SIGH. ANOTHER EARNINGS

season, another dollar.

Or perhaps I should say another eight billion dollars. Since the end of March, just a few short weeks, that's how much Wall Street has upgraded its appraisal for the S&P 500's earnings over the last year.

If S&P 500 earnings grew at that rate for a whole year, they'd rise 14.4% an earnings gusher. And don't think it can't happen. Earnings have been growing at that rate or better for most of the last three years.

Why not make it four?

If that were an impossible goal, then as these spectacular earnings numbers came in, we wouldn't see upward revisions in forward-looking earnings forecasts. Analysts would assume that the booming earnings being reported now were all in the past, not to be repeated in the future. But instead, forecasts for future earnings are rising just as fast as past earnings.

As we came into this earnings season several weeks ago, the bears were in control of sentiment and expectations, just as it seems they always are. How many authoritative-seeming "analysts" and "economists" and "strategists" did you see on CNBC warning about the impending earnings disappointment, as the housing slowdown and the subprime mess take their toll on the economy?

We've heard all that same twaddle every earnings season for the last three-plus years of consistent double-digit earnings growth. Will the bears never learn?

Apparently not. Remarkably, even as upside surprise after upside surprise pours in this earnings season, and stocks make new all-time highs, they try to find ways to make it seem as though they've been right all along.

One particularly brainless bear with whom I'm sometimes paired on CNBC debates tried to make the case that, if you took energy-sector earnings out of the mix, overall S&P 500 earnings would actually be down this quarter.

Investors listening to someone say such a thing on television with a straight face tend to believe it but nothing could be further from the truth. Energy-sector earnings are actually down this quarter, while overall S&P 500 earnings are up by something like $11 billion. Take energy out and the S&P 500 would look better, not worse.

When Texas Instruments reported a fabulous upside earnings surprise this week, the same fathead on CNBC said that didn't count because cellphones are free for most consumers they are included in calling plans. So even though (he claims) consumer spending is cratering due to the housing slowdown, cellphone sales can still boom, so TI's communications semiconductors will still sell like hotcakes.

Oh, come on. There's no such thing as a free cellphone, just as there's no such thing as a free lunch. If consumers were so tapped out, they couldn't afford cellular calling plans, the prices of which necessarily include the price of a new cellphone. I hate to break it to the bears, but TI's earnings were the real thing.

This earnings season is especially sweet for me, and not just because I love to see bloviating blowhard bears on television make fools of themselves. It's because two months ago, I was getting worried that it just might not turn out as well as it actually has.

I've already mentioned forward earnings forecasts and how they give us important information about the future of earnings, while the numbers normally reported in earnings season just tell you about the past. Two months ago, forecasted earnings were decelerating dramatically, and for a couple days it looked like they were even going to turn negative.

The worst moment for earnings forecasts was the couple of days following that terrifying drop in stocks on Feb. 27. It got my attention.

That's because I've studied the patterns of earnings forecasts for many years. Generally these rise sometimes more rapidly than others, but usually the direction is upward. They've only fallen during two periods in the last 25 years. The first started in mid-1989, and that perfectly predicted the 1990-91 recession, which began precisely one year later. The second was in late 2000, and that perfectly predicted the 2001-02 recession, which began yep precisely one year later.

Thankfully, it was just a passing thing. A near-death experience.

Since that slowdown in forecasted earnings in late February and early March, the forecasts are growing again at double-digit annualized rates. That tells me that the economy is fundamentally sound, and all the talk about a coming recession is just talk.

I really shouldn't have worried. There virtually can't be a recession on the horizon. The world is awash in financial liquidity. Anything that goes wrong like the housing slowdown or the subprime mess is easily absorbed by the massive amount of money available in the world.

Just think of what we've been through the last couple of years without any substantial economic disruption. We endured the complete destruction of a great American city New Orleans and the wipe-out of nearly half of America's energy exploration and refining capacity. We endured the blowup of the Amaranth hedge fund, which involved larger losses than the Long Term Capital Management debacle of 1998. And look how we're absorbing the housing slowdown and the subprime collapse.

All that liquidity has a dark side. It's gradually adding to inflation pressures, and sooner or later I suspect sometime in the next six to 12 months the Fed will start raising interest rates to sop some of that liquidity up, and bring inflation down. If history is any guide, that could lead to a sharp slowdown.

But that's over the horizon. For now, the direction is clearly up, up and away. For the moment, let the bonehead bears say whatever they want on CNBC. It's good for a laugh at their expense. And besides, we bulls have to have someone dumb enough to sell us the stocks we want to buy.

Donald Luskin is chief investment officer of Trend Macrolytics, an economics consulting firm serving institutional investors. You may contact him at don@trendmacro.com.