Earnings season starts on Wednesday - here's what you need to know

Earnings season is here.

On Wednesday, aluminum giant Alcoa will report earnings after the market close, marking the unofficial start of first quarter earnings season.

In a note to clients ahead of the report, Jonathan Golub at RBC Capital wrote that earnings for the S&P 500 are expected to decline 4.2% in the first quarter.

This is down from prior expectations for growth of around 4%, and this more than 8% decline in expectations is the largest since the financial crisis.

Here are the four big things Golub is looking for as earnings get underway:

• Earnings Revisions: Year-to-date, 1Q estimates for the S&P 500 have fallen by 8.3%. Excluding Energy, revisions appear far less problematic, nearly in line with historical averages (see Exhibit 2).
• Growth Expectations: Bottom-up growth expectations of -4.2% seem quite ominous. However, when stated ex-Energy (and assuming beats) the result is likely to be 6-7%, plus buybacks (see Exhibit 3).
• Impact of Oil: WTI is down 50% YoY, leading to a 64% decline in 1Q Energy sector EPS. By contrast, crack spreads finished up 5%. Excluding the group, S&P 500 EPS would be 800 bps higher.
• Impact of the Dollar: The dollar appreciated 16% (trade-weighted basis) from 1Q14, subtracting ~150 bps from 1Q earnings growth (100 bps from 2015).

And via Golub, here's a handy schedule showing how many S&P 500 members are reporting each week.