By Richard (Rick) Mills

As a general rule, the most successful man in life is the man who has the best information

The Fed has been dumping billions of dollars into the US markets each and every trading day since late 2010. Because of this massive money creation the dollar became much weaker.

Movements in the dollar influence commodity prices, commodity prices influence bonds, which then influence stocks:

  • A falling weaker dollar pushes up the price of commodities, rising commodity prices tend to push bond prices lower. A falling dollar is bearish for bonds and stocks because it is inflationary
  • A rising dollar is noninflationary so the rising dollar produces lower commodity prices. Lower commodity prices lead to lower interest rates and higher bond prices. Higher bond prices are bullish for stocks
  • Commodity markets move in the same direction as Treasury bond yields and in the opposite direction of bond prices - bond prices and bond yields move in opposite directions

Today's strange market conditions (the dollar up, markets down) are temporary and are providing a huge buying opportunity. Here's why...

As soon as the QE program, part 1 & 2, ended in June, the markets had to get by on a lot less money and liquidity - the effects of QE x 2 have worn off. The stock market and commodities are tanking while bond yields are making new lows - the dollar is getting stronger.

Today the dollar is up because the EU, and the world, have an acute shortage of dollars for the necessary bailouts and needed liquidity, the markets have already priced in a Western recession but do not know how the Greek situation is going to be resolved.

If Greece is allowed to default markets would plunge.

But, massive central bank bond buying will keep both the Italian and Spanish bond markets afloat. This would be perceived as the double threats of a systemic breakdown and a return to the 2008 global crisis significantly receding.

"We are in a fresh cyclical downturn within a structural slump/depression. We need global co-ordinated monetary action and the ECB must cut rates by 50 points. It made a terrible mistake by raising rates in July." Andrew Roberts, credit chief at RBS

The EU will use its bailout fund, the European Financial Stability Facility (EFSF), to purchase bonds and recapitalize banks. French Finance Minister Fran