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Illustration: Eniola Odetunde/Axios

Earnings from big banks were expectedly awful on Tuesday, but much more important than JPMorgan's 69% profit drop or Wells Fargo's $0.01 earnings per share in the first quarter, were details about their cash holdings.

What we learned: JPMorgan, the largest U.S. bank, added $8.3 billion to its reserves last quarter, more than five times what it held in the same quarter last year, and Wells Fargo set aside $4 billion, an increase of $3.1 billion.

Why it matters: The holdings suggest the banks are doing more than preparing for “the likelihood of a fairly severe recession” as JPMorgan CEO Jamie Dimon put it.

  • "[T]he banks’ maneuvers to steel themselves for losses reflect their calculations that the $2 trillion economic relief bill, which includes direct payments to low-earning Americans as well as $349 billion in forgivable loans to small businesses, will not be enough to stave off widespread financial instability for everyday Americans and their employers," my former colleague Emily Flitter writes for The New York Times.

Be smart: The banks are quite literally exchanging their profits for the cash to ride out the pandemic and protect against losses on loans to customers, Flitter adds.

  • "JPMorgan’s net income fell to $2.9 billion from $8.5 billion for the last quarter of 2019 and $9.2 billion for the same period a year earlier — with the bank’s new reserves essentially the difference. Wells Fargo reported a steep drop in profit to $653 million from $5.9 billion during the same period in 2019."

The intrigue: Many of the bank's high-income customers appear to be taking similar action. Deposits rose 23% at JPMorgan during the quarter and grew in every line of business. Wells Fargo saw deposits rise by 4% to $1.4 trillion.

Go deeper: Banks' first-quarter profits are expected to get rough

Go deeper

2 hours ago - World

Maximum pressure campaign escalates with Fakhrizadeh killing

Photo: Fars News Agency via AP

The assassination of Mohsen Fakhrizadeh, the architect of Iran’s military nuclear program, is a new height in the maximum pressure campaign led by the Trump administration and the Netanyahu government against Iran.

Why it matters: It exceeds the capture of the Iranian nuclear archives by the Mossad, and the sabotage in the advanced centrifuge facility in Natanz.

Scoop: Biden weighs retired General Lloyd Austin for Pentagon chief

Lloyd Austin testifying before Congress in 2015. Photo: Chip Somodevilla/Getty Images

Joe Biden is considering retired four-star General Lloyd Austin as his nominee for defense secretary, adding him to a shortlist that includes Jeh Johnson, Tammy Duckworth and Michele Flournoy, two sources with direct knowledge of the decision-making tell Axios.

Why it matters: A nominee for Pentagon chief was noticeably absent when the president-elect rolled out his national security team Tuesday. Flournoy had been widely seen as the likely pick, but Axios is told other factors — race, experience, Biden's comfort level — have come into play.

Updated 4 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: WHO: AstraZeneca vaccine must be evaluated on "more than a press release."
  2. Politics: Supreme Court backs religious groups on New York COVID restrictions.
  3. World: Thailand, Philippines sign deal with AstraZeneca for vaccine.
  4. Economy: Safety nets to disappear in December Black Friday shopping across the U.S., in photosAmazon hires 1,400 workers a day throughout pandemic.
  5. Education: National standardized tests delayed until 2022.