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Wednesday marked the start of earnings season, with BlackRock, the world's largest money manager, and JP Morgan Chase, America's largest bank, first up to the plate.

This is the first earnings season that will shed light on how major banks and financial institutions are handling the fallout of the war in Ukraine and the shift among central banks to higher interest rates.

No Bets on Hope

JPMorgan's first-quarter results were headlined by a $524 million loss tied to Russia's invasion of Ukraine. The extreme volatility in nickel markets, which went so haywire trading even halted at certain points, led to $120 million of those losses. Worse yet, the bank's net income of $8.3 billion in the first three months of 2022 was down 42% compared to Q1 2022 and fell short of analyst estimates. Eating away at profits was a $900 million increase in credit reserves, $300 million for markdowns associated with Russia, and $600 million due to a greater risk of a US recession.

"I hope those things all disappear and go away, we have a soft landing and the war is resolved," Jamie Dimon, JP Morgan's CEO, told analysts. "I just wouldn't bet that at all." One thing Dimon will bet on: himself. JP Morgan said it approved a $30 billion share buyback program, suggesting confidence in its long-term prospects.

BlackRock Solid: BlackRock managed to increase its net income 18% year-over-year to $1.4 billion in the first quarter, beating analysts' forecasts. CEO Larry Fink said he's optimistic an "investment boom" in green energy is beginning as countries shift their energy reliance away from Russia, but even BlackRock's results made clear the world is still a long way from reaching Putin-zero. The asset manager has taken $17 billion in losses on Russian securities due to the war. As well, Blackrock's inflows fell to $86 billion, half the $172 billion in Q1 2021 and down 59% from the $212 billion in Q4 2021. That suggests investors are sheepish about the market amid all the macro forces driving uncertainty right now. BlackRock's assets under management also fell to $9.6 trillion, below the record symbolic threshold of $10 trillion the firm passed at the end of 2021.

The Bottom Line: Get used to quarterly reports chock-full of Russia caveats.