tomorrow southwest cancellation the airline denying that a vaccine mandate backlash is behind the trouble and we'll check in with gary kelly as well. and texas bans vaccine mandates on all entities how willbusinesses respond and what does that mean for the return to the office trend watching the vaccines, the development of its most advanced covid-19 vaccine candidate and moderna now says that data does support a booster. we're going to start, though, with the cancellations at southwest. you've got a long list of questions you want answered just about labor relations with the carrier. >> a lot of things have not been answered yet and i do put out what i'm looking at. you can get it if you're a member of the investor club. i'm not satisfied with anything i've heard they're saying it's scheduling i'm not satisfied with what

this -- the representative of southwest air has said representative the representative is gary kelly. but i'm satisfied that gary kelly is coming on and that is going to change the tenor of what's going on. >> he's very straight forward with us. we've interviewed him countless times. i'm looking forward to that as well given there seems to be a lot of confusion about what is behind this significant slowdown and/or cancellations that have occurred in their service. >> talk about southwest air. we're talking about the machine. i recommend southwest since gary came in. how can you not? they're the best-run airline in the country. or are they? and i think that's what gary has to answer to when you talk about culture and there's phil going back and forth about culture. culture? i think the culture was unassailable there it doesn't feel that way anymore. >> many years where they were on the other side of labor strife where they had relative peace

and the large unions of the legacy carriers were embroiled in various disputes. there is this discussion of the hub and spoke root network, though, and the way in which it depends on florida >> it's worked for years suddenly it's a problem? wow, i woke up and southwest air, what they've been doing doesn't work in other words, someone this morning -- brian sullivan was talking about they do a 15-minute turnaround versus 30 when something has worked for years, we discover it's the problem? i'm not buying it. >> you're not? >> no. i'm not buying it. >> a lot of the scheduling is making assumptions about traffic and maybe they were just running it hot. >> but this is southwest first they say we're not going to do a lot, we're going to furlough a lot of people, come back, put more flights on for columbus day is this southwest air or the keystone cops? what i love about gary, they're smarter than everybody else.

i do know -- we've been talking about how their information technology is not good they underspent on i.t.? southwest is king of i.t. >> we are going to ask the questions and we'll see what -- >> he's the best there is. >> meanwhile, let's talk about the stock price and/or the airlines overall, jim at this point. we can see southwest shares seem posed to at least go up a bit in the early going here they were down yesterday >> oh, yeah. >> you got american, american weighs in today. s says q-3 revenue should be at the high end they're looking for a dollar loss revenue down 25 on a two-year stack. prior guidance was 24 to 28. i'll take that. >> and i think when delta reports, i think they're going

to be the star of the show delta has become southwest. >> do you own southwest in the investment club? >> no, i do not. i would have at one time but i think i'm now going to -- >> you don't own any airlines -- >> i'm back to the way when i was at goldman sachs in the '80s. >> for decades they didn't -- >> they started selling at six times earnings. >> and then they had this incredible move and they charge you for ever last little -- nickel and dime you for everything and it worked out. >> the only travel i'm in is wen. people went much too negative. let's say you were talking to a guy like steve wynn. the chinese, they need jobs. i know that sounds odd i come back and say i've before evergrande -- how many

evergrandes are there? we have others that are coming up cynic. when is that coming up sinic. it feels like a bit of a house of apartment cards >> they've got a great deal of property that isn't being lived in that's developed that's resulted in enormous debt loads being amassed by these companies. if they can't sell as quickly, it becomes more difficult to service that debt or they -- and there's a level of speculation we've made the point many times, the chinese as a percentage of their wealth and a place to store wealth, real estate is a more significant asset than it is here because they don't invest as much in the stock market. >> they have apartments. >> they do >> did you see -- do you follow

our guy in asia? he is awesome. he cycled past the evergrande office it has police fencing around this is china. you're not able to protest >> the journal has been doing good reporting on it we have to rely on others, frankly, talking about xi and now they're looking at the relationship between the state-owned banks and/or state-owned entities even the cic and the private businesses >> people know that they've had problems. >> now they're looking more closely at that. >> are the blue days over? >> yeah, i think they may very well be. a lot of this design to ensure he gets another five-year term, which would be out of the ordinary to say the least because typically premiers have

served two five-year terms and called it a day. xi is going to go for another five. >> i wish they would fix their banking situation. they may be all powerful -- i would like them to clean up the balance sheets. >> the tech companies have had a nice move. >> he's not targeting them anymore. he's targeting the banks you can't target everybody even president xi. you just kind of run out of people to target people doing the targeting she's got these different people who target and they're going -- >> a pretty significant surveillance state there so they may be able to individually target every single person. >> they could put your head on someone, have you say things that you don't say and we would all say that you've lost your mind and you should work for the network that at&t has been backing. >> that was an interesting story, wasn't it, about at&t --

>> we never talked about what happened with at&t and that story. >> oan, you mean >> yeah. >> certainly john oliver and some of his colleagues at cnn have taken at&t and task for financing an organization that argues questionable things about vaccine and is the election. >> i think it's a good thing. >> without a doubt -- >> we'll no longer be owned by at&t, it would run by david at some point -- >> but you know why it's a good thing? >> why >> it's kept me from focusing on the stock for three minutes. that yield gets bigger and bigger and bigger, step by step, inch by inch slowly -- >> the yield is 8%, but the yield is not going to be -- even the yield, though, on what will be the remaining at&t which is going to be cut is going to be fairly significant. >> wish they would come on "squawk on the street. >> 20 billion in free cash flow -- >> we're warming up to it.

>> this is new at&t. we got to get ready for this and shareholders do as well. >> they warmed up to it. i was disappointed >> meanwhile, our parent company is flat on the year. >> flat. >> comcast shares have been in free fall, charter as well -- you have to use the word free fall. >> and another one deutsche bank gets in on it. >> they -- from under a rock they came out and just slaged us >> i mention it because it's about at&t's competition through fiver -- >> they don't have two nickel, by the way, by the way, how many -- all three pieces say the same thing t those days are over. >> it's only when you look back and say, the good old days, what we had at '62.

>> look at the chart it's worse than day two. >> a lot of that involves sort of the pandemic, broadband demand that we went through as you stayed home. speaking of staying home, new data shows that employees are going back to the office as new covid cases decline. castle systems which tracks office check ins says in the past week, back to work average hit a new high occupancy averaging 36.1%. one of the points they make, jim, is that more workers -- it's not that they're being asked to come back, they're voluntary coming back because cases are down. >> i think that fear has been an underreported upon issue when 700,000 people die, more than the civil war, you think, i don't want to die. that's a powerful reason to not go back to work. the key person to talk about this is james coreman from morgan stanley

he's said, we're vaccinated let's go to work i was listening to that excellent piece on "squawk on the street." three vaccines are great i went into cvs, i said i would like my third vaccine. i get it and i feel like a king. but i'm tired of seeing -- i'm sorry. >> no, you're saying it's a health issue most of these ceos will say -- >> look at this. >> -- that it's not. it's people wanting to not -- to do whatever they want to do. that's not coming into the office. >> i'm afraid of smallpox? look out >> these numbers are incredible in the sense of, we're 19 months into the pandemic and only 36% of people are coming into the office i made the point many times, we all have these conversations with people who run large and smaller organizations. nobody is coming back to the office five days a week, period.

james gorman want them in the office five days a week -- >> if the nfl -- >> maybe they're getting close to goldman sachs friday is no-go territory. and most companies are going to be three two or two three. if you do not offer them that flexibility of workplace, they will go somewhere else, period. >> good luck >> a lot of ceos have said exactly that and now they're saying, i was wrong. i got to offer flexibility that's what i'm wearing. we may look at 36 and maybe it will get to 50 or 75 during three days of the week but what it actually means for a lot of downtown areas and cities and certainly this one and many others is going to be very significant question for their economic development you're not going to have the same amount of people coming. >> six days a week was right and now i think there's room,

carl, for some companies -- you want to make a lot of money? come five days no zoom. we're going to ban zoom. we'll ban webex, teams, we're going to ban facetime. >> amazon, which had been definitely in the you're coming back camp, andy jassy said innovation can't happen remotely now saying it's up to the local manager. >> i'm telling you, the workforce is making the decision here, not the boss, period. >> the workforce doesn't know enough how do you show that you're going to advance how? >> i think young people who would be staying home sitting in an apartment all day are making a mistake from a mental health perspective as well. they're not going to listen to me i'm a dinosaur i'm a parent an old man they're not interested hit the road >> they want to get paid to watch "squid."

how much will you pay me that's not a job whole new definition of jobs, by the way. >> we'll take a break and take a look at the futures here a lot more to get here as they hug again. j.p. morgan will kick off the earning season in ernest tomorrow we're watching oil close above 80 for the fstir time since 2014 we're back in a moment ok, let's talk about those changes to your financial plan. bill, mary? hey... it's our former broker carl. carl, say hi to nina, our schwab financial consultant. hm... i know how difficult these calls can be. not with schwab. nina made it easier to set up our financial plan. we can check in on it anytime. it changes when our goals change. planning can't be that easy. actually, it can be, carl. look forward to planning with schwab. schwab! ♪♪

we continue to keep stock of the energy market. oil closes above 80 yesterday for the first time since 2014. again, yesterday, jim, j.p. morgan came out, said if you adjust for inflation and the intensity with which we use energy, relative to gdp, that the market can sustain itself with oil anywhere between 130 and 150. >> i agree with that think about how much milk cost and how much gasoline it costs and how much harder it has to get gasoline to the store than it is to get cow to the store. farm to table. cow to the store the thing has not kept up pace with inflation i'm not freaked out by oil last wednesday was the top of natural gas. when putin said, hey, listen, maybe we ought to have more, he was starving europe, but they said nothing because they're so scared of putin, they are. everyone is scared of the russians and chinese

9 out of 10 people, according to my friend, are concerned about cybercrime the russians are just thugs. we don't talk about them as thugs. we talk about them as a member of the council of nations -- >> i think we do -- >> what show >> you just did, anyway. we've referred -- they're running a criminal enterprise over there >> they shut off europe. we could have provided all the nat gas that they need there are countries in europe have enough natural gas because they contract. >> european and asian gas prices, there's an interesting note from city saying that recent pullback after the rise that we've talked about, we're talking here in europe where the prices are so far beyond what we're paying here. the market has only grown uncertain since september. china decided to secure energy at all costs, as you say, and global hoarding increases just as putin spoke of raising gas

exports. limited evidence of capacity to do so. such push-pull drivers on top of weather uncertainty should keep prices under justified levels, volatile as well >> that's possible don't forget the european environmental laws have made it very difficult for normal business to be done. and we all know that europe is much tougher i had -- i had plug power on last night, hydrogen europe is way ahead of us. maybe we can get a $3 subsidy and do okay. europe is just really move fast toward hydrogen and that's causing a lot of havoc too they're going electric over there. they're going hydrogen we're going ice. >> hydrogen? >> we could do hydrogen. >> expect the differential is large. we've got to lessen that --

>> senator schumer is trying to -- andy marsh says $3 per kilogram subsidy which would make it so that hydrogen is really in the ballpark, particular if we use solar don't rule out hydrogen for the long haul. you've been bullish on hydrogen for a long time. green hydrogen is the answer, unless you're elon musk who doesn't care for it. what has he been up to >> selling his solar panels. >> he was in europe, germany, showing off the factory. >> 56,000 -- >> he's everything >> he visited the outer atmosphere -- >> i'm jealous of him. >> when is shatner going up? soon >> any day now >> when we come back, as jim said earlier, don't miss our live interview with gary kelly we'll talk about these cancellations and some of the labor strife in the meantime, futures close

to the highs of the session. "squawk on the street" is back in just a moment

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seven minutes before we get started with trading here at the new york stock exchange. let's get to a mad dash. netflix. >> what did you talk to me before the show began about a disturbing series that everyone in the country is talking about. >> and the world. >> and the world "squid game". >> they spent a billion dollars in korea somebody hit a home run. >> north korea is not -- that's much more of -- when you think of it, it was -- during that period of -- no.

>> no. >> okay, so netflix, three different firms. jeffries, truest and baird all say, look, it's back they all raised the price targets and the underlying theme is the grand illusion that is "squid." when you see this kind of thing, you remember, wait a second, covid stopped productions, now they're back and this thing has become -- they're -- faang is in. >> it's produced out of korea which show it is power of netflix as a global platform because they can take something from here, here it becomes a huge hit and other places around the world. by the way, if you haven't seen it -- >> i'm not sure what it actually -- >> you know what's disturbing, they missed this whole move because they didn't know about

"squid." it's about "squid. >> my wife says it's too violent. she finds led tasso frightening. >> we got opening bell coming up stay with us, by the way don't forget gary kelly is going to join us as well keep it here

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>> announcer: the opening bell is brought to you by nuveen. a leader in income, alternatives and responsible investing. >> firstly, bitcoin is worthless. i don't care it makes no difference to me i don't think you should smoke cigarettes either. now it comes into, okay, j.p. morgan our clients are adults, they disagree that's what makes markets. if they wanted to have access to buy yourself bitcoin, we can't

custody it but we can give them legitimate -- as clean as possible access. >> that's jamie dimon weighing in on bitcoin yesterday. made some other headlines on supply chain and local growth. but what do you make of the stocks on bitcoin? >> i love the arrogance of jamie. our clients, our clients, he says, basically don't want it. so i have a lot of ethereum. what do i want to do i want to go to j.p. morgan -- i've been a customer for four years. no i have to go to some outfit, i don't know what it is, and i get 8% and i'm wondering how they do that i want to go to j.p. morgan. no, he'll have none of that. the customer, david, is right! >> yeah, that's what i thought he was going to say. the customer is right. >> jamie, you are not the one who can tell me what's worthless

and what's not by the way, if it's worthless, it's selling at 3,000 -- it ain't worthless. it's got a price and i'm not -- i'm not -- give me a break i'm a customer i do what i want i'm not alone. >> essentially, he's saying the customer has the right to be foolish. right? >> now that i bought a farm with how much money i made with bitcoin and there's a -- this thing is taking over my ponds, it's terrible, invasive species of plants. >> it's always something >> exactly >> it's always something. >> there's the cnbc realtime exchange of the real board the other big --

>> they have so many people. the only one that's been any good is the reit industrial where you can store your cannabis >> yes it has had a very rough go. >> spacs or cannabis about three spacs. let's put on some spacs. no don't put on any spacs there is a hippocratic oath even for people on air. a hippocratic oath for anchors first, do no harm. >> yes, that is true although -- there is -- it's funny -- we haven't talked about spacs in a little while. a journal did a story about talking about you can buy them as a rate of return vehicle because you can buy them at a discount and analyze a percentage return which is probably better in the bond market as i pointed out in previous reporting, there are other who is are making choices about who

is going to get the highest rate of redemptions and then you can orchestrate a short squeeze. >> in other words, you want to have spac that comes on and says mine is going to go to a discount because the business is awful, you should buy it that to me is persuasive. >> yeah. that is agreed that is an interesting -- >> that's not even -- it's better than a lotto ticket, obviously. >> yeah. >> the other headline was on supply chain issues which he felt would not be an issue next year we have intel and samsung looking to restart some production at a ho chi minh city plant. that's being taken as glimmers of hope on supply chain. >> gm would be at 65 if it weren't the fact that they made a big bet. i think it's going -- i think that supply chain was deeply relate today the fact that they

thought they had beaten covid over there with their inferior shots. now they're starting to get the pfizer shot, things are going much better. i wonder if they'll get your merck pill >> you wonder what where? >> what were you -- >> that stopped working. it's been a distraction. >> i'm just saying if the asians had not taken -- asians were well ahead on trying to stop covid. but then they got complacent and they got the wrong vaccine they got a second-rate vaccine they didn't get the penicillin from the third man, but they got second-rate vaccine. sputnik turned out to be a second-rate vaccine. >> they locked down effectively over there to contain the spread of the virus. >> they had virus in vietnam we had known that. they got virus in malaysia

what i'm saying is, we tend -- we thought their supply chain was unassailable, and it turned out not to be. and a lot of companies relied on mala malaysia i haven't been to malaysia. >> i don't think i have. the closest i've came was to malaysia was about reading about goldman sachs in malaysia. >> i was there for a few days on business i was covering emerging markets. it was like 1992 >> you are amazing >> 1992. >> you were, like, 3 you never age. i'm going to go to southwest i'm done talking to you. i feel like something is coming over me. southwest shares are edging higher this morning. the airline is hoping to normalize the schedule by tomorrow, normalize is an odd term i expect normal from southwest a wave of cancellations in the

last few days. earlier in the spring, this is suboptimal joining us now is southwest airlines ceo gary kelly. you do not shy away. gary, because you're so good and so deserving of the respect, could you please tell us what you see going on because this is not you and it's not southwest >> good morning, jim great to be with you it's been a rough weekend and, obviously, i really feel for our customers and our people that are trying their best to serve our customers. but when an airline gets behind, it's hard to catch up. if you go back to friday, basically the faa had a series of delay programs that were implemented that covered all of florida, every single one of our stations, including a seven-hour ground stop at orlando

you'll have to ask the faa what was the cause of all that. about half of our airplanes touch the state of florida we're one of the largest airlines in the country. by the end of the day, we had significant numbers of airplanes and flight crews that were totally out of position. and as any -- again, any aviation expert knows, it takes several days to get everything back aligned so we had a pretty good day yesterday. far fewer cancellations than what we were experiencing saturday and sunday. today was pretty much shaping up to be a normal day as usual, we have other issues that we have to deal with, whether it's weather or other atc delays across the country. but for the most part, today is pretty much back to normal >> okay, gary, i understand that the weather-related issues, florida. didn't see that much cancellations from other companies in your industry there's a lawsuit that was filed. southwest airlines pilots

association n the northern district of texas. what is disturbing about it earlier this year, they say that basically you're using illegal tactics, are a faorm of asymm asymmetrical warfare tactics wait a second, maybe vaccines are an issue, maybe labor problems so you understand how we quickly just pivot from florida and faa to wondering what happened here with the pilots? >> well, yeah, again, i think that we're uniquely affected because we have so many of our flights that touch florida all the airlines were impacted on friday. it was just more of an impact on us and took us longer to recover. but all of our employees work very hard through the weekend and it's tough on our customers. but it's also tough on our people they did a phenomenal job.

there's absolutely no issue in working with our employees talking about the vaccine mandate, oh, yeah, there's some that have very strong views on both sides of that issue and it's not -- as i think you probably know, i've never been in favor of corporations imposing that kind of a mandate. i'm not in favor of that never have been. but the executive order from president biden mandates that all federal employees and then all federal contractors which covers all the major airlines have to have a mandate -- a vaccine in place by december the 8th. we're working through that we're urging all of our employees to get vaccinated. if they can't, we're urging them to seek an accommodation, either for medical or religious reasons. and my goal, obviously, is that no one losing their job. the objective here, obviously, is to improve health and safety.

not for people to lose their jobs so, yes, we have strong views on that topic, but that is not what was at issue with southwest over the weekend. >> i want to go over this. united has only 3% of people who are not vaccinated delta, you have a $200 monthly surcharge, health care if you don't get vaccinated. what do you have to make it so people get vaccinated. if they don't, what's the procedure? >> we're encouraging them and offering the equivalent of two days' pay for them to turn in their vaccination card that compensates them, obviously, for the time that it takes, and any aftereffects from the vaccine. so it's an encouragement and, you know, not any kind of a stick, if you will >> gary, all the same, the cancellations are being used by some to argue that this was a

huge vaccine protest in the words of donald trump jr. on twitter in the past 24 hours i mean, how much can you push back on that you say it was not an issue, but to what degree did it contribute to this problem at all >> zero. again, we look at all of our employee behaviors in terms of absenteeism, in terms of people volunteering to come in and pick up what's referred to as open time and they're all very normal the president of our pilots union has been out talking to the media, confirming all of that i think people, again, that understand how airlines work, when you get behind, it just takes several days to catch up and the fact that we're basically caught up -- yesterday and today, supports the assertion that we're making here but we were significantly se behind on friday and it just

takes several days to catch up >> gary, i feel awful doing this, but i got to go back to june you had two days technical issues, 500 flights canceled i want to step back for a second you're southwest air i frankly don't care that there were problems with florida you're southwest air, you solve these things you have two outages you had one in june. maybe southwest air has to change its ways, it can't be just shut down because of orlando. maybe shouldn't do that. this is your airline and everyone knows that never -- no cancellations. no problems. the fact that we have to ask about labor, something is wrong at southwest air >> well, i think very fair criticisms, jim. i was simply answering the question of what happened here over the weekend not whether we should have been better prepared or have done something differently.

we operate a linear route network. probably the largest airline in terms of seats offered in the state of florida every single airport in the state of florida was impacted by this so it's very unique. it's very unusual. it wasn't anything that southwest caused if you go back to the june outage, that was us. that was a technology outage and those are few and far between. but it's been a rough summer and i'm not offering any excuses. our customers didn't get their best from southwest airlines it's not what we want. we definitely are -- we definitely have some staffing challenges as well that we've talked about before. so we have moderated our flight schedule and accelerated our hiring plans so there were definitely steps under way to

mitigate the issue we were thinly staffed coming into the weekend and that certainly didn't help things as we were trying to recover. but point well taken and, you know, it's -- as usual, any company is a work in progress and we've always got opportunities to improve you get no argument from me that this is not the kind of service that we want to offer from southwest. >> fair enough >> gary, it's david. when it comes to those opportunities to improve, where is your -- by the way, the next ceo, where is the focus going to be on that improvement given what you've seen both this weekend and obviously from june? i know not necessarily related, separate issues, but still >> yeah, not related at all. but i think in the -- in this particular case, it would help for us to have better tools to recover. so there aren't perfect optimization tools to re-flow

airplanes when we have a setback like we did on friday. and then secondly, there's technology that's required to reschedule our flight crews. so we have flight attendants, pilots, airplanes, and once it gets behind, it's just difficult to get that back together. so i think the opportunity is to improve on that process. it's called repair -- it's complicated. but we definitely have some good opportunities there for the future >> gary, finally, there's some commentary from some of the other carriers today about the holiday season, preparing for robust travel period are you seeing that kind of booking in q-4 >> yeah, i think -- on the business side of things, you have the delta variant, the surge in cases that occurred beginning back in june and then eventually that has an impact on air travel and it suffers. so that wave has turned over

and we've seen some improvement in bookings there. yeah, we're looking forward to a strong holiday season. and we just want to be very focused on offering a high-quality schedule and experience for our customers >> go deeper on this weather issue. ibm has a weather product. they indicated maybe it was not up to snuff. there are questions about whether you spent enough money on i.t. during the 500-flight cancellation in june are you underspending on i.t. and have you overfurloughed and having trouble getting people back >> all great questions i think the answer is, you know, a very emphatic no we're not underspending. we suspended investing in some of our initiatives early on when the pandemic first unfolded in march. but we very quickly got back on track once the c.a.r.e.s. act payroll support program came

through and made sure that we continued to make those investments. the two technology outages that occurred back in june were human error. it wasn't a lack of technological capability it was simply in one case not adhering to a procedure. so it happens to companies occasionally we don't want it to happen very often. obviously, every time something like that happens, we try to learn from it. we deployed new technology for reservations we're in the process of deploying new maintenance, recordkeeping software that supports all of our aircraft one of the largest projects we've ever undertaken, probably the largest deployment in the airline industry in history. so we have wonderful technology. we have wonderful technology

department they're very well resourced. i think like a lot of companies, we definitely are having some hiring challenges. we're trying to get 5,000 people hired by the end of this year. we're about halfway there. but overall, technology is in pretty good shape in terms of staffing for the most part, our staffing challenges have moderated. i still like to have more cushion in the operation so we can absorb the kind of blow that we saw last friday better. >> all right thank you, gary kelly, chairman and ceo of southwest airlines. thank you, sir. >> you bet >> satisfied with the answers? >> i'm satisfied with the answers but that doesn't make it into a better situation. i don't feel -- there's a difference between mendacity and optimal and it's a suboptimal situation where we've just heard

a very honest depiction. david, what we -- we never want to give someone credit when united is delivering and delta is delivering and american airlines is delivering, and -- candor is great. customer service is better >> doing it right the first time is better too. >> exactly >> yeah. but, listen, he's a very straight forward guy when i did my first documentary on walmart, they had a language that spoke which was, that's an opportunity. when they used it, i was like what do you mean it was every time they made a mistake. that's an opportunity. and he used the same language there. it's an opportunity to get better which it is. >> he's a great man. the company is a great company it's just -- it's like a job-like situation here of biblical proportions i don't want that. >> old testament job. >> i got it. i'm with you i'm not looking at you quizzically. i understand what you're talking about. >> it sort of relates to these

weird dislocations in the labor market right now and southwest has a highly efficient structure and model that depends a lot more on efficiency at the gate. >> 15-minute turnaround versus 30. >> you have to say maybe we're too dependent on orlando maybe we have to rethink what we're doing. we may have spent a lot of money on i.t., but did they have the right weather forecast i think gary kelly on once again makes it better. but i don't want gary -- i would like to go through a period where gary kelly doesn't have to come on. >> when is he stepping down as ceo? >> that's soon, right? >> just to tell the people at home, i felt terrible asking tough questions of gary kelly. he does a tremendous job who am i i'm a tv guy but i asked the tough questions. >> we did lose a little bit of the bounce of the open the dow is down 66 points. ten-year did get to 1.63 this

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good tuesday morning welcome to another hour of "squack on the street. i'm at live at post nine of the new york stock exchange. dow's about flat been up or down about 60 points in the past few minutes. we're going to get jolts as we watch the tenure near. >> yes, jolts for the month of august, comes in at 10,439,000 and last month was originally reported at 10,944,000 and leap frogged to over 11,098,000

now, this month ux august is a setback but only because of the strength we saw last month it begs the question between 10.5 and 11.5 million job openings, many who have gone to hospitality and leisure is where the openings are exactly what it is we better get to the bottom of it. yields under base points five-year note yields, 20-month high and the super weak job report. you want to keep an eye on this. call it what you want. but with boom yields and guilt yield said approaching, boom yields are approaching the 28-month high. but they're almost going back to may of 2019-like yields. we see europe yields going up,

business activity a bit staginate. not a great combination. morgan, back to you. >> we are 30 minutes into the trading session. here are three big movers we're watching nike and siting a healthy industry back drop as well as strong growth initiatives another retailer on the move announcing the acquisition of diamonds direct for $490 million in cash. saying it would add immediately to earnings. it's up 200% year to date. we'll end with fastenal. the fasner company, seen as gauge of the broader industrial economy's health, saying it continues to have higher concentration related to yields that contributed to the higher revenue numbers.

those shares are up 1.5% and southwest airlines canceling more than 2,000 flights since saturday they sate air traffic control problems, bad weather. and we talked about those issues >> by the end of the day, we had significant numbers of airplanes and flight crews totally out of position and again, as any avination expert knows, it takes several days to get everything back aligned. >> also got his take following texas mandates, given the texas mandate. >> i've never been in favor of corporations imposing that kind of mandate never have been. but the executive order from president biden mandates all federal employees and federal

contractors, which covers all the major airlines have to have a mandate -- a vaccine in place by november 8th. so, we're working through that >> and got his take on the holiday travel season, which he sees as pretty good, as well as commentary with united this morning. if this continues, there will be other tough questions. >> and forcing back against the issue that there was any labor stoppage that it was completely and totally related to what he was outlining. not having crews and planes in the right place and getting hit with a weather problem in florida. >> speaks to the fridgility and honestly the travel situation as we do come out of the pandemic and sounds like the delicate balance between work force and weather issues and making sure you have enough flights but not

too many that you cancel all of those flights. you talked to him about that as with well since the summer for this company specifically. meantime, business jet demand continues to boom. because even though maybe commercial business travel isn't picking up in a meaningful way, you're seeing the private business travel pick up. and they're announcing two more of their jets. >> new focus for those that don't want to go to the commercial carriers. what can we put together between those two interviews >> i don't think anyone can come away satisfied you heard a lot of this is what happens when you have an outage in one particular part of the country. it was friday for southwest airlines and that's understandable to an extent

what's not satisfying if you're a traveller is that makes me no more comfortable in the future that this will happen again. there will be weather events and things that happen time to time with the air traffic control sisterm. the question becomes if it was southwest that was hit and they had things we couldn't correct that quickly what confidence do you have it won't happen again in the future and the pilot's union says they have to revamp the it systems when it comes to working with the flight crews gary kelly says they've been investing in the area. you come away from the two interviews going yeah, it's unfortunate. i have no confidence it won't happen again >> it's funny you say that because i asked gary kelly, as i'm sure you heard, what lessons have been learned?

and to your point, it didn't sound as though there's a plan they can immediately put in place, which allows them to say this is not going to happen again? >> correct and remember they had a number of pilots who took early buy outs during the pandemic so, they're downen the total number of pilots and then it takes time to bring the pilots back in. they had an aggressive schedule and didn't have the staff to keep up. it's like a chain of dominos if it's hub and spoke, you can still get hit but recover quicker than when you're point to point and we saw this with spirit earlier this summer look how long it took spirit to get back on schedule >> hoy quickly could -- and i guess how competitive is the landscape to hire those pilots and bring them back on

>> going to take time. do they have the pilots they're going to need for the holiday season i'm sure they do but are they able to add as many flights they would like to with the pilots they have right now probably not they probably don't have the same number as they did prepandemic. so, if you're a ceo and i could understand this from southwest perspective. there are people that want to fly. but if you don't have the pilots, this is the constraint in the choppy rebirth of travel in this country that we're seeing right now >> phil, thank you well, the fda is expected to give its first opinions on moderna 's booster shots for covid-19 that will happen, i guess, this morning. >> that's right. we're waiting for the fda to post its opinion and analysis of

the moderna booster application ahead of an advisory committee set this week. and along with nih data and what happens when you mix brands for the booster. what we've seen so far are company documents supporting their applications for boosters. let's go through what moderna had presented first. they're aplaying for a half dose booster given at least six months out they say 50 micrograms, compared to the first two shots, boosts it two fold compare would preboost levels and you get less side effects with the half dose and they say it would increase world wide supply of the vaccine. they're asking the fda to consider giving it at the half dose for the same population for whom the pfizer booster is cleared.

now, johnson & johnson also submitting documents ahead of the friday advisory committee meeting. they showed that two months out , you increase the efficacy of that shot to 94%, compared to the 70s for just one dose of the j and, j vaccine if you give it further out, you get a bigger increase in antibodies so, j and, j trying to paint a picture of let's decide when the give a booster dose based on the risk or what's going on in that setting. they say high risk people, maybe you want to give the booster 2 months but for other people, six months for more protection. along with the mix and match data i'm excited to see.

and more news in the rna vaccine space. that company saying they're abandonedling their first attempt. the stock down 5% this morning if you reverse back to june, it dropped precipitously. it's only about 48% effective. and so the company had been forging ahead but this morning saying we're going to withdraw the application in europe, feocs on a second generation, and we're seeing the market start to evolve but the next generation could be different. >> this news that merck is looking to double the capacity, i'm wondering how you're looking at the interplay between antivirals and boosters in the months to come >> doctors are expecting the one-two punch -- having protection from vaccines is the

broadest protexts you're going to get but having the chance of an antiviral drug, perhaps multiple drugs. could really change how we live with covid-19. and so, there's a hope there will be enough of this drug that the long-term safety is considered acceptable so we have more tools in the tool bag >> thank you let's turn to the broader markets with major averages trying for the first days of gains in three days. right now lower all of the major outages. >> and three days in a row it's been fade to close we'll keep an eye on that. volume light friday and monday take a look that major sectors remember, the big momentum names have been in the stocks. just want to highlight we've had no energy at all health care has been a terrible performer the last six weeks

and as rates have risen in the last few weeks, real estate and utilities have dramatically underperformed the overall market comments give an indication of what we're going to see. let's start with fastenal. they talked bult much stronger demand for their products and cost side. high employee base play and said net sales are up 10% that's a very good number, by the way. how much were higher prices? 2.3 to 2.6% of that was because they raised prices so, strong product demand coupled can rising salaries and higher material, transportation

costs. let's turn to siginate they talked about significantly increased demand 2367. they raised third quarter revenues and significantly raised same-store sales. they're saying will beup 10 to 12%. prior guidance was up 1% this is a big increase they talked about the witch to travel was not hurting the jewelry business as much as exected. and said results so far have exceeded expectations. and they're buying diamonds direct so, if you take a look at the two stocks fastenal trading in the mid-30s here in terms of pe. traditionally it trades in the 20s. siginate jewellers $80 it was $6 at the bottom in 2020 in april

that's been one of the biggest performers in the s&p 500 since the bottom >> talk about a big move as we head to a quick break, here's a look at our road map for the next hour. and jamie diamond saying he thinks it's worthless. >> we're going to break down what to expect from big banks. vein dadces at their highest lel aece.

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can your internet do that? i personally think bitcoin is worthless our clients are adults they disagree. that's what makes markets. if they want access to buy or sell bitcoin, we can't custody it, but we can give them as clean as possible access >> that was jamie diamond speaking yesterday at an international finance event about whether his views on bitcoin has changed. let's bring in also a member of the economic forums global counsel on currencies.

i want to get your comments. he's been out spoken critic for a number of years now. but the fact the bank itself is and has been rolling out products and offerings to its clients speaks to what where are we in the cycle? >> you're absolutely right jamie diamond has been playing the same tune for five or six years now. which means he's personally, it sounds like, at least, missed out on the last five or six x that bit coin has seen i worry for him that he's not going to make it but j.p. morgan has been a different story. of all the wall street banks, was in fact one of the first to be investing heavily in r&d technology and blockchain technology ultimately they're a client servicing business and their clients are demanding

access to this new asset class >> so, if you looked across the different financial firms right now that are dipping their toes and, in some cases whole bodies, into cryptocurrencies, who would you say is the win ners and losers >> i have to say the financial industry players that are in deepest and emerging as the biggest winners are not actually the j.p. morgans or goldman sacks of the world but rather the start ups that have come into the space and disrupted it. they have not waited on j.p. morgan to enter the custody space. anchorage has been working on that for years and across exchanges, otc desks and so forth those are really the players i would focus on and i think that's true in terms of who's

servicing venture capital players, who's servicing corporates and who's servicing even those clients that j.p. morgan and goldman sachs have had for a long time. the hedge funds and so forth entering crypto. they're all still looking to the start ups and not incumbents that makes for an interesting dynamic in this space. >> would it still be accurate t say this is going to be very disruptive to the banks and more traditional financial firms or is this a situation where technology is here and everybody pe 's getting on board? >> it certainly feels like it's trending towards everybody getting on board some of the new emergent applications we've seen built out on the likes of etherium that do offer trading platforms and so forth right now we're not seeing those

meaningfully compete with anything that exists within the traditional finance ecosystem. if you look atinstitutions getting into bitcoin, there's a necessary lag because, for a long time, those companies servicing those clients did not offer custody. they did not offer liquidity to those types of players and we're seeing the same dynamic play out in decentralized applications where there's not yet the infrastructure built out to allow institutions to access the markets. so, rilgit's a lot of retail moy and venture capital money to take that type of risk but we're not seeing meaningful inf inflows from the likes of hedge funds. if you ask me, it's a mat of time before that infrastructure

comes out. >> they wrote that universe of digital assets is too large to ignore our view is there could be more opportunity than spectics expect i have to think you imagine that's just another step >> i think that's right. and that same research piece, i think pointed out 16 billion just from venture cacapital alone pouring into assets in the crypto currency space in the first half of this year. when you look that trajectory of growth over the years, that's more than threefold what it was in the first half of 2020. and you look at the fact that this asset class is taking all the wind out of the room and it's still only a $2 trillion asset class, suddenly 17 billion is nothing to sneeze at. you look a that growth trajectory and it's too large,

certainly for venture capitalist to ignore, and too big for hedge fund managers to ignore as well. as we go to break, airbnb argue that the pandemic fuelled shift to alternative lodging will be permanent and they take their target from 160 to 220 there's a lot more aadhe stay with us

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welcome back here is your cnbc news update at this hour. the international monetary fund is lowering the economic growth forecast siting the failure of supply and projects global growth will be down from the july forkals of 6% and for the u.s. the forecast is now 6%, down from 7% in july california now dealing with two new wildfires in one day, the alisal fire has burned 3700 acres and jumped a freeway

it is 0% contained and near sacramento, a brannan island fire is at 30 acres but hit 30 homes and the trump hotel near the white house may be getting a new name "wall street journal" reporting that the trump organization is in discussions to sell the rights to the hotel for $370 million. perspective buyer is talking energies and financials. the only two energy sectors in the green. 8 of the large banks are set to release this week. if a lot more on what we're going to watch, we're joined by ceo of kbwa steeple company. good to see you.

so, higher rate invienvironment now comments by diamond about loan growth. does that mean good things for the quarter? >> we really think so. what's interesting is the margin for the banking industry in the second quarter was the lowest it's been since 1951 that tells you how difficult the operating environment's been for the banks. and it's been hurting revenue growth for the industry. we updated stocks because we thought three things were going to happen. i think you're going to see signs of all three in the upcoming quarter you're going to see loan growth and unprecedented times that took the place of a lot of loan growth we expect to see better loan growth we think interest rates are going to start down. we won't continue to get much worse and in the third thing is

there's a record amount of cash on bank balance sheets today we calculated 2% was the cash amount precovid. it's 8% today. what we're hearing is, in our speaking with management, is the bankers are no longer as worried about it being transitory and they're willing to start putting that to work and the benefits of the three trends, we think we're going to see it in the quarter and it's going to continue to get better into next year >> would you consider the stocks coming in more hot >> i tell you, first of l from a trading perspective. if you want to focus on the quarter with the big banks, we expect the quarterly banking results are going to be positive we think the street's going to talk a lot about mma revenue and we think that trend is going to continue beyond the third quarter. if you're a trader looking for a

surprise, that might be an area you're going to see it but the big picture -- frankly, if you'r buying bank stocks tody it's because you're looking at the end of 2022 and there's going to be a continuing grind, we believe, of continuing results. and banks are probably 20 to 30% valued over the market where they've historically been and that's the play. and it won't all come in one quarter. and i think you've already been seeing the stocks moving this month, since early september and we think it will eb and flow but likely banks will continue to out perform as we look into next year. >> tom, we could talk about record mma and what that means for the investment banking segments in the firms. does that continue >> abstolutely

we measure mna in the banking industry as a percentage of the entire industry. it's been running around 5%. the historical number's been about 3% there's a deal announced today in the regional banking industry our view is a couple of things bigger banks have become more profitable in many cases and covid has changed everything our view is the forces that were at work precovid only accelerated with the pandemic. so this talk about digital engagement with clients, it feels like it's been pulled forward by years banks under that and they intend to compete with bigger banks and the thin tech sector i think that's part of the reason why they're looking for scale. >> tom, you've been positive for some time and as we pointed out, it's been right to have been

i do wonder what, if anything, would change your opinion, given the long-term opinion of being positive >> it's really a mixed change. because coming into september, we like the big banks. i don't know if you remember but we were neutral on regional banks coming into september. we've never had -- i shouldn't say never. in a really long time, we've never had an out perform rating up and down the sector there are times we've gone to more of a market perform cautious view on the stocks. but right now our view is probably about as broad as it's ever been in terms of support. and to get to carl's question, we think there are going to be nice surprises around investment banking. but if you buy these stocks now, you have to look out 12 to 18 months for how it's going to play out and the other thing though,

david, is some of the figures are historic thebleance sheet as strong as it's been. and daud frank has helped a lot in terms of being the investor's friend in terms of liquidity i also believe covid's going to create a bigger gap between winners and losers so, it doesn't mean we're bullish on all companies there will be some winners and some losers. i think the trends, since we have a margin that's the worse it's been since 1951, hopefully now we're going to start to bottom off that and you'll see improved improved broader results for revenue growth >> and finally, there's no headline like a jamie doesn't like bitcoin headline. how is his comment resonating on the street >> we're still figuring it out i think market's have to

acknowledge that blockchains are real and that it's going to drive a lot of change. and i expect a lot more regulation to come around it so, we're going to bump around for a while until we figure out what the right spot is for a lot of the crypt cryptokurnszys and personally believe the regulators are only still gearing up we haven't seen most of their plans because i think they're still developing them. so, this is -- while crypto currencies have gotten a lot of traction, my view is there still is a lot of regulation yet to come >> well, tomorrow's going to be a big morning. always is. thanks for priming it for us >> let's turn to the ongoing supply chain issues pressuring ship operators and ocean carriers

frank holland is taking a closer look at some of the space toosz buy. >> obviously investors can see containership is booming and maersk are down, even after they raised the top end of profit guidance by $3 billion. at the port of l.a., there are 140 ships in port, 83 arrived in the last 24 hours. 63 more expected in the next 30 days but container ship and prices from asia to the west coast have fallen 20% in the last month and that's with companies racing to bring in goods before the holiday season china-based costco and taiwan-based evergreene down double digits over the last month. these stocks all control more than a third of global capacity. one factor of temporary slow

down due the national holiday of golden week, where production travels as people travel to see loved ones and some is concerns that the surge will end sooner than expected container shipping capacity is growing month by month, expected to increase up to 23% in 2023. if your 're look interesting the surge to -- looking for surge to be continuing, look at j.p. hunt and others moving to port. still to come, we'll talk about global food prices at their highest levels in years. and take a look at the top gainers. and las vegas sands, the top gainers this morning for the s& p.

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because seeing a better-connected world isn't far in the future. we're building it... now. ge. building a world that works. welcome back to "squawk on the street." and you may be paying more at the supermarket this year as global food prices are the highest they've been in a decade that's according to the food and agricultural food in a decade. they have to get used to higher food prices. we're joined by the president and ceo of giant food stores great to have you back on the store. and i do want to get your insight on what you're seeing on your store shelves >> griit's good to be back and o morning.

honestly, by june, we'd have the same number of cost increases than we got in the whole of 2020 and it seems to continue to accelerate of course, we ran it through our commodity strategy team. anywhere we can push back, we do and anywhere we absorb costs for customers, we do and everything continues to get more expenseival right now. >> if everything is continuing to get more expensive, where consumers expect to see the pinch of higher prices and sometimeswhere package food is concerned, it's smaller quantities where are you seeing the biggest points >> right now as we talk today it's costs have gone up 20% verses last year and we're seeing 8% inflation right now in the meat category. we already ordered all of our turkeys back in february

so, we're feeling good about supply you're going to see it in the sea food case more than stone crabs and claws and everything like that. and those different spots. where you don't see it and we're most proud is in fresh produce and i think about fruit and all the local growers that we have you don't have the shipping costs and other things and that's why that department is so important to the giant company >> i realize you're doing what you can to mitigate those costs and absorb them and not push them on consumers. but where it's unpreventible or inevitable, how sticky is it when you see prices go out on shelves? >> customers are aware it's publicized all over the place. and i think they've appreciated us for the last 90 years, we've done everything to hold costs back we've absorbed as many as we can. our customers enjoy being able

to get online deals and everything else. we haven't done things to help them save money. our loyalty program is very valuable and fuel rewards is actually quite good with the increase in costs as well. >> if you can site one factor across your different product lines that your vendors are siting to you as a reason for higher costs what would it be >> in the past, it was all about the input cost, like all the raw materials. it's really transportation fuel diesel is up verse as year age. if you discovered it amoment ago, and look at how long it takes to get over. we have one manufacturer last week that told us they have a plan to get fill foreman their product and flew it over because they couldn't get through the boarders

honestly, they're doing everything they can to get product. and it's creating more costs than we want to see otherwise. >> are you seeing across your different markets. are you seeing a normalization or has there been a secular shift towards ecommerce type of deliveries >> br >> it's been growing for many years. and so, as i look at the channel split, we're seeing a lot of growth in pick up, delivery. last week we announced 30-minute deliveries and that's picking up as well. i see a good spread i look at retail foot traffic. people are shopping more and they have to you don't have the option still that once existed. and i think one of the paositivs out of the pandemic is families

enjoyed cooking together and how much they enjoyed it and healthier they can be by using better ingredients >> a lot of folks are spectacle that in a long run grocery can make a business out of delivery. how would you push back on that thesis >> i would say look at asia. look at europe, look at some of the other countries that went there before the united states did. we're fortunate that we get to see those trends up close and personal that's why we position our selves to be strong for the future the investments we made are huge they're working, paying off and i'm very optimistic that not only will we be around but we'll thrive >> and finally, given the fact that, as we learned last year so acutely, grocery store workers are frontline workers. how are you handling vaccine

mandates and the like, especially given what we've seen out of the federal government? >> what we've seen out of the federal government is creating more questions than answers. and that's why i'm thankful for the food industry association, which represents us in washington i think the questions they have hold listen, i'm pro-vaccine, my wife is, our boys will be when the ages come out. and a large number of our teammates have chosen that as well and we'll always comply with whatever the law is, especially when it's clear and we understand exactly what it is being said the best things usually come from state and local it's hard to govern 30 million people with 30 different things going on in so many communities. >> nick, we appreciate your time thanks for joining us. >> take care coming up at the top of the hour, do not miss angel investor jason calacanis back on tech as the shares work their way back to 318 this mniorng it begins at 11:00 a.m. eastern

time we'll be right back.

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discretionary stocks among the outperformers. on the other end of the sector, the communications sector is the worst performer by a wide margin that group is getting dragged by weaknesses in telecom names like at&t and verizon as well video game publisher like electronic arts. some of the tech names wamong th worst performers, alphabet and twitter. and facebook tcfabo a social media. keep it right here "squawk on the street" after this break don't go anywhere.

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that the love for this world that gets us out in it sometimes leaves behind the things that can harm it? but now, flight by flight, we can make a difference. because delta has committed to becoming the world's first carbon-neutral airline on a global basis. we believe you shouldn't have to choose between seeing the world, and saving it. ♪♪ . some of the world's largest companies including amazon and coca-cola are relying heavily on carbon offsets we have that story >> well, the idea is pretty

simple, the company admits emissions and can't fully eliminate the bad stuff that goes into the air so they buy carbon voluntarily and these are by climate action projects like planting trees or storing co2 underground that would not otherwise get off the ground with a slew of countries as well making that carbon offset microsoft has bought 1.3 million carbon offsets just this year alone. but what happens if carbon offsets are just a license to pollute versus a pact. >> there's no regulations about offsets in particular that measures their quality, whether or not they're permanent on whether or not they're really providing the emissions reductions that they're often told zmrf despite uniform regulation, a voluntary carbon offset market is on target to hit $1 billion in transactions for the first time ever and possibly hope towards putting a global price

on carbon. >> one of the developments of the voluntary capital markets is it is a global market, albeit very small at this point, it has the potential to bring together corporates that are trying to make carbon neutral claims around one price >> the inconsistency among carbon credits leads to challenges for this nascent market but as it grows and gets the kinks worked out, experts a there's no doubt the market would support progress towards a low carbon future. >> kristina, heard a lot put a price on carbon, especially companies like exxonmobil would very much favor that to enhance the work that they're doing right now. >> right, there's so many sbrepss in the mark that's because there's no one-set verification process there are third party certification that's you can receive. but because of being so inconsistent across the globe, that's why we have price

discrepancies. >> kristina, that's a conversation we'll continue to have, fascinating. better get a quick check on the markets s&p down fractionally the dow slightly as well the russell 2,000 small caps are higher that's if for "squawk on the street." "tech check" starts now. ♪ ♪ good tuesday morning welcome to our big hour of "tech check" i'm carl quintanilla with jon fortt and julia boorstin today, the internet's third rail jason calacanis joins us with whether facebook is investable here plus, what's the opportunity in tech, wearabl