47x Revenue for Figma (FIG). Nothing To See Here.
Fundamentals no longer matter and have not mattered since 2020 because of poor Government policy - Fiscal and Monetary.
One could argue that the Fed has been dovish since its founding in 1913, but for me behavior started to change under Greenspan in the early 2000s with near-zero rate monetary policy. Greenspan worked to prop-up the U.S. economy after the Tech bubble burst, combined with the post-9/11 economic fallout.
Bernanke and Yellen kept the ball rolling with low rates and QE, which of course only further inflated the credit bubble coming off of the 2008 credit crunch (fueled by lax bank reserve standards). The 2004-2007 housing bubble was a function of the Fed’s lenient bank regs, only to fuel a new, much bigger mortgage bubble some 13 years later when fiscal and monetary policy lost its collective mind in response to the flu blowing through in February 2020.
Powell went on his massive, historic, shameful, QE buying spree in 2020, purchasing $90 billion of Treasuries each month and $30 billion of Agency bonds (not to mention the special non-recourse lending programs, and the Fed’s buying of corporate issues, namely Apple, which did not require the Fed’s capital), in his desperation to prove he was a “team player”. And now Powell complains about Fed independence.
This is to say nothing of the entirely irresponsible fiscal policy which has operated at deficit levels of approximately $2 Trillion since 2020. The combination of hot fiscal and monetary policy has led to the everything bubble and a greatly devalued Dollar over the past 5 years.
We don’t have an equity market. We have a Government-subsidized equity trading house that leads to companies like Figma (FIG) trading at 47x trailing revenue and Systems Integrators like Palantir (PLTR) trading at 124x trailing revenue.
Meanwhile, Treasury Secretary Scott Bessent plans to fund the Government at the short-end of the yield curve. Of the $28 Trillion in Marketable Treasury Debt outstanding, approximately $6 Trillion is comprised of T-Bills (21%). If that T-Bill figure grows to $9-10 Trillion, Bessent will need to find buyers. That is why the banks are now operating under more lenient capital requirements as of this year. They will be the buyers, gorging on short-term Treasuries. Private capital will not buy this shit paper. In addition, Bessent needs the Fed Funds rate to come down to 1% as the U.S. will be rolling over one-third of its Marketable debt every 30 days. Talk about risky!
Imagine when this next equity bubble bursts because the U.S. has over-extended its credit? How many more printing cycles does the Fed have in its coffers and stimulus checks can Treasury hand out before the Dollar gets clobbered and Gold goes to $10K while eggs go to $25/dozen?
The fact that the 10-year Treasury yield isn’t higher tells you that Treasury traders are 40 years old and younger.
I have bitched about fiscal and monetary policy since 2020 because the fiscal health of the U.S. is being destroyed, the Dollar is wasting away, yet the public is not panicked enough to demand fiscal austerity. Perhaps the answer is that the public is only too happy to receive 10 cents back for every Dollar they pay into Social Security and Medicare/Medicaid, just like they were all too happy to take an experimental drug in 2020. Perhaps the public craves a welfare state. The U.S. is not far away from Western Europe in that regard.
We need more John Smiths, Samuel Whittemores, and scrappy entrepreneurs. We don’t need ANY Washington politicos. Not a single one across Congress, the Executive Branch, the Judiciary, nor the alphabet soup of agencies staffed with unelected people who pissed away more than $7 Trillion last year.