It’s purgatory season for money. Leading up to earnings season, analysts often do little as they await company guidance. However, this earnings season is trending differently. Point 1: Profits are expected to increase in the third quarter, but the unusual profits of oil companies are skewing the results. Without energy, income is negative. Q3 Profit Expenses: S&P 500 All sectors: up 4.1% Excluding Energy: down 2.6% Source: Refinitiv Score 2: Companies that reported early were generally disappointing hope. Of the 20 companies reported to date, fewer than the beat estimates and the beat percentages are also much smaller. Some believe the long-awaited earnings “recession” will hit the fourth quarter, others say 2023. Fewer companies hit estimates “and in fewer numbers… growth is slowing rapidly, and there are increasing revisions to negative EPS estimates from the previous quarter and what we’ve been used to over the past few years,” said Nick Raich from Earnings Scout in a recent note to clients. row. Most notable was the number of companies that missed or went down for the rest of the year, including FedEx, Nike, CarMax and Micron. According to Refinitiv, of the 20 S&P 500 companies that have reported third-quarter earnings so far, 65.0% have reported earnings above analyst estimates. This is much lower than the 78.1% average in the previous four quarters. Score 3: Overall earnings for the S&P are still expected to increase in the third and fourth quarters, but several sectors have seen significant cuts over the past few weeks. Traders are focusing on the fourth-quarter estimates, where four sectors are inherently negative and technology is moderately positive. S&P 500 Q4 results: Negative growth in key sectors Services Information: down 9.5% Finance down 2.9% Consumption Consumption down 2.3% Materials down 2.1% Technology up 0 .2% Source: Refinitiv Raich says the level of uncertainty around earnings is particularly high. Raich told me, “A lot of CEOs have the ‘nail in the headlights’ look. “They don’t know how to forecast how rising interest rates will affect demand. A lot of executives have never lived in a rate hike and don’t know how to forecast it. ” Raich is still expecting overall earnings to be positive in the third quarter, but he said that the fourth quarter will “come to an end.” He expects Q1/2023 to be “preferably flat” and Q2/2022 likely to see negative growth. While he is certain that earnings will likely move sideways to slightly negative, the extent is still unclear and this explains the huge level of uncertainty around both earnings direction (up 4%? Flat? ?Decrease?) and market multiples (13? 15? 17?). “It’s becoming a reality now, but it still has a lot of work to do,” Raich said.