Good morning welcome to Worldwide Exchange on cnbc. Im sara eisen im dominic chu in for wilfred frost. Its throwback thursday, heres a onehit wonder, im blue. You wremember this. Who could forget. It was all over new york all over cincinnati, too. Glad to have you here. Good to be here lets check in on the Global Markets after broadbased rally yesterday for u. S. Equities comeback futures set for a higher start dow jones up 33. Financials were a big driver after the stress test results. Nasdaq up 1 point. S p up 4 the banks led the session yesterday. They came out with much bigger than expected cash returners in the forms of buybacks and dividends. The fed blessed all of it financials got a further boost after the close. Theres the early action in terms of the xlf, the etf that tracks financials, up 1. 5 in the early action whats helping the banks is the tenyear treasury note yield has been bouncing. Certainly off the lows of 2. 13 we saw this week 2. 24 not bad. Some selling of treasuries for the last few sessions sending yields higher. If you get those yields higher and the stress tests, probably a good recipe for the banks asian equities now around the world. Well talk about the closed market asian markets broadly higher hang seng up by 1 the kospi up bay half pey a halt in europe, financials being buoybuoy ed over there by some results of the stress tests here. The dax fractionally higher. The ftse 100 up a half percent all the other markets fractionally lower the Broader Market picture, lets show you oil prices which are firmer wti is back above 45 a barrel nice comeback for oil after reaching a bear market last week its up 1 this morning. Real strength in oil prices after inventories yesterday. Brent, 47. 72, m land the u. S. Dollar, traders didnt believe mario draghi or at least the attempt to walk back the hawkish statement earlier in the week. And the euro soaring, up 114. 21. Its Pretty Amazing a half percent its may of last year, thats the last time we saw this. Strong euro, and this idea that central bankers, which happen to be speaking this week, some gathered in portugal, yellen in london, everyone talking about getting out of this super easy Monetary Policy. Even if mario draghi is not explicitly talking about t hes talking about a more inflationary, deflationary world, thats a signal that were coming out of it deflation not as big of a concern. But with oil prices trying to find footing not like theres signs of inflation everywhere the your ro euro is a big mo. Gold is down 2 bucks the fed clearing capital plans for 34 of americas biggest banks. The move prompting mthem immediately to announce dividend increases and buybacks citi group doubling its Quarterly Dividend to 32 cents a share. Jpmorgan at 19 19. 4 billion. Morgan stanley raising its dividend by 25 . Joining us on the cnbc news line is Longtime Bank analyst Gerard Cassidy, Rbc Capital Markets good morning is this a sign of strength overall in the Banking Sector . Are these banks being aggressive when it comes to returning cash . Not at all. This is a good sign of the strength of the system after the stress tests of last week, the banking system, the ccar banks that go through the stress tests, they had over 4 40 billion of capital above the minimum levels even with this disbursement today, we are still well capitalized. And investors should expect another big number in 2018 as well this is not a onetime item. This will continue for a number of years gerard, you are a guy that knows distressed banks very well you developed the texas ratio to talk about nonperforming assets to equity. As you look at the bank picture overall for u. S. Banks, are they positioned better than just about everybody else in the world at this point . I really believe they are we have not seen the system this healthy in decades as you point out, the texas ratio for these banks are very low. The capital levels are very strong and credit remains so good it is a move we have not seen in quite some time. So the picture is very good. What we would like to see, though s a steeper yield curve and rising rates that would be the icing on the cake. You and those banking executives take us through some of the ultimate winners based on what we heard last night. Who gets paid the most i think you identified a few of them. Number one, citi group had a great number they paid out more than 100 of earnings in their announcement with their buyback and dividend. I would also point to bank of america. As you have identified, another big winner this year with a big number a couple other regional banks. Regents financial put up a strong number, over 11550 of earnings going back to shareholders this year a very strong number and discover financial, a Credit Card Company doing a good job. Everybody had strong numbers with the exception of capital one and wells fargo, they were a little bit less than expected. Generally most banks came in better than expected with numbers and many of them came in at over 100 of earnings one quick point here, as you look at the banking seblgctor overall, if you want to look at relative strength and weak ps, wheweakness, where would you look who has the brightest outlook . Monster banks with multiple sources of revenue are the better places to be and more attractive on a valuation basis, particularly bank of america and citi group as you pointed out in your opening about whats going on globally, i would say the economyglobally and volatility picks up that helps the banks. Thanks for jumping on the line today thank you Gerard Cassidy. Worth mentioning one spot that potentially was weaker than others was the credit cards. Two of the largest issues, capital one and American Express had to take down their payout requests interesting that gerard mentioned discover financial is one of those as we talk about the banks, its also interesting to point out, citi group had the biggest boost but also one of the biggest monster banks far away from the precrisis highs. This is a 570 stock at 65 right now. Just for perspective blue apron pricing its ipo at 10 a share. Thats at the low end of the reduced range that the Company Announced yesterday, well below the original estimates of 15 to 17 a share. Blue apron raising 3 300 million valuing it at 1 1. 9 billion two years ago this company was valued at 2 billion in the private particular kemarket the company will trade under ticker aprn. Theres also that amazon whole foods deal taking the sign shine off this this is a hyper competitive space. They are the king. They are. Theyre a big player. They are relatively lower barriers to entry. You went to chef school i did. Do you buy into this Meal Delivery stuff im one of those who likes going Grocery Shopping its therapeutic for me. I want to go out and do it. Fun fact about dominic chu. Moving on to staples, going private. The Office Supply chain is being bought by sycamore for 6 6. 9 billion. Reports in april said the company was exploring a sale the buyout comes two years after a federal judge blocked staples planned merger with office depot on antitrust grounds. Dow chemical and dupont reaffirming plans to close their merger in august the boards also announcing plans to spin off parts of the combined company within 18 months of the deal closing. Shares of pier 1 tumbling after the Company Announced a major miss they had revenues it of 4 409 million last quarter, 12 million short of expectations. Shares are getting slammed, down almost 11 h m posting a 10 increase in pretax profits, the company saying positive results thanks to continued expansion and tighter cost controls. Those h ms and zaras of the world competitive. We have sarepta naming dog also a ingram as the new ceo he will take over as of september 20th. Carrizo oil gas with a Public Offering of 15. 6 million common shares, priced at 14. 60 per share. And Progress Software topping wall streets forecasts. The company seeing q2 income jump by 25 . Shares up by 5. 5 in extended hours trading. On todays agenda a pair of economic reports and plenty of bignamed earnings weekly jobless claims are out at 8 30 a. M. Eastern along with the third and final estimate on First Quarter gdp. Growth expected to remain unchanged at 1. 2 . Well be looking for clues if anything changes on what that tells us about the second quarter. James bullard will speak this afternoon in london. On the earnings front, walgreens, along with conagra and Constellation Brands after the close, micron and nike will be the big ones big earnings day. Nike has a lot to prove theres a big bull bear debate on nike. North American Business is key its the biggest business, can they turn things around after sales weakened and heating competition with addidas. Theres a lot of addidas retro sneakers on sale its highly competitive. Coming up a flawed person with a dysfunctional personality, thats how Martin Shkreli described him as the trial got underway more on that case straight ahead. Youre watchinwlddeg orwi exchange on cnbc. So you miss the big city . I dont miss much. Definitely not the traffic. Excuse me, doctor. The genomic data came in. Thank you. You can do that kind of analysis . Yeah, watson. I can quickly analyze millions of clinical and scientific reports to help you tailor Treatment Options for the patients genomic profile. You can do that . Even way out here . Yes. 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He said shkreli may be crazy but definitely innocent. He also quoted lady gaga saying though shkreli is odd, he was born this way. Well have a live report from the courthouse and with meg within the next few moments. Just a little over four hours until we get to the opening bell and it rings on wall street. In the early action those financials continue to lead the Broader Markets higher after all 34 major u. S. Banks passed the feds big stress test. Here to set us up for the day is tom reynolds of the janice hand hand hennwhe henderson small cap fun. Is this rally in banks for real . For now, yes. I think capital return is a great tool to keep the rally going. And for small caps in particular, while theyre not si subject to the stress test t will trickle down and the capital you saw proved to getting returned to Share Holders yesterday and the way that everybody passed indicates a softer regulatory hand which is one of the reasons small banks in particular rallied after the election in november, that lighter regulatory touch you expect this to be a more pronounced move . More than the reaction today could they be market leaders they could be were certainly not set up to have it be the market leader, but in the event it does, were comfortable with our portfolio were equal weight banks, which in small cap is significant. 18 of our holdings. The one thing the small banks have going for them that other sectors dont, you have seen some inputs change theres hope on the agenda for infrastructure, taxes, there actually have been several fed rate hikes, this flows directly into banks, and some Smaller Banks have seen expansion. As we talk about the way financials set up the small cap space, these stocks, this market cap world has been an underperformer will it play catchup . Is there reason to be optimistic overall . Yeah there are reasons to be op optimistic small caps have lagged this year after a good performance last year the outperformance after the election was driven by the agenda, hope for low taxes, lighter regulatory touch, and for infrastructure transactions. As the agenda stalled a bit, that really gave up heading into the summer now, coming into august, if healthcare is put aside and we turn our focus to taxes, infrastructure, you could begin to see a reflation trade put back on, which small caps would be a part of significant amount of that is banks, industrials, materials companies. What indication do you have they just delayed the healthcare vote by an undetermined amount of time until they can get their party on board what makes you hopeful about taxes, infrastructure and small caps im hoping theyre moving on beyond healthcare and putting that aside, i think indications are if they cant get healthcare done, they will mv on ove on to taxes . Do you have a couple picks . U. S. Concrete, i experienced part of their backlog today flying into laguardia. Thats a good one. Commercial medals company. That stock rallied hard in november after the election. Come all the way back down to 19 they basically make long steel that should be going into a fair amount of trucinfrastructure, a trade case review from secretary ross underway that could have wults later this week. Some interesting picks. Tom, thank you very much for joining us tom reynolds waking up with us on Worldwide Exchange. Talking about the trump trade. Still ahead, we take you to washington for the latest on the president s push to make America Energy dominant. As we head out, a check on futures. Right now at least were showing signs of gains Worldwide Exchange about be back after this break. Mom gets breakfast in bed. You get to do the dishes. Bring em on. Dawn ultra has 3 times more greasecleaning power. A drop of dawn and grease is gone. Welcome back to Worldwide Exchange. Good morning im sara eisen here with dominic chu. Were following a developing story out of arizona where firefighters are struggling to contain a Massive Wildfire burning out of control as of yesterday, the blaze burned more than 20,000 acres. The massive fire is feeding on dry fuel and rugged terrain and gusty winds are creating dangerous conditions many homes and businesses have been evacuated other nearby communities have been put on notice smoke can be seen from the fire from 100 miles away in phoenix well watch that story hope everybody is okay and evacuated. Well keep you posted on any developments absolutely. South Korean EnergyConglomerate Sk Group signing an agreement with Continental Resources to ramp up a shale gas development. Cnbc caught up with Continental Resources harold hamm to ask about the deal this is especially significant because of what it could do to the environment around the world with americas clean abundant Natural Gas Resource its significant in that regard. Hamm said besides the positive environmental effects of the deal it will allow the company to create more jobs. Speaking of south korea, President Trump will welcome the countrys president to the white house today and it is energy week in washington, and the Trump Administration will continue their push to make America Energy dominant. They have that harold hamm deal to talk about. Tracie potts joins us now with the latest whats on the agenda the president heads to the Energy Department to do a speech today about that concept of Energy Dominance lets talk about what that means. There are two parts of it one were familiar with and one that is new Energy Dominance, the United States relying on its own energy, oil, other forms of energy fossil fuels, something thats been a big change from this administration to the last but the idea of the United States not relying on the middle east for energy is very similar to what president obama called energy independence. The other side of this, the president wants to get into the game he actually wants to sell energy to other countries and that is something that well see, how is that going to play out do these compauntries want to be dominated . How does the United States come on the market with the big players like saudi arabia. He will unveil some of that today at the Energy Department the other thing is how will this play out with the president proposing cuts in the department of energy and pulling out of the paris agreement. Very big differences on Climate Change some of the things that would have made the United States more Energy Efficient in that deal, the u. S. Is backing away from as the president said he wants to be energy dominant by relying on our own resources. Today hope fly well