After taking a pause the last nine days of 2017, which almost pushed our risk gauges to the point of exiting stocks, a monster rally emerged to start off the year with the Dow Jones Industrials jumping over 2% and the Nasdaq 100 over 3% in the first week of trading.

The laggard is small caps which was not able to close above all-time highs set in early December. If you annualize (you do the math) this week’s gains in the Nasdaq, it makes last year’s run look paltry.

Depending on your political bent the appearance/reality dichotomy exhibited by the markets has never been greater. According to Trump and some of his supporters, the tax cuts and monster stock market rally is solely due to his genius and that under his watch recessions are a thing of the past.

The reality is that the markets are really melting up and have some world class gurus like Jeremy Grantham (he runs $70 billion) saying that we are in or about to enter a parabolic, two sigma blow-off that will last for 6 months to 2 years.

In layman terms, that is called a bubble, parabolic, or irrational exuberance. Grantham also notes that bubbles don’t end well with drops of 50% or more, taking years to recover if ever. His record of identifying bubbles is legendary and well documented. Consider him the best bubbleologist. Think tulip bulb mania as the “classic” and more recent ones like the Internet in 2000 and Housing in 2008.

Another classic bubble was Silver during the Hunt Brothers debacle when in 1980 they tried unsuccessfully to corner the market. It was one that I experienced firsthand as a floor trader and it was a life changing experience. It required special skills and instant reflexes to adapt to extreme conditions.

Ray Dalio, who runs the biggest hedge fund, is nervous looking out over the next few years. He sees parallels today to 1935 when the wealth disparity was huge (top 1% as rich as bottom 90%).

He also sees the tax cuts spurring huge and bigger deficits, rising rates, no trickle down and serious conflict between the haves and have-nots.

On a broader view, the disparity between Trump supporters and those seeing him unfit to serve and mentally incompetent highlights the disparity. Meanwhile, the markets just don’t care, and for now the economy is unaffected, chugging along just fine.

The biggest themes to watch are base metals, silver, energy and emerging markets.