Hello my name is Nimish Vyas and I am a research analyst on the global market insights strategy team at JP Morgan Asset Management. Welcome to on the minds of investors. Today's topic is what should investors expect for 3Q2022 earnings? The third quarter earnings season is set to kick off with the large US banks releasing results. Our current estimate for 3Q2022 S&P 500 operating earnings per share is $53.82, representing year over year growth of 3.5% and quarter over quarter growth of 14.8% The strong estimates are supported by a number of tailwinds, including higher energy prices, a resumption in travel during the summer, and positive industrial production and retail sales data. That being said, there is also a considerable set of macro headwinds which could push actual earnings to come and below projections. The US dollar strengthens 16.7% year over year during the quarter, which, coupled with deteriorating economic conditions in Europe and continued COVID 19, lockdowns in China, could weigh on foreign source sales. Furthermore, early reporters have noted additional headwinds of softening consumer demand amid higher prices, increasing labor costs, higher freight costs, and a build up of excess inventories. At the sector level, energy is projected to lead the pack due to higher crude oil and natural gas prices in. Similarly, estimates indicate a strong quarter for industrials. Within industrials, the airlines are expected to see profit growth decelerate due to increasing costs relative to demand, but are expected to stay profitable. Transport should also be another bright spot as the rail companies benefit from higher volumes and higher pricing due to fuel surcharges. Materials are likely to be weaker due to a pullback in commodities prices and the sector's high exposure to foreign markets. Financials are expected to contract primarily due to a build up in loan loss provisions, weak investment banking activity and slower loan growth. However, higher interest rates and market volatility may partially help may help partially offset these pressures by boosting net interest income and trading revenues. Turning to growth, consumer discretionary could be well supported in contrast to recent quarters by demand for services, although preliminary reports have highlighted softening consumer demand in retail and production issues at the auto companies. Health care information technology are currently set to see more subdued rates of growth in earnings this time around Among the health care names, COVID 19 vaccine and testing sales are expected to be down from their peak in 3Q2021 and will act as a drag on profit growth. In information technology, persistent inflation fears of a global slowdown have seemingly begun hurting demand for hardware. The number of firms announcing plans to scrap production increases and cut spending communication services is tracking a much sharper decline than its growth peers, as analysts are pessimistic about the sector's ability to grow streaming and gaming subscriptions in the current market environment similar to the prior quarter operating leverage, which is defined as the change in operating income from a 1% change in revenues, will be key for profitability. Value sectors tend to have more operating leverage than growth sectors. Profits and in sectors with greater operating leverage should be more resilient given elevated inflation over the next few months. But as economic growth begins to slow and inflation cools, we may see investors rotate back into the wealthier parts of the market.