Alcoa Inc. (AA) must have drawn the short straw to be the economic canary in the coal mine decades ago, but for many investors the aluminum maker's earnings are seen as a harbinger of things to come. Judging from Wall Street estimates, expectations are so low, they are almost laughable.

Analysts expect the Dow component to lose 56 cents per share on revenue of $4.08 billion compared with $303 million, or 37 cents, a year earlier on revenue of $7.38 billion, according to estimates by Thomson Reuters. The Pittsburgh-based company reported its first loss in six years in January. Its shares are down about 30 percent this year, even with the recent surge in the stock market.

Wall Street analysts seemed to have thrown up their hands when it comes to fourth quarter earnings. Given the current economic environment, who can blame them?

Earnings estimates are almost useless. They have ranges big enough to drive a truck through. No, make that a train. I mean a tank. Imagine a large mode of transportation and you get the idea. My colleague Douglas McIyntyre recently argued "that has changed so much in the last two quarters that predictions have become hard to make and going into this earnings season the job may become impossible."

Take General Electric Co. (NYSE:GE). The conglomerate, which has been in Wall Street's dog house forever, is expected to post earnings of 52 cents for the fourth quarter. Or, the parent company of NBC might earn 36 cents. Everyone is sure that Citigroup Inc. (NYSE:C) is a basket case but exactly how screwed up the company is a matter of debate. Analysts are forecasting a losses of 47 cents to $1.14 per share.

Time Warner Inc. (NYSE: TWX) could earn anywhere from 18 cents and 33 cents. Analysts' estimates for JPMorgan Chase & Co. (NYSE:JPM) range from a profit of 25 cent to a loss of 20 cents. Pfizer Inc. (NYSE: PFE), which recently announced it would fire 800 scientists, may earn anywhere between 55 cents and 63 cents.

As each day passes, estimates for how bad Q2 earnings will be grows. According to The Wall Street Journal, "analysts estimate S&P 500 operating earnings -- income excluding one-time items -- fell 11.5% in the second quarter."

While the paper points out that earnings often come in a bit worse than expected, this quarter could be a bit different. Everyone expected the numbers to be bad in sectors including banking, brokerage, insurance, autos, and airlines. But the real question is whether business and consumer spending have been hit harder than predicted.

If spending is down, even companies which are expected to do fairly well such as Apple (NASDAQ: AAPL) and Cisco (NASDAQ: CSCO) could face rough earnings reports as big business and the little consumers defer purchases which they feel they cannot afford. That means that tech earnings, which were expected to be OK, could take a big hit.

If tech falters, what is left? Energy and commodities companies? Perhaps, but that is thin ground on which to build an earnings season.

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

A recent study by a trio of accounting professors reached a conclusion that many of us have suspected for a long time: The practice of "earnings management" is commonplace in corporate America.

By looking at economic growth from 1962 through the first quarter of 2004, they calculated the approximate number of companies that likely would have achieved 20 consecutive quarters of earnings growth. Their number? 46.

The actual number of companies that achieved that feat? 587, leading the professors to suggest "prima facie evidence of earnings management."

Worried? According to The New York Times, Professor Douglas Skinner, one of the study's authors "also stressed that earnings manipulation does not have to involve outright fraud. It could involve something as innocuous as postponing spending on research and development in order to avoid reporting a loss in the current quarter."

So is this really a big deal? I would argue that it is. At the very least, earnings management amounts to a waste of time and energy, and tactics like postponing R&D expenses can be harmful to the long-term future of the company.

At worst, the leap from earnings management to outright fraud may not be that big. But until Wall Street can get over its obsession with quarterly earnings numbers, it seems like "earnings management" will be here to stay.

When is a dollar not a dollar? Did you ever hear someone refer to "quality of earnings"? Why do they say that? Is there a such thing as earnings that lack quality? Actually from an investment perspective there is.

I have given this a lot of thought, but most often in terms of real estate. Sometimes properties that are being prepared for sale have a lot of cosmetic improvements made while important maintenance and operational activities are suspended to show increased profit. History has shown us that it is not uncommon for companies to 'dress up' quarterly reports in the same manner. That is why smart real estate investors always want to see expense records for several years. The following was found on Investopedia.com:(http://www.investopedia.com/terms/q/qualityofearnings.asp)

• Quality earnings are the amount of earnings attributable to higher sales or lower costs rather than artificial profits created by accounting anomalies such as inflation of inventory.
• Quality of earnings is considered poor during times of high inflation. Also, earnings that are calculated conservatively are considered to have higher quality than those calculated by aggressive accounting policies

The Dow Jones Industrials have lost 437 points in the last week. Last Sunday, after the Dow had lost 262 points, my post at The Informed Observer revealed my thoughts on what would happen next and why.

When I read Amey Stone's interview yesterday afternoon with Joe "Uber Bull" Battipaglia, I thought it might be interesting to offer another perspective. Even though the Dow is tumbling and we could be in for some rough sledding, I am reminded of the advice I gave a friend after September 11: If you can afford not to sell your stocks, the market will probably recover in the long run. Therefore, it is better to avoid the transaction costs and possible taxes of getting out and then getting back in; grit your teeth, and hold on.

Yesterday's official Consumer Price Index (CPI) report triggered investor fears that the Fed was unlikely to take its foot off of the interest rate brake pedal. In my view, this represents a potential first crisis for the new Fed Chair. Here's my view of the balance of economic downsides and upsides facing Ben Bernanke: