Earnings Season’s Nasty Little Secret

If you look at the headline numbers, you’d think we were having a somewhat decent earnings season. But we’re not.

That’s according to top trader Steve Weiss, managing partner at Short Hills Capital.

The headline that you’ve probably read is something like what follows:

With 23 percent of S&P 500 companies having reported results, 67.5 percent have posted earnings above expectations.

“But what’s going on is this,” says Weiss. “Estimates have come down a lot. And the Street is so tense that when a company beats, we get a relief rally.”

And Weiss adds, that although 67.5 percent of companies have beaten expectations, almost an equal number have missed on revenues.

All told, that suggests to Weiss that companies are hitting these low numbers by cutting costs. And eventually there are no more costs to cut.

“Ultimately I believe any productivity gains will go by the wayside,” says Weiss. “I’d remain cautious on the market.”

* You can find our conversation with Weiss about 2 minutes into this video clip.

Posted by CNBC's Lee Brodie

Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our Web site send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On July 23, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Stephen Weiss is long BTU; Stephen Weiss is long QCOM; Stephen Weiss is long VZ; Stephen Weiss is long T; Stephen Weiss is long PCAR; Stephen Weiss is short X; Stephen Weiss is short JCP; Josh Brown is long JPM; Josh Brown is long WFC; Josh Brown is long GDX; Josh Brown is long GLD; Josh Brown is long XLU; Josh Brown is long XLF; Josh Brown is long WMT; Josh Brown is long TGT; Josh Brown is long SBUX; Josh Brown is long MSFT; Josh Brown is long F; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Mike Murphy is long SBUX; Mike Murphy is long FB; Mike Murphy is long URI; Mike Murphy is long BTU; Mike Murphy is long TOL; Mike Murphy is long LEN; Mike Murphy is long PHM; Mike Murphy is short XHB

For Dennis Gartman
Dennis Gartman is short CORN

For Barry Bannister
Nothing to Disclose

For Larry Mcdonald
Nothing to Disclose

CNBC.com and wires