Things have gotten pretty crazy out there.

No, "crazy" isn't the right word. I should say "complacent".



Known as Wall Street’s “fear gauge”, the Vix has been trading at historically low levels for a few years, stymieing the efforts of traders to make money and raising concerns about investor complacency.

...The Vix fell 1.4 per cent on Friday to 9.75, the lowest closing level since 1993 and a steep drop from its long-term average of 20.

What's wrong with that?

Is it wise to believe that stock prices have almost no chance to fall when prices are already too high?

When the markets have no fear, and everything is already expensive, strange things can happen.

100-year bonds from who!?!



This week, Argentina startled the markets by issuing $2.75bn worth of century bonds, with an effective yield of 8 per cent. You might have thought this would be a hard thing to sell. After all, Argentina has defaulted on its debts eight times in its 200-year history, with no fewer than five defaults in the past century alone, most recently in 2014 amid a legal dispute with the Elliott hedge fund.

....But investors do not seem to care: there were $9.75bn of bids. And Argentina is not the only peculiar event in bond markets this month. Take a look, for example, at Ivory Coast. In recent weeks, this west African nation underwent yet another military uprising. But this month it sold 16-year bonds with a 6.25 per cent yield — and these were also heavily oversubscribed.

A gold rush on bad debts???



Bad loans are rapidly becoming the latest hot commodity in China as more domestic and foreign investors rush into the market and bid up prices.

Non-performing loan prices have risen more than 30 percent this year, according to distressed investor Belos Capital Asia Ltd. The average selling price of NPLs has climbed to around 50 cents on the dollar in the past two years, from 30 cents, said Victor Jong, a partner in the deals and business recovery services unit of PricewaterhouseCoopers LLP in Shanghai. Such a high level is “very rare” in international markets, Jong said.

...Non-performing loans at the country’s lenders jumped 61 percent in the past two years to 1.58 trillion yuan ($231 billion) at the end of March.

In the previous NPL cleanup in China, between 2001 and 2008, secured debt was typically sold at 20 cents on the dollar, and unsecured creditors got back only 5 cents, said Wang Yingyi, a partner at Bald Eagle in Beijing.

These examples are obviously bizarre, but the craziest examples are in the tech field.

Let's consider Netflicks. I was watching Orange is the new black last night. Little did I know I was also watching a bonfire of cash.



On Monday, Netflix reiterated that it expects to have a negative free cash flow of $2 billion in 2017, versus $1.7 billion in 2016.

Netflix is confident it will make that money back over the long run, but expects negative free cash flow "to accompany our rapid growth for many years." It's that "many years" part that has Wall Street a bit concerned.

Netflicks is far from alone.

Uber is losing money by the billions, and investors don't care.



The ride-hailing startup said Wednesday it lost $708 million in the first three months of the year. The financial data was paired with Uber announcing its search for a chief financial officer.

To many readers, the loss is nothing short of staggering. But for Uber's investors, it's actually something to be applauded.

Snapchat, Twitter, the list of tech companies hemorrhaging cash seems endless.

And yet, that isn't anywhere close to the craziest thing in the tech world.

For the truly insane you must look at cryptocurrencies.



Bitcoin has clearly become more user-friendly in its eight years of existence, and the other cryptocurrencies and blockchains will certainly follow that trend.

But if you look at Ethereum, right now the world’s second biggest blockchain platform, you need to be a HIGHLY experienced software developer in order to create one of its ‘smart contracts’.

Again, look at the Ether token that runs on the Ethereum blockchain; on January 1st of this year the Ether price was less than $10. Today it’s nearly $350. That’s a 35x jump in just over six months. It’s hard to find another asset with that sort of performance. Ever.

Even John Law’s doomed Mississippi Company stock in the 1700s only increased 20x in a year.

In fact, Ether has outperformed the 17th century Dutch tulip bubble, the 18th century South Sea Bubble, and the 20th century dot-com bubble.

Yes, yes. The explosion in prices is nuts...and yet that wasn't what I was talking about.

What I want to talk about is something even more strange - an ICO.

No, not an IPO (initial public offering). I mean ICO, Initial Coin Offerings.



Last month, the technology developer Gnosis sold $12.5 million worth of “GNO,” its in-house digital currency, in 12 minutes. The April 24 sale, intended to fund development of an advanced prediction market, got admiring coverage from Forbes and The Wall Street Journal. On the same day, in an exurb of Mumbai, a company called OneCoin was in the midst of a sales pitch for its own digital currency when financial enforcement officers raided the meeting, jailing 18 OneCoin representatives and ultimately seizing more than $2 million in investor funds. Multiple national authorities have now described OneCoin, which pitched itself as the next Bitcoin, as a Ponzi scheme; by the time of the Mumbai bust, it had already moved at least $350 million in allegedly scammed funds through a payment processor in Germany. These two projects—one trumpeted as an innovative success, the other targeted as a criminal conspiracy—claimed to be doing essentially the same thing. In the last two months alone, more than two dozen companies building on the “blockchain” technology pioneered by Bitcoin have launched what are known as Initial Coin Offerings to raise operating capital. The hype around blockchain technology is turning ICOs into the next digital gold rush: According to the research firm Smith and Crown, ICOs raised $27.6 million in the first two weeks of May alone.

If you don't understand what an ICO is, try watching this Max Keiser video.

If it still makes no sense to you, well, you aren't alone.

To me this smells like Ponzi Scheme, which often pop up at the peak of bubbles.