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Earnings Scorecard: Schizophrenia!

So far, earnings this quarter have painted a mixed picture, some good some bad, but they're far from the disaster some had feared.

This illustrates the reality of the current economic condition; some parts of the economy are stabilizing while other areas are still mired in disaster. Understanding that clarity is a fantasy and will go a long way towards helping one understanding this quarter's mixed results. Confusion and conflicting signals will continue to reign.

Intel signaled that perhaps the slowdown in PC sales is moderating and that inventory channels are clearing. This confirms, at least from one company, the belief that the inventory cycle of excess reserves is beginning to turn the corner towards a restocking bias.

Goldman Sachs showed its dexterity in reacting to current conditions by posting record trading profits. J.P. Morgan , though continuing to struggle with loan portfolio deterioration, posted reasonable results. Other institutions such as Citigroup and Bank of Americashowed positive one-time results but still struggled under the burden of legacy decisions.

General Electric was weighed down by continuing problems in their financial division but highlighted some glimmers of hope in other business units. And Alcoa lost less than expected because of cost cutting. A mixed bag of results to be sure.

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The earnings message here, is that stabilization is well underway but the recovery will be less than consistent and a struggle for many industries.

Now, more than ever, investors should look at individual results and not attempt to generalize while forming conclusions. Don't be dogmatic in your assessments but take a balanced view as you look at the numbers. Don't trust headlines screaming obvious, global assessments; nothing is obvious in this environment.

Instead, look for clues as companies report earnings for what their economic outlook is and prospects for business growth. These are the key signals to digest in a crazy, uncertain economic environment.
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Michael A. Yoshikami, Ph.D., CFP®, is Founder, President, and Chief Investment Strategist of YCMNET Advisors, Inc., a registered investment advisory firm (www.ycmnet.com). Michael oversees all investment and research activities of YCMNET. He is a respected lecturer speaking frequently on market issues, tactical asset allocation, and investment strategy. He appears regularly on CNBC and CNBC Asia and can be reached directly at m@ycmnet.com.