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>> just to recap for you, prince alwaled and his partners have announced a bid to take 2.7% of the bank of china. they are coming through with an i.p.o. and he is making a bid, him and his partners for $2 billion to get 2.7% of the bank of china. this was just released a little while ago and looks like it was a press release statement to announce the i.p.o. bid. that is the latest that we have got on this. in term of the housing market , we had sales of new homes unexpectedly went up last month. in fact, it was the highest pace so far this year. it would have been a decline except that march’s figures turned out to be lower than what the commerce department first reported. earlier this morning we learned that mortgage applications fell last week and that was the sharpest drop since the beginning of february. with us to dig a little deeper in the numbers is david cider, the chief economist at the national association of homebuilders coming with us to washington today. thanks for your time and tell us your reasons about the data. wed what two pieces f data that came out regarding the housing market . seemingly saying different things. what do you think?
>> certainly nice to see the new home sales for april rise around 5%. we all expected them to be down. but as you mentioned, there was major downward revisions to march and actually the entire first quarter. i think this so-called rebound is probably temporary to begin with and certainly does not erase the sort of the downward trend that i think is still in place. the mortgage applications off last week. that’s been a little up and down as well. we use a four-week moving average on that one and on that basis the last couple of week don’t look that bad. that also is well off the high. highs for all of the series somewhere probably in the third quarter of last year. i think moment sum still somewhat downward.
>> what are your expectations, though, for how slow this market is relative, of course, to the highs that we saw in 2005?
>> on a year to date basis, these home sales, despite the april rebound, are off about 11% compared to the first four month of last career. i’m looking at my forecast with a 12% down for the year as a whole, feeling like the down slide might be somewhat deeper than that. and i think that there’s no doubt that housing is in somewhat of a retreat pattern. i think that in terms of g.d.p. contributions, we did deliver a positive in the first quarter. i think beyond that we’ll probably turn into this drag on the economy that we have been anticipating for some time. i think the overall pattern that i have been looking for is still evolving and hopefully that business capital investment side will pick up some of the slack, certainly the durable goods orders were not terribly reassuring on that front.
>> david n a market like this, you hear about more incentives from the builders. what are you hearing that the builders are doing to try and keep the moment numb this market ? • to keep the momentum in the market ? .
>> i do survey builders directly and they have our surveys in hand through the early part of may. we have been seeing the measures of builder added to deteriorate substantially since the middle of last year. i asked about what they are doing about things. we are getting a large number of builders offering various kinds of sales incentives both to bolster sales and prevent cancellations. cancellations don’t show up in this report at all. we are seeing builders give away amenities and buy buyer’s closing costs, upfront financing point and buying down mortgage rates for a couple of year, rolling out the same kinds of incentives they used in the past when market conditions got tougher that. game is really on right now.
>> would you say, david, that the market , the housing market is actually softer than what these numbers would indicate on the face of it?
>> i would say anybody that thinks the housing market is now in a recovery phase because of the april new home sales number probably should be locked up. this market is well off the highs of last year on a trend basis. it’s still moving downward. and as i said, the first quarter was revised down pretty dramaticcally. we all know that these numbers particularly ton preliminary basis can be extremely volatile, so this one might get revised down when the next is report put out. >> what everyone care about, of course, is how much less is their home worth today than it was a year ago.
>> this is a little arcane, but those are probably best ignored for the time being. congress made changes that basically invalidate those figures. it’s generally rising, though at a much lower pace than last year.
>> david, we leave it there. thank you very much. we take a quick break, everybody. stay with us.
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>> crude oil inventories are coming in with a decline of three million barrels. the survey was expecting them to go down only by a million. gasoline inventories coming in higher than expected. those inventories are up by 2.1 million barrels. they were expected to only be up about 1.3. the distillate inventories, they’re coming in also much higher than expected. they are coming in at almost 2.5 million versus expectations of them only to be up 550,000. again, higher than anticipated gas leend distillate inventories, but much lower than anticipated crude oil numbers. for a little bit of a check on the reaction from the floor of the new york mercantile exchange, let’s take you straight down to see how the trade is with su keenan.
>> well, this is a fury on the floor behind me. a trading fury. and this is the report that’s all over the map in term of expectations. suzy, as you mentioned, the gasoline build much greater than expected. it is the fourth straight weekly build of supplies. and it is more than double the 1.3 million expected by analysts polled by bloomberg. also, focus was on the refinery utilization number. expected to rise above 90% for the second time in five weeks. it is slowing slightly, so we’re right at the 89% utilization rate. that also a surprise. take a look at how we’re moving. oil on the day $70.70. that is down and pretty much where we were ahead of the report. gas fall 2g.5%. we are seeing an acceleration of the declines happening before the report. heating oil down 2.5%. natural gas down 2.5%. and natural gas trading on a different track and that inventory report will be out tomorrow for natural gas. in term of what analysts have been saying, it was al about the gasoline number even though refinery utilization has been down two weeks in a row, we have seen a lot of oil companies boosting the gasoline production during the turnoverover period to make way for the memorial day weekend. right now this is a tough read for the market . step back in a couple of minutes and we’ll tell you how it’s going.
>> all right. thank you very much. just to update you about the other story, we got new home sales which unexpectedly went up to the highest pace this year. there was a revision to the previous number revised lower. at the same time, we got durable goods order this is morning that came out also and fell the most since the beginning of the year and that drop was much worse than economists had expected. vonage is making its public trading debut this morning. mastercard, their i.p.o. also will be priced later on today. and as for the trading in the session right now, here is a check of how the benchmark indices are doing. holding onto gains for the dow and the s&p and the nasdaq up almost ¾ of 1%. we’ve got julie hyman and connell mcshane at the nasdaq for us. julie taking a look for us at the market and specifically the health care stocks this morning. >> that is right, suzy. health care shares are one of the groups that is contributing the most to gains in today’s session. it is a group talked a lot about recently and a lot of investors have said they have been getting into health care because it’s a group that is seen as fairly resistant if there is economic weakness. however, it is not reflected if you look at the year to date performance of the broad health care group, the s&p 500 health care index is down 5% for the year to date even though it’s rising in today’s session. where investors have been finding value it looks like is some of the smaller cap stocks and specifically some of the equipment makers. not medical device maker, but rather companies that make lab equipment, for example. the best performer is thermo eelectron that makes the equipment used in medical labs up 20% this year as is the company that is taking over, fisher scientific. those shares also up in the neighborhood of 20%. the reason why they’re strong performance is masked by some of the other stocks we’re seeing and masked by the overall drop is those that are more heavily weighted are the worst performer. for example, we have news on medtronic today that are trading higher in today’s session after the company came out with the earnings. the earnings almost quadrupled and it raised the forecast for the full year earnings because implantable defibrillator sales will grow more in the second half of the year. but those shares are down about 13.5% for the year to date. and that stock alone accounts for about 4% of the health care index. also some other examples we have united health care and aetna, both of them weak performers for the year to date in that health care index and together they account for about 5.7% of that health care index, the most heavily weighted stock johnson & johnson is not much changed on the year. so it’s interesting where we have seen this health care buying, it’s been in some of the smaller stocks. now we’re going to talk a little bit more about health care and specificcally about the effect that avian flu and the news about it has been having son some stocks. for that we go to connell at the nasdaq.
>> all right, julie. it has been having an effect on a number of stocks here. very interesting story because it is so news driven coming out last night. the word from the world health organization that seven people from indonesia contracted the avian flu and apparently or most likely done so through contact with hue mans and not directly with birds, which has people talking about the possibility of pandemic or at least worries about that. of course, that is bad news for travel stocks from a stock market perspective or airline stock. but for the vaccine maker, we are seing a number of them move higher in today’s trading. a.v.i. biopharma with a 6% gain and novavax up 12.6%. and gilead sciences up by 4% after earlier highs, but percentage wise is the biggest gainer in the nasdaq 100. i say it’s off earlier high. one of the things we got it a about half an hour ago from the w.h.o., the world health organization, is that they do not immediately floon raise the alert level for a possible lethal pandemic for avian flu. still obviously a developing situation and from here we’ll continue to watch these stocks. suzy, back to you.
>> thank you very much, connell. and while connell was talking, we’re getting some headlines crossing regarding the bank of china. we have just learned that the prince has offered $2 billion for a 2.7% stake of the bank of china. again, prince alaweed has offered $2 billion to buy a 2.7% stake of the bank of china. this is the latest headline crossing ton bloomberg wire, and of course, we will take a look at it and we will―oh, by the way, he is bidding with patter in. so a bid for 2.7% stake of the bank of china. the story on that coming up just after this break. please stay with us. when we return, we will cover the bank of china news and also talk about new home sales and what do they say about the economy with david ciders from the national homebuilders association.
