Transcripts For CNBC Closing Bell 20150311

Heard got a new round of stress tests coming out at 4 30 p. M. Eastern. Those results are what investors in the financials and, frankly, in the broader indexes have been waiting for. Will banks be able to up jury dividends, return capital to shareholders and should they . The results could move the bank stocks big time in either direction. This used to be the biggest dividend paying sector of the market. Well have the results and the fallout to you first. Leading up to it they have been pretty strong. We will shake things up after the close with shake shacks first Earnings Report as a publicly traded company. The popular burger joint took wall street by storm on its ipo day at the end of the january. Remember that day there, kelly . The crazy line outside the exchange when they set up a mobile restaurant and people couldnt get enough of the free burgers that they were handing out that day. That first day performance wasnt bad either. After that and the Strong Performance across the restaurant space, well see what the First Quarter earnings look like, how the shares digest that. Earnings for a lot of companies once they have gone public that first couple quarters have been a little rocky. What are you laughing about . Thinking about shake shack . Well see how the market digests that. Im sorry. That is pretty good. Very shallow of me. Im just a shallow kind of guy. 59 minutes to go. As he discusses national pie day. The dow is up 25 points at the moment. The s p is adding 2 the nasdaq 2 points. A dead cat bounce is what art cashin is calling it. Were joined by john manley. Keith fitzgerald from money morning. Com so is Kenny Polcari and our own rick santelli. Kenny p. What was that selloff sed and its so quiet today relative to recent days. It was i think ait caught a lot of people by surprise after we had the bounce back on monday and that vicious kind of move yesterday which was really i think it felt like more of a culmination. People were just so tired of talking about what the fed is going to do what the speculation was, raise rates, not raise rates. Oil coming under pressure. It gave everyone just some opportunities to say let me just start over again and thats what it kind of felt like. Today we bounce right off the 100 day yesterday at 2039. It seems were bouncing off that again today. It seems to be holding here. Theres not a whole lot of volume or is there a sense of nervousness like there was late in the day yesterday. So i think its going to just kind of churn right here and close tight. John manley is this an opportunity for people to buy who might have missed out on a lot of the previous rally or do you think we have further to go in the mini correction. Maybe yes to both. Its a classic bull market correction. Scares the heck out of me which is exactly what you want it to do. It says we havent developed that deep, abiding confidence that we have near the top of almost every bull market. It comes down really easy. I get undone very easily. I get scared very easily and it comes right back because the fed hasnt left. I think both sides of the volatility are positive things. I will say, Keith Fitzgerald on monday an awful lot of people who had been bullish were suddenly cautious about this market with not only the way the market was reacting but the dollar is getting stronger and what that could do to earnings. How are you feeling about the market right now . Well look here is the thing, bill, people load up in this country on ice cream when it goes on sale. They should be doing the same thing with Quality Companies right now. The pullback like this is a classic bull market pull back. I think its a great time to buy. History shows that. Im excited to see that because it means the markets are showing normally. Ice cream is ice cream and its always good. If it goes on sale of course youre going to buy it. With stocks is it always the same thing . Sure it is. If you have a Quality Company making Real Products with real services, real earnings and real sales, its hard to say wrong with that. If youre buying some of the nice to have the fly by nights the fringe tech companies, i would have a problem with that. 15 years from now you may have a winner but you may have nothing. Rick a 12year low for the euro against the dollar. Were at 10. 05 to 1. 05 to the euro. Were were looking at the yen with an eightyear low against the dollar. You start to get the picture what this is really about. And i think many are justified at this point because i have never advocated liquidating equity positions. Theres whip cream and then theres miracle whip. Just because its miracle whip making stocks go up doesnt mean you cant get a check. But i think you need to pay closer attention. Also something fascinating happened today that doesnt happen very often. Canada issued yankee notes, okay . They issued 3. 5 billion threeyear notes at a yield of 119. One of the few countries that still has aa aa gold plated rating with all the major rating agencies. They did one in 09, 12, and 14. They had about 8 billion orders for those 3. 5 billion and i think it speaks volumes about how theres a nervousness to maybe diversify with regard to holdings on the sovereign side. One second everybody, while we get some news back at headquarters with dominic chu. Hi dom. Kelly, bill what we want to update you is trading now on whats happening with endointernational. That drug company is reopened for trading. Shares down in a choppy trade it looks like by about a percent as i can see right now. About a percent to the down side. Through 0. 75 . Confirming it has made a bid for 175 per share in cash and stock to take over Salix Pharmaceuticals. They will reopen for trading at 3 20. Valiant shares also moving and have been throughout the course of this. Theyre down by 4. 5 . Val eant has hahn agreement to take over salix. Salix being courted by endo. Endo is trying to pay 175 per share in cash and stock. David faber has been reporting on this all afternoon. For right now we know that those shares of endo reopen for trading, down a percent, salix will reopen in 13 minutes. Back over to you. Let us know. Thank you, dom. Lets go back to our conversation kenny. Well i think keith and john have it right. On days like this when the market is on sale and he used ice cream. I would use bloomingdales. When bloomys has a sale, everyone runs out and buys it. If theyre good quality stocks and you get the opportunity on day was theres a downdraft to scoop some up, thats what you do. Look at exxon. The point of the stock market is you dont always know necessarily which are those companies that are worth buying or not. Were seeing a lot of pressure on exxon which has always been the one to buy if or when it goes on sale. Oil comes under pressure again and people might rethink that. In that case there are extenuating circuitsmstances, but stocks that get dislocated when markets are under pressure those are the ones you want. When the story changes, exxon the story is changing a little bit. I go back to the statistic that kelly and i talked about last friday. So far this year according to the isi group, individual investors have pulled 13 billion out of equity mutual funds and theyve put in 39 billion into bond funds. For you is that a worry or a good contrary indicator. As long as theres funds, im happy. I want to know where the ice cream is on sale. I think its a contrary indicator. People still dont believe it, and i have lived through a lot of bear and bull market. I cant remember a bull market that didnt have icing on top, a period of froth where people really wanted to own stocks are you seeing froth now . Im seeing a little bit of excitement where there wasnt any before but its not 2000. Its not 1980. Its not 1986. Its nothing like it can be and all these disappointments to the down site all these failed failures make people more skeptical, and at some point of time it comes back to us. What are you buying here. What do you think is on sale and what are you staying away from because maybe its spoiled . Well i think Consumer Discretionary items, anything in the nice to have pile is something i dont want to deal with right now. If youre looking at medical tech, defense tech, looking even at energy those are things that are attractive because the world needs them they have to have them. Whether my time perspective is a year from now, five years, ten years from now, those are companies that are probably not going to go nothing going away anytime soon and thats why i want to own them. Were going to get those stress tests, number two, this afternoon. The financials back in the spotlight again. How important do you think that will be, kenny, for them if they do get the green light from the fed to be able to go ahead and do their buybacks and dividends . I think its going to be a huge plus for them. The Group Already theyre going up today in anticipation. The group in general is going up in anticipation. If they get the green light, think about what that means for investors and the message that it sends to the industry and to the market. And the last word to you, rick, the other big piece of regulation this week or macro if you will is what the fed is going to do. A lot of reports now suggesting they get rid of that patient language i couldnt hear your question. My ifb went dead. A quick word on the mutual fund inflows. We dont know with full transparency whats behind exactly specifically paper. Theres a lot of liquidity issues with regard to the fixed income side. You really want to Pay Attention to that. Well leave it right there. Sorry about that. Thanks, rick. Thanks, everybody. Enjoy the ice cream or whatever were having. Pie. 50 minutes to go into the close. Looking to see if the dow can actually stay in positive territory today. Down 332 points yesterday. Today only adding back 12. The s p up less than a point. The nasdaq there it is at 4859. Its now negative on the session. Coming up, we mentioned this before, David Rosenberg is calling the recent slide a fed tantrum. Hell explain why and he says its a buying opportunity. Hell tell us what is looking cheap for him. Just over an hour from now the fed releasing part two of the key stress test on the nations biggest banks. Could be big swings for these names after hours. Stay tuned for that. Plus sheila bair will be here to give us her exclusive reaction to the stress test results. That should be very instructive. Dont touch the remote. Well be right back. Pretty quiet day for the major averages. We have had a lot of volatility lately. Yesterday was a really tough session and weve had the nasdaq and the s p turn negative which tells you a lot more. And there goes the dow. 45 minutes to go well see if we can get any kind of rebound today. Well look at some other indicators and see how were doing today. I think we had a heat map we were going to show for the s p 500 index. Theres the sector heat map. Interestingly, of the ten sectors, six of them are positive, four are negative. The financials are the leaders to the up side today. Watch out for disappointments. Dominic chu is keeping an eagle eye on the specific movers. Kelly bill a boost for a major chipmaker in todays trade. Goldman sachs is adding sandisk, it makes memory chips, to its conviction buy list. The firm hiked the price target to 106 bucks a share from a prior 100. The move is driving sandisk higher. Meat packing stocks especially those geared towards chicken, theyre getting crushed on fears of avian bird flu. The usda has started testing samples from arkansas. There are confirmed cases in missouri, minnesota, on the west coast as well. The government says this strain poses no health risk to human beings. Its not stopping investors from selling off tyson foods, pilgrims pride, and Sanderson Farms and shares of Lumber Liquidators soaring again. Robert chapman announced he took a long position. Chapman talked about the position on cnbcs Halftime Report earlier today. Lumber liquidatorseors has been under intense scrutiny. They hold a special Conference Call with analysts and investors tomorrow. Very much a focus ahead of tomorrows meeting. That has been turbulent. Dom, thanks very much. Now, if Hillary Clintons plan was for yesterdays News Conference that you saw live right here for that News Conference to tamp down the email story, that its clear, didnt happen. The Associated Press slapping a lawsuit on the state department to force a public release of the emails. John harwood here with the details. The combination of a doubleteam from the press and republican opponents is going to keep this issue alive for Hillary Clinton for some time. I just want to go back and review hillarys emails by the numbers. These were put out by her office idea idea. They found 62,000 messages on the server. Of those 30,000 were turned over to the state department deemed potentially work relevant. 32,000 Hillary Clinton made the decision herself to delete deeming those personal and not related. Libya and benghazi is one of the motivators for the search. Thats what the House Benghazi Committee is seeking. They determined 300 emails which they said were already in possession of the state Department Related to the country of libya and finally people have asked about communications with Foreign Governments. Hillary clintons office says only one communication with a Foreign Government official, one from the united sing edd kingdom, was found on her server and those questions are going to per sirs but persist but those are the totals they released after her press conference. Were seeing the statement from the ap saying after careful deliberation and he can hausing our other options, weve taken the necessary legal steps to gain access to these Important Documents which they feel will shed light on actions by the state department and former secretary clinton, a presumptive 2016 president ial candidate, during some of the most significant issues of our time. Yesterday state said after a review that could take some months they will post redacted emails that came from Hillary Clinton. So im presuming that what the ap is after are the rest of the email even those personal emails that she says were deleted. What do you think . I dont think she the ap is seeking personal emails. But theyre trying to accelerate the process, and the important thing to remember is the ap has had those tiers for some time and the state department had 90 of the emails that she turned over for months now or for much longer than months for the reason that she had sent them in kor spontcorrespondence that were preserved on the state department servers. If you are the ap why is it taking so long for you to get access to those emails . The state Department Says everybody is eventually going to see them, but ap has reason to having requested them a while ago, to make that move faster. John just to that point, we were wondering about this as well, if im the ap and i f request it from the state department, because of the distinction between personal and her job has been made by clinton herself, can i make the request for all the materials . I dont think so. Remember, lets keep in mind as secretary clinton said yesterday, every Government Official makes that choice. In other words jeb bush has released, for example, his emails that he sent and received as governor but those are workrelated emails. If you were to go and say i want all of jeb bushs personal emails, theres no way youre going to get access to that information or to the personal emails of colin powell or other officials. The key question thats hanging out there since she has deleted those you know she made it an issue by commingling the personal and the professional. She could have avoided that had she used the state. Gov email. Now that she made that mistake, which she acknowledged yesterday and commingled the two, she unilaterally took the action to declare which ones were not work related and deleted them. Thats what creates the question, but its not because anybody has an inherent right to the personal emails of any Government Official. John thank you. Just to clarify, foia fro dom of information act going back to 1966. John harwood in washington. Thank you. We have more breaking news. Dominic chu . We told you at 3 20 we would have shares of salix reopen. They are up 7 8 . A drugmaker wants to buy salix. Endo is seeking to prevent valeants purchase of this company. David faber has been reporting on this all day. We have a receipt, at least an acknowledged from Salix Pharmaceuticals saying they have received the offer to acquire all of outstanding shares of the stock for the company. They have received the proposal. The board is in consultation with its financial and league advisers and will carefully review and consider the proposal. So its typical boilerplate stuff but it said its received the proposal. Its going to evaluate it so well bring you up to speed with more details. For right now all sides have agreed there is a proposal on the table, 175 per share coming from the likes of endo international. Back over to you. Thank you, dom. Valeant under pressure as a result. We have breaking news on General Electric with our mary thompson. Whats happening . Dow jones is reporting the company is weighing bigger cuts intog e capital and is looking at parting with parts of its commercial lending business. The consideration according to the dow jones headlines of these deeper cuts reflects a change of thinking at ge which, remember has been reducing its financial unit, the size of its financial unit. The level of profitability that contributes to the jooverall company ever since the financial crisis. The headline says its rethinking of the capital business comes from pressure from investors to exit the lending business. Some investors very discouraged with the disappointing performance weve seen in ge stock lately and pressuring the company to think about exiting the lending business. Again, these headlines noting it would take time to make the reductions but a change of thinking at ge about its lending business and if we have any additional details, we will bring them to you. Back to you. All right mary. Thank you very much. Busy day as we head toward the close. 5 minutes left 35 minutes left in the trading seg and unchanged for the major averages. The dow is down 11 points s p down a point, the nasdaq down 5. Truly whats remarkable is whats not happening. The fact we arent seeing a nice bounceback after yesterdays tough session. The dow negative by 11 points now. Up next our weekly beat the street segment. Find how one fund manager is racing ahead of his benchmark. And David Rosenberg will speak with us exclusively and tell you what hes buying and what some are calling a fed market tantrum right now ahead of a possible Interest Rate increase. Cannot afford to miss that, coming up. Welcome back. Europe is on sale for american tourists. Chart of the day, week month, maybe year. 1. 05 is where we stand. Bill, when i studied abroad 1. 42 and it hurt. Your daughter, same thing. She was there at the same time you were there. A lot of people looking at this rate finding it more compelling perhaps for a trip maybe some property. Thats a lot of the water cooler talk around here anyway. Its certainly getting a lot of peoples attention. Maybe even 85 cents. So youre saying 85 cents. One of the forecasts. To the euro. Deutsche banks now. Its time for our weekly beat the street segment. A fund manager outperforming their benchmark. Its thes aston lmcg small cap growth fund. Up 9 . Its benchmark is not the russell 2,000. Its the russell 2,000 growth index which itself is up 7 in the same time frame. Up now is the funds manager andrew more. Great to be here thank you. We have highlighted it in the last few years how the index funds are far outperforming the actively managed funds, but yet youre still able to turn in a performance like that. How do you do that . Well our investment process focuses on unrecognized or misunderstood growth potential, and it does so also with a valuation discipline that prevents us from overpaying for growth. That unrecognized aspect can also act as a catalyst as well when the situation becomes clearer to the broth broader audience of investors driving valuation higher. Whereas some other Fund Managers in small growth focus primarily on the fastest nominal growth rates in revenue and earnings irrespective of valuation. That can lead to periods among those stocks where those stocks are substantially overvalued, especially stocks with a focus on price momentum. We saw that in 2014 and thats not our focus so we really benefited benefited. I see one of your top holdings is sothebys. Show us where you see the cut off between small cap and everybody else and how a name like that would be considered small . Absolutely. The weighted average market cap for our index is right around 2. 1 billion and were about 2. 3 billion so just above that. We do want to have the potential for our stocks to appreciate higher, so certainly something up to 3 billion and 4 billion can be in our portfolio. We want our clients in the fund really to benefit from the upside potential. Youve actually seen some names in health care in the biotech industry in small growth go as high as 4 billion, 5 billion, 6 billion with some of the moves made again mostly in 2014. Im looking at the sector breakdown of your fund. This is as of january 31. Information technology and health care are by far your two biggest categories that youre investing in. Then you have Consumer Discretionary and industrials. So would you say that youre investing for growth and how much of it is defensive as well . Yeah no. I would not describe it as defensive. We really see the recovery in the economy as continuing and that being a tailwind and, again, small Growth Stocks benefit disproportionately from the changes in the economy. So whether it be Consumer Discretionary, industrials, technology, we see those sectors benefiting. Just final question the consumer im sorry, go ahead. I was going to say whether it be housing or autos, there are areas that are still benefiting. We see that continuing. Sorry. I think theres a slight delay on our audio. Final question just about the dollar. A lot of folks have said strong dollar i want to stay with American Companies without that much international exposure. Are you going to make any adjustments to our holdings to reflect the king dollar environment here . Yeah agree, not really because small Growth Stocks are a beneficiary because its relatively a smaller portion of their sales and earnings are derived overseas so the dollar translational impact affects Large Company companies more so than smaller growth companies. Well leave it right there. Andrew thank you for joining us. Continued success to you. Great, many thanks. Time now for a Business News update. Here is sue herera with the headlines. Hi, bill. Here is whats happening at this hour. Jurors in the Boston Marathon bombing trial saw pieces of a Pressure Cooker that was turned into a deadly bomb. Fbi agents held up the pieces on the stand today. Three people died. More than 260 were hurt after the bombs detonated at the finish line in 2013. Staples has agreed to allow shareholders who have at least a 3 stake for three years to nominate directors bowing to pressure from the new York City Comptroller and the citys public pecksnsion funds. Amazon launched amazon exclusive giving customers first looks at products that amazon calls up and coming. Britains parliament approved legislation to ban branding on cigarette packs. It drew immediate threats of legal action from the countrys 29 billion tobacco industry. And thats the cnbc news update at the hour. Closing bell is after a quick break and kelly and bill will be back, too. Bafter a quick break and kelly and bill will be back, too. After a quick break and kelly and bill will be back, too. Ckafter a quick break and kelly and bill will be back, too. After a quick break and kelly and bill will be back, too. [ male announcer ] legalzoom has helped start over 1 million businesses. If you have a business idea, we have a personalized legal solution thats right for you. With easy stepbystep guidance, were here to help you turn your dream into a reality. Start your Business Today with legalzoom. Here is how we stand as we head toward the close with 25 minutes left in the trading session. The dow is down 29 points. S p is down 3. Nasdaq down 9. Not a lot of volatility today. Whats interesting is its not a very i mean its a very split day. Look at that. Thats the s p 500 heat map and just a rough look suggests that roughly half of the 500 stocks in the s p are positive and the other half are negative. Is the recent volatility now just a market tantrum because the fed is likely to raise rates this year . Yesterday you would have gotten a first glimpse at this piece as market pros tell you how to take advantage of this. We are joined by David Rosenberg who was quoted prominently in that story. What makes you think, david, this time is a good opportunity, good buying opportunity . Weve had many times over the years where it seems like were headed toward the proverbial 10 correction and then it doesnt happen. You dont even have to go back to the bernanke taper tantrum in 2013. Just go back to last year between Vladimir Putins incursions and all the uncertainty in Europe Germany going into recession because of the sanctions, the ebola scare, isis and, of course you know, the resumption or the renewal of the fed concerns were alive last year as well. I think i can probably point to 18 different events last year that would have caused you as an investor to have your knuckles turn white and to bail. And the reality last year, you know, you had basically 9,000 cumulative down points for the dow and 11,000 cumulative up points. If you think youre going to time the market perfectly, nobody could do that but corrections come and go in bull markets. This year has been a challenging year, no question about it. If i remember correctly in 1994 the fed didnt talk about raising rates. They raised rates 300 basis points and for one year out of a decadelong bull market the stocks didnt do a whole heck of a lot and then resumed the course on an upward trend in 1995 if you remember. This is just one of those pauses. The market went into the situation of with a forward multiple. 17. If youre long term bullish here on this market then what specifically do you recommend people here buy . I think for the here and now, you want to focus on, you know the 55 of the s p thats domestic and not really go near the 45 of the market that is going to get dinged by this relentless strength in the u. S. Dollar and the sketchy growth were seeing overseas. I think Consumer Discretionary stocks are beneficiary from the stronger dollar because the prices of imported goods come down. Youre creating 300,000 jobs per month. We havent come close to seeing the gasoline windfall being spent yet, and 20 states are seeing income taxes going down. Real Income Growth in this low inflation environment is running over 3 . I like Consumer Discretionary. Now the productivity is going down, not slowing down. Its actually contracting. Thats one of the reasons why employment is doing a lot better than gdp growth right now. The fall out is productivity is going down so companies will have to start focusing on of their attention on diverting some of their cash flows to capital spending. Technology is another area i would like against that backdrop. What about investing overseas . Plenty of people believe that now that Quantitative Easing Program is under way by the European Central bank their markets will respond much the way our markets did five or six years ago when the fed was going through its various phases of quantitative easing. Is europe ripe for the picking as a result of that do you think think . Its not even a forecast anymore. Its a reality. The u. S. Market is down fractionally and the euro stocks 600 is up around 15 , 16 . They have a lot of catching up to do. They have lagged so far behind. They got better valuations. They trade with a 3. 5 dividend yield competing against flat to negative bond yields and when you take a look at what the euro has done to earnings estimates, you know, at a time when eps revisions are going down in the u. S. To their lowest level in four years, theyve gone up in the eurozone to the highest level in 18 months. This is the Silver Lining in a dark cloud for the euro is what it does for their earnings estimates which are going up. Its a better valued market. Absolutely, weve been allocating for several months more exposure towards europe and my sense is that this will still be a turnaround story for the balance of the year. I have to ask you about rates here. You were memorably said we could be going higher here. Are you shaking your head at the recent moves banging your head . What do you make of it in the u. S. And around the world . You know look the reality is this. You know if you ran any model on u. S. Bond yields, say the 10year against the domestic economy, that 10year note would have gone to 3. 5 last year but we know that didnt happen. The real correlation, the 95 correlation was with the german bunds. So the u. S. Bond market doesnt operate in a vacuum. We imported like we imported the big decline in oil prices and gasoline prices, we imported this massive decline in bond yields like in 1997 and 1998. Understanding that dynamic today, now what do you do . What do you recommend . Do you think bonds are still going to be dragged lower by europe or is this it . Well i think that you have a gaping spread. You look at 5 or 10year treasury notes against where theyre trading globally and even among some credits like italys, spine italys, spain, these are bbb. Its basically its the worlds tallest midget or treasury yields. So long as yields globally are going to remain anchored towards zero, you will be limited on how far up bond yields can go. Im not bullish on bonds. There are better places to make money than the bond market but i think yields are probably not going to go up much from here and they may go down if the expectations on the fed start to reverse. The bottom line is everybody pays attention to every syllable, every sentence that every fed Bank President has to say. Theres only one vote that matters. Nobody is going to override the vote by janet yellen, and when you go back and read and reread her testimony, there is nothing in there telling you that she had an itchy finger to start raising Interest Rates this summer. And we get more from her next week after the fed meeting they have their News Conference so well get more at that point. Good to see you again. Thank you. Thank you. David rosenberg joining us with his take on this market as we head toward the close. 18 minutes. Good to see david again. By the way, havent mentioned yet, oil closing around 48 a barrel. Its been the sleeper story that it keeps getting hit on that strong dollar. A strong dollar confounding different asset classes. The dow after yesterdays 332 point decline, its off another 26 points. S p off 3. The nasdaq off 8 now. Up next the next possible catalyst for this market. Banks face their second make or break moment in a week. Part two of the feds stress test will be revealed in less than an hour. This is the one that could really move the stocks because its about banks returning capital to shareholders or not. Well tell what you to expect and how stocks usually fare the day after those results are announced. Plus we have shake shacks first Earnings Report since coming public. Theyll be hot off the grill here it says after the bell. Find out if consumer are still flipping over their burgers like they did on shake shacks first day of trade here on wall street. Everybody lined up out the door. As you have heard, the fed releases part two of the stress test results of the nations biggest banks within an hour. Todays results will determine the scope and size of the dividends and stock buybacks that can be issued by banks if they can. That, of course, is a big deal for investors. Some could pay out to 100 of their earnings. Dominick chu, what can we expect . Here is how it happens. Less than an hour away from those tests. Were going to take you through what the fed has to say about the big banks. So we asked our partners at data and analytics form kensho so examine how the Big Bank Stocks perform in the first full day of trading after the results were released. Now, there have been five tests since the inception of these programs back in 2009. First, the Financial Sector overall in the s p has averaged a return of almost 1. 75 and has been positive four out of those five times. Bank of america whose shares have risen an average of almost 2. 5 in the day after the results were released. Its been positive 80 of the time. 4 out of 5. Regions financial posted 6. 5 gain on average and its been positive 4 out of the last 5 times. And Capital One Financial up 5 and positive 100 of the time. Each of the last 5 data releases. So thats a big deal for a lot of investors. The notable downside performer is citigroup which has averaged around a 1 drop and its only been positive out of 1 out of the last 5 occurrences. So traders will be watching closely if those trends stay intact this time around. So, again, upside standouts by the numbers here Capital One Financial has been positive each day after the last five capital return stress tests, kelly and bill. Back over to you. 12 minutes to go to the session here and then another 30 until we get those results. Art cashin just walked by. 600 million to sell so the imbalance is to the sell side as we head toward the close. Well see if that takes an even greater toll on what is already a decline today as you pointed out after that big selloff. Along with the stress test results coming up we have a full plate of after the bell earnings tonight. Some pretty high calorie companies, krispy kreme, shake shack, and box. So dont go anywhere. Stay tuned. Im type e. My golden years will not just be gold plated. I had 3 different 401 k s. E trade offers rollover options and a Retirement Planning calculator. Now i know when im going to retire. Not if. Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. About 7 30 left. Mentioned art cashin saying the imbalance was to the sell side by 600 million. Not really seeing the impact so they may have pared off but were down 20 points on the industrial average as we head toward the close with the s p down 3 and the nasdaq still down 9. Joining us right now is Peter Andersen from Congress Wealth management and our own bob pisani. One of the voices of reason here. And lately this week weve me . And, yes, you, too, bob. A few people have been coming through saying theyre a little more cautious maybe we will finally get this proverbial 10 correction and they want to step aside aside. What are you thinking . I think the overhang is oil prices. Have you noticed people are now starting to talk about this excess inventory, and prices actually tanking. And i think that could possibly happen but its just temporary but unless were educated about that, people will think of that as an equilibrium price and that could spook things. Negative oil would be negative for stocks. Could be a strong driver. More so i think than even if Interest Rates are going to be moved up which i think is a good thing. Weve been saying this now for a couple years. Meantime financials are higher as we get ready for those stress tests. Thats the important thing and thats good news. The banks a little better than yesterday. But we couldnt even put together a modest rally. Weve been in and out of negative all day. No bounce today. The dollar thing is a problem weve been seeing. First we had the impact on earnings from oil killing the earnings for the oil companies. Now the strong dollar is definitely going to be a problem in the First Quarter, in the Second Quarter for companies. Already in the Fourth Quarter we had dozens of companies in the s p. I was looking at campbells soup tj maxx home depot, deere, all cited 2 3 4 negative impacts on earnings and sales due to higher dollar. And thats just weeks ago. In the last two weeks the dollar has rallied 5 more. This is going to be an even bigger problem, and now were facing with negative First Quarter, negative Second Quarter growth. We may be negative for the whole year. I think thats a real headwind for stocks. What do you think, peter . Good point. I think the dollar has move strength and i think we will see that over the next two months the dollar will continue to climb before we start to see a little bit more also a headwind for stocks . Absolutely. You sound like youre getting cautious. I am but i still love the stocks in my portfolio. I understand. Well come back with peter and with bob in just a moment and have the closing countdown and see how we do as the bell rings and after it rings, hard to believe shake shack came public just month and a half ago. The burger chain known for drawing huge lines posts its first Earnings Report since becoming a publicly traded company. Well have the numbers the second they are released. 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And after the bell tonight, the earnings coming out, highprofile companies of interest including shake shack krispy kreme will be out and box is doing pretty well today up 4. 5 . How do you play the stronger dollar . What are you going to like here peter, as we go ahead . I would tend to stay away from companies that have a lot of exposure in europe just because i have a question mark about europe, so i tend to play it actually i tend to ignore it right now because i think theres a lot of noise. Theres not a lot of clarity. So maybe six months from now we might start to play that but instead good old domestic u. S. Stocks are the place to be. Especially with the fact rates might raise. If they raise, they can pass on the increase in price to the consumer. That will increase the revenues and increase the earnings. I think people have gotten caught up in a lot of different details. Overthinking it maybe. There may not be a lot of fundamental clarity but theyre about to embark on the biggest qe theyve ever done. It certainly worked in the United States to drive up asset prices. Its a pretty obvious buy right now in europe. We get those fed stress tests coming up in just a moment here. That will be big and it will set the tone not only for tomorrow but maybe the rest of the week as well. The dow is down 22 points. Here is the second hour of the closing bell now with kelly evans. Ill see you tomorrow, kel. Thank you, bill. Its a noisy one in here. Welcome to the closing bell, everybody. Im kelly evans at the new york stock exchange. Here is how were finishing the day on wall street. Its not the fact that the dow is off by 25 appointments at the close, its the fact its off 25 on top of yesterdays more than 330point decline and the fact we were up this morning 69 points, gave all of that up and then some. The s p going out with a decline of 4 points 2040. Thats the closing level there. The nasdaq off 9 to 4,849. Were 150 points below nasdaq 5,000. Thats a level we closed above for the first time in 15 years just last monday. Lets bring in todays panel for more as we await key earnings this afternoon. Bill smead is in the house. Stephanie link from tiaa. Great to have you back. And our own Steve Liesman joining us down here at post nine as well. Hello to all of you. With us fast money trader tim seymour and cnbc contributor michael yoshikami. Bill, first word on these markets. Are you surprised we didnt see more of a bounce back . No not really. We think the healthiest for the market would be to reestablish the wall of fear and some of the sentiment numbers the last two, three, four weeks, some of the other statistics indicate that people that participate in other than Long Duration are a little bit excited and a little bit frothy. So you like the fact some of the froth is being blown off this market . You feel the same way, stephanie . Well, yeah. I think the valuations are fair. Theyre not cheap, theyre not super expensive, but i think you could get a better buying opportunity. You know the market doesnt like uncertainty and we have a little bit of it here in the United States with the fed and what theyre going to do and the timing in terms of Interest Rates with currency. On the Fourth Quarter Conference Calls, most companies are guiding the euro at 1. 15. Were at 1. 05. Theres some ric tosk to the downside but you want to use that as a longterm investor to buy because i think at the end the economy is Getting Better and i like the economy Getting Better for overall earnings and for the market. Im just waiting for parity on the euro because the math is so much easier. If you think about how much time well all save i give you 1 you give me a euro. You give me a euro i give you a dollar. We dont have to do the 1. 05, the 1. 20 thing. Just going to make life easier. Plus you have to rip up the calculations and redo them every hour it seems. That 1. 15 thats being cited by the companies, it means more of a negative effect for exporters. The s p gets about 45 of its revenue outside the United States and just take a day like today. You noticed the big u. S. Banks primarily domestic. 45 of revenues outside the u. S. , not just earnings. Outside the United States. And so therefore, there are people inviting pain. You got a lot of Money Managers that are hoping that large cap tech and staples are going to be the place to be and thats really hard to do when what steve says when the currency goes down 8 in what, a month or a month and a half. We were in europe a year, year and a half ago at at 1. 38 and i remember paying twice as much for Starbucks Coffee in the major cities of europe all over, even the ones that have terrible economy. And that is the new big mac index. You can shift the trend shifting away from the u. S. And to europe stocks and international markets. You dont fight the fed in the u. S. You dont fight the global Monetary Policy makers as well. They are embarking under an enormous qe Monetary Policy easy platform and that tends to be very good for stocks. The valuations overseas are less expensive than here in the United States, but that said again, the u. S. Is Getting Better. So you will see better topline growth as the u. S. Gets better. I think you want to use any pullback to be buying. Before we get to the results on the screen tim seymour, i want you to get a quick word in. This is right in your bailiwick. Talk about commodities. Its not just oil, its iron ore. This vicious cycle for countries like canada like australia where they get downward pressure on the currency downward pressure on their Big Industries and it just continues. Its been interesting because commodities in this last dollar kind of turbo charge higher, if you look at the crb, i think its been very well contained. Its down 3 with the dollars last 10 move. Historically it would have moved at a beta of 2 . I think commodities have priced in a lot of bad news. Emerging markets currencies, they staged edd an interesting intraday reversealreversal. This is a case where this currency has been destroyed. Watch a lot of these. I think when we get to the fed and the first fed meeting where they do hike this is a case where it does better. But now its volatile times. Were keeping an eye on southern texas, houston home sales results. Thanks for right now. Lets get to the shake shack results with kate rogers. Shares look like theyre under pressure. Thats right, kelly. Shake shack is reporting in its first ever quarterly Earnings Report a loss of 5 cents a share. Also revenue coming in higher than expected at 35 million versus the estimated 33 million. They say theyre targeting to open ten domestic shake shacks per year and to triple their store counts over the next fi years and right now it looks like shares after hours are down 3. 5 . Back over to you. All right. Thank you, kate. Bring michael in for his reaction. A little bit of a disappointment . It is a disappointment. The revenue was higher than expected. Consensus was 31 million, 32 million. If you buy shake shack, lets be honest, youre not buying it for this quarters earnings. Youre buying it if its going to be the next chipotle. Its like in california for example, they have a chain that isnt public its privately owned call innout burger. These are the Niche Products the niche spaces that are going to be inserted into an environment filed with the burger kings and mcdonalds of the worlds that arent hitting on all cylinders. You buy this as a growth prospect. Maybe the earnings are disappointing this quarter but youre buying it for ten years down the road. Were going to get to these box results here as theyre hitting the tape with our josh lipton. First results here as a publicly traded company. Josh . Thats right, kelly. Box just reported so lets get you those numbers. Reporting a loss here of 1. 65. That is worse than expected. Remember analysts were looking for a loss of 1. 17. But ref shooting up to 63 million. Thats better than the 58 million. Billings, 82 million. Up 33 . Also some guidance a q1 guide of 63 million to 64 million. Analysts had been looking for 62 million. Well be on the Conference Call at 5 00 p. M. Eastern and bring you headlines as they develop. Appreciate it josh. Thank you. Bigger loss than expected. Now you can see the reaction taking a hit. Box is down 5 . Both they and shake shack struggling a bit on the results. By the way, dont miss the first on cnbc interview with box Ceo Aaron Levie at 3 30. Look forward to talking with him. Another twist in the Hillary Clinton email controversy. John harwood rejoins us with the details. Hi, kelly. We were just talking a while ago about the fact that Hillary Clinton had not been able to put this issue to bed. Here is an example of that. Jason chaffetz the chairman of the house government oversight company has just told our colleagues at dow jones he will subpoena Hillary Clintons emails if she does not respond voluntarily to a set of questions that hes forwarding her by friday. Now, this is going to be a continuing saga both with that committee as well as the benghazi committee. Democrats are counting on republicans to overplay their hand. Republicans want to keep this in the news because this of course, is going to be damaging to Hillary Clinton at least they hope so who is the overwhelming democratic frontrunner, kelly. John thank you very much. Important update on that story for us as well. A lot of moving pieces here. I turn to the panel for a little bit of context. Weve had shake shack miss just in terms of the after market response, same for box. A couple of Different Things to kind of watch. Stephanie, which one jumps out to you. First and foremost these stocks are very expensive and the fact theyre not earning is a little bit of a problem, but theyre also i think the problem is also theyre spending a lot of money. So i want to see what the margins look like at both shake shack as well as box because thats really the story. People have not been that happy with the level of expenses these companies have really been going after. And i know its going after for growth and i know theyre longer term stories. For me like box, you have competitors like google and microsoft and i dont see that spending subsiding anytime soon. Charlie monger said last year that competition is the enemy of competence competence. The problem with a shake shack and a very high price is their revenues might grow a lot but right about the time they make a lot of money three or four years down the road, these mill lennal young men get maertrried and they wont go there. So this whole wanting to be the next chipotle whenever you hear anybody saying is this going to be the next its like thats almost a curse. Time for some diaper innovation. Does anybody else pass a shake shack and see the line and wonder why they dont raise prices . Theres a thing in economics called the market clearing price, and its the price that clears your line away so theres always whatever the price is you see them beating on revenue but missing on the bottom line. It means their rpb must not be sufficient or revenue per burr ger. Its expenses though. Its expenses. Theyre running at a very high level. Lets talk about box. Google Just Announced today something called a cold storage offering. Cold storage offering is data that is not immediately accessible. In some cases its maybe 30 minutes or an hour. Google is saying theyre going to have it available in three or five seconds. Do you know what the pricing for that storage is going to be . Its one penny per gigabyte. Wow. One penny per gigabyte. Talk about a market clearing price. You tell me how is box going to compete with that price understanding they have applications and theyre trying to get into the institution, but i talked to ctos at major companies, at large Silicon Valley companies. Were very close to Silicon Valley, and theyre saying box has got this great strategy but how are you going to compete with one penny per gigabyte . We got box shares under pressure to the tune of 12 now after hours as well michael. We have to leave it there. But we will be speaking with the ceo tomorrow on this program. Plenty of questions to put to him. Thanks as well here after hours to tim seymour and the rest of the crew. Tim is coming up on fast money at 5 00. Youtube might be struggling to make a profit but they will be talking to one youtube star who mate have might have the answer. Were just minutes away from round two of the feds Bank Stress Test. All 31 banks passed the first round but will they be allowed to raise dividends . Stick around for thats potentially marketmoving results. And european stocks outperforming the s p 500. Many think that will continue for the next few years. Up next wisdom trees director of research telling us why they Just Launched a new product to capitalize on smaller cap stocks in europe. Stay tuned. Es. Its a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. Do y ou like to travel . Im all about free travel babe. Thats what i do. [ female announcer ] fortunately, theres an easier way, with creditcards. Com. Compare hundreds of cards from every major bank and find the one thats right for you. Creditcards. Com. Its simple. We begin at cnbc headquarters with another market flash. Hi, sue. And we have some news concerning Acadia Pharmaceuticals. It is affecting the stock in after hours trading as you can see down almost 24 . Acadia pharmaceuticals has Just Announced that the chief executive officer will retire immediately and will leave the board of directors and steve davis, the chief business officer, has been appointed the interim ceo. In addition to that separately, the company says Acadia Pharmaceuticals has issued a separate news release that says they are going to change the timing of its planned new drug application submission and the company will be holding a News Conference today at 5 00 p. M. Eastern time to talk about the planned submission as well as the management change. So youre up to date on that. Were watching it in after hours now down almost 23 . A huge move. Thank you so much, sue her hara. The euro hitting multiyear lows against the dollar. It may move people to take a european trip. Suddenly its not nearly as expensive. Our producers hit times square in new york city and here is what people told us. A couple of my buddies have been talking about going to the euro trip. Obviously money is a big factor. Now that the dollar has increased, its definitely a bigger incentive to get that trip going. Had a much more idea about thinking of doing something rather than before i was hesitant because we didnt the funds werent available, but now, yeah now ill take a chance. Look into it. I think it probably would, and it would maybe make us reconsider going to europe now. It will probably make me more likely to travel. I travel every year anyway or once a year to europe, but i would definitely, you know, travel more because the Dollar Exchange is better. Buying european based stocks has been getting more expensive. Outperforming the u. S. Market this year, many think its a trend that will continue as our central bank is about to raise rates and theirs is set to cut. Joining us now is Jeremy Schwartz director of research at wisdom tree Asset Management the company launching a new small cap european etf. Welcome. Thanks for having me. Talk to me about why now is the right time. That segment you just had with people wanting to go to europe. You see the euro going down, its getting more competitive. You talk about the central banks, the ecb is doing qe the fed is on path to raise rates. You have this weaker euro leading to support for their exporters. Hopefully the qe revises their local economy while the fed is tightening. If the ecb is successful in getting the rebound in local economy, thats where small copsaps come in. Are you buying bill . The question is in the small cap snas europe how much Critical Mass can you get in an etf before it starts affecting price itself. Thats the main way to use etfs. We have an index based approach that has an average market cap of 2 billion for securities. You get a very broad holding and so when you think about the large caps or the exporters, i think you have a very broad diversified basket. You dont have to worry about picking individual stocks there. So what about the reforms that were seeing over there in italy and in spain . Do you think thats going to make a difference . I think for europe really to work, for their economies really to recover, they need more than just qe. They need to see some structural reforms. Were starting to see that but do you think well get any kind of momentum from that and any further announcements . The Interest Rates have been one of the primary benefits. Theyre as low as they can get. The german bund at 20 basis points. Japan at 40 basis points. Scary. You think where the u. S. 10year is versus the italian or spanish 10year. The yields come down. From that perspective thats very positive. The qe is doing well for that. The lower euro is probably the main benefit. Its making everybody more benefit. Hopefully it will drive german inflation which makes spain and italy more competitive. When i come in and buy your fund, am i taking a risk on the euro Dollar Exchange rate . No thats the benefit with the currency hedge approach weve done with this new eusc as well as the flagship youre hedging the euro. You dont benefit if it goes up you dont get hurt if it goes down. Its just targeting the stocks. What does that mean for returns . If europe was up 15 yeartodate or 14 , what is it on a hedged basis . 15 . Youre getting the local economy stocks. How do you do that free of charge . Nothing is free. Its better than free. You will get paid to hedge because the hedge is based on forward contracts which is relative Interest Rates. So the u. S. Is going to have a higher rate. If we go up to 1 you will get paid 1 to hedge. It costs you 12 to hedge the real because their Interest Rates are 12 but the forward contracts with the u. S. At higher rates youre getting paid to hedge. Better than free. We have to go. Real quick. The economy can grow two ways. More people or more productive. Even though you do qe are they going to get more people and more productive . Demographics are a tricky issue but you know the stocks the stocks will benefit from qe and thas the main thesis. We have to leave it there. Jeremy schwartz with a better than free approach. Will the banks finally be allowed to significantly raise dividends . Will the results give clues with the feds plans to raise rates . Thats coming up in a few minutes. Former fdic chair sheila bair will join us with her exclusive reaction right after those results hit. Were back in two. Lac and a gentle wavelike motion. Ahhh ahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim before i knew it. Ahh so he had your back . Yep. In just one day, we approve and pay. One day pay, only from aflac. [duck former fdic chair sheila bair welcome back. Some earnings updates. Box shares tarpgnking after quarterly results. Kelly, you know, boxs stock had soared more than 40 since the ipo heading into this report. As you say, down hard. A loss of 1. 65. That was worse than expected. Also operating expenses here up across the board. Research and development, sales and marketing, it looks like total operating expenses about 94 million. Thats versus 71 million in the year ago period. This Conference Call kicking off in 40 minutes. Well be on it and bringing you headlines. Back to you. Thank you joshua. Well have more on todays market and the looming stress tests. First though sue herera has this hours update. Its been a busy day and at least six people were killed in baghdad today when a suicide bomber rammed his vehicle into a building. 35 people were wounded in that attack. The incident took place in one of the citys shiite neighborhoods which are frequent frequently targeted by isis militants. The st. Louis post dispatch is reporting Ferguson Police chief wilson is resigning. A report found a culture of racism in the Police Department and city offenses. Nascar has reinstated kurt busch. He was suspended before the daytona 500 and missed the next two races in atlanta and las vegas. The suspension stemmed from Domestic Violence allegations last september. A powered alcohol intended to be mixed into drinks has gained approval from the alcohol and tobacco tax bureau. It would come in a pouch with water added for the equivalent of a alcoholic beverage. Thats your cnbc news update for this hour. Back to you, kelly. I guess then you dont have to carry around wine bottles for something. My flask. Powdered alcohol. Im thinking about crystal light and these sort of pink lemonade exactly. Or maybe airborne. Its getting a lot of pushback from certain parts of consumer groups who say they dont want it approved but its gotten this nod so far. I cant imagine it seems like a product thats almost obviously aimed at younger drinkers. In any case well leave it there. Thats the worry, kelly. Thanks very much. The feds Bank Stress Test results due out in a couple minutes. Well find out which banks can begin paying bigger dividends and the impact that could have on the overall market. If youre up there, i could use some help. Smart sarah. Seeking guidance. Just like with your investments. That sets you apart. It does . It does. Youre type e. And seeking another perspective is what type e s do. Oh, and your next handhold. Is there. You dont have to go it alone. E trade gives you the support and guidance to make informed decisions. Are you type e . 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Kelly, the fed has approved the capital plans for 28 of the 31 bank that is underwent this years stress test. It rejected Deutsche Bank and did ask bank of america to resubmit its plan by the end of the third quarter. The firms were notified of the final results this morning. Now, the original capital plans submitted by Goldman Sachs, jpmorgan, and Morgan Stanley would not have passed the feds minimum capital levels falling short notably in the column for riskbased capital as you can see on your screen. Each of those banks decided to resubmit those plans. They reduced the amount of capital that they plan to return and after doing so they did pass all of the feds bars. The fed notes that after those resubmicks all 31 banks met the Capital Requirements on a quantitative basis but the three plans that i mentioned had not been approved were not approved because of what the fed calls qualitative issues. For bank of america, the fed says deficiencies in the way it plans for capital returns needed work but that it shouldnt undermine the strength of the banks outright capital levels so it can go ahead with the capital plan in the meantime but the fed reserves the right to nix it if the issues arent fixed by the end of september. Senior fed officials said examiners for banks in question would be sending out letters next month detailing specific issues. Deutsche bank and another bank had significant and widespread deficiencies in the way those banks model for risks and plan to distribute capital. Theres one bank that wont get a slap on the wrist and thats citigroup. Fed officials saying the process saw notable improvements. You can see that stock, kelly, after hours is up about 1. 5 . Ceo mike corbett had said if the bank did not pass this year he deserved to lose his job. Shareholders responding positively. I will be back with any news we should get after hours of what exactly banks will give back in the form of buybacks and dividends. That will come out shortly but for now back to you. Kayla, thank you very much. Well try to get all those bank names up for everybody shortly. Joining us chris whalen david ellison, and jack moore from the street. Com. Welcome to all of you. David, first to you, this bank of america news a surprise . Not really. I think its amazing that here we are going through a stress test and basically all of them passed. I dont know if you have gone through some of the details, but this is an industry thats being stressed for the end of the world. They all passed. They all can do buybacks and do difficult dends. I dont think theres any other industry out there thats gone through this kind of testing. This is probably one of the safest industries in the country right now. Unless youre Deutsche Bank or song tong dare. Theyll tix itfix it but you have these regulators, theyre assuming the Unemployment Rate goes to 10 next year assuming the stock market goes to below 9,000 next year and theyre having them do the stress test under these significant, dire scenarios. Theyre assuming home prices drop by 30 , commercial real estate drops by 30 sometime in the next 2 1 2 years. Under all of that they can still pay dividends and still return capital. So to me no other industry in america is going through this type of test and theyre all passing basically within all but two of them. Okay. An incredible story of improvement. Its a valid point, david. Well hear i believe, from the bank was more detail on what exactly capital plans they intend to pursue. Jack moore, what do you think is likely . Well i think, first, id say theyre big scenarios but the banks know what to expect. Theyre told explicitly what the parameters will be and they have time, and especially year after year to refine it. So i dont think theres any excuse for a bank of america. For Deutsche Bank and sang tang dare, its tough being a foreign bank and operating under the rules of the fed. If the rest of them have a green light, what moves do you expect them to make . Its going to effect not only people who have been investing in the financials but the financials used to be the largest dividend payers in the s p 500. The dividends are tough for the regulators because theyre not flexible. They cant pull them back as quickly. So i think they will be more flexible with the buybacks. I think these banks realize they have to be conservative. There is no free pass here. And they cannot have aggressive moves. Thats what citi learned. Im not surprised citi is not on this list. They know if they try to be aggressive, they have the potential to be denied. Here is Deutsche Bank among the banks coming out in response. Deutsche bank you saw it shares under pressure. It is not one of the bank that is got that green light. It said it hired 1300 employees dedicated to ensuring their systems and control are best in class. Lets get to chris whalen for his take. You know its interesting. Deutsche is no surprise. The fact that they hired a lot of people doesnt impress me. They need capital. Theyre one of the least capitalized of the large banks. The biggest bank in the eu they have had issues for a while. And bank of america, my gosh they have been struggling for years. We still havent seen a change in management. Its really quite incredible to me that the board of bank of america tolerate this is kind of performance from senior management. I think you need to see a change there. Bill, you were saying . Thats hogwash. What do you mean its hogwash . Deutsche if it wasnt for one at a time. The net present value of the future income stream of the company is not affected at all by what some regulator tells you to or not to do. Okay . So you think Warren Buffett puts a thing in his annual letter and says this is my fourth Largest Holding and were excited about it through 2021 and we value it highly. It has the best deposit structure, their costs are going down because millennials never go in a bank what you are you talking about . Thats short duration silliness. Stephanie . Kelly, you asked about or you talked about dividends and how this group used to be the largest dividend payer in the market. I think when you see all the results that come out, you will see that the regional banks do quite well and the Credit Card Companies do quite well. I think those are the areas where you probably want to be maybe a little more overweight versus these Money Center Banks because there are a lot of moving parts to the Money Center Banks and the tests themselves are changing. All the various different pieces. Sorry, steph guys one second please. We have some detail on Morgan Stanley in particular. Morgan stanley just putting out a press release, kelly, saying they have increased their Quarterly Dividend to 15 cents a share and they will also pursue a buyback of 3. 1 billion beginning in the Second Quarter or when these new capital plans go into effect. That is a raise Morgan Stanley last year had authorization for a 1 billion buy back and it is raising its dividend from 10 cents each quarter. So of course, this is a raise for Morgan Stanley. Morgan stanley may have tried to do a more aggressive Capital Return Program and what were seeing is actually a lowered expectation for the bank. Of course, we showed you that graphic when we did our hit at the top of this block where they would not have surpassed the feds capital level if their original plan had been approved. Even though they are raising 3. 1 billion buyback, 15 cent dividend, that does appear to be a less aggressive version of what they had originally planned to do. Kelly, back to you. Thank you, kayla. Morgan shares up better than 1 . Goldman as well submitted an adjusted plan. Steve liesman, you were saying . I think this section of the stress test goes too far. I dont think the government should be in the business i think its one thing to stress them for capital. I think its up to the companies and up to the markets and investors to decide is the Share Buyback and distribution commensurate with the amount of risk i want to take as an investor. I think this is emergency crisis period operations on the part of the fed. Absolutely. I think were past that. I think the government should not be in the business of david . I would agree. The government first is in the business of predicting the future and we know how that works even for the people that are paid more highly to do that doesnt work. But at the end of the day, this shows you how the industry has evolved the last four or five years. Now were talking about buy backs in the billions of dollars. Five years ago we were talking about capital raises in the billions of dollars to stay solvent. This industry has come a long way. It will continue to improve and to say that bank of america missed it by a little bit, who cares. Theyre Getting Better. This is a longterm process. A healthy Banking System means a healthy economy means a better market. Thats why the market is going up but do we want our banks to have to hold on to enough capital for a 10 Unemployment Rate at all times . To me that seems to be excessive and over the top. Steve the point is why are we doing this . I mean, weve turned this into a circus where were going to control dividends and equity Market Expectations instead of benchmarking safety and soundness which is what were supposed to be doing here. Bond investors gain nothing from that. I would say that bank of america hang on jack. With bank of america the bottom line is high school never ends. With bank of america they can issue a press release saying we totally disagree with how the fed operates we disagree and it doesnt matter. It doesnt matter because their stock will be down tomorrow. These are the rules that you have to operate within and thats just the framework. The underlying we went through this i understand that but the underlying theory is not that the market failed in 2008 but it will always continue to fail to adequately price risk at the banks. I dont think thats true. I think we had an aberration of risk pricing in 2008 for a variety of reasons that began with completely no oversight, not no oversight but steve, the bigger point is that you dont need to do economic scenario modeling to test for safety and soundness and loss absorption. The fed has to wrong here. You dont need an economist to do this. These banks are over capitalized. Theyre way over capitalized. Absolutely. What we need is more velocity of money, more activity and theyre in a great position for when the economy gets better. An incredible five six years it has been since this crisis. Today marking an important point in that recovery process. Thank you so much for joining us. Chris whalen david ellison, jack mohr. Well have much more on the banks stress tests. Former fdic chair sheila bair will weigh in on the results and whether the fed made the right call. Shes been a long time proponent of breaking up the biggies. Well hear what she has to say next. You total your brand new car. Nobodys hurt,but there will still be pain. It comes when your Insurance Company says theyll only pay threequarters of what it takes to replace it. What are you supposed to do, drive threequarters of a car . Now if you had a Liberty Mutual new car replacement, youd get your whole car back. I guess they dont want you driving around on three wheels. Smart. 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Last year the company was allowed to increase its Share Repurchase authorization by some 350 million shares but it appears to have a little more tempered expectations this time around with just roughly 3 cent increase or 2. 5 cent increase to its dividend for the coming five quarters. Back to you. Thank you very much kayla. Moments ago the fed did release the results of the second round of Bank Stress Tests and here with her reaction is former fdic chair sheila bair joining us in an cnbc exclusive. Welcome. Whats your reaction to these results as you hear them . Well i do think its important to understand the difference between the quantitative results that occurred last week and the qualitative results that occurred this week. They look at Different Things. I focus more on the quantitative results and i still i heard the commentary earlier from your panel about thats banks have too much capital, and i guess i dont feel that way. If you look at the leverage ratio which i think is important, this is a measure of capital strength that does not allow banks to risk weight their assets. Its still out of leverage of the system and if you look at the poststress scenarios for most of the largest banks, the leverage ratio is between 4 and 5 which isnt a lot of common equity. So i think we still have a ways to go but, you know, hats off to the fed. They keep plugging forward on this. But i think we still have a ways to go with the very largest complex institutions to get those capital levels up. And im glad you said we sheila, because on a way youre now on the board of santander. The fed raised issues about governance about this bank. Its continued to struggle with regard to the tests and as a board member now for over a year, whats your comment on the situation there . Well i dont comment on santander. Im an independent board member. Im on the group board, not the u. S. Board. The u. S. Our subsidiary has its own management its own board. You should talk with them to get their response to these results. The u. S. Operations is about 10 of the groups earnings. I would say i think theres no higher priority than to get this straightened out. She is bringing in new management strengthening the boards. Just my personal view any bank needs to not only meet but exceed regulatory expectations and i know anna and the team shes bringing in in the u. S. Operation is very committed to doing that. Its going to take some time but i think theyll get there. And sheila just bringing the panel in here now as we all continue to sift through the numbers here. Steve . Nice to see you. I was wondering about the conversation we were having. Is the government going too far . One thing the stress tests of the bank but should the government be determining the number of dividends, the number of Share Buybacks. Does it make the banks less competitive . Yeah. Well, i think, look if youre in the safety net, especially if you have insured deposits there is government exposure there, and we have long had a prow prudential supervision of banks in the safety net, so i think they have to accept that. And in truth, regulators dont want to admit this but in truth prior to the crisis regulators had authority, longstanding authority, to order banks that were starting to get in trouble to reduce or eliminate dividend to conserve capitals. Those powers werent used. Citigroup wasvidend these are essentially bank that is are healthy and we have to look at you like youre in receivership. I wouldnt disagree with you, steve. Weve gone so far the other direction now because those tools werent used in the past and the pendulum swings the long way the other way. But if i had to choose, i would rather have a process where the regulators are keeping tabs on capital distributions versus precrisis when, lets face it a lot of people were asleep at the switch. So it is what it is. As one of your earlier panelists said you may or may not like it, it is what it is but i would rather they are doing this rather than what they were doing precrisis which is not much of anything. Bill . Thank you for your comments. I think of bank of america, bank of americas primary capital problem is the government comes in every two or three months and tries to strip away some of their capital to penalize existing shareholders and existing employees about something that went on seven or eight years ago. Then they come on and they want to tell them how much dividend to pay and how much capital to return, and dick was on two years ago and he said if they had called me in 2005 and 2006 he says, you know, we were not making loans to people because they were uneconomic and i never got a single call from a regulator saying by the way, why are you letting your market share in mortgages shrink . Theres no demonstration that regulators will do the job but yet theyll come back here is another 5 billion to pound on them. How does that help the United States economy to continue to do that . I think youre talking about all the Enforcement Actions and various penalties and fines and it has troubled me. Shareholders have paid the vast majority of that. The lack of personal accountable, the people responsible for it would be nice to get beyond this. It would be nice to show more personal accountability atz opposed to shareholder accountability. It is what it is. I still agree with it. If we werent putting people in jail at least making them pay out of their own personal pocket. Let me interrupt to bring news out of all of this. Kelly two companies to tell you about at this hour. American express will buy back 6. 6 billion per share. Also increasing Quarterly Dividend by 12 . That will move shares after hours but bank of america is announcing a new 4 billion Share Buy Back program. Last year they planned on buying several billion of stock buy back. But it found issues with the way it calculated its observe capitol. It maintained its raised dividend to 5 Cents Per Share. Its keeping that in place this year. So 5 Cents Per Share is the dividend for bank of america but the board of directors authorized a brand new 4 billion buy back program that certainly will be music to shareholders ears after a couple of missteps over the last couple of years. I also want to tell you this capital plan is at risk if bank of america doesnt meet or fix some of the issues that the federal vefsh has raisereserve has raised. Its going ahead with an increased buy back program. Thank you again this hour. A word to you before we let you go. Reacting to these plans from bank of america, major comments and concerns still about capital levels and even about individuals being held accountable as we continue to sort through the financial crisis here. I think thats true and again in looking at the quantitative results we need to put more focus on it and those are still a little problematic with the larger more complex institutions. Hopefully we will dig out of this. Sheila thank you for joining us. Much more right after we take a very short break. Stay with us. Welcome back. Breaking news with Goldman Sachs right now. News is coming in fast and furious. We want to bring you an update on goldman that announced it will increase its dividend by 5 cents to 65 Cents Per Share. The press release mentions the continued repurchase of common stock. It doesnt say how much but certainly a continued repurchase and 65 cent per share dividend over goldman sacks. Back to you. More closing bell in two minutes. Well be right back. Financial noise financial noise at mfs, we believe in the power of active management. Every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. Welcome back a lot of action this hour for you. We can begin with the earnings movers and a couple reporting. Shake shack, box, krispy kreme. In the red under significant pressure. Box looks like now lets circle back to 4 30 p. M. Youre getting a lot of detail on capital plans seeing dividend hikes. Top of the list includes Morgan Stanley. Jp morgan in the green. Bank of america under some pressure here as well. Stephanie, what do you do with this tomorrow . This information. I think you have to step back on the banks. If you think the economy is improving this is icing on the cake. Five syllable final thought. Those should be the next place to be the next four or five years. The money youll spend on burgers and donuts put them in banks. Thanks guys. Hah does it for us here on a crazy closing bell show. Our thanks to kayla for doing great work on these results. Fast money starts right now with melissa lee and the gang. Breaking news on the Bank Stress Test. The fed rejecting the capital plans. Bank of america will also need to resubmit its plans. Welcome im melissa lee. Two companies releasing their First Quarter Earnings Report since going public. Both stocks falling in the after hour session. Well bring you the latest on both companies but first the latest on the stress test result with kayla back at headquaters. Hey melissa, very interesting results coming out of this stress test this afternoon. Four of the six biggest bairngnks in this country were forced to go back to the drawing