here are the stories we are watching ahead of the closing bell -- nomura is suspending a debt trader, matthew katz has been trading federalize loan obligations backed by high-yield debt. the suspension is tied to his activities at rbs and nomura. this is according to a person with knowledge of the move. he is affected -- he is expected to plead guilty. this is for transactions backed by everything from mortgages to corporate loans. and though international is making a takeover offer for sale x pharmaceuticals. that is topping billion's agreements to pay $158 a share. new york city's first new golf course in 52 years is scheduled to open on april 1. now i know where my dad will be. it's accepting its first online reservations today. it's a collaboration between donald trump and jack nicholas making it the most expensive public golf facility ever built in the u.s.. we have less than an hour ago -- hour to go before the close of trade. scarlet fu is looking at the action on the street. scarlet: nothing like yesterday. it's downright touring compared to the selloff we got yesterday. just one stock for example -- it was a third straight day of intraday point moves. today, the move is fewer than 90 points. we are higher for all three indexes, but not by a whole lot. financials are performing better ahead of the fed's stress test results. we will find out which banks can return cash to shareholders in the form of buybacks and dividends. crude oil something to a five-week low after a report shows inventories climbed for a ninth week. rising productions still in the backdrop. brent, up high 2.5%, halting a five-day decline. and just to wrap up what has happened in europe -- equity markets continue to be beneficiaries of quantitative easing. the stoxx 600 up by 1.5%, the highest in seven years. the dax making another all-time high. so far this year, it has gained 20%. the cac is up almost 20%. if you convert that into u.s. dollars, the gains are very different. alix: you love those conversions. thank you so much. staying on europe, it's time for our big story -- and unbelievable slide in the euro now at levels we didn't even see when new york was falling apart just a few years ago. all of that from the ecb's 5 -- bond buying programs addicting verity by the end of the year. what is behind such a steep slide? here to discuss it is lisa abramowitz and the strategist from societe generale. you were calling for 105 euro-dollar, and we hit it. were you surprised we hit it so fast? >> i think we have found out that if you want your country, to go down, the number of interest rates and quantitative easing is the most powerful drug you can throw in as a mixed together. it has been an amazing move and i think a lot of people put on derivative trades by selling downside but the big moves to make it cheaper to go short they have been stopped but that has accelerated it. we have come in a straight line from the mid-100 20's without any kind of significant pullback at any stage all in anticipation of a fed rate rise that has not happened and quantitative easing that has just started. but we priced it in before and after. >> it seems like contrary and don't -- any that were left, are being encouraged by jeff dunlop saying don't try to short the dollar. it's just not worth it because realistically, it's going to keep strengthening. you have the double effect from the u.s., even if they don't tighten policy right now there's much more economic growth and there seems to be an acceleration here. you've got the european situation and potential deflation, but you also have a qe program that seems to be working. alix: when do you see parity? deutsche bank says by the end of the year. >> i don't have any magic way of knowing the answer to that. it could happen tomorrow. the people who dry lines -- you draw lines and make charts if we break through, we will be at parity within a few days. if we stop here, it could take longer. there is no magic time. the euro will have to find stability at some point, but first, we have to get confident that the greek crisis can be kicked more than 100 yards down the road. second, we need to get optimistic about the european economy. alix: what happens if the fed doesn't hike in june or september or even december? does the dollar sell off? >> it depends on the circumstances. if we all revise our forecast for the first rate hike three or six months down the road and have the same conversations all of us might get quite bored with that. i don't know these changes very much because the forward interest rate curve in the united states would not move very much. we would have a balance at some stage but it does not get rid of the uncertainty. the reason this economy is losing momentum significantly in one sense makes me more nervous about currencies generally. i don't know that the dollar weakens on a re-think by the fed as opposed to a's sharp slowdown in capital spending as a result of weakness and corporate earnings as a result of the strong dollar. the rest of the world needs u.s. demand to prop it up. at that point, you would have emerging markets leading the dollar higher more than euro -dollar. i would not feel great about the economy slowing down. alix: is there anything that can send the dollar lower question mark >> a recovery in europe and a re-think about monetary policy from the ecb. if at some point we get to the point where we think it is going to work and quantitative easing won't last as long as we thought, rates will be going up in two years time. the greeks will get some growth and everyone will live happily ever after. that is the mind shift that turns this round. i'm no smarter than the rest of you in terms of things that can happen soon, but i think that is what it takes. the weaker euro has to start helping in the quantitative easing has to start helping the outlook and cashing out some of the euro. alix: if we see some kind of recovery in europe and a weaker euro, might we see the same kind of velocity in money flows that we saw out of the currency go into the currency and other assets? >> yes, to some degree. as surprising as the weakness of the euro has been in terms of its speed, europe has the biggest account separate these days. i've spent a lot of time watching the yen be strong because of a huge account surplus. if the euro recovers against that kind of position and we rethink the interest rate outlook, you will see the money currently flowing into european equities and hedged in currency terms, you will see that come in with more enthusiasm and that could send euro-dollar up sharply. but it is just a big, gray area. alix: we have seen a risk on-risk off go up and down. just look at oil. great to speak with you on this -- i would call it a momentous day for the euro and the dollar. coming up, today is the main event for the fed boss stress test round two. there are billions of dollars at stake. less some of the wall street bonus pool rising 3% to $28.5 billion. is this a trend that will continue in 2015? i will discuss it with the new york state comptroller. ♪ alix: welcome back. here's a look at the top stories we're watching ahead of the closing bell. nasdaq is expanding into energy derivatives. the ceo says it could undercut the cost of rival exchanges. he spoke to betty liu earlier today. >> when you look at the capture rate in energy futures versus other markets, it is quite stop -- it is quite stark. all in with clearing, it's under $.20. the first -- the main competitors charge $1.34 or $1.45. it's a huge difference. >> that ecb governing council members as negative on rates are not here to stay. he spoke about the ecb's qe program. >> the intention of the program is that we can get into the territory of higher inflation rates and higher expectations. that should translate into higher government bond yields. >> a former j.p. morgan executives is heading a virtual currency startup. he aims to change the way traded assets are settled and recorded using bitcoin. staying on finance, the final report card for big banks part two of the fed boss stress test results will be released later today. all 31 banks may have passed the first round last week, but now they will find if they've got the green light to pay out capital to shareholders. billions of dollars are on the line and several dollars as well. i'm joined by keri geiger. is goldman sachs the bank to watch? >> i think citigroup is the bank to watch. the stress tests are put together to see if banks can commit -- if banks can maneuver around stressful situations like interest-rate's going significantly up housing prices losing value, all the things that came into play during the financial crisis that put the banks underwater. last year, several banks could not pass the second part of the stress test which is what we're waiting for today. one of those was citigroup. analysts, investors, they are all looking to see if citigroup can pass the line. there's also a question if michael corbat would step down after this. it would be a breath of fresh air in terms of ceo accountability if that did happen. alix: water analysts saying about the chances of that happening? >> i think it's low. the expectations are that they deployed a lot of capital to get risk controls together and bolster everything they need to do to get across the finish line. while last year was a bit of a surprise to say the least, people are pretty comfortable that they will get across the finish line. most banks at this point have figured out how to get their capital ratios right and get their internal controls right and that formula to deploy capital. >> we did see that goldman sachs came the closest to falling below the regulatory minimum. i hairs wrath, it succeeded. >> the more capital in ratio, the less you have to deploy, so goldman might be right on the line in terms of what can be most profitable and pass the stress test alix:. alix:what about the payouts? where could we see the most upside question mark i'm assuming citigroup since their paint one sent right now. >> bank of america had to restate some of their issues and there was a decrease in the amount they paid out. dividends are big issue for bank stocks this year. banks have made a lot of money over the last 12 to 24 months and shareholders are expecting there to be pretty good dividends this year. >> what about u.s. foreign-based banks? are they the banks that are more at risk? >> last year, royal bank of scotland -- they've had trouble with the stress tests. it is tough for european banks who are not raised with the u.s. regulatory system to catch up to this. a lot of european banks are still trying to catch up and figure out how they need to configure their rich managed -- there management. alix: last week, the theme coming out was the fed was harder on banks with big investment bank units. do you expect the same heavyweight to be put on that this time? >> i think there's no reason for them not to do that. investment banking can be capital intensive and that's why they're so much focus on it. alix: we are so excited. an hour and change to go. thank you for the preview and we will bring you those results live at 4:30 right when they break. coming up next, job growth on wall street -- how the financial sector added jobs in 2014. can that growth the sustained? ♪ alix: wall street's bonus pool rose 3% in 2014. it represents a 1.5% increase, so first time wall street has added jobs since 2011. this is according to thomas dinopoli who joins me now. were you expecting this? >> the big welcome is that the numbers are going up. we've seen it growing post global financial crisis. right after the global crisis, they started hiring on the street and then it went down. part of how they kept profits up was to lower the headcount. now we see the bonus pool growing, modestly, but growing. do we know where those jobs were added in the bank? >> we don't. anecdotally, we hear about positions related to compliance. can't and pointed with precision but i guess it's a fair number related to compliance. alix: what is your best guess? >> optimistic. the industry has such an impact on the rest of the economy. two of the jobs created in new york city, one of the jobs in new york state, typically in the suburbs -- just look at the wage impact. about 5% of employment accounts for 20% or 21% of private sector wages in this city. so the impact of those folks spending their money reverberates through the rest of the economy in a way that benefits us all. we do this report every year because of the impact of our residents coming to the state. so how the street is performing and impacts the tax revenue is very important to us. alix: do you expect the payouts to change and put these legal issues to rest question mark >> that's a great question. one of the drags on the process has been the settlements no doubt about it. as they put that to rest, that will put profits higher and bonuses will be higher. alix: do you get the feeling that anecdotally, firms are holding back? >> it is still a challenging climate. certainly the drag on legal settlements, these are great challenges that are out there. everybody is not sure what the new normal is and adjusting to regulatory reform, which has changed the compensation model. some of the bonus represents money paid out from years before. it makes a harder to do those calculations because we don't know from what year the bonus is coming from. alix: how much smaller are these payouts from pre-crisis? >> the average now is the largest since the crisis. in terms of employment, although they are adding jobs, it slowed down by about 11%. it still adjusting to the new reality. alix: what do you think changed most this year for banks? it's hard to make money. they are doing it in a new regulatory environment and fixed income -- forget about it. what's the big changer? >> profits were down slightly, but $16 billion -- you look at the years since the global financial crisis, three of the best years ever. you still have the ability to make money and if you want to retain people who can navigate in a difficult climate, you have to pay them. >> i guess private equity isn't able to snag them. >> exactly right. hopefully, there's a fair amount of good news in our report. alix: thank you. we appreciate you having here -- appreciate having you here. coming up, how plunging oil prices can hurt and islamic state militants. that's coming up next. ♪ alix: welcome back to "street smart. the euro slump is cushioning the oil and gas producers from the crash in crude prices. they will benefit the most according to data compiled by bloomberg intelligence. the companies paid a large chunk of salaries and rent in euros while earning revenue from oil and gas shale assets in dollars. another board getting another member from lion capital, the retailers founder according to a person familiar with the situation, loaning money to them in the past pointing to directors because of the warrants it holds. pharrell williams and robin thicke, ordered by a u.s. jury to give up $7.4 million in compensation to the children of the late marvin gaye. lord lines was found to be too similar to give it up. we will talk about what this means for young musicians who want to sample older songs with joe libby. stay tuned for that. 30 minutes until the close of trading, let's go back to the breaking news desk, where scarlet fu is taking a look at some of the mood -- movers on this snoozer of a day. >> perhaps there will be more excitement after the close. the banks responded to the fed stress test results and ahead of that we are seeing rallies from big names like citigroup, goldman sachs, and bank of america, all of them posting their best day in a month. last week goldman sachs came pretty close, the closest under some regulatory minimums where bank of america told us last month that they had demanded changes to some of their models. we want to tell you about shake shack, reporting its first financial results as a publicly traded company. can it live up to the hype? the stock is up 123% since its ipo and $21 per share. sounds fairly cautious, their average price target is $10 below right now, consensus is that it is too rich, so let's go to the bloomberg terminal to see how it shaped -- shakes out against competitors. there is no pe in this category for them, they are expected to post a loss, but before is 754. the average in the industry is 35 point 82. here you can see chipotle wendy's, and noodles on the high-end over 40, on the low-end you have panera and starbucks, below 30. revenue growth will be interesting, they rose revenue 45% on average, it has dipped 14%, better than the consensus among these other restaurants, but very few restaurants hold a similar rate of growth. only zoe's kitchen and have it restaurants with 40% revenue growth. we will see how it all shakes all that shakes out, later on. alix: i got that wordplay. pretend you do not love the shake shack. scarlet: i try to only have it once per week. [laughter] alix: shameless plug there. iraqi forces backed by iranian forces battling their way into the hometown of saddam hussein early this morning. congress was asked to approve new authorization for the use of force against the islamic state. peter cook has more. peter what kind of progress might the administration make today? peter: some progress on capitol hill trying to sell the authorization for the use of force to a skeptical congress. it appears they still have some work to do. specifically the president faces skeptical democrats, who thinks the authorization may be too broad when it comes to the role of u.s. forces. skeptical republicans on the other side think that it is too limiting, tying the president's hands. today members of the administration tried to ease those concerns, ash carter saying that the language gives the military the flexibility they need and martin dempsey said that it was suitable for the mission a hand. john kerry said that the momentum of isi l is being diminished. >> the president already has statutory authority to act against iso--- isi l. at this moment in time this would dispel doubt that might exist anywhere that americans are united in this effort. >> more of a sales job will be needed for the nuclear talks are ongoing with an expanded influence in iraq. he got into it with marco rubio. alix: he also got it into -- he also got into it with -- help me out here -- a letter to the iranian leadership signed by republican senators. he was not the only one who had such a strong response on the hill. peter: the debate over this is going to continue and it is getting pretty heated today. a former member of the senate himself, he said it was stunning and a responsible on the part of republicans. he got into it with rand paul for little bit. a couple of other senators republicans, pushing back, saying that it was the chance to weigh in on what they call a bad deal. alix: much more rhetoric to come. thank you so much, peter cook. staying with a rack, file -- falling oil prices could be the next shoe to drop, prices have been cut in half over the next let -- last few months. joining me to discuss what this means former mckinsey vice president bloomberg news's isaac armes dorf. what is it going to take for big multinational companies to get out of iraq? to leave. we don't want to be involved with this drama, too much risk. >> those companies are used to operating in environments like that. they have been as long as oil has flowed from the middle east. there will always be competitors willing to take it up. alix: what will it take for iraq to continue getting money out of their oil? isaac: ever since the iran-iraq war iraqi has been underperforming its potential with oil production. the problem now is the oversupplied market. many countries like iraq just want to keep using more. alix: they don't care about the price, they just want to sell it. isaac: that is the challenge for them, can they maintain the progress they have made in increasing production? alix: and of course, oil prices having a big hit on oil companies as well. around this time is one oil companies tend to go back to banks and get re-rated for their loans they look at their oil price and they judge how much money they will lend companies in the future. what is going to happen this time around? >> we think that in the next couple of weeks they will reset that curve in than the banks will be testing those loans. the loans being tested are the reserve base loans. not every company uses those loans and the ones that do do not pledge 100% of their reserves but what will happen is the curve comes out. they will test the loans and some companies may not past -- may not pass the test. now the banks have to figure out how to keep those viable companies out, getting them back into compliance so that they do not have to foreclose. alix: how do you do that? what happens? skip: a number of creative things will be going on. if you are a viable entity, the last thing a bank wants to do is bolt on you. they only assets and they are not in the position to be the best owner of the assets. a lot of creative financing will be going on. you have already seen it in the relationship between blackstone and linn energy providing some debt for them to continue their drilling program but if the gsl has a fairly large working interest under a certain rate of returns other operating companies are already going back and equity markets. a more expensive form of financing the does relieve you of making those debt payments. alix: it comes with a really big price. they gave up the majority of their ownership and assets to private equity. alix: create -- isaac: creative is one word for it. alix: is that going to squeeze these companies? isaac: they have basically got a gun to their head, don't they. this is what they look for when they can buy companies and borderline distress situations. the banks do not want to foreclose, companies don't want to go out of business there is the opportunity. alix: gun to their head, perfect sentiment there. thank you for joining me. what is next? the future of satellite radio and howard stern? can serious xm radio survive without the king of all media? this is street smart. ♪ alix: welcome back to "street smart." blackrock, warning that the debt market is not adequately prepared for the fed to raise rates in june or september and that this may lead to price tightening. they say that because investors do not expect higher yields there may be another "tantrum." the vp of ferguson is considering resigning he may step down today. last year the police chief made a public video apology for the unarmed shooting of a black teenager. the justice department concluded in a report that they suffer from systemic racism in the police department. the new york jets will fire ryan fitzpatrick he started 12 games for the texans last season it would give houston a conditional late round draft pick. shifting to the media world subscriber numbers for serious xm -- sirius have continued to rise, but it howard stern is leaving, what does that mean? for answers i am joined by amy. first off, what howard stern really leave? amy: you never know with media characters. alix: are you calling me a media character? amy: media personality. my guess is that he stays on. alix: why is this becoming such a drama right now? amy: remember when he negotiated his second five-year deal? now there has been a change of control and it has been headed up by jim myers. there is a lot of speculation that he had been in there for 10 years, but with a new ceo this could be his exit. alix: how much do they pay him? amy: we do not know, but my estimate is $8 million to $10 million per year. a lot of that includes staff-based compensation, which can be tricky to pull out best figure out, but it is a pretty good job for someone who works a few days per week. alix: i will take it. if howard stern leaves sirius where would he wind up going? what is the new frontier? alix: i think he knows who his fan bases. he is king of radio in many respects. i think he is kind of committed and loyal to the platform. the could be some opportunities to go to the direct consumer, to launch an over-the-top service. you certainly never know in the digital world. alix: what kind of place does sirius have on the landscape over the next few years? you can get apple in your car. amy: that has been a huge investor concern. i would remind people that they want to look at spectrum. to that extent, they have about 25 megahertz of spectrum can be used in the ip world, they are hedged to that extent. alix: real quick, if you left, do you know the number that would leave sirius? amy: we polled consumers last year, a very small percentage of people would actually leave alix:. less than 5%. alix:maybe he needs -- less than 5%. alix: maybe he needs sirius more ? interesting. after the break, apple shareholders putting the pressure on ceo tim cook to buy tesla. is it actually more effective? more details, coming up. ♪ alix: this is "street smart." i am alix steel. out -- apple fever is not going away, tim cook is being hounded about a potential deal. shareholders are hoping that apple will use the cash to buy tesla. with me now, cory johnson from san francisco. corey, what are the chances that apple does this? >> i put them at zero. maybe less. this is ridiculous. tesla is trading at seven dollars and book value. they do not even see how much of the path they have in test value and they worry that their patents might not be enforceable. what would apple get if they pay that much to buy tesla in the public market? seven dollars worth of a factory and some charging stations that tesla owns with a handful of patents that may or may not be enforceable. i don't think -- they get the name. tesla. alix: a good point. they had a good write up a couple of days ago in "the financial times." they spent $6 billion per year why buy the company? just spend more on r&d. cory: it raises a much bigger question, what are apple's intentions. they probably do not even know yet. and what is the ultimate value of something as innovative and interesting as tesla? what is it worth? the car is cool, but what is it worth? the car is putting a certain kind of a bet on it, but when you look at the physical assets in terms of what you get with the company, that is a lot less than the actual value of the stock. alix: fair point. one thing to bring your attention to itunes outages, we were looking at eight hours where you could not download an app from the app store. what do you make of that? i have heard rumors about a data center reach. what are you hearing? cory: i don't want to speculate. when the app store is down, tens of thousands of people at companies around the world were trying to sell into the platform , so this will have some ripple effects that are quite wide. alix: i should point out that if it is a data breach, it could be very serious. cory: it would. we don't know that yet. alix: i'm glad that we agree on that. thank you so much, cory johnson, from "bloomberg west." we are counting down the earnings from fox and shake shack, so stay with us, lots to cover. ♪ alix: welcome to our viewers around the globe. you are watching bloomberg television, this is "street smart." into the closing bell, turning negative in the final hour of trading after the horrible fall from yesterday in which the dow jones and s&p erased their games of the year. joining me to break it down, james lou, ed schill and our chief markets correspondent, scarlet fu. i thought that this was the theme of the last year. >> i think maybe what they are doing is taking a stance to see the whites of the eyes of what the fed is going to do. if people are doing that as they have been speculating, that is what might happen. >> i think that buying the tip is the right thing to do with a longer time horizon. the u.s. dollar will hurt earnings in the first quarter, but the second half of the year stabilizes. in my estimation it will raise in june so after that you might see market stability. scarlet: you have an important morning meeting happening before they come out next week. to what extent was last week's report a real game changer or paradigm shift for investors? james: it increased the probability dramatically. you saw the markets react to the bad news. even good news is bad news for this market. it will increase in june. in our estimation it will probably take more patience. in my mind, you know, by the end of next year market should rebound. alix: but her point, we saw the dollar just skyrocket higher with the euro having an unbelievable kind of race to parity. that would send shockwaves to the market if it continued right? ed: i respectfully disagree with james. when you look at the payroll number, weak wage growth, the dollar taking off, the fed has a lot of cover not to tighten. they have a couple of mandates here. alix: meaning that they are looking at a stronger dollar and thinking they do not need to do anything? ed: they have mandates were growth, mandates for inflation. they will be waiting until they see the whites of their eyes before they type. we have been waiting for six years backing off on qe since the fall. from my perspective they want to see if the economy can stand on its own. the actual tightening, i think that that would be to spike the diet -- spike the dollar higher. alix: what does this mean for companies looking for m&a opportunities coming in and trying to upend the values or even companies looking to go public? cannot favorite place of alix steel we heard this this afternoon. what does it mean for treasury management there? ed: i think it will accelerate that, if anything. if anything gives you a lift it will be that financial engineering with more buybacks. alix: what do you think? if the fed does not tighten, how does that play out as a result? james: you could see a reversal of a lot of these trends. the market reaction certainly tells us about the probabilities and fed governors will pull up the points. [closing bell] james: then the euro trade falls apart. alix: i just want to update everyone on where we are for the closing bell, financials within the s&p and energy sector in the green today overall a relatively down day for stocks. the nasdaq off by nine as wheat churn into the close. not long before that we saw the disastrous day yesterday erasing the gains for the year. what is going to be the biggest catalyst if not the fed? we have been talking about the fed for how many years at this point? we have all telegraph what we think may or may not happen but aside from that what is going to move? ed: i think that earnings are going to come in weaker than expected. we are sitting here with a modeling economy and gdp growth. outside the payroll numbers there is not a lot to hang your hat on. top lining the all-time high profit margins outside the engineering that we talked about, they are going to struggle. alix: there is someone on your side when it comes to the fed and the dollar jeff dunlap warning that if the central bank raises rates in june it will have to reverse course, which will not look good in the investor presentations. he also said not to bet against the rally in the dollar. what do you think about that? james: i get that oil prices are low and we have transitory factors and it is true that they do not have all of their ducks in a row but they have enough in a row that they can get off the zero ground. to your earlier question of what really drives the market forward year lower energy prices are still the biggest catalyst especially for consumers. we will see if the retail sales are really filtering to the economy. alix: have we not already seen that already with low prices for six months at this point? >> in our estimation it takes to quarters to four quarters to get it out there. alix: on the flipside, we will see a lot of pain in the energy markets. potential m&a asset sales with issues, what will be the payout from that perspective? ed: i thought that that was very interesting in last friday's payroll number, the job loss was more than that. the other thing that i think not everyone has taken full appreciation of it this point is that the earnings revisions have been so negative that all of a sudden we are standing here in march with an earnings forecast for the s&p that suddenly looks like 2014 or less. we have had massive revisions on full earnings in the last three to four weeks coming from energy. alix: hang on, i have some earnings coming from scarlet fu. scarlet calling -- scarlet: shake shack, showing a loss, which was anticipated, and it was smaller than what they were looking for. they were expecting a three cent loss, this was a one cent loss per share. when it comes to the revenue line they have $38.4 million higher than what they were anticipating. this is the outlook here looking for 100 59 million to $163 million in sales for the full year, analysts were anticipating 160.5. that is pretty much in the right range. shake shack has seen an international license since their opening at the end of 2015. you have not been to one of these, ed? ed: they don't have them in upstate new york yet. maybe we will swing by one today. alix: if you do not want a burger, maybe you might want a doughnut. earnings coming in for the second quarter at $.17 per share, right in line with estimates. $.17 per share, looking at revenue going up while 11% to 125.4 million that again in line with estimates. taking alina cobbs store sales, you're looking at 6% growth which is really interesting when you take a look at people continuing with the health craze , not wanting to eat that food but the same-store sales for krispy kreme, what kind of environment is that? what kind of company does best in that environment? ed: consume -- james: consumer discretionary, clearly. people trading gas prices for doughnuts is what we are saying and it does well in a cyclical environment. my view is that gdp growth is not as fast as it should be but we think that it will get up to par relative to the last six years, which is a great environment for consumer discretionary environment stocks. alix: you heard conference calls all week saying strong dollar, when is that going to filter into other sectors? james: about 45% to 50% of the revenues come from abroad, so there is going to be that. alix: that's huge. james: the question is, what is it going to be for the rest of the year? is this spike going to continue? alix: one hour ago i heard they were looking for parity within a few days. that answers -- how is that as an answer to your question about velocity? james: the economic situation is that there still is a current account surplus and over the next few years it should slow down to parity, which is too strong. alix: what do you think, ed? ed: it is just a rounding error away from this, at this point. i think we will be there in june and we will cut right through that. again, i think that is a negative. i think the fed should be -- and i think they will -- take in the week growth and the lack of real inflationary numbers, hang their head on the bag of low inflation before they pull the trigger along with the rhetoric that goes with it. i agree with james on that point. alix: vox coming out with their first earnings since going public. scarlet: the outlook is better than what analysts were looking at in 2016, they had been looking at 276 million, almost 277 million. as for the quarter that ended $62.6 million when the consensus was for $68 million, the adjusted loss per share was $1.05, better than what analysts were looking for. excuse me, that is a bigger lost and what they were looking for. they had anticipated a loss of $1.52 which is perhaps why it is trading lower despite the better forecast. how much patience are investors going to have with new companies that report losses but show a pickup in revenue? james: i think quite a bit of patience. the reason is that valuation levels are stretched in the sectors. look at information technology they are below the average. consumer discretionary is right there. financials might you been above but not stretched by any means. i agree that earnings certification has come down but that just means that the overall market is trading at 17 times and not 15 and a half times. that does not change much for the stocks. alix: i want to bring in cory johnson, from san francisco. give us the context. >> in terms of trading i tend to focus on the companies and not the way they are traded, but this was the most heavily shorted tech stock coming into this announcement. it might be down 6% after hours but as far as it might fall it will not fall quite that far some people shorting the stock will cover their chance when they see the stock down a bit this quarter. we will continue to go through these numbers but it is still a business that is spending a time of money on the market. they talked in their roadshow about their cohorts, the age of certain customers. they are saying that customers that renew, marketing dollar spent now will not be needed in the future and they will have to start proving that with these results and at first glance this does not show the flywheel effect, stock compensation is mixed in and it is hard to see those numbers, but we will pull them apart. alix: we will continue to talk about those earnings as well. scarlet: that is a good point this is a highly anticipated ipo that was put off a couple of times because market conditions were just not right. alix: it had a huge debut. scarlet: they did, but it was not copacetic when they had planned to do it and i wonder to what extent that will discourage companies down the road with the currency volatility and so many? 's over the macro environment in the united states? ed: i think that if i was an entrepreneur looking to bring out a company, i would bring it out asap and put it ahead of the curve here in terms of a negative outlook for the market with a weaker outlook for the economic landscape, you would want to get in front of that, from my perspective. i think that vox is a good example. you cannot come out of the chute and post bad from the start. people will must stay around to see the recovery. alix: amazon can put that out in the weather. ed: that is more positive, the more they lose, the higher goes. alix: thank you so much, james, ed, great to see you. thank you also for joining me, scarlet. coming up after the break, box after the ipo. plus, in half an hour big banks will pass -- find out if they passed the tougher fed stress tests. there are billions at stakes will break it down. ♪ alix: breaking news out of ferguson missouri, the police chief there has resigned after the justice department concluded a report that the justice -- police department there was plagued by racism -- endemic racism. you were on the ground there when they did not indict darren wilson. what kind of reaction do you expect for the -- from the people there as these -- as this is the sixth city official to resign since the report? >> the people have been calling for the resignation of the chief for months now. i expect the protesters on the streets to welcome this news. they had been expecting it, hoping that he would resign. in part because of the michael brown incident, as well as many previous incidents. all interactions with the police department had been negative they felt they had been targeted by the department. the report that came out last week sort of backed up those claims so i think they will be happy that he is leaving and will hopefully turn into a new chapter. alix: is this enough to turn the chapter? to loose -- toluse:: they are calling for the police department to be dismantled, which is an option for the justice department. they are calling for the officers to be dismantled and taken over by a different body. there are definitely going to be people asking for more than just a resignation. alix: is it surprising that it took this long for him to resign? toluse: there have definitely been calls for his resignation for several months. the mayor stood by him and basically backed him up. the city government in this report said that there was very little chance he would be able to stick around much longer. alix: thank you for bringing us that report from ferguson. shifting back to earnings, shake shack crossed 10 minutes ago. the first time that both companies reported results since they went public. scarlet fu joins me, so does cory johnson. they seem to be having a pretty big movement in the after-hours. we cap the headlines for us scarlet. scarlett:. bigger than what analysts had been looking for, one dollar 65 in deficit we are not sure if this compares, let's hold off before we compare these two numbers. revenue looks better than anticipated in the fourth quarter. $62 million as opposed to the consensus estimate with a first-quarter outlook in the 2016 full-year looking better than what analysts have been looking for. analysts had anticipated an increase in full-year sales for 2016 and it looks like we will get at least that, according to the company's latest earnings report. alix: cory johnson, you had some time to look at the numbers? cory: i like the ceos so much personally it pains me to look at these results, they are not great. but i think that with a company that is this young, it is ok to look at sequential basis. a pretty consistent trend moving at 19% over 18% growing only at 9.8% less than 10% growth for the first time ever on the revenue side. their marketing costs groups -- grew faster than sales cost. for their percentage of sales they spent $.88 of every dollar on revenue marketing. on the one hand, that's ridiculous. on the other hand, it's the best that it it has ever been. it is still a business that is massively dependent on paying money to get people to use the service. alix: should it have stated the private market where it could stomach these losses? cory: i don't know that they could. they were rapidly running out of cash, taking a bridge loan with their initial ipo funding hailing, they have got enough money to get through a bit more but now those losses are everyone's losses and at some point they will have to turn this around or raise more money. we will see what happens here how much more stock they want to sell. as i mentioned, there was quite a bit after hours and as i mentioned for, it would be a lot worse if the short-sellers were not covering their position. we will -- we will not know until it is published, but it was a massively short stock going into this and i think the reason for that is that there are a lot of follow ons in that vein and fundamentally a business that loses money and spends so much on marketing is hard for investors to understand any real value. scarlett: the latest numbers indicate that 39% of the flow on the network trading have been shorted right now in box. how does that compare to other companies in the sector? cory: we are putting gamestop in that category, they are even more short. it is the 13th shortest stock on the exchange as percentage of flow. a lot of people were betting against this company. thinking that results will be we does that work. alix: good perspective there. things would be worse without the short-sellers covering. thank you for breaking down all that news for us. coming up next, greek creditors are heading to athens tomorrow. does the country need yet another bailout? that is ahead on "street smart. ♪ alix: welcome back to "street smart." univision, firing -- hiring goldman sachs to help go public according to people you knowledge on the matter. the company may seek to raise $1 billion for the transaction, which may happen as soon as the third quarter. and the foreign secretary may be unveiling for the -- secret details about the wealth of vladimir putin according to "the telegraph. aggression in eastern europe poses the single greatest threat to british national security. he imf approved a $17.5 billion loan program for the ukraine including an immediate disbursement to help them avoid default amidst conflict with pro-russian rebels, ukraine expected the economy to shrink 12% this year. now to the clouds getting dark over greece, today in brussels the ecb, the european commission and imf, now loosely loan -- known as the brussels group met with officials to discuss emergency cash for the greek bank. bailout checks have ended and it is up to athens to cover their deficit by rolling over treasury bills, forcing greek banks to make a choice between participating in liquidity auctions or letting greece default. do not forget that those banks are being kept afloat by a lifeline from the ecb. at the same time officials say that they will be in athens tomorrow but it is not clear when greece will open its bank -- books and if they need a third bailout, will brussels throw them another lifeline? here with me now is pimm fox. what is at risk? greek banks or greeks themselves? >> to some degree, i think greek banks. the people themselves could actually benefit if greece does exit the region, right? they have their own currency and it is a lot weaker in terms of improving economic conditions. eventually the long run unless there is complete financial meltdown, which is always a possibility, but we are not saying that. pimm: i thought that he said the greek banks were going to be the ones to take the hit as the population has already taken the hit. use unemployment at 60%. imagine all the people, all of them in one room, half of them between the ages of 18 and 24 are unemployed. everyone else, the unemployment rate their is over 26%. they haven't yet to gdp of 175%. i don't know if they do german math, belgian math, or greek math because the greek math does not work and if you are going to eat the country of 11 million people hostage because you are not going to disperse the money that goes to the banks anyway and then goes back to the ecb, what do they wind up doing? go ahead, why are yields so low? who is buying all of this that? alix: we had an option that you are quite surprised with, lisa? lisa: about $1.4 million in bonds over a year, with 2.7% in yields that they had to pay out -- are you rolling your eyes? pimm: no, no. lisa: yes, it is amazing that they got it done, but people are pricing it as a possibility. alix: does that mean that athens is going to hand it over to the brussels fraction? is that a real possibility? would they even tell you? lisa: no, they are not calling that a possibility, and if you look at the peripheral debts on the yield curve, people are not pricing it in. pimm: there you go. alix: it is amazing, we continue to hear those headlines. incredible, thank you so much, guys. always good to have you on lisa. next, the fed releases the final results of its annual stress test results that we will post right after this break. ♪ alix: the stress tests are out. scarlet, you're watching them to >>. >> a lot of people were wondering whether michael corbat would lose his job, but now that it has gotten the ok, they are looking for a $.10 dividend to -- dividend. bake -- bank of america has to re-turn capital to shareholders. the u.s. units of deutsche bank have failed this part of the federal reserve's tested. they had to revise their proposal in order for them to get the passing mark. this is the fifth year that the federal reserve has scrutinized banks, and we know the fed looks at quantitative and qualitative factors. quantitative of the projected capital ratios. qualitative is less number space and more based on the perceived strength of the companies financial and capital planning processes. this is what we are looking at when the fed determines whether these bank should be able to return cash to shareholders through dividends and buybacks. alix: thank you. the analysis of these results. joining us from washington tim karpoff former counsel to gary gensler. thank you for being here. what is the bigoted -- biggest negative standout. tim: we knew the foreign banks were getting up to speed for capital planning. looking at the results from last week the banks might have to take the mulligan and make some adjustments. based on where citibank was from last week, we had a good sense that they were likely to pass. alix: eric, what about you? eric: there may have been no negative surprises, but it's not good to fail. important to emphasize the deutsche bank trust is a unit of deutsche bank's american business, which is a unit of the global firm. it's not good to fail. it's also not great to get a conditional pass, because in all three cases senior -- the fed, and according to senior fed officials the fed found serious deficiencies. in aspects of bank management and operations, revenue projection, modeling fundamental parts of running a bank. here is a direct quote from the feds report. widespread and critical deficiencies across the banks capital planning processes. numerous and significant deficiencies approaches to loss and revenue projection. these are things that should raise red flags for shareholders and customers. in the case of bank of america the company can proceed with its dividend and buyback plan on the condition that it resubmit's i capital distribution program to the fed by september 30, and they gets approved. weaknesses in certain aspects of bank america's loss in revenue modeling practices and in some aspects of the dhc's financial -- from the standpoint of the fed there are problems. alix: to eric's point, it is the second time around they have a new chairman, new ceo, and they continue to have these issues. what you think about the foreign bank? >> there are real some -- some real concerns generated with these results. i think we all knew that bank of america had disclosed that the fed had raised some concerns but they are still able to return a lot of the capital. i think that is the major takeaway. the way i think about the stress test these days is that it is like the bar exam the best score is one above passing. as long as you can return the cash that you're looking for you don't want to hold any more capital than you have to. so, for jp morgan, goldman sachs, morgan stanley yes, they had the market down. they are still able to return a substantial amount of capital to their investors. eric: from the head -- that perspective, there's a balance being struck here. according to officials i heard from on this conference call, they expect about 60% of the net income that these banks will generate over a five quarter. to be paid out in the form of capital distributions, which means that 40% will continue to be retained earnings, and other words, the banks are still as a group -- were not just talking about jp morgan, goldman sachs -- the ones most active in capital markets, but all as a group are continuing to build capital from a perspective that the rule making the american banking system safer and sound because there is deeper cushion. alix: will there be some kind of fallout from the shareholder perspective? you make a case on how banks wind up allocating their net income. do you think we will see this reflected? >> because the stress test have become for many banks what you manage from a capital perspective. we spent so much time over the last year and a half thinking about leverage and heightening leverage requirements, but stressed this base capital for a lot of banks is a metric that you're looking at. under these new stress tests come you have entities like goldman, morgan stanley, jp morgan, that used to be 16% return on equity stocks, which now may be looking to generate 10% return on equity. that is a very different investment proposition. as a result, do you end up with different investors and different people who are putting pressure on management? >> hang on with me for one second. we do have breaking news from morgan stanley and its buyback. morgan stanley has set up a buyback announcement. it is up to $3.1 billion and it has also increased its quarterly dividend to $.15 a share. these banks are able to disclose details of their capital returns plan as early as today, and it looks like some of them are wasting no time. morgan stanley with a $3.1 billion authorized buyback. plans to boost its dividend to six cents a share from four cents a share in the second quarter as well. it's planning includes a preferred dividend at the current rate. bank of new york i'm looking for that right now, and i'm not sure -- let's see if i can get that up right now. i'm going to come back -- i just pulled it up. it is saying that it is going to keep its dividend unchanged at $.17 a share right now. a buyback has been approved of up to an additional $700 million, but that buyback is contingent on the issuance of $1 billion of preferred stock. looking at the after-hours trade is see how these issues are trading. bank of america lower by one quarter percent. city up by 1.5%. morgan stanley -- let's pull that up right now -- it is currently trading at 35.43. >> zion was able to lose its common dividend to six of the share. >> they filled the qualitative tests last year. was not a matter of the qualitative assessment, which is where others build on this year. last year, their balance sheets did not stand up to the stress. >> it seems like they had a good combat. -- good comeback. >> it is worth pointing out that u.s. bancorp -- larger banks in the country, discover boosts its dividends, discover runs a bank. it is largely a credit card company. >>regions is losing its dividend and looking at a buyback. this is what we do expect from these banks could they got the all clear from the fed that the publication of these so-called results we begin to find that immediately with a plan to do their capital. >> a buyback program up to 2.8 billion. i want to turn eric. a lot of difficult with the stress tests last week. this week, they had resubmit their capital plans. what kind of position does it leave the bank in? >> this is not bad news. >> ok. >> this is where some counterintuitive conversation is due. it appears on the surface, and i would love to hear tim's thoughts on this. it appears on the surface having to resubmit a capital plan is a bad thing. you couldn't figure out your own balance sheet. he did not know how much capital you're going to have after the fed went with stress tests exercise. i look at it completely differently. i suspect that the people at goldman sachs and jp and morgan stanley do as well. you should be swinging for the fences, because the fed used the resubmission with no prejudice. i learned this on a conference call with the senior fed officials today. there is no penalty for taking a mulligan. it's like playing golf with friends. they let you take another shot no prejudice. same goes for the fed. it raises the question that this came up as well -- as to whether other bank should be more aggressive with the capital request. why aren't all 31 thanks swinging for the fences and asking to return to shareholders more capital than they might otherwise get approval for? they aren't. the basic do have the reputation for understanding how markets work, understanding games there he for example, morgan stanley, goldman sachs, jp morgan other ones that are asking for more and they can ballot back. if that is ok with effect, why not? that is what shareholders would want them to be doing. >> tim would you think about that? >> he makes a good point. we are getting to the state with a bifurcated stress test structure is business as usual. you have your first shot, make a bit with the fit, and if you have to adjust, you are just good the truth is that not being so aggressive and conducting your initial stress tests and situated to undermine the confidence the fed has in you that you fill on qualitative grounds, but if you look beneath the surface particularly at goldman sachs, you will see where the fed and goldman came out different a, particularly with the total to one ratio. it was not so much and how they treated their loan book or anything like that. it was more about how they projected revenue going forward. with a copy asset base would be going forward. this is issues that involve management discussions. i think eric is right. goldman treated as the right way. it worked out all right for them. they had to use a mulligan, but again they got the one about passing or that is what you're looking for. you don't hold any more capital than you have to. >> we do have breaking news on wells fargo. >> it has included a proposed dividend boost from $.35 a share -- from $.35 to $.37. that is a two cent dividend increase. also, wells fargo getting no objection to the 2015 plan overall. i don't see anything on a share buyback announcement from wells fargo yet. we are just looking at a proposed dividend increase. >> a little more detail. we did learn in this conference call with fed officials that where the fed and the street banks have had to reason that the capital plans differed was on -- there were assumptions about the credit markets specifically spreads on corporate bonds and the assumptions that they were making about corporate bankruptcies in the months ahead. from what i could tell, it's quiet all right that these firms might have different assumptions about those eventualities than the fed. the fed is going to be more conservative. the fed does other things, for example, like estimate losses on credit portfolios as opposed to using reserve which involves reserve bills and releases. the fed has taken a different approach to the likelihood that capital distributions might be cut off over eight span of time. when they look at the balance sheet, the fed assumes that the firm is going to continue with its current capital plan whereas if the firm were to run into an adverse economic scenario, it's reasonable from the standpoint of the ceo to plan, to curtail dividends payments, and buybacks. again, that the difference between the way these banks stress test their own balance sheet versus the weight the fed does. >> here's my question. are these tests hard enough question mark a week -- hard enough? the banks are able to go back and re-configure their capital plans. is it enough? >> these are pretty rigorous stress test. banks are still retaining about 40% of their earnings as additional capital. not only are they putting the banks to their case the banks are also continuing to try to enhance their capital position. i also think that the qualitative side, the management processes are up to snuff and this results in a lot of criticism, you've heard recently that the fat stress tests are a blackbox, and if u.s. the fed they say that is right. they are intended to be a blackbox and they intend to keep it that way, thank you very much. i think that gives the fed and its ability to set up what the scenario looks like to goforth bases and change your two-year a lot of flexibility in making sure that these tests are consistent with market conditions. if things need to get tougher, the have the discretion to make them tougher. >> again on this call with the senior fed officials, we learn that they -- the banks have a lot of work to do. just because the stress tests are perceived to be tough, does not mean the system is safe and sound. there is work to be done. >> great to have you both here to help me break it down. street smart will be right back. ♪ alix: welcome back to street smart. >> in the wake of the stress test results, american plans to increase its dividend to $.29 a share from 26 is -- from $.26 a share. it's going to increase its quarterly benefit -- dividend by 12% and buyback $6.6 million of its own shares. this is the reaction you are getting an after-hours trade. it is higher on that announcement, 1.62% increase in stock in after-hours trade. >> huge move there. we are three hours away from asian markets open. a week start for the world's second-largest economy. industrial production, retail sales, factory investment, all lower than estimated. a sluggish start to the year. what will china do? part of this is china looking to overhaul a state-run company. what does that mean to you? >> the reform of china's state owned enterprises is like this mythical uniform -- unicorn people talk about. first of all, them talking about this overhaul is something pretty big. some of the industries they will focus on is oil, energy, and telecommunication. what is that mean? that could impact some of the worlds largest firms. that includes china national petroleum corporation. that is the parent company of petro china, the sixth most by your company in china. it could also impact china mobile, the 11th largest mobile company. china has 100,000 state owned companies, and of course that is perceived to be corrupt, not transparent, inefficient, not profitable. about one quarter of those 25,000 companies, are operating in the red. alix: how are they trying to reform? what a looking at new ceos question mark is it structural? >> structural. they come down to consolidation. oil, energy telecoms they put all of these companies into these major groups and handoff these groups to state backed asset companies to run. the hope is they will be run more efficiently. talking about the prophets, i know we have a graph that i wanted to pull up. if you compare the average returns of china's private companies against the returns of the state companies, we see a clear difference. the green is private enterprise returns, 26% returns over a 12% return for the most recent data available. alix: is this one trickling down to wages, workers, employment if they can get more efficient in their state owned enterprises. >> that's a good question. them talking about this overhaul is just one step, and we have to see over the next 10 years come when people are saying by 2025, some of the state owned enterprises could potentially ipo, but that's 10 years from now. >> thank you so much. it was good to have you on china. up next, pharrell williams and robin thicke are ripoff artists? when it comes to blurred lines, a los angeles jury says, yes. we will discuss. ♪ alix: more breaking news. >> after the stress test results, where everyone passed except deutsche bank. goldman sachs is losing its quarterly dividend to $.65. no details on stock buybacks. all we have is a quarterly dividend increase. bank of america also coming up with its own buyback announcement as well. a $4 billion buyback that has not decided to do anything with its dividends. it will maintain its five cent a share dividend for the quarter. bank of america got a conditional pass in this stage two of the fed stress test. these are sharp internal processes to recommit its capital plan, while goldman sachs, jp morgan, all pass, but they had to revise their proposals be forgetting the ok from the fed. alix: thank you. shifting to a different note. according to a u.s. jury, pharrell williams, and robin thicke cross the line when recording the biggest hit song of 2013, blurred lines. jurors in los angeles rewarded marvin gaye's family $7.4 million. how will this ruling affect the future of sampling music? joining me is joe leavy billboards magazine editor at large. would you think about this question mark -- this? >> it's a surprise on the side of the re--- awards. second, the fact that it went for the marvin gaye family. it looked like early rulings might shifted over to the robin thicke-pharrell williams side. this should not have come to trial. most suits of this nature are settled before they get this far. they are settled through shared credit on the publishing rights or a lump sum. >> what kind of presidents -- presidents does this set? >> i think if i was in the music industry, i was on the publishing side come the label side, i would be preparing for a lot more suits of this nature. in ecb said, there are already a lot of sense of this nature. there are copyright lori's when a suit of this nature is brought , and someone trying to extort money out of songwriters and producers. i think that is a little extreme. we are going to see more of them. i suspect we will see people looking for more, bigger sums. >> what was it about this committee go to jury? >> that is a good question. i have not spoken to legal counsel on both sides so i cannot tell you if pharrell williams or robin thicke were unwilling to settle or if the marvin gaye family was unwilling to accept a settlement but they were geared up for a fight. for real williams and robin thicke tried to blow this out of the water before the suit was filed. >> how hard is it to really prove? if you're listening to something and it inspires you -- >> it wouldn't be in the back of your brain. there is a real similarity here, but that's what makes it so interesting. the judge did not want these tracts played back to back. he told the jury to look at the compositional elements, to look at the sheet music and that's when we thought it was going to lean towards the robin thicke-pharrell williams side. >> how can they revamped best practices to take this out of -- >> in the hip-hop world, they use experts to listen to the tracks, to identify samples, and say that we have enough to get this cleared, and i think we will see a similar thing on original compositions. we will have people listening to say i think we may have an issue here, let's get ahead of this before the problem. >> thank you so much. we have to leave it there. great night everybody. ♪ >> everyone knows in republican politics that chachie is definitely in charge. ♪ >> happy national oatmeal-while phil -- autoliv. he swings for the fences. the bush and walker pitching duel in this morning's washington post. team bush tossed a high heart went at the gove

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