The following two charts show just why any hopes that corporate earnings can mask the US economic deterioration this year, as they did in 2011 (probably the first and only way in which 2012 is not a carbon copy of 2011 so far), should be promptly dashed.
[3]
Basically revenue growth is abysmal. But no surprise there - after all we have been warning for nearly a year that with the Fed intervening directly in corporation cash allocation decisions (via ZIRP), management teams are much more eager to hand out retained earnings in the form of dividends than reinvest via CapEx - an extremely short-sighted strategy and one that backfires immediately with cash-generating assets around the world already at record old age. (for more read: "How The Fed's Visible Hand Is Forcing Corporate Cash Mismanagement [4]").
And with revenue growth absent, EPS can only grow if corporations cut even deeper into the muscle and let even more workers off, since employee pay is already abnormally low and can not realistically be cut any more. [5] Sure enough, ex-financials, Year over Year EPS growth is now at 0% for the first time since the Lehman collapse!
In other words, corporations have already extracted all the growth they could courtesy of ZIRP.
It is all downhill from here, as only the negative consequences of the Fed's disastrous policies now predominate in finance and the economy.
As an appendix, here is a full summary of the earnings season to date:
[6]