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Is a phony recovery showing its ugly teeth?

The earnings season so far is actually more disappointing than that absolute underperformance suggests. Too many of the earnings beats are by just a penny or so and too many earnings surprising are coupled with misses on revenue. Others combine an earnings beat with a cut to guidance for the first quarter or all of 2014. And other companies are managing to report an earnings beat only thanks to a clearly one-time factor or a bit of financial engineering using, frequently, share buybacks.

With U.S. stocks ending 2013 at historical highs, investors just aren’t impressed with that kind of earnings beat.

So far in absolute numbers this earnings season could be called somewhat disappointing. About 50% of the 10% of Standard & Poor’s 500 companies that have reported earnings have beaten Wall Street estimates. That’s below the long-term average of 63% and well below the four-year average of 74%.

Want some examples? Then continue reading.


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