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Stocks are up sharply on this morning's news that on deal has been struck to reopen the U.S. government. This, combined with the China trade deal and the Trump administration’s proposal to flood the economy with free money (more on this shortly) has opened the door to an early “Santa rally” to 7,000 on the S&P 500.

This is the good news. The bad news is that inflation is surging higher again.

The Trump administration has bet the republic on the notion that the U.S. can somehow grow its way out of its debt issues. This is the proverbial “run it hot” economic framework in which you pursue growth by any means even if it means risking an inflationary storm.

To this end, the Trump administration is proposing everything it can think of from:

1. Inflating a stock market bubble.

2. Inflating a housing bubble, while introducing policies to try to get more buyers in the market (see the proposed 50-year mortgage plan the Trump administration unveiled over the weekend).

3. Running massive fiscal spending programs that are equal to if not larger than those run by the Biden administration.

4. Stimulus checks: including $1,000 to be invested in stocks on behalf of every new child born in the U.S., potentially $5,000 in stimulus checks to every household as a “DOGE Dividend,” and $2,000 in stimulus checks for every American courtesy of tariff revenues, etc.

Put simply, the Trump administration is flooding the financial system with money whether it be in the form of fiscal spending, stimulus checks/ helicopter money, or monetary easing via the Fed.

All of this is highly inflationary. And it is creating what I call the Great Global Melt-Up: a process through which risk assets EXPLODE higher in a massive bubble. The S&P 500 has already hit 28 all-time highs this year. Gold has nearly doubled in value from $2,600 per ounce to $4,400 per ounce. And $BTC and other risk assets have exploded higher too.

The flip side of this is that the USD has collapsed and is on the ledge of a cliff. After all, inflation means a weak-$USD. Oh, and by the way, remember that the Fed hasn’t even started printing money yet!

Is this dangerous? Yes. Will it end horribly? Yes. But as investors, our job is to make money from this… because when this bubble bursts (as all bubbles do), the coming crisis will make 2008 look like a picnic.

So, take advantage of this while it lasts. Inflation is dangerous… but it also presents the opportunity for life-changing gains with the right investments.

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