Palantir (PLTR) and Animal Spirits
As of this writing PLTR is valued at 64x MV/2025 Revenue. 214x MV/LTM operating cash flow. This equity market is more unhinged than 2021’s everything bubble and 1999’s .com bubble.
These more than lofty equity valuations are what happens when massive amounts of liquidity are injected into an economy. In the case of the U.S., we have had $11 Trillion in deficit spending from 2020-2024. That’s more than all of the previous years of American history combined. That fiscal liquidity injection was augmented by the Federal Reserve’s wrong-headed idea to more than double the size of its balance sheet from January 2020-April 2022.
No wonder the Dollar has crashed versus Gold since 2020. No wonder real world prices are through the roof. No wonder the equity market is plagued by animal spirits.
The good news is that excess liquidity is drying up. Has anyone noticed that the overnight reverse repo market is now at $98 billion? That’s down from a peak of $2.6 Trillion.
However, don’t expect real world prices to come down anytime soon, regardless of what CPI may tell you. Real world prices are what they are, unlike CPI, which plays with weightings, rotations, and hedonics to artificially suppress reported price increases.