As all farmers worth their salt will tell you, green shoots do not guarantee a harvest.

And Wall Street may well be forced to learn that age-old agricultural lesson in the corporate earnings season that has just started.

Breathless talk this past spring of metaphorical 'green shoots' -- portending the end of the recession and a revival of profits -- has tailed off as the economic data have been mixed at best.

The green shoots theory may have been somewhat exaggerated, said Nariman Behravesh, chief economist at IHS Global Insight. But it is not entirely unrealistic, as we are either very near or at the bottom.

That leaves investors eyeing second-quarter earnings releases not so much for a view of the most recent quarter but what is happening out there right now at the factory gate or in the order book.

What people are looking for in this quarter isn't necessarily good second-quarter earnings relative to expectations, but what the guidance looks like for the rest of the year, said John Forelli, portfolio manager at Independence Investments LLC in Boston. This is the quarter that matters, people want to see progress in the third quarter.

Still, few expect to get many solid predictions for the rest of the year as many companies hide behind the phrase lack of visibility -- a euphemism for saying they really don't know what is around the corner.

Right now people are very reluctant to make predictions, said Peter Morici, an economics professor at the University of Maryland. Too many of them have been burned by the green shoots theory.

Instead, companies are expected to focus on their own businesses and customer feedback rather than providing a big-picture view for the rest of 2009.

Among the nonfinancial companies that have reported quarterly results so far, there hasn't been much conviction about a sustained recovery being around the corner.

For example, Dell Inc (DELL.O: Quote, Profile, Research, Stock Buzz) forecast lower gross margins in the current quarter because demand has shifted toward cheaper computers and as component prices are rising.

Railroad operator CSX Corp (CSX.N: Quote, Profile, Research, Stock Buzz) posted better-than-expected earnings on Monday as cost-cutting offset a 21 percent drop in freight volumes and its CEO Michael Ward said that the worst of the recession appears to be over.

But, he also said: The question now is how long we'll stay at the bottom and how long it will take to recover.

SHADES OF GREEN

Amid the economic chaos and freezing in credit that followed the demise of Lehman Brothers (LBHKL.PK: Quote, Profile, Research, Stock Buzz) last September, corporate earnings predictions vanished at the beginning of 2009 as corporations couldn't see beyond the next day or week.

But as the worst of the crisis appeared to have passed, it was not long before talk of tentative signs of recovery appeared, most notably from U.S. Federal Reserve chairman Ben Bernanke, who said in a March 15 edition of CBS' 60 Minutes that he saw green shoots out there.

Soon executives were either saying publicly they saw green shoots or calling a bottom to the downturn.

Now the few that still engage in the practice do so in a nuanced manner.

I see green shoots but it's a very light shade of green, Howard Stringer, CEO of Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz), said last week.

The trouble is, while there are signs the speed of decline may be slowing, a return to growth may be some way off.

What we're seeing is the absence of negatives rather than the emergence of positives, said Diane Swonk, chief economist at Mesirow Financial. We're not getting a sense of momentum, which clouds the earnings picture.

The pace of job losses may have eased modestly, but nearly half a million Americans joined the ranks of the unemployed in June. The decline in U.S. house prices has slowed, but property values are still falling. U.S. same-store sales fell 4.9 percent in June.

Durable goods orders in May, however, were up 1.8 percent, though Swonk said it was unclear whether this meant demand is really coming back or if companies faced with empty shelves are starting to rebuild their inventory.

At this time of renewed uncertainty, analysts say the second quarter, except for the last few weeks of June, is ancient history. The key question is: what is happening today, tomorrow and next week?

Investors are going to say ... what are you are seeing in first couple of weeks of the current quarter? said Owen Fitzpatrick, head of U.S. Equity Group, Deutsche Bank Private Wealth Management, in New York. What were you seeing at the end of the quarter? Were things improving?

That leaves corporate America in a bind, stuck between being punished for irrational exuberance on the economy and being pummeled for irrational pessimism when everyone wants to see signs of a recovery.

Companies are going to try to manage expectations when they report results, IHS Global Insight's Behravesh said. And the tea leaves of what they say about what they're seeing right now are going to be parsed very carefully.

According to Professor Morici, in this environment corporations are likely to stick to talking about what they know and avoid commenting on the economy as a whole.

What we'll see companies do is talk about what they are hearing from their customers rather than their internal economists' views on the whole economy, he said. What we'll see is a ground-up analysis, instead of a top-down view.

(Reporting by Nick Carey; Editing by Gary Hill)

Ben Bernanke