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Groundhog Day for Earnings: Two Reliable Patterns Play Out

Groundhog Day for earnings. Fourth-quarter earnings started last night with Alcoa. We are going to begin a dance that is very old. Companies know how to play this. Analysts are willing accomplices.

We are not expecting much: A modest 3.2 percent increase in earnings for the S&P 500 index, and a roughly 3 percent increase in revenues. That may be enough to argue that third-quarter was the earnings trough, but it's a pretty modest upside.

Regardless: A familiar pattern is developing. Analysts had high hopes for fourth-quarter earnings a few months ago — back on Oct. 1, analysts were anticipating growth of 9.6 percent, which is has now dwindled to 3.2 percent.

There are two fairly reliable patterns that play out in earnings season:

1) Having now lowered expectations, companies will proceed to beat them by a modest amount ... a few percentage points; that will likely be enough to satisfy the markets.

How predictable is this pattern? VERY. In the last three quarters, companies beat expectations by 67 percent (first quarter), 65 percent (second quarter) and 63 percent (third quarter). The historic, 10-year average is 62 percent.

2) The difference between the final ESTIMATE for earnings on the quarter (in this case, 3.2 percent) and the ACTUAL final number is usually about three percentage points.

For the current quarter, the final estimate is 3.2 percent ... it's very likely the final ACTUAL number (which we will not know for a couple months) will be about 6.2 percent.

At the beginning of earnings season for the third quarter, earnings for the S&P 500 were expected to be down 1.4 percent, the final number was UP 2.4 percent (a spread of 3.8 percentage points). For the second quarter, earnings were expected to be down 1.9 percent, ended being up 1.8 percent (a spread of 2.7 percentage points). See?

Elsewhere:

1) Alcoa earnings were about in line with expectations. Guidance for a 7 percent growth in aluminum was modestly above the previous 6 percent. There were positive comments on demand in China, with good growth in automotive, heavy trucks, and building and construction, and beverage packaging expected in that country.

This and the knock-on effect for BRIC countries should be a positive today for many multi-industry companies like United Technologies, Emerson, Honeywell, and others.

But here's what matters: More and more, the ability of Alcoa to perform depends not on the price of aluminum, but on their ability to cut costs.

Alcoa has survived only by becoming a cost cutting monster. In response to weak aluminum prices last year, the company curtailed smelting capacity in Europe, and has permanently closed part of its smelting capacity in the U.S.

Bottom line: Alcoa is not an economic or stock market bellwether. You doubt me? Alcoa's shares have gone NOWHERE for the past four year. The materials sector that Alcoa is a part of has DOUBLED in that time period. You can go back 10 years and see the same thing.

(Read More: Adami: Little Reason to Watch Alcoa)

2) Find my luggage! Now HERE is a great idea: Of all the new gadgets I've read about at the Consumer Electronics Show, this is my favorite: Globaltrac has introduced a small device that can be placed in your luggage to track where it is, and send signals directly your cell phone.

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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