new york city's private sector so nice work if you can get it. >> quickly, what's on "fast money" tonight? >> we're trading the results of the bank stress tests, brian. lots of breaking news. >> thank you for watching. get your "power lunch" to go on cnbc.com. "closing bell" starts right now. and welcome to "the closing bell," everybody. i'm kelly evans on this hump day at the new york stock exchange. >> happy hump day. we're pondering that saturday is pie day but we'll get to that later. i'm bill griffeth. markets stabilizing a bit after whatever happened yesterday. the 300-plus point decline, a fed tantrum, a strong dollar tantrum, whatever it was. it was the worst selling that we've seen in a while. it could happen again, maybe not. we'll take you through the final hour of trading. david rosenberg is with us. he says this right here is a buying opportunity, and he is here to name some names of things he likes right now. >> and we've also as you just

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. we'll 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 shack's 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 couldn't get enough of the free burgers that they were handing out that day. >> that first day performance wasn't bad either. after that and the strong performance across the restaurant space, we'll 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? >> we'll see how the market digests that. i'm sorry. >> that is pretty good. >> very shallow of me. i'm 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. >> we're joined by john manley. keith fitzgerald from money morning.com so is kenny polcari and our own rick santelli. kenny p. what was that sell-off sed and it's 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 that's what it kind of felt like. today we bounce right off the 100 day yesterday at 2039. it seems we're bouncing off that again today. it seems to be holding here. there's not a whole lot of volume or is there a sense of nervousness like there was late in the day yesterday. so i think it's 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. it's a classic bull market correction. scares the heck out of me which is exactly what you want it to do. it says we haven't 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 hasn't 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 it's a great time to buy. history shows that. i'm excited to see that because it means the markets are showing normally. >> ice cream is ice cream and it's always good. if it goes on sale of course you're 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, it's hard to say wrong with that.

if you're 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 12-year low for the euro against the dollar. we're at $10.05 to-- $1.05 to the euro. we're >> we're looking at the yen with an eight-year 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. there's whip cream and then there's miracle whip. just because it's miracle whip making stocks go up doesn't mean you can't get a check. but i think you need to pay closer attention. also something fascinating happened today that doesn't happen very often. canada issued yankee notes, okay? they issued 3.5 billion

three-year 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 there's 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 what's 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. they're 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. let's 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 bloomingdale's. when bloomy's has a sale, everyone runs out and buys it. if they're good quality stocks and you get the opportunity on day was there's a downdraft to scoop some up, that's what you do.

>> look at exxon. the point of the stock market is you don't always know necessarily which are those companies that are worth buying or not. we're 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 they've put in $39 billion into bond funds. for you is that a worry or a good contrary indicator. >> as long as there's funds, i'm

happy. i want to know where the ice cream is on sale. i think it's a contrary indicator. people still don't believe it, and i have lived through a lot of bear and bull market. i can't remember a bull market that didn't have icing on top, a period of froth where people really wanted to own stocks -- >> are you seeing froth now? >> i'm seeing a little bit of excitement where there wasn't any before but it's not 2000. it's not 1980. it's not 1986. it's 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 it's spoiled? >> well i think consumer discretionary items, anything in the nice to have pile is something i don't want to deal with right now. if you're 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 that's why i want to own them. >> we're 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 it's going to be a huge plus for them. the group -- >> already they're 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 couldn't hear your question. my ifb went dead. a quick word on the mutual fund inflows. we don't know with full transparency what's behind

exactly specifically paper. there's a lot of liquidity issues with regard to the fixed income side. you really want to pay attention to that. >> we'll leave it right there. sorry about that. thanks, rick. thanks, everybody. >> enjoy the ice cream or whatever we're 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. it's now negative on the session. >> coming up, we mentioned this before, david rosenberg is calling the recent slide a fed tantrum. he'll explain why and he says it's a buying opportunity. he'll 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 nation's 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. don't touch the remote. we'll 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 we've had the nasdaq and the s&p turn negative which tells you a lot more. and there goes the dow. 45 minutes to go we'll see if we can get any kind of rebound today. >> we'll look at some other indicators and see how we're doing today. i think we had a heat map we were going to show for the s&p 500 index. there's 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 today's 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, they're 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. it's not stopping investors from selling off tyson foods, pilgrim's 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 cnbc's "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 tomorrow's meeting. >> that has been turbulent. dom, thanks very much. now, if hillary clinton's plan was for yesterday's news conference that you saw live right here for that news conference to tamp down the e-mail story, that it's clear, didn't happen. >> the associated press slapping a lawsuit on the state department to force a public release of the e-mails. john harwood here with the details. >> the combination of a double-team 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 hillary's e-mails 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. that's what the house benghazi committee is seeking. they determined 300 e-mails 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 clinton's 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. >> we're seeing the statement from the ap saying after careful deliberation and he can hausing our other options, we've 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 presidential 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 e-mails that came from hillary clinton. so i'm presuming that what the ap is after are the rest of the e-mail even those personal e-mails that she says were deleted. what do you think? >> i don't think she -- the ap is seeking personal e-mails. but they're 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 e-mails 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 e-mails? 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 i'm 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 don't think so. remember, let's keep in mind as secretary clinton said yesterday, every government official makes that choice. in other words jeb bush has released, for example, his e-mails that he sent and received as governor but those are work-related e-mails. if you were to go and say i want all of jeb bush's personal e-mails, there's no way you're going to get access to that

information or to the personal e-mails of colin powell or other officials. the key question that's 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 e-mail. 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. that's what creates the question, but it's not because anybody has an inherent right to the personal e-mails 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 valeant's 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 it's typical boilerplate stuff but it said it's received the proposal. it's going to evaluate it so we'll 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. what's 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 we've 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 what's remarkable is what's not happening. the fact we aren't seeing a nice bounceback after yesterday's 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 he's 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. that's a lot of the water cooler talk around here anyway. >> it's certainly getting a lot of people's attention.

maybe even 85 cents. so you're saying 85 cents. >> one of the forecasts. >> to the euro. >> deutsche bank's now. it's time for our weekly "beat the street" segment. a fund manager outperforming their benchmark. >> it's thes aston lmcg small cap growth fund. up 9%. it's benchmark is not the russell 2,000. it's 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 you're 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 that's not our focus so we really benefited benefited. >> i see one of your top holdings is sotheby's. 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 we're 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. you've 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. >> i'm 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 you're investing in. then you have consumer discretionary and industrials. so would you say that you're 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 -- >> i'm 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 there's 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 it's 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. >> we'll 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 what's 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 city's public pecksnsion funds. amazon launched amazon exclusive giving customers first looks at products that amazon calls up and coming. britain's parliament approved legislation to ban branding on cigarette packs.

it drew immediate threats of legal action from the country's $29 billion tobacco industry. and that's 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.

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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. what's interesting is it's not a very -- i mean it's a very split day. look at that. that's 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? we've had many times over the years where it seems like we're headed toward the proverbial 10%

correction and then it doesn't happen. >> you don't even have to go back to the bernanke taper tantrum in 2013. just go back to last year between vladimir putin's 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 you're 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 didn't talk about raising rates. they raised rates 300 basis points and for one year out of a

decade-long bull market the stocks didn't 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 you're 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 that's 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 we're seeing overseas. i think consumer discretionary stocks are beneficiary from the stronger dollar because the prices of imported goods come down.

you're creating 300,000 jobs per month. we haven't 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. it's actually contracting. that's 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? >> it's not even a forecast anymore. it's 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, they've 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. it's a better valued market. absolutely, we've 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 10-year against the domestic economy, that 10-year note would have gone to 3.5% last year but we know that didn't happen. the real correlation, the 95% correlation was with the german bunds. so the u.s. bond market doesn't 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 10-year treasury notes against where they're trading globally and

even among some credits like italys, spine italy's, spain, these are bbb. it's basically -- it's the world's 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. i'm 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. there's only one vote that matters. nobody is going to override the vote by janet yellen, and when you go back and read and re-read 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 we'll 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, haven't mentioned yet, oil closing around $48 a barrel. >> it's been the sleeper story that it keeps getting hit on that strong dollar. a strong dollar confounding different asset classes. the dow after yesterday's 332 point decline, it's 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 fed's stress test will be revealed in less than an hour. this is the one that could really move the stocks because it's about banks returning capital to shareholders or not. we'll tell what you to expect and how stocks usually fare the day after those results are announced. plus we have shake shack's first earnings report since

coming public. they'll 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 shack's 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 nation's biggest banks within an hour. today's 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. we're 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. it's been positive 80% of the time. 4 out of 5. regions financial posted 6.5% gain on average and it's 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 that's a big deal for a lot of investors. the notable downside performer is citigroup which has averaged around a 1% drop and it's 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. we'll see if that takes an even greater toll on what is already a decline today as you pointed out after that big sell-off. 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 don't go anywhere. stay tuned.

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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 we're 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 we've --

>> me? >> and, yes, you, too, bob. a few people have been coming through saying they're 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 it's just temporary but unless we're 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. we've been saying this now for a couple years. >> meantime financials are higher as we get ready for those stress tests. >> that's the important thing and that's good news. the banks a little better than yesterday. but we couldn't even put together a modest rally.

we've been in and out of negative all day. >> no bounce today. >> the dollar thing is a problem we've 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 campbell's soup tj maxx home depot, deere, all cited 2% 3% 4% negative impacts on earnings and sales due to higher dollar. and that's 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 we're facing with negative first quarter, negative second quarter growth. we may be negative for the whole year. i think that's 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 you're getting

cautious. >> i am but i still love the stocks in my portfolio. >> i understand. we'll 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. we'll have the numbers the second they are released. we'll have the full team anal analysis coming your way in minutes. you're watching cnbc, first in business worldwide.

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about two minutes left. show you the dow. this looks like today, steve. this isn't the three-day chart i was after. what i wanted to show was the volatility of the market this week. we had the big up day on monday after friday's big down day. then yesterday was a big down day, and today it's been relatively quiet. we'll move on. the euro/dollar continues lower. 12-year low of the euro against the dollar. we're at $1.05 now and change. a decline of 1.5%. that is continuing. and after the bell tonight, the earnings coming out, high-profile 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 there's a lot of noise. there's 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 they're about to embark on the biggest qe they've ever done. it certainly worked in the united states to drive up asset prices. it's 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. i'll see you tomorrow, kel. thank you, bill. it's a noisy one in here. welcome to "the closing bell," everybody. i'm kelly evans at the new york stock exchange. here is how we're finishing the day on wall street. it's not the fact that the dow is off by 25 appointments at the close, it's the fact it's off 25 on top of yesterday's more than 330-point 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. that's the closing level there. the nasdaq off 9 to 4,849.

we're 150 points below nasdaq 5,000. that's a level we closed above for the first time in 15 years just last monday. let's bring in today's 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 didn't see more of a bounce back? >> no not really. we think the healthiest for the market would be to re-establish 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. they're not cheap, they're not super expensive, but i think you could get a better buying opportunity. you know the market doesn't like uncertainty and we have a little bit of it here in the united states with the fed and what they're 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. we're at $1.05. there's some ric tosk to the downside but you want to use that as a long-term 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. >> i'm just waiting for parity on the euro because the math is so much easier. if you think about how much time we'll all save i give you $1 you give me a euro. you give me a euro i give you a dollar. we don't 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 that's 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 that's 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 don't fight the fed in the u.s. you don't 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. it's not just oil, it's 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. >> it's been interesting because commodities in this last dollar kind of turbo charge higher, if you look at the crb, i think

it's been very well contained. it's down 3% with the dollar's 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 it's volatile times. >> we're keeping an eye on southern texas, houston home sales results. thanks for right now. let's get to the shake shack results with kate rogers. shares look like they're under pressure. >> that's 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 they're 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, let's be honest, you're not buying it for this quarter's earnings. you're buying it if it's going to be the next chipotle. it's like in california for example, they have a chain that isn't public it's privately owned call in-n-out burger. these are the niche products the niche spaces that are going to be inserted into an environment filed with the burger kings and mcdonald's of the worlds that aren't hitting on all cylinders. you buy this as a growth prospect. maybe the earnings are disappointing this quarter but you're buying it for ten years down the road. >> we're going to get to these box results here as they're

hitting the tape with our josh lipton. first results here as a publicly traded company. josh? >> that's right, kelly. box just reported so let's 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. that's 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. we'll 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, don't 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 e-mail 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 clinton's e-mails if she does not respond voluntarily to a set of questions that he's 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 front-runner, 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. we've 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 they're not earning is a little bit of a problem, but they're also -- i think the problem is also they're spending a lot of money. so i want to see what the margins look like at both shake shack as well as box because that's really the story. people have not been that happy with the level of expenses these companies have really been going after. and i know it's going after for growth and i know they're longer term stories. for me like box, you have competitors like google and microsoft and i don't 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 won't go there. so this whole wanting to be the next chipotle whenever you hear anybody saying is this going to be the next it's like that's almost a curse. >> time for some diaper innovation. >> does anybody else pass a shake shack and see the line and wonder why they don't raise prices? there's a thing in economics called the market clearing price, and it's the price that clears your line away so there's 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. >> it's expenses though. it's expenses. they're running at a very high level. >> let's 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 it's maybe 30 minutes or an hour. google is saying they're going to have it available in three or five seconds. do you know what the pricing for that storage is going to be? it's 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 they're trying to get into the institution, but i talked to ctos at major companies, at large silicon valley companies. we're very close to silicon valley, and they're 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. we're just minutes away from round two of the fed's bank stress test. all 31 banks passed the first round but will they be allowed to raise dividends? stick around for that's potentially market-moving results. and european stocks outperforming the s&p 500. many think that will continue for the next few years. up next wisdom tree's director of research telling us why they just launched a new product to capitalize on smaller cap stocks in europe. stay tuned. es. it's a fact. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda.

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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 you're up to date on that. we're 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 it's 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, it's 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 didn't -- the funds weren't available, but now, yeah now i'll 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 it's 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, it's 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, that's 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. >> that's 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 don't have to worry about picking individual stocks there. >> so what about the reforms that we're seeing over there in italy and in spain? do you think that's 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. we're starting to see that but

do you think we'll get any kind of momentum from that and any further announcements? >> the interest rates have been one of the primary benefits. they're 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. 10-year is versus the italian or spanish 10-year. the yields come down. from that perspective that's very positive. the qe is doing well for that. the lower euro is probably the main benefit. it's 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 that's the benefit with the currency hedge approach we've done with this new eusc as well as the flagship you're hedging the euro. you don't benefit if it goes up you don't get hurt if it goes down. it's just targeting the stocks. >> what does that mean for returns? if europe was up 15%

year-to-date or 14%, what is it on a hedged basis? >> 15%. you're getting the local economy stocks. >> how do you do that free of charge? nothing is free. >> it's 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 you're 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 fed's plans to raise rates? that's coming up in a few minutes. former fdic chair sheila bair will join us with her exclusive reaction right after those results hit. we're back in two. lac! and a gentle wavelike motion... ahhh- ahhhhhh. liberate your spine... ahhh-ahhhhhh......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, box's 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. that's versus $71 million in the year ago period. this conference call kicking off in 40 minutes. we'll be on it and bringing you headlines. back to you. >> thank you joshua. we'll have more on today's market and the looming stress tests. first though sue herera has this hour's update. >> it's 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 city's 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. that's your cnbc news update for this hour. back to you, kelly. i guess then you don't have to carry around wine bottles for something. >> my flask. powdered alcohol. i'm thinking about crystal light and these sort of pink lemonade -- >> exactly. >> or maybe airborne. >> it's getting a lot of pushback from certain parts of consumer groups who say they

don't want it approved but it's gotten this nod so far. >> i can't imagine -- it seems like a product that's almost obviously aimed at younger drinkers. in any case we'll leave it there. >> that's the worry, kelly. >> thanks very much. the fed's bank stress test results due out in a couple minutes. we'll find out which banks can begin paying bigger dividends and the impact that could have on the overall market. if you're up there, i could use some help. smart sarah. seeking guidance. just like with your investments. that sets you apart. it does? it does. you're type e*. and seeking another perspective is what type e*s do. oh, and your next handhold... is there.

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the fed's second round of

bank stress tests have been released. kayla tausche with the results joining us now. >> kelly, the fed has approved the capital plans for 28 of the 31 bank that is underwent this year's 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 fed's minimum capital levels falling short notably in the column for risk-based 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 fed's 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 shouldn't undermine the strength of the bank's 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 aren't 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. there's one bank that won't get a slap on the wrist and that's 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. we'll 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 it's amazing that here we are going through a stress test and basically all of them passed. i don't know if you have gone through some of the details, but this is an industry that's being stressed for the end of the world. they all passed. they all can do buybacks and do difficult dends. i don't think there's any other industry out there that's gone through this kind of testing. this is probably one of the safest industries in the country right now. >> unless you're deutsche bank or song tong dare. >> they'll tix itfix it but you have

these regulators, they're assuming the unemployment rate goes to 10% next year assuming the stock market goes to below 9,000 next year and they're having them do the stress test under these significant, dire scenarios. they're 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 they're all passing basically within all but two of them. >> okay. >> an incredible story of improvement. >> it's a valid point, david. we'll 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, i'd say they're big scenarios but the banks know what to expect. they're told explicitly what the parameters will be and they have time, and especially year after

year to refine it. so i don't think there's any excuse for a bank of america. for deutsche bank and sang tang dare, it's 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? it's 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 they're not flexible. they can't 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. that's what citi learned. i'm 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. let's get to chris whalen for his take. >> you know it's interesting. deutsche is no surprise. the fact that they hired a lot of people doesn't impress me. they need capital. they're 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 haven't seen a change in management. it's 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? >> that's hogwash. >> what do you mean it's hogwash? deutsche -- if it wasn't 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 we're 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? >> that's 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 we're 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 fed's 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 don't think the government should be in the business -- i think it's one thing to stress them for capital. i think it's 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 we're 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 doesn't work. but at the end of the day, this shows you how the industry has evolved the last four or five years. now we're 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. they're getting better. this is a long-term process. a healthy banking system means a healthy economy means a better market. that's 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, we've turned this into a circus where we're going to control dividends and equity market expectations instead of benchmarking safety and soundness which is what we're 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 doesn't matter. >> it doesn't matter because their stock will be down tomorrow. these are the rules that you have to operate within and that's 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 don't think that's 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 don't need to do economic scenario modeling to test for safety and soundness and loss absorption. the fed has to wrong here. you don't need an economist to do this. >> these banks are over capitalized. they're way over capitalized. >> absolutely. >> what we need is more velocity of money, more activity and they're 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. we'll 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. she's been a long time proponent of breaking up the biggies. we'll hear what she has to say next.

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we begin with some breaking news on wells fargo. >> we're just getting news out of wells fargo. it plans to increase its dividend to 0.375 cents per share. that's roughly 38 cents per share up from 35 cents a share from a year ago. the company's ceo and chairman saying that the company will also continue our strong share repurchase activity but it appears, kelly, that the company will be keeping its buyback activity static from a year ago. 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. what's your reaction to these results as you hear them? >> well i do think it's 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 that's banks have too much capital, and i guess i don't 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. it's still out of leverage of the system and if you look at the post-stress scenarios for most of the largest banks, the leverage ratio is between 4% and 5% which isn't 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 i'm glad you said we sheila, because on a way you're now on the board of santander. the fed raised issues about governance about this bank. it's continued to struggle with regard to the tests and as a board member now for over a year, what's your comment on the situation there? >> well i don't comment on santander. i'm an independent board member. i'm on the group board, not the u.s. board. the u.s. our subsidiary has its own management it's own board. you should talk with them to get their response to these results. the u.s. operations is about 10% of the group's earnings. i would say i think there's 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 she's bringing in in the u.s.

operation is very committed to doing that. it's going to take some time but i think they'll 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 you're 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 don't want to admit this but in truth prior to the crisis regulators had authority, long-standing authority, to order banks that were starting to get in trouble to reduce or eliminate dividend to conserve capitals. those powers weren't used. citigroup wasvidend --

>> these are essentially bank that is are healthy and we have to look at you like you're in receivership. >> i wouldn't disagree with you, steve. we've gone so far the other direction now because those tools weren't 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 pre-crisis when, let's 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 pre-crisis which is not much of anything. >> bill? >> thank you for your comments. i think of bank of america, bank of america's 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? there's no demonstration that regulators will do the job but yet they'll 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 you're 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 weren't 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 it's observe capitol. it maintained it's raised dividend to 5 cents per share. it's 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 doesn't meet or fix some of the issues that the federal vefsh has raisereserve has raised. it's 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 that's 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 it's dividend by 5 cents to 65 cents per share. the press release mentions the continued repurchase of common stock. it doesn't 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. we'll be right back.

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debate investment opportunities. which leads to better decisions for our clients. it's a uniquely collaborative approach you won't 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 let's circle back to 4:30 p.m.. you're 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 you'll 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 it's plans. welcome i'm melissa lee. >> two companies releasing their first quarter earnings report since going public. both stocks falling in the after hour session. we'll 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