×

Here's what to watch for in the coming earnings season

Now that the Federal Reserve has made its decision—for better or worse—it's time to turn to what really matters: 1) the state of the U.S. economy, 2) the state of the rest of the world, and the impact this has for corporate revenues and earnings.

To the extent that the Fed lowered its expectations for growth, that is certainly a negative sign for earnings.

And earnings and revenues could use some help. The second half of the year was supposed to see an improvement over the first half's flat earnings growth, and negative revenue growth. Not happening.

Here's the current Q3 estimates from FactSet:
Earnings: -4.4 percent
Revenue: -2.9 percent

Much of this disappointment is due to energy, where earnings are expected to again be down a stunning 65 percent. That's not a typo—65 percent. If you remove energy, the S&P earnings would be positive 3.1 percent, revenues would be positive 2.7 percent.

Read More Pisani: Did the Fed just make a third mandate?

Trader on the floor of the New York Stock Exchange.
Lucas Jackson | Reuters
Trader on the floor of the New York Stock Exchange.

The earnings number will likely improve in the coming weeks, but in the last two quarters the negative revenue numbers have not, and that is again an issue.

What we need—I have been saying this for over a year—is not more cost-cutting to hit the bottom line. What we need is more revenue growth. And we are not seeing it.

The Street is expecting higher revenues, but they have been consistently disappointed.

I'll give you an example. On average, about 60 percent of S&P 500 companies beat revenue estimates. That's been the average for years.

In Q1, less than 45 percent beat estimates. In Q2 only 49 percent beat. See what I mean? The Street has been surprised by the lack of revenue growth.

Read MoreFed dovishness may have stopped soothing market

What we need to hear in the coming weeks is more companies beating revenue estimates ... and by more than the average. We need to see 65 percent or more beating revenue estimates.

Can that happen? It's looking doubtful. Here's an example: the Street is pinning a lot of its hopes for earnings and revenue growth on a few sectors—consumer discretionary, up 11.6 percent, financials, where earnings growth is expected to be up 7.9 percent this quarter, and health care, which is expected to grow 7.5 percent.

Consumer discretionary may be in better shape, with gains in housing and autos, though retailers are problematic. Health care in good shape as well.

Read MoreThis bank just slashed its S&P earnings outlook to zero

Financials, however, are a problem. Now that the Fed is not acting to raise rates, there will be less upward pressure on U.S. interest rates, which would have been a benefit to banks.

This is especially true of regional banks, which are more sensitive to the "spread lending" than big global banks likeCitigroup and Goldman Sachs, that get part of their business overseas.

What's it mean? I wouldn't be surprised to see earnings estimates for some banks coming down.

Read MoreFed holds off, markets now betting on hike in 2016

We are waiting to hear comments from CEOs about the third quarter, but the early signs are a bit worrisome. Sales have been weak again. The first two out of the gate—FedEx and Oracle have not been encouraging.

FedEx is a good global barometer, it raised prices and should benefit from lower fuel costs, but doesn't appear to be reaping big headwinds.

Next week, a couple companies with odd fiscal years will report: homebuilder Lennar the 21st, and Autozone on the 22nd. Costco will come the week after.

These will provide a good look at the state of the consumer.

  • Bob Pisani

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

Wall Street