they have investment day next week i think we'll get strong updates. stay well. >> gxo stocks pull back a little bit but still do quite fell. fedex is moving up, so why can't this i think it's a good one to buy right here >> all right joe terranova, quick to you. >> waste management. >> all right good stuff thanks for watching, everybody "the exchange" begins right now. and thank you very, very much, scott. hi everybody, i'm kelly evans. here's what's ahead on the "the exchange." big tech, real estate and casinos are the latest to get crushed as the china crackdown intensifies. we'll explore what this means for investors and tell you what bridge water says is the key thing to remember. >> we'll speak with one analyst giving us his top pick for the long run ceos and big businesses have

not been shy about their supply chain struggles, but a lot of those companies have the money and the global reach to figure these things out we'll focus on them coming up. we begin with the markets this hour dom chu is here with the numbers. dom? >> the markets are green they weren't that way to start it was very mixed to start the day, kelly we are seeing a definitive move higher the dow industrial is up about 200 points the ap about two-thirds of 1%. and the nasdaq up about half a percent as well. up across the board. the s&p 500 near session highs right now, up 30 points is where we were. and of course they switched it on me but it would have shown down 5 was the low of the session so far they got trigger happy in the control room energy oil right now is the stand out. if you look at the top 10, 20 stocks in the s&p, the vast majority of them are in the oil and gas patch. eog resources, diamondback

energy, marathon, crude oil has been on the mend over the course of the last couple of weeks. there is some concerns about demand disruption. however, traders seem to be working those things off right now. watch the oil trade. and then the stock of the day, not in the s&p 500, not even close. if you've never heard of them, greeksky is up 52% right now because they will be bought out by goldman sachs in a $2.2 billion all stock deal. greeksky is in the buy now, pay later space. they specialize in large scale spernl loans like home improvement, surgical procedures goldman is getting into that it's going to add to the banking platform so, greensky up 52%. i'll send things back to you >> you've got to be careful messing with the control room, dom. they can make things miserable for you. >> trigger happy

>> dom chu task very much my next guest says the recent pull back is heading the a full correction. let's welcome in steve op. he's the chief investment officer. >> thanks, kelly >> are you a little -- what's the conviction level in this let me put it this way should people already be reloading on the reopening trade? >> absolutely. >> okay. >> yeah, no. our condition level was higher, kelly, in the year and we raised our year end number to 48. it's been 4,500 all year we just raised it to 4,800 we think the countercorrection has a little bit longer to go. once people start to digest fed tapering, which we think is coming, and i think the tax hikes, which the market is still kind of blowing off. we do think they're likely to come through so, you know, that'll take a little off the earnings numbers

for the s&p. i think the vulnerability here is the stocks -- you look at all the stocks we like here, they're down 10% to 20%. so, the market looks like it's hanging on, but it's largely because the large cap growth stocks, which have become the long duration plays in the market so, we get a little pressure once the fed starts tapering, that supply in demand in balance in treasury starts to come away. and i think that's when the event that everyone's been predicting all year begins to happen which is you start seeing yields go to a more normal level, given what we're seeing in economic growth and inflation. so, that's going to take a little bit of the air out of the big cap tech names i think their earnings power can carry them into next year. that's where if there is a correction at all, that's got to be where it's going to be. >> let me rattle off, you have a lot of specific picks in financials

you like cof, travel, united >> yeah. >> autos you like gm i want to focus on energy in particular not that you're the oil analyst here, steve, but you guys do have a $90 oil call. we see this compass baugs in global energy crisis whether oil or gas what would your advice be to investors here >> i think people have given up on this space. you know, it's been a terrible space to be. the standard line is that, you know, the only thing that corrects oil prices is high oil prices even the companies hate investing right now. we think the esg factor is another factor to play here. the big call for us, kelly, isn't so much $90. we put it out at the beginning of the year, people thought we were crazy next year we're going to stay up and elevate. and i think the reason these stocks aren't being bought is because people think, well, even if it does -- if we do see a short-term covid-driven hike in prices, it will all come back down that's not what we're seeing

the oil companies are not reinvesting in the space they're paying out the catch we like here because they're a big player in squeezing oil out of players and a big player internationally, which is where the focus is going to be given where the administration is on carbon energy. we think there's a play here, and people are really underexposed it's also an inflation hedge we see that lasting longer than most people think as well. and yeah, these stocks are some of the cheapest stocks in the market, kelly. >> in a way it's almost like everybody out there in the public listening should have exposure to these stocks because it would hedge them against the bills they're going to be paying, which are going higher and going to be huge source of pain imagine -- this is the worse case scenario for the fed. they always hated when energy spikes inflation because it's deflationary in the long run it acts like a tax on consumer spending, however you want to describe it. it peaked obviously before the great recession and collapsed

again. so, from this point of view it would make little sense for you to speed up a taper that is response to something that's already going to have negative impact on consumers and businesses >> absolutely. they're coming with taper. i'm completely unimpressed with the cpi yesterday. if you look at the underlines here, we're starting to see wage inflation in areas the fed cares about which is lower income, different demographic groups that are watching. and then you've got rent starting to come up now. that's a big component of the cpi. we've had the commodity push already. people think commodities are going to dcome back down we don't see it. we look at cleveland cliffs we look in the chip space these folks have order books now and contracts going out well into next year at high prices. so, the rollback in prices there that's supposed to offset the rising wages and rents there are coming that everyone can see coming isn't going to happen

so, we think inflation is going to remain elevated into next year and people just don't have enough exposure to these inflations in their portfolio. >> very well explained steve, it's great to have you here we appreciate. >> thank you, kelly. one sector that's still trying to charge up despite everything we've been describing, high fossil fuel prices, big push by the administration towards clean energy and all the rest of it. look at the ev stocks still lagging the market this year the s&p up 20% tesla down 5%. fis kerr is down about 10% and lordstown is down about 65%. lucid also declining since its spac debut in july the stock heading lower since then the big spike was when the spac acquisition was announced. called it the tesla/ferrari of ev auto maker. and john murphy from bank of america is with us now

john, welcome. >> thanks, kelly thanks for having me >> lucid hasn't delivered any cars they had about 10,000 pre-orders from what i read the most expensive version they make has a range of like 500 miles on one charge is that right? >> that's right. that's one of the key metrics is the miles per kilowatt hour. it's one of the things it brings to the table it's sort of a new view of how you measure efficiency and productivity of the battery but also the power train so, that 500-mile range serve a testament to them being able to put up 4 1/2 to 5 miles per kilowatt hour. everybody else is about 3 miles per kilowatt hour or less. not only is it a high-priced vehicle but it is a technologically advanced vehicle. >> we've seen a lot of hype in the ev space obviously but the reason why people, yourself included, like this name is because the deceo did tt work on the tesla model, right >> that's absolutely right

he was the chief engineer on the model arguably through the entire program so, you know, as you look at these companies, there are companies judging their success and viability and financially modeling these companies but you have to take a leap of faith on the management team and their experience, their ability to execute we'll get a good view of that as we go to the arizona plant in about two weeks. we're really looking forward to seeing how the production is working there. >> so, obviously we can't talk about any p/e ratios for this name the valuation being what it is is why people are concerned about the stock underperforming a little bit this year your $30 price objective is the 3x ev to sales ratio to put that into context for the rest of the space. when you look at the valuation that tesla commands and the technology it's working on under the hood for self-driving, whether or not it comes to fruition, is lucid -- do these companies have to play in that high-end computing space in

order to command tesla-like valuations or will they otherwise be relegated to another ev maker, even if it's a really nice one. >> i think it's going to be a really nice ev maker, auto manufacturer over time will be quite successful i think the success on the evs is not really binary at the moment and it's still an open ended question on whether tesla has the best technology or companies like gm that have vehicles running around san francisco without test drivers in them anymore. are they really ahead. that means they could be behind on the ev front. we need to spend or buy to catch up there i think the core platform of the vehicle itself is where lucid is really going to succeed and really outstrip a lot of the competition and where they'll be really successful. it's still a very open ended question, who the winners are going to be and what that means over time. >> and it's certainly far off like you said. and i think the points about gm are relevant here. a final question about

batteries. how are they able to deliver that kind of range on a battery similarly sized to tesla why shouldn't we expect tesla and others to catch up >> there's a hyperfocus on batteries, basically 100 kilowatt per hour, costs going down over time and getting $50 to $75 to break through and be cheaper. but ultimately there's the power train and efficiency of how you get that electricity to the wheels and ultimately the err dinam ibs of the vehicle so, i think that's one thing peter is unique on maybe the battery has a longer range or maybe have a smaller battery that's less expensive and have a similar range and the discussion here is going to more outside just the pure battery itself, get a lot more into the efficiency, the power train and the aerodynamics of the vehicle to help ease the pressure on battery advancements and i think that's a key point here for lucid that people really need to understand. there's a whole lot more than

just a battery >> thanks for joining us and walking us through >> thank you, kelly. >> john murphy with bank of america. coming up as pfizer and moderna mon pliez attention, non-covid drug innovation has quietly been humming along we'll speak to horizon therapeutics about their operations next. this is just the latest industry to be hit by china's regulatory crackdown we'll dig into what it means for the future of investing in the region coming up on "the exchange." >> announcer: this is "the exchange" on cnbc.

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like sharpening your cooking skills with a top chef. join for free on the xfinity app and watch all the rewards float in. our thanks. your rewards. welcome back to "the exchange," everybody while covid vaccines and therapeutics and have been hogging the pharma spotlight, one drug makers has been quietly posting big gains. horizon therapeutics, sales surging 30%, despite starting with the a supply shortage it's the eye disease drug began a phase four trial shares are up 50% this year after doubling in 2020 for more, let's welcome back chairman and ceo tim walberg it's good to have you. >> thanks, kelly >> what can power this next phase of performance understandably you're working on

trading this eye treatment to something that's chronic or acute with a phase four trial. can you tell us about that >> first of all, as you recognize, we had a great second quarter, strong 80% revenue growth, strong growth in ebitda, and that was powered by the relawn of of tepeza. just over guidance we expect second half this year, greater than 1.55 billion this year and over 3 billion in sales for the company. so, continued financial performance execution, but importantly investors are recognizing the value in our pipeline we have 22 programs of which 8 are starting alone this year >> tell me what your philosophy is on m&a. i don't know if you have those kinds of discussions obviously it starts to pick up a little bit here. there's a lot more investor interest in the health care space. it's been very quiet during the pandemic and maybe now companies are looking to back fill their

pipelines. >> we're definitely seeing a lot more activity in the market. we started off this year with announcement of $3 billion acquisition, which really bolstered our pipeline, which we'll discuss more on september 29th when you look at the overall activity, we see a lot of people looking at a lot of activities, including ours our focus is on bringing more development stage vehicles >> what would you add -- another drug bit focuses on gout how is the health of the population looking post-pandemic? and is there anything that you guys may be working on in particular that you think will be of wide interest? >> sure. our gout medicine had a great second quarter, 130 million in sales, up 30%. we're really excited about hcn-7734 which is a different approach to treating autoimmune

diseases we launched a study in lupus patients, and we're really excited with this medicine also where else he can take it, what other autoimmune diseases and we look forward to discussing that in a little over a week at our september 29th r&d day. >> i'm just curious what you would say about the administering of a lot of these drugs. you know, some colleagues who work in the pharmaceutical industry and are really excited about the ability to maybe use pills to treat cancer and that sort of thing, is there anything you can add from that perspective? >> any time we can make things easier for patients, that's going to be the most important task if we can get pills for patients with cancers and tumor types, that would be fantastic. it really depends on the innovation in the case of tepeza, that is infused. but it's only three weeks and only eight treatments. so, if we can have treatment for chronic diseases that you can

treat acutely, you can still get away with biologics vz pills alone. >> tim, thanks again for your time it's good to check in with you >> thanks so much, kelly and coming up, starbucks is on pace for its worst day and worst week since january as concerns here and china weigh on shares wooechlt have details later on new data shows 80% of retailers are dealing with supply chain disruptions into the holiday season we'll speak to u.s. chamber of commerce about the challenges facing small businesses in particular and what it means for consumers coming up.

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now, about two-thirds of 1%. it's trying to avoid the nasdaq. the s&p is up three quarters of 1% here's where we stand for the major averages railroad stocks are higher after canadian national said it would not accept the offer becoming the first single line railroad linking canada, the u.s. and mexico. stickingwith the transports, it's been a rough stretch for the airlines, which are moving lower again. united, american and delta all about 20% or 30% down since early june if you look at these declines from the recent highs, delta has turned negative for the year versus their 52-week highs, delta down 25% let's get to rahel solomon for a cnbc news update

>> here's what's happening at this hour. the military is defending two calls made to china made by general mark milley. in the wake of the january attack on the capitol, milley reportedly assured his chinese counterpart that president trump was not planning any military action trump says that was an act of treason. >> the president knows general milley they've worked side by side through a range of international events the president has complete confidence in his leadership, his patriotism and his fidelity to our constitution. >> colorado's toattorney general says a civil rights investigation shows that the police department in aurora has a pattern of racially biased policing a former minneapolis police officer mohommad ward says the charge doesn't fit the circumstances of the case in

which he fatally shot an australia woman who reported a possible sexual assault behind her home as tropical storm nicholas continues to dump rain on southeast louisiana here's what's becoming an all-too-familiar sight this season flooding in texas, one of the closest where hurricane nichola came ashore. president biden meets with ceos ha coming up, thinking of skipping the mall and heading to main street for holiday shopping we'll tell you what to expect from smaller businesses this holiday season from tutoring to tech to gaming, china is showing no signs of slowing down government scrutiny what that means next on "the exchange." or necessity. we can explore uncharted waters, and not only make new discoveries,

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john, what would your advice me to investors right now who might be thinking about how much further they need to divest from china exposure >> get rid of it is the simple answer look, my old friend ray is right in the sense that china's huge and you can't ignore it and investors are going to have to deal with it over the next 10, 20, 50 years but right now they're going through a constriction, which is not like a strict parent it's more of a mugging that's going on

a year from now xi jinping will be appointed the leader again, the first time anyone has broken the time rules since mao he has seized total control. when you talk with the chinese leader, the only word you hear in every paragraph of the conversation is stability. stability means maintaining control. xi needs control in order to do what he needs to do in the year. so, this is going to get worse and it's going to get -- it's gone from education to gaming, and now they're controlling content on tv and content ing t. what do we want to own there actually nothing at the moment but i especially don't want to own luxury booths in china, a e what are you going to own? you can own baby diapers, i guess. they certainly won't challenge you on that. but china is just a very, very hostile environment right now,

coming straight from xi jinping on down. >> well, the whole luxury space is basically, i would think, probably 40% of their sales must come from chinaor chinese buying elsewhere, if not more in many, many cases we're talking about many of th big european names and u.s. as well that's maybe a further area to explore and interesting warning there. derrick, i wanted to ask, we've been looking at this from the lens of social transformation, the idea of increase children, lower the cost of living, make sure society's gains are distributed fairly would you though also point to the economics as being a catalyst of some of these changes? when we see them imploding skyscrapers, covid concerns and a lot of discussion about what's going on with the property bubble, what's the connection there? is there one >> yeah, i wish there was an economic rationale certainly macao doesn't fit into that if you were proceeding according to what's important economically in china, macao wouldn't crack

the top 100 issues i think john's got it right. there are economic concerns, for example the retail sales figure you noted being so weak. i think this is coming from xi and i think he's also right that the party congress where xi's trying to extend his rule is fall of next year, which means we have to anticipate another year of this, that it's political, that the only way you link data concerns with tech companies to macao gaming is that you're attacking other members of the communist party what they do with their wealth, what they do with their consumption, gathering data on them and so on -- obviously that's not the way the chinese are going to present it. but it's certainly not economic in its rationale it doesn't seem to be prudential financial regulation it looks political and looked aimed at the rest of the party >> john hinted at what other areas could be at risk here. what would you say i know you've talked before sort

of jokingly but not joking about the consumer goods makers who are making diapers and baby goods and house hold -- those would be maybe the safer areas here but what would you also say is probably likely at risk whether it's because of the crackdown on fellow communist party members or their style of living, what have you >> well, at the core of a lot of this is non-bank finance, meaning it could be state-owned finance but it's not through the state banks. it's other kinds of financial organizations. the chinese are not going to ramp up the state banking system maybe some people will get arrested but the state banking system is safe everyone else can be at risk so, if we find out, hey, you know, there's lite of money being sent over to macau so you can gamble and you're doing it through this trust, non-bank financial, or you're speculating on ipos through non-bank financials or buying goods through non-bank financials, the element that links them all is financial activity outside the

state banking system so, that's where i think there's a high risk before the party congress next year of a crackdown. and then for investors, they have to follow who needs that money. are we exposed to anyone who gets a lot of their financing outside the state banking system because those people could see their financing dry up >> very, very interesting. john, what would you add about the ipo market, the dual listing in ther wanting disclosure the chinese do note want any rules that favor the listed country's paradigm over their own for their own companies. >> it's nuts not to have financials for a company you have in your financial markets he's absolutely right about that the risk we were talking about that maybe derrick was referring to is the winter olympics are coming up. but china has structural problems that have been there for a long time. in china there are not enough banking systems to feed the economy. china, therefore, for many years

did too many small ipos. so, there's lots of little public companies in china. in china the banks often accept shares of public companies as collateral for loans so, when the stock market goes, you also can kill the working capital market with it the non-bank finance derrick's talking about is all of the working capital for the private small and medium-sized companies. that's where the risk is, and that's where the slowdown is happening in china right now so, i think that we're going to see -- china's growth is definitely weakened. this is all going to come to a head when the winter olympics happen and we decide whether -- which countries want to go or not go i think there are going to be some bad surprises there for people and between now and then, stand by for more rounds from mr. xi the one thing -- i don't want to talk too long about this kelly but across the street from the great hall of people, there's a

compound the 100 leaders of china live in that compound. during the the days of hu, nobody made an announcement that hadn't gone around the compound and been consensus agreed. that's no longer true. xi has taken power from those other leaders, and there are people he's hurting, as derrick says >> if there's anything i'm thinking listening to this discussion -- derrick i want to give you a quick word to respond on this -- it's that how can china remain prosperous while draining all the financial support? >> well, i think, you know, we shouldn't confuse the medium term, which is the next year or so and there's a lot of risk in the medium term -- with the long term i think in xi jinping's head this crackdown is not for the next 25 years. it's to make sure he's in charge next year, extend his time, and he'll pick what is important to ease up on and tech would be important

there because tech is so important to china's development. so, there's a bad year coming up, but i don't think xi thinks this is a permanent change where finance and these various sectors of the economy are going to be repressed indefinitely >> very, very interesting. thank you both for this discussion today derek scissors and john rutledge we want to take a quick look at our markets we are heading to fresh session highs. dow down 264 points. nasdaq trying to break a losing street pain on main street. the pandemic weighs on small business owners. we'll dig into the data next before we head to break, it's hispanic heritage month we're spotlighting cnbc contributors, business leaders and our own employees. here's norwegian cruiseline's president and ceo frank del rio. >> census just came up, we make up 20% of the u.s. population. we are the melting pot of the

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but freedom means you don't have to choose just one adventure ♪ ♪ you get both. introducing the all-new 3-row jeep grand cherokee l jeep. there's only one. welcome back, everybody. the u.s. chamber of commerce releasing its small business report for the third quarter, highlighting a ton of the challenges facing main street right now. it's all the usual suspects, supply chain disruptions, hiring issues, inflation. joining me is neil bradley for the u.s. chamber it's good to have you we didn't even state the obvious which is there was a pandemic that saw the big guys, especially retailers, gain probably huge market share at the expense of smaller ones, restaurants, retailer, you name

it yes, there was a lot of small business aid but how much has the landscape changed? >> thanks for having me, kelly it's changed quite a bit 55% of small businesses in our most recent survey, this quarterly survey, report that their business conditions are good two-thirds have confidence in their revenue. and 58% think their revenue's going to grow over the next year those are new highs since the beginning of the pandemic. so, in many ways we recovered. but optimism's beginning to slow, and that's what worries us the most and frankly all of those issues you just identified, work force, supply chain, inflation are all beginning to erode the confidence that small businesses have in the future >> how are they dealing with labor market constraints, whether it's trying to find pe people, the cost of hiring what's the biggest problems and how are they going to be resolved >> 50%, the most recent survey,

report they're having difficulty filling their open jobs. so, in some cases they're actually pulling back hours and pulling back work that they would otherwise do so, when we talk to retailers and restaurant operators, they're not fully reopened they're either closing a lunch service or a dinner service. they're turning down jobs if they're in the construction industry simply because they don't have the workers to meet the needs the consumers have so, that's incredibly difficult for them when it comes to supply chain, small employers don't have a lot of options they're simply struggling through with what the supply chain can provide. that's one of the bigger difficulties, even worse today than hiring for many businesses on main street >> we haven't talked about ppp in a while what would your postmortem be on the whole program? >> well, for a brand-new program that was an experiment that had never been tried before, i think you have to give it an unqualified success. of course there were bumps in the road but compared to ppp to say, the

aid going to individuals to help with back rent payments. that money hasn't been able to get out the door the government has struggled to get it through state and local governments. and it's been, by all accounts, pretty much a disaster compare to with ppp where we rescued millions of businesses literally on a dimebecause we brought the private sector into it it's not just a government effort when it comes to ppp. it was what banks and local community, lending institutions did to help get that money in the hands of businesses on main street >> so, i guess my final question would be if we've moved past the need for acute help in the pandemic but we still have a lot of pandemic effects, delta still going around, mask issues, vaccination issues, finding workers, figuring out how to stay open, how to make that transition to virtual, what that means on showing up to work or not. what would be the best way to support a vibrant, small -- new

business community, small business community in the u.s. from here? >> first and foremost, it's exactly what you said. we have to beat covid. more vaccinations means a quicker end to this pandemic the more people we get vaccinated the more we can be fully reopened we need the federal government to help in some areas, helping unlock the supply chain disruptions, dealing with these bottlenecks in ways they can help do. we also need support when it comes to our work force. that means getting people off the sidelines, back into the job market with job training programs it also means increases in legal immigration. and only our government can help effectuate that. at the same time it's critical they don't do any harm this $3.5 trillion plus tax and spending package is only going to make the inflationary measures faced on main street multiple times worse when we think about the old adage, the positions, first do no harm. first they can do no harm when it comes to this reconciliation

package. again, unlocking some of these bottlenecks when it comes to the work force and supply chain. >> that is a hornets nest of political problems to deal with. thank you very much for joining me to talk about it today. neil bradley with the u.s. chamber of commerce. bonds are typically viewed as a safe, tax free investment but there's a risk emerging in the market he'll join me to explain next. and remember, you can catch this program any time, anywhere, by listening to and following "t ehae"odst we're back in a moment

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wild fires in the west, widespread hurricane damage and extreme flooding are all putting climate change center stage for a lot of investors these days. not even the muni bond market is immune to the effects of weather. what should investors be watching more now. joining me is neuberger berman's head of fixed income this is a bit of a warning in a sense there will be bigger fallout from municipalities for these storms rahel was just showing us there are parts of the country getting drenched and hit by these storms hime and again

how is that affecting their financial stability? >> it's always great to see you. and these risks are elevated they're getting bigger day by day. you pointed out all the storms that have taken place. you know, the hurricanes, the fires on the west coast. look, i think this municipal bond market is do-it-yourself market. you really need professional manage many. you need to go into the bond market and look at issuers one by one and look at the vulnerability that they have to these climate risks but also what money are they going to have to spend to defend against them because when they spend more money leverage goes up and that can weaken the credit we really think is a market you have to assess bond by bond in order to deliver preservation of capital to clients >> so there's some obvious recommendations like don't put your entire portfolio in coastal communities. what are some of the more subtle things you point out >> sure. bigger can be better, kelly. look at larger cities, cities

with huge economies. even if they get hit by one of these natural disasters or storms, it's incredibly likely people will return because there's a lot to return to the city of houston is a great example of that. they got walloped by hurricane harvey a couple years ago, but this is one of the largest cities in america and people came back and they got lots of federal aid which helped in the rebuilding one of the things investors can do to insulate portfolios is put some of the state credits in your portfolio a storm can hit a part of a state. it's very unlikely that a storm would wipe out an entire state's economy. so putting in state-level credit is a good way to preserve portfolios >> you also say that broadly speaking these risks are not properly priced in the muni bond market last week we were talking about the flood of capital into the space. investors simply have too much cash on the sidelines. yes, there's a bit of a tax concern as well. i don't know if you want to speak on the record where you

think some of the biggest dislocations are aside from your advice to go big, what else do you think people should keep in mind >> look, i think the muni market has been slow to recognize these risks and we see a lot of deals where we locate serious climate risk to the credit, yet it's not in the price what i would advise investors to do -- here is the good news. the muni market has over 50,000 different issuers. if you see these problems and are not being compensated for them, you can move on. be selective right now you don't have to be too aggressive taking on these risks. >> thank you for joining us. jamie iselin still ahead, starbucks employees could be voting on whether or not to unionize.

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a unionization effort led by starbucks employees in three stores in buffalo, new york, is becoming a citywide issues kate rogers is here with the latest on that story and its implications for starbucks kate >> reporter: workers at three starbucks stores in buffalo, new york, petitioned for a vote on whether to unionize late last month and has told the labor relations board all 450 of its workers in the city should be allowed to vote according to a memo starbucks sent to employees obtained by cnbc this would take that vote from three stores to 20 the letter to the buffalo workers also said the company was taking action to bring store operations back up to its standards including bringing in help with staffing and repairing store issues ask us anything, we're all here to help. you have the right to work directly with starbucks.

in response to this starbucks workers united sate starbucks is trying to delatey the vote we are trying to organize even one store and win the right to organize at this company we've also learned that starbucks executive howard schultz, the company's former ceo and the executive vice president of starbucks north america have both been conducting store visits to listening sessions kelly, back over to you. >> kate, they must be -- not that any company wants employees to unionize but starbucks so puts them first that i can't imagine they would not ultimately have to support this. wouldn't it be hypocritical of them not to? >> reporter: they're saying we are not anti-union we're pro-partner. we want to let them know that if they want to continue to work well with the company the open dialogue is between you as

partners and us as starbucks come to us we're here to work with you. we'll have to see what happens september 22nd and who is able to participate in the union vote >> it's like change from within. the issue about young china and what did it say about its profit warning and what's the read through to starbucks there >> reporter: obviously starbucks china is its second home market, very important there they did warn the delta variant would take its q3 profit down between 50% and 60%, impacting 500 of its stores in china that's weighing on starbucks shares they're lower and on pace for their lowest close should be in about eight months clearly investors concerned about what delta means for companies that have a huge footprint in china >> have you heard anything from the company itself they're in a pretty awkward position as china continues to

crack down they're probably one of the biggest u.s. businesses with operations there >> reporter: yes, about 5,100 stores for starbucks in china. they have a good working relationship with the chinese government we haven't heard anything on that investors a little bit concerned about the profit warning for sure >> kate rogers, thank you. that does it for "the exchange." "power lunch" begins right now kelly, thank you very much welcome, everybody, to "power lunch. here is what's ahead on a very busy hour. crypto madness ray dalio, the fund manager, says if bitcoin is successful governments will kill it are the battle lines being drawn? plus, hitting the gas. group 1 automotive buying up dealerships amid record high companies and record low inventory.

we'll ask if prices will ever, ever come back down. show me the money. new analysis shows skimping on salaries is bad for business and companies that pay up have higher stock prices. >> where the markets are this hour the dow up 247 points. similar gains about three-quarters of a percent. oil prices are also higher after industry data showed a larger than expected drawdown wti crude is approaching 73. natural gas was the first to pop. crude is following close behind here look at some of the names benefitting from this increase in cruise prices today all up between 6% and 7% going the other way shares o