The MSM keeps talking about earnings beating expectations, but it leaves out pertinent facts that its readers need to actually see the picture clearly. Earnings per share have been beating estimates for two reasons. The first is that analysts have been lowering their EPS forecasts since May. If the earlier figures are used, most companies have missed. The second reason is that EPS is based on profits, and profits are easier to manipulate. Firms sandbag profits from earlier quarters and release these profits to bolster earnings in weak quarters. This makes the company look less volatile than it actually is.
The better number to use in analyzing market conditions is revenue. This number is harder to monkey with. While about two-thirds of companies are beating EPS estimates, three-quarters are missing their revenue estimates. Eventually the market will figure this out; it always does.