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Illustration: Rebecca Zisser/Axios

Share buybacks contributed about half of S&P 500 companies’ earnings growth in the first quarter, a new report from JPMorgan shows.

Why it matters: "This is corporate executives saying, 'Rather than investing back into the business by making capital expenditures or buying equipment, I’m just going to buy my own shares,'" says David Kelly, a global market strategist at JPMorgan Asset Management, which published the report.

  • "That says a lot about your view of the long-term prospects for your business."

Quick take: Buybacks accounted for the highest share of EPS growth since 2007, and Q1's share was almost 8 times higher than the average from 2001 to 2018, the bank found.

The big picture: S&P earnings growth has been a major worry for stock analysts this year, after 2018's blowout earnings following the passage of the Tax Cut and Jobs Act. The permanent reduction in corporate taxes was backed by President Trump and Congressional Republicans as a catalyst for a boost in wages and long-term investment.

  • While companies have slightly raised compensation and increased spending on business infrastructure and R&D, the overwhelming majority of tax cut savings has been spent by firms to buy back their own shares.
  • The trend has gotten so strong that Moody's warned in May companies were spending more on buybacks and dividends than they were paying in taxes before the cut.

Remember: Stock prices typically are tied to salaries and job performance reviews for top executives and boards, the very people making the spending decisions.

  • Companies spent more than $1 trillion buybacks last year and are on pace to spend more in 2019.
  • Earnings also were particularly low in Q1, Axios' Felix Salmon points out, making the increased level of buybacks an even larger percentage.

The last word: JPM's Kelly says the rising level of stock buybacks is one major reason he and other market analysts are worried about continued growth of business output, stock prices and the broader economy.

  • "This is probably one of the bigger issues that we’ve been talking about."
  • "It could perpetuate the slower growth environment we’ve seen in this expansion."

Go deeper: Too much money (and too few places to invest it)

Go deeper

Mike Allen, author of AM
44 mins ago - Technology

Axios interview: Facebook to try for more transparency

Nick Clegg last year. Photo: Matthew Sobocinski/USA Today via Reuters

Nick Clegg, Facebook's vice president of global affairs, tells me the company will try to provide more data to outside researchers to scrutinize the health of activity on Facebook and Instagram, following The Wall Street Journal's brutal look at internal documents.

Driving the news: Clegg didn't say that in his public response to the series. So I called him to push for what Facebook will actually do differently given the new dangers raised by The Journal.

The Exvangelicals

Illustration: Aïda Amer/Axios

Even as evangelicals maintain their position as the most popular religion in the U.S., a movement of self-described "exvangelicals" is breaking away, using social media to engage tens of thousands of former faithful.

The big picture: Donald Trump's presidency, as well as movements around LGBTQ rights, #MeToo and Black Lives Matter, drew more Americans into evangelical churches while also pushing some existing members away.

Updated 8 hours ago - Science

Huge wildfire reaches edge of Sequoia National Park

A plume of smoke and flames rise into the air as the fire burns towards Moro Rock during the KNP Complex fire in the Sequoia National Park near Three Rivers, California, on Saturday. Photo: Patrick T. Fallon/AFP via Getty Images

Firefighters in Sequoia National Park were working into the night after two wildfires merged to reach the Giant Forest Saturday.

Why it matters: This forest contains over 2,000 giant sequoias, including the General Sherman Tree — the world's largest tree by volume. Park officials wrapped the redwoods in foil last week as the Paradise and Colony Fires, now known as the KNP Complex Fire, neared. Protection efforts appeared to be working overnight.