>> pete najarian >> i'mgoing withuranium and give you ccj, scott. >> the cco of all-in capital what do you have >> cvs reports last week it has 20 quarters of unblum issue unblemished beats on quarters. >> thank you for watching. "the exchange" starts right now. ♪ thank you very much, scott hi, everybody. i'm kelly evans. here is what is ahead this hour on "the exchange". trick or treat stocks reverse higher today even after apple and amazon failed to inspire investors. the nasdaq and the s&p 500, like scott was just pointing out, they're at fresh record highs even as earning season so far has been a mixed bag we will have the latest. plus, crypto banking the fdic consider how to allow traditional banks to hold cryptocurrencies on their balance sheets and for customers. former fdic chair sheila baird joins us to tell us what she likes about the plan and what

she really doesn't plus, celebrity chef bobby play we will get his take on labor costs, the supply chain and we will tell us about his latest foray. let's quickly check out the lay of the land here the dow is up about 65 points at this hour. we have seen a turn around from the declines earlier on. the s&p just a point below 4,600 which it crossed the first time today, at a record intraday high here is are big stars. the dow itself i don't believe has been an intra record high as well, but it is a matter of time this is the flip side of falling yields look at the activity over the past week. the ten-year note hovering around 1.5%. a big decline from last week as we get more warning about inflation, we will tell you what we heard from bill ackman in a moment apple and amazon disappointing on earnings,

supply chain issues weighing on both companies first time since 2017 apple's revenue missed estimate you but off the lows here. you can see the lift taking place throughout the session apple is down 2% right now amazon, down less than 3%. apple's decline is helping microsoft surpass apple today as the world's most valuable company. so just an extraordinary rebound for microsoft this year, and now it gets to enjoy the superlative at least for a period of time. another victim of supply chain woes is western digital, sinking after providing weaker than expected guidance an 8% drop for wdc, there we go. for starbucks, down a similar magnitude. the bigger issue is wage inflation. the company saying spending on wages will depress profit margins next year and it expects to raise prices to compensate. more than a 7% drop for starbucks today. all of this said, today is the actual halfway point in earnings season. bob pisani is here with a granular look at the trends,

what we have learned from earnings so far and the stock reaction to it >> yeah, kelly, there are two main trends and takeaways here number one, demand is strong across all industry. that's the number one takeaway secondly, you heard about the supply chain issues. they're trying to navigate with them against them. some are more successful than others i think the most important thing is profit margins are a tad lower but still very strong, close to historic levels earnings growth still there but the guidance is slowing down a little bit if you look at the fourth quarter, that's what we care about right now. we will be up close to 23% in earnings growth. that's pretty good but nothing close to what we had earlier in the year the amount that's been going up in the last few weeks much smaller than it was earlier in the year when we saw big, big jumps as we head into the front month quarter here not as enthusiastic as they were earlier in the year. two big issues out there our supply chain worries peaking now or in the next quarter or not? pricing power, how long can corporate america keep raising prices like this

the street is trying to convince itself most of the worries are temporary. look at chris bosick who said we ultimately view the pandemic-related impacts as temporary and remain focused on creating value for our stakeholders over the long term. here is what is valuable and important, kelly, margins. that's what powers the stock market we had historic high margins in second quarter, 13.5%. 13% earlier in the year. we are probably going to be in the 12% range. that is not bad at all considering, kelly, the average, average profit margin for the s&p has been 8% going back almost 30 years. so the profit margins have been going up, kelly, because earnings are rising faster than the revenues here. bottom line here is more revenues are going to the bottom line because corporate america is getting more efficient. they're cutting costs out. the question now is when are people going to push back against the price hikes the corporations are getting i bet you will have a problem by the second half. this is not going to keep going. people will just say, enough is enough

i'm not spending this for a chocolate bar or a defense contract or whatever you are going to start getting push back soon >> i hear the same thing we appreciate it, bob pisani new data shows what is going on with the inflationary pressure across the economy a key inflation gauge closely followed by the fed surging to a more than 30-year high, the pce price index rising .3% last month at 4.4 on the year, the most since 1991. my next guest has been warning about inflation for sometime so how should investors play it randy ealy, chef investment officer at the edward lomax company. great to see you again what do you make of this environment? >> it is great to see you, also. >> what do you make of this environment, randall >> i think the developments happening are pretty much what we were talking about a year ago. i will not claim to be so prescient that i saw it a year ago, i didn't know the supply

chain problem would be this bad. let's face it, we have known for a long time historically inflation pressures are building up when the economy is reaching various levels of imbalances >> let's talk about how you think investors should play that you know, there's the point bob p pisani was just making, it is seeing expanding profit margins but high-profile companies are struggling these days. >> as you know, i am a value investor and i believed in value for the long run as a better and safer way to invest for most investors anyway nothing against growth i am just talking about for the long run, because however exciting returns may be for a one or two-year period with any investment strategy, long-term investors will be in for the rest of their lives. so we -- i think we need to assume interest rates are going to be going up in the long run, that's the key element i think in the solution

for inflation, which includes the various supply chain problems we are seeing now and so - >> the tricky thing -- sure, i was going to say looking for the value companies you describe is people wanting to avoid value traps. i think we talked about at&t in the past, and i'm curious if it is still a name you like >> i was hoping you wouldn't bring that up. i say that kiddingly but at&t was one stock in a total portfolio, and, as you well know, they're going through a restructuring that i think bodes well for that investment in the long run, but we have other names. you know, some of which have been doing very well i mean cvs health, for example, has done quite well since the last show way back in march, i think it was, when we recommended them i think in addition the met life is a name i was planning to talk about today. >> absolutely. we can see that those, met life up 36% this year, cvs up 20%

let me point out a warning we've just received from bill ackman, the hedge fund -- what do we call them? owner, operator, on twitter. here is his tweet. he says he just gave a presentation to the federal reserve bank of new york to share his views about policy and the fed. bottom line, we think the fed should taper immediately and begin raising rates as soon as possible what would happen if the fed had to play catch-up raising rates look at what happened with australia and the bond yields or other parts of the globe, germany's ten year almost going to turn positive could we see a bigger reset with rates if the fed is behind the curve and has to play catch-up >> there's no doubt. if they suddenly have to move quickly, there's a greater chance of a severe recession as opposed to a common garden variety one. but the fact of life is no matter how they do it, the job removing qe and then raising

rates, it is going to be a very difficult job for the fed this time around. i wish them well they have admittedly a number of signals that they are about to start. so let's see how fast they get on with it, but sooner or later, if developments keep as it will, they are going to have to speed up the pace. >> yeah, i think it is a warning a lot of people are thinking about right now, and your pick certainly reflect a world that might be moving in that direction. randall, great to see you. thank you for your time today. >> thank you, too. >> randall ealy with the lomax company. energy and financials are the two best performing groups over the past few months, up 15% and 10% respectively communication services is the biggest laggard and the only sector in the red that time. dom chu has a closer look at what has been ailing it, dom >> the companies that really matter, the social media companies with the biggest market caps have been driving things lower

you mentioned the three-week span, on a year-to-date basis it has been an underperforming after outperforming. the orange like is the communications services sector for the better part of this year it has been above the white line, but only in the last couple of weeks here has it tilted the other direction there's a reason why, because of the big social media companies let's take a look at what has been helping matters out for the overall sector so far. many of the names are doing well on a year-to-date basis. alphabet, the most important of which is up 65%. it is such a huge market cap so it plays a lot in terms of influence on the market overall for communication services ipg, fox, live nation, news corp., among the names up very well over the course of the year to day period, helping to drive the action to the upside on the downside some of the biggest laggards so far this year have been, you mentioned at&t in the last segment there you can see at&t down 12%. take 2 interactive down 13%.

t-mobile, activision and discovery. so many of the media companies have been overall drags on the sector so far. i will point it out because there are values out there at some point there could be performance to the downside enough to where some of the stocks may appear attractive mome momentum names like alphabet, up 10%, a leader over the last month. netflix has been a big leader, too, very big mega cap names but look at take 2, one of the biggest laggards over the last months, that's the white line, and things could drop enough that some investors may say, things have gotten bad enough, let's step in to buy we will see if it plays out with other video game publishers as well >> i think the fact video games are in something called communication services means the sector needs to continue to evolve >> right >> those are the worst movers. here is a look at the top

stocks in the top sector which is energy, apa, halliburton, occidental, all jumping between 14 and 23%, benefitting from crude's 10% rally this month still ahead, construction, crypto, cooking and cruises. the ceo of meritage homes joins us to discuss it plus, bobby play is cooking up a surprising new business venture. we will talk to him about that the ceo of royal caribbean is here fresh off earnings to talk the future of the industry and their new 274-day cruise a lot more coming up right oof this this is "the exchange" on cnbc

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♪ welcome back, everybody. the housing market continues its wild run as yields soften again and demand for homes remains sky hugh that helped meritage homes, the stock up 30% on the year, taking a profit on a little less than 1% the question is whether the housing market is showing signs of losing momentum joining me is philippe lord with

meritage home. welcome. >> thank you great to be here >> what is your typical price point? >> our average price point is around 400 we closed around 400, 3,000 houses this last quarter and our outer jp was around 400,000. >> are they inline with the national average year on year? >> you know, store-to-store they are, but part of our strategy is really to provide affordable housing. we have been moving down price point. a lot of the new communities we are bringing on are at a lower price point. when you look at the year over year we are only up about 7% because our mix has really changed. >> wow why would you go down in terms of average selling price at a time when supply and labor chain pressures are so high? >> you know, around six years ago we looked at our strategy and really our focus was we felt there was a really under built part of the market, which was the affordable part of the market we see that as any price under 400 in the markets that we build

in so we redesigned our product, started sourcing land and tried to position our product in the future at a lower hp because we felt interest rates were going up they haven't gone up yet, but we see them going up over the long term, and clearly we think that the lower price you are, the more affordable you will be and that's the people that will need homes and want to buy homes. >> that's so interesting most of our guests come on and talk about how they think bond yields are going up so they're not buying amazon. you are staking your whole company on the possibility that higher yields could dent home price appreciation or affordability, and you are looking at sort of the lower price segment of the market. i mean would you abandon that strategy now how is profitability going have you been able to absorb the pressures, and, if so, how >> it is going great the last quarter -- or yesterday we reported our earnings and we had the highest closing gross margin in the history of the company of 29.7. we also were able to close the 3,112 houses, which was above the guidance that we gave, and

the expectations out in the street so we think our affordable play in the market allows us to manage through the supply chains but also we're continuing to see strong housing demand where interest rates are because that's really what people can afford as prices have escalated over the last, you know, 12 to 18 months. >> i was, you know, looking at your twitter feed. you had some of the properties that are beautiful, some have solar and different features do you use a lot of lumber where have you spirnsed the most supply cost pressure, which those have obviously come down, and what about the delays? one thing we are trying to understand is to what extent are delays keeping the supply of housing from increasing to meet demand are we going to end up with a glut >> that's the real challenge, getting product to the market, whether it is in the form of land that's still taking long it is extremely regulated. it is very slow to get new communities to the market. the same thing with building our houses the input costs are up you know all about the supply chain. labor is constrained as well

that's why we are very bullish about the next few years because we just don't see a lot of supply being able to enter the market with the way supply constraints are today. we really like our story, right. we had community count growth year over year we now have 236 communities across all of our markets and we set a goal of getting to 300 next year. we think it gives meritage a big opportunity to provide supply in a supply constrained market. >> i guess going back to the price point and looking at where we are in northern new jersey, i think it would be possible to get land at that price or build at that price. what parts of the country are still affordable and how far out do people have to go has work from homemade it more feasible now than it would have been 10 or 15 years ago? >> yeah, you know, we build in the smile states, california, arizona, colorado, texas, florida, georgia, tennessee, south carolina, north carolina, and we're just seeing a ton of in migration from the more expensive parts of the united

states of america. we are building further out, but not too far out, right still in areas where there's really good schools, really good infrastructure, services and et cetera that's where people are moving is it because they can work remotely is it because they just have a desire to move out from dense areas into what we call the suburbs? i think all of it really matters, but the preference for single family detached housing right now is the highest it has ever been in my opinion since i've been in the business. >> amazing philippe lord, thank you for joining us >> thank you very much he is ceo of meritage homes. still ahead, the fdic is developing a roadmap for banks to hold crypto ashets. next we will hear omfr former fdic chair sheila bair about the right way to move forward.

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(rhythmic electro rock music) (crowd cheering) - bito, bito, bito, bito! - [announcer] bito, the first u.s. bitcoin-linked etf.

sc ♪ welcome back to "the exchange," everybody s&p back above 4,600 it is the first time it has ever happened intraday highs today for the s&p and the nasdaq, even though stocks in general are up anywhere between .1 and .2% this hour u.s. steel is surging after beating expectations they announced a $300 million stock buy back and increasing dividend from 5 cents a share to 1 cent mohawk getting a haircut after a slight miss on revenues. the company telling investors it expects challenges to continue, saying, quote, rather than improving as expected the availability of labor, materials and transportation became more challenging resulting in higher costs in the period. they go on to say for the near term we do not foresee significant changes in the external pressures, giving shares down 11% for the worst

day since july last year zen desk not so zen today, on pace for the worst day since march 2020 after reaching a deal to buy the parent company of survey monkey. analysts at jefferies, piper, sandler and b of a are downgrading zen desk on the $4 billion deal others point out it is too soon, but not too early to think about describing it that way momentum is down and not near the acquisition price today. to rahel solomon for an update rahel. >> hi, kelly here is what is happening at this hour. president biden met with french president emmanuel macron in rome ahead of the g20 summit. it is first time they've met face to says since the spat over the submarine deal french officials said they were blindsided by the secret u.s.,

british submarine deal with australia. the faa reportedly planning to issue warning to pilots and airlines ahead of the rollout of a new 5g wireless service. according to the "wall street journal" regulators are intending to warn about the potential interference with key cockpit services it is slated to go live as soon as december. in london protesters taking to the streets to lobby against the use of fossil fuels. demonstrations were joined by greta thunberg and come ahead of next week's u.n. climate summit in scotland. back to you, kelly >> ra tell, thank you. now, crypto as been rallying with ether hitting an all-time high, up 45% this month. bitcoin is above 60,000 again and having the best month this year, up 40% now, this week regulators say they're looking to provide more clarity on banks holding kriptd owes currency as assets on the balance sheets

if crypto isn't ensured by the fdic, who holds the bag if it goes best. putting so much risk on the bank's balance sheet might be the wrong anser. joining me is sheila bair, former fdic chair, and also on the board of paxo. you are also an author of a set of children's book >> thank you for mentioning them >> we are showing them on the screen >> great let's start with what the fdic wants to bring into the regulatory framework >> yeah. >> are they going to move before the stable coin issue is clarified or after >> i don't think so. i went back and read the speech and the interview again. they didn't completely line up i think -- it was good but they will be trying to clarify all of this it is a big muddle right now i think these are areas they're seeking to provide clarification. i don't think they've gotten so

far as to say, yes, it is okay for banks to hold crypto on their balance sheet. that's one of the things they want to clarify and provide answers for. >> i think the banks are sitting there going, wait a minute, we have enormous growth in fintech and the crypto platforms >> right >> and all of this, our users in the community, they want to use the services but they obviously want to do so in a regulated way and we don't want to be disintermediated what was the answer there? >> well, the technology is probably going to disintermediate them i don't know if it is a bad thing. look, if it happens, it happens. it should be -- you know, if it is a better mouse trap, a more efficient, lower cost to customers and businesses, then that's what is going to happen look, i think if you are a regulated bank, an fdic insured bank, you get certain benefits you get deposit insurance, you get access to the federal reserve. with those benefits comes the obligation to operate in a safe and sound manner i think parts of the business

can appropriately be in banks, for instance custody where the customer is keeping the market risk because they are highly speculative assets, that's fine. but holding them on balance sheets, making markets in them, they're very volatile, very risky and a lot of things we say are too risky and inappropriate for a bank, which is expected to operate in a safe and sound manner you know, there's a lot of things that going on, super things that go on outside of banks that are not regulated and people lose money all the time, you know if they understand the risk, fine, that's how capitalism works but it doesn't mean everything has to be in a bank >> would i be correctly describing your view as saying it is okay for banks to touch crypto activity as long as they're not holding their own cash and capital in the form of cryptocurrencies >> i think that's right. i don't think -- market making should be done in a separate affiliate, not in the bank that's what we do with the security markets now, it is not done in an insured bank. i think you need to think hard,

regular everyday people, our deposits, fdic insured deposits, what are appropriate uses of those and holding them in bitcoin, doge coyne, whatever the fad may be, i don't think it is the right use of fdic insured deposit. >> paxos and some of the stable coin companies have said what makes us different is we have clear assets which back the value of our stable coin, they can issue their own documentation attesting to that, that sort of thing when we talked to gary gordon the other day he made it sound like they should come down really hard on stable coins. are they going with the money market mutual fund framework or treat them like -- how do you think they end up kind of being defined within the financial system >> well, i think they are the closest thing to a government -- or should be close to a government money market fund in the sense they represent they're stable value, dollar in, dollar out, so they should be in a

higher liquid, federally backed short-term securities which is basically what paxos is doing, tether is out there and nobody is sure what they may be invested in. it would be a small leap to issue something like a government regulated fund they can operate under. that's the current model is for best practice rather than forcing it into a bank where you have the fdic, you know, streak of stablecoins is deposited, you have the fdic providing stability. a bank could take those reserves and lend them wherever you know, banks do silly things with their money as we saw it is not clear to me shoving it into a bank makes sense. i think making it akin to a government money market fund makes a lot of sense >> yes >> and it is close to best practice now >> no, i totally get what you are saying there now that i know i can talk to you about stablecoins and paxos and the rest of it, i will be banging down your door sheila, we appreciate -- by the

way, do you personally own bitcoin? >> i do not. i do not own it. i stay away from it. i know people that are long bitcoin get mad when i say it but i think it is highly speculative. way too risky for me >> thank you for your time today. great to see you >> thank you bye-bye. it is all industries but especially industries face higher labor costs and worker shortages. could turning over some tasks to robots save time and money plus, celebrity chef bobby play joins us to talk about the labor problems he is seeing in his restaurants, food price inflation as well, and he is the co-founder of a new company. wait until you heawhthr o e other kmco-founder is. that's coming up next. ♪ say it's all right ♪ ♪ say it's all right, it's all right ♪

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- [announcer] bito, the first u.s. bitcoin-linked etf.

♪ welcome back labor costs are soaring for u.s. companies. this morning the employment kostin decks jumped 1.3%, which actually makes its biggest jump since 1996 as workers become harder to find and more expensive to pay, we could see an increase in companies trying to automate more and more tasks. kate rogers is looking at how robots are coming to restaurants. >> reporter: meet woody. inspire brands, which owns

buffalo wild wings is testing out the robots which will make wings in the back of house over the next year. the company says it is more about speed than the labor crunch >> really, it is all about how we increase our capacity, and so all of the automation that we are looking at will allow us to unlock that and provide faster food to our gusts. >> reporter: whippy, made by miso robotics takes over a less desieshl tasks in fast food kitchens and cost up to 3,000 a month. >> it solves the fry station problem which is a job that is tough to do, monotonous and sometimes dangerous and pretty repetitive. >> reporter: while flip pi mans the back of the house, in comes the mater d robot, which costs up to $20,000. >> it will be assisting a lot of customers with delivering of food without a food runner, which basically allows servers to serve a lot more tables,

customers get their food faster, and restaurants are able to boost revenue. >> now, on every earnings call we heard about labor challenges in the space this quarter. companies like domino as rand restaurant international said the costs were drags in some cases. meanwhile mcdonald's is partnering with ibm to work on automating the drive through with artificial intelligence which would eliminate some of the labor pains more broadly when it is implemented >> last night i finally had an experience with toast, kate. you are talking more obviously the back of the restaurant, but it is a qr code on your receipt you scan with your phone, pay, leave, never have the back-and-forth wait for the check. >> exactly >> i realize they have over a $30 billion market value so i'm last to realize this my last question is what is the latest with the unionization effort at starbucks? we saw what happened with the earnings last night and obviously the pressures will

give labor more bargaining power. >> workers in buffalo got a win allowing separate votes to take place to move ahead. starbucks wanted it a market wide vote which would have involved many more workers the stock is under pressure today, as you mentioned the wage hikes it announces will impact earnings next year so it is raising pay for workers but those workers in buffalo seeking to unionize did get a small victory. we will see what happens and we'll see what happens in early december >> thank you so much, kate rogers >> thank you some restaurants are struggling to pass on rising costs to consumers, another breed of customers contending with rising costs, it is pet the pandemic pet boon made a bigger brand bobby play has a brand launching. joining me is chef, restaurateur

and co-founder of made by nacho. it is great to have you here, bobby. it is a pretty competitive space. do you think you can break through so to speak? >> i think so far we launched about six months ago in an exclusive deal with petsmart in 1,400 stores plus, you know, of course direct to consumer. we have seen immediate growth and basically week-to-week we are growing every week you know, petsmart has been amazed by our launch they're so incredibly thrilled and so are we. i think what has happened is, you know, because we are so focused on cat, i think that cat parents are feeling like, you know, they're being taken care of and they're being looked after in a different way so far it has proven to be incredibly successful. >> you do seem like a big cat guy, you know, is it really national cat day >> i'm not sure what that means. >> i don't either, but i appreciate the enthusiasm as someone who grew up with cats and personally i love them how big is this business going

to go? you can't invest all of your time and energy in all of your enterprises all the time, so i would love to know from a manager's point of view how you kind of launch something, get it up and running and figure out, especially at a time like this, how to spend the rest of your time >> well, that's a really great question this is no hobby for me. number one, it is a business that stems and starts with a passion. as you mentioned, i have been a cat guy my whole life and nacho really inspired me basically i had a hard time myself trying to figure out what to feed my cats. so i sort of took it upon myself to create made by nacho, and then i put together literally a team of weapons, some people who have been just amazing i use the idea of premiumization of human food and transferred over to the cat business the first person i called was a woman named ellie trucedale who was running -- head of global innovation at whole foods. i took that experience and my relationship with her and asked her literally on day one to be

my partner then we started to build the team first, and then we went out and got a person named julie nelson who we made president almost immediately she was at petco for 14 years, so we had the human food business, the cat food or pet food business sort of covered, and then just recently after, you know, about six months of launching we saw that the growth of our business was really taking off, i hired a ceo. i was the acting ceo, but then i acted -- we hired what i would call a real ceo named tessa gould. she comes from kinship, which is a mars company as you know, mars is one of the biggest pet food companies in the world. >> absolutely yes. >> i really have a team of really innovative people who are making -- this is a real business, kelly. it is not just a hobby >> oh, yes >> definitely a passion but it is for real. >> i might try some. you have the bone broth, nacho signature ingredient

it is coming full circle let me ask about you, there had been the restaurant that maybe closed but you guys have operations in states, you have exposure to las vegas, to new york city, to a lot of markets is an effort like this, a direct-to-consumer launch a step away from a restaurant space that has like a zillion challenges right now or am i reading too much into it >> i think we have a zillion challenges everywhere. one of the things that makes made by nacho a nimble company is my involvement. like, you know, when you think about chefs, we're not always able to get the ingredients that we want at the price we want, but we still have to serve delicious food we are not always putting black truffles and caviar on everything to taste good, but we have to be innovative. so with, you know, of course there are -- there are, you know, concerns and there's definitely challenges with the supply chain in every business, the restaurant business, the pet food business. you know, we are all basically in the same pond but being able -- you know,

using my experience by, you know, feeding people for the last 30 years, whether it is in my restaurants or getting, you know, dinner to their table by watching tv shows on food network, et cetera, that's where i can really be helpful in made by nacho, really using the things that are available to us in the very best way so they're delicious and nutritious and the cat parent is happy all around >> i was almost going to joke, don't divert the supply chain to cats right now, but that's not the point here last question, bobby, we just saw -- i don't know if you were able to watch. kate rogers did a package where we saw robots moving through restaurants, and we know the pressures these spaces are under. >> sure. >> i just can't see your restaurants going in that direction, but how is this all going -- are we really going to see this kind of experience? >> you know, frankly, i hope not. >> yeah. >> i'm all for innovation and i'm all for, you know, tech moving things forward, but there is something about the experience where, you know, it is person to person. i actually heard the end of your

interview, and when i heard you say, you know, you can kind of get out of the restaurant quick without actually having to deal with other people, you know, there's something -- there's an intangible of customer service, and that's one of the things that even if -- whether it is in my restaurant business or made by nacho, customer service is king i think if you lose that humanization of it all, i think, you know, you can be in a little trouble. >> yeah. no, i agree with you and i thought the same thing myself even as i was, you know, lamenting or enjoying what was taking place >> sure. >> bobby, again, congrats on the launch of made by nacho. happy national cat day >> same to you, kelly. >> thanks for joining me today, bobby play still ahead, supply chain pain thousands of shipping containers stuck in port. we will tell you about the new plan to get rgcao off ships and on the way we will ask the most important question, will it actually work.

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♪ welcome back, everybody. we've talked a lot about supply chain bottlenecks, and a major source of the problem is the congestion at the ports. in los angeles and long beach 60,000 containers are waiting. if shipping companies don't unload them by sunday they will be hit by $100 per container it is part of the biden administration's plan to unclog the supply chain it is great to see you again are they going to meet the deadline you know, is the financial penalty enough to resolve this problem? >> the penalty definitely is not going to resolve the problem in fact, there's no way they will be able to make this. they're like the real-time indicator we are seeing is 82 ships we are seeing waiting outside of those ports at anchor, and in three days time you will have an additional 21 container vessels. so when you look at the 60,000 vessels, right, comprised that

is $2.66 billion in trade that is just sitting there. >> wow >> gene sir oaoka told me, list, the carriers knew starting on monday they had to get it out of there. 30% of the containers you see at port that have been there 13 days, and traditionally they've normally been out in four days >> wow my understanding is about two-thirds of the merchandise moves via truck, maybe one-third by rail. >> yes >> the real issue is this bottleneck with the trucking companies. or is that the real issue? i mean is there -- who is the responsible party for actually getting that couple of billion of dollars that you mentioned moving through the u.s. economy? >> according to the ports the ultimate responsibility is the carriers that's why they're being fined they're on the bills of lading, they're the ones that are supposed to shepherd the products from point a to point b and they have to make sure the middle man, the truck and rail get the product. the rail is right now at 4 1/2

days past that time. the truckers, it is hard because they have full chassises, they can't drop off their empty it is a conundrum. it is not just one problem, it is the whole system in lock down >> if that's the case and they now have to pay $100 a day for the system's breakdown, that cost, will that ultimately be passed to consumers? again, how else can this problem be resolved? >> you know, that is like the billion dollar question. in fact, it is definitely going to be passed over to the consumer a lot of people are saying, will it, won't it, a lot of hand wringing zen integrated shipping sent out a letter yesterday to customers saying, starting on monday this is the new surcharge marsk said they have to wait to see what happens with the port of l.a., to see what they're doing with the penalty, how they roll it out. here is the catch. not all contracts are created eye qual there are some contracts with

clauses that prohibit new surcharges, and mars told me, hey, listen, we have clients with these clauses in there but not everybody has them >> interesting well, again, a couple of important days to watch. lori anne, thank you for following it for us. investors are still waiting for the post-pandemic come back of the cruise industry royal caribbean losing money and missing on their quarter and the stock is flat over the past six months wta to the ceo about what has him optimistic about 2022 right after this.

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trick or treat! do you have any idea whose house this was? trick or treat! did you ever hear of michael myers? trick or treat! [ screaming ] happy halloween, michael. exchange," everybody it has been an up and down year for the cruise industry battling with forces to get their ships back this the water. today, royal caribbean predicting a brighter 2022 they expect to be cash flow profitable by the ends of next year joining us, seema mody with the ceo of royal caribbean, richard

fain. >> i think that was the takeaway from your earnings call, looking to be profitable by spring of next year. i am wondering, what do bookings look like going into the holiday season >> bookings mostly this year continue to be weak as people are looking at 2021 and didn't have time to book earlier on the holiday will be much better, of course, it always is. but next year the bookings are remarkably strong. >> there seems to be this race to get as many ships back to sea, between royal caribbean, carnival and norwegian er at 65% capacity aiming to get to 100% by tend of the year. there are supply chain issues. how are they affecting the cruise industry? >> ortunately, like every othe business in the world today, is finding supply chain challenges. but we prepared a lot of this in advance. so it's really not interfering with our basic business. as you said, we have been

successful so far already we have been bringing back almost two thirds of our capacity. and we really wanted to get that fly wheel going. it was really important that we could show to the public the ships are operating, they are reliable, it's business as usual. that's happening we think that fly wheel will give us a very good start, we are already seeing in our bookings for next year we think as we enter the key booking period in january it would be stronger. >> your stock rallied off the pandemic lows but recently has been trading in a narrow ange. i think there are questions around pricing power we are in this environment of travel inflation if you look at the hotels, rates are up 40% year over year, car rentals, a similar story what about in the cruise industry can you start to raise ticket prices. >> well, we did say that -- our prices are up, in fact we are not seeing the spikes you are seeing in other parts of the travel business, but that's because our real focus is on

getting everything back. we don't want to get very high prices on a small proportion of our fleet. we want to get good prices on our whole fleet. we think the pricing power is there. and the forward bookings tend to give us support for that projection. >> what about staffing because right now the labor shortage issue in the hospitality sector is certainly significant when i talk to the ceos of hillton among other hospitality operators. but most of your staff is coming from overseas. does that insulate you from the labor short j? >> it certainly does, actually i think that, and the fact that our jobs are seen as so desirable. so we really had essentially no problem in attracting the kind of talent -- the people that provide the service are what makes the company so successful. they are the ones that the guests love. they are the ones that bring them coming back fortunately, we have had no difficulty recruiting. again, as i say, i think it's

because we are just seen as such an attractive job for people all over the world. >> efforts to reduce debt on your balance sheet -- where are you at there, richard? >> well, we've been -- obviously, we took on a great deal of dent as we went lieu the pandemic but now we are in the process of reducing -- especially some of the more expensive debt. so we just did something to replace our expensive debt that we took on during the crisis with cheaper dent at today's prices, 5.5% and we are really looking to get completely out of all the crisis debt before -- or covid debt as we would sometimes refer to it, really in a year and a half or two years? okay we will be tracking that progress as always, richard, great to see you. thank you for joining us richard fain the ceo and chairman of royal caribbean. kelly? >> our thanks to richard, seema. is royal caribbean doing the 472

day cruise we are talking about later. >> 271 days, around the world. join me one day, we'll go. >> i will talk to you later. thank you, everybody, for tuning in to "the exchange" today "power lunch" begins right now welcome, everybody, to "power lunch," i'm tyler mathisen here is what is ahead this hour. boot barn sales are up 67% from prepandemic levels the stock more than tripling over the past year the ceo will be here to discuss his business and what comes next plus the ceo of ray mopped james. the company reporting record quarterly numbers. the stock up nearly 60% this year we will follow the money to find out where his clients incesting. and lucid shares are skyrocketing this. ev maker is one of this week's hottest stocks we will talk about that and