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Earnings Season Opens

It's time to stop debating whether

Alan Greenspan's

briefcase is half full or half empty. Earnings season is here.

The week beginning Oct. 6 will bring the first wave of corporate earnings reports for the third quarter. The stock market's inability to sustain a meaningful rally -- even as bonds have moved higher -- has underscored skittishness surrounding this earnings season. While the usual number of companies have warned about earnings problems, red-flag wavers have included such stalwarts as


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"There's been a broader group of negative preannouncements," says Michael Clark, head of block trading at

Credit Suisse First Boston

. "The last eight quarters it's been about 2-to-1 positive to negative surprises. I think it's going to be fairly even this time around."

Despite the market nervousness, Chuck Hill, director of research at

First Call

, thinks that the third quarter will be a good one. Third-quarter earnings growth for

S&P 500

companies will average 12.2%, according to analysts' estimates. Given that earnings historically come in better than expectations, Hill says that earnings growth should be from 13% to 14% -- and that because analysts have revised their estimates downward less than usual, 14% is looking more and more likely.

Though he would not be termed a pessimist,

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market strategist Doug Cliggott doesn't have the same high hopes for the third quarter that Hill does.

"When you look at consensus top-down numbers, you come up with a fairly modest deceleration in earnings growth," says Cliggott. He expects to see year-over-year growth at 8% to 10%, and believes that the market is currently priced for those kinds of gains. Anything better, and stocks go up; anything worse, and they go down. (For's

calendar of the week's earnings releases, click



Until Friday afternoon, bond traders expected to sit happily on top of the Treasury market's newly lofty levels, maybe take along some sandwiches, watch a little Greenspan testimony on Wednesday, and wait for Friday's release of the September

Producer Price Index

. All that changed, of course, on news that the aircraft carrier


is chugging its way to the Persian Gulf. As noted in a separate

story in

, market players will be nervously awaiting the Nimitz's Wednesday arrival. Only when the market has handicapped the situation in the Persian Gulf will focus return to domestic issues -- and the PPI.

With the standard yardsticks for getting an early read on inflationary pressures -- employment rate and the economy's rate of growth -- seemingly out of whack, the PPI, which measures inflation in the prices manufacturers pay, is being very carefully followed.

"At this point, given how tight the resource market is, any report on pricing and labor costs will be pretty closely watched," explains John Youngdahl, money-market economist at

Goldman Sachs

. Consensus expectations are for both the headline number and the core, which excludes the volatile food and energy sectors, to show a 0.2% increase. Much of those gains will be the result of a jump in the tobacco component, according to Youngdahl, a reflection of the cigarette price increase in September.