and, to a lesser extent, used car dealers (+4.1%).

Real gross domestic product (GDP) increased at an annual rate of 3.4 percent in the third quarter of 2018, according to the "third" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 4.2 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 3.5 percent. With this third estimate for the third quarter, personal consumption expenditures (PCE) and exports were revised down, and private inventory investment was revised up; the general picture of economic growth remains the same.

The price index for gross domestic purchases increased 1.8 percent in the third quarter, compared with an increase of 2.4 percent in the second quarter. The PCE price index increased 1.6 percent, compared with an increase of 2.0 percent. Excluding food and energy prices, the PCE price index increased 1.6 percent, compared with an increase of 2.1 percent.

Nike (NKE) reported Q2 FY 2019 earnings of $0.52 per share (versus $0.46 in Q2 FY 2018), beating analysts’ consensus estimate of $0.46.

The company’s quarterly revenues amounted to $9.374 bln (+9.6% y/y), beating analysts’ consensus estimate of $9.169 bln.

NKE rose to $73.20 (+8.40%) in pre-market trading.

Gross fixed capital formation (GFCF), in volume terms, was estimated to have increased by 0.5% to £85.8 billion in Quarter 3 (July to Sept) 2018 from £85.4 billion in Quarter 2 (Apr to June) 2018.

Business investment was estimated to have fallen by 1.1% to £46.9 billion between Quarter 2 2018 and Quarter 3 2018; this is the third consecutive quarter-on-quarter fall in business investment and the first time this has happened since the economic downturn of 2008 to 2009.

Between Quarter 3 2017 and Quarter 3 2018, GFCF was estimated to have fallen by 0.3% from £86.1 billion; business investment was estimated to have fallen by 1.8% from £47.8 billion.

Borrowing (public sector net borrowing excluding public sector banks) in November 2018 was £7.2 billion, £0.9 billion less than in November 2017; this was the lowest November borrowing for 14 years (since 2004).

Borrowing in the current financial year-to-date (YTD) was £32.8 billion, £13.6 billion less than in the same period in 2017; the lowest year-to-date for 16 years (since 2002).

Borrowing in the financial year ending (FYE) March 2018 was £41.5 billion, £4.1 billion less than in FYE March 2017; the lowest financial year for 11 years (since FYE 2007).

Debt (public sector net debt excluding public sector banks) at the end of November 2018 was £1,795.1 billion (or 83.9% of gross domestic product (GDP)); an increase of £59.3 billion (unchanged at 83.9% of GDP) on November 2017.

The UK’s current account deficit widened by £6.6 billion to £26.5 billion in Quarter 3 (July to Sept) 2018, or 4.9% of gross domestic product (GDP) – the largest deficit recorded since Quarter 3 2016 in both value and percentage of GDP terms.

All of the main components contributed to the worsening current account balance, with worsening primary income, trade and secondary income balances.

The primary income balance deficit worsened by £3.6 billion to £11.1 billion in Quarter 3 2018, driven by an increase in the profits generated by overseas investors on their UK foreign direct investment (FDI).

Partially offsetting the decline in the primary income balance was a continued increase in the UK’s income from overseas currency deposits – attributable to rising overseas interest rates.

UK gross domestic product (GDP) in volume terms was estimated to have increased by 0.6% between Quarter 2 (Apr to June) 2018 and Quarter 3 (July to Sept) 2018, unrevised from the first quarterly estimate of GDP.

GDP was estimated to have increased by 1.8% between 2016 and 2017, revised upwards by 0.1 percentage points from the previous estimate.

At headline level the GDP dataset is largely unrevised, with a 0.1 percentage point revision to Quarter 3 2017; revisions reflect the inclusion of annual benchmarks from a number of sources for 2017 and the incorporation of administrative Value Added Tax turnover data in the output approach to measuring GDP for Quarter 2 2018.

Services remained the strongest contributor to growth in the output approach to GDP in Quarter 3 2018, with growth easing slightly from the previous quarter; construction and manufacturing also contributed positively to growth.

This decline was particularly explained by the decrease in food consumption (−0.5%) and engineered goods purchases (−0.6%). Energy consumption slowed down (+0.7% after +1.5% in October).

In November, spending on engineered goods decreased (−0.6%), after being relatively dynamic in October (+0.8%). In particular, purchases of durable goods fell sharply, while purchases of clothing and other manufactured goods decreased slightly.

Consumption of durable goods declined strongly in November (−1.1%, after +1.0%). This decrease was mainly due to the drop in transport equipment purchases (−1.4% after +1.0%). In particular, sales of demonstration vehicles fell sharply.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1592 (4282)

$1.1578 (1681)

$1.1561 (260)

Price at time of writing this review: $1.1466

Support levels (open interest**, contracts):

$1.1430 (2719)

$1.1389 (2887)

$1.1344 (5612)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date January, 7 is 67165 contracts (according to data from December, 20) with the maximum number of contracts with strike price $1,1650 (5946);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2812 (1449)

$1.2788 (546)

$1.2757 (240)

Price at time of writing this review: $1.2678

Support levels (open interest**, contracts):

$1.2641 (1448)

$1.2609 (2009)

$1.2572 (1736)

Comments:

- Overall open interest on the CALL options with the expiration date January, 7 is 35214 contracts, with the maximum number of contracts with strike price $1,3400 (3746);

- Overall open interest on the PUT options with the expiration date January, 7 is 32654 contracts, with the maximum number of contracts with strike price $1,2450 (2872);

- The ratio of PUT/CALL was 0.93 versus 0.91 from the previous trading day according to data from December, 20

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

As reported by the Federal Statistical Office (Destatis), the index of import prices increased by 3.1% in November 2018 compared with the corresponding month of the preceding year. In October and in September 2018 the annual rates of change were +4.8% and +4.4%, respectively. From October 2018 to November 2018 the index fell by 1.0%.

The index of import prices, excluding crude oil and mineral oil products, increased by 2.3% compared with the level of a year earlier.

The index of export prices increased by 1.7% in November 2018 compared with the corresponding month of the preceding year. In October and in September 2018 the annual rates of change were +2.0% and +1.9%, respectively. From October 2018 to November 2018 the export price index slightly fell by 0.1%.

The attitudes of German consumers do not portray a uniform picture at the end of 2018. While income expectations are increasing slightly, both propensity to buy and economic expectations have had to suffer losses. Since propensity to save is also decreasing slightly, GfK is predicting an unchanged (compared to December) value of 10.4 points for January 2019.

With the third decrease in a row, economic expectations are continuing their downward trend at the end of 2018. After a fall of 3.3 points, the indicator has slipped to 14.1 points. This is the lowest value since February 2017, when a score of 9.7 points was recorded. Compared to the same time last year, therefore, this score has fallen by more than 30 points.

• Fed's Projections Substantially Below Ours Coming Into 2018

• We Believe We'll Deliver 3% or Higher Growth

• Still Confident We Can Deliver 3% Growth in 2019

• Think Will See Rebalancing out of Bonds Into Equities

• We Are in Close Contact With Fed on Treasury Issuance

• Fed Simply Reinvesting Assets at a Lower Rate

• Downsizing Balance Sheet Now Gives Fed Capacity to Respond to Weakness Later

• We're Comfortable With Treasury Supply, Not as Worried as Markets Appear

• Not Appropriate to Comment on Whether Fed Made Right Move

• Think Market Disappointed in Powell's Comments

• Can't Just Look at Fed Median Projection, Should Look at Range of Dots

• Clearly People on FOMC Who Thinks Rate Don't Need to Go Much Higher

• Fed, FDIC Warn of Shortcomings in Wind-Down Plans of Barclays, Credit Suisse, Deutsche Bank, UBS Group

• Shortcomings Less Severe Than Finding of 'Weaknesses' in Plans

• Firms Must Address the Shortcomings When They Next Submit Living Wills

The 10-year Treasury note yield was mostly unchanged at 2.787%, near its lowest levels since March. The 2-year note yield ticked 2.5 basis points higher to 2.671%, while the 30-year bond yield was down 0.6 basis point to 3.010%, its lowest point in more than three-month low as it extended its weeklong move.

General Jim Mattis will be retiring, with distinction, at the end of February, after having served my Administration as Secretary of Defense for the past two years. During Jim’s tenure, tremendous progress has been made, especially with respect to the purchase of new fighting....