>> not necessarily at all. facebook sa good example. >> are you trading all the time now? >> no, just when i see things. i'm a big believer you keep cash. when we hit the lows, i went crazy buying mlps. >> would you come back? >> love to. >> mark cuban. everybody have a great weekend. join us on monday. right now, it's time for "squawk on the street." we have a big friday morning on our hands. the august employment report showing disappointing jobs growth. could q.e. 3 on the way? good morning. welcome to "squawk on the street." i'm melissa lee with jim cramer and david faber live from the new york stock exchange. carl quintanilla is in san antonio preparing for a very important interview on this very big day. carl? >> hey, melissa. obviously a lot of reaction from the gop expected later on this morning as we got the jobs number. 96,000, as you point out, 8.3% down to 8.1%.

the big question will be what is politically more potent? the payroll number or the unemployment rate? if we have time, we hope to get the vice presidential candidate on bernanke, on the likelihood of q.e. 3, on the deficit, on what obama and clinton said earlier this week at the dnc. a lot to get to. but a lot more corporate news in addition to job this is morning. i know you guys have that covered top to bottom. >> we look forward to that interview. we want to get you caught up on where the futures markets are standing. we had a big global rally. here we have the futures markets have pared their gains. keep in mind that the dow had closed at the highest levels in many years here, since december '07. holding on to some gains here. s&p 500 looking at 2.5 at the hope. as for the picture over in europe, holding on to the gains across the board. our roadmap starts with jobs.

that goldman now saying chances of further easing are above 50%. >> and what about europe? shares pared gains after hitting 13-month highs. but spanish and italian bonds, rising month highs. china's market, very strong. big spending on things like subway construction. >> bell slumping premarket. the chip giant cutting third-quarter sales citing a challenging macro environment and weakness in the pc enterprise market. are we watching the death of the pc trade unfold? >> could apple's next victim be pandora. pandora shares are down. >> as we mentioned, futures off their highs of the morning after the august employment report showed weaker-than-expected jobs.

the unemployment rate falling from 8.3% to 8.1%. but the drop is due to a decline in the labor force participation rate. so, jim, does this cloud -- does this change where you see the fed going next week? >> i think they have to move. i think that this was one of those win-wins that -- not a win-win if you're looking for a job. but only in america can fewer jobs give you a better employment rate. a little counterintuitive. >> all about the labor participation rate and that coming down, which is depressing when you think about it. fewer people looking for work. perhaps some staying in school longer because they know they're not a market for jobs. but overall, not a great picture. >> but if you're the fed, you're going to say, we can't wait any longer. this was the number. if you're the president last night, obviously i thought he had a poker face. he saw the hand, that it was not

high. >> do we enter the session in a win-win sort of scenario where the jobs report, if it had come in better, the markets would have been higher? the jobs report came in worse -- there's a notion that bernanke stands ready to launch another round of easing. >> i think so. but we have a great bull market. it's the bull market in europe that continues. deutsche bank up, santander up very big. italy, up 6%, 7%. that's a great market. italy! wasn't italy supposed to have disappeared by now, mr. david bond market faber? >> yes. you are correct. the equity markets in europe have been very strong. quite a rally we had here, too. >> it was a rally. it can pause but what are you going to do next week when you're waiting for bernanke to say, here's the 40 things i'm going to go to -- >> we're going to get all the q.e. 3 chatter now. it's coming from everywhere. rates are going to stay low through 2015.

is it going to be more buying of something -- >> if we get 140,000 jobs, i was going to say the chatter would be, oh, no q.e. 3. that's a bummer. it's a win-win situation if you're in the business of looking at stocks. we know that liquidity, whatever kind of liquidity has certainly been a decent forward indicator of how stocks do. >> that's right. >> and did he have a sense in jackson hole? >> i'm not really in his brain. >> not in bernanke's brain? >> no. >> even holding on, just marginally, on to the futures to gains, that's a big accomplishment. the s&p, the highest close since january '08. the nasdaq, the highest close since november of 2000. people say this could really change the outcome of the elections. these are the highest levels in the stock market we've seen

since obama took office. >> i think the best performance for a president, a four-year term in the stock market. obviously he took office when it was near its lows and hit those '09 lows. but up over 65%. >> let's go with something -- we're being obscured here. china, holy cow, great number. it's infrastructure, building more subways. building a sewage system. >> it's all still stimulus. >> and now you have a feeling that sunday night they do something -- so you get central banks on the team. you've got the european banks able to do some refinancing, issuing equity. you remember you were saying yesterday, you can't win with debt. but can you not win with equity? there's a bank rally going on that's significant. i watched the bank rally in this country by looking at the preferreds, by looking at the subordinated debt. the piece of paper i follow which is a bond 1028, that

signified all the problems -- >> what does that say? >> these things -- these preferreds have signaled a dramatic rally. >> yeah. >> in the common stocks. >> right. you take a look at the stock market performance in the past week or so, take a look at goldman sachs, big gains on heavy volumes. the action in the options market also point to investors believing there are further gains ahead a big trade in morgan stanley yesterday indicating that somebody out there believe that is morgan stanley will be considerably higher by january or so. it's all out there right now. >> i just decided to look back to what the market was doing during the period, say, the end of 2008, beginning of 2009. morgan stanley, one day was at $42. then a few weeks later, it was at like $9. >> yeah. >> this stock has done very little. goldman sachs has done very little. they traded down to $66. they protested they didn't need the government. no one did.

but stocks have had remarkable moves to the upside. obviously if morgan stanley was at $9, it goes to $16. but at the same time, the bank stocks have been nowhere. they can have -- >> back to the u.s. economy, whether we get q.e. 3 or not, we lost 15,000 manufacturing jobs. >> i know. >> it is not -- it's sputtering along. >> yes. >> and doesn't that at some point get reflected in the performance of equities? >> it should. it's just that that's not the sector that we're looking at. intel may be the technology sector but that could be a secular decline in pcs. the guys i deal with -- people say, where are the manufacturing jobs going down? we were drilling like mad for natural gas. and it's been shut. we're not drilling. >> why? >> because of the price. you can't justify it. and natural gas is -- >> chesapeake took a lot off line -- >> none of them want to do it

because they're hurting their own cause. >> unless we can figure out a way to put in stations across the country. >> yes. >> that filled up -- >> but the president doesn't mention we need to have it as a surface fuel. if natural gas had been a tremendous driver, 17% -- apparently some people were saying up to 20% of the jobs are being created in the last year were related to natural gas and that stopped. >> let's talk about intel because those shares are falling sharply premarket. cutting its third-quarter revenue forecast to a range of $12.9 billion to $13.5 billion. well below wall street estimates. about $14.2 billion. intel is seeing softer demand because of a weak macroeconomic environment and it's cutting gross margins. this is not good and having an impact across the board. we had a downgrade of amd earlier this week. there was a notion yesterday that pc sales are declining and they're in a secular decline as

you had mentioned. >> i think the death of pc, this is one where i'm going to disagree with mark twain, it's not greatly exaggerated. people are still buying pc fz you're in a less developed country. but here's the issue for intel. they had a difficult product transition going on right now into servers. they're doing a lot more chips and servers. there was a hole? in the season. but here's what intel is to me. yesterday, you're sitting there trying to analyze where you should buy the kindle or whether there's something great coming out in the ipad. there's no room in that world for an ultrabook, a notebook where the growth had been. there's just no room. the kindle and the ipad are better than the ultra and the notebook. >> intel cited a lack of interest into the enterprise pc market. it wouldn't seem that's a trend that's going to change. >> i just think that -- there's

government that's not buying pcs. that's the dell problem, to some degree. obviously europe has stalled in buying pcs. but there are a lot of companies right now trying to say maybe the pc is not what we should be upgrading to. we have powerful cell phones. we have amazing ipads. >> deliver ipads to your entire workforce and have a -- >> isn't it possible that it's just not the device of the future? >> yeah. it's interesting, though, to see the non-reaction, essentially, in shares of dell and hewlett-packard to this news. one would think that immediately use go to those shares. they'd see some sort of declines on the back of this news. but maybe that was marginally factored into the price already. >> and what i see with what's happening within the actual semiconductor industry is if you're shipping and you're in the samsung, if you're in the iphone, if you're in the -- >> qualcomms of the world. >> yes.

a lot of people say kindle, maybe they're selling 1 million a month, but this is a secular change. and i think it's important to recognize the data general and digital equipment -- oops, i mean dell and hewlett-packard, are in the -- >> that was rough, man, rough comparison. it's not as though the market hasn't been paying attention. bol both of them are at near lows -- >> intel's a great company. but the world's changing. >> the world indeed. >> by the way, what's your take on amazon? it's ticking higher after hitting a new 52-week yesterday on all the product launches. i heard an interesting analysis from gene munster who said the device is about 15 bucks. they don't make money on it and they don't intend on making money on it. all they have to do is sell two

books on each device, they're a-okay. >> that's different from what apple has. but apple can say, we also have radio. iheartradio. these companies, there's room. there was room for years with hewlett-packard and dell. i think the ipad -- there's room for 1 billion ipads to be sold. >> 1 billion ipads? >> 1 billion ipads? >> billions upon billions of pcs and hambergers sold. >> you sound like carl sagen. >> that is not an exaggeration. there's 70 million ipads that have been sold. say 70 million. >> 70 million. >> that's just rich people right now. >> that's true. most of the world's population still lives in some form of poverty, but that's okay.

they'll be able to afford a $700 ipad. >> okay. there will be over 6 million ipads sold -- >> thank you, ron johnson. >> 25% of the ipad business is sold right now. >> let's move on to pandora. shares taking a hit in premarket. the market cap not particularly large. "the wall street journal" reports apple is in talks to licensed music for a custom radio service similar to pandora, a move aimed at expanding apple's dominance in online music. apple's declined to comment on the story. easy to imagine. you could have an app, something you do or hit on your -- >> which has a better balance sheet, microsoft or pandora? you remember when microsoft went up against amazon with the zoom? i feel what you can argue is that apple can wipe out anybody it wants to. >> yeah, i would think that that's probably a fair assessment. >> except for twitter. >> except for twitter. >> this is the time you've said that of late. >> yes, i do.

i think that twitter is too cheap versus whatever price people are saying because social is -- >> they haven't figured out a business model yet, that is, twitter, in which they're going to monetize all of that. >> not yet. but surveys came out yesterday which said their mobile revenue is going to far exceed facebook's mobile revenue. that piqued my interest. >> apple's dominance will continue into the -- >> yes. billions upon billions sold was an allusion to mcdonald's. but i believe there's room for amazon and apple. i like the apple eco system of which i will now add this radio thing. listening on the radio. you go to your sound hound and you hear -- you guys know that? and then you go to itunes and you buy the song. >> what do you tell people who own shares of pandora, $2.1 billion market value. >> pandora is paying royalties

based on rates set by the federal government. apple's going to individually negotiate each license and each rate it has to pay. you tell me whether or not apple is going to get a better deal? apple's going to get a better deal. >> yes. apple's opened pandora's box. >> oh, that was just -- >> had to. come on. i always thought it was a negative thing to say anyway. how about harrah? >> all right. i'm with you. you're in greek mythology and -- >> just to button up this -- >> i don't know. >> pandora's a little guy. >> with acquisition costs up 80% year-on-year, 80% rise. >> the ibm select was a great machine. >> but it was 50 times what their market cap is. apple has 50-fold of pandora --

>> pandora, it's not like people -- i have a big short position in pandora. but apple can destroy anyone it wants to destroy. >> coming up, two perspectives on this morning's jobs report, an exclusive interview with republican vice presidential candidate paul ryan on the numbers and the raj rajaratnam game plan for job creation. also, first reaction from the obama administration. alan krugeger joins us live. take a look at futures. s&p looking to add about 4. much more "squawk on the street" straight ahead. streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! strategies, chains, positions. we put 'em all on one screen! could we make placing a trade any easier? mmmm...could we? open an account today and get a free 13-month e ibd™ subscription when you call 1-888-280-0149 now. optionsxpress by charles schwab.

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♪ i'm sharon epperson at the nymex where commodities are moving higher, energy and metals, as traders expect there to be more stimulus from the fed in light of the disappointing jobs data. we are looking at gold that's leading the charge here. it's gained more than 20 bucks. topped $1,730 on ounce here. and gold go push toward $1,800. slightly higher prices for oil. as we get closer to that triple-digit level for crude oil, traders say there's more talk about a possible sbr release putting pressure on the oil markets. >> thank you, sharon epperson. big story today, the august

employment report showing 96,000 nonfarm jobs added last month. did you nail the number? we asked you to tweet us your prediction. right now, our staff is going through the entries in search of the winner. this month's prize? get this, a back-to-school bag signed by all of us here at "squawk on the street." it's also filled, by the way, with a lot of goodies which we won't actually divulge the contents here on tv. >> no, something that -- we do these things all the time. >> all sorts of swag. >> but keep it tuned here. we'll announce the winner later on in this program and maybe we'll reveal what's in that very big stuffed back. coming up next, cramer's here to help you get the job done when it comes to your portfolio. we have his had mash next. and you want to hear what paul ryan has to say about this morning's jobs report, an exclusive interview coming up. take a look at futures once again as we head to the open. dow strengthening just a touch, up 11 right now. stay tuned.

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♪ a little less than six minutes before the opening bell. time now for cramer's mad dash ahead of that market open. we mentioned chinese stimulus, thousands of miles of roads, subway construction. it's gotten shanghai moving in a direction it doesn't usually move, that is up. but what does it mean for some of the stocks we talk a lot about? >> people at home would be very confused here probably. you see an unemployment number that's clearly not good.

normally you would expect caterpillar, cummins, freeport, copper, right, to go down? no, they're all up, because these are chinese stocks. the marginal player in the capital equipment world is china. freeport, 40% of the world's copper is used by china. ten years ago, only 10% was used. so you see these stocks traded up. nothing to do with our employment number anymore because they are international companies. >> commodities are coming down. it's not clear that one stimulus plan, albeit maybe fairly large s going to change that direction. >> that's really important. copper's been ticking up. but here's -- iron ore is down by a third in the last two months. so this is a reversion -- remember the shanghai, the bear market over there has destroyed a lot of our companies. trying to get over what looks like to be a conundrum. caterpillar reaffirmed the other day, united technologies did as well.

i want to point out that the market is so international that stocks that should be down circa 2000 are not going down because circa 2012, the idea of subways being built and maybe escalators being put in, the idea of earth-moving equipment because you have to build all these projects, that's caterpillar, united tech, cummins, freeport. these stocks that would normally be hammer and would have been the go-to shorts at another time in the economy, are go-to longs. >> in terms of still playing china and assuming we may get even as low as 5% growth -- >> coal. i think there's too much coal in the world. and i think that coal requires some structural changes in the epa, which we may not get unless you think romney's going to win. i want to avoid coal. coal's had a couple of day's bounce. and the rails have had a bounce. those are coal derivative plays. there are industrials -- maybe

fedex shouldn't have gone up. maybe they revisit where it was. >> we have a lot more ahead. of course, that opening bell, followed by two different takes on the august jobs numbers. an exclusive interview with vice presidential candidate paul ryan. also top white house economic adviser, alan krueger. "squawk on the street" is coming right back.

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friday trading session begins. at the nasdaq, american realty capital trust does the honors there. and we are following up on what was an extraordinary session yesterday because not only was it a big rally, but it was a broad-based rally. all ten of the s&p 500 sectors finished the day with gains of more than 1%. we also had a rally on pretty sizable volume. nice change. >> i think that part of the rally that was tech will be challenged because of intel because there's too many company that is cut capital spending. they obviously signaling worldwide slowdown. i don't think that that's a good answer for them. i think they've got the wrong

product. but anything that drives technology down is going to be able to turn back that nasdaq rally or at least check it for a little bit. and i think that that's where the weakness is going to come in. >> that is quite a decline on shares of intel, down by more than 4%. taking the philadelphia semiconductor index down by about 1.25% at this point. we are seeing microsoft, by the way, speaking of technology, down by 1.3%. 1.4%. so it is showing some weakness here. >> it's interesting, dell, people expected it with dell. hewlett-packard had been trying to rally a little bit. hewlett-packard has not been able to get back to $20. >> no. so many questions in terms of hewlett-packard. after the earnings, the years it will take -- $33 billion market cap, that's hewlett-packard. unbelievable. we should call kraft foods if we can. the stock is down. if you recall, it's going to be splitting into its grocery

business and foods components. once's going to be called mondel zeshgs indust and then kraft foods. >> what happened there? >> the guidance, i think they gave the grocery business is not what people had been hoping for. some of the numbers they put out there in terms of their long-term output -- but particularly for 2013, kraft foods grew where they're talking about -- 2013 earnings per share of $2.60 on a gap basis, assuming interest expands, tax rate at 35%. may not be what people were hoping for. by the way, october 1st, when that's going to take place. that's a big split. people should keep in mind, not much longer. >> expected more from her. >> i wanted to flag a big move outside of equities. watching the euro trade higher

by more than 1% against the u.s. dollar. these are four-month highs. the gains climbing after the u.s. jobs numbers came out. this is a broad-based rally. the euro at eight-month highs. mario draghi not surprising, but the flip side of not surprising the market is that he actually delivered on what was floated in the prior session. >> and people should understand that a lot of the earnings that were reported in the earnings reports, you heard what ceos were using as their benchmark. a lot of them were using 123. that's the fxe. using a stronger dollar. if you're a consumer packaged good company, you were surprised to the upside. one of the reasons i was concerned about kraft. i'm looking at companies using 1.23 for the euro. goes to 1.26.

pvh, a remarkable story. >> and we should mention the ten-year is going up in price, down in yield. we had seen as high as 1.8 not that long ago on the ten-year. now we're around 1.6. expectations of q.e. 3. >> and the out-of-bonds into stock trade is happening. it just happens in germany where the bunds have been under pressure. one of the best-performing stocks this morning is deutsche bank, that stock is up gigantic. >> things around the world are rallying. let's send it over to bob pisani who's here on the floor with more on what's moving. >> i want to take up the theme of what's going on in asia. that was the big story and arguably is a more important story here. we've got china -- shanghai up 3.7%. shanghai doesn't move up 3.7%. the biggest gain since january 16th. hong kong was up, japan up 2.5%, korea up 2.5%.

these are huge gains. china announcing a huge infrastructure project. we've had regional governments saying, we want to do something, attract investments. those aren't real numbers. this is going to happen. you're going to see more on railway stocks that move up. steel stocks moving up. there will be ports, more highway investments. not as big as 2008. but it's definitely going to happen. that's why mittal, bhp billiton, moving up. of course on the disappointing nonfarm payrolls, but these stocks were up even before that. gold stocks flying all morning on the q.e. 3 prospects and the weaker dollar. germany is at a 52-week high. the dax index closed at a 52-week high. volumes trading were twice normal yesterday. all the major banks up 3% to 5%.

back to you. >> thanks very much. that jobs report for august came in below what had been expected, nonfarm payrolls rose 96,000. the unemployment rate did fall to 8.1%. it had been 8.3%. but that was largely due to a lot of americans who were no longer looking for work. we're joined now by alan krueger, the chairman of the president's council of economic advisers. dr. krueger, appreciate your joining us. 96,000 again. people had been hoping for as much as 125,000 or perhaps even more and that labor participation rate keeps coming down. why should we feel good about this report? >> i say every month when the news comes in it's important to take a step back, take today's report in the context of other information that's coming in, recent reports. and we see a pattern that the economy is continuing to heal from the very deep recession that struck at the end of 2007

and really came to a boil in 2008. we've now added private sector jobs for 30 months in a row. 4.6 million jobs have been added over this period. so the economy is continuing to head in the right direction. we're still expanding. there are steps we can take to speed up job growth. we'd like to see job growth faster but the economy is continuing to heal. >> it just felt a lot better, though, nine months ago. when we started into this year, we felt like we really had a head of steam there. the jobs numbers, of course, were much stronger. the economy in the first quarter, gdp growth and everything else, much stronger. then we started to slow -- it doesn't appear that that's changed, does it? >> recoveries have ups and downs. that's the nature of recoveries. and this recovery in particular because of the nature of the economic crisis in the first place, the fact that we had such a big housing bubble that consumers lost so much wealth because of the financial crisis and the bursting of the housing bubble has faced headwinds that

have been unprecedented. continuing to see losses of jobs in state and local government positions. so this recovery has been different. but we've now had 12 quarters in a row of economic growth. and as i said, 4.6 million jobs added over the lost 30 months. >> dr. krueger, jim cramer. last night the president talked about 600,000 jobs created by nat gas. that was the single biggest driver of new jobs in the last few years. it's almost been shut down. where do you get those jobs -- >> i didn't hear the very end of your question. >> without natural gas being used as a surface fuel for vehicles, which the president has not point-blank mandated, how do you get the 600,000 new jobs when those jobs are being lost left and right for natural gas? >> there are a lot of opportunities for natural gas. if you look back, it's really a model for the economy. government investment hell topped develop the technology. private entrepreneurs applied that technology and over a

period of years, we're seeing a tremendous benefit. and there are many applications, not only for surface transportation, as you mentioned, jim, but also in the chemical industry. so the president is pursuing a strategy of all of the above for our energy needs to develop safe energy resources. and there will be many applications for natural gas to come. i'm sure many that we can't even anticipate given this tremendous resource. >> it wasn't that long ago that there appeared to be maybe renaissance is too strong a word, but certainly a rebound in manufacturing. not the case for august. down 15,000 in terms of jobs. is that a worry to you, dr. krueger? >> well, again, you can't make too much from one-month report. over the last 30 months, we've added 500,000 manufacturing jobs. in july, you'll recall there were fewer seasonal shutdowns because the auto companies were keeping their plants open. so there were fewer recalls in

august. and there was a little bit of a payback from the auto sector which i think affects the manufacturing numbers. but also bear in mind, manufacturing is affected by what's going on in the world economy. and there are some headwinds out there the rest of the world has not been growing as well as the u.s. has been growing. >> speaking of the world recovery or world economic crisis, i should say, dr. krueger, does your outlook for the u.s. recovery change at all even on the margin based on what mario draghi announced yesterday? >> i think that mr. draghi's announcement yesterday was a positive development. i think it's very important for the europeans to implement the announcement that is they've made. i think the reaction to yesterday's announcement was positive. and we need to take the step that is we can take to strengthen our economy and we should recognize that there are going to be ups and downs in the world economy. that's the nature of the way recoveries move. >> dr. krueger, china last night

announces this gigantic sewer building, subway building. they want to put people right to work. but that's an old-fashioned way to put people to work. what happened? >> we have been doing that, from the very beginning, the first meeting i had with president obama, he talked about putting more americans back to work in infrastructure projects. that was even before the recession struck. the president having the recovery act, support for infrastructure projects and those are being implemented now and the president recognizing the weaknesses in our economy has asked congress for more funds to invest in infrastructure, to rebuild our roads and ports and highways. and that will put more people back to work today and help our productivity in the future. i think that is the right economic strategy and i think that's something that congress can act on as soon as they come back to strengthen our economy. >> when are you going to get more people actually willing to look for work, though? >> the demographic trends in the u.s. have been in the direction

where we're going to have more older workers, more people retiring. we also have more people enrolled in school. so i think that's something that one could have predicted a while ago. but what we really need to keep our eye on is to take the steps we can take to strengthen this recovery, to strengthen economic growth and to put more people back to work. that's what the president remains focused on. you heard him talk about that last night, from the very beginning, since i first met him, that has been his main focus. >> all right. dr. krueger, as always, appreciate it. >> thank you. >> now to the republican response, to the jobs report. let's head to carl in san antonio, texas, this morning. carl? >> hey, melissa. joining us to talk about that jobs number, vice presidential candidate paul ryan, republican of wisconsin, chairman of the house budget committee and if there were a hall of fame of former "squawk box" guest hosts, he'd be on that, too. mr. chairman, good morning to

you? >> carl, i don't think i've talked to you since you got this new gig. congratulations. good to be with you. >> thank you very much. let's talk about the number. you heard dr. krueger. we've heard this described as everything from dismal this morning to tepid to something for everyone. how do you see it? >> carl, this is not even close to what a recovery looks like. look, we would need to actually have 150,000 jobs created just to keep in pace with population growth. this is not what president obama promised. i would argue this is the result of failed leadership in washington, bad fiscal policy coming from the administration and that is why we have this very tepid report. for every net one job created, four people -- nearly four people left the workforce. so this is not what a recovery looks like. we need growth. we need economic growth and we can get that if we get the right policies in place. that's what mitt romney and i are proposing, specific solutions, pro-growth economic policies to get the kind of growth we ought to be having in this economy to get people back to work. >> we all know the rate itself

is a bit of a black box, a lot of discussion this morning about participation rate. >> right. >> but 60 days ahead of an election, mr. chairman, and the optics of this is going to be about the number 8.1%. isn't there the risk of some americans who will say, it's not a great number but it didn't go up? >> 8.1% this month means 43 months above 8%. remember when the president promised that he would prevent unemployment from getting above 8% if we passed his stimulus package? it hasn't been below 8% since then. if you looked at the predictions they made when they passed the stimulus, they said that unemployment would be down at like 5.4% today. so this is just another example of lots of promises and lofty rhetoric made by the early obama presidency or by candidate obama. and look at the lackluster performance, look at the broken promises. this is not an economic recovery. we are limping along. this is stagnant growth. for every person who got a job, nearly four people stopped

looking for a job. that's not a statistic to brag about. look at factories. 15,000 factory jobs lost. 7,500 of those jobs lost from automakers alone. so, carl, what mitt and i are proposing are pro-growth economic policies, an energy policy, tax reform, regulatory reform, clean up the spending problem in washington to prevent a debt crisis. those are the kinds of things that we're proposing, expand markets for our trade. these are the things we need to get growth back in this economy. we have a very serious plan for pro-growth solutions that we think we can get people back to work and really work on this number. >> let me ask you about what the markets are telling you. you like free markets. no one would disagree with what you're saying about this job market in this country. but stocks yesterday closed at the highest level since inauguration. retail, housing, autos have all been on the margin more impressive than they've been disappointing. they can't all be wrong, can they? and as far as the market rally

goes, who owns that? >> well, look, i think ben bernanke claims that his model owns some of it. what we've had lately is because we've had a lack of leadership on fiscal policy. you've had bad fiscal policies here in america and you have the federal reserve trying to bail out fiscal policy. you sort of have a story around the world of central banks stepping in and trying to bail out lackluster fiscal policy. you probably look at the ecb, draghi press conference yesterday, for one of the biggest reasons why you had that market rally. but we have to be clear about the fact that there is no substitute for good fiscal policy. you can't expect central bankers to bail us out all the time. we have a fusion of our fiscal monetary policy which at the end of the day could spell danger. we need to have low tax rates, economic growth, regulatory reform, predictability, certainty, those are the kinds of things that investors and job creators need to take risks. all they get from the white

house is the promise of higher taxes, more regulations. it's those kinds of things that make it impossible for people to predict and create jobs. we're going to change that. we've got a five-point plan for a stronger middle class, specifically aimed at creating economic growth, specifically aimed at trying to get our economy to grow on an average of 4% a year, creating 12 million jobs over the next four years if we can get those pro-growth economic policies in place. >> you seem to be placing the market rally in bernanke's hands. his defenders would argue he is -- >> well, i'm not going to -- no one knows exactly -- nobody can say who did what. what i'm simply saying is central banks and our monetary policy has been trying to serve as a substitute for really bad fiscal policy. and that bad fiscal policy is the fact that we don't have the kind of leadership we need in the white house to get this economy going. >> right. do you believe this jobs number makes q.e. 3 more likely and if you and the governor win the presidency and the vice

presidency, do you fire bernanke on day one? >> no. i don't think it's appropriate to comment on what you do with personnel such as that. i've known ben a long time. he and i have disagreements on these issues but are respectful of one another. i think q.e. 3 -- i think q.e. has done -- the costs outweigh the benefits, in my personal opinion. but i think this lackluster report probably increases the likelihood. the markets would speculate that. the next fomc is in september. and then another one in october coming up. my guess is the market would expect that. sort of seemed like that from his jackson hole speech. but at the end of the day, all this easing is simply, in my opinion, the federal reserve trying to bail out bad fiscal policy. i think the costs are clearly outweighing the benefits of this. >> the president this week in charlotte seemed to make the argument that he hasn't had enough time. i know you're smart enough to

have read people and you know that capital market crises is not solved in the amount of time it takes to fix a cyclical slowdown. why sit fair to judge the president -- >> when your debt gets to 90% of your gdp, your economy starts slowing down. that's what we're doing. the president is giving up four budgets with trillion-dollar deficits and he's never proposed to even come close to balancing the budget. the deficit increases under his watch. look at the trajectories. they're terrible. if you look at rogoff, we're close to that danger zone. four years into this presidency. if we put the right policies in place that are pro-growth policies, we would have had the kind of recovery we should have. we're not even close to the predictions he said would occur when he passed his stimulus bill. you can make the case that

looking back, it's slow. that's not what president obama said, if we would have passed his keynesian agenda. if borrowing and spending and regulating and taxing was the secret to economic success, we would be entering a golden age along with greece. it's not. it doesn't work. we sound low tax rates, fiscal discipline, regulatory certainty and we need to stop this notion of a government-driven economy. we need to allow entrepreneurs to flourish. we need businesses to have certainty. we need competitive policy that is put us on a level playing field on tax and regulatory policies. we need to unleash this energy boom being stifled by this administration. >> it brings to mind, mr. chairman, some of the comments the president made last night. he did mention 600,000 natural gas jobs. he did say the government is not the solution to every single problem. did you loan him your copy? >> he's great at giving speeches and good at making lots of

promises. he made a bunch of promises four years ago he hasn't kept. if you take a look at his record, it just doesn't add up. >> speaking of speeches, president clinton this week took you to task fenlt said it takes some brass for you to criticize the medicare cuts the president was making when he says they were in your own proposal. do you have brass? >> look, when you write a budget, you write it based on the currency of the baseline. don't ask me. look at what the trustees, meaning the cbo. you can't count the same dollar twice. you can't say, $716 billion is going to be used to shore up medicare and that same $716 billion is going to be used to pay for obama care. you can't count the same dollar twice. the problem is the president got caught with his hand in the cookie jar. he got caught using medicare as a piggy bank to pay for obama care. they don't like that fact.

we've pointed it out. this is what happens when people don't have a good record to run on. they try to distort. they throw blame. mitt romney and i are offering bold solutions, big ideas for big problems to get growth back in this economy, to create jobs. if we can average 4% growth with the right policies in place, we can pull the $2 trillion of capital parked on the sidelines back into this company and get people back to work, get back to prosperity. we don't want a borrow and spend and regulate welfare state which inevitably leads to a debt crisis like they have in europe. >> mr. chairman, i know you talk about 12 million jobs and 4% growth. this might be an unfair question. but do you ever pause and wonder whether making promises like that could put you in the exact situation the white house is in where they did, in fact, as you

say, promise 8% and haven't gotten there yet? >> this is our goal. and we think this goal is achievable. we've talked to lots of different economists as to whether or not this is an achievable goal. the point is, you need to set metrics and benchmarks. president obama did that. he just missed them. he didn't cut the deficit in half in four years. he didn't keep unemployment from getting above 8%. but it's because he put the wrong policies in place. he ran washington for two years with his party. he accomplished nearly every item on his agenda. the problem is those are bad policies. we believe if we use proven pro-growth policies, we'll get pro-growth results. energy policy, trade policy, fiscal discipline, job training to get people into the skills so they have the careers they need and to champion small businesses. clear the regulatory hurdles making it harder for people to take risks. give us sound money, low tax rates, give us tax reform. do these things in 2013, we

preempt a debt crisis and we get growth again. our focus is growth. it's opportunity. it's job creation. and if we use the policies that have proven to work in the past, we'll get the same kinds of results in the future. >> you mentioned sound money and plans that worked in the past. the gold standard is at least explored in the republican platform out of tampa. how serious should the market take that? are you and the governor behind this committee? should their recommendations be binding? are we going back to that? >> no. i've just recently become familiar with this. i'm not sure how this thing is being structured. i don't think it should be binding. you should question the feasibility of such a thing. what we want is to have real good fiscal policy so we get jobs and we don't want monetary policy to try and substitute our fiscal policy. we want stable prices. we want sound money. a necessary precondition to economic growth now and into the future is sound money is price

stability. that's what we're after. . >> finally, i'm told chris van holland is playing you in the biden debate preps. what does it take to play paul ryan? >> i've known him really well for a long time. i've been the head of the budget committee in my party for six years. we've debated quite a bit over the years. we're personal friends. we just don't agree on a lot of policy issues. but personally, we get along quite well. >> congressman, appreciate your time. i've asked them to pump out with "stairway to heaven." but anytime you're ready to come back on "squawk," we'd love to have you. >> best song of all time in rock 'n' roll. >> paul ryan, congress from wisconsin, congressman, thanks so much. >> you bet, good to see you. >> back to you. >> thank you very much, carl.

certainly an extraordinary interview, an exclusive on cnbc. but a couple of the highlights here is it's interesting how he dissecting the numbers. he said, for every person who got a job during this whole administration, four people stopped looking. that's their spin of it. he also commented on ben bernanke, which is interesting. obviously a long-running stance on ben bernanke that the monetary policy, the costs are outweighing the benefits. but he would not comment on whether or not they would actually fire mr. bernanke once they take office. >> which you would imagine would be the case and is a smart thing to do. we have two more employment numbers before the election. each is going to provide fodder for both camps. >> just quickly on the markets here because we are coming off a very big day in yesterday's session, still continuing to see big gains in the euro declines in crude oil and small gains here in the markets. coming up, a "squawk on the

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good morning. welcome back to "squawk on the street." let's get to the roadmap for the next hour. jobs, jobs, jobs or maybe not so many jobs. we've got an exclusive interview with jan hatzius on those numbers and what they could mean for next week's fed meeting. >> plus, the u.s. auto bailout and state of the auto industry. a hot topic in the race for the white house. >> and pandora shares slumping today after "the wall street journal" reported that apple may be mulling over licensing its own radio streaming service. is apple now pandora's biggest threat? >> in honor of jobs friday, we

sit down with the ceo of a company that knows a thing or two about hiring in the employment industry in general, manpower's chairman and ceo will join us live. august nonfarm payrolls showing 96,000 jobs added to the u.s. economy, below analyst expectations of 125,000. let's bring in steve liesman. the q.e. 3 chants have begun in earnest, haven't they? >> definitely. this is a disappointing report from almost every angle. hopes were high the u.s. would build on last month's strength with another solid jobs report. but the best you can say about this report, it was lackluster growth. even the good news looks lame in here. here's the breakdown. 96,000 jobs, 125,000 was the forecast. unemployment rate down two ticks. revisions for june and july down 41,000. hourly earnings, down 0.1%.

jeffries saying the household surveillance looks good with a drop to 8.1% but the drop in the participation rate to a 30-year low and the 119,000 drop in household employment are quite discouraging. over at bmo, they said, uggh! after getting our hopes up after the solid adp release, today's jobs report suggests the recovery in labor markets remains painfully slow. there weren't a lot of negatives in terms of categories. but minus 15 on manufacturing giving back some of the 23,000 we gained last month. finance and retail up. but the thing you see, it's not up a whole lot. temporary help, sometimes a leading indicator of where things are going, down almost 5,000. government down again 7,000. the government was a big part of the revisions for the prior months. they revised them down something like 20,000. the report has many economists

thinking this almost guarantees additional fed help next week. august employment report, q.e. 3, here we come, says btig. you see the disappointment here. notice what happened in december, january and february. had that rebound from the swoon that happened in the summer and the fall. there was hopes that the july number was the beginning of that rebound. but august is telling you it wasn't. we'll have to wait another month. one other thing that's come up is how big a miss is this for the economists? forecasting 125,000. they got 96,000. here's two ways to look at it. the forecast error, that is the miss, as a percent of the estimated change, they're off by almost a quarter, 23%. but if you take the forecast error as a percent of total employment, it's off by .02%. depends on how you judge the economist ifs you want to know whether or not they did good or bad on this month's report. >> steve liesman, thanks so

much. let's bring in jan hatzius, the chief u.s. economist at goldman sachs. how do you judge the forecast here? where do we actually stand on the recovery here? >> i think the recovery is very sluggish. and there hasn't been a major change, i think, in the pace. we're roughly in a 2% growth environment. and these types of jobs reports where payrolls are growing somewhere in the 100,000 range or so, maybe a little more than that on trend, if you take last month's report into account as well and the unemployment rate is fairly close to flat. that's what you would get in a 2% type of recovery. i think that's where we are. >> what happens next week? the chances of q.e. 3 are now what versus what yesterday? >> so, i think it virtually guarantees some kind of easing action next week. the probability of that was already very high. and i think the probability that that easing action includes not

just language about the funds rate but also asset purchases, q.e. is now solidly above 50%. i don't think that's guaranteed. i think it's possible that they find some way in which they change the guidance sufficiently to really make a significant difference. but that's not my baseline. >> let's just double back a minute. >> the labor department itself points out that employment growth is slowing. last year, we were averaging 155,000 a month. this year 139,000. it's anemic growth and it's slowing down. what's happening in this economy that we cannot generate jobs? >> the main reason why the economy continues to be slow and it was slow in 2011 and still slow in 2012 is that we're still recovering from a massive asset incredible that has kept the rebound in the private sector relatively muted. the private sector is improving,

no question. but it's a relatively muted recovery. and at the same time, there are other factors, fiscal policy and also the drag from abrood to some degree that are holding things back. >> yet if you look within that, the nature -- maybe just at the margin. who knows when we get decent growth moving forward? what's happening is certainly last month a contraction in manufacturing jobs and job growth in health care, though that is slowing down, and importantly food services and drinking places. how is the nature of the american workforce changing and if we increasingly move into that sort of area of the service sector, what does that mean for the nation overall? >> i think the sectors you talked about, there's one big distinction between two classes of sectors. there are cyclical parts of the economy. manufacturing is one. temporary help services which was also down is another. and they're essentially noncyclical sectors like health care and education. and if you only -- >> structural changes because

we're getting older -- >> that's right. >> we eat out more? >> that's right. those sectors are always going to be growing. they're growing in a boom and they're growing in a recession. so it doesn't tell you much about the cycle. what tells you something about the cycle is the cyclical sectors and those clearly aren't telling a positive story here. that's a solid rationale for policy mcca policymakers to try and do more. >> what possible use is the increased buying of mortgage-backed securities by the fed? how can that change the picture you have just described even if we get to that level of q.e. 3? >> it helps out the margin. but we have to be realistic about the extent to which it's going to help. there aren't a lot of instruments on the table that really would make a major difference. and so the fed is basically looking for things that help at the margin. q.e. is one. i think a lengthening of the forward guidance into 2015 is another. again, not super powerful.

but it helps out the margin. they'd rather do something that's a little helpful than nothing. >> you, like a lot of economists, have taken in your gdp forecast as this year has moved along. you mentioned abroad in terms of pressures. what are you seeing as this year finishes and next year unfolds in terms of gdp growth, jan, especially given europe and china? >> in 2012, our gdp forecast has been pretty flat, 2%. we've been in a 2% environment. i think there was a lot of hope in some quarters early in the year that we -- >> we had a strong start to the year. >> yeah, but for some special factors. help from the weather, probably some distortion in the seasonals, and inventory cycle. it didn't look that sustainable to us. that's broadly held up. i think it's still a 2% kind of world. >> and to simon's question, what do you expect them to buy, given that you've now raised it above 50%.

they'll buy-chance something. >> i think it's mostly mortgages. conceivably all mortgages. there's also -- there are technical questions around whether operation twist is continued or is replaced by balance sheet financed treasury purchases. my guess is it's going to be continued. >> along that line, i'm glad you're here because we've had both the democratic reaction and the republican reaction to the jobs report. and what came out of the paul ryan interview is something that we've heard repeatedly. the cost of further easing outweigh the benefits. where do you stand? >> my view is there are conceivable costs and chairman bernanke went through them in quite a bit of detail last friday in the jackson hole speech. but at the moment, those costs seem small. and in my judgment, even smaller than the benefits which aren't that huge either. but on a cost benefit perspective, i think it's still a decent call. >> let's cut to the chase for people watching now who would

like to make a change, they have a vote, most of them, in 60 days. if you can extract your own personal view from what you see and extract the rhetoric and all the hot air between the two sides, what different trajectories is each side laying out for jobs and growth as the chief economist at goldman sachs? how do you -- >> clearly they have different views about what should happen to taxes, different plans about the deficit, different plans about spending. and i think those plans are out on the table pretty clearly. and i think -- >> if i'm interested in job growth, in your professional opinion, which way should i vote? >> i don't think that's something -- depends on a lot of factors in terms of what happens after the election. i don't think i can make a call on that. >> on the fiscal cliff? >> yes.

there are a lot of different potential outcomes in the election. there are a lot of different outcomes from the inevitable horse trading that's going to happen after any outcome of the election. so i think it's a decision tree with many hands. >> jan, we're going to leave it there. thanks for coming by. we appreciate it. >> thank you. >> we have a quick market flash here. let's get back to kayla tausche at headquarters. >> we're taking a look at kraft because it's the biggest laggard on the dow today. today looking at the north american grocery business. low growth and high dividend. but i don't think investors knew what that would look like. the company saying it's going to be expected eps of $2.60 a share. but also going to be single-digit growth both for income and eps. this follows the announcement yesterday about its mondelez unit. that company was supposed to be

high growth but it's going to take a big restructuring hit in the near term. >> thank you very much for that. want to do another market flash here. google shares worth pointing out, now above $700 a share. this is the first time they've crossed $700 since december of 2007. highest level since december of 2007. google up by 1.6%. the u.s. bailout and the state of the auto industry, a hot topic in november's race for the white house. find out what the former u.s. treasury auto adviser has to say when steven rattner joins us next on the show. ♪ [ male announcer ] how could a luminous protein in jellyfish, impact life expectancy in the u.s., real estate in hong kong,

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president obama asking voters to grantd him four more years with a promise the nation's economic problems can be resolved. john harwood is hanging tight down in charlotte, north carolina. he joins us now. the big question is how does today's jobs number change if at all the credibility of that promise? >> melissa, i don't actually think it does. i think everybody has known that we are in a weak jobs market. this was a weak jobs report, offset slightly by the fact that unemployment has fallen from 8.3% to 8.1%. but i don't think that provides a whole lot of a boost for president obama. and it's more of a stay-the-course report. that was his message last night. president obama had wone overriding mission. he appealed to them for

patience, said, we know this wasn't going to be easy. >> now, i won't pretend the path i'm offering is quick or easy. i never have. you didn't elect me to tell you what you wanted to hear. you elected me to tell you the truth. and the truth is, it will take more than a few years for us to solve challenges that have built up over decades. it will require common effort and shared responsibility and the kind of bold persistent experimentation that franklin roosevelt pursued during the only crisis worse than this one. >> some of the harder shots against mitt romney were saved for president obama's running mate, joe biden. he attacked what joe biden called the bain way. said mitt romney was more concerned in his business background with corporate balance sheets than he was with average people. and he pointed specifically to the shipping of jobs overseas. >> the most fascinating thing i

found last week was when governor romney said that as president, he would take a jobs tour. well, with his support for outsourcing, it's going to have to be a foreign trip. >> and you can consider that a preem-emptory strike against wh we heard from paul ryan on our air just a few minutes ago, attacking this weak jobs number as evidence of the administration's failed economic policies. >> john harwood, thanks for breaking it down for us. the u.s. auto bailout and the recovery in the industry for a hot topic at the dnc last night. in his speech last night, vice president joe biden was critical of mitt romney's view of the bailout. take a listen. >> i don't think he understood that saving the automobile worker, saving the industry, what it meant to all of america, not just auto workers. i think he saw it the bain way. i mean this sign serely. i think he saw it in terms of balance sheets and writeoffs.

folks, the bain way may bring your firm the highest profits. but it's not the way to lead our country from the highest office. >> steven rattner is the current chairman of ouellet advisers. were you surprised at how much time was spent last night on the subject you spent a lot of time on when you worked in the white house? >> i would say i was initially surprised. but you realize the points that people like vice president biden made about how important the auto industry is to this country. you realize how significant this was for the economic recovery and for the president's political situation. >> there was a bit of rhetoric last night. were we really in danger of liquidating, as they use that word, the auto industry of the united states at that time?

>> it sounds like rhetoric. but -- and it is rhetoric, i guess, because it's words. but i think they're actually factual words. president bush and hank paulson agree because they were the first ones to provide capital to the auto industry. if the government had not stepped in, these companies would have had to literally shut their doors, they would have run out of cash, had to lay off their workers. the suppliers would have gone down. ford would have gone down. the industry would have shut down. whether it would have ultimately liquidated would depend on what would have happened after that. >> that is not the case. and in fact we got some very strong numbers earlier this week. are you surprised at the strength of auto sales at this point? >> no, i'm not surprised because you need to sell 15 million cars a year in this country simply to keep the fleet from aging. and we have not done that now for over four years. this is unprecedented in american history.

so you have a huge amount of pent-up demand for cars because people eventually do want to replace their cars. so i frankly did expect this trajectory and i expect the trajectory to continue to be upward. this is one of the bright spots in what as we've been talking about this morning as an otherwise fairly gloomy or modest economic situation. >> certainly is in many ways. coming back to that auto bailout, i get this a lot from a lot of hedge fund managers and the like, about the fact that the administration made decisions against what should have been by law in terms of what the creditors wanted. what's your response to those who say they completely went outside the bankruptcy code in what should have occurred? >> i hear a fair amount of that. my response is simple, we didn't do that. you don't have to take my word for it. you can take the word of the united states supreme court for it because this bankruptcy was litigated all the way through bankruptcy court, through the

federal district courts and courts of appeals all the way to the united states supreme court in the case of chrysler. and the people who argued what you just said never even got a wink, a nod, a tip of the hat, a single vote from any judge throughout this process. the fact is that every creditor in this situation got more than they otherwise would have been entitled to. that's a fundamental principle of bankruptcy reorganization as the courts recognized. >> mr. rattner, let me take you back to the politics because you've clearly over the last couple of weeks put paul ryan on the defensive by revealing that when you were car czar, he came to you and asked that a gm plant in his district closed under george w. bush be reopened. would you at least credit mr. ryan with some personal integrity here in that he voted for the automotive bailout and broke ranks with most republicans to do that? >> sure. i was really more having some fun with representative ryan. it's ironic. i get the joke that when you're -- even if you're a hard

right republican, you have to do what's right for your district. i don't have a huge problem with that. i had a bigger problem with the fact that he very, very strongly implied if not stated that president obama was responsible for the janesville plant closing where as you just pointed out, the plant closed in 2008 for all practical purposes. >> maybe the headline there has changed. let me ask you specifically about the gm stake that the treasury still holds. do you think that actually it should be sold, as mitt romney suggests he would do on day one in power, and take a loss because we are 35% below the ipo price, a loss of $14 billion or $15 billion on the bailout, or would you hold it on the hope that it doubled in value and the taxpayer would get its money back? >> first, we were very clear from the start that we were not promising or even necessarily believed that the taxpayer would get all the money back from these auto rescues. we believe this was an important role for government. it was money well spent. if the government ended up losing $10 billion, $20 billion,

even $30 billion to save 1 million jobs, that's what the government was here to do. we never promised that. i believe the stakes should be sold but we always said it should be sold as soon as pra practicable. if you look at the analyst community, i think the analysts are in widespread agreement that general motors stock is very undervalued, as frankly is the whole sector because of all the nervousness about the state of the economic recovery. >> you've written recently certainly about mitt romney and taxes and the like. as somebody who also participated in the private equity industry and as somebody who myself has watched it closely, i've always been amazed that carried interest can be treated as a capital gain. but i was not aware that many of these firms are taking their management fees and something making them into carry. are you surprised at that?

do you support the treatment of carried interest as a capital gain? >> what they were doing is converting management fee into capital gain, not into carry, per se. but that's a small difference. this is a practice that has been -- existed from almost the beginning or at least as long as i've known about it in the private equity world. every firm, every individual has been filing tax returns for years. the irs, i think it was in 2007, said it was looking to look into this practice and then they never did anything. this is not something that was going on secretly. it's been out there. i do believe that these practices are wrong. i don't believe that private equity professionals should receive capital gains treatment either on their carried interest or on their management fee income. i support changing that. but let's not act like we've suddenly discovered gambling like in the movie "casablanca". >> really rich guys pay 15%.

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♪ there's been a lot of looking back over the last four years asking the question, are you better off? that got me to thinking a bit and thinking about a name we haven't discussed much of late, bernie madoff. of course, he remains behind bars and will do so for the remainder of his life. but looking back over four years, i wanted to put it to both melissa and simon. what would the returns have been if you had put $100, let's just say, with bernie madoff back at this time in 2008 or you might have chosen to invest in aig,

which was already getting absolutely crushed, citigroup, bank of america, morgan stanley or goldman sachs? let's not forget, of course, there is a way for us to track what madoff's claims, the bankruptcy claims are worth. there's something called the optimal claims. they were santander investments or backed investments that had traded fairly robustly. many of them are owned by hedge funds. i will put it to you, theer one of them. want to take a guess, on $100 invested four years ago, the best return? >> it's obvious because you've put madoff in it. madoff, you've done -- >> on the psychological gaming that dvrnlgts w-- >> why else would david do that? >> all right. i'll give you the answer. simon, your instincts are correct. but it's interesting and worth pointing out. if you had invested $100 in aig, you'd have $9.

citigroup, $16. bank of america, $27. goldman sachs, about 70% of your money left at this point. that's as of yesterday's close. by the way, yesterday, many of these stocks were up, 2%, 3%, 4%. $79 with more madoff. that's what you would have. shocking, isn't it? >> the conclusion is don't worry about financial journalism. just find yourself a ponzi scheme and put your money in that and everything will be absolutely fine. >> you may be wondering how is that possible? the madoff bankruptcy continues. picard has been going around collecting a lot of money. there are $18 billion worth of claims out there. picard's already recovered $13 billion in cash. it's sitting there right now. the estate contributed $7.3 billion of that when it did that. already at that level, these claims already had traded at 74 cents right now.

they've already paid five cents back on the dollar. and there's going to be another 33 cents paid back in october, plus you actually had an interesting ruling from the judge who said there could only be a two-year lookback. that's being challenged. if that is successfully challenged and they're able to go back more than two years in terms of losses, you may end up with a lot more than a 79 cent recovery. you could perhaps get closer to 90 cents, in fact. many of these claims, by the way, were trading -- claims were trading in the 30s initially when they first started to trade. but, again, now at around 74 cents, on top of the -- in addition to the five cents you've already been paid back, hence, we're going with 79. some way say it's even 80 cents. $100 invested four years ago with bernie madoff and you would have done better than investing with goldman sachs. >> the power of the trustee in this case and the talent of the trustee, the doggedness with

which they've pursue that had. >> fascinating, david. who would have thought? pandora shares this morning taking it on the chin after report that is apple is mulling a licensing custom radio streaming service. is this the end-all, be-all for pandora? we have an analyst on that very topic next. sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.

bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.

we are an hour and four minutes into trading.

this is "squawk on the street" live from the new york stock exchange. amazon.com amongst the stocks hitting new all-time highs today. now up more than 48% so far this year. looking at the blue-chips, disney trading at record highs. home depot and exxonmobil rising to new 52-week highs. and in the past hour on "squawk on the street," in an exclusive interview for this network, the republican vice presidential candidate paul ryan spoke out about the drop in the august unemployment rate. >> 8.1% this month means 43 months above 8%. remember when the president promised that he would prevent unemployment from getting above 8% if we passed his stimulus package? it hasn't been below 8% since then? if you looked at the predictions they made when they passed the stimulus, they said that unemployment would be down at like 5.4% today. so this is just another example of lots of promises and lofty

rhetoric made. >> it's a tricky headline to campaign against, particularly if participation in the labor force keeps falling and therefore that unemployment rate falls into the election in 60 days' time. >> he made the point, for every person who got a job, four stopped looking for a job, which i thought was -- it's such an interesting way of putting it. >> a lot of people who are not participating in the labor force. and to your point earlier and some of the questions you were asking, some of the makeup of those jobs themselveses is not what we would hope for as well. food services and things like that are not high wage-paying jobs. >> what i don't understand is that the headline overnight from china is that they're going to spend $156 billion on infrastructure. it's a big headline. it's moving stocks in europe. it's moving some of the basic -- the steel stocks, for example. and yet we don't have those sorts of headlines coming out of this presidential election. they're not pumped up as hard, if you see what i mean. >> so you think that somebody should say, we're going to spend

a boatload of money on some sort of infrastructure buildout and that could generate -- >> the rhetoric the democrats have is that effectively that's where they're headed. and they say the house has blocked us in the past. >> there's been talk about infrastructure spending but other than the initial stimulus and there was a good amount of it in there, there's not been follow-up because of the budget issues in congress and the white house. >> talking about the need four years in for fdr-style bold measurements and experimentation moving forward. but even after four years, you don't have that, unfortunately. >> right. and there will be finger-pointing as to why. from ryan to the tech world, shares of pandora down as much as 20% this morning on news that apple is planning to license its own music streaming service, radio style. is it game over for pandora from here on out? rich greenfield is with btig. since the ipo, you have never been a pandora fan. you have a sell rating on pandora with a $3.75 price target.

how much does this development hasten that decline that you're predicting? >> i think the reality is, when you think about apple, really go back to the ipod. the very beginning, music is really core to the apple experience, the apple eco system. and they've taken that ipod with music and look where we are today. we're talking about them getting into the living room. we're actually talking about them using siri getting into the cars. music is such a part of apple. you're seeing lots of debate, why would apple want to get into a business that doesn't make money? pandora is obviously losing money and people are betting on how much money they're going to make. the real question they should be asking is what's taken apple so long? music is so important to them. why don't they want to own everything about this experience? look at amazon getting into the video experience versus just using netflix. look at what apple's doing in maps, kicking out google and trying to do their own mapping service. the question is, what's taken apple so long to get to this

point, not why are they doing it in the first place? >> at the same time, if there are other companies out there trying to be an apple and create that eco system, could pandora be a takeout target now that its stock is down 20%? >> you say that in terms that it could be a takeover candidate. that's been the crutch used by a lot of investors when you look out over the last 12 months. but the reality is what pandora uses are called compulsory licenses. anybody can go out and simply start using -- if you follow the radio rules for online customized radio like they do, you're allowed to have access to every song in this country. so the barriers to entry are very low. you're seeing a company like clear channel with iheartradio. spotify, which is a subscription service, recently said, we want to have an entry level service that's a trojan horse to upstream you up to the paid

service. so they launched a radio product using the radio rules that pandora uses. so i think the reality is buying pandora, spending up to buy pandora seems like an odd move when anyone can enter the business relatively easily and cost efficient zbli the questly >> if you took pandora's market cap now and say, if i spend that money, could i create the business that is pandora at the moment? the same argument you might use for facebook, for example. >> i think you could. the pandora user experience continues to suffer. we've been hammering on the quality of their advertising. they're doing a lot of things to negatively impact the user experience to drive revenues. you're seeing more what i would call low quality ads fill the screen. they're hiding parts of the applications so you have to click around the screen so they can serve more ads. they're degrading the user experience. mobile is hard. we've talked about it with facebook. serving mobile ads is not an easy task right now and everybody is struggling.

and i think with pandora, they're trying to figure out a way to basically drive revenue, be a public company, apple doesn't have that concern, nor would amazon. i think amazon is going to do something similar and include a music service within prime over the next 12 months or so. there's going to be more competition. >> rich, you've made no secret of your dislike of this stock over time. but i haven't heard you talk about this as a potential threat all the time either. what has been the thesis under which you have just simply not liked these shares from the beginning? >> this is an intention between user experience and a business model. that's really the problem here. but the competition hasn't been apple specifically as competition but rising competition has been a theme from very early on. we've been really focused on things like songs and iheartradio and spotty. why wouldn't they want to do something within this space? it's all about controlling more

of your time. people spend a lot of time every single day listening to music. if you go into the car, that's going to grow exponentially as people want to have these devices power their music experience while they're in a car. >> this cuts to a much bigger issue with big tech. and the degree to which it can move into other areas of vi industry and commerce and absolutely devastate what already exists there and how many hundreds of companies are under threat. for example, the hotel industry is petrified as to how google develops its travel search capabilities and the sort of economic model that it decides it will impose on the rest of the industry because it's so dominant. this is not just a pandora story. this is going to be replicated time and time again, isn't it? >> yeah. go back to what's going on in maps. there's lots of -- when you're looking at all these worlds colliding and how these devices, meaning phones, smartphones, tablets, these are becoming the

central driver of your life. people are using computers, less people are watching tv. these devices are taking over more and more functions of your daily life. as they do that, the idea is, why don't you want to control more of the services that flow every day over these devices when you know how to deliver a great user experience? and so this isn't apple saying, we want to make lots of money in the music space or we want to be the hugely profitable streaming radio company. this is, look, our devices form an eco system in your home, in your car, everywhere you go. why shouldn't we control your music experience the way we did with itunes back with the ipod? i think that's really -- they're not doing this to kill pandora purposely. this is a natural extension of their business that unfortunately pandora and other companies as you mentioned are going to get caught on the short end of the stick. >> rich, leaving it there. thanks for your time. >> thank you. up next, we're going to sit down with the ceo of a company that knows a little something

about the employment industry. we'll talk employment trends, the economy and business with the ceo of manpower next.

♪ huge disappointment this morning that the employment market only generated 96,000 jobs last month. we're joined by the chairman and ceo of the manpower group. good morning to you. thank you for joining us on cnbc. >> great to be here. >> the tragedy is that you know that there are huge labor shortages in parts of this economy. >> yes. it's really interesting. in some ways, there's no surprise we saw a number like 96,000. we were seeing slowness in the summer months and we can't expect to have pmi numbers down, some hesitation, lots of uncertainty. and then have this pleasant surprise that we're going to get 150,000 jobs in the labor number. what is even more difficult to

understand is while we only have this number of jobs created, 96,000, we've got more disenfranchised or discouraged workers leaving and at the same time we're still hearing from employers that, i can't find the right skills and i could hire more. we're in a very unique and difficult position right now. >> what is the scale of that? those unfilled vacancies, those employers who can't find the worker that is they want? can you give us an idea of the scale? >> there are some numbers you can throw out. unfortunately i think the numbers get a little distorted. i've heard as high as 1 million, 2 million. you can't really look at some of the data, how it's collected to say that, in fact, yes, that is what -- if we could get those skilled workers, we would fill 1 million more jobs or 1.5 million more jobs. down to a local level where labor markets work, it's 150,000 here. we're not going to be able to fix that problem in a short period of time. it's technical schools.

it's really employers actually being a little bit more flexible as well. there's a combination of things. but at the end of the day, most of that can be solved if we had more demand because companies would take more risk on bringing on less qualified employees because they absolutely need the people. >> jeff, what's your guess on which sectors those people who are not participating in the labor market, which sectors they were trying to look for a job? is it the sectors that haven't expanded their hiring? >> i think in some cases -- one of the things that was a bit more disappointing than most is you have 15,000 less jobs in manufacturing. and manufacturing has great entry level jobs. that's where we're starting to see the skill levels creep up so that entry level job is where it was before in a skill level. that's one of the ones that's holding us back. it's one of the first i've seen for a while that manufacturing has slipped. we were starting to see 30,000, 20,000, 25,000 jobs in manufacturing. that's great for the economy. that's starting to slip and it

coincides with what we saw in the pmi data. >> jeff, thank you for your insight. it's a big day for the employment market. chairman and ceo of the manpower group. >> nat gas futures have been halted. we want to go to sharon epperson at the nymex for the latest on this story. this story. sharon? >> melissa, i'm talking to traders about this. since 10:00 a.m., they have been halted due to a trading glitch. as of 10:45, traders weren't able to put in premarket orders and trading is scheduled to resume around 11:00 a.m. eastern time. we have seen a big slide. down about 3% or so. we're still waiting to see where the price will be when trading resumes at 11:00 a.m. we'll keep you posted. back to you. >> thanks very much, sharon epperson, on that stop in

natural gas trading. jobs, jobs, jobs, clocking in with 96,000 additions. but what about the exact number of jobs created under president obama since he took office? we've crunched the numbers. we'll give you the truth behind obama's job creation in his four-year reign. that's next. ♪ ♪ introducing a stunning work of technology. ♪ introducing the entirely new lexus es. and the first ever es hybrid. this is the pursuit of perfection. [ "the odd couple" theme playing ] humans. even when we cross our "t"s and dot our "i"s, we still run into problems -- mainly other humans.

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here we go with the euro. hbc said it's time to stop worrying about the euro and start worrying about the u.s. dollars. they can a usually focus on one thing at the moment and maybe they are increasingly thinking with the highest levelses on the euro since late may. it actually cost 1.28 and has backed off that a little bit. we are reaching the resistance levels at 1:.27. >> 96,000 jobs, meanwhile, generated in the united states last month. that's got people questioning exactly what is president obama's record. eamon javers has more on that. eamon? >> good morning. we're taking a look at president obama's numbers since starting as president. his first month in office until august of 2012, you see, in

february of '09 we had just over 132 million jobs, now over 133 million. actually, a net increase of 463,000 jobs since february 2009. that's an opportunity cost based on where we would have been in a healthy economy, much higher than that. take a look sector by sector. the sectors that have added the most jobs since president obama has been in office, education and health up 1.2 million jobs. that's driven almost entirely by health, not by the education side and then professional services at just over a million jobs added and leisure and hospitality at about 500,000 jobs added. just for fun, we ran the top five companies and how they have done in the stock market since president obama was sworn in and you'll see kind of a grab bag of different stocks here. priceline, apple, whole foods,

wyndham, xl group, all up humongously since president obama was sworn in. what all of those companies have to do with each other, i'm not exactly sure but those are the companies that have done the best in the stock market since president obama was sworn in back in 2009. >> they are growth companies. >> that's a new word. >> thank you, eamon. >> kroger with a slight rise in earnings. we'll talk to the cfo for his take on that quarter next. bob...

oh, hey alex.

just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.

the august employment report showing 96,000 nonfarm jobs were added last month. did you nail the number? all week we asked to you send in your predictions and we are in contact with our winner right now. the so-called mystery winner is getting ready for their on air appearance. the back to school bag will be signed by our entire gang. stay tuned for that. it will be interesting to see how close they get to that number. >> a disappointing number. >> a disappointing number. 96,000. >> exactly. it will be interesting to see what is in the tote bag which we have not revealed so far. >> i know what is in it.

>> you did? you looked? >> cnbc gold stickers. >> real gold? >> let's get to it. here's what you might have missed if you are just tuning in. >> announcer: welcome to hour 3 of "squawk on the street." here is what is happening so far. >> i'm willing to take the responsibility and i don't think everybody is to say, i'm going to invest in hundreds of companies. i've never met the people. it's been via e-mail because i know that's going to create jobs because i think i have the responsibility to do that. >> thank you. >> august nonfarm payrolls increased by 96,000 jobs. the unemployment rate is 8.1%. >> if you're the fed, you're going to say, we can't wait any longer. if you're the president, obviously i thought he had a poker face. >> he sold a hand that was high. >> this recovery has been

different but we've now had 12 quarters in a row of economic growth and as i said, 4.6 million jobs added over the last 30 months. >> this is not an economic recovery. we are limping along. this is stagnant growth. for every person who got a growth, nearly four people stopped looking for a job. that's not a static to brag about. >> if the government had not stepped in, these companies would have had to literally shut their doors, they would have run out of cash, laid off their workers. the suppliers would have gone down, the industry would have shut down, whether it would have ultimately liquidated would have depended on what happened after that. >> good morning. we are live here at post 9 at the new york stock exchange. let's get a check on the markets on this big jobs friday. a disappointing 96,000 jobs compared to 125,000. we are sitting here at the flat line. s&p yesterday had the highest close since 2008.

the fact that we're able to hold on to these gains at this point can be seen from most market participants as a good thing. we are being held by material and the financials are seeing huge gains in today's session. lululemon reporting better than expected second quarter results. intel, though, trading sharply lower after the company slashed the third quarter sales estimate. declining demand for pcs. >> here is the road map as we head into the third hour of "squawk on the street." it's all about jobs. the u.s. adding only 96,000 jobs last month. fewer than many had hoped for. is qe 3 now a sure thing and when will it come through and how do you play it? plus, the chairman of the rnc will be here. we'll ask him about the number and get his take on this week's events at the democratic convention. then, is it time to say

hello to i radio? apple planning an internet radio service. are pandora's days numbered. and the cfo of kroger will join us. that's all in the next hour on cnbc. first, another cnbc exclusive this morning. gop vice presidential candidate paul ryan talking to us earlier on this show about that jobs number and the economy. take a listen. >> 8.1 this month means 43 months above 8%. remember when the president promised that he would prevent unemployment from getting above 8% if we passed the stimulus package? it hasn't been below 8% since then. if you looked at the predictions they made when the passed the stimulus, they said unemployment would be down at like 5.4% today. so this is just another example of lots of promises and rhetoric

made. if we can average 4% growth with the right policies in place, america can be the storm in the global economy. we can trigger a renaissance. get people back to work, back to pr prosperity. we want a safety net. we don't want a borrowing spending regulate create a welfare state that leads to a debt crisis like they have in europe. you have the story around the world of central banks stepping in and trying to bail out lackluster fiscal policy. you probably look at the e ecb droggy press conference. but what we have to be clear about is there is no substitute for good fiscal policy. you can't expect central bankers to bail us out all the time. i think qe -- the costs out weigh the benefits, in my personal opinion, but this

increases the likelihood that all of this easing, in my opinion, the federal reserve is trying to bail out bad fiscal policy. >> let's head to washington for more reaction from paul ryan. chairman of the republican national convention, it's always a pleasure to speak with you. >> thank you for having me. >> some might say the disappointing jobs report may be a good thing for the ryan/romney ticket. we're sitting at four-year highs, the highest levels since president obama has taken office. what is the story for the economy and how do you spin those very different story lines? >> well, for one thing, people that are unemployed, people that aren't making the money they should make, there's a whole other page to this and that's people going to work every day and barely getting by.

they are employed but it's tough out there. most people aren't worried about their 401(k). they are worried about where the next job is going to be, how they will fill the tank in their car that is twice as high as four years ago. here's where we are at. i think it's all coming down to just a few simple facts that people are going to ask themselves, which is, am i better off today than i was four years ago? did this president fulfill the mission? did he complete the mission that he presented to the american people in '08? there is nothing better than going into a closing argument with the facts on your side. now, these are not good facts for america. we don't like these facts. but they are what they are. and the facts are, this president hasn't lived up to the promises that he made to the american people and he can't manufacture something that is isn't real and, unfortunately, we're in a bad situation in this country and a lot of it has to do with the fact that barack

obama hasn't led this country. >> i fear for you, mr. chairman. the reason that i fear for you is i'm not sure that people will say where am i relative to four years ago. they'll say, where will i be in four year's time? and if you listen to what ryan is doing -- and he did it on cnbc again today -- it might be the right message but it's a very harsh message for many people. there will be no cradle to the grave support. there is no substitute for good fiscal policy. if i can trust it with what mr. obama was saying last night, he's talking about real, achievable plans, more opportunity, rebuilding the economy. my concern for you, is that the tone is too negative for most people, for the independents, those that sit in the middle. >> well, simon, i mean, it's a good point. but i think, though, that where the president's at is that he's not real anymore to the american people. i hear what you're saying.

in a vacuum, you know, hearing the same old message from barack obama, maybe to some people it sounds good but i think people are to a place now where they've got a guy who is in love with giving speeches, he's in love with the sound of his own voice but i think there's a lot of folks out there in iowa and wisconsin and ohio that are watching him give these speeches and they are saying, you know, that's great butt fact of the matter is, you know what, you didn't do it four years ago and i'm just not buying what you're selling anymore. i think there is a place in the american electorate right now for truth and where we're at. not just for where we are at today, where we're going to go next year, but the bigger problem facing america, which is, where are we going to be seven years from now if we don't get on top of the debt and the deficit and do the things that barack obama promised that he would do for us four years ago. i do think that there is a place for the argument about the truth

of the american economy. i think americans are ready for it. but i think it's up to us to point out every day that, look, this is a speech. this president didn't get the job done and this is where he needed to go and what we needed to get our economy back in line. >> we have two more jobs reports before the election actually happens. this one was disappointing. how critical is the data that faces us? yes, you're looking at four years, seven years out. but the fact of the matter s. once a central banker says we are going to ease the market rallies, and the markets are sitting on multi-year highs and they can could be increasing including the federal reserve. >> well, i think in regard to the jobs numbers, they are going

to be important, of course, and i don't know how they are going to play with the electorate as we get closer to november. this is clearly the most important jobs report of the election. it wasn't a good report for barack obama but worse yet it was a terrible report for our country. and so i think by the time we get down the road four more weeks and you saturate the airwaves and the messaging is clear, early voting is going to start in october, i think some of it is setting in. clearly october is going to be an important report for september, obviously. but we'll see. i mean, the fact is, this is going to come down to just a fundamental question. are you better off today than four years ago and did this president live the mission? most people are already answering that question, no, which is why we are out there telling the mitt romney story about a guy that can fix this economy, set goals and meet goals. i think those two messages together win the election for us in november and, most importantly, help us save this

country. >> mr. chairman, thank you very much for your time. >> thank you, melissa. >> let's get a quick market check with kayla tausche back at hq. >> hello, simon. you can see apple is up one half of 1%. the company has a $36 billion market cap on news that it may launch a radio stream. >> thank you, kayla tausche. let's go to the santelli exchange. you're looking at the u.s. versus canada? >> yeah. you know, i know the song is "oh canada" but this is important. august job creation, 34,300. u.s. is 96,000. there are a couple of things we need to make clear here. the recent population estimates

for canada are a whisker under 35 million. of course, the u.s. is about 315 million. so i think that puts it in a little perspective. and to be fair here, it's been up and down. canada's jobs did not look that great last month. i believe their unemployment rate held at 7.3%. the point of this is actually two-fold. you know, we didn't hear much substance at the republican or democrat convention regarding jobs, jobs, jobs. let me think, maybe energy, maybe mining, maybe all of the things where we have our hands tied behind our back. i think somebody needs to pursue them. i'm a big star trek fan. where have all of the unemployed gone? there's that song, where have all of the flowers gone? my star trek analogy is this. hey, scottie, where have we beam

beamed all of the employed? interesting tweets today, we're going to put them up on the screen. if you held the labor force participation rate at the same level it was in january of 2009, where would the unemployment rate be today according to jimmy p.? it would be 11.2%. that's fascinating. but let's take a shorter view. if the labor force participation rate shrank, today's unemployment rate according to jimmy p. would have been 8.4%. real quickly, i've heard mark cuban, we never talk about regulations. we never talk about tax policy. i wonder why. do infants worry about their retirement? the businesses are not even ongoing yet. back to you. >> thank you, rick santelli. coming up next, apple reportedly planning its own

internet radio service. could it be a pandora killer? we'll talk about that right after this. >> announcer: cnbc program sponsored by america's natural gas alliance. to supply affordable, cleaner energy, while protecting our environment. across america, these technologies protect air - by monitoring air quality and reducing emissions... ...protect water - through conservation and self-contained recycling systems... ... and protect land - by reducing our footprint and respecting wildlife. america's natural gas... domestic, abundant, clean energy to power our lives... that's smarter power today. we create easy to use, powerful trading tools for all. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! strategies, chains, positions. we put 'em all on one screen! could we make placing a trade any easier? mmmm...could we? open an account today and get a free 13-month e ibd™ subscription

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apple is reportedly planning a web radio service. julia boorstin is live in los angeles with much more on this story. julia? >> pandora's domination of

internet radio could come to an end if apple launches a rival treem streaming radio app. it hasn't been a threat to pandora which is entirely focused on apps. 72% market share and 6% of the total radio market. pandora's free ad radio service and nearly twice as many people have radio apps on their phones as music store apps. pandora's stock is plummeting because half of its listeners comes from apple's devices. apple's advantage is that in addition to being preinstalled on its devices, sources tell me apple is negotiating with record labels to give it more

flexibility and higher margins than pandora which has yet to report a profit. it wants to keep people inside the apple ecosystem for all of their music needs. apple can send people to buy songs from itunes. it currently lags pandora. pandora will grow mobile ad revenue to more than three times apple's by 2014. when it comes to this rumor here and this report that sources are telling me about, both pandora and apple say they do not report on rumors but we'll have to see how quickly apple can get this up and running and my sources tell me it could be a couple months out. >> in terms of the calls for apple, if apple is able to extract a better deal than pandora, that doesn't make a difference. it is still paying a lot to acquire it is content.

>> absolutely. pandora pays sort of basic, traditional radio rate. their content costs are fairly high. apple could take advantage of the fact that it has all of these other content deals to help bring those licensing deals down and we'll likely have higher margins. >> julia, thank you so much for that. coming up next, we check in with rick santelli who is deep in the pits. and we're counting down to the close in europe. seven minutes to go with the euro against the u.s. dollar. close to session highs. we're back right after this break. we're sitting on a bunch of shale gas.

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in the wee hours of this

morning, glenncore proposed to exchange 3.05 of its own shares. the new terms were designed to xstrata shareholders to vote in favor of the merger. because the new bid was last minute, the vote scheduled this morning in switzerland has been postponed for at least 20 days and there's a hitch. glencore ivan glasenberg would be the ceo of the combined group. former british prime minister tony blair and in the days to come we'll see if the $36

billion deal can be brought back from the dead. let's head to rick santelli in chicago who is in the pits of cnbc. >> i'm with my favorite economist, james bianco. we talked about a contributor at cnbc doing the math of the labor force participation rate and it's declined to three decade-plus lows. we'd be at 11.2. 8.4 if it was the same number for last month than this month. these are long-term trends. i'd like to see somebody acknowledge and deal with it, even ben bernanke. but he goes and talks in front of the politicians he stresses to drop the unemployment rate. how disingenuous is that? >> i think it is somewhat. if you look at the payroll numbers, we need to create about 175,000 a month to cover population and immigration in the united states.

2006 is the last time that happened. we're going on almost year seven now and we're not catching up with population and immigration. this is a much bigger issue. in other words, it's a structural issue with the economy. bernanke insists that it's a cyclical issue and that it can solve the unemployment problem although we're going nowhere for six years. >> you're preaching to the choir. i think it was april of '09, at least it was my opinion, that we're giving the wrong medicine. cyclicals are much easier to heal. we have a structural problem and it's like using drano when your pipe is broken, correct? >> correct. the way to create a job has changed. just making money cheap is not going to work. that worked from 1982 to 2007 but in this post crisis period we're seeing that it's not working and as a matter of fact, if you look at this year, 2012, we've created 139,000 jobs on

average, that's lower than 2011 and about the same as 2010. we're still hovering under the number that we need and we can't seem to move forward. it's structural. >> i agree with you. in terms of post-droggy, i am getting great e-mails from our sources out there and there are a lot of germans that seem to be very unhappy with the recent trends. you want to weigh in on that? >> yeah, the germans are not happy at all. they made a deal with the public, you don't take an increase in wages or raise and you work very hard and you'll have a job and our economy will be okay. they did that. their economy is okay. now the rest of europe that's been spending money, working 35 hours a week and retires in their 50s, they are saying we are broke and want german money. the final word on europe has not been written because there is a lot of dissension on what they are planning on doing.

>> james, thank you. melissa lee, back to you. we are just a few minutes away from europe's close. we have the details on how it's impacting the u.s. here. that is next after this. eaming , any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade. oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty.

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we are in the final seconds of the session for europe. >> and for the week. it's been a very, very important week for europe. it's six weeks since draki said he would do all he could do to

save the euro. he put it on the table and said now it's up to the politicians. at that point it could have ebbed, dissipated or increased and today's session in europe is about increased confidence. have a look at the close. >> the european markets are closing now. >> now we're off our highs because when europe is off the highs because of the labor report here in the united states and the fact that the dow, which was, of course, had a good showing on the futures has come back down to the flat line. in the six weeks, let me position this for you. in the six weeks since he first started verbally intervening, the euro is up 15% in just the last six weeks. take a look at this. this now meanses that for this year stocks in the eurozone have

performed better than the dow jones industrial average. take that through the week. this yil low line is the top 50 in the eurozone. the dow here is just up 9%. so it's worth paying attention to what is happening in europe because people have made an awful lot of money since the beginning of june if they had listened to the rhetoric coming from draggi. europe has performed really bad, just to put it in context here. as you know, we're basically breaking even now to where we are. just for the record, it's down 40%. but let me come back to the central point that i'm making here. the confidence has increased in europe after what he said yesterday. it has not dissipated.

i was showing you how he managed to compress the yields at the front end of the curb across europe. today that confidence moved down the curve. the ten-year yield is beginning to curve. you can see this. they have decided to be very important. it's also true, what is happening in italy. today, importantly, the yields have sunk at the ten-year level in italiey, as you can see. those are big, significant moves. conversely, bonds in germany have sold off.

what does that mean for you as an equity investor? whatever is happening here in the united states today, it is risk on if you're in the banks. take a look at even the german banks. of course, who wants to concentrate on the bonds? look at this, deutsch bank up 6%. big bank across europe rallied strongly again today. there is no new news today but the confidence is shifting. it may not be sustained. they may sell off on monday. but, look, in italy, this bank here almost up 10%. you know these guys here exposed to sovereign debt. look at the way in which they have gained today. separate to that, of course, kate kelly was showing us that we have an improved offer for xtrata. importantly, from china, and i've spoke with the steel stocks. in china you have the announcement of $157 billion of

infrastructure spending. look at how the other miners around the world, a lot of them in london, have also gained today. it's been a terrible performer, up 7%. a very important day today in europe. melissa, back to you. >> let's get a check on energy and commodities. sharon epperson at the nymex. sharon? >> it's an important day in the commodity space as well. the floor traders here in natural gas didn't really miss a beat but for an hour between 10:00 and 11:00 a.m. there was no trading for actions on the cme electron neck trading system and we're looking at natural gas futures that have resumed trading and it's been going on for about half an hour or so. down 3% or so, down 9 cents on the session. que we're also looking at the oil because based on stimulus hopes, it's been somewhat muted and we

are also hearing in the oil market about a potential spr release. of course, those helped to put a little bit of a cap on oil prices. meanwhile, gold and metals continue to rally. look at 1750 as the upside target now for gold. back to you. >> thank you, sharon epperson. >> let's bring in bob pisani. how are we doing here? >> it's a very narrow trading range. 2 to 1 advancing to the declining stocks. it doesn't feel that way because a the lo of the pharmaceutical stocks are down and oddly a lot of tech stocks are down. it's a weak day for semiconductor stocks. with the dollar down here today, you've got that kind of a risk on thing with materials that are advancing, energy, and financials that have been doing very well. so again here's what happens when the dollar is weaker. the big question is, we are at four years, what's it going to take for people to get back into the stock market? you know what numbers look like. outflows almost every month for

three or four years. let me show you what they look like. they talked in the last three years, equity mutual funds have $347 billion in outflows. $5 trillion in equity mutual funds. it's not even 10%. it's rather shocking when you see bond mutual funds, $775 billion in inflows. twice as much. twice of the money that has gone out of stocks has gone into bonds. and exchange-traded funds, equity etfs have had nice inflows as well. they keep track of this in a separate area. the answer to the question is, what is going to make people get interested back into the stock market? part of the problem that we have today, while the s&p is up 40% in the last three years, bond funds have done quite well and they are matching people's risk tolerance. people are comfortable in them. money has been pouring into junk bond etfs. we are right near multi-year highs. these are yielding 7% right now.

people are comfortable in these because they haven't been destroyed and then they are getting 7% yield. they are comfortable in other funds. the corporate preferred etf, there's a lot of money in this right now and it's at a 52-week high. it's nearly a 6% yield. people like this. it's not dropping. they are getting a nice yield. why should they pull out of the money that they pulled out of stocks and put into these? they are quite happy with it. even in the plain old boring treasury, put up the agg, this is probably $14 billion, 15 billion in it. look, we're at new highs on this. and it only yields about 2%. i'm going back three years but these are new highs. that's why people aren't pulling money out and putting them into the stock market. can i point out etfs are continuing to get money, $105 billion.

by the way, none of that volume is trading down here on the floor. there's a distinction because it's highly correlated, it's a stubs tut trade. >> listen, why i listed those numbers, and i pulled them out separately. my point is, money has been going out of stock and nointo bonds. that's been doing very well. that's why it's not pouring back into the stock market. >> okay, bob. thank you. the poor employment figure, we are going to get qe 3 from the fed on this network from the republican vice presidential candidate paul ryan hit back at qe 3 saying it came through saying it would simply with a substitute for poor fiscal policy. >> you sort of have a story

around the world of central banks stepping in and trying to bail out lackluster fiscal policy. you probably look at the e ecb draghi press conference and what we have to be clear about, there is no substitute for good fiscal poll seechicy. you can't expect central bankers to always bail us out. >> joining us now is michelle and chief global economist. bob, if this employment report is going to lead us to qe 3, the market is not exactly rallying on that prospect today. >> well, i think the market's got cross currents going on today. we have a very weak employment report to start with. what happened yesterday in europe was pretty positive for the market. so i think they are just really some cross currents today. i don't know that -- you know, there are a lot more costs, i think, to qe 3 than what

bernanke had mentioned in his speech last week. you know, people on fixed income aren't getting any kind of earnings. it forces pension funds and insurance companies into riskier assets t essentially brings about inflation and worries people about higher gas prices and commodity prices. i think the chairman left out quite a few of the costs to qe 3 when he talked last week. >> so, bob, could i push you perhaps out of your comfort zone and suggest that you advocate raising interest rates here or at least the threat that interest rates might rise as being a positive force within the economy? we seem to have lost bob. let me put that question to michelle. michelle, what do you think? >> sure. i would take the opposite view, which is that when the economy is running at such a slow growth subpar recovery, unemployment is too high, you have a lot of slack in the economy, i think it warrants additional

accommodation and, of course, we're constrained at the zero boubd. monetary policy is not a pan see yeah. there are diminishing returns to every round of quantatative easing. at the same time, the fed cannot sit idle. >> why can the feds not sit there and do nothing? if paul ryan is saying that qe 3 is a poor substitute for a decent fiscal policy, why can't the feds sit there and say the same thing? it's not about the price of money in this economy at the moment. you can borrow if you're a business if you choose to. it's just that they don't want to because they don't see the demand. if qe 3 was working or qe 1 was working, we wouldn't have the poor employment situation that we have right now. >> two points to make to that comment. first, in terms of monetary policy being a substitute to fiscal policy, that's abs absolutely correct.

it should be a compliment. we should see support of monetary policy to work together to help the economy. on the second point, which is qe 1 and qe 2 not working, i think the fed would very much argue against that. we've seen a number of fed studies that suggest that. they were supportive, particularly qe 3. a little bit different now in that you don't have that same scenario which is why there is diminishing returns and which is why the fed is trying to think about more creative ways to support the economy. >>, so, michelle, would you sa that the need is greater because there is no fiscal policy solution on the horizon? is your role as an economist converging with the political world at this point? >> i think that's a great point, melissa, which is that one of the down side risks comes from poor fiscal policy. we've all been talking about the fiscal cliff nonstop but it's a

really important part of the forecast, which is that the end of the year we see a pretty dramatic cut to fiscal spending and a cliff that could kick in that could be very damaging to the economy and before that cliff happens you see uncertainty hit the economy as businesses become worried about what the trajectory looks like. when the fed is thinking about the forecast for growth, we're taking into effect downside risks, one of which is coming from the partners. >> michelle, it's not the most positive of messages but great to see you. michelle myers, senior economist. and bob bauer who disappeared somewhere. straight ahead, intel taking a hit after its sales outlook. is it another nail in the coffin for the ecb world? more on that after the break. we're sitting on a bunch of shale gas. there's natural gas under my town.

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coming up next on "half time," does the fed hold all of the cards? top fund manager. we'll trade all of that with

steve najarian and godfrey at the top of the hour. >> we look forward to it as well, scott. the stock taking a hit on the news that it's down 3.4%. jon fortt is live with the chipmakers troubles. jon? >> you heard about pc-related stocks going along with intel with the exception of dell and apple and amazon and it's taking a dive and they went through choppy waters last year and two

pcs don't apple next month and and in the dollar range basically, and the lower price points, should move even faster, at least in theory. intel still not really in the game when it comes to chips from mainstream phones and tablets. and targeting higher end enterprise tablets and those don't really start selling until next year. then you have the issue of intel doesn't yet have an lte play and lte is what the phones and increasingly tablets as we saw from amazon yesterday is going to be about this holiday season going into next year. back to you. >> jon fortt, back to you. the shares of amd and microsoft down about 1.5%. straight ahead, kroger beating the stretch.

the cfo joins us live to talk about the quarter, jobs, and the state of the consumer, that's next. [ male announcer ] how do you trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade. trick question. i love everything about this country! including prilosec otc. you know one pill each morning treats your frequent heartburn so you can enjoy all this great land of ours has to offer like demolition derbies. and drive thru weddings. so if you're one of those people who gets heartburn and then treats day after day, block the acid with prilosec otc

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kroger holding down rising food prices. the biggest u.s. supermarket operator slightly raising its forecast for the full year. now exclusively on cnbc, the chief financial officer.

what is working for you at the moment. >> well, the biggest thing that is working is our relentless focus on our consumer and we've been oh a strategy for over eight years now for whatever we try to do, we're giving the consumer more of what they want, whether it's in products, whether it's in shopping experiences, and better customer experience and certainly we've spent a lot of time working on price over the last eight years as well. >> so you are a company that is clearly succeeding, if i look at your like for like sales. how many people -- and we're hear on employment day -- are you recruiting at the moment? >> well, we've had a positive identical food store sales for the last 35 consecutive quarters now. so it really goes back to that trend over the last eight years that i spoke of in our investment and our strategy. as far as the food stamp cycle,

it continues to be an important part of the overall food stamp -- the overall sales of the store. one of the things that gets a little choppy today is more and more states are spreading those dollars out over the course of a month rather than dropping them at the first of the month. it's actually better for a consumer because our stores end up being better stocked rather than at the first of the month. >> i was actually asking you about how many people you're recruiting at the moment because we have a problem generating employment in the economy. you are clearly the largest supermarket chain and doing well. are you recruiting and, if not, what is holding you back? >> i'm sorry. i misunderstood the question. for the last five years we've added 29,000 jobs at a time during one of the worst recessions that the united states has ever seen and we've continued to grow our store base. we've spent about $2 billion annually over the last five years, modernizing and opening new stores and relocating some. we've actually added, as i said, about 29,000 jobs over the last five years.

>> i think a lot of people were probably a little bit surprised, mike, about that stat. you said about 35 consecutive quarters of same stores sales growth given the likes of a walmart and dollar store, fill us in on how you're seeing the impact. are they impacting you on price? are you feeling more pressure on cutting loss leaders? how is this playing out? because they are gaining share from someone. >> well, certainly they are gaining share. we also are gaining share. because when we look at our share, we look at you are oh ability to gain share in the entire food industry, not just in the supermarket industry. whenever we talk about share, it's in food overall and i really do believe it goes back to eight years ago when we changed our strategy to be more focused on the customer. we've consistently gained shares since then, as you've said, we've had 35 straight quarters of positive. we've been around for 125 years and over the course of that time we've seen a lot of challenges, be it economic, the competitive

challenges, and we continually change in an environment, whether it's a competitive landscape or economic landscape and i think that's one of the things that it has served as well. >> that said, your share prices may be disappointing. he left, according to the research note, that the stock was significantly undervalued as a result of the type of briefing that you were giving the analyst. what are you saying to them that they can become more bullish than the market judges you at the moment? >> well, i wish i knew exactly what sentence to give them because if i did, i would. we believe that the stock is undervalued as well. we bought back 23 million shares of stock over this quarter. since january 2007 we've bought back stock at an average price where we're trading today. the good news is, with our financial position and our balance sheet, we're continuing

to be able to invest in our own stock at pint in time where it remains undervalued. >> it's good to see you. thank you for joining us with a cnbc exclusive. good luck with the business. thank you. up next, the moment you've all been waiting for. the mail winner number is revealed. bob...

oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners. the economy needs manufacturing. machines, tools, people making stuff. companies have to invest in making things. infrastructure, construction, production. we need it now more than ever. chevron's putting more than $8 billion dollars back in the u.s. economy this year. in pipes, cement, steel, jobs, energy. we need to get the wheels turning. i'm proud of that. making real things... for real. ...that make a real difference. ♪

we've gotten hundreds of numbers on twitter and a winner. this viewer nailed it. we need exactly 96,000. on wednesday, joining us on the phone from memphis, tennessee, it's adam locke. you said it was a lucky guess. well, good guess. >> yes, it sure was. >> right now you're not working. you're on disability but you are helping to trade your parents roth i.r.a. i know you watch the show every day. >> caller: right now it's kind of hard to guess. right now i'm looking at