Business

This rally looks complete.

The S&P 500 has broken the rising wedge pattern that has sustained it throughout the bounce from the February lows.

This is hitting as new evidence suggests corporate profits are collapsing at a pace not seen since the 2008 meltdown.

This type of collapse does not occur outside of recessionary periods.

The US data has yet to show a recession hitting because:

1)   Most of the initial data points are too high and will be revised down in the near future.

Earlier today we said that following the abysmal January spending data revision as shown in the chart below:

... that "the Atlanta Fed will have no choice but to revise its Q1 "nowcast" to 1.0% or even lower, which would make the first quarter the lowest quarter since the "polar vortex" impacted Q1 of 2015, and the third worst GDP quarter since Q4 2012. It means one-third of already low Q1 GDP growth has just been wiped away."

It was "even lower."

Headlines will crow of the seasonally-adjusted 'beat' of expectations for the Dallas Fed survey (-13.6 vs -25.8 exp) but this is the 15th month in contraction (below 0) - something only seen in recession. Scratching below the surface we see employees, workweek, and capex all in contraction and forward expectations for new orders and employment tumbled. Perhaps that reality is what drove one respondent to rage, "anyone who says the economy is not in recession is peddling fiction."

With stock markets roller-coasting by the most on record, February pending home sales rose 3.5% MoM (seasonally-adjusted) dramatically beating expectations. In fact, sales spiked 29.5% MoM (non-seasonally-adjusted) - the best February spike ever. Price gains have slowed notably, which is being cheered by NAR's Larry Yun, but notably the majority of the sales surge in Feb was driven by an 11.4% spike in The Midwest (biggest since Dec 2008).

Panic buying homes in Feb:

On Friday, the US government's Bureau of Economic Analysis had some good and some not so good news: the good news was that the final estimate of Q4 GDP was revised higher from 1.0% to 1.4% (driven by an odd rebound in spending on Transportation and Recreational services). The bad news was that pre-tax earnings tumbled 7.8%, the most since the first quarter of 2011, after a 1.6 percent decrease in the previous three months, suggesting that while it is only the "strong" US consumer that is keeping the US economy afloat on their shoulders.