Managing earnings or managing earnings expectations? Nearly three quarters of the S&P 500 companies reporting for the June quarter (94% of the total number) have supposedly met or beaten their earnings forecasts but estimates had already been cut by 10% since July 2012 resulting in an earnings rise of 4% over the last 12 months rather than the originally anticipated 19%. Fed policy has helped offset this source of potential disappointment. Right now, S&P 500 earnings are forecast to rise by 14% over the coming year. If the same pattern of downward revisions occurs in the coming 12 months, as reporting dates loom, this time without the help of the Fed, the S&P 500 could start to look expensive. Revenue improvements (possibly helped by stronger growth in Europe) are becoming more critical by the day.