this is "nightly business report sue herera. stress relief. the federal reserve releases the final results of the bank stress test. and now the big financials are giving back in the form of buybacks dividends. emerging concerns as the dollar strength ch the strain. and something with exposure to the region should pay attention to. and the ties that bind. why the federal reserve may have a big dollar dilemma on its hands. all that and more for "nightly business report," wednesday, march 11th. good evening, everyone and welcome. stocks failed to hold their gains, extending yesterday's big slide as the dollar continued to climb but we begin tonight with the final results of the bank's stress test. 28 of 31 large banks received the go-ahead from the federal

reserve to return capital to shareholders. bank of america has been given conditional approval and will have to resubmit its capital plan while the u.s. unit of deutsche bank and sander has it rejected. the big winner may be citigroup which saw its stock initially rise in after hours training after its capital plan was approved a big change from a year ago when it failed the annual test. kayla tausche joins us now with more on that. it is a big win for citi kayla. >> it is. of course you remember last year when citigroup was rejected on qualitative issues and mike korback said he wanted to take the entirety of 2014 to fix those issues and citigroup by many measures was best in class when capital levels came through in the stress test. and in the form of being able to raise its dividends to 5 cents a share and $7.8 billion buyback. previous year only done $1.2

billion. so this is multiple of what been doing before. >> let's talk about how the banks are doing so well. deutsche bank and sander. got a conditional approval. what was wrong there and do depositors or investors in those banks have anything to really worry about? >> well the capital levels tyler, on the whole looked okay. a crisis-like scenario with losses they would have enough cushion on hand to pay for those losses without taking taxpayer money, but where the fed raise concerns is how the bank plans and risk management processes work. in some times, their governance did overseize the stress test. there were some intangibles, some say vagaries as to why those banks received full approval or were rejected. next month, examiners that live inside each of these banks will

be sending letters to the executives to say what exactly they need to fix. exactly what went wrong. some things cannot be fixed in a matter of months but at least get the ball rolling. >> they change some tasks for reasons that are obvious but this time they made it extra tough on big investment banks. >> they did. beneficials would say we don't want people teaching to the exam. they don't want it to be something that only goes so far as to prevent what contributed to the last crisis. they want banks here in the u.s. to be so sick they become a coming crisis. one of the ways they did that this year is estimating or hypothetically propose we saw a large number of corporate bankruptcies. that's an issue that's going to hit the banks with investment banks, capital markets and trading activity when those assets get marked lower. what you saw was actually goldman sachs, jp morgan and morgan stanley actually with their capital plans come in

below the fed's minimal level and the fed said take a week after last week's results came out, take a week resubmit your capital plan and in many cases, they came back with a less aggressive buyback or dividend and they were able to clear the bar. >> kayla tausche, appreciate it. resurgence goes past the stress test. several business units are really clicking again. gerard cassidy joins us now to tell us if investors can invest on citi. he's with capital markets. good to have you with us. bottom line me here. is citi stock a buy in your universe? >> yes, it is. we believe citi is a very attractive investment for all type of investors because of its valuations but more importantly, the company has real momentum in its recovery and tonight's see car test is another piece of that recovery. >> what are the risks that are perhaps still inherent in citi

or are they now taken care of given it did pass this test with flying colors? >> i think there's risks in all banks. you never immunize yourself from all risks but the risks have been greatly reduced for citi and the u.s. banking system. so when investors look at citi there's a real value here because over time the profitability will rise as they continue to simplify their business model and as the global economy continues to recover, especially here in the united states. >> they strip down they sold off units. i believe they sold a prime brokerage unit a prime finance unit not long ago. in today's "new york times," there was an article that pointed to the strength of its derivatives operations. some people might see that as a little bit worrisome because it was derivatives that were blamed for so many of the problems during the financial crisis. why is citi different on this score and why, if it doesn't, why doesn't it worry you? >> i think when you look at the derivatives business for any

company that's in that market as well as citi of j.p. morgan chase and goldman sachs, morgan stanley, it's all about management of risk. and if y t risk properly it can be a very profitable business. that's what citi has done. now granted, they have learned some very hard lessons during the financial crisis that brought them to their knees and as a result of that that unit is managed much more conservatively than it was back then. >> what other banks do you like in this sector? you know a number of them did very well. 28 out of 31 passed. would you buy any of the others? >> yes. we see there are a number of banks that would be returning enormous amounts of capital over the next few years. pnc financial is one of these banks well managed out of pittsburgh pennsylvania positioned in the southeast now to grow even faster and they also had a big win today. key corp. out of cleveland ohio another well managed bank. they've done a great job in managing their capital and these are regional banks that people

can buy as well as j.p. morgan. we think j.p. morgan is another investment people can own. >> yes or no will rising interest rates help these banks? >> near term absolutely yes. you want to own the banks going into the first fed fund's rate increase. >> gerard cassidy with rbc capital markets. well 2014 was a good year on wall street. the avrnl bonus rose to nearly $173,000 according to new york's comptroller's office. as the securities industry added new jobs for the first time since 2011. the increase came even as financial industry profits fell slightly. the overall bonus pool over $29 billion. back to stocks now which were lower for the second straight session. the concerns are familiar ones. the dollar's strength and the outlook for a possible fed tightening and by the close, the dow industrials were off by 27 points to 17,635. nasdaq down about 10 and the s&p 500 off almost 4.

as for oil, west texas intermediate moved lower after inventories hit a new record high but brent saw its first gain after five days of losses. more signs of weakness out of china. china, the world's second largest economy, reported growth rates for industrial production retail sales and factory investments below economists' expectations in january and february. that country is also experiencing a slowdown in real estate and sluggish exports. thailand which conducts a lot of trade with china, is growing the number of central banks in the globe's rates now. it's the first time it's lowered the befrnl mark interest rate. the move was to boost lackluster groups and increase exports. markets losing some of the luster due to the strong dollar. the emerging market's etf which tracks that reason has been lower 8 of the last 9 sessions but what about the big u.s. multinationals with exposure perhaps, in some of those

regions? how is the stronger dollar impacting these u.s. companies? lauren goodwin is director at frontier strategy group and she joins us now. welcome here. >> nice to be here. >> let's start with the strong dollar and how it might be impacting the u.s. multinationals. what do you think? >> i think that the dollar will remain strong and will strengthen throughout the rest of the year so looking to in the second half of 2015 we do believe that when the federal reserve raises interest rates that the dollar will strengthen even further. and for, when it comes to u.s. companies, dollar's strength isn't necessarily a bad thing, but the unpredictability of currencies globally can be difficult to plan for. >> what does the strong dollar mean for the economies of the emerging market? some of which are heavily commodity dependent. >> sure. well when it comes to simply the strong dollar local currencies being more weakly valued makes the input to production that tend to come

from abroad more expensive. so all of your sugar or your glass might be more expensive coming from other places. and particularly commodity-dependent markets still have to purchase that oil in dollars which makes it more expensive locally. >> which emerging markets do you think look like they're in the best shape given everything that we've discussed? >> most emerging markets that are energy importers are being helped by this strong dollar and low energy price environment. we tend to like developing asia as well as some countries in subis asub subsaharan africa in this environment. we see philippines and vietnam boosted by this environment. >> some people say watch out. russia heavily impacted by the fallen energy prices the sanctions. brazil the bricks. you got brazil, india, china, and russia. three of those bricks china, russia, and brazil, seem to be

struggling. >> in reference to russia and brazil we see, broadly speaking that where financial markets don't trust the government to be doing the business-friendly thing, they see further depreciations against the dollar than other places where the government is more stable. china's slowdown is a structured slowdown which we still see as being in pace for now, but certainly, where we see governmental or political issues russia and brazil as you mentioned. some of the other markets that our clients tend to watch like nigeria, for example, we do see struggling. >> we mentioned about u.s. companies being impacted by the u.s. dollar. but what about companies that have a lot of exposure to some of those emerging markets? >> sure. the, when it comes to u.s. companies exposure companies that are exporting to the emerging markets for sale will have a harder time in this environment. those that are able to produce locally and already have those

local production facilities in tact will do a little bit better. speaking in terms of industries we see health care being more rezil yenlt because it's typically government-funded in emerging markets and more resilient to the market impacts, but consumer durable goods as well as energy companies are struggling. >> lauren, thankl leave it there. lauren goodwin with financial strategy group. the dramatic climb in the dollar is already impacting the u.s. economy in much the same way a rate hike would. steve liesman explains the link between the strong greenback and the central bank's decision to tight. >> rep 22% rise of the dollar over the last year means the french bottle of wine got cheaper but for a california winery it means it might have to lower its prices to stay competitive. the same is true for u.s.-based car manufacturer competing with a european importer. its cars are now less

competitive. that's the way that a stronger dollar ends up importing lower inflation or disinflation into the u.s. economy. overseas goods get cheaper. u.s. exports more expensive and u.s. prices have to adjust. in this case downward. and this is now a problem for a federal reserve that's scheduled to meet next week and possibly signal rate hikes ahead this summer. inflation is already running bhoe the fed's 2% target. lower oil prices and a stronger dollar which is importing disinflation meaning in the months ahead, inflation will lose even more ground relative to the fed's goal. the way economists look at this it's almost the same as an interest rate hike from the fed. here's why. central bankers believe what's important to the economy are real interest rates or what you pay for your loan after adjusting for inflation. so your mortgage rate is 5% and inflation is 2%. the real on your mortgage is 5 minus 2 or 3. but let's say the inflation rate

falls to 1% and interest rates stay the same at 5%. then the real rate rises to 4%. that's the same effect that the fed would have if it tightened policy. and if the fed does raise rates anyway the dollar would strengthen further. that's because the u.s. is attracting capital from savers in countries with lower rates. they're putting their money where rates are higher selling their home currency and buying higher yielding assets like u.s. treasuries. it's a tough call for the fed. raise rates to head off possible inflation, but risk at the same time moving even further away from its 2% inflation target. it's enough to make you reach for one of those bottles of wine. french or californian, depending on the price. for "nightly business report," i'm steve liesman. all right. still ahead, moving america. the fastest growing business in transports and how it's helping drive ec

poultry producers saw their shares slug today on news of a bird flu outbreak. there are confirmed cases in missouri and arkansas. the government said this strain poses no health risk to humans but that's not stopping investors from selling. shares of tyson, pilgrim's pride and sanderson farms all closed 7% lower. sales pharmaceuticals where we begin market focus. endo international making an offer to buy sai lix as it seeks to up end valiant pharmaceuticals. endo topped it with a nearly 12

million bid. sai lix popping 7%. valium tumbled about 4%. retailer express posting results that beat estimates. current outlook also topped the consensus. one thing that helped quarterlies was less promotional activity. shares up 3.5% to $53.47. general electric weighing deeper cuts to ge capital. could even part with the unit amid pressure from investors to exit that business. shares rose a fraction at ge today to $25.19. >> and shares of lumber liquidators spiked on news of an activist investor taken a position in the recently battered stop. this is after "60 minutes" some flooring products contain higher than expected levels of a known carcinogen disputes.

surge to $72.73. kd farmpharmaceuticals say it's delaying submitting a marketing application for a parkinson's disease drug and chief executive will retire. plunged in after hours trading. before the close stock off to $44.76. and shake shack out with its first earnings report since going public and the investors were not pleased with the results. the burger chain reported a loss. sales s jumped and topped estimates. closed before the stock up 2.5% to $46.90. >> u.s. airlines preparing for a busy spring expected to carry more than seven years. airlines america say the number is up 2% from last year and to meet demand carriers are going to increase the number of seats available. economic activity is

dependent on transporting goods from point a to point b and there's one mode of transportation used by a wide variety of industries and companies that's growing at a faster pace than all others. morgan brennan has more from kansas city missouri. >> reporter: this is intermodal. and so is this and these are containers used to ship anything you'd expect to find on a walmart shelf. as the name suggests, intermodal refers to freight that's used several modes of transport. ocean rider. the concept has been around for decades but it's really taken off since the downturn becoming the fastest growing business within freight transport. so how important is intermodal to kansas city? >> intermodal is very important to kansas city. >> reporter: mike is in the port authority, one of the largest transportation hubs in the country. >> when we look at the market anal lisysis

analysis the industry analysis we know intermodal is the growth for freight. >> reporter: it's because of accessibility. >> the fact that kansas city is centrally located with the infrastructure rail and highway, we can reach 85% of the country and all of the country on 2 days with ecommerce deliveries. >> reporter: across the country, companies playing out their infrastructure to handle more intermodal cargo. with the southeastern u.s. growing the fastest. it's been especially benefic for the railroads like northern southern, csx and kansas cityson. >> it's one of our strategic and it has been for a number of years. we tried the growth of this particular segment in order to grow the company overall. >> reporter: rail has been taking market share from trucks that used to move freight exclusively over the road. that's because more can move by train and when energy prices are high it's much cheaper, more fuel efficient to ship this way

for the majority oe haul. but crude oil has fallen diesel prices lower than six months ago. analysts say it makes the cost of trucking over a long distance look more traffic, especially in light of the congestion at the west coast parts where faster. business is growing fast with the industry's trade association forecasting another year of forward of 6% growth. as more of these containers move across america. for "nightly business report," i'm morgan brennan in kansas city missouri. coming up what's hurting small business owners in many u.s. cities and how they're fighting bac

it's one of the biggest issues facing small business owners. rising rents. a growing number are being forced to close up shop unable to afford the increasing costs and as kate rogers tells us, it's happening in cities across america. >> can i help you? >> reporter: many consider an institution after opening in the 1830s. abe learner has been there for three decades. he'll be done for good. he tripled the rent from $20,000 per month. >> we have a thriving business here. business went up every year. the whistle and chain store with the farm sis around we were able to increase business because we just provided a service here.

>> reporter: but steady business isn't enough in the face of soaring rent from coast to coast. office space and store front rentals in new york city have increased by more than 20% in the past five years and in san francisco, the problem is even worse with store front rentals up over 30% and office space up more than 65% since 2010. a new social media campaign called save nyc is hoping to change that. the effort was launched by blogger, jeremiah moss, who's been chronicalizing the demise. another initiative called save soho out of london aimed at protecting local art venues in the city. in san francisco, city officials have recently set up their efforts to shield mom and pops from commercial rent hikes there. there are outliers like joe rocco, third generation owner of shoe repair on the upper east

side. he wound upsetting out of court, when dwayne reed wanted to expand into his store. a customer took his case pro bono. >> i feel good about new york city having an old business staying here and hopefully we can start a trend where landlords say, hey, we need to keep old new york some of these old businesses alive to keep the character of new york. better than becoming a cement city. >> reporter: rocco realizes he's a rarity an old-school shoe shine shop in a city where chain retail stores have increased by nearly 2.5% in the last year according to the center for an urban future. for "nightly business report," and now what to watch tomorrow on the economic front, reed will come out on the weekly jobs report. wall street expecting an increase there following a dip in january. partly because gasoline prices came back last month and greece's new prime minister will

meet with the head of the organization for economic cooperation and development to discuss reforms. wouldn't you like to be the fly on the wall? >> yeah i really would. there will be some good headlines out of that i think. all right, that's "nightly business report" for tonight. i'm sue herera and we want to remind you this is the time of year your public television station seeks your support. >> and i'm tyler mathisen. on behalf of your public tv station, thanks for your support and we will see you here tomorrow.

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