many talk about pressure on profit margins with so much inventory and got to discount it there's no requirement this time around might not see the discounts this time. >> thank you i think. >> going to costco thank you for watching "power lunch. "closing bell" starts right now. welcome to the "closing bell." i'm wilfred frost at new york stock exchange the bond market closed today major averaging kicking off the week slightly in the red i'm courtney reagan in for sara eisen. cleveland cliffs announced an acquisition this morning and southwest airlines getting hit after the company canceled more than 2,000 flights over the weekend. we'll have more coming up. hopefully you with reren't a passenger on the flights. indeed rising costs with jeff currie

and savita subramanian will weigh in focusing on the big story just mike santoli is tracking the market action and phil has the latest of cancelations at southwest airlines mike >> remans an indecisive market you mentioned the bond market closed we lacked the guidance from treasuries yields are higher going into today's market session con central banks might be apprehensive and in the confusion zone even as the highs of the day still below let's say the s&p 50-day average and still kind of side winding in this area, still a 3% orso pullback from the highs. doesn't look like an urgent negative action and stuck.

maybe waiting for that inflation print. earnings coming. look at the value versus growth dynamic. from the pure value dynamic. against mega cap growth. this is a main kind of opposite ends of the spectrum here for the market thafbl largely inversed. so we have seen as the market in general has struggled pure value statistically cheap stocks did well so you can look at this and say the market is maneuvering to get into position for a reacceleration to the economy. but you also can say that's fine but is it just a pendulum swinging the value stocks are below the high just the growth stocks in a growth trend and this is why you can talk yourself into almost any version based on the market action we'll be talking about commodities in detail. look at the goldman sachs

commodities index relative to the emerging market index ex-china this is part of the equity markets that typically move with commodities. look at this liftoff as emerging markets have been weak brazil profoundly weak normally they the end to get a lift when we talk about a global increase in commodity prices and often beneficiaries and seems the market is saying this surge is a supply issue. other inefficiencies that might be a restraint on growth and the dollar's been strong and people worried about tightening moves interesting there. >> i know that you said the markets are sort of waiting for a catalyst maybe inflation. earnings this week with a bang but the weekend note talks about how seasonality is factoring like we have seen in the past. if that continues to be so what's another key date to look for and how it might play out in

the charts >> this is the beginning of september the high this year and last year. second half of october tends to be when things turn slightly for the better this is an options expiration week and been weak this year although october in years passed is okay. i think we are in the transition zone to when seasonality is no longer the reason or the excuse why the market can't make headway anymore. >> thank you j. to southwest airlines canceling flightsbecause of werth and staffing problems. phil >> reporter: hey more cancelations today but certainly not what we saw over the weekend and improvement. take a look at the weekend scenes depending on the airport chicago, in dallas, in a number

of different places where people delayed more than 2,000 flights overall canceled since saturday. southwest coo did say to employees updating them on the situation yesterday we have made significant reductions from the previously published november and december schedules and if we think we need to do more we will take a look at shares of southwest, it's been a rough week but all iairline stocks down as you take a look at the major irl airlines they expect more holiday passengers this season as covid cases drop and people take holiday trips tomorrow morning on "squawk on the street" at 9:30 we'll be talking with southwest ceo gary kelly and talk to him about the situation there including the fact that they have staffing issues and seems to be a problem

where they got too aggressive setting the schedule and with cancelations on friday due to weather in florida, it sets up the schedule and they'll talk to him. how can you assure people this will not happen in the holiday season and added more flights? main question that everybody has about southwest. back to you. >> two follow up questions one, this is purely southwest only issue even on friday it felt like southwest. >> reporter: predominantly southwest over the weekend you are right. >> how many times do passengers and customers need to go through an experience like this to give up on the previously built loyalty with an airline? >> reporter: depends on where you are and what options you have for taking another airline.

if they have cancelations that come out of the blue and say we have perfect weather, why is this flight canceled if you have options odds are you will try somebody else depends on the loyalty mileage and points with a particular carrier but there are some people they have southwest as the predominant carrier in the market and it has more flight options and you go with where you have the most options and the lowest price. >> before you go, there was another discussion on the social media universe about what's going on with the pilots for southwest and not consulted before decisions made about vaccination. clear it up. it is not pilots not showing up to work? >> reporter: this is not an official or unofficial sickout by the pilots at southwest

airlines they haven't been happy for sometime and gary kelly will talk about that tomorrow what's interesting is looking at the relationship between southwest and the pilots how much it has changed let's say of the six or seven years if you said united airlines with terrible relations with the pilots would have better relationships with the pilots' union than southwest people said no way they need to work on that. that's a case for sometime and again not an official or unofficial sickout from the pilots causing the cancelations. >> phil, thank you so much good the see you. next, goldman's jeff currie breaks down the commodities and how high oil could go. you are watching "closing bell" on cnbc.

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we have 48 moneys left of the session. lower at the moment. well off the session highs down about 0.3% on the dow 120 points or so the s&p down a quarter of a percent. materials the best performing sector worst is utilities 56 million not enough. that's what analysts say about the bond film. up next a closer look at the box office numbers what wall street was expecting from the film. as we head to break check out the top searched tickers today the 10-year yield as ever is number one southwest, alibaba, wti crude

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bond market is closed today so we have a different type of bond report. the james bond report. julia boorstin has the box office numbers for us. hey, julia. >> i know you saw the film because you're a fan business james bond "no time to die" grossed $56 million domestically and less than $60 million that analysts expected and $80 million projected after a strong thursday night opening nearly 2 1/2-hour run time meant they couldn't play it as many times as "venom" that set the pandemic opening weekend record and the oldest audiences that tend to flock to bond films less likely to rush out the opening weekend so amc and imass hoping

the hold up better in coming weeks than superhero fare. mkm partners handler said that the film's $330 million global take is quite good and not hope yet in china and the first time that the box office has topped $100 million two consecutive weekends since before the pandemic so the box office is coming back but perhaps just a little bit slower than some had hoped why you saw the movie? >> of course i would say similar to the box office numbers, very, very high hopes. fractionally disappointing because the hopes were so astronomically high and the best film of a long time and 4 out of 5. i still daniel craig's tenure is stunning i just put "casino royale" ahead as the best and it was awesome very, very enjoyable i don't want to go into the

reasons because otherwise i'll give spoilers but it was really very good. >> i talked about it i haven't seen it and could only share so much without ruining it are there other movies that could be that big box office win to come and hit at the same demographics that bond hoped to as we move through the back half of the year with the holidays a good time with family? >> it is a good time and there's big movies coming up "the internals" and the fall is serious oscar bait films so some films are "dune" and also "the duel" with big movie stars and a costume drama so hoping to get something for everybody there but it's interesting to see how the films play out especially

the more franchise from marvel. >> is part of this "top gun 2" is pushed back to may next year. what's happening i thought that was coming very soon after bond? >> it was. that was the perfect example of paramount making the decision not to risk having any impact from the delta variant people are wary. we want to make sure people out to see it theatrically it's not as crowded as it might have been. we'll see horror films still coming out universal with a big halloween sequel and then the oscar bait films but some studios are doing the simultaneous release disney not doing that right now. they feel it out and this is a

period of sort of experimentation and some big ones like "top gun 2" you have to wait. sorry about that. >> so interesting. been so long since i've been to a movie theater. thank you. kr with big changes and the founder's succession plans. bank of america is here to weigh in on earnings season and what to own ahead of those reports. we'll be right back. i'm so glad we did this. i'm so glad we did this. i'm so... ...glad we did this. [kid plays drums] life is for living. let's partner for all of it. i'm so glad we did this. edward jones

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it is not just oil prices pushing higher the cotton commodity prices are at a decade high the price pushed by supply due

to a trump administration decision that's been upheld by the biden mrks blocking the united states from importing cotton from western china. the region where there are concerns that the ethnic group is forced into producing things like cotton. second you have unfavorable weather in the united states and in india it's all pretty bad timing for retail because they're focused on how to mitigate the supply chain and the resulting higher costs there and a double burden. we haven't talked about it that much because so much else is going on that's just higher priority for the supply chain but as the prices continue to rise we should pay attention to it getting closer to the holiday season especially. deutsch bank upgrading starbucks saying they have incredible momentum in the united states. you can see shares of that stock are lower by a tenth of a

percent and wynn higher on the back of the broad market jim cramer said he is buying more and multiple notes to the invest investing club an ento learn more head to cnbc investing club or point your screen for the qr code i figured it out after the pandemic. >> you know how jim says wynn? wynn well worth signing up. bitcoin rallying hitting the highest level since early may. ceo jamie dimon is not a believer cnbc pro reporting at a conference said i personally think it's a worthless i don't care makes no difference to me.

i don't think you should smoke gets either. you can read more on cnbc pro. i would say he goes on to say we allow the clients to trade it. that's what makes a market but also points out that they can't offer custody but a safe place for people to trade it and the fact that they can't offer custody sums the situation up. behind the curve they're still catching up, offering it to clients but not able to offer custody shows the skeptical view without that level of endorsement and legitimacy. >> this is a consistent position and you know that inside of jpmorgan chase is massive amounts of research and find out the utility of crypto and to participate in a way to have utility and gets to the point of

most of the rational of why bitcoin trades at $57,000 is very circular. people want to own it and want to buy it and trade it and think there's a story and maybe there is but for now the price goes up to trade and own it why that's fine doesn't go away because ultimately it hasn't been this magical solution already to a lot of these transaction issues. >> we have jamie dimon who the market listens to. that case still holds up just because he doesn't believe in or understand it doesn't mean people doesn't want to own it. >> same time you see the long tenured hedge funds participate in the early rounds of startup for crypto businesses and feel like maybe i'm right or wrong but it seems as if this is a generational shift with legs to it we also i pointed out before that jamie thinks interest rates should be higher and thought rates are too low and the market

doesn't say, oh, you know what you are right? >> the things to allow a bank to be a custodian would be bearish for the aset itself and serious regulation and putting it in a bucket and why it is doing well that it doesn't have that. >> as a believer - >> right china banning crypto underscores the rational why people like crypto. >> exactly exactly. the transcript from that event worth a read and the write-up on cnbc pro nothing too focused on jpmorgan quiet period beginning to report. looking forward to those we have got 31:30 left before the bell. lower. just accelerating a little bit down 181 the low of the day for the dow

earnings season on wednesday when the big banks start to report up next paul hickey with the playbook and later talking about southwest's troubles this weekend with gordon beunthe. we'll be right back. that building you're trying to buy, - you should ten-x it. - ten-x it? ten-x is the world's largest online commercial real estate exchange. you see it. you want it. you ten-x it. it's that fast. if i could, i'd ten-x everything. like... uh... these salads. or these sandwiches... ten-x does the same thing, but with buildings. sweet. oh no, he wasn't... oh, actually... that looks pretty good. see it. want it. ten-x it. yum! sales are down from last quarter but we are hoping things will pick up by q3. yeah...uh...

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merck and partner ridgeback bio therapeutic announcing it's submitting an emergency use authorization to fda for its oral covid-19 treatment. the pill showing positive results in a study

here's former commission dr. gottlieb on cnbc this morning talking about the timetable for the drug. >> i would suspect this is going to be perhaps a two-month review i don't think it's as fast as some of the vaccine authorizations so figuring that it's about two months which i think is optimistic you could have it on the market before the end of the year. merck will be ready to ship it with authorization. >> he sits on the board of pfizer and is a cnbc contributor. pfizer down today. time now for a news update hi. >> hi. the columbus day federal holiday celebrated in new york with the 77th annual columbus day parade and considered the world east largest celebration of italian-american heritage and controversial adds the impact of

colonlism. >> a use ship returned to san francisco. majestic princess broke the streak the fist cruise ship to visit since the grand princess docked early in the pandemic with dozener of passengers with covid. and this is big news superman is coming out as bisexual jonathan kent the son of clark kent and lois lane and said he will fall for a reporter just like his dad but unlike the father or his father the reporter is male and will be in stores november 9th. you are up to date back to you. >> thank you. markets drifting boo the red. the s&p down let's take a look at the sector heat map materials and energy in the lead earnings season kicking off

wednesday. joining us is paul hickey with bespoke investment group always an interesting read to see what the early reports have to say and i can't imagine anything top of the list more thain labor and supply chain issues what should we expect for the big themes >> yeah. you have it right. we will see every company reporting except maybe financials with labor shortages and inflationary pressures that's well-known as this point and i think if we were heading into an earnings season where earnings expectations and earnings expected to rise over last quarter is a big concern but we are looking at earnings to fall so i think some is priced in here and heading into earnings season we view it all as an expectations game.

if you are a "c" student and gate "b" you are happy so as we have seen earnings revisions lowered into the season, revisions are the weakest of five quarters so heading into the last five earnings season we had upward trends. this quarter we see weaker trends earnings earnings. >> would you say then the sentiment is looking more negative or set up for low expectations for easier beats? >> i think we are in a situation of expectations more muted than prior quarters they're at levels that are more manageable than expecting real strong growth ahead so i think you could see a situation where the market as a whole pulled back into the season and seen some reflected in the fact that

expectations have come in a little bit and sets the barlower and easier to report as they beat who doesn't know about supply chain disruption and inflationary pressures we'll hear about that. most people are well aware of the fact. >> are there any sectors that stand out to you in either direction where expectations come down plenty or a sector where they haven't come down at all? >> what you have is either end of the spectrum energy with the most upward revision it's very strong positive revisions to negative revisions and the other end you see materials which is one of the weakest trends right now and when you look back at prior quarters over the last decade where energy revision trends have been this strong or stronger what we have seen in

the subsequent earnings season is the energy sector is facing head winds when you have the material sector when sentiment is this weak heading into earnings season you have seen the sector median gains so it's just a real world illustration about when the bar is set high and makes it harder to impress investors and when the bar is set low as it is in the sector like materials and industrials it is easier to surpass the bar that's been set. >> separating from earnings, s&p at 4372. what are the key levels in your mind above and below to confirm that we have finished the bounce or the pullback is broadening out a bit?

>> yeah. right now the heading into the week is a limbo period with the market between the 50 and 200-day moving average investors think is this bounce we had last week the beginning of a new leg higher or a fakeout? until we get a break of either level i think it's just going to be some churn here to see. but what's really interesting is seeing the first big pullback in close to a year and at the time pullbacks seem concerning and scary as they happen but when you look back at prior periods as we have done recently and seen the steady up trend in the market and a pullback similarly like we have now you look back at the charts and historically those pullbacks have resolved higher going forward. in the present again like i said they're very scary if they

happen but more often than not it's not the end of the world. >> i was talking on friday i believe with mike here on "closing bell" about how companies are often so close to the vest coming to details about the supply chain but because of everything going on and you mentioned previously very few people follow this that aren't aware of it and do you think the companies need to give more information than they have in the past or maybe that they're comfortable with so investors more clearly evaluate the problems or do you think that we are not going to get that level of clarity so better decisions can be made about the investability of these companies? >> the ultimate more information is always better in our view if companies can give more information on what they see going forward, we see the results are going to be impacted and have been based on the reports going forward but getting commentary that things

are starting to look better in the quarters ahead or starting to see some easing and return back to work that's viewed by the market positively. right now again the market's in a bit of a limbo period and the economy is sort of in this period and we're not sure. are we transitory inflation factors or supply chain or not as the covid waves start to recede like we have seen that will ease the pressures but only time will tell on that front. >> thank you for joining us. good to see you. >> thank you. we have a market flash on solar stocks frank? >> hey there a market flash on several solar stocks outperforming today an etf that tracks them t.a.n. names of sun power, solar edge

and sunrun and enphase leading the s&p heading into the close they have underperformed in 2021 the t.a.n. down from the highs every name flat or negative territory. some 50% off the january highs back to you. >> thank you straight ahead kkr with big changes and the fastest growth story in the consumer finance space. those stories and more coming up in the market zone watch or listen to us live on the go with the cnbc app we'll be right back.

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from a tentative bounce day to a nervous pause about this recent rebound. >> that's the pattern where rallies suspect. stopped at the levels that you might expect them to as a purely technical bounce i get why people are apprehensive we have market moving stuff coming cpi number matters in this context of the energy surge which seems more of a shortage issue than a demand issue and a restraint on growth than emerging growth and makes sense. we don't have a quorum without the bond market trading and waffling in this range >> charlie, it is nice to have you here again with us do you feel that there's apprehension in the market or waiting for a catalyst and the earnings reports starting with banks here this week

>> a little of both. i agree with mike but i'd say there is a demand explanation for the strength in energy seeing the different stocks do okay today the inflation sensitive names are fine energy, oil is over $80. a lot of that is coming from increase demand for natural gas, for oil around the world as natural gas has benefits versus coal and other energy and seen wind energy not holding up in europe. so i think it is a mixed message. a good message for value stocks and the inflation sensitive stocks we like right now >> shares of southwest hitting turbulence today coming after the airline canceled thousands of flights over the weekend saying it's due to air traffic control issues, weather and the staffing

shortage southwest airlines down sharply. almost 4%. seems strong for canceled flights. >> i agree it does. the market is takingi it as a mismanagement issue. i've seen the search volumes people are looking to take more flights and not necessarily a macro move hard to know what's gone own and will persist southwest did have the benefit of the doubt of being well managed and free of some of the other labor oiissues that plagu other carriers. >> this sector as a whole is there an opportunity given that it's softened as of late given the fact that -- go on pick it up and answer. >> absolutely not. you know the answer to this question before you asked it never a good time to buy airline stocks this is just a bad industry with

bad economics. where people are constantly competing to lower fares complete price trance parent not good labor relations and energy costs are heading way up. it is not a good industry. please avoid. >> we'll switch to one where i think you have a different point of view. kkr, leslie? >> that's right. for the first time in the 45-year-old history of the firm there's a new guy. really guys in charge. kkr announcing that henry kravis and george roberts are moving up and the ko-presidents to be co-ceos and moving to one share one vote structure the elimination of shares with

special voting rights could allow a broader suite in indexes. guys >> thank you so much for that. i guess that change will give you quite a few vote just still significant shareholder of this one? does this change in leadership alter the view at all? >>no tft well signaled before this is a final step they did a great job to put in place several years ago and the reorganization is shareholder friendly they're now giving more voting power. getting rid of the partnership that some people thought produced a conflict between p publish shareholders this is a great company and business that continues to grow. very well run. >> in the broader financial space approaching earnings what is the top pick? >> kkr hastripled since

announcing they won't be a partnership. i think '21 or '22 we talked about it wonderful company. not that cheap anymore the names that are cheap are names that benefit from interest rates going up northern trust goldman sachs will benefit from interest rates going up. and love lazard. it trades at a very low multiple at ten times earnings. volumes will be great and love that and northern trust. >> mike, what do you think about the move in kkr? >> no. the two co-ceos, co-founders, the key is that kkr along with blackstone, apollo, carlisle they have such a scale that they became institutionalized they became kind of

multigenerational businesses before this happened and before public companies there's a question whether the founding generation of the business which is what it was initially can pass the torch i wonder if they're valued richly bla blackstone with more assets under management the fact that it is not as susceptible to the whims of public market moves. >> fascinating in how it's changed and grown. sofi with a bump the firm is bull ib on the student loan refinancing business saying that the potential approval of the bank charter application is another potential catalyst for upside and shares higher by 13% why that's a big move on an

initiation. >> very big. this is a company to put a firm and the customers like the stock. fascinated by the initiation in the sense to attempt to value the company and valuing it on an enterprise value to revenue basis and talk about adjusted ebitda this is not the coin of the realm in normal companies. it is not earnings it is very much a growth company story and you have to believe to unfold for years to come interesting that this is being a sofi with an advantage over companies to become the all-inclusive financial services app to young people because they lend to take out student loan debt and maybe a better way in and stickier way. >> i'm interested your take with the notes and the valuation multiples that we know exist for

the broader fintech space. on goldman sachs, whenever you usually mention goldman it is not because of the acquisitions and green sky or am i wrong? is that why you hold the stock >> no. you're right there goldman sachs is a growing part of it. werner vous going into a new business like this people value goldman as a multiple of book mike is right. valuing a financial services stock as a multiple of revenue is very much an alarm bell we look -- this is a business where you refinance student loans, bundle those loans and sell them off as collateralized loan obligations have we heard this story before? tends not to end well. there are seven andists on the stock and all seven have a buy

rating why not a good sign. >> also to round this conversation off in terms of charlie saying have we heard this story before in the buy now pay later market and do it and bundle it up and sell it on. >> absolutely. it was like the great consumer finance companies that did well until it lost up with them. >> selling off session lows still but nothing too pronounced down on did s&p 500. are you optimistic or nervous heading into earnings season as a whole? do you think estimates come down enough to have beats and put a floor in >> i would say i'm short term nervous and haven't heard that from me in probably 18 months. the supply chain issues, the people shipping into christmas there are people with negative things to say about the fourth quarter. there are going to be people showing the signs of inflation

and what that will do to margin. auto sales are spooky in terms of lots being empty so i think it is bumpy in this quarter. i think financials should do fine and a strong economy but short term i am a little nervous. >> when you say short term how long is short term >> this quarter. this quarter. >> okay. anything worried about now alleviated by next quarter or you have to wait and see >> i think '22 is a good year. sorry to cut you off i would say that this is a short term problem i think we'll get these incoming ports open we are not going to have 60 ships waiting outside of san francisco like today this will resolve itself by january or february of next year and the next couple of quarters i think could be a little bumpy.

>> we have just over two minutes left in the trading day and we have slipped into the close. the dow down 248 point just the s&p down two third of 1% and the nasdaq that was holding on to gains until the last 20 minutes is down. mike, internals have probably worsened >> they were holding up okay and 4278 is the low from a week ago in the afternoon intraday low about 2% below where we are right now. you see right here a 3 to 4 reich owe of advancing volume to declining volume sector moves below the radar, look at the aero space and defense etf compared to industrials. that's part of the industrial sector and relative performance. nosing ahead perhaps because the election

time fears of some kind of constraint on defense spending is not coming to pass. industrials struggling to make headway. volatility index is a lift normally on a monday you get an upside bias rebuilding the possibility for movement after the two-daybreak but here we have it close to 20 again and still unsettled. well below the highs of 28 last year a one oirnl spike in september. calmed down. >> just under one minute to go down by two thirds of 1% 0.6% on the nasdaq two sectors in the green, real estate and materials it is slight other nine sectors in the red. we did have of course oil gain today up 1.4% and energy a better performing sector and

joined the selloff in the last half an hour and down now. the dollar gaining about a third of 1%. but on the day when there's volume there as the bond markets have been closed at the close the s&p 500 down 0.7% aen the dow down 248. session lows at the close. nasdaq down. >> welcome to the "closing bell." i i'm courtney in for sara eisen and mike santoli we are closing lower on the dow. 249 points s&p off. the nasdaq closing lower by more than 93 or .6% and the russell 2000 off just over a half of a percent for 12.5 points and talking to bank of america on

why she thinks the supply chain problems are not yet priced into the market that's up for debate coming up the sectors that she thinks are most at risk. we have charlie from ariel and another guest joins us mike, we did sort of lose the steam going into the close and the bond market reopens tomorrow maybe it will turn around. >> certainly the market traded as if yields are going up. look at the bond etfs trading down in price meaning that they assume u.s. yields to be up and maybe saw that impact and just kind of unwound thursday and wednesday. i talked about the confusion zone because it is sort of trapped in this mode we are quicker to sell rallies than buy dips but not necessarily told you the fatd of whether in fact this is a

bottoming process. probably builting to a viable krerks if it's not already gotten there but usually tests the conviction along the way. >> to what extent is the pull back been because people are concerned about the economic outlook? >> there's definitely been a buy binary reaction to the market with the clients and the force conference in chterms of what colleagues are saying. you have a market concerned about rising rates, higher oil and myriad policy changes potentially in washington and incertainty that brings to the table. we have a potential for better earnings that's what's taking down the market the oil is probably new to that. the inflation story has been here and then we had the same conversation and the same tug of war three months ago in june

the only difference is the market was higher. here is price that's come down earnings going up. so we can think that this is a buying opportunity and especially in those cyclical areas like banks >> we'll hear more about the cpi number and inflation is so much focus of course for sometime now and continues to be perhaps even more so now with these supply chain worries and hearing about wages and the impact as we talk about the employment picture why what do you think we'll see from cpi? would you advise clients differently based on the results showing? >> yeah. so look. the good news is that the cpi, the number of the consumer inflation, seems to be big irand the magnitude is outweighing the

ppi which means that producer can pass on margin and the story that's let the markets continue to run the question becomes, if that no longer is the case and arguments that neither show you what's going on in the space. we talked to ceos every day who are the clients and the conversation around input costs whether oil based, shipping based or whether white collar labor the costs go up and saw that in the jobs data of friday. even though thedata disappointing especially on the public side what you will see is that the earnings per hour for hourly employees are going up. so there is definitely a rub there that we keep watching and i think that the concern should be reflected in people's portfolios in that as has been said all day and probably all mom month you look for the winners and looking for the stocks

within the broader indices that have pricing power and can pass that on to consumers. >> charlie, completely different question for you you haven't been a holder of faang down the years i wonder with the recent tremendous vails if facebook is cheap enough, a value name, a market multiple, to consider it. >> that's a great question the answer for the first time maybe since the ipo is we are thinking about it. it is an extremely well positioned company with massive m mote, barriers to entry my generation tends to use it more than younger people but the regulatory risk is real here not much the democrats and republicans agree on they hate facebook that is not a good thing and have to navigate the regulatory

but the core point is right. they sell ads on facebook. >> let's hit the supply chain issue story now. showing no signs to slow down and neither is the labor crunch. steve liesman looks at the employment problem for us. hi, steve. >> yeah. they're related. ed for the lost workers is everywhere stores closed at odd hours lacking employees. and in the jobs numbers friday with the weak hiring from a lack of workers women, new retirees and immigrants of the workers in the workforce 63% or 2 million are women this is the reverse of most revegss. 20 to 34 is the half of the lost workers. child care issues are a major reason and then the number of americans 65 and older leaving

the workforce each month up to a new level with the pandemic it's never returned. 145,000 americans in this age group. they drop out of the labor force every month up from 93,000 do the math an extra 1 million plus retirees. finally a decline in immigration began in the trump administration before the pandemic it increased in the pandemic and it's only been somewhat eased by the biden administration david byer tells me the lack of immigrant workers is a substantial portion of the labor market the economy would have been expecting to be present but are not and estimates half a million lost legal immigrant workers can they be found? that is braugh back to fill the 11 million open jobs folks? >> steve, thank you so much.

much appreciated charlie, this is a big issue but is it already priced in? everybody's talking about it for a month. >> i am so glad you asked that the answer is no in general the consensus is that inflation is transitory. if you go around and you read the surveys of money managers they tend to -- not all but majority are calling for inflation to be transitory and what steve just outlined and referred to us as inflationistas is the immigration issue is a very important issue for wages that force is heading the other way. outsourcing to asia is big reason putting lower pressure on inflation. that is no longer as big of a force. keeping inflation down that's now reversed. we have the major trends that have shifted size and are now

going to be inflationary >> i want you to respond to that thinking about the inflation that comes with looking for workers and paying more to do the jobs i don't think it probably hits all sectors evenly here hearing from companies that will be reporting results. any factor into the way that you need to be considering what's going on coming to costs for these companies? >> absolutely. we have talked a lot about the cost of goods and the inflation there but remember that oil goes up and down. seen lumber go up and down and it can peak and then come down you cannot hire someone for $18 an hour or a recent college garage wait for $80,000 an hour and then tell them that immigration started up again or a automation made the hourly wage go down.

this is part with us and short term and again comes down to the intersection between the pricing power of each firm and the ability to automate and create technological efficiencies and with tech market, health tech market, you name it, always going to need to be there and increasingly increase in value. >> pivoting back to the broader markets approaching earnings this start of the week intraday selloff a nervous factor that people should worry about or easing the market levels >> the market is still unsettled. the market is going back and forth as it does hunting for conviction it is textbook failing right here 20-day average where people said it would i think the day-to-day is a little bit in the hands of

people paying attention to technical triggers as opposed to getting earnings coming and maybe trade off bonds and cpi and could change and i think it's a little bit of an uneasy position right here because bulls don't see a rush back in august you bought every % dip because you wouldn't get another one why now a 5%, almost 6% pullback that held for weeks and changed a different short term economy. >> we'll funnish there thank you so much for joining us. >> thank you. >> bye. shares of southwest falling after canceling the flights this weekend due to staffing shortages. gordon bethune on whether it threatens the rest out industry bank of america on why guidance this earnings season could be ugly.

we'll be back in a couple of minutes.

shares of southwest tumbling in today's session finishing down 4%. we spoke about that earlier after the company canceled flights over the weekend and hundreds more today. southwest blaming air traffic control issues, bad weather and staffing shortages here to discuss is gordon bethune. i'm sure as ceo you paid attention when your stock price was hit and 4% seems like a big hit for a weekend of canceled flights because it happens is there a risk that the reputational damage could be bigger to southwest than just one weekend? >> hi. it is a big revenue hit, too so the 4% probably is that nick right there. but they have had a couple rough spots this summer and operational difficulties didn't help that the jacksonville air traffic control center under short ands and

canceling and crews running out of time. they're recovered. should have been up and downing by now and still in recovery mode. >> did this seem to be fairly isolated to southwest but talking aboutbad weather and staffing shortages and that many airlines are struggling with the crews and demand and the right people in the right places why did this hit southwest so badly this weekend >> more in florida and concentrated with point to point and a lot of input into that region air space but you are right. it is not -- measure than just air traffic control center friday it's a lack of operational expefr's the i'm not sure what's causing it but there's maybe a management change which is recent enough and in the operations management ballywick, that's for sure. >> what extent do you think

staff shortages down to vaccine mandates to what extent is the industry going too far by requiring them given that we did handle things kind of all right with mask mandates and travel is not luxury but a necessity for some people >> i would say the previous administration and current administration been generous to the airlines and protecting pay for thousands and thousands of employees so i think it's appropriate to be asked to help because this is a national issue and you are right in all this turmoil. there could be some resentment i doubt it but i'm not there day-to-day when you don't want to fix an airplane it takes longer to fix it. >> more broadly on the industry and vaccine mandates, do you think that is the right way father or not?

given as i said that it worked fine with masks before vaccination and not like a moment of critical spiking in cases or shortage of hospital beds. >> i could second guess and say that they shouldn't do it now but the sooner to get back to normal things are better i do know that the public contact sports do have requirements that other people don't have so i can understand a very public nature of airline personnel with vaccination but whether this is the right way to go ab it i wouldn't say it is or is not i think it's okay for the president to ask for it and i'm not sure mandate is the right word to use. >> if you were running a major airline today what would be a number one priority, return of the business traveler? >> absolutely. that's where the money is in the business traveler. i think they are looking at the friends at united

looking at a december with highest bookings in two years and there's really good positive things for all airlines on the horizon. getting the covid behind us if this is the final straw you don't want to chop a dog's tail off more than once because he'll bite you let's get back to normal. >> good advice i like that one. be careful with what you do there. learn the lesson the first time. thank you for joining us. >> thank you. >> thank you. don't miss gary kelly tomorrow on "squawk on the street." we'll hear from the kroceo tomow morning. bank of america analyst will be on the sectors to buy ahead of the results and why supply chain irses are not priced into the market and details of an epic flip flop for apple and could impact the company's

bottom line later on "closing bell."

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welcome back earnings season this week and big head winds like labor costs remain supply chain constraints in

focus. mentions of the word supply chain on calls more than doubled from a year ago according to global research. let's bring in banlg of america securities head of u.s. strategy great to see you as always let's start about the level of optimism in general that people have going into this earnings season we have seen estimates come down does it make it easier to beat them >> they have come down a bit you are right. i think it sets the stage for kind of a lower bar to beat. i don't think we'll see the kinds of beats we have seen over the last few quarters but folks used to the record level 20% earnings beats are disappointed. i think we'll see a quarter where earnings essentially meet exec taigs at best and guidance will be downward than upward so i think that when we look at the

sort of stage setting that q2 and analysts have led up to heading into the third quarter i think we're at a point where i'm not superoptimistic about blockbuster results of the last few quarters and i think the earrings of risk are really around supply chain. i worry when you look at the companies that as you mentioned in the second quarter we heard this sort of huge kind of revelation of supply chain disruption in all sorts of area. and those companies, we just looked at where they trade today versus the historical average multiple they're trading a full standard deviation expensive. so this is an environment where the companies are trading at sort of unsustainable levels of

positive optimism. i think that's where we were. >> supply chain issues have been well telegraphed but you think not sufficiently >> what's surprising to me is that margins are forecast to reach brand new record highs by the end of the next year but looking at data, wages, the cost of raw materials, oil prices and maybe not at the super high levels but they moved up a step function hand hard to argue you'll see the continued gains for tech and for the companies as we have gotten to a point where the market is priced for per ferks. looking at valuations, okay, i'll tell you that the one thing

that gives me real pause coming to the s&p 500 is when i look at sort of a longer term forecast framework. what we found is that valuations may not determine what happens over the next year or two but sort of an all that matters for ten years. that would explain over 80% of the returns vablability. it's spitting out flat returns for the next ten years this is a different environment than we have been in in the past and i think what concerns me is that we are in an environment where analysts are extrapolating from the great trend in earnings but all of a sudden we are seeing hiccups and more kind of friction than just positive pricing power. so here's the way to think about investing for earnings season and going forward.

you really wantto focus on companies that have pricing power and we came up with a list of companies with the analyst's help of 54 companies in the s&p 500 with pricing power surprisingly very few consumer names came up. there were a lot of commodities companies that actually seemed to have more pricing power and sustainable margins and techs and industrials and not a great list of companies. a pretty slim list of companys that are probably going to be able to maintain margins in an environment where costs are really starting to impinge on earnings and profitability >> if you came up with the 54 names with the help of analysts are you able to share any of those with us today? >> i can't talk about stocks but i think it's just an interesting list from a variety of sectors i think that there are companies

in the market that have pricing power. u.s. corporates are great at creating demand. one of the reasons that the cost pressure has reached such sort of untenable levels because demand is there and supply is not and better setup of an environment with no demand but what you want to look at are companies after three or four price hikes we have seen who sees demand destruction and who isn't? unfortunately i can't discuss the names but there are a lot of opportunities in a diverse array of sectors. >> maybe some u.s. corporates. we can take a hint there and see more when we hear from the companies of course as the weeks roll on starting with the banks. not sure that supply chain as big of an issue for them but we'll get the clues. >> that's right. >> thank you for joining us. >> thank you for having me.

bank earnings this week and let's send it to mike santoli with a look at that particular sector for us. >> a setup for the banks and relative to the market and valuation. a couple different ways to look at it. down in the 20-plus zone forward pe for the s&p 500 we have had the returns. up 15% year to date. is that still too rich that was the ceiling before. 18 times as high as the bull market got for banks roughly 12-ish below the peaks and going back to 1718 yields are higher so that's why the relative case with case for banks. take a look at the dividend story. really scraping the lows here. 1.4% why now back below the

10-year treasury yield and been a very, very vague rough marker of relative stocks versus bonds but with the banks 2.3%. pretty good premium here looking at how fatd it is relative to the overall market this is the setup. the bank stocks are have been strong maybe set up potential for disappointment in the short term but the underlying value case if up capital return coming is probably taking hold as long as the macro fundamentals hold tight. >> the big point is that if this is a steady economy and market for five years there's an attractive valuation gap for the banks and shareholder return factor the question is for a very cyclical sector its will be tied up. >> not priced in. >> on the dividend yields the

buyback is a very interesting point coming into this particular quarterly earnings with the changes and the way the fed is giving leeway opposed to waiting for permission every year for a swing factor for individual names that say we are going ahead with a chunk more of a buyback and get that off the back of that. >> that's a swing factor you can't predict and have to hear what they have to say. >> thank you so much. still to come, shares of matter poor making 3d digital verses of physical spaces up since july the stock jumped last week with the bull oish call on it. >> i couldn't tell you if it's up or down it is an investment and not a trade and i don't view it as

tech stocks got cheap. this is closer to the high than the low and view it as something where the news that is propelting it is the kind of news to see so it's confirmation i'm in the right place. >> company ceo to join us to discuss the stock's strong lar "osornc teoncling bell." (vo) while you may not be running an architectural firm, tending hives of honeybees,

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facebook's oversight board meeting with the whistle-blower that testified last week on capitol hill hi, julia. >> wilf, that's right. the facebook independent oversight board said it appreciates the chance to discuss haugen's experiences the board is specifically looking at an issue that haugen's leaked documents highlighted that facebook is trabs parent about the application of the cross check system that's how it reviews content decisions with high profile users. the board saying it will share the analysis of the process in the first release of reports and that's coming later this month guys >> julia, remind me or let me

know if you know or if i missed this did frances bring up the concerns to folks at facebook before she became a w whistle-blower >> she did say and this is something that came up in the testimony that she did raise these issues, particularly when the group disbanded and the vir you people in the sort of public safety group assigned to different divisions in facebook and raised the concerns but it sounds like what she did realizing the concerns were not heard and made the discussion to take tens of thousands of pages of documents with her. >> raises the whether this advisory board that's supposed to be independent doesn't offer itself as the place for people to make internal complaints rather than going external

originally and if the result of going in front of congress to then go to the board it raises the question whether congress is toothless. it is kind of interesting and one doesn't feel like there's sufficient kind of momentum behind this to actually see any action yet any way. >> you raise a good point. this idea that should people raise the questions internally and have them taken seriously interimly than haugen feels like the concerns were taken but there's a lot going on here. right? seems like facebook needs to address these issues and whether congress will strengthen laws and not clear what the laws would be privacy laws change section 230 laws that are specifically about protecting kids and ma layers

here and what the oversight board is focused on right now at least is whether facebook is clear and transparent about a double standard about how it treats different people on the platform and the concern that haugen raised. in the documents and then discussed in an expose article in "the wall street journal." >> all very fascinating. i will be interested to see if major changes take place after this. now an update with shepard smith. >> thank you more than 70,000 people died of covid in california. the most in the whole country. but things are improving the state is now reporting the lowest rate in the whole country of new covid cases more than 70% of people in california are now reported to be fully vaccinated. at least six people died after severe flooding in china

the area hit is large es producer of coal in that nation and the disaster pushed the coal futures to a record high. a day of firsts for the before marathon. first time in october instead of april. first time win irs both from kenya and another first tonight the red sox will play a post season game on the same day as the marathon tonight here kyrie irving of the nba might be sitting out half the games because shots are required and he doesn't want them not only a blow to the team but the bank account that's tonight right after jim cramer back to you. >> what a big day for before. ceo of matterport, going to talk to us about the outlook for revenue growth and how the partnership with facebook is

impacting the business. apple called a court ruling a win but now an about face. details tonight on "closing bell." ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪

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. shares of matterport up 35% and falling recently over the past two weeks the business helps businesses create 3d digital twins of

fizzal plans it covers 80 cities in the u.s. and the uk joining us is ceo rj pittman really fascinating business. and first big picture question if i may which is these digital versions we just threw a few of them up on screen of physical spaces are used for what exactly? real estate and hospitality companies with digital versions of the properties they own what do they use them for? >> matter port is leading the digital transformation of real estate and the entire built world for more than a decade and co covers commercial and residential real estate, hospitality, industrial, manufacturing. think of a digital facilities management platform in the enterprise and scaled this broadly across a number of key vertal markets. >> so what are this used for

showing someone the home and potentially sell it. only useful at the point of transaction or has the pandemic and the way we interact digitally added a deeper potential use for your product >> that's right. yeah it is absolutely the gold standard for virtual tours we have sold more properties sight unseen poured by a matterport 3d model and that has really moved the needle since the pandemic but like i said this is a business of ours for over a decade that's accelerating through the pandemic and in the space of the enterprise not just about promoting a property for sale or rent or airbnb it's actually now being used for everything from digital construction documentation so large construction projects,

home construction projects, high-rises are using this to document every step of the project from framing to sheetrock to finishes all in detailed and accurate 3d and then once the property is done and operational it becomes basically an operating system for the building because we have turned the entire building into a digital version of itself that we can do things smarter than we did in the physical or offline world of years of old. >> i cover retail and automatically i'm starting to think of the applications in retail i know they try to use augmented reality to sell high consideration products so a couch or dining table so you don't order and then realize it doesn't look right there is this something to offer a retail customer like the augmented realty products or can't be done for sort of every

day products and needs to be a much big every project to make the woth it? >> no. we are simplifying it and bringing it to the home. we had a great project with cost plus world market, for example, that over last summer in the pandemic they did an entire e-commerce experience powered by matterport and showcase the outdoor furnishings, the things for sale in a way that you are in the store or actually in an outdoor setting and became a compelling experience better than the traditional way of shopping online we have been turning up retailers for an immersive experience one after the other again not just in covid but beforehand and another part is realizing that they can take the products in digital form and allow you to place them inside

your matterport digital twin so this is better than augmented reality. you can create that replica of the home and put furniture in from anywhere. crate and barrel ikea you name it. get a clear view of what an ensemble of new furnishings might look like, offices and home. >> sound like a case of geographic expansion rather than necessarily expanding the product suite. >> one of the things i'm most excited about is the enterprise. i'll stay with retail. think about the businesses that have huge fleets of physical real estate. right? like starbucks and home depot. two customers of ours and not for what you might think they use us to manage facilities management at scale. these companies have tens of thousands of locations around did world and now with a digital

twin instead of sending building inspectors, product managers around the world to do things like upgrading the merchandising or adding new equipment to the checkout lanes this can all be planned and managed and monitored in a digital fashion from the phone in the pocket or the laptop on your desk. saving huge amounts of cost and inefficiencies that was required to manage physical real estate in the physical word and bringing that digital and creating a scaleable solution for march properties and facilities managers all orr the world and no question. international expansion is a massive market opportunity for growth we got the start here in north america. but we are now digitizing spaces in 170 countries around the world and just tapping into -- i would say the early innings of the opportunity around the

globe. >> it's fascinating stuff and you have to see it to understand what we're talking about and we have shown several videos as the digital twins as you have been speaking thank you for joining us. >> thank you. up next, so much for a victory. that's what apple called the verdict with epic games but now it looks like a change of heart. next wednesday cnbc's at work summit returns. register now at register now at cnbcevents.com/worksummit. and twice as fast. fedor. talk to your broker. ten-x does the same thing, - but with buildings. - so no more waiting. sfx: ding!

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apple filing an appeal the epic games case. >> the apple/epic war continues. in this latest twist apple filed a notice of appeal in the fight. the iphone maker is asking for a delay on a judge's order remember in september tim cook and tim sweeney took the stand in the high-profile antitrust case the judge ruled against apple on

everything, nine of the ten claims, and apple is saying that such a policy change could introduce security risks and disrupt the use experience it's also a potential financial risk apple is a critical part of the higher-margin services business, which reported $54 billion sales. a question for investor here -- how much of a risk is this even if developers can steer customer to say alternative payment systems, how many customers would actually do so or would most actually opt to stick with apple's pay system, the one they know and trust. that's what gene muenster expects. back to you all. >> josh, thanks so much. mike, it's been interesting.

at one level it was claimed by a victory for apple. they might as well try to appeal the one out of that -- >> and also, it's easy to say people with stick with what they know but it gives clarity exactly where apple makes a lot of money. a very small number of games and in-app purchases, so that was somewhat interesting i don't think it's really material in the future, in terms of determining apple's earnings power, but it's been fascinating. i imagine apple has teams of lawyers wanting to make sure they can -- we knew from the beginning whatever side lost, they would appeal it. >> i also would not completely discount the idea that apple believes it is prayeding from a

position of principle. we want to control what is in our ecosystem, you know, there's money for sure, but they also believe that they know a better way. that's been their -- i think that's presumption all along for almost everything. they might not be right, but that's the way they act. >> apple finishing the day basically flat it was a down day on wall street we will preview the key things to expect tomorrow, after the break. it's hispanic heritage month. we'll -- and anchors and reports. here is andy medina. >> other people are asking for advice be really to be rejected deal well with that rejection. a rejection doesn't mean no, it just means not now and it always means you can do it later, but this ability to build your network and rely on other people, learn from each

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now for a look ahead, some economic data to watch jolts tomorrow morning, these are things we all look at very carefully as we watch what's going on in the labor market and with small business. on a programming note, don't miss our exclusive interview with fed's james bullock we look forward to that as we look forward to inflation data in the week. some -- out of policy committees suggesting we might in fact get a evening this year, consensus my question on that, was whether you start to see another major bank -- even if we don't have the same strength of rhetoric? >> i think it was absolutely on investors' minds today what happened over there with the uk yields, starting to fly a bit. just a general sense that the hands of central bankers might be forced by what's going on i still think you can say the

fed can afford to be more patient, but it's not necessarily the people are going to just assume they're going to have that luxury i think it's in the conversation, that's why the focus is there, but again, you know, i still think this is supply chain stuff even though the inflation story is almost being ruled more as a restraint on growth than setting the expectations for years to come it's tricky. >> how much do you think the market will be paying attention to the price of oil? >> that's all part of exactly this byrne, that actually feeds pretty directly into yields usually. it goes into headline cpu and i think that's been one of the drivers. i don't think the absolute level of crude or gasoline at the pump is somehow critical. but it doesn't mean it's comfortable when it's happening. it seems like this more han become a little untethered

>> we finished on the near the session lows today, down 250 on the dow, or 0.7% we're out of time here that does it for "closing bell." thanks for watching. "fast money" starts right now. live from the nasdaq marketsite, this is melissa lee. the three words that sent the bitcoin brigade wild today what jpmorgan said about the cryptocurrency that gets a ton of heat. southwest shares until pressure, the airlines canceled thousands of flight? a nightmare weekend for travelers. we'll break down the fallout later. and ante up, should you roll the dice on these names? running out of gas, so to speak, xle hitting