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Takeaway: Don't believe Wall Street's storytelling.

Today's Economic Data Bolsters Our 2016 Recession Call - storybook

While third quarter GDP was revised up to 2.1%, bubbling beneath the economic surface are some worrisome signs. In fact, two of the top three leading indicators for a U.S. recession were confirmed today:   

1. Corporate Profits—the most important component of this GDP report slowed to -3.2% year-over-year. Why does that matter? Take a look below.

Today's Economic Data Bolsters Our 2016 Recession Call - eps inflection

2. Consumer Confidence—dropped almost 10% in November to 90.4. Note: The top was 106. That ain’t coming back anytime soon.

Today's Economic Data Bolsters Our 2016 Recession Call - consumer confidence inflection

On a related note, retailers are getting shellacked by falling Consumer Confidence. There was this "gem" from Tiffany’s (TIF) Q3 earnings release this morning after the company missed expectations and cut its outlook.

“… We believe that volatile, uncertain economic and market conditions in the U.S. and other regions are affecting consumer spending, causing us to maintain a cautious near-term outlook.”

CEO Frederic Cumenal also cited the U.S. dollar strength, which “continued to put pressure on our financial results.” 

We’re not exactly sure why, but investors appear a bit confused. Shares of TIF popped as investors ate up management's suggestion that it would increase prices to compensate for the stronger dollar.

Our Retail analyst Brian McGough has been particularly bearish on TIF. In a note to institutional subscribers earlier today, McGough wrote that "there are no obvious margin levers to offset the declining growth profile in the business, especially amidst increased late cycle risks." TIF was added to the short side of Investing Ideas in October.

The data on consumer confidence slowing is unequivocally red. But don't take our word for it. Ask TIF shareholders. In the past year, the stock is off 27%.

Today's Economic Data Bolsters Our 2016 Recession Call - tif past year

None of this bodes well for Wall Street equity bulls peddling the mid-cycle economic story. But that’s not our call or our problem.

Today's Economic Data Bolsters Our 2016 Recession Call - Keith GDP