"It's hard to argue the world isn't manic right now.
Global central banks have pumped $15 trillion in cheap money stimulus into capital markets since 2009. Long-term government bond yields are at the lowest levels in recorded human history. As of last summer, there was $9.5 trillion of debt carrying a negative yield. Austria issued a 100-year bond in September with only a 2.1% coupon.
The S&P 500 rose on a total return basis in each month of 2017 for the first time ever and has climbed in 21 of the last 22 months. The Dow Jones Industrial Average just crossed 25,000. The NASDAQ, 7,000. The only time stocks have been more expensive, on a cyclically adjusted price-to-earnings basis, was in the final stages of the dot-com bubble. Corporate profits remain below the highs hit more than three years ago. When the Dow was trading near 18,000.
On a relative strength indicator basis, stocks haven't been this overbought since the 1950s. Corporate bond issuance pushes to new highs as bond spreads test record lows. Thanks to debt-funded share buybacks, 40% of post-recession earnings growth has been fueled by financial gimmickry. In Europe, junk bond yields have fallen below comparable US Treasuries. Measures of investor sentiment and positioning are off the charts. (e.g., Investor cash levels at Charles Schwab have fallen below the depths seen as the last two stock bubbles were preparing to pop.)
Oh, there's more.
Private market unicorns are badly overvalued. Corporate leverage is extremely high. Private markets are drowning in cheap cash. Underfunded pension plans are taking more aggressive bets on alternative assets in a desperate attempt to close asset-vs.-liability deficits in a low-return world, increasing the likelihood of a taxpayer bailout when it all goes sideways.
And the tail-eating dynamic seems to have accelerated over the last couple of months, as asset prices become more extreme and startup ideas more bizarre.
Bitcoin's rise has eclipsed the Dutch Tulip Mania, as crypto true believers bounce between bitcoin, Bitcoin Cash, Ethereum, and Ripple, chasing momentum as new coin-based billionaires are created seemingly overnight. Ripple's founder, for example, is now worth more than Mark Zuckerberg. Struggling publicly traded companies are enjoying huge rallies by simply adding "blockchain" to their name.
Doug Evans—the Silicon Valley entrepreneur behind the $400 Juicero press that squeezed juice from $8 bags of fruits and veggies about as well as your hands could—is making a comeback as one of the proponents for "raw water," which is unfiltered, contains no additives and turns green from microorganisms if left too long. You know, ones like Vibrio cholerae, the bacteria that causes cholera and kills upward of 143,000 people per year, according to the World Health Organization."
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Half decent job of summing up the current situtation, IMO.
However, we know it all already and nothing is changing.
Maybe, this stuff is just the new normal. Only time will tell.
