tv Whatd You Miss Bloomberg July 8, 2015 5:30pm-6:01pm EDT
freeze, the biggest interruption. chinese markets keep plunging. not as scary as you think. a file and move down in commodities. alcoa gets ready to report earnings at any moment. we have to talk about stocks. the s&p 500 closing below its 200 day moving average. the first time in 178 days that it has closed below this important moving average. >> it triggers automatic purchases or selling orders. people look at it as a gauge on sentiment. alix: the context is the crazy day we saw. the new york stock exchange halting trading for over three hours. the biggest interruption in about two years.
>> if you look at a stock like general motors, an s&p 500 company on the new york stock exchange. down 5.8%. chinese retail auto sales fell. our equity specialist crunch the numbers. 26% of shares are traded on the big board. there was no trading on the big board. volume for gm was 150% more than the 30 day average of the time. alix: that leads me to my point. does the new york stock exchange matter? bank of america, 23% of shares trade right now on the new york stock exchange. 2005, 75% of u.s. stocks, a staggering difference. >> the stock market is so much more fragmented.
it's just one of a few players now. alix: it is still the big show. >> companies want to be on the nyse. alix: important to note on a day like today with the s&p off by 1%, second quarter earnings season, revenue estimates revised lower. they are -4.5%. a couple of months ago, 3%. >> what happens when you take out energy companies, oil, gas? revenue is expected to increase 1.3%. that is half the pace. if you look in the different sectors, three sectors will see sales climb, energy, materials,
industrial. alix: we want to get to julie hyman at the breaking news desk. >> we don't have much. earnings are coming out below analyst anticipations. $.19 of versus the $.22 that analysts had been anticipating. i will go through quickly as i'm talking to you. it looks like revenue came in at $5.9 billion versus the $8.1 -- versus the $5.81 billion anticipated. we are looking at the different segments for the company in terms of their different lines of business. engineer pro products, $210 million, up 4%. air and space revenue up 29%. $76 million, up 9%. engineered and rolled products. these are the more refined products.
alcoa has been trying to shift its business towards that to be less reliant on the raw price of aluminum. the midwest transaction price was down, 22% through june 30. these are some of the headlines i am seeing. i know you have been waiting eagerly for these numbers. i am sure you are going to do the statement, too. we are going to get to the most important charts in a bit. for now, i want to look at the one commodity you need to know about, iron ore. it's at its lowest level in six years. it is dipping below $45 a time,
ton, $44.59. lowest in six years, mines flagged for closure are coming back online. more supply coming on the market. steel mill margins are falling. they don't want a lot of iron ore. a huge mismatch there. this is the chart you need when you want to find out about global growth when you wake up. >> i want to stay on china. china may not be as bad as you think. investors may have gotten to o negative on the underlying backdrop. what's critical here is that this line, above zero indicates
data is stronger than anticipated, below zero indicates the data was worse. there was a big drop here in the first part of the second quarter, but since early june, a little bit of a recovery. it looks like we have bottomed out. alix: the disconnect between fundamentals in the markets. i want to bring in wells fargo securities senior equities strategist. thank you for joining us. today was a crazy day. what was your reaction? >> i was pretty engrossed in what was happening between greece and china. i didn't notice at first. my big take away is that this is one other concern to add to a lot of uncertainty that investors are facing.
alix: joe is not here, but i did bring in a tweet. greece, china, u.s., trading halt, maybe markets have found equilibrium. what you think about that? >> we were satisfied in the first half of the year. we basically fell asleep. the s&p 500 went nowhere. a lot of things changed, oil prices moved a lot. the 10 year treasury moved a lot. the dollar moved a lot, the shanghai exchange extraordinary exchange, then a major meltdown. so a lot of risks have taken investors by surprise. we had a low volatility, no volatility market went nowhere. suddenly we have to wake up. alix: i like the way you put that. the percentage of bulls was
little changed from the prior week at 44.8%. excuse me, 15.8%. those expecting a correction, 39.6%. seven years into this aging bull market. are we still too complacent? >> i don't think so. while advisors show very few bears and people are expecting a correction as opposed to being bullish. the retail investor is very bearish. alix: were they ever bullish? >> they were at the beginning of this year. suddenly they experienced this market that went nowhere. they started investing overseas in europe and china, and unfortunate have expense some -- and unfortunately have
experienced pressure of the last few weeks. the retail investor is really not optimistic, and that balances out which are seeing. alix: the retail investor wakes up. not a lot of confidence. talking about second-quarter earnings, if you take a look at gdp versus s&p revenue, they track in line. last quarter gdp was down. what can we expect in terms of solid revenue growth? >> it will be tough. it is tough because of the energy sector. falling 60%. it will be a big hurdle for the index to overcome. there are notable things. a few things shifted between first and second quarters. second quarter growth was 2% to 2.5%. you saw oil prices bottom in the first quarter at $45 in march. they rebounded through the
second quarter. the dollar peaked in the first quarter at a high of 100. it has since fallen a little bit. those pressures we experienced did ease in the second quarter. the incremental improvement in chinese and european data. some of this may be moot. we may look for lower earnings. nonetheless, there was improvement in drivers into the second quarter relative to the first. alix: what about large caps as opposed to small caps? small caps should benefit if the u.s. is an oasis of growth. should we see that? >> we did. when the small caps really
surged. i'd like to reserve my opinion until we get through this china situation. we did see the small-cap index recovere tremendously. last year, if you recall, we saw major diversion. small-cap started to break down in the spring. that gave us some indication that we would see the large-cap index breakdown in the fall. we are seeing the opposite. some all caps made major new highs, hold up well. large caps are breaking down. i would say the fact that small caps are holding is a good sign for the large-cap index, to hold in their relatively well. alix: where are the bears? thank you. good to have you on the alcoa day. much more coming up. alcoa earnings out. three things you need to know about the company after this. ♪
alix: tuesday i said down with the ceo of cypress semiconductor. i asked if he was worried about a china slowdown. thee are worried about consumption of products. anything growing as fast as they grow has to slow off. they are the number one consumer of chips. the market continues to grow. we are looking for more competition. right now, we do not see anything. retaileems like
investors and china are making up a lot of the stock market. they can use their house as collateral, if they want. will there be enough money in china to buy a samsung phone or a smart car? >> the economy is stable and strong. their manufacturing base makes it that way. you mentioned some dicey financial system stuff. that i cannot tell you about. i am an engineer and a chip guy. alix: look at the part of your business where you bought the acquisition that closed in march. basically, if someone bumps my car, i know is coming.
it makes up about 29% of your revenue. how big could this be? what is your mix in five years? >> we went for automotive. we had a modest business doing well for us. if you look at the chip industry, think about a 3% growth rate, you are looking at a 5% growth rate and in particular parts of automotive's that we are in, those things grow in the range of 7% to 15%. the automotive sector is the largest growth for electronics. my car has 200 computers in it. it has a computer in each rearview mirror. that will go forward. you will buy a toyota and have a
bunch of computers and it. that number is going up dramatically. alix: the other part of the industry has been consolidation. we have seen humongous deals. why do you think this is happening right now in your industry? >> first of all, you get something going financially and it tends to be an avalanche. i think there is a momentum kind of thing there. on the financial side, it was an $800 million company, cypress semiconductor. now we are 2 billion. as the single ceo of a company, as opposed to having two ceo's, two offices in paris to sell chips, our overhead, which i have to worry about all the time when we were in $800 million company, have gotten better. we have more people and capability to do things with a lower percentage of sales. it is a matter of scale. i believe there is a magic
number somewhere around $1.5 billion, where you can be competitive in the market. if you're below that, you will struggle. alix: does this counter the cyclical nature of semiconductors and technology? you put your cash to work in r&d or something else. >> i think the cyclical nature of semiconductors is getting better. when semiconductors are in everything you use and they are daily commodities, we will look more like a market at large, as opposed to a highly volatile sector in the market. alix: that was cyprus's ceo tj rodgers. >> trading was halted for more than three hours today. the ceo tom farley joins us next. ♪
alix: what did you miss? i'm alix steel. stephanie ruhle is standing by. take it away. >> from first thing this morning, problems, messaging, walk me through that and the shutdown. >> we take our role in the center of the global capital markets seriously. we hold ourselves to a high standard of having hours systems trusted, open and available at all times. the open went off as you would expect. soon there after we were getting intermittent messages with customers not seeing the data and messaging they would expect. i did not feel like we have the level of trust in our decisions
is required. i made the decision working with and thelatory team council's office to suspend trading at the new york stock exchange in part because those listed stocks continued to trade elsewhere during the day, and i team in a delivered fashion to determine what went wrong, put together multiple plans to come back up for the close. >> you did a great job holding things firm, but you were out for 3.5 hours, and when you came back, volumes were up, almost the beat goes on. what does that say about our need? >> the most important thing, do no harm for nyse listed stocks. the market consolidates around the new york stock exchange. those are the biggest trades of the day. our closed today was a market
average of 150 million shares. my first concern was do no harm during the day. the stocks trade elsewhere. get it fixed and back up and running for the close. stephanie: why not roll over to your backup? >> we chose the least disruptive option for customers. if we had moved to our disaster recovery center, customers would have had to do a good deal of work to connect to it. contrast that to what we chose to do, root out the problem, put a plan in place to fix it, fix it, reopen the stock exchange, and no work for the customers to do to reconnect. stephanie: when did you make the decision to shut it down? >> i don't remember exactly. i spent most of my day talking to customers and staff. it was shortly after 11:00. it was when i heard enough reports that customers were not seeing the behavior they expect. i said to take it down. stephanie: do you attribute this to a system upgrade?
>> i'm not certain. most of the day i spent with customers and staff. there was a configuration problem in our system. it likely had to do with an upgrade, but that is premature, and something that will come about as part of a full analysis of the situation. it began today. we found the problem. if it continues tonight, we will look at the steps that led us to this place. we will look at it in the future to improve the technology we offer. stephanie: you have cleaned up a tightened the ship shareholders like what you have , done, but you are leaner and meaner. had you had a bigger staff with more i.t. professionals could this have been avoided? >> this wasn't a resource issue. i have been here since the intercontinentalexchange acquire d the new york stock exchange. i have seen the changes firsthand. our technology is more responsive to the needs of
customers, by and large reliable , and i feel customers pain. >> i'm worried about confidence. we are faced with greece, china, united airlines, people are worried. are you worried the perception of this will keep people out of the markets? >> this goes back to what i said, and our management team agrees with this, and it is something we talked about his -- talked about as recently as today it's important we are open , for business. public perception is important. am i happy about today? obviously not. can we work through it? and i appreciate our customers. yes, absolutely. we will invest in technology, get better, and learn a lot from today. stephanie: outside there are tv crews everywhere. the global new story of the day. i'm walking this floor. it is business as usual.