Earnings season begins, and Wall Street is waiting for analysts to start cutting estimates. Wall Street and the analyst community have been engaged in a furious fight for two months over the refusal of most analysts to lower their 2022 and 2023 earnings estimates in the face of what seems like an obviously slowing economy. In one sense, the reluctance of analysts to slash estimates is understandable. Company analysts are not macroeconomists. For the most part, they do not make guesses about the future of the U.S. economy. Instead, they analyze trends in their individual company and industry, and unless there is a radical departure in the data or their CEOs tell them things are different, they don't change their models. Many strategists are now betting the analysts are going to be forced to change those models. Among the early reporters, there has been a far higher number providing negative guidance. John Butters of FactSet noted over the weekend that 71 companies have issued negative earnings-per-share guidance for the second quarter — the highest number since the fourth quarter of 2019, when 73 issued negative guidance. Most strategists are expecting second-half guidance to come down substantially in the next several weeks. "All of the macro barometers we track that tend to lead earnings results are pointing to a miss," Savita Subramanian of Bank of America said in a recent note to clients, referring to earnings estimates for later 2022 and 2023. Two big winners in Q2: Energy and airlines Oil companies are gushing profits. With oil 50% above where it was a year ago, profits in the energy sector have been rising every month this year, and are now expected to be up 239% over 2021. The profits of oil companies have been so large that it has distorted the overall earnings outlook for the S & P 500. Second-quarter earnings for the S & P 500 are expected to be up 5.7% over the same period last year, but if the energy sector is excluded, earnings would be down 3%, according to Refinitiv. Another bright spot: Everyone is traveling. Airline earnings are expected to grow 193%, a "significant contributor to Industrials growth," according to Jonathan Golub at Credit Suisse. This morning, Delta Air Lines reported higher demand for both business and leisure travel . Revenues were stronger than expected, though earnings fell short. Pharmaceuticals are also a bright spot: Earnings are expected to go up 19.8%, according to Golub. Downside: Amazon and Meta Outside of energy, most sectors have seen decreases in estimates: Nine of the 11 S & P sectors have experienced downward revisions to estimates in Q2, Refinitiv noted over the weekend. And five of the 11 are expected to see outright declines in earnings. For the top five S & P 500 companies, the picture is mixed, but mostly lower. Meta and Amazon have been major drags on the S & P this year due to a notable decline in their profit outlook. Big cap tech earnings (Q2 2022 ests. vs. Q2 2021) Microsoft up 6% Alphabet down 6% Apple down 11% Meta down 28% Amazon down 79% Amazon's earnings decline has been a major drag on the consumer discretionary sector (the stock price is down 34% this year), and Meta's falloff has been a drag on communication services (the price is down 51%). Another problem for earnings: Banks Banks are another drag on earnings: Financials are expected to see a decline of 20.8%, the biggest sector decline in the S & P 500. The main problem? Banks are taking "higher provisions for loan losses ( > $4.0 billion?) compared to reserve releases of more than $7.0 billion during the second quarter of 2021," according to John Lynch, chief investment officer at Comerica Wealth Management. Guidance: Everyone is expecting a guide down The Street is expecting that CEOs will signal that higher costs are going to remain an issue for the second half, and that some will signal uncertainty over how far they can continue to raise prices before there is significant pushback from consumers. Others will anticipate the economy will slow significantly and will seek to reduce sales expectations. "Weakening guidance will remain the focus," Subramanian said. That pessimism — the feeling that there is another down leg in the market coming because analysts will inevitably be cutting estimates — is so widespread some feel the risk is now to the upside, particularly later in the year if the economy does not completely fall apart. "With our market implied recession probability rising to 40%, it is increasingly clear that some proportion of the risks have been priced in," Keith Parker at UBS said on Monday.