Impending Economic Crisis: Bond Market Is Going To Implode In The Beginning of Q4 2013 As Basel III Goes Into Effect!!! The Economy And Stocks Makes Almost No Sense!!!

Yields have been steadily moving up since Q1, had some big volatility in May and June, but they pumped some more in…it will begin when Basel III goes into effect in Europe and the USA, the beginning of Q4 2013…

CLICK ON CHART TO ENLARGE
The yield on the 30-year bond created a bullish inverse head & shoulders, suggesting rates should rise quickly....and they have over the past 90-days.
http://blog.kimblechartingsolutions.com/2013/08/joe-friday-interest-rates-should-rise-13-more/
More QE Would Be Repeating The Same Thing And Expecting Different Results
http://soberlook.com/2013/08/qe3-act-of-doing-same-thing-and.html#ixzz2b6xsChlX

Basel III is going to force the Mega-Banks to increase their capital reserves, but as the Fed begins to taper off the purchases of Mortgage Backed Securities, the banks will be forced to sell Treasuries they’ve accumulated from the Feds purchases of MBS for cash…
Basel III is scheduled to go into effect at the beginning of Q4…
We could well begin to see some violent moves in the markets even here in August as banks try to position themselves for the regs, hence Duetche Bank’s deleveraging lately, so yes, September, October…
We’ll see the headlights in the tunnel by the end of the year for sure…
Basel III: How The Bank For International Settlements Is Going To Help Bring Down The Global Economy
The new set of regulations is known as “Basel III”, and it was developed by the Bank for International Settlements.  The Bank for International Settlements has been called “the central bank for central banks”, and it is headquartered in Basel, Switzerland.  58 major central banks (including the Federal Reserve) belong to the Bank for International Settlements, and the decisions made in Basel often have more of an impact on the direction of the global economy than anything the president of the United States or the U.S. Congress are doing.  All you have to do is to look back at the last financial crisis to see an example of this.  Basel II and Basel 2.5 played a major role in precipitating the subprime mortgage meltdown.  Now a new set of regulations known as “Basel III” are being rolled out.  The implementation of these new regulations is beginning this year, and they will be completely phased in by 2019.  These new regulations dramatically increase capital requirements and significantly restrict the use of leverage.  Those certainly sound like good goals, the problem is that the entire global financial system is based on credit at this point, and these new regulations are going to substantially reduce the flow of credit.  The only way that the giant debt bubble that we are all living in can continue to persist is if it continues to expand.  By restricting the flow of credit, these new regulations threaten to burst the debt bubble and bring down the entire global economy.
http://theeconomiccollapseblog.com/archives/basel-iii-how-the-bank-for-international-settlements-is-going-to-help-bring-down-the-global-economy
Banks May Face Extra Basel Capital Rules for Interest Rate Risks
Global regulators may force banks to hold more capital to guard against the risk that they may lose money from changes in interest rates, Stefan Ingves, chairman of the Basel Committee on Banking Supervision, said today.
Authorities will examine “the need for a capital framework for interest rate risk” on assets that lenders plan to hold to maturity, Ingves said in prepared remarks for a speech in Basel, Switzerland today. Such a move may improve consistency with capital rules on assets banks intend to trade, Ingves said.
http://www.bloomberg.com/news/2013-03-12/banks-may-face-extra-basel-capital-rules-for-interest-rate-risks.html
And as the chart below shows, mortgage rates have a lot more room to go up…

As mortgage rates go up, so do monthly payments.
And monthly payments are already beginning to soar.  Just check outthis chart.
So what happens if mortgage rates eventually return to “normal” levels?
Well, it would be absolutely devastating to the housing market.  As mortgage rates rise, less people will be able to afford to buy homes at current prices.  This will force home prices down.
To a large degree, whether or not someone can afford to buy a particular home is determined by interest rates.  The following numbers come from one of my previous articles…

A year ago, the 30 year rate was sitting at 3.66 percent.  The monthly payment on a 30 year, $300,000 mortgage at that rate would be $1374.07.
If the 30 year rate rises to 8 percent, the monthly payment on a 30 year, $300,000 mortgage at that rate would be $2201.29.
Does 8 percent sound crazy to you?
It shouldn’t.  8 percent was considered to be normal back in the year 2000.

http://theeconomiccollapseblog.com/archives/why-another-great-real-estate-crash-is-coming
Fisher Warns Feral Hogs: “Don’t Rely On Fed Put”
“Financial markets may have become too acustomed to what some have depicted as a Fed put,” Dallas Fed’s Fisher warns, causing “serious misallocations of capital.”

• *FED’S FISHER SAYS U.S. INVESTORS CAN’T RELY ON A FED ‘PUT’
• *FED’S FISHER RECOMMENDS TAPERING STARTING ‘THIS FALL’
• *FISHER: FED MUST AVOID ‘MARKET HAVOC’ IN BOND-PURCHASE TAPERING

Once again, the non-voting ‘feral hog’ caller is a voice of some reason amid the calls for moar…
http://www.zerohedge.com/news/2013-08-05/fisher-warns-feral-hogs-dont-rely-fed-put
http://www.bloomberg.com/news/2013-08-05/dallas-fed-s-fisher-says-u-s-investors-can-t-rely-on-fed-put-.html
Treasury Sell-Offs In Context, And Why There Is Much More Room To Fall
While many people doubted early in the year that a 1994-style sell off in the Treasury bond complex is inconceivable, this is precisely what we got in the two months between May and July, as we showed previously.

But while the bond rout of 1994 is merely one example of a rapid Treasury selloff, there are many more, and many that put both 1994 and the (first?) great bond dump of 2013 to shame.
http://www.zerohedge.com/news/2013-08-05/treasury-sells-offs-context-and-why-there-much-more-room-fall
The rich are saving cash at a record pace
It seems so long ago. But in 2009, many of the wealthy were stunned to find themselves in a cash crunch. Despite all the talk of cash cushions and risk management, many of the wealthy suddenly realized that they had overborrowed, overspent and overconcentrated on a single asset or industry.
We had suddenly entered the new age of the High-Beta Rich, where the wealth was volatile and far more cash was needed to absorb the shocks of financial markets.
Four years later, the lesson still holds.
A study from Spectrem Group asked wealthy and affluent investors “what do you wish you had done differently in the crisis.”
http://www.cnbc.com/id/100935856
Retail investors most bearish in 7 months: Survey
Retail investors took profits in July on fears about the Federal Reserve’s exit plan from its monster monetary stimulus, with the group showing the lowest sentiment reading since January, according to data culled from the largest pool of retail traders by TD Ameritrade.
The firm’s proprietary “Investor Movement Index” released Monday showed a 4.87 reading, down from a bullish 5.15 reading in June. They were net sellers of equities last month, especially in shares of 2013 highfliers like Hewlett Packard, Cisco andTime Warner Cable.
“I think its taper fears,” said Steve Quirk, senior vice president of TD Ameritrade’s Trader Group. “The investing public is not stupid. They know it’s coming and this is probably a point that if you’ve seen appreciable gains, you should start to take them off the table.”
http://www.cnbc.com/id/100939544
That’s the beginning of the end…

CHART OF THE DAY: This Chart Of The Economy And Stocks Makes Almost No Sense


Bloomberg, Business Insider
Read more: http://www.businessinsider.com/gdp-growth-expectations-vs-the-sp-500-2013-8#ixzz2b89Yakz6
Saddletramp