we want to thank our guest hosts mark vandy and zannedia. we want to thank our technical production supervisor. after four years of overseeing all of the satellite feeds and remote shots for squawk box, he's moving on to "power lunch." we'll miss him, but he gets to sleep in. right now it's time for "squawk on the street." 175,000 jobs. that is the better than expected non-farm payroll figure in the may employment report. good morning, everybody, and welcome to "squawk on the street." i'm david faber, along with jim cramer and kelly evans live from the new york stock exchange. carl quintanilla has the day off. let's take a look at futures, shall we and look at the reaction to the 275,000 number and there it is to the s&p.

volatility whether it be in the bond market or the equity markets although we're hearing the tapering, tapering, tapering call in the last half hour still coming in september. >> i'm beginning to care less and watching the ten-year. >> during judge wapner's show it started because the interest rate just ticked down a teeny-weeny and the euro got stronger and people could say the dollar got weak. i just care about the ten-year because when the ten-year goes down, they buy toll brothers and whirlpool and a bunch of banks that are levered to mortgages. if we can get 2 opinion.01. >> yesterday you saw people more worried. any time we see the growth worrieses that the fed will stay in. is that not what this is all about? >> i think that things got away from the fed so i'm not as focused on the fed. i think alan greenspan has a

good point saying listen, if we got away from this discussion, if the fed started tapering we would see how much stocks are worth. the fed may have lost control. >> if i want to follow the ten-year and i assume that we'll get a decent jobs number for june and that the experts are right, the tapering will begin in september based on what will be a number of fairly strong numbers, the ten-year will go up in yield and therefore, what do i do? >> it's the velocity. and 60 bases points. in a couple of days and that's a monumental move and we just needed to cool. i would love it so mortgage rates would go up to 3.75. you check your five-year cd. 80 basis points and we're making 20 basis points now and that means the -- >> not too hot, not too cold. >> we need to focus on earnings again. we can focus on other things. >> this is partly what greenspan

was talking about. let's just play this tape for people if they missed it this morning on "squawk box." here's alan greenspan discussing propensity of the federal reserve to start exiting here. >> the sooner we come to grips with the successive level of assets and the balance sheet of the federal reserve which everyone agrees is excessive the better. i think the issue is not only the question of when we taper down, but when do we turn? and i think that the markets may not give us all of the leeway we would like to do that. >> so that would sound like his concern about what happens as we look ahead to the tapers, we are just saying, but he also then went on to almost imply that if it's going to be a disruptive event for markets maybe policymakers should think about it. take a listen to this. >> there is a general concern here that i don't think people are aware of that we are still

well below the level where we normally ought to be at this stage and the consequence of that is when a bond market begins to move we may not be able to control it as well as we'd like to and that has a lot of ramifications with respect to all sorts of markets with which it's associated. >> this is what you're talking about. >> yes. it got away, and i think that when it gets away your hope is that rates come back down so people who didn't get a chance to buy a house will say, we've got a window here. i didn't catch the bottom. that's your hope and the bullish scenario. isn't it great to have greenspan saying on the one hand and on the other so we could win either way. >> what do you think investors do with this here? do they look at this? do they look at what happened in the bond market in the last month and say oh, my god, look how bad this could be? or maybe the fed realizes it so they'll be careful about moving too aggressively here? >> i don't want to be too

bullish because there's been a lot of damage done in the last two weeks, but a pause would allow people to catch their breath and then realize rates are not that high. >> if we can even think about normalized rates, but it's hard to do given that we have it for five years. >> we'll go down 500, 600, 700 points within a quick period of time and you can't go to two and a half. the system can't adjust fast enough, it is, to use jamie dimon's term, scary. >> would it be interesting to hear jamie doimon say that? is there a point at which you think, david, they might be saying to the fed be really careful here? >> i think they're saying that loud and clear. >> yeah. >> to greenspan's point, how much can you control it? you mentioned it, 60 basis points in a matter of days. >> always feel badly at home that people don't understand that. >> that's why i like to put it in mortgage terms. >> people negotiating at 3 1/4.

that whole discussion was taken off the table. >> we've had some damage done and we've had a bad couple of weeks here when it -- unless you were short the market or took a lot of risk off which, by the way, a lot of people have done. it is summer, volumes are lower. people don't necessarily go to the beach, but they do pull back and we may be seeing a bit of that, as well. we got the jobs number and it ended up being more or less what people would have hoped for if they want a kwi withesent market. >> not that if they would have believed in america. >> 400,000, but to the point, what do we do now? here it is. we've watched credit market dislocation and we don't talk enough about that, and the equity market dislocation so where do we go from here now that we have another month. >> i feel like we already went there. we saw the fulcrum move which was incredible and talk about low volume, but we have what

used to be as the late mark haines would tell you there was a woosh, and then the day you don't retest it, so to speak, to be too technical, then it's bullish. my problem is that if you look at the real estate investment trust those are the ones that are most hammered. they bottomed. >> they didn't do that well. i'm watching housing. i'm watching lumber. >> we've been talking so much about lumber. here is what's interesting. that move happened aggressively before we started worrying about the poor housing data and now it's doing better. >> it's been five, six months ahead just the way the market is supposed to be. >> is it a leading gauge with some disruptioning with regard to the u.s. housing market. it's actually been a difficult one to read, i would think and i wonder now if we continue to see a rally and i'm not sure if we are at the moment, what is that

telling us? >> talk about a rally. let's talk about currencies for a moment here and it's something you've been following which is the yen dollar or the dollar yen is more often commonly referred and what's been going on with the nikkei. yesterday we saw the dollar weaken. we are back, what? below a hundred, right? >> at first it looked like a yen move, but yesterday it was almost as much about the dollar. it was a dollar move and it had something to do about the fed and the strong dollar trend in the u.s. for the next five to seven years has got to be intact. if you look at what will happen with regard to the current account and with what happened with energy prices and with the stronger economy relative to the rest of the world and it seems like a much shorter term that i'm surprised, frankly at the magnitude of it. >> i wanted to take a contrary view to all of this, and i'm getting europe bottoming. we had a lot of pmis that were good. >> i think it was 275. it was the high. not 27 5,000, mind you.

275 jobs. >> better than nothing. >> i do think you have to watch europe. i like what you're saying, kelly. you are putting it in context of what you're saying and you're saying the country's coming back. >> you hear most and i would say, by the way, outside of the u.s. and it's when you travel to europe and when you go to london and hong kong it's when people are saying my god. look how much cheaper new york real estate is relative to some of these other parts of the world and a downward move like you said yesterday -- >> what did you just say? >> i know. i don't know what to believe, i know. i know. >> hong kong and london, it makes new york look like a bargain. >> how about the fact that brent posted 95? >> i'm sure that gives me comfort, by the way. the actual price is $87, and by the way, it's positive. let's come back to stocks which

we love to talk about. >> i like the banks because now we don't have to -- we seem to have a calming in rates. they're not repricing the cds. we have spent a lot of time talking about net interest margin and it's going up. we've been waiting and waiting and wait for example that so when we get it we can't come up with with a new negative. >> although the refinancing wave is over. that is the fee generator bar none for a lot of these banks. >> now let's really get interested here. it never helped the banks. the whole refinance wave. they only care about the cd rate differential. >> so they just care about nim as opposed to the refinancing wave is over. >> do you think nimrod. it was nim. >> they care about nimrod. >> net interest margin. >> yesterday it was jgb. i like to use the english stuff. >> you, do that english stuff

works pretty well, doesn't it. >> how little they pay you versus how-they pay in treasurys. that's a risk-free business. i love that business. >> if you want exposure to banks or cyclicals, the program that we've started to hear a lot in the program, it's all supportive in your view? >> look, i -- let me go back. if europe's bottoming, then they'll take chinese goods. >> if europe is bottoming then we get a real -- the big, bad notion of a collapse finally gets off the table. you were over there and you kept doing better. ireland. >> ireland has 4 million people. stop talking about ireland. nobody pays taxes here. i'm going to talk about elon later. >> god bless them all. it's all about, thattes there and 4 million people. ireland's turning around. >> oh, that's almost like greece. ooh! wow! 8 million people there. >> i think ireland is a tell.

they bought austerity. it it worked and they're coming back. >> all i'll say is markets have been trading more from asia. >> we've got to go and come back in a minute and move on. this week we've been asking you to tweet us your prediction for this may non-farm payrolls and our staff looking to see who nailed that number. usually they get it right on. in fact, we do have a winner and that winner who hit it on the nose will receive a shirt that's autographed with the "squawk on the street" gang. >> kelly. >> we'll announce that winner who nailed 75,000 later in the show. >> kelly, of course, we'll see you later in the show. >> apparently goldman got it right. >> not on the unemployment rate though, but all that mattered was -- >> no, it was 175 and he'll be joining us later and i don't know if he participated in the nail the number contest. >> of course, they do.

>> they. >> maybe the head of m & a. >> not even that much in credit right now. we've got first reaction by the way from the white house to today's jobs report. economic adviser alan krueger will give us his live take. it's his last one. >> i don't know if it is his last one and i think he's in for a couple of more months. >> let's take another look at futures. there it is. looking up across the board as we end this volatile week. more "squawk on the street" from post 9 when we come back.

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the nsa and the fiber reportedly tapping into the central servers of nine leading u.s. internet companies. the washington post says the program allows them to view photos, emails that can be used to track other contacts. google, facebook are denying the government are denying the government had access to the central servers. it was established under president george w. bush in 2007 and has grown exponentially

during president obama's administration. yesterday, jim, we had a number of senators, congress people defending, to a certain extent what was news from the guardian. why we need the uk paper breaking the news about domestic going on here and of course, it was at&t and sprint, as well that the government is monitoring. they're not monitoring phone calls per se in what's said, but they're aware of the number to the number and what numbers those are are and the duration of the call and things of that nature and now we find out as well and there's so much there for google and facebook. so much information, in part goes back to the value proposition for shareholders when they think about these companies and you do wonder what did the government have, should they have it? >> it's know iffy because maybe i was a little bit older and was a protester in college against the war which was the war in vietnam. i have to say that now. >> you were always concerned

about the government and nixon trying to find out things that he should not have been able to find out about me. i think that this is very nixon like. nixon was paranoid. always wanted to know what we were thinking and the country was torn asunder then and people thought they were directly related to the soviet union. it's not big brother. it's the way nixon played it and i am surprised that it would have been all over nixon. >> although in a world in which a terrorist can learn how to make a bomb and do something terrible on the internet, why shouldn't our security agencies be able to use those very tools to make sure they don't do that? >> that's right. the other side is now the threat is very real. i can understand where lots of people say, look, you know, nobody bad did is going to get pulled in, but i'm enough of a civil libertarian to say, you

know what? i don't like it. i just don't like it. >> it gets you a little closer and they can turn a knob and get us very close to a police state. >> remember the left was audited by the irs and there was an enemies list and, look, you don't have to have an enemies list. they're just trying to find everybody. i just find these things too close to what i remember when i was -- >> we're going to actually -- all right. we're going get to the "mad dash," in fact, cramer is working on heading into the weekend into a profitable note. we'll talk about samsung, downgrade and we have a lot to cover on "squawk on the street." let's have you take a look at futures as we head to break. [ male announcer ] it's intuitive and customizable,

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seven minutes before the bell. time now for the mad dash ahead of the market open. let's talk samsung, shall we? >> $12 billion on market cap loss on smartphone worries? david, i thought the smartphone was going to inherit the earth. maybe everyone who needs a smartphone has one. maybe the galaxy 4 is a bust. maybe we have to rethink exactly how badly apple is doing. people are talking about how apple is. david, it could be an overall -- all right i'm not paying this much for a smartphone. >> the galaxy s4, a number of downgrades and samsung's stock down over 6%. apple, what does it mean? should i view it positively or is it not a zero sum gain.

>> you're not allowed to. >> you're not allowed to do anything positive with apple. apple is dead money, they cite pessimism. the reason why apple is not going up is people are pessimistic. well, that's a wonder. jeffrey says iphone sales are trending downward. again, maybe we have to think of it as it was always share take by samsung. maybe we questioned whether there's an economic reason why people aren't gravitating to a more expensive phone and maybe it's one of those things that is now a luxury. >> you get the trimmed down versions of both, right? >> yes. you go to verizon and it's not like the apple's a bargain. >> oh, no. >> samsung had been underpriced the apple and maybe that's not underpriced enough. >> i'm thinking about an economic story, let's mention yum before we go to break. it looks like the colonel is back. general cho.

colonel sanders and the trends are getting better in china. david novak told you this is going to be a problem we're going to solve, this problem about the poultry and we don't have clean food chain over there. this one is coming back. i think the stock can go higher. it's the only thing out of china that's selling, right? >> the news is all bad -- >> it feels like every time okay, their problems are behind them there's something new. >> they attack them. smithfield foods, they want our pork. >> they want our pigs. >> because their food chain is totally corrupt. i mean, i love the fact that obama's saying he's one-upping the chinese on spying. we want to up the chinese on air, food on technology. the inferior complex, i'm tired of it. >> water, too. >> maybe we're not so bad after all. >> that's what we're going to go break with.

many we're not so bad after all. we can ask alan kruegcrewinkrue he thinks we're not as bad after all. we'll get his reaction to the jobs report and we have a lot moving on post 9. we're back after this.

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>> you're watching cnbc's "squawk on the street," live from the financial capital of the world, where the opening bell is set to ring in one minute exactly as we wait for the end of the week flurry in equities and 175,000 jobs which is just what many people had hoped for, of course, if you wanted to hope a lot for the american worker you wanted a much bigger number, but those in the market we have to say that sometimes when we say hoped for. >> thank you for that. i don't ever want to identify with jobs not being created and with the rate of unemployment going higher and to balance against too many -- however -- this will focus fundamentals.

>> they rang that bell way early. >> 9:29. >> i know. >> you heard a little whoa from some of the -- all right. we'll call it here now and it's time more or less for the open to begin. >> i started late. >> you're watching that opening bell and you're hearing that opening bell about 25 seconds early. the s&p 500 and the cnbc real time exchange, it's almost all green on the board. >> the big, bad event's over, david. every day we freak out, okay? because what's it going to be? what's it going to be? let's focus some fundamentals. >> let's quickly tell you what rang that bell, celebrating its 60th anniversary at the nasdaq and we have analog devices and the newly appointed ceo. >> they put the new ceo in and analog devices is the stock to watch and it's a great semi. >> i love that you have -- it he was a great ceo and he passed

away and the new guy comes in and the classic analog stock like texas instruments doing very well. >> taking a look here on my screen and the things i follow, almost all green. i noticed cbs was part of the media stocks and it is now part of a conversation that's going on about reits and tax treatment of reits and an irs working group that has been set up to at least examine what has been not traditional reits. real estate, remember, and you think, of course about actual real estate and things that people office in or live in. >> right. >> but cbs' outdoor business. >> iron mountain. >> cbs' -- >> data centers, david. >> mountain is down a lot. there is some question, jim, as to whether the working group will then result in changes that do not allow for the esoteric

reconversion. >> at one point that was down 20 and it was down 20 in the pre-market. david, this has been one of those things that the purists have been saying, are you kidding me? can anything be a reit? now, remember jeffrey did american tower as a reit. anything that has rents i think is conceivably a reit, but if you're rents, rents meaning physical rents and i told les moonves he's a brilliant man, but the idea of a rent for a billboard. do you live in a billboard? should it matter? if you work in a prison or work in a french that's a cool hand look. >> american tower is another one. >> irm is one we really want to see here. yes. >> because that seems to be taking the brunt of at least this concern over this working group. there are many share holders in there who with believe it will

succeed and becoming a reit. that is the domestic outdoor business of cbs and then we'll have a significant return of capital from that reit which will be used to buy back stock, and perhaps an acquisition and we asked les moonves about that. you throw in the thought process and we don't know that that's the case. >> no. there was a premium built in, and again, iron mountain is the one they're focused on and did the working group, but this, the theme of it could be a reit had been one of these terrific themes before the end of this big move. >> right and cbs has been -- maybe the market leader in the last six months. >> yeah. >> it's unbelievable. >> the discovery, obviously, with time warner, but cbs has been one of those stocks that every time it's been weak people have bought. down 2%. this will be the tale. this and therma, this and tmo will be the story. >> tmo did sell the 2.2 million

in terms of stock, and it was 85, i think. >> 85.5, and the stock was at 84 and change in the pre-market and it was starting to percolate. >> percolate. i love when you use that word. it reminds me of clyde frazier. it was one of his favorite verb, right? >> can i use that stuff? maybe. i don't know. i don't know. let's talk intel. >> yes. >> we had a downgrade from piper. >> okay. >> that was weak pc demand. really? that's a shock! you know what is shocking? intel, microsoft, everything with the guts inside a pc they've all been strong and microsoft i want to talk about the value act in a moment, but david, this group has been since the market's peak, the best single group and it's been impervious to downgrades. >> all right. so they say the honeymoon unlike it will last until year end. >> honeymoon. to the moon, alice, is the way i

look at intel. i would not short that stock. >> we're going come back to microsoft in a minute and let's get to mary thompson. she's at the shareholder meeting for walmart and wmt announcing a buyback, mary. bring us up-to-date on what we're hearing. >> david, a new stock buyback program, $15 billion affected yesterday june 6th and essentially replacing, and completed a previous stock buyback program also worth $15 billion that it started off in june 2011 so walmart making the announcement during the annual meeting when they were touting the very strong performance noting that it was the only one of the dow 30 to grow sales as well as earnings per share and network. as you can imagine why the cheers are going on by the like of hugh jackman, john legend and prince royce. back to you. >> i've been to a couple of shareholder meetings myself and anything interesting occur inside the meeting in terms of

the -- >> well -- >> go ahead. >> well, we do have -- basically, it's been a very courteous tone. we did have some of the shareholders presenting the proposals. there was a bangladeshi activist telling walmart that it's time to do something now about the suppliers overseas and the bad conditions over there. another shareholder was submitting a proposal about executive compensation. she received big applause when she noted that ceo mike duke's pay was 1,000 times that of the average walmart worker, but overall the tone has been very courteous and one that's very enthusiastic for the retailer despite a couple of people pointing out that the company is not without its problems or its critics. >> mary thompson reporting live from the -- >> they always bring out the celebs. >> walmart is cooler than we think. hugh jackman is -- >> he's cool. >> he's very friendly. he didn't give it to you?

>> i couldn't get over there. a lot of people wanted to get his autograph. >> he's a very cordial fellow. >> there were so many people who wanted to talk to him because he's such a good -- >> nice guy. >> the job's report for may coming in better than expected as you probably heard by now. 175,000 non-farm jobs were added in the month and let's get the first reaction from the white house here in a first on cnbc interview is alan krueger. he is the chairman of president obama's council of economic advisers. mr. krueger, always nice to have you. give me your reaction to the may jobs number. >> thank you. today's report shows that the economy is continuing to recover. there's a lot more work to be done given how many jobs were lost during the great recession and we've added another 175,000 jobs and businesses have added jobs for a total of 7 million in that period so we're headed in the right direction and we're looking for ways to speed the recovery. >> jobless rate went up to 7.6%.

why? >> today bls reported that the participation rate increased. we saw more people coming back to the workforce searching for a job. that's a sign that workers are feeling encouraged and i bring back more job seekers. >> alan, jim cramer, good to see you. this is it, i guess, pretty soon. you're going back to princeton? >> i plan to return teaching this fall, right? >> i was talking to my friend chris matthews and isn't this the team to launch an eisenho r eisenhowerlike plan and he wanted to think whether president obama is a budget buster and i have to ask you because you know more than anybody. >> he has been committing from the day he took office to fixing our roads and highways and improving our ports and our

airports. the president proposed a $50 billion infrastructure proposal as part of the last budget. just yesterday he was in miami. if congress won't go along the president will do what can with administrative authiority and h yesterday he was in north can carolina and he announced a connect ed plan which would connect every school in the country to broadband to improve education. the president is deeply committed to improving the infrastructure in this country. >> again, just to go back to what chris said. i know you're not a stranger to the idea that old liberal politics could be good. what chris is saying why doesn't the president say you know what? we have to put $2 million people to work and the republicans are keeping us from doing it because they're way too worried about the budget. >> the president's been fighting for more investment anden fra structure. it's been in every one of his budgets and i went to mime toe look at what was being done at the port of miami and a new tunnel being built on new york

city to bring more products to market and it makes an infinite amount of sense and to invest more infrastructure today, and raise our competitiveness in the future. >> dr. krueger, perhaps our most important economic relationship is the one we have with china. it's one that is not without a lot of significant strains. of course, today, of course, chinese premiere and silicon valley. do you have expectations of what may come out of these meetings in terms of furthering that relationship? >> they have a very full agenda. they'll cover cyber security and climate change and we are economic competitors with china, but we can also see a ground to improve cooperation and that being both of our interests. china represents a big market for us. our exports at china have been growing so there are a lot of economic opportunities that can come out of of this meeting. >> alan, they pollute and don't play by the rules, they take our jobs. what are they doing right for us

that makes it so that we don't just stand up and say you guys have to play by the rules from now on. you can't pollute the earth and take our jobs. >> and spy on us. >> as i mentioned a very important subject at the meeting will be climate change and china represents a big market for us. it helps to create job in the u.s. and one of the exports that china's increased is our farmers who have been having a record period of years and we're looking to improve on that relationship and the level of playing field helped create more jobs and more growth here in the u.s. >> dr. krueger. i had you on a few mocks ago and i asked you this question and perhaps you'll be more willing to speak now that you're almost -- your tenure is almost up although i doubt it. disability. disabilil iility continues to b issue with so many people taking disability in this country and taking themselves out of the workforce. the numbers we've never seen before. can you offer some sense as to

what is going there and why that's happening and whether it's distorting the employment picture. >> there's been a rise in application for the disability insurance program for some time. it's typical that it increases during a recession. i don't believe it's distorting our employment picture because if you look at the numbers even though we've seen participation in the program insurance increase it's small compared to the overall size of the workforce and the increase is small that why need to bare in mind that our population is having older and that's having an effect on us in a number of ways. one of the drivers of the increase in the disability insurance has been the aging of our workforce and that's been one of the causes of the decline in the labor force participation rate which began in the 2000s. it peaked back in 2000. >> is there any expectation that labor force participation rate

will move up appreciably? >> i think what we're going to see is two competing forces. a continuation of more workers retiger as they get older and as they can afford retirement and that's a healthy development and we will see as the labor market continues to heal and the market's been healing because we're seeing a turnaround in housing and because wealth has increased nationwide and because the energy sector is doing quite well and because we've done quite a bit of adjustments after the great recession. i think as the labor market continues to heal, more people will come back to the workforce which is what we saw last month and those forces are roughly going to trade off, and i would just throw in -- i think we see in today's report and what we've been seeing recently, the economy is poised to do a lot better and what we need is more help from congress. investment in things like infrastructure, early education which will help put more people back to work and make for a

competitive force, and the sequester's going to have -- the more adverse the effect and one of the most disturbing aspects of the sequester is that it's cutting into the estimate which led to horizontal -- for the natural gas and oil boom that we're seeing in the u.s. that's why the president will work to replace with the balanced deficit reduction. >> dr. krueger, we always appreciate your time and being with us. alan krueger. >> thank you. >> you're welcome. bob pisani is on the move. >> we have an unusual situation with the ipo and textura is about to go public. this is an on-demand software for the construction industry. they price at dollar 15, small deal and oh, $75 million, but

look here, 21 to 24. i think people are surprised at that. this is the construction industry and the industry itself is improving and the price was 13 to 15 and i'm looking at 21 to 24 and i'll go over here does talk to some people here. it's been a tough week, though. bee did have an ipo that did price this beak. colony and american home is a big reit and they buy single family homes and it never went this week and it's still on the calendar and it will likely happen and it just didn't happen. it will be a beg ipo next week and cody, this is a fragrant and cosmetic manufacturer, think sale hansen and they'll be pricing in the middle of the week and a lot of demand for that one. we're all to the upside here. just good enough and that's what everybody seems to feel and strong enough for officials to continue their talk of tapering here and we see modestly improving jobs outlook. as for bond, we've been watching to see any sign of outflow here.

we had a lot of talk yesterday at the san o'neal conference. no great rotation out of bonds into stocks and look at the lipper numbers $9 billion in outflows from bond funds and that includes etfs and that's a fairly high number and modest inflows into stock funds and half of the losses of the bond funds were from high-yield funds and in times of volatility tend to track stocks a little bit more than the bond funds. elsewhere, very good day for gm. that move into the s&p 500 at the close happened yesterday. smoothly, no problems at all and gm back into the s&p 500. of course, the government pricing $30 million shares and government ownership and gm maybe 14% and it's getting down there and the talk down here is they may have been accelerated and it's going so well and it should be first quarter of 2014 and they may continue to liquidate positions and we have the medical retirement program for the employees.

they sold, too. they probably have less than 10% and a 9% stake and they're lick wi gaiting as well. >> how about some kind of investment-grade rating for the bonds and that's the big issue for general motors and right now, 21 to 24 for textura. >> it traded 33. the government stuck by its terms of not wanting to be -- congratulations. let's shift to the bonds and the dollar. rick santelli at the cme group in chicago. >> the treasury market his volatility on today's data and you can find people who liked the number and you can find people disabs pointed in the number and pretty much by the market's reaction, it's about as expected. it will take a long time to get 6% to 6.5% at this pace, but it could be worse. we are now at 210 yield and we settled at 2.09 yesterday and

we're settling into this above 2% range. jgbs. we talked about yesterday that with the volatility in the end and the volatility in the nikkei and all of the economics that this thing looked like it was being rejected by the market and the one silver lining was jgb volatility moderated a bit and it picked up again on the subsequent session and you can see it on this chart. if we look at the foreign exchange side in a minute and this is important and a two-day chart of dollar yen, it's very significant if you're looking at momentum and you're thinking technicals that we keep extending down lower and we hit a solid test of 95 and this looks aggressive for stronger yen and it's not much different other than the levels and the last chart, we talked about leverage. this ten-year spanish note, as you can see, isn't at the highest yields, but certainly yesterday's impact on leverage and carry drape having a lasting impact on some of these securities. back to you, david.

>> thank you very much, rick santelli. you've heard from the white house and now find out where jan hatzius agreers on disagrees. after all, he did nail the number and now we don't know if he's going to get a t-shirt. that cheering is not for him, though. that is probably the ipo. jc penney ceo mike ullman speaks to cnbc. [ male announcer ] with wells fargo advisors envision planning process,

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welcome back. let's give you a bit of a faber report but i'm david faber and that's what i do. >> our own david faber. >> our own david faber. a company called royalty pharma which is basically a hedge fund, if you will, based on the cayman islands that buys royalty streams and also wants to buy elon and you have elon out there who wants to become a company very similar to royalty pharma buy buying royalty streams and doing deals of that nature after it sold what it owned of it's key drug to biogen and took in a

quarter of a million dollars. roime royalty pharma went to $13 a share and it was $2.50 a share is and it had a potential right. and that would be based on the royalty stream that would come in from tysabri over time and world wide tysabri sales that were achieved. this has become an interesting battle because elan is an irish company with the great irish tax rate or the non-existent irish tax rate. it will have to take a vote on the 17th on all of those deals and right now it does look like they'll have a very hard time getting the approval of their shareholders even with a record day of may 23rd to axe prove those deals and then you have this continued tender, there is a temp raefr restraining order on the ten-year and we're set up

for an interesting battle and the key being the june 17th meeting and jim, not to mention there's been a complaint here filed to get that temporary restraining order in which elan alleges that royalty pharma operates through a complex web of domestic and offshore limited partnerships and that it has some investors including a peruvian bank. >> this is too nasty for me, david. >> there are allegations and it gets to almost p/e view offian money. >> oh, please. >> you know where that goes. >> shiny path? come on. >> we'll see where the shareholder vote goes, but nonetheless, royalty pharma does go up $13 bucks and they're up, by the way. ? we'll cover a lot more stocks than just that when we come back with "six in 60" next. we're cracking down on medicare fraud.

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time for "six in 60." six stocks, 60 seconds, give or take a few. let's start with continental airlines. >> this group has been horrendous. i like these not as a trade, but an investment. >> they've been listening to you. >> monsanto. >> they have a $2 billion share repurchase and let's get it back to where it was before they reported the bad quarter. >> the gap. >> you know, this is a shocker.

they came through with unbelievable numbers. a lot of people keep rumoring that the numbers aren't any good and they're back, okay? >> back. period. >> no kidding? >> yes! >> biogen. rbc says this is a great opportunity. the biotech stocks are thetel for this market, the fact that they're back is a good sign. >> they're up 32% and that's incredible. tivo. >> we know they had a big lawsuit and people didn't like to settle. >> some of the coal stocks. >> oh, man, it's so funny, union pacific and norfolk southern are back. >> ray j is says they're all going lower. >> what do you think? >> it's a little late to sell. >> a little late to sell. >> heir all pretty -- >> ooh! it's up. >> well, there you go. it's like a ten-year and they trade at 2.5. >> it's like the ten-year what do we have to close out the week on "mad money." we have a china play that people

are still playing with, imax, and they're putting up theaters everywhere. i like 3d, david. >> they like it. i think it's overhyped, with the glasses and the ooh, ooh. see? -- ooh. >> it worked for avatar which happens to be a picture. >> that was really good, though. >> look, it will be a good interview, okay? there. >> all right. have a great weekend. >> you have more on the job's report and including goldman sachs. jan hatzius. he nailed the number right on the nose and we'll talk about what it all means right after this. [ male announcer ] it's intuitive and customizable,

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and the road. that's american ingenuity to find new roads. >> if it was the most important employ chlt report going in for years, it still is the most employment report for years. we have goldman sachs chief economist here to tell us what happens next to the markets. >> and we've got j.c. penney ceo to tell us what he thinks can help the struggling department store around. walmart shareholders are

gathering in arkansas this morning. the board approved a $15 billion share buyback program. we are live on the ground with the controversies surrounding this year's shareholder meeting. >> plus is apple looking to take down another industry. apple will begin accepting iphone trade-s in. we have the ceo of gazelle to talk about the impact on his company coming up. the market reaction to the jobs report may not be that dramatic, but it still tells us a huge amount about what is going to happen now and through the summer. steve liesman has more on those figures. good morning, steve. >> good morning, simon. sometimes i think i have the words to characterize it and sometimes somebody else does. i want to read you right off the top what david zervos is saying. he said, quote, if someone asked me to put together a jobs report that would have read as soothing to a frazzled, ma it would have read pretty much as just

released. it was just a bit better than expected and also better than the whisper number which might have been around the 140 area revisions taking 12,000 off the path and the unemployment rate up and we'll go through

reports would suggest a loss of momentum and i also want to bring in diane swonk into the conversation and she's chief economist at mesereau financial. good morning. >> good morning. look, you've made the point here that not all jobs are created

equal. how important is the composition of the jobs growth that oui seen in the last month. this is one of the issues that the fed has been watching very carefully. a lot of the jobs are in part-time sectors and low-wage sectors and steve mentioned the fact that average hourly earnings have not gone up very much and that's something that was concerned about. it's pick your poison. you can argue this glass half full and glass half empty, but the glass is not filling up and it confirms a moderation in growth and the composition of job gains is somewhat worrisome. also we saw teenage unemployment rate pick up as more teenagers went to go look for jobs and that's good news that they're hopeful. the question is will they be able to get them competing with older workers who are now also in the labor force looking for jobs. >> right. this all comes at a time when steve mentioned there's some concern about momentum as well. we had a monster job month in february, and i think with revisions of 300,000. in your view, is this good, or should we get to trend in the

month ahead. >> the headwinds of the sequester are starting to seep if. postal workers retiring out and not being replaced and they're losing a lot of money and they're not getting cuts and they're showing up in state and local offsetting that a bit is important going forward and the bulk of the sequester cuts have to occur between now and september and most didn't believe that congress would be so stupid to go forward with the sequester, so i think we have headwinds over the summer where we'll stay close to the 150,000 range and maybe dip below it and that could question the timing. >> i have a question. i just thought of something here. what if the fed was wanting to reduce the amount of qe out there, but didn't want to freak out the market. what if it says something like, we're going go down to 65 billion and expect to remain there for the next couple of months. >> could it do that and say, this way it would acknowledge the strength, but then also forecast and not cause markets

to price in further reductions? >> that's a very good point and you know, steve that's exactly what they're trying to do is manage it. we've talked about the communications issue here. open-ended easing on quantitative easing and they'll do 600 billion on qe, too. they would have exceeded qe-2 and i do think that it's important that the fed will taper gradda you willy and what people really don't understand is they're overblowing this tapering issue as an exit issue and they clearly are not the same things. >> diane, i have a more fundamental question. if the question is, as you say it is, why would the fed have decided over the last two weeks to create this turmoil in the markets by the type of things that they have said. they're nowhere near tapering with this sort of employment situation and this isn't a great surprise. this is in line with what the market was expecting. so why have they chosen to unnerve the markets with the comments that they've made starting on may 22nd.

>> communication is still a major issue at the fed, and you have to remember that ben bernanke sort of lets everyone go out and exres their views and new consensus are arriving at the fed. at the same timed they would like to taper the consequences of the balance sheet. that said, the market puts far too much weight on people that do not vote, and that's another issue is the market is putting too much weight on that. >> lastly on this point. >> shire. >> it was bernanke's testimony itself which caused some of this concern. he was the one who said within the last couple of meetings even though he was talking as a hypothetical. >> the market rallied and it was the minutes from the meeting which was before that that freaked everybody out. so when he said that, it was reassuring to the markets that we're still on this easing trend and it was the minutes as steve points on ut that freaked everybody out and reversed the market later in the day, so it's the debate within the fed.

bernanke had shown the sausage being made and all of us don't like to see the sausage being made. it's not a pretty process. >> diane, thanks very much for that this morning. >> you know, freak everybody out is an official fed term. you know that. >> it's an extremely sophisticated one, steve. >> thanks very much, as well. >> look, the market rally is more than triple digits and it's 141 points. john manley is chief equity strategist from wells fargo funds and art cash en is director of floor operations with ubs financial services. >> john, i assume the market is rallying because the fed is not about to taper. >> i think so. it was almost a perfect report. we figure anywhere between 165 and 200 was good, but the whole point is there's not that much risk. i lived through in 1984 a complete fed reversal and that was 10% of the market. 3% to 5% corrections have a way of taking the edge off things without really doing a lot of damage. >> have we taken the edge off

now? >> think so. i think underneath it all the people have convinced that sooner or later we'll come across. this has been through for five years. that's been the consensus and what's happening is every time it rallies up that goes under the covers and as soon as it has a small pullback it goes right back up. >> there are groups that i've owned and not owned as the last couple of weeks. >> you still have that buy the dip mentality out there and the fact that the sell-off seems to have abated. you rally back through a couple of resistance points. you're going to hear people saying oe my god, the boat's leaving again and i have to go there. let me digress for a second and go back to the discussion you had with diane. i think and i think there are several other people who feel this way, i think the fed got into the tapering discussion because they began to realize that the available supply of both bonds and mortgages is decreasing. so they have themselves boxed in at 85 billion and they realize

there may not be $85 billion readily available. so i think what they wanted to say is we may have to adjust this and they didn't say it well enough and it sounded like tapering. >> this is a great point because what's happened, they almost tightened a little bit giving themselves room for the market to then relax when it seems as though that isn't going to happen. so, art, at this point people are saying, okay. at least we'll have the status quo in place for some time. at what point did they come to the board again? >> i think when they begin to announce it. >> i think clearly, bernanke is a fan of no surprises. so he's going have to rather than us waking up one day and saying the fed only came in to buy this amount. that would panic the market so i think they're going have to explain that and probably within the next couple of meetings and that's why you're going to see people hone in on the discussion. >> give me a blueprint for the

summer and we'll have the continuing conversation ad nauseam and it will go on. do i want to move away from this idea of the big dividend payers. where do i want to be? >> i think you want to be more cyclical. it's always tentative, at first and the fed is pushing a lot of money on it and there's a lot of pent-up demand out there. qe3 focused on the early part of the economic and it focused on where the economy starts which is the consumer and the rotation so far has been classic and you start with noncyclical stocks and then you rotate in toward technology and industrials following exactly what can happen to the economy down the road. so i think you want to get more cyclical and you want to save more large cap, and i still think the quality stocks. >> you're fundamentally of the view that the economy is getting stronger and getting stronger. it's weak and getting better. >> i want to own the stock market when things are bad and going to good or worse, going to

bad. i'll even take that. when things get to be good and then they get better and then they get worse. i'll leave that to the smart guys. >> to the point that carl was making earlier on. is there a possibility that you get a tapering of money being injected into the economy because that's the right thing to do when actually the employment market isn't responding as it should be at this stage. >> is that restrictive policy on the part of the fed and getting less accommodative is less restricted and we have to realize that. risk is the whole thing. how much risk is there with the fed doing this. i think it's 3% to 5% corrections. >> i don't want to get too involved with conversations about japan, but obviously, there are big moves on dollar yen and there are also reports of hedge funds with heavy losses like man which is public. in this particular fund we didn't do so well. are we okay at the moment, do you think? >> i think it's still out there. in fact, i'm amazed that the markets don't see the obvious

sometimes that we had a rally based on the idea that the japanese pension funds might come in and begin buying more equities and immediately on this floor they say they'll buy fewer bonds and that will create a problem on the other side and the markets didn't focus that until just the last couple of days. so i think there are things going in japan that may come back to haunt this. buying the dip is giving us a big rebound here and you can see where we go. >> in the meantime, the weekend is upon us. probably a weekend to stay in. >> as long as there are multiples as home. >> thank you both. >> art cashen, have a great weekend. >> thank you. >> did you nail the non-farm payroll numbers? all week long we've asked you to submit youring ises. we'll announce the winner later in the show and we did have a

win or wall street, guys, as well. goldman sachs, david's made this point, 175 and missed the unemployment rate, though, and no one expected the labor force to be quite that strong. >> so we will give the shirt to jan hatzius. >> the question is did he use the #. we'll have to go back to the report. jan's coming up. >> ahead on the program, goldman's top economist nailed the number and he's coming to post 9 to tell us what he thinks now is next for the economy. he's still talking about scenario tapering in december. walmart's slogan is save money, live better and at the retail giant's meeting, there are other messages that the company executives are sending to shareholders. a live report when we return. oh, yeah. ♪ ♪ veretires -- keep working, but for himself. so as his financial advisor, i took a look at everything he has. the 401(k). insurance policies.

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is is. employers stepped up their hiring last month to 175,000 and the market has rallied a broad-based rally. only two numbmembers of the dow negative territory, boeing and honeywell now up 143 points. >> wow! there are new privacy concerns today. reports of the government reporting with tech giants like google, apple, yahoo and facebook to monitor users. eamon javers joins us with the latest. >> good morning, kelly. it was a stunning day of of revelations about u.s.

intelligence programs yesterday, starting with "the london guardian" which reported on a secret fisa court order. that's a secret intelligence court order to verizon ordering them to turn over phone records on americans and foreigners. that story dominated the bulk of the story yesterday and then last night the guardian and the washington postal most simultaneously revealed an 11 bigger scoop and this one about an nsa program and a secret program called prism any in that program, both newspapers said nine of the biggest american technology companies work with the u.s. government to spy on people that the government is targeting. after that story came out we got a range of denials. first apple. they said we have never heard of prism, and then google who said we have no back door to access private user data and facebook who did not provide any government organization with direct access to facebook servers. following with microsoft who with said if the government has

a national security program to gather customer data we don't participate in it. yahoo said we do not provide the government with direct access to our servers, systems is or network. clearly, guys, maybe this is direct access. what does that mean? what do the companies actually denying will be one of the key questions to follow up on this story. we got this statement from the director of national intelligence james clapper, fairly direct and powerful statement. clapper saying the guardian and the washington post articles refer to collection of communications pursuant to section 702 of the foreign intelligence surveillance act. they contain numerous inaccuracy. clapper going on to say the unauthorized disclosure of information about this important and entirely legal program is reprehensible and risks important protections for the security of americans. obviously, guys, there's a lot more to come on this and it all comes on a day when the president of the united states is ironically in silicon valley where he's going to be meeting

with the chinese president. >> president obama had planned to speak to the chinese president about chinese hacking of american computer systems and this will make a much more awkward conversation for the president today, simon, given the level of leaks that we've now seen about what the nsa has been up to allegedly. >> much more difficult, eamon for the u.s. to take the high moral ground here as a result. i just want to go back to where you were stay saying with the tech companies and while using if, effectively acknowledging this program's existence. so why, or how is it that we're able to see the apples or the googles of the world to deny it or to deny their involvement. >> that's a really good question, and we'll need more reporting on that and i don't want to get too far out in terms of speculation, but you wonder if there's some type of technological nuance about that phrase direct access that they're getting some kind of indirect access, perhaps. what you saw is with clapper's

statement. he said the article contains numerous inaccuracies and i've asked them to specify what was inaccurate here. he's also saying that even though it was inaccurate it was reprehensible to put it out there. so we'll have to do a lot more reporting to clear up just what exactly was going on here. we've asked all of these companies for statements and so far we've gotten these statements that nbc news, independently of the guardian and "the washington post" and the prism program as the data collection program. so there's a lot going here and it was a fluid situation. >> big story, eamon. very important, thank you very much. eamon javers there in washington, of course, and we'll be live in california with the president later, would you trade in your older iphone for a newer mobile. apple said to be starting a program that would let you do just that. we'll talk to the ceo of gazelle and an existing electronics

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>> aggressive buy on that dip today. j.c. penney launching its home department in grand fashion. courtney reagan has caught up with ceo mike goldman and we hear what he had to say. >> after construction delays and ceo shift, j.c. penney's home transformation is complete. 505 j.c. penney stores will be outfitted with home shops and 145 will have new merchandise from designers like martha stewart, jonathan adler and sir terence conran and others. last night j.c. penney held a house warming event launching the home collection and the retailers, design partners, analysts and media joined company executives mingling among the new product displays and i spoke with mike ullman at the event. he said, quote, we are very excited to be back when the home building business is picking back and our dotcom business is likely to grow to over 50% home

in the near future. home was once a cornerstone, accounting for 21% of sales in 2006, but for the last seven years it's been the retailer's worst performing category in 2012. >> it will bring it to 2006 or level. home gives us a chance to grow our business back to historical levels. the vision does belong to ron johnson, but ullman is taking on responsibility for its success saying i'm responsible, no matter what happens. that's what you signed up for. i'm responsible for the team, frankly. i bear the responsibility and i feel the responsibility for a lot of people's well-being. that's what it's about, it's the reason i came back. people deserve a chance to be successful. i hope i can help in some way. >> simon, some are concerned that the higher prices on some of the new designer home goods, but ullman likened it to the severa shop. that took time to gain traction, but last year it was only a part of the store that was profitable.

>> in the meantime, courtney, are people able to use the coupons that are appearing on the everyday low prices? are they selling a lot of stuff near cost? >> what actually happened, simon. they've gotten away from the everyday low prices and they've marked it back up to offer the promotions with the sales and the coupons. they're running a sales on many of the products 20% to 40% off and an additional 10% off on those purchases to spur back that core consumer into j.c. penney. give her what she wants. >> courtney, thank you very much for that. courtney reagan there with the latest on jcp. we stick with retailer walmart that's coming out with some very interesting indications as to the resilience of the u.s. shopper and in addition to the buyback program. we are live from arkansas. mary thompson is covering walmart's shareholder meeting this morning. good morning. >> reporter: good morning, simon. as you mentioned the big news out of the meeting today, a stock buyback program from walmart, a $15 billion program

replacing an old $15 billion stock buyback program. the nice told to associates and investors who are here today to celebrate all things walmart while being entertained by the likes of singers prince royce and john legend as well as guest emcee hugh jackman who serenaded the crowd with a special rendition of "oh, what a beautiful morning". >> oh, the things you will see in this session, it's an honor for me and i do guarantee ♪ ♪ that we'll celebrate everything edlp ♪ >> reporter: of course, edlp refers to walmart's slogan of everyday low prices and it resembles a mini opening ceremonies for the olympics with flag bearer, jugglers and men on stilt, but it is not all fun and games submitting a proposal for the special shareholder meeting and the activist improved more

with overall donees in the wake of a collapse in the factory of lang bad earngladesh. >> forgive me, for years, every time there is an accident walmart officials have promised to improve the terrible conditions in my country's garment factories, but the tragedies continue. with all due respect the time for empty promises is over. >> ceo mike duke's $20 million in pay also on critics' agenda, one investor pointing out it's 1,000 times that of an average walmart worker and that drawing applause. the taupe was courteous as well as enthusiastic. the board members were here, too, including marisa meyer. she received big applause when her name was mentioned and not all were welcome by the proxy advisers. four of them recommending that

investors withhold votes because of their -- during the mexican bribery scandal. >> given warren buffett's annual meeting a run for his money. good thing they're not using taxpayer funds. mary, thanks. >> jan hatzius coming to post 9. he did accurately call the payrolls number and now that the jobs report is out you might want to hear his message for the fed. the employment data is fueling a pretty strong rally on wall street today. we're up 160 points on the dow. the s&p is about 2% still off its nominal highs. keep it here.

not too hot and not too cold, the market is rallying strongly into the weekend in the wake of the employment report. y woo are now 165 points on the dow. >> the u.s. economy did add 175,000 jobs in may along with slight upward revisions. we are joined now by the economist who did call that number. jan hatzius is chief economist at goldman sachs here with us now at post 9. welcom welcome. >> nice to be here, thanks. >> we have these t-shirts, jan, who correctly nailed the number, but you didn't put you your #nailthenumber. so i'm sorry, but we can't give it to you. >> we can talk about it later. >> you also missed out on the unemployment rate which did increase from 7.6% to 7.5% and what's the real signal from this report as you see it? >> it's very, very close to expectations, generally.

some things were a little better. some things were a little worse. overall it's broadly encouraging and we have decent growth in employment and more of a comeback in labor force participations and the first increase in a while. a good increase in the labor force. it's a noisy number month to month, so i don't know whether that's the start of a trend, but we are projecting stabilization in that and if this the start of that that would be important. >> it would mean a higher hurdle for job gains and the chicago fed was out saying we might only have to add 80,000 jobs -- or excuse me, 40,000 by the end of the decade on these trends. so what's your call? are they right or is labor force participation going to stay stronger lear? >> i think they're right in terms of the trend level, but over the next few years if you get a stabilization in labor force participation over that period partly for cyclical reasons and then the break even number will be higher. they weren't saying that it's

80,000 on the actual numbers over the next couple of years. >> it's interesting though, cyclical recovery may draw people back into the labor force and construction was a weak spot and manufacturing hasn't been that strong. >> those are two softer areas and manufacturing isn't particularly surprising and you look at some of the manufacturing industries and certainly the ism earlier in the week and that wasn't a big surprise. i am a little surprised over the last few months as a whole that construction hasn't added more jobs because generally things in the construction sector seem to be doing better. i still think it's a lag, but it's trailed a bit. >> can i just draw your attention to the chart we put up which was the year to date dow jones industrial average. i know that communicateing to the market is a very difficult thing for the fed to do and it's a lot of planning and a lot of discussion. if you look at that chart it's very interesting. as you come out of may, and you get that very strong rise in the stock market and then out of march, forgive me and into may,

it begins to accelerate and on may 22nd the fed decides that it will come out and crave volatility in the market to talk about tapering in a way that it has never done before. your best case scenario is that we'll tape it in december. do you think it came out and of course, the turmoil that they have done in the last two weeks specifically to cap the rally in equities so they didn't see irrational exuberance? >> i don't think they view it as having done something that's as new as you just characterized it. if you go back to the march press conference, the chairman did talk about adjusting the pace of purchases. >> up or down -- or down. they keep saying they can adjust the numbers and they can adjust the pace of purchases and i think at the moment given what's going on, daown is much more likely. i don't think the mess angs from the fed has been all that different from what it was previously. i do think that the markets

started out in a place that long-term -- ten-year note yields were in the low 160s and that was a vulnerable place to be to be reminded that, of course, an adjustment is possible. >> they did make a fundamental decision to shatter the idea that there was unlimited, skwaunt tative easing to come. they made that deliberate decision at a time when you know that the other metrics that they look at in the labor sector or the labor market is still very weak. there are other areas that they look after that are not even as strong as this. >> that's true. there's a long way to go and i think if you look at the level of employment level of potential there's a very long way to go and there's still the unemployment rate at 11.6% and labor force participation which is partly depressed for for other reasons. partly structural and cyclical. i don't think they deliberately tried to shatter a particular impression. i do think that some people in

the market had thought qe forever. that was never their intention to signal that. >> where are you on economic growth for the second half and does this change your opinion at all? >> no. our expectation is, you know, third quarter similar to where we are now. 2% and then gradual acceleration and 2.5% in the fourth quarter and 3% to 3.5%. >> when do you think they'll start using broadly, and effusive. >> into 2014 we'll talk about actual good growth. >> same timing for the taper has. what is your base case? >> our base case is the december announcement of a taper and then to enter the program for q32014. so september is possible, i think, but that will depend on the data and december is still a little more likely. >> take the t-shirt. you deserve it. >> you're very tall -- take it.

that's wonderful. >> thank you very much. >> you're welcome. >> i'll savor this. >> yes, i'm sure. >> we cana you will sign it for you, if you like. >> i think there is one signed in the back. >> that's david. he can't help himself. he signs everything. >> jan hatzius from goldman sachs. >> south korea's samsung became the best-selling smartphone in the united states moving apple to second place. now apple has a new strategy. learn about it next on cnbc. the jobs report is out. >> may non-farm payrolls increased by 175,000 jobs. >> were you able to nail the number? if so, you've won these his and hers cnbc polo shirts signed by the entire "squawk on the street" gang. find out if you're the lucky winner later on "squawk on the street." [ lorenzo ] i'm lorenzo.

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into launching an iphone trade-in program into boosting sales by encouraging those with older upgrades to newer models. the co-founder and ceo of gazelle, a mobile device trade-in service that's been in existence since 2008. welcome to the program. it's nice to see you again. >> good morning. good to be back on the show. >> before we talk about your business, let's just dwell on what apple is doing here with your love of technology and your passion for the business, this seems almost like a steve jobs approach to a problem. what more can i give an apple customer that they might want? ahh! the ability to buy a phone now and know that they can upgrade it it for, i don't know, $100 when we next have an upgrade and from there they walk back for the details and that seems like a huge change for the industry, isn't it? >> it's a brilliant move for apple. as you said, we have founded gas elle and been advocating for the trade-in concept for over five years and seeing apple moving

into it is a huge validation for what we've been talking about all those years. it's great to see them coming in. >> because effectively they get to manipulate so much more of the market. they get to manipulate resale value. they could easily, for example, set prices above the open market price that you get on your platform in order to shift newer models. >> absolutely. you have to look at it from both sides of the equation. on the one hand, here in the u.s. what it's doing, to your point, it's going to enable apple's best customers to upgrade more frequently and stay in the apple ecosystem and do it in a way that's much more affordable and then on the other end of the equation and think about the emerging markets and we've been talking about that as well. apple does not have a competitive product in those markets to compete effectively with samsung and some of the other oems so all of a sudden by encouraging trade-ins here in the u.s. you will create supply of used iphone 4s.

iphone 4ss and bring them to the market in asia, latin america and compete more effectively with those other oems in those markets. >> israel, doesn't this kill your business? >> we are very excited about apple moving into a -- don't forget that today only 20% of all consumers trade in their device or resell their devices when they upgrade. only 20%. most of us do nothing with the old device. we put it away in the drawer and let it collect dust. with apple moving into the space and assuming they put a brand and their marketing capabilities behind it that will change consumer behavior and we believe that oh, boat, including the gazelle baute will rise from this tide. >> just wondering because apple is interpressure here and since their devices aren't selling and just in terms of the perspective that you see in what secondhand prices are doing.

how does apple look today? what kind of prices is it commanding and what about samsung, as well? >> again, the demand in those markets is, as i've said before truthy insatiable. about 2 billion smartphones are expected to be sold in those markets over the next couple of years and whether it's an apple phone and a samsung foen and the demand is incredible. so to give you an yet for the economics here, we at gas elle would pay $200 for an iphone 4s and the end yiezer in china, in india, in brazil would pay about $400 very effectively with the cte phone and a samsung phone and it was an alternative for the brand new cell phone five. >> that's incredible. >> because of the rivalry from

these two can we glean anything from their product relative to apple's? >> the price is comparable if you look at it from the high end to high end basis. for the samsung galaxy 4 now and the iphone 5 in looking at older generations they're very comparable in terms of the prices they get in the secondary markets. >> israel, we are out of time, but just very briefly, don't people in emerging markets want new things the same as we want new things. why would they buy success hand? >> just like in any other market we like to think about the used car business and as much as there is demand for a brand new bmw and mercedes in any market, only a small fractions of the consumers can afford those cars and there is plenty of demand for what we bring into the market and we'd like to think those products as the iphones as pre-owned certified. >> thank you. >> pleasure to be here. >> i'm glat glad to see your

business will thrive through. >> the domestic diva herself will talk about the new leadership over at j.c. penney. >> the stores are still not completely set as far as i'm concerned. >> more from that interview when we come back. stayinterview when we come back. stay with us here at "squawk on the street." anteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. always go the extra mile. to treat my low testosterone, i did my research. my doctor and i went with axiron, the only underarm low t treatment. axiron can restore t levels to normal in about 2 weeks in most men. axiron is not for use in women or anyone younger than 18

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the consensus seems to be the result we got on the jobs report means the fed won't be tapering any time soon and the dow continues to gain 171 points higher on what otherwise haven't moved the markets. >> it's not just the dow. the transports are doing well also. >> let's get rick santelli for his take of the cme in chicago. >> thank you, simon. maybe my take is changing because of your take. he could be 100% correct. based on the way stocks are trading in today's 175,000, it doesn't look like there's any taper coming. how do we know that? we really don't. that's an issue of the uncertainty involved in managing markets versus true signals of operating markets.

but everybody is going bonningers on the trading floor. they haven't stopped talking about the report. not the u.s. report, the canadian jobs report. that's really the the talk of the town. i'll tell you why. canada has 34 million people. so anything we deal with regarding canada, and we've been down this road before, you have to multiply by ten to make it an apples and apples equivalent for the u.s. so what happened today? well, they were going to look for 15,000 jobs. what did they end up with? they ended up with 95,000 jobs and unemployment rate of 71%. so to make it apples to apples, 95,000 becomes 950,000. i believe in the reagan administration we had a million job creation in one month. but this really says a lot. let's go back to our number in simon's comments.

london, i don't know that any discussion is settled. i can tell you a couple of things very much unsettled. i've hit on it many times. mr. fisher from the dallas fed two and a half weeks ago when he was on hit on it. everybody knows they exhausted the supply. they buy miranda warning the supply. when they buy treasuries, they're buying auctions. just a handful of days ago. and the unintended consequences. there's so many things with unintended consequences. more than anything i like simon's comments. we all have a gps in our car, right? or most of us do. when you want a direction, when you want to have knowledge about where you're going. the two things you need is where you are and where you want to go. nobody knows where we are.

it makes the equation seem a little bit ridiculous in my opinion. this is the one, people. cause/effect, cause/effect. some of these programs may or may not be working. i have a tree in the yard. here's the way a normal tree trunk should be. when we were putting christmas lights on it i tied it with these things to hold the lights on. now when i look at this tree it's got this little thing right here. the tree is still not growing. not as good as it could be. if you drop a flagstone on the perennial, it's going to come back, but none of these will be efficient. animal spirits are good. don't confuse it with the outcome of some of these fed programs. back to you, kelly. >> rick, it's like the play by play. we'll get you on a screen like on espn. >> no, no! we don't want a screen. we're old school. >> you need chalk and a chalkboard, not this dry erase

business. >> i wish the fed liked it better as well. rick santelli in chicago. thank you, sir. martha stewart has a lot on her plate from online dating to a pretty public court battle. she's telling us what she thinks about the future of jc penny. >> and we'll reveal the winner of the name the number contest later on this show. ♪

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david, have a great weekend. >> you, too. >> we can always hope that this month we'll bring it. >> if you add up the months we're almost there. >> it's 8:00 on the west coast. good morning. this is what we've been up to so far this morning. >> welcome to "squawk on the street." here's what's happened so far. >> i think the issue is not only the question of when we taper down but when do we turn? and the markets may not give us all the lee way we would like to

do that. >> may nonforeign payrolls increased by 157,000 jobs. >> although i'm already hearing the tapering, tapering, tapering call in the last half hour still coming in september. >> i'm beginning to careless about tapering and just watching the tenure. zbr we added 175,000 jobs. a total of 7 million in that period. so we're headed in the right direction. and we're looking for ways to speed the recovery and get more people back to work. >> the bulk of the sequester cuts have to occur between now and september and most governmenting asies didn't believe congress would be so stupid to go forward with a sequester and have not made the cuts yet. >> the economy is strong and getting stronger. >> it's weak and getting better3 i don't want to own the stock mark when things are bad and going to good.

>> i don't know if this is the start of a trend. we are projecting stabilization. if this is the start of that that would be important. good morning. we're live here at post 9 of the new york stock exchange, and as you can see markets are rallying pretty strongly coming back from the jobs report that fell in line with consensus and has paved the way for the federal reserve not to have to jump in soon. looking at shares of iron mountain in particular. the company stock now hitting a 52-week low off almost 18%. also look at shares of apple and sony. they have officially signed up for the upcoming apple radio service. they have agreements with all three major music labels for the

audio project. it doesn't have a release date yet. expect to hear more about it next week. and the last hour of "squawk on the street" before the weekend. the markets are back in rally mode. will the momentum continue? we'll tell you how you should be investing now. and speaking of the jobs number, we're revealing the winner of the nail the number contest. >> plus, martha stewart speaking out about the new leadership at jcpenney. she's telling us what she thinks of the company's new direction. probably positive. >> let's hope. as we said, it was better than expected and sending the markets higher this morning.t(ñr

first to you see we're seeing the strong market reaction here. what do you think of this? do you fade it? do you buy into it? >> this is a goldi locks number. what you got was just about right. it was in line with expectations. it was strong enough to mitigate concerns about the economy slipping back too much. and it wasn't nearly strong enough to push the fed off their current path. it gaf investors what they wanted. they were negatively positioned coming into it. and we're seeing a rally. likely to see less volatility and not a bad environment for stocks. >> are we just delaying the reckoning here. greenspan talked about it on "squawk box." major issues when we think about the the fed trying to leave the

if the economy doesn't continue to gradually improve. >> we have always known that the fed was going to have to leave. even when they announced the open ended qe in december. they didn't tell us they were going to do it indefinitely. they told us they were going to do it for aw3 long time. so now they're trying to take the markets off automatic pilot and they have done that. people will be looking meeting to meeting to get a sense of what the fed is going to do. we're off the hook for june and even august. i don't think the fed will decide to taper either one of the meetings. it's not just the labor market. they're over a percentage point below their target right now. put the fed to one side. where are we on the recovery where market interest rates should be?

longer term. >> we're on an upward trajectory that's very slow trajectory. at the same time we're seeing a girth of supply. we're seeing less supply from government. and the net effect is the yields continuebáe to grow higher. it's not the armageddon that people are afraid of. zm do you think potential the economy is stronger than we think? always or recently reminding us of how the jobs, particularly in a rebound. you've had disappointing data anyway that is stronger in the autumn. in other words, the true picture now could possibly be better than we see.

>> well, there's been a lot of noise in the data. there's still questions of seasonal adjustments. they have been fairly consistent for the last few years. the economy is chugging along close to 2%. it will probably struggle a little bit because of the sequester. get stronger in q4. but we're not really in that different of environment as we have been the last three years. a slow growth, positive recovery. >> that distinction is very important. if i'm trying to work out whether i stick in dividend paying defensive stocks or go cyclical to a greater extent. what do you say to people? >> i would say cyclical. the defensive names. particularly places like utility. there's extreme positions in the sectors that make me nervous.

all else equal, the evaluations and utility companies and other defensive names should drop. >> quickly to you. what are we talking about with regard to a taper? how worried at all should we be about this still looming on the horizon? >> well, first of all, they want to make sure that the economy is doing okay. we're in another soft patch. this entire recofferry has been a series of accelerations and deaccelerations. and think also have to agree among themselves on when to do this and based on a comment of a variety of fed officials they have not been able to agree on when to do this. i'm still thinking it's a q4 phenomenon. they have to see a reacceleration in the labor mark

and they will also want to see inflation back at the market. it does seem that inflation is getting short thrift. >> and it's been following as well a great point that we haven't talked about. thank you very much. appreciate your time as well. >> thank you. >> in 40 minutes time the president will make a statement to the press where he is in california today. he is going to talk about where he is in the jobs report. but the real pressure of this stage is the huge volume of headlines that broke last night about the nsa privacy concerns. john harwood is in california traveling with the president. >> i think the base position will be unchanged. he will try to get in the cyber

hacking that goes after the u.s. national security beaches but also hundreds of millions of dollars a year. the president couldn't have anticipated a backlog like this. when american press headlines are!ae9e filled with creepmy amn espionage and that sort of thing. he's going to plow ahead anyway. you have some positives also strengthening the hand that the north yeah koreans have talking with the south koreans. that changes the atmosphere of the meeting. the president does have good news in the meeting. the good news is solid jobs report. he's going to talk about the affordable care about, where the implementation in california suggested not too bad so far. more modest premium prices on the california exchanges than we expected.

overall it's the long term u.s./china relationship. this is the two biggest economies in the world. it's important to get on ab sound footing for security reasons and economic reasons. the president will do his best to ignore the atmosphere, but it won't be easy. >> so you would describe it as atmospheric. and already he's fighting, of course, negative battles on three fronts. now you have a fourth surely when you learn the nsa are tapping into the service/ leading u.s. internet companies to monitor people's e-mails and video chats. >> honestly it's not as dangerous as people are making it out to be. the american people understands the government needs to be

aggressive about monitoring potential threats to the country. president bush took actions that were controversial in the media generally supported by the public. and i think this president changed the legal regime for some of those. have some of those in the court where @ bush was ding it without court orders. but there's going to be a debate and oversight. this is about keeping america saf safe. >> we'll link back later on. for the moment, thank you very much. >> now we have some breaking news on mysterious gold move. ayman, what can you tell us? >> good morning, kelly. i want to show you a chart here you're not going to this see anywhere else. take a look at this chart and

what it shows. there's a line down the middle of the screenlp that shows 8:30 this morning. that's when the jobs report came out.n

subscribers. we don't have information on what happened this morning. there you see the three legs down on gold. now let me bring you something after 8:30. this first started by the folks who now have it confirmed. they said they had a stopped logic circuit breaker. that circuit breaker is in place to prevent markets from spiralling down. that is the kind of thing that happens from time to time. when it does happen, regulators will typically look into it. there was a five-second halt in trading this morning. and i can tell you that regulators are aware of this

move in gold this morning. no indication of what they may do about it. >> it's a big deal. >> it is a big deal.ñ6nvñ a trade goes through on gold before the employment data is released and what? what more do we know from that? nothing. i'm not clear what we're saying here. >> it's a lot of trading volume in the 62 milliseconds before the numbers came out for gold that did in fact happen later in the day it would have been the type of trade you wanted to make beforehand. i have a hunch we're going to see a jobs number that indicates gold goes down.

that's definitely a possibility. but on monday we saw a move 15 milliseconds ahead of the ism report. after we investigated what we found out, thompson reuters had high frequency traders. we need to be very clear about that. we get the moves out to people as we can. thanks for bringing us the details. jcpenney made headlines for all the wrong reasons. it had to do with this tea kettle that some thinks bears a resemblance to adolf hitler. what the heck was the designer think sng we'll ask him about it next. then rick santelli has his own take on the jobs number. >> i wonder if eamon is still

listening. i'm sure they can find it really fast. we always like to look at conventional wisdom or market myths. several involve the six-month moving average of jobs. . has anything really changed? i don't know. if you want to know show up in about 20 minutes. announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions,

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welcome back. take a look at the telecom

sector today. it's one of the few not participating in the broad rally. josh, we see it down 1%. >> that's right. one sector that suspect working is telecom and within the sector it's at&t that is lagging as walter points out here the headline is the company saying promotions will weigh on margins. investors a bit worried on that news. the value of increasing customer growth. down 8/10 of a percent. it's a big day for jc penny. they've been able to roll out the brand new home shops getting positive reviews. >> good morning. jc wenny may finally have reason to celebrate.

and last night at the house warming event, all the designers are truly excited to be a part of it. and now the former ceo for ron johnson's tragedy, including the elimination of sales an coupon has are back at jc penny. >> i joined because ron johnson was there with a very appealing concept. thousand it's changed and i have yet to see the success of it. so we're looking forward to it. >> so terrance conrad doesn't want promotional pricing either. saying the simple and more honest offer to the customer, the better. >> i don't like the whole business of discounting very much in my own business. but i'm not running jc penny. >> he said because of the 20% to

40% sale, he is going to get christmas shopping done for grandchildren this weekend saying if there's a sale, i'm going to take advantage. he is also the designer of the billboard that became accidentally controversial. >> we were really happy with selling 1,600 kettles last week. that's a phenomenal number. we never did that at target. >> never did that at target, a previous partner. i spoke with the ceo about the concern some analysts do have about the price points. revealing that sephora is the most successful part of jc penny. >> amazing they've sold that many of the teapots. now, coming up, it's the moment you've all been waiting for. >> the jobs report is out.

>> were you table to nail the number if so, you've0j and her cnbc polo shirts signed by the

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now to the moment you've all been waiting for. it's time to announce the nail the number winner. accurately predicted 175,000 for may. >> look at those shades. >> thank you for having me. >> 26 past 8:00 you are in las vegas. congratulations. >> thank you. >> how did you get the number? what sort of calculations did you go through? >> to tell you the truth, i won't b.s. you through the

calculations, i will tell you it was luck. >> oh. >> it was your gut. >> that's the journalistic way of saying it. >> there we go. >> is it your first time play sng. >> i've been doing this for six or seven months now. >> still. after six or seven months. we've had people on wall street trying to name the number for 10, 15 years. what do you do? >> i just graduated from college and passed my series 65 exam. i'm starting my own financial advisory firm mere in las vegas. >> do you have a year end s&p target? >> i'll be quite bullish and say about 1700. >> 1700. so about 60 points higher than here. we will see. greg, congratulations. it's in the mail. >> i love it. took him only six months. i want to check back with him and see how that firm is doing in a couple of years. we'll bring you the close and details on the impact across the

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the european markets are closing now. >> yes, they are. and simon, it's green. s yesterday. >> there is only data point without fail will move world markets. and sure enough, europe has rallied very strongly, as you can see, on the back of what they saw here.

and more importantly, the fact that you have the market reaction to the figures. that is simply a trading indication for everybody else. that is what is happening at the end of the week in europe. we had upgrades coming through there. slim there. upgraded by some. what's interesting is if you track where we e have been now so far this week, the damage, of course in europe, earlier in the week was much greater to the stock markets there. and you see the dow jones's top 50 blue chips in europe tracking way below what was happening to the dow. now that is being made up to a certain extent. check tout the year to date position and you will still see p) off where it started the year.

in contrast to what is now a 16% gain on the dow. >> let's also bring in bob pisani with a look at the big board. bob, 200 points today. big move. >> the important thing is just on the jobs report. for all the worries this week, we went positive at the open. that's what it took to be positive on the week. how about the jobs report? most of the traders down here slowly improving labor market. most traders down here are still very split on how it's going to happen this year. a lot of people pointed out to me, zero waste growth. that means subdued core inflation this is a little

different than it was earlier in the week. this is a much more defensive tone for the week. consumer staples. they are interest rate sensitive and tend to be defensive. one of the only interest rates sensitive groups that are on the downside. finally i want to point out how well general motors did big day yesterday. huge trade right at the close here and went perfectly. no problems with that. u.s. government owner ship down 14%. so the owner ship is really down. very broad for the company. here it is. a it's slated for the first quarter of 2013. they are going to get rid of everything by 2013. how about upgrading to investment credit rating. that could be a very big move

for the company. there's the chart. back in july of 2012, i think. >> we're up 205 points on the dow jones industrial average right now. there's pictures from san jose, california. we're just moments away from%! president obama's statement. we're expecting him to speak about the affordable health care and jobs. first let's go to rick santelli. he's in chicago with more reaction to the jobs theú:tz da. go ahead, rick. >> thank you, kelly. never use those two words in one sentence very often. there's a lot of conventional wisdom out here. lest see if it's true or not according to the man. right now we are in taper time.

let's give a deaf nation. predictable stair step moves. they said they're going to move. they're going to then assess and the next move may be higher. the new funds rate is bonds purchases. it's going to go up and down with perceptions of the economy and perceptions of the markets. i think a lot of people have a hard time getting their arms around that. >> i know where mr. fisher is. there's only so much product to buy. there's only so much being auctioned. we have a small window of one-time benefits to the pull forward at the the end of 2012. that alone is going to throttle it at some point, or do you think that's going to make it more confusing? >> i think it definitely is. if you want to make a fed official uncomfortable, tell them the purchases of bonds or mortgages is enabling.

they're buying up the deficit. they're helping to lower interest rates. that is something that the fed is very sensitive to. they may throttle back a little bit. >> just ask them if the repo guys have bags under their eyes and they'll know what we're talking about. it isn't doing anything. if you go back to april of 2011 a little over a year ago. the six month average on private payrolls is 160,000 jobs. today the six month average on private payrolls is 190,000 jobs.zhl we've been vacillated around 150,000 jobs for years. they did operation twist. it doesn't change. we grow at 200,000 jobs, whether

the fed is doing something or not doing something. why is the fed declaring victory? >> cause-effect, cause-effect. these are smart guys. they have a lot of letters after their name. they go to great schools. in the end, a lot of thingscan happen. plants can grow that willddm÷ b damaged. you will never know how they could have grown if they weren't damaged and maybe are keeping things for working. right now the most important issue for all of us to discuss in the media and the trading rooms is the fed. do you agree or disagree? >> sort of agree. the most important issue is central banks. world central banks. all of them. what's happening in japan is at least as important. >> ah, the trader lack therein. >> and the move down from 103 or 104 to 95 is not good news.

>> if i'm a japanese automaker, what thoughts do i arrive at? >> it's all temporary. >> so the behavior they're looking for won't happen? though to make people believe 105 on the yen is permanent automakers aren't going to change. have you checked your carry trade today? back to you. it's all yours. kelly? simon? >> don't worry about it, rick. we're up over 190 points on the dow now in reaction to the dimon report. i think maybe this could be the big interview of the morning. dan fits patrick is president. good morning. >> good morning. based on your introduction i think i just peaked. >> i think you're simplifying it

down for people. there are a lot of central banks and yen and you're saying something very simple. >> it actually is really simple. the markets have a handle on it. there's a confluence of things that pointed to a big buy. all the green trend line that connects the lows, which doesn't happen very often, but it connects the lows going back to 2012. then you have the 50-day moving average. bounced off last time. it started to take off right around 12:30. and the last thing, a lot of traders will trade off of these numbers. so the type i[frb retracement w

23.6. so you really had three different things that were pointing to buy. we found that on the friend line. >> yeah, actually, i thought it wasi]ñi more healthy. because we really penetrated it for a bit, and it just looked to me like maybe this is it. then when the market rejects that and pushes back up, that's really a rejection of the bears. the bulls came back. >> with what probability are you saying buy? >> i think you have an 80% to 90% chance of making money from here. and it's just because we're doing what we do here. >> what are these here? >> these indication how rare this buying opportunity is. because the biggest problem and i hear everybody talk about this on cnbc all the time. very tough to chals stocks. i hate chasing stocks.

everybody is chasing them reluctantly. here every so often is a key buy signal. that's what we got yesterday. >> so if you -- once you hit the trend line, if you bounce on it, then buy? >> see, that's the key point. you hit it. if you bounce on it. and that's ben p when a lot of newer traders look at the trend line and go, oh, we hit the trend line, i got to bounce. every once in a while they fail. so you wait for the confirmation and that's when you buy. >> you have one last chart. >> yeah. >> what's that? >> this is a pretty interesting chart. it's a weekly chart that goes back to 2004. if i extended it further we would pick up the eye in 2000. we came through this last high decisively. 7% not as good as 70%.

then it would be too late to buy. >> that's resistance on the way up. and if you were to go back on a tighter chart and look and see what happened, there was a lot of resistance. the market was flopping around. a lot of selling happened. finally the supply got exhausted. the demand came and pushed the market higher. now we're in another buy on dips mentality but on a longer time horizon. >> give me a context that you're not always happy clapping. say something negative for me so i know there's a negative bone in your body. >> okay, from a technical standpoint, here's the negative. this last move higher we went further up above the moving day average than we typically do. that means it calls for a deeper correction. it's going to be really tough to predict the next high. what i'm sensing is if we don't hit that within a week, maybe ten days, because that's the

pattern, about every week or ten days after a correction, i think we're going to go range bound in the summer. now you have other things coming in. the fed easing. now it gets to june, july, august. what are we going to do? we could have a tough time going up if this does not keep moving now? >> you kind of half deflated it for me. >> it's fascinating, especially keeping an eye on the ten-year which is back to 2014. and tropical storm andrea is another thing we're keeping an eye on here. this is making its way up the coast and headed to the northeast. we'll tell you which areas could be hardest hit when we come back. stay with us. (announcer) scottrade knows our clients trade

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and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. ask your doctor about the only underarm low t treatment, axiron. tropical storm kelly is drenching florida and making its way up the east coast. the weather channel is in south carolina with the latest on the storm. dave, it looks like it's getting rough behind you there. >> kelly, you're coming to us at the exact right time. we have a squall coming in here, and as i put my wind speed monitor up here, we are at 30 miles an hour. i've seen double that already. 40 miles an hour. 46 miles an hour of wind gusts down here. this is the kind of storm that's going to dump a lot of rain and up to 50 miles an hour wind gusts. here comes another one right

here. that's what a 39 miles an hour wind looks like. but even as the storm is coming through, this is a good business angle for cnbc here. we have the tourists, and they are not phased by this here in north carolina, from here all the way to the outer banks, down to hilton head, we have folks walking through and not paying it any mind. this is the small end of a tropical storm. so it's not going to really cause that much damage, but we have had tornadoes. we've had tornado warnings. we've had power lines come down and trees and limbs so it can be dangerous, but this is moving so fast that it's going to be through here, and then up into the atlantic ocean by this weekend, and then after that, we're going to have a beautiful day here on the coast of south carolina, north carolina, the

outer banks all the way to boston. so minimal impact on the tourism that is the life blood of this area right here in north carolina. kelly and simon, let's go back to you. >> okay. thanks, dave. >> president obama is expected to start speaking in california very soon. we are looking for comments on where we are with the employment market and the chinese premier. we will talk to you about that and john harwood who is on the scene momentarily.

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president obama is about to speak from san jose any minute now. john joins us, our chief washington correspondent and clearly, john, he's taking the battle to convince people that it is the affordable care act to latinos in california. >> he is simon, and california provides him a very good back drop for doing that. what we've seen in the early estimates from the california exchange that's been setup are premium levels that are significantly lower than what the congressional budget office projected when obama care passed. they said the average family insurance rates would be $5200 a year. in california the early bids from the exchanges suggest there are $3600 a year.

those rates are also -- range from 2% higher than the current rates on the individual marketplace to 29% lower in the early assessments, they've achieved competition. you have whole lot of plans from the 19 different geographic regions where the exchange is operating. some of the early signs are good and the president will tout that as an effort to try to convince the american people, which has been very mixed and divided on obama care, that it's going to work. >> if you look across the country though, the battle is becoming more of an uphill struggle. it would appear that the popularity of obama care as it was is falling. >> well, obama care has always been mixed in popularity, if you look at the polls, the country is divided slightly more negative than positive. but what the white house says is that opinions are pretty fixed. people are going to react now based on individual experience. what the president is trying to do is look at the biggest state

in the country, look at the actual on the ground experience here so far. it hasn't taken effect. we're talking about exchanges that are going to begin operating this fall and we've got a long rollout period. there are many things that could go wrong, many actors, insurance company and doctors and hospitals, various levels of government, and the president is going to try to do what he can to sell it. >> john, we had the senator on the program the other day drawing attention to a survey that suggested that not enough americans understand obama care and as a result more likely to pay the penalties, for example, because they don't phase into the more punitive penalties for a couple of years, thereby, his argument some say, raising the cost for everyone here because you don't have the healthiest and youngest people in the system. is it the case it's too early to know whether that's going to happen in california or is california telling us it may not be as bad as feared? >> well, senator barasso is

right, that is the challenge of the rollout of obama care and the obama administration is strongly focused on that, both on the outside efforts linked to supporters of obama care but also the administration. they know that getting young healthy people to enroll in the system and not take the penalty is critical to keeping premiums reasonable. and we just don't know yet whether the target is 7 million people nationwide on the exchanges of the young healthy target population, you don't know the answer yet. >> john, stay where you are, we're going to squeeze in a quick break and we'll be live with the president from california with a dow up 177 points. lf. with so much noise about health care... i tuned it all out. with unitedhealthcare, i get information that matters... my individual health profile. not random statistics. they even reward me for addressing my health risks. so i'm doing fine... but she's still going to give me a heart attack.

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♪ from the floor of the stock exchange, we're watching for the president to start speaking in san jose. the president expected to take questions, and on the security issues dominating the news right now. >> i don't know. the guidance i got earlier he might take one but there was no guarantee or expectation. it's unpredictable when a president makes a statement like that and gets questions shouted

at him. mostly he's going to talk about health care and his view of the progress in california. i would expect he would also probably near the top of the remarks make some comments about the jobs number today, which was on trend, not breath taking but solid. he wants to tout the 29 consecutive months of private sector job growth. >> do you think the white house is satisfied with the job level? >> absolutely not. nobody is satisfied with it. nobody is satisfied with the level of gdp growth we have. it's better than the alternative but it's not robust enough to bring unemployment down to where it needs to be for a healthier economy and bring wage growth up. that's one thing we haven't seen, a whole lot of wage growth. >> where are we now on some grand sort of plan to systtimul the economy? where are we there? is that possible? >> nowhere. the stimulus that we're going to

get is coming from the fed. the president is -- got his hands full trying to figure out some way to roll back the budget sequester. republicans have not been willing to do that although interestingly, they've shown discomfort with the low defense number, which if they -- if that's genuine, if they are really upset, that might be a lever for negotiations in a bipartisan deal. as of now, we are not looking at any additional substantive stimulus programs, whether infrastructure or anything else. >> we're just waiting the president to take the stage there. what do you think he will say on china in meeting the chinese premiere this afternoon? >> i would expect him to say nothing on this event, other than noting the meeting will take place later today. we're hours from the meeting and the president will try to talk about health care and the economy first as we've noted

earlier, he got a very awkward back drop because of the nsa story. >> we'll leave it for this program. that does it for "squawk on the street" we'll hand it over to "the halftime money report." have a nice weekend. >> thanks very much. it is noon in the east. welcome. we do have our eyes on the podium out in san jose where the president is expected to speak about the affordable care act, likely to make some type of comment about the jobs report, better than expected. that's the reason you have wall street off to a great start this day. the dow jones industrial average is up 172 points, stocks up across the board. quite a reversal that picks up on the momentum that was built midday yesterday when the stock market completely turned around. remember the dow and s&p had broken below the 50 dayin