Jeff Cox — Here's the one trend to watch in earnings season

The first-quarter earnings season looks to offer something the market hasn't seen in years. Subsequent quarters likely will have to keep up or it could be an ugly year for corporate America.

Total sales could top bottom-line profits, a turnaround that comes after corporations had spent quarter after quarter slashing costs through layoffs and other forms of austerity. At the same time, revenue lagged amid weak demand and a general lack of confidence.

So in some respects this could be what the market has been waiting for since the financial crisis and the accompanying recession—that point where consumers are willing to take the handoff and generate growth....

Corporations have utilized the Fed's zero-interest-rate policy to run up huge levels of cheap debt, which they then used to buy back shares of their own stock. More than $1 trillion of buybacks have reduced share counts and thus boosted earnings-per-share levels to record highs.

The question now is whether companies can begin to drive earnings organically once the Fed ends QE, which has sent the central bank's balance sheet to nearly $4.3 trillion.

If revenue doesn't grow, "the market will say these valuations are more and more based on QE," Krosby said. "The market is trying to find that equilibrium: What is fundamentals and what is QE? Top-line growth is really key. It's so important because it feeds into a spectrum of analysis that goes beyond just the typical company."

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Here's the one trend to watch in earnings season
Jeff Cox

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