What's going on?

US �earnings season� kicks off this week � that means that hundreds of companies will give a report on how they performed in the first three months of this year (a.k.a. the first quarter).

What does this mean?

Investors� expectations are very low. In fact, companies� profits are expected to fall almost 10% versus the first quarter of 2015 � and that would make it the worst quarter since the Great Recession in 2009. Energy companies (e.g. ones that drill for oil) in particular have seen their profits crushed (as a result of low oil and gas prices). But because their stock prices are already at low levels compared to where they have been in the past, the bad news might not cause them to decline further (i.e. it�s expected that profits will be low). Indeed, investors� expectations are very low for many of the companies reporting results (not just energy companies).

Why should I care?

For stocks: Beware the �beat.� With expectations having declined so much, it shouldn�t be too hard for companies to �beat� estimates � so beware of fancy headlines claiming such things. On the more positive side, the US dollar weakened quite a bit over the quarter, so some companies (especially those that do a lot of business internationally) might indicate that profits are starting to pick up as a result � and that would probably be good for stocks. But with US stocks already back near record-high levels, it will likely take quite a bit of good news to justify moving much higher.

The bigger picture: This will give investors info on the world�s economy (not just America�s). Remember, most big American companies have global operations – McDonald’s, Facebook and Wal-Mart (which owns Asda in the UK) to name just a few. Also, it�s not just the revenue and profit numbers that matter. Commentary and forward guidance from the companies will play a big role in setting investors� expectations for the months to come.