Analysts have inflated expectations for late 2008

A recent survey of analysts by Reuters shows that forecasters believe that earnings growth will be very slow in the first half of 2008. First quarter profits are only expected to rise 2.6% and the second quarter is forecast to be up 3.5%. But, according to The Wall Street Journal, "S&P 500 earnings are expected to be up 20% in the third quarter and 50% in the fourth quarter, analysts said."

The numbers seem overblown. They might work because banks and financial companies had such huge write-offs in late 2007 that an improvement could help push earnings up. If a bank lost $10 billion in the second half of 2007 and makes only $1 in the comparable period in 2008, the numbers on earnings growth look pretty good.

Of course, the headline does not take into account that, leaving out perverse weighting of improved earnings at banks, the increase in EPS at all other companies in the S&P could be very, very modest.

Averages can be deceiving and, in this case, could lead investors in the wrong direction.

Douglas A. McIntyre is an editor at 247wallst.com.