U.S. companies shy about outlook, sowing doubts

By Nick Carey - Analysis

CHICAGO (Reuters) - As all farmers worth their salt will tell you, green shoots do not guarantee a harvest.

And Wall Street may well be forced to learn that age-old agricultural lesson in the corporate earnings season that has just started.

Breathless talk this past spring of metaphorical 'green shoots' -- portending the end of the recession and a revival of profits -- has tailed off as the economic data have been mixed at best.

"The green shoots theory may have been somewhat exaggerated," said Nariman Behravesh, chief economist at IHS Global Insight. "But it is not entirely unrealistic, as we are either very near or at the bottom."

That leaves investors eying second-quarter earnings releases not so much for a view of the most recent quarter but what is happening out there right now at the factory gate or in the order book.

"What people are looking for in this quarter isn't necessarily good second-quarter earnings relative to expectations, but what the guidance looks like for the rest of the year," said John Forelli, portfolio manager at Independence Investments in Boston. "This is the quarter that matters, people want to see progress in the third quarter."

Still, few expect to get many solid predictions for the rest of the year as many companies hide behind the phrase "lack of visibility" -- a euphemism for saying they really don't know what is around the corner.

"Right now people are very reluctant to make predictions," said Peter Morici, an economics professor at the University of Maryland. "Too many of them have been burnt by the green shoots theory."