submits: The first six months of 2009 have been a very good time for the high yield sector. They had fallen sharply in 2008, especially in Q4, when investors sold yield high yield securities to buy Treasuries. In 2009, they rebounded sharply as investors decided to accept risk in pursuit of double digit high yields. But REITs have not shared as much as other groups (MLPs and junk bond funds) in the gains for 2009. The Dow Jones REIT Index began the year at 151, but plunged to 101 at the end of the first quarter. In Q2, the best quarter for stocks in many years, REITs climbed back to 128. REITs had a good gain in early April, but since then have been trading sideways between 120-140. After peaking early in June at roughly 140, the index has been slipping and sliding (as have many stocks). The Alerian MLP Index has a similar price pattern, but its decline from the high and subsequent recovery was more mild.

Economists and others weigh in on . This was a very ugly labor market report , and there is no amount of lipstick that can improve its image. Indeed, not only does it suggest that the pace of job losses in the U.S. remains very high, it bucks the trend of four consecutive months of improvement in the pace of job losses. Moreover, with conditions in the U.S. economy continuing to be very weak, there is little to suggest that a turnaround in U.S. labor market conditions is on the horizon. –Millan L. B. Mulraine, TD Securities Yes, the drop in payroll employment has moderated from the 700,000+ results reported over the winter when panic and paralysis was the order of the day. But, private sector job losses in excess of 400,000 this deep into a recession cannot be viewed as anything but terrible news. –Joshua Shapiro, MFR Inc. The headline payroll drop overstates underlying job losses because of the 49,000 decline in federal employment, which was largely due to the layoff of temporary census workers (which boosted payrolls in April)… Nonetheless, the rate of private sector job losses is slowing (the peak rate of job losses was the November–February period) and we expect that trend to continue… We are encouraged that both the narrow and broad measures of unemployment rose only marginally in June and this, along with the slowing in the rate of private sector job losses, further suggests that the recession is drawing to a close. –RDQ Economics The payroll number is very disappointing . We had hoped to see a third straight movement back towards the 200,000 or so implied by the level of jobless claims, but instead the gap widened again, suggesting gross hiring remains extremely weak. The deterioration from May was mostly in services… In short, labor market is still terrible; don’t be swayed by a small unemployment rate rise. Wages will soon be falling outright, a classic deflation signal. –Ian Shepherdson, High Frequency Economics Services and construction accounted for most...

Credit card companies are raising interest rates and fees seven months before new rules go into effect that will limit their ability do so, much to the irritation of Congress and consumer advocates.

We recently surveyed CFOs of 540 companies in the US, and nearly 800 in Europe and Asia, to gauge the status of credit markets and the world economy. About one quarter of companies has been severely impacted by tight credit markets, and another third has been moderately affected. These financially constrained companies are in a troubling position because they for the most part have negative earnings and have seen their cash holdings shrink on average by about one-fifth over the past year. Finding credit is difficult for them, and when a loan can be secured, the interest rates and fees are high. If these financially constrained firms are losing money, their cash is disappearing, and they can not borrow on favorable terms, what can they do? More than 80 percent have had to postpone or cancel valuable investment projects due to credit tightness. Half have sold assets just to fund their remaining operations. When they do obtain funding, these companies draw heavily on their bank credit lines, rather than using lines as short-term funds or as a bridge as intended. For these companies, credit market conditions have worsened during 2009, despite the historic efforts of the central bankers and Treasury Department. Moreover, many of these firms indicate that they will need to borrow before year-end, though it is not clear whether lenders will be willing to provide them funds. But not all companies are in such dire straights. Among the 40 percent of companies that say they have been largely unaffected by the credit crisis—mainly those that have remained profitable and retained a good credit rating—four out of five have found stable or improved credit conditions during 2009. These stronger companies are able to borrow and the fees and rates they pay have not increased. These firms have been able to build up their cash reserves this year, and they are not leaning heavily on their available lines of credit. While these companies are cautious about their hiring and capital spending...

A public-private government program to take billions of dollars in so-called toxic mortgage securities and other assets off bank balance sheets is expected to be unveiled Thursday.

> Another fascinating take from the new CIO of the USA. Track all of the United States spending, access the raw data and analysis at . USAspending.gov is a re-launch of a prior attempt to put all this info online, I was surprised to see that the top 5 vendors are all defense contractors. I suspect that putting the nitty gritty details of the government’s spending won’t be too great for certain recipients. > Some other USA Spending.gov data series . . . 1. 2. Total Spending 3. Spending Overview by State and Year

I am especially pleased to introduce today’s Think Tank guest, Economist David Rosenberg of Canada’s . For most of you, however, David needs no introduction: A 20 year veteran of the Street, David most recently was Merrill Lynch’s chief North American Economist, where he correctly warned about the Housing and Credit Collapse and Recession in advance. With Non-Farm Payroll scheduled to be released tomorrow, the timing is perfect to hear some thoughts from David about Employment . . . > > A survey conducted by YouGov for the Economist magazine found that 5% of respondents had taken a furlough this year and 15% had accepted a pay cut (see The Recession and Pay: The Quiet Americans on page 33 of this week’s edition). As wages deflate, workers are looking for ways to supplement their shrinking income base, for example, by moonlighting. Indeed, a poll undertaken by CareerBuilder.com and cited in the USA Today found that one in every ten Americans took on an extra job over the last year; another one in five said they intend to do so in the coming year. These numbers are double for the 45 to 54 year olds who now see early retirement, once around the corner, as an elusive concept. Most pundits who crow about green shoots and about an inventory restocking in the third quarter giving way towards some sustainable economic expansion live in the old paradigm. They don’t realize, for whatever reason, that the deflationary aftershocks that follow a post-bubble credit collapse typically last for 5 to 10 years. Businesses understand better than the typical Wall Street or Bay Street economist and strategist that everything from order books, to output, to staffing have to now be restructured to adequately reflect a permanently lower level of leverage in the economy. Indeed, by our estimates, there is up to another $5 trillion of household debt that has to be eliminated in coming years and that process is going to require that consumers go on a semi-permanent spending diet. Companies...

I've already posted most of the data in this article ... so I'll just excerpt a quote. From Bloomberg: (ht mark, ghostfaceinvestah, brian) As many as one in five U.S. hotel may default on their loans by the end of 2010 as the recession forces companies to spend less on travel and perks, according to Kenneth Rosen, an economist at the University of California. The value of hotel properties in default or foreclosure almost doubled to $17.3 billion in the second quarter through June 24 from $9 billion at the end of the first quarter, data compiled by Real Capital Analytics Inc. show. The New York-based research firm, which began tracking distressed commercial property in November, expects hotel defaults to increase by as much as $2 billion next quarter, said analyst Jessica Ruderman. “Hotels without question will have the highest foreclosure rate of any commercial real-estate sector,” said Rosen ... The hotel segment was the most overbuilt of all CRE - and that is saying something with all the excess retail space!

David H. Stevens, president of the Washington, D.C., real estate firm Long & Foster, is a step closer to being head of the Federal Housing Administration.

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New York Fed purchases $2.999 billion in Treasury coupons

In general, the suburbs continue to grow faster than cities, and probably will for some time. But the country’s ten largest cities are bucking that trend. Today’s notes how cities are growing faster in the recession, while suburbs are growing slower. As with most demographic changes this one is the result of a whole slew of factors, from yuppies who prefer a denser urban lifestyle to immigrants returning to city centers. Immigrants also tend to be younger, and have slightly higher birthrates, driving births in city centers. And then there is the recession and housing mess: Between underwater mortgages, lost jobs and uncertainty about the future, U.S. migration has slowed down at just about every level, including that mid-life move from the city to the burbs. The central-city population in U.S. metropolitan areas with more than one million people (excluding New Orleans, where recent growth rates reflect residents returning to the city following Hurricane Katrina) grew at an annual rate of 0.97% between July 2007 and July 2008, according to Brookings demographer William Frey . That compared with a growth rate of 0.90% in 2006-2007, and growth rates around 0.5% in the years between 2002 and 2005. It makes sense when you consider suburban boundaries continue to expand, and anyway most of America already lives, works — and reproduces — in the suburbs. Hard to stop a speeding train. But demographer Mark Mather at the Population Reference Bureau has . America’s ten largest cities are now growing faster than the areas outside them. That’s a significant change from only a few years ago, as his chart nicely illustrates. It’s worth noting that this was a trend that started before the recession. There’s an open question as to whether this will reverse in recovery (there’s an open question about how everything will look after the recovery). And contrary to the wishes of some, suburban living and car-based commuting will remain the preference of most Americans. But it’s safe to say...

Investors who stuffed themselves on a constant diet of asset appreciation for the past quarter-century will now be enclosed in a cage featuring government-mandated, consumer-oriented fasting.

Regular TBP reader Steve Barry created ; We first ran this back in , and it was lifted and ran all over the internet (mostly without attribution). Here is Steve’s updated version: > > hat tip Steve Barry

The Office of the Comptroller of the Currency says . Delinquency rates on the least-risky mortgages more than doubled in the first quarter from a year earlier as U.S. efforts to help homeowners failed to keep pace with job losses that pushed more borrowers toward foreclosure. Prime mortgages 60 days or more past due climbed to 2.9 percent of such loans through March 31 from 1.1 percent at the same point in 2008, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said today in a report. First-time foreclosure filings on the loans rose 22 percent from the fourth quarter, the report said. “I’m very concerned about the rise in delinquent mortgages and foreclosure actions,” Comptroller of the Currency John Dugan said in a statement with the report. President Barack Obama’s plan to create “sustainable, payment-reducing modifications is a positive step that should show significant benefits in the coming months,” Dugan said. Obama’s program, unveiled Feb. 18, aims to help as many as 4 million homeowners by modifying loans and calls for Fannie Mae and Freddie Mac to refinance mortgages for as many as 5 million borrowers who owe more than their houses are worth. Foreclosure filings surpassed 300,000 for a third straight month in May, according to RealtyTrac Inc., and the U.S. economy has shed about 6 million jobs since the recession began in 2007. Serious delinquencies on prime loans, which account for two-thirds of all U.S. mortgages, rose to 661,914 in the first quarter from 250,986 a year earlier, according to the report . Overall, mortgages 60 days or more past due rose 88 percent from last year, the report said. “Serious delinquencies are a leading indicator of increased foreclosure actions in the future,” the report said. The data shows 5.9 percent of the 21.8 million Fannie Mae and Freddie Mac loans serviced by national banks or thrifts were at least days 30 days late, in foreclosure or subject to bankruptcy, compared with 3.2 percent a year...

Earlier I posted some graphs on the surge in prime delinquecies from the See: Here is some info on types of modifications: While 185,156 mortgages were modified in the first quarter of 2009, 122,398 were “combination modifications” that changed more than one term of the loan. Of the modifications made in the first quarter of 2009, 70.2 percent included a capitalization of missed payments and fees, 63.2 percent included a reduction in interest rate, and 25.1 included an extended term. By comparison, 12.6 percent of the mortgages received modifications that froze the interest rate, 1.8 percent included a reduction of principal, and 1.1 percent included a deferral of principal. All modification actions during the quarter are indicated in the table below. Since nearly two-thirds of the modifications changed more than one loan term, the sum of the percentages in the table exceeds 100 percent. The types of actions taken have different effects on the borrower’s principal and interest payments and may, over time, have different effects on the long-term sustainability of the loan. Of the nearly two-thirds of modifications that were combination modifications that involved two or more changes to the terms of the loan, 83.4 percent of them included capitalization of missed payments and fees, 86.1 percent included reduced interest rates, 36.3 percent included extended maturities, 12.4 percent included interest rate freezes, 2.8 percent included principal reductions, and 1.6 percent included principal deferrals. Click on graph for larger image. In normal times, a capitalization of missed payments and fees is effective - because usually the homeowner fell behind for a short period because of a lost job or an emergency expense. However, in these times with many homeowners underwater (with negative equity), capitalization isn't very effective. A reduced interest rate or longer term might be helpful. And here are the re-default rates. This graph shows that about 30% of modified loans...

Delinquencies and foreclosures on first-lien mortgages continued to increase during the first quarter of this year, but loan modifications also increased and the trend continued toward more sustainable modifications with lower monthly payments, according to a report issued today by the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS).

submits: at Rortybomb wades into the CRA debate with a very good point: toxic subprime loans bear almost no relation to CRA loans. 80% of the subprime mortgages expired in 30 months; they perpetually had to be refinanced. 75%+ of subprime mortages had a prepayment penalty. This is not at all what CRA loans looked like. CRA rooted for solid, longer-term mortgages.

WASHINGTON (Reuters) - World Bank President Robert Zoellick said on Tuesday that financial markets are showing signs of stabilization, but warned that the global crisis was far from over in developing countries.

The Obama administration sent Congress a detailed proposal on Tuesday to create a consumer protection agency responsible for financial products, a move that marks the first shot in a heated battle with banks and other financial institutions over how to regulate home mortgages, credit cards and other forms of lending.