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Axios' Dan Primack (left) and Joe Kaiser, Mercato Partners. Photo: Axios

Public markets have adopted a venture capital mentality during the coronavirus pandemic, Mercato Partners' director Joe Kaiser said on Wednesday during an Axios virtual event.

The big picture: The divergence between capital markets and the "real economy" — defined by mass unemployment and Americans lining up at food banks — can be seen in highly optimistic fund managers and BlackRock's latest forecast that expects stocks to keep rallying into 2021.

What they're saying: Kaiser believes that public markets are focused on what companies will be worth five years from now, instead of near-term net profit or earnings per share (EPS).

  • "I think that's why we had this peculiar disconnect as people, investors, public market investors see the light at the end of the tunnel from a COVID standpoint and the sort of the restart of the economy."
  • "And that's why we're we're ending up with these valuations that look frothy relative to the bread lines that you mentioned," he added.

The bottom line: There could be consequences if "growth rates can't keep up with market expectations," Kaiser acknowledged.

Go deeper

Tesla mania vs. economic reality

Data: YCharts; Reproduced from Razum Capital; Chart: Axios Visuals

Tesla is now more valuable than the combination of the world’s top seven traditional auto makers, despite only delivering half a million cars this year.

Why it matters: Anyone searching for evidence that the stock market and the real economy are not the same thing, should look no further.

In cyber espionage, U.S. is both hunted and hunter

Illustration: Eniola Odetunde/Axios

American outrage over foreign cyber espionage, like Russia's SolarWinds hack, obscures the uncomfortable reality that the U.S. secretly does just the same thing to other countries.

Why it matters: Secrecy is often necessary in cyber spying to protect sources and methods, preserve strategic edges that may stem from purloined information, and prevent diplomatic incidents.

1 hour ago - Politics & Policy
Scoop

White House plots "full-court press" for $1.9 trillion relief plan

National Economic Council director Brian Deese speaks during a White House news briefing. Photo: Alex Wong/Getty Images

The Biden White House is deploying top officials to get a wide ideological spectrum of lawmakers, governors and mayors on board with the president’s $1.9 trillion COVID relief proposal, according to people familiar with the matter.

Why it matters: The broad, choreographed effort shows just how crucially Biden views the stimulus to the nation's recovery and his own political success.

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