that's going to come back and hit the economy and be a further drag on growth. >> tom: we look at the state of the housing market and get a lesson in mortgage refinancing. you're watching "nightly business report" for wednesday, august 25. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by: this program is made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt >> susie: good evening everyone. sales of new homes fell to an all-time record low in july. tom, you'd have to look back to 1968 to see home sales this low. they plunged 12% last month. >> tom: and susie, today's news comes on top of yesterday's disappointing report of a big drop in existing home sales. things are so gloomy that president obama took time out of his vacation to hold a conference call with his economic team, focusing on the deteriorating housing market. >> susie: home prices continue to fall as well. the median price of a new home last month was $204,000, almost 5% lower than a year ago, according to the commerce department. now, prices on existing homes? about $183,000, slightly higher than last summer. lower prices haven't been enough to turn browsers into buyers, and economist dean baker says there's a reason why they're waiting. >> people are acting reasonably, given that you do have an overvalued housing market and it makes good sense to wait. i mean, my expectation is house prices will be sharply lower next year than they are this year. so you stand to make a lot of money by waiting six months, nine months. >> susie: speaking of waiting, many homeowners have been watching interest rates drop and wondering if refinancing their mortgage makes sense now. record low rates have pushed demand for re-fi's to a 15-month high, with applications up almost 6% in the last week alone. so, even if you renegotiated your loan in the last two years, should you try for another re-fi now? erika miller gets a lesson in refinancing math. >> reporter: when elizabeth safran bought her harlem condo three years ago, she took out a 30-year, fixed-rate mortgage that allows interest-only payments for the first ten years. she recently looked into refinancing, and discovered she could get a plain vanilla 30- year fixed at a rate two percentage points below her current one. you've considered refinancing? >> i have. >> reporter: and you're not doing it? >> no, because when i actually inquired-- when i called up to see how much better a deal i could get, it turned out it wasn't that much of a deal. >> reporter: since she's only paying interest on her current loan, she says her payments would fall by just $40 a month. she'd have to write a check for closing costs of $12,000. she calculates it would take 25 years to recoup that outlay. for her, that was a dealbreaker, even though she'd be paying down loan principal. with interest rates at historically low levels, many homeowners are grappling with the same problem: whether refinancing makes sense. so, we thought it would be helpful to get a lesson in refinancing math. mortgage banker david dessner crunches these numbers for a living. he disagrees with the common rule of thumb that refinancing only makes sense if the rate falls by at least two percentage points. >> in many cases, you have customers refinancing for a half percent-- or five-eighths interest rate drop. >> reporter: he has a different way of evaluating whether refinancing makes sense-- figuring out return on investment. he gives an example of a borrower who could save $338 a month refinancing, but it would cost $5,000 to do so. >> $338 a month over a year is $4056. so essentially, you are getting an 80% return on your $5,000 investment. over the life of the loan, you are saving $109 thousand-- almost $110 thousand. >> reporter: for many people, there's also the question of whether to shorten the duration of the loan-- say, from a 30- year term to 15 years. >> the shorter the duration of the loan, the higher the payments are going to be, but the less interest you are going to pay over the life of the loan. a lot has to do with cash flow, affordability and comfort level. >> reporter: in almost all cases, dessner recommends paying closing costs out of pocket instead of rolling them into the new mortgage. that way, you will not pay interest on the closing costs. you will also reduce your loan- to-value ratio, which may make you eligible for a lower rate. as for saffran, she's done trying to make the refinancing math work. she hopes to sell her place as soon as the housing market recovers. erika miller, "nightly business report," new york. >> tom: here are the stories in tonight's n.b.r. newswheel: stocks break their losing streak. the dow up 19 points, the nasdaq rose 17 and the s&p 500 up three points. volume, 1.1 billion shares on the big board, and just over 2 billion shares on the nasdaq. both are slightly lower than yesterday. more signs of a stalling recovery. companies cut back last month on purchases of big-ticket equipment and machines. durable goods orders rose 0.3% in july, less than expected. consumers are buying less and focusing on paying off debt, credit card companies say "charge-offs" dropped in the last quarter. those are the delinquent loans they've given up collecting on. nationwide, americans owe an average of about $5,000 on each of their credit cards, 13% lower than last year. >> tom: still ahead, so far this year india's economy has grown by over 8%. we'll look at investing there as we continue our weeklong look at the bric economies. >> susie: a big win today for shareholders' rights. the securities and exchange commission approved a rule making it easier to nominate directors at public companies. the change lets shareholders who own 3% of a company's stock for three years nominate candidates on the annual proxy ballot. until now, a company's existing board of directors effectively controlled which candidates were chosen. the nation's biggest business lobby wanted it to stay that way, arguing the new rule would give interest groups too much power. but corporate governance expert charles nathan says things won't change much for small, individual investors. >> the little guy will never be able to get to the 3% threshold. indeed, 3% is going to be challenging for the large institutional investors in a number of companies. but at the end of the day, what this rule does is empower the corporate governance activist community to band together in some form of coalition to either nominate, or threaten to nominate, directors at companies they've targeted for any variety of reasons. >> susie: but the number of shareholder board nominees is limited to 25% of a company's board, or one director, whichever is greater. the rules adopted today will be in place in time for the corporate elections season this spring. >> tom: a failure all around-- that's what the co-chair of the white house oil spill commission says about industry and government actions leading up to the b.p. disaster. washington bureau chief darren gersh spoke with former senator bob graham at a commission meeting. graham had just been briefed by government scientists on reports bacteria may have eaten up much of the oil spilled in the gulf. >> they would admit that there's a range of unknown, maybe plus or minus 10%. of the nature of the gulf of mexico, the way in which these modules move, that there has been a significant level of either absorption, evaporation, or disperse al of the materials. >> reporter: does that change much, because some people may say this problem is not as big as we thought? >> that's exactly the question i asked. i said what is the difference in the operational response if your numbers, which are more optimistic, are correct, or numbers from some of the academics which are less so, are correct. >> reporter: in terms of the oil that's been eaten up. >> the answer is we're going to do the same thing, whatever the reality is, which is we're going to, a, continue to monitor, we're going to try to learn more about the effects of this sub surface explosion. >> reporter: but ask this change about how you think about how we should regulate this industry? >> well, in terms -- this industry has been rapidly developing its technologies. 20 years ago it was almost no deep water drilling. today it's 80% of all the oil that comes out of the gulf is from 1,000 feet or more, and today almost a third of it is more than 5,000 feet below the surface. what hasn't happened is the safety and the ability to respond to a negative event such as this blowout, has been far outrun by the technology of drilling itself. we need to close that gap. >> reporter: there are reports out today that the regulators of this industry basically took reports and rules that had been written by the industry and simply put them in place. are you finding that, and how does that have to change? >> that wasn't by any means the end of it. once the regulations were in place, they weren't very aggressively enforced. there was a cozy relationship between the industry and the governmental agencies. i think yes that needs to change. the fact that now mns has been divided into three different agencies with responsibilities for collecting the money, establishing the leasing policies and regulation, is a step in the right direction. we're going to be asking the question, is it a sufficient step, or do we need to go further. we had witnesss today who felt that what we needed to do was to find the agencies that had the best expertise and put them in charge of the individual components that are involved in regulating an industry as complex as deep water drilling. >> reporter: you talked this morning about an industry approach called defense in-depth. what is that, and why are you interested in it? >> well, defense in-depth means having chevroleters of regulatory -- having several layers of regulatory governmental or nongovernmental. what happened in the nuclear power industry, where they have set up an industry based organization using expertise from the industry to evaluate each of the hundred plus nuclear plans in the united states. what that reflects is when the whole industry has an interest in the lowest performing company because that's the company that the public and the government is going to judge the whole industry on. >> reporter: finally, you were just down in new orleans. there's a report out in the "new york times" that the moratorium is having less of an economic impact on the chill of the region, as we had thought. do we still need a moratorium? is it hurting the region that you saw and could it be lifted soon? >> yes, we need the moratorium until we've accomplished several things. one, we need to have some safety standards in place that will give us greater assurance, that won't have a repetition of april 20th. second, we've got to have a cleanup of the regulatory agencies to eliminate this cozy relationship. and we've got to begin to move towards a change in culture within the industry itself. >> reporter: bob graham, vice chairman of the oil spill commission, thank you for your time. >> thank you very much. >> tom: at this hour housing numbers and durable goods figure well, investors were able to shake that off by midday. let's get you updated in tonight's market focus. >> tom: for the first time in five sessions, investors were able to shake off bad economic news and see stock prices march higher. not big gains at all here, but the market's tone did see some improvement. it was a weak start to the day, thanks to the disappointing durable goods report and then new home sales dropping to a record low. but the s&p 500 was able to poke into positive territory mid- afternoon to end higher. consumer-focused stocks led the way up, with energy lagging. homebuilders continued to find buyers for the second session in row. d.r. horton received some positive analyst comments, helping boost its stock by more than 4.5%. lennar and pulte also rose despite the disappointing new home sales data. results from toll brothers may have helped. it was a surprise profit, it's first in almost three years.v> toll builds luxury homes. revenues continued to drop, but less than feared. shares responded with a rally of almost 6%. company management thinks there will be pent-up demand for higher-end homes "once the recovery takes hold." earnings season is winding down, but a hand full of retailers are still turning in their results. teen retailer american eagle outfitter's results came in as expected, but they were hit by a double whammy of lower margins and higher costs. the company also announced it will close up to 100 stores over the next five years. women's clothing store coldwater creek surprised analysts with a slim profit compared to the forecast loss. sales were better than expected and it cut costs. coldwater creek shares rocketed more than 40% higher on nine times its usual volume. even with the rally, the stock only is at its highest price since june. american eagle also saw big volume on its almost 8% rally. watch guess tomorrow. after this regular session rally, shares were down almost 6% after the close. the company's earnings beat the street, but says consumers are cautious. j.d.s. uniphase may be another stock worth watching tomorrow. it makes communication test equipment. for the first time in more than two years, it reported a quarterly profit, and that was a penny ahead of estimates. shares came into the report with a small rally, but volume was strong. after the results, shares were down by as much as 5% after the close. coal stocks were among the weakest in energy. this is a story about natural gas prices as much as it is about coal. nat gas prices dropped below $4 today, to a new low. above-average inventories, a calm hurricane season so far, and lower industrial demand have led to lower prices. cheaper nat gas favors those power plants, leading to lower demand from coal-fired power generators. coal miners massey, peabody and consol energy all dropped on heavier-than-usual volume. with weaker demand comes lower coal prices, which are at two- and-a-half-month lows. finally, somaxon pharmaceuticals. its insomnia drug silenor is picking up a sales force. procter & gamble has agreed to help sell the sleep medicine to certain doctors. shares saw a huge volume spike on the 29% jump in price. the big pop in march came when the f.d.a. okayed its drug. shares remain less than half that high, even with the rally today. and that's tonight's "market focus." >> new data out on friday is expected to show the american economy grew at a much slower pace in the second quarter than first reported. for investors looking for economies with a bigger bounce, look at emerging markets. all this week on nbr we're liking at the bric economies, brazil, russia, india and china, tonight it's indy a. the indian economy continued to expand, at a slower rate. so far this year that growth is picking back up again. the senior vice president with j. p. international, a global brokerage firm joins us tonight from the cme group in chicago. welcome to "nightly business report". >> hi, how are you. >> tom: i'm well. so what's fueling the indian economy in the middle of 2010? >> hi, tom. basically it's the domestic consumption and the investment and infrastructure by the government of india. >> tom: what's the longer range picture developing? is that internal domestic consumption sustainable, the indian workers have their incomes rising? >> yes. over 50 to 60% of the indian population is under the age of 25 and we see a strong internal demand coming from within the country, and i think it's sustainable. >> tom: u.s. ins stus al investors direct access to the indian markets. what industries are attracting u.s. money? >> mostly the sectors would be media, telecommunication, i. t. sectors, and the banking sector. >> tom: you brought along some specific picks for u.s. investors to consider, in the financial space, icici bank, the ticker symbol is ibn. what makes you like this one? >> basically ibn is india's largest private sector bank with a market cap of 26 billion dollars. and we have investment in infrastructure and domestic consumption is playing a big role in banking sector and banking sector is a proxy plan for the indian economy. >> tom: you also mentioned i. t. as an area that's attracting foreign investments. imfosys is probably best known. infy. has had a said i rise over the past 12 months, what's the catalyst? >> they are one of the leading ex porters of technology services out of india, it has seen from constant increase in earnings, an average of 60%. but they have also coming into defense segments, media and rollouts. >> tom: any disclosures for these two? >> we own both the stocks. >> tom: our guest this evening, talking about the indian economy m. chowdry with j. p. international. >> susie: we wrap our series on the bric nations tomorrow with a look at china. the asian nation recently became the world's second biggest economy. we'll ask mike holland, director of the china fund, if that growth is sustainable. also tomorrow, we'll get a read on employment with the latest weekly jobless claims and quarterly results from retailers j.crew and zale. >> susie: wal-mart wants the u.s. supreme court to block what could be the largest sex- discrimination case ever. more than a million women are involved in the class action suit. they claim wal-mart pays female workers less than men, and gives women fewer promotions. the discount giant wants the cases tried separately, not as a class. the high court is expected to decide later this year whether it will hear the case. >> tom: expect congested roadways, full flights and crowded trains if you're traveling this labor day weekend. a.a.a. says about 34.5 million people will spend the holiday away from home. that's 10% more than last year. the cost of getting away is getting higher too. airfare, car rental and gas prices are all up. experts say even though unemployment still weighs on many americans, most folks just want one last hurrah before summer ends. euquu >> susie: with heavy summer selling taking the dow back near the 10,000 level, many investors are wondering if their portfolios need tweaking. tonight's "money file" has some thoughts on investing in times like these. here's charles sachs, vice president of wealth management at evensky and katz. >> surely you must do something. you can't just sit around and do nothing-- activity, almost any activity, is certainly good, isn't it? well, maybe it is, and maybe it isn't, but two factors are at play here. one is that wall street makes its money from transactions. the more you buy and sell, the more it makes, and the second is that while all investors say they'd like to buy low and sell high, the fact is they almost always do the opposite. you see, our animalistic flee or flight mechanism takes over and when the market is down, it feels right to flee and sell. and when markets are on a tear, instead of selling, it feels like the time to buy. compound this with the pure fantasy of investors attempting to be in the market only when it is going up and getting out before it goes down, and it's no surprise that investors as a group dramatically underperform the overall market. so, enough with what not to do. here's what you should do. create a well diversified portfolio, which can be done by maintaining ownership of just a handful of broadly diversified funds. start with a focus on low-cost index funds, and don't deviate unless you can make a compelling case for why you should pay a higher fee to use an active manager. plan to have two years of your cash outside of the portfolio, so you're not pressured to sell into misbehaving markets. and finally, rebalance your portfolio periodically, taking advantage of opportunities to buy more of things that are lower priced and selling those that are high. in other words, build in a method to buy low and sell high. successful investing requires discipline, and keeping your inner animal at bay. i'm charles bennett sachs. >> tom: that's "nightly business report" for wednesday, august 25. i'm tom hudson. good night everyone, and goodnight to you too susie. >> susie: good night tom. i'm susie gharib. good night everyone, we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> more information about investing is available in "nightly business report's" video "nbr guide to stock market strategies".
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