>> yeah, i think so. kudlow made a great point, reasons to be concerned about that, but i think sentiments improved and more investment. >> all right. thank you. >> yeah, thank you. a lot of fun. >> enjoy the week, a long one, join us monday, and "squawk on the street" begins right now. breaking news this morning, of course, the june jobs report blowing past expectations, the unemployment rate falling. good norng, welcome to "squawk on the street," i'm david faber with jim cramer, and carl quintanilla has the day off. futures, of course, after, what are we, a half hour after the jobs number? we are looking for an up open, at least thus far. not too much, although won't take much on the dow jones industrial average to take us to that psychological important 17,000 milestone. ten-year note, where the new seems to be flowing right now, jim. we're almost at, well, 268, up

sharply on the yield, of course, as the yield goes up, price goes down. the differential has not been larger in a very long time. >> interesting state. >> yeah. >> glad you put that up. people talk about why rates are low versus europe. good point. >> talking europe, there it is, largely in the green. european central bank, by the way, leaving rates unchange as you see, largely a positive picture. they will not be closed for the july fourth weekend. >> no. >> they will be trading. we will be, starting with the jobs number on a thursday. the u.s. economy added 288,000 jobs in june, ahead of estimate, and unemployment rate fell to 6.1 %, the lowest number since september of 2008. remember that month? >> yeah. >> all this pushing futures, as you saw, slightly higher, dow closer to 17,000 having that impact, as i said, on the yield, on the ten-year note. a look here, my friend had a

great summary, which sometimes i use, thank you, peter. 194,000 for 2013, household survey up by 107,000. talking about the up employment rate to 6.1 from 6.3. expectations for at 6.3, lowest numbers since 2008, and 6 down to 12.1. overall, very positive, jim. you can at least, seems some people say, well, there was a fall in the household survey in terms of full-time component versus part-time. >> right. >> and that may be something that people look at, the quality of the jobs, again, and come back and say, well, that may be one area, at least, put up big numbers, 230, average last month. >> i think one of the extra boosts was we saw the gdp number for the first quarter was very weak. look at the businesses that nrkdsed higher, retail agreement increased 40,000 jobs in june.

when the country thawed, business came back, when business came back, people said, holy cow, we don't is people working to handle business. this is a demand-driven hiring. it's so across the board, david. when was the last time you saw businesses in bonanza adding jobs? 17,000 jobs. transportation warehousing, shipping more goods. this is a really beautiful mosaic of an economy hiring in many sectors. it's only been oil and gas for a long time, but now it's across the board, very positive. >> i want to get the impact from your mind in the stock market, of course, but in terms of the bond market and fed which many people turn when they hear a number like this, if participation rate say stays the same, book says labor markets tighter than the fed thinksing and 6.1% unemployment rate matched target, hence, move on rates faster than 2015?

>> say it's a reaction to slower gdp. look, it's good -- good numbers, okay. perfectly within reason for her to signal something, and -- >> by the way, six months away from 2015. >> it's going to be the year, but we're all so conditioned, some ideological and some of its prelim, and so conditioned when you get the numbers, sell stocks. that's true, you have to sell utility stocks, start selling the companies, general mills reported a number last week. i don't mean to pick on them, have a great ceo, but you have 1 1% revenue growth there -- >> hard to come by given the cereal market. >> goes from 54 down to 52 bouncing back to 53. okay, that's a bond. bonds are -- not much more than that, after tax, the tax rate's good for dividends, but i have to start about thinking

caterpillar. wait a second, they were the best performing stock on the dow from -- 16 thourngs level to dow 17,000. but so what? >> you want to keep owning and/or buy the industrial names? >> yes, exactly. >> i pulled the file numbers from this morning saying, woah, that stock shouldn't be at 66 longer. ache a company, honeywell will not stay at this level. this is what we waited for, numbers higher, revenues up, and the price for employment, the labor's not gone up. it's leverage to people at home. leverage makes earnings explode. >> and top line growth to the point earlier with joe, where you are focused opposed to multiples which are fairly high. >> we have been through a lot of economic captiexpansions togeth and what's important, david, stop paying higher multiples for

earnings and get bottom line to jump because of the top line. it's good, not bad, and please don't be confused by those wo give you a mixed message. >> no. we're not seeing wage pressure. if we start to, that could eat into margins. >> that's why she has to raise, when she sees wage pressure. right now, talking a quarter when we get reports next week, you're going to hear a word not hear in a long time. visibility. people are going to say we have good visibility. have not had visibility since 2007. >> that's true. lost it and never got it back. >> trying to get the contact lenses. >> every time we're out of the woods, we have not quite been there. >> yellen is thinking that, not wanting to use rates as a tool because of the financial inability. the fed uses this ridiculous, let's raise rates or help wall street at the heart of main street. she's promain street. the fed has not been promain

street in a long time. lulu lemon founder speaking to private equity firms to take the firm private according to "wall street journal," but there's there's no deal in the works, and the transition would be facing hurdles, but the stock is moving higher on the report, and that's why we mention it. we do seize these mentioned occasion occasionally. it's an idea on the part of the founder considering. back in my day -- >> back in your day? we're in that day. i can use that phrase, you have no right to it. i was there when they signed the declaration of independence. >> it's not that great, and covered it seven times as long as anybody else. you wouldn't have done a story like this, but that's what stories are like now. the stocks move's jim, i don't know what the numbers are, are not going up now. >> going down. >> leading buyoffs, a special committee, you know, you got a

lot of things going on. he's x. >> right. this has a best buy feel to it,day, and if you recall r there was not an inflection. there's a lot of good ideas out there. what's the process? is he calling bankers, do you think? >> yes, he is. if he's interested, line up financing sources and figure ought who the partner's going to be and potentially getting calls in terms of your equity partner, right, and bring in the management team or leading that charge, and them the key is, can you raise the money, model out problemerly and had you be able to fine a firm and/or firms willing to do it, move ahead with it, negotiate with the company itself, and see if you get to a number that makes sense. >> going a model that shows if you execute better, cash flow is x and then you can snare the company like dell. >> yes. >> fire more people or

potentially not -- feels in the case of del, a perfectly good example because they had a management -- by the way, is going extraordinary well from what i hear, and making carl icahn look right in terms where they were able to purchase the company. although, there the special committee gave them a hard time for a long time talking about significant decline in pc sales we know about, but, yes, that's the process you follow, but we'll see. the stock doubled from where they could have got it done on the numbers. >> feltd the competition from amazon was too great, no onemented to buy it, and them the turn around. be careful, under armour, careful, gap, it's not execution. there's competition in the segment, david, and that's why people are evacuating. >> yeah, and also transitioning the ceo position not lock gene.

>> khristine was a bin winner, she's gone. >> she's gone. google blocked access to an e-mail containing confident rl client da to sent to a stranger's g-mailing the by mistake. they are looking for a court order to tell google to delete the e-mail. former ceo lynch, we mentioned him 2008 early we are, removed from europe's right to be forgot p. i foipd this spresing, right to reserve justice? >> this was negative, not that there were not many of them, but a difficult tenure at the end there as we know. perhaps not waking up to the portfolio, and seeing this before it was too late, but that said, what's the impact, if any, of the various rulings that get to privacy on whether it be google or the facebook, the facebook psychological

experiment that we saw of a few days ago, that, again, in europe, much more sensitive to these things. don't seem to care in this country. >> no, because i was taught by my lawyer for 25 years that when you send an e-mail, it's on the "new york times" so feel selective. i see this thing, i remember the rule that my friend bill taught me, don't use more than ten words in the e-mail. we e-mail back and forth, and there's no expectation that e-mail -- it's on the server, and the government knows receiverers. i had serges done where the government has a guy. usually, your internal counsel does it, and there's not anything you've ever written they can't get. by the way, i've been involved with the government where you thought that you deleted it, you thought it was not on your hard drive. oh, man, the government has the greatest people in the world. you have no expectation of

privacy. i don't know why they are getting lucky. >> maybe they will. i don't know that impacts google this morning, but up next, we will talk about one stock having a big impact, petsmart, a big spike and we'll tell you why. thomas perez joining us live with the first reaction to the jobs number this morning. another look at futures here. yes, it could hit dow 17,000. got a lot more "squawk on the street" live from post nine at the nyse. latte or au lait?

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on qualifying purchases. know better sleep with sleep number. petsmart spiking more than 10% after disclosing a 9.9% stake and intends to have conversations with management including exploring a potential sale of the company, talk about the capital structure, return to capital, all sorts of different things. obviously, jana is among the more active of activists, led by barry, he of the hampton's house fame, paying the most money for a residence, but i think he beat

the market, move above what he paid. >> flip it. >> that a story for another day. here, what do we know about petsmart? >> there's a 17% short position because it was to beat amazon. go to the petsmart.com site, which i do, the worst site seen. i said that on air, and they have money, save up to 40% on a dog collar. it's a terrible site. that's what people bet, that petsmart sells a lot of stuff that is sold on amazon where it comes to your house. they have not done good with private level, estimates going down, negative same-store sale, and all that said, david, this is a terrific growth category with not a lot of people coming in. get the omi channel right, and the stock goes up. the stock is going down, down,

down, and there's a trend in having pets, we know that, with the best data on pets, but it's smart to buy the company, take a shot at it. i have to tell you as the piece, the best, dated june 19th, waiting for the dog to learn some new and old tricks. i've been too. jana thinks they have them. a smart call by them. >> all right, 8.9 million shares, 4.7 million under option, a $341 million investment. >> it's cheap. going for 435. inexpensive stock. when i see a big short position in the stock, i say, guys, what are you thinking? think amazon will wipe out petsmart? this is not that story. this is not circuit city. it's got a growth business, just not executing. >> a battle may end sue here. we'll follow it. for now, though, the stock is up

sharper. arthur reaching hurricane status this morning moving steadily towards the north carolina coast. the weather channel is live in kill devil hills, north carolina, and she has the latest for us. good morning. >> well, good morning, david. the surf and the wind is picking up here, but it is going to pail in comparison with what is headed our way. hurricane arthur bringing heavy winds and rain and dangerous rip tides. the 250,000 tourists here to celebrate the fourth of july week are keeping a close eye on conditions as are tourism based businesses. this is the busiest money making weeks of the year, and so far, it looks like hurricane arthur may not devastate the earnings. a lot of people indicating that they plan to stay here, plan to ride out the storm. stores already reporting a run on supplies, gasoline, lanterns, batteries, things like that as people prepare to hunker down. now, arthur's actually expected

to be somewhat mild compared to hurricanes of years past. still, officials are warning people to take their warnings and cautions seriously. north carolina's governor saying earlier, don't put your stupid hat on. david, it is a blunt, but an important reminder as things are going to get more extreme here as the day goes on. back to you. >> all right, thank you very much, we try not to have the stupid hats on too often. up next, cramer's mad dash counting down to the opening bell. a look at futures, of course, before we hit the opening bell. we have a lot more "squawk on the street." >> looking forward to mad dash too. >> all right. we have a lot more, stay with us. were you able to nail the number? if so, you're taking home the cnbc construction hat sign by

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seven and a half minutes before the last trading session of this week, and, of course, our markets have the big employment number to digest. that is having an impact already on rates, which leads us to the mad dash. >> all right. sometimes you don't want to out think tings, david, say to yourself, all right, what's going right and what can go more right? the banks recently started pickups. why is that?

the banks are wear you go when rates go higher. i'm using bank of america only because deutsche bank had a piece yesterday saying, look, business could be better, you know, the fix in the trade might be better. there's a pull over it because president obama talk about how there's too much risk in the banks. stick with the regionals. regionals should fly here. there's wells fargo, u.s. bank, but don't forget rs when the -- this is about just margin expansion for a bank, and when you have more demand in the industries, that means they do top line growth, so when we go into earnings period, the conversation becomes very different in the q&a because of the employment numberment don't out think, buy the banks. >> net interest margin a beneficiary. >> yes. >> especially to the likes of the wells fargo. you mentioned fixed income, currency, and commodities, more of an issue for the likes of a goldman sachs or the bigger banks, jpmorgan, citi group, and concern about that business?

>> that's what struck me about the deutsche bank. they said that vix is bottom. i said, going back and forth with the travel trust manager, and i said, listen, the job cuts are kicking in, revenue. she goes, no, the deutsche bank piece was about increase in business, stabilizing. if that happens, and you have mna is good. >> we know that, capital markets are good, the ipos, the fee structure, fees when you have a very strong fixed income cap on commodities. >> multiples here are low. no one is expecting that rates are going to have this kind of move because no one expected the job numberment you' menumber. you'll see these flying meaning they could fly into the report, and they report in two weeks. >> we'll watch that and the commentary around it, particularly if we see a ten year staying at 27 or moving pup. >> look, this is the focus name. the industrials too, but the banks have been -- bank of

america is still down from where it was a couple year ago, and this is brian's chance. if there's no screw up, this is best in show. i know, what a caveat. >> no psychiatry up. we have the opening bell, last trading day of the week as well. just a few minutes away, the dow, of course, poised to breakthrough the 17,000 barrier. we have the market open. stay with us with "squawk on the street." today, provocative guests, hot topics, actionable moves in the middle of the trading day, futures now today at 1

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with the mobile trader app. from td ameritrade. you are washing cnbc's squt squawk on the street" live on at the financial capital of the world. opening bell set to ring in two minutes. the number itself, well beyond that in terms of the participation rate, in terms of the idea of people who are working part-time and full-time, that's 6.1% unemployment rate, by the way, where we were before the recession, where we were in september of 2008. pre-recession levels, but when you look within the number, some say, you know, 3% of the figure in terms of part-time work is much higher than it was back then. >> well, someone's going to say

that's because of affordable care act. paychex on last night, most use that, and they said, they are adding people. why? because they got more demand. that's kind of what you want. don't ever confuse people at home. the idea that economic growth is not as good or better than having low interest rates driving the market. it's just different stocks. you switch your portfolio. by the way, there's nothing wrong with saying, you know what? i had a good run in dominion or electric power, but the runs are over for now. switch your portfolio. >> if we have this number, you are going to have to start to have that conversation about qe ending perhaps earlier than we expect. the two-year yield, the highest since may of 2011.

>> there's stocks that get hurt. look, you can come with a wrap about how they were doing better, and i think the secret that happens now, tax receipts go up, and that means of the goch government, a bad source of growth, will start hiring again rather than laying off. it's a circle. i use the word virtuous because in the end, when jobs are created, there's more money. when more money is created there's more wealth, and wealth means more to buy stock, meaning more retail sales, more companies making it so you can have 19 million cars sold. i'm just telling you it's not -- i'm not a polyana, economic expansion helps the market. >> see the realtime exchange at hq, and cheering going on at the nasdaq, that's the off broadway production of heather's musical, and that's the four block foundation, providing career development to returning veterans and transitional support to their families.

off broadway production of heathers, the musical. >> i saw it, it was great. shaking from how great it was. people should see that. you can't be in the yuits. >> i make a point of saying irrelevant average followed, however, closely, price weighted, that's why. above 17,000, never seen that level before. >> okay, look, s&p is what you have to focus on. dow is fun. i like to talk about it, companies everybody's heard of. they kicked out companies who do well like alcoa, but s&p is where the money is, and that's how people trade. they don't trade -- there's not billions of dollars of index to the dow. it's nice. it's a talking point. it is not what the stock market is about. >> now to the extent the individual investor is not a part of the market for a very

long time, and conceivablconcei of the market begin what happened not just in 2000, but then in 2008 and 2009, does a number like this make them wake up and say, oh, maybe i should, you know, be thinking about something? >> what should make them wake up is they are not making anything in fixed income. they are in the wrong place. i saw municipal bond funds hammered yesterday. >> puerto rico is concerning a lot of people there and power authority with what's going on. >> i think that people -- will people wake up? the asset class is permanently damaged, okay. it's considered to be a rigged asset. michael louis, powerful writer, said this thing's rigged. people don't want to be in a rigged asset. i come back and say, do you think that a company like a verizon is rigged? i mean, do you think that disney is rigged? these are companies that do well in an economic expansion, stop out thinking it and thinking the asset class itself is what you

should be or shouldn't be in. buy great american company stocks and do well here as we get into economic expansion. >> i just want to point out i know our viewership in particular is highly capable of doing math, but the difference between 16 and 17 is far less than 10 and 11. >> and, no -- >> it's not going to take as much to breach the psychological thousand barriers. >> i remember growing up, i listened to the dow jones industrial average would close before -- remember in 1983, the money was indexed, when everything changed. dow was important because it's how we thought of the stock market. should retail investors care about it? absolutely not, but you're not going to get a good return in fixed income with this kind of number, and, so, therefore, call your broker say, listen, i need an alternative to fixed income because i'm not getting a return, but maybe negative. >> electric power, dividend ye,

3.7%. >> that's not enough. >> enough for you? particularly after given what we have seen year after year. yeah, the ten-year breach that 25, but it comes back down to it. when i say year after year, we have momentum and it stalls. >> that's always been the case, and the gdp is expanding here, and as -- that you've seen a lot of stocks that have high yields do incredibly well, and they became kind of growth stocks, and what i'm saying, use the example of clorox, okay? yields 3. good company. procter & gamble yields 3, good company. you're looking for earnings growth. that puts you in a different category. if you're in the utility fund or you've been hanging out in cash, i am saying that you got to realize that maybe a fund that has a little more industrial

exposure does better than a fund in utilities where i think you're going to get hurt. >> can't help but look at petsmart again. the number is soaring. a big number based on a significant stake from a well-known activist, a 14% jump. you pointed earlier, jim, there's a short position there. >> yeah. >> some analysts are weighing in. >> it's unlikely a deal occurs. look, i know petsmart well, been negative on it, and the idea that i can dismiss the idea there's a deal, look, the company has been undermanaged, people trying to figure out how to have a growth story on pets, and the companies not do better. look at kroger, for instance, the best run chain in the world, private label, a lot of good stuff, bought a company yesterday to increase their online strategy. i look at petsmart, they have been caught with their -- just -- okay, with their pants down not understanding what's happening in the country in terms of how i can order pet

food. when i order pet food, frankly, i order from the case by amazon. i don't go to a pet store anymore. these guys were not early on the chinese pet, don't buy that dog food, and now they are caught up with it, but i don't use them anymore. i don't use them because it's too heavy to lug the cans. the stuff comes to my house. the dow industrial average, of course, and when you look at it, given how long we've been looking at that thing, 17,000 does sort of -- makes you -- braces you for a second. >> well, talk about pricing, how the index is calculated. >> moving more or less the same percentage-wise as the s&p 500, which as we point out many times is the relevant index of course as always. a market cap weighted index. >> i use it when i send out the performance letter in 1999 and 2000. now i realize i look back, and if someone showed me the performance from 2000, and it's like i started with the dow average. >> did you really? >> yeah, the dow was up max. >> 14 years ago.

the dow is comprised of financials, obviously, the industrials as you mentioned, and beneficiaries conceivably up, a strong employment number and rising rate environment. >> if you look at what didn't do well from the march of 16,000 to 17 thourk, it was pfizer and verizon. people are shorting caterpillar, and there's a case it makes $7 or eight bucks, and i was told i was too conservative, and now too big a bull. that is the way to play this number. >> bob seeing 10, 11, 12, 13 on the floor. >> we have made 17,000, and it is important in the context of what we're seeing today with the excellent jobs growth. the dow stocks here pushing us over 17,000, and as i

emphasized, it's a di veeverse p of people and stocks here. not just one sector. you have goldman, energy stocks, chevron, technology stocks, visa, all moving, cricketing. goldman, the two points there, 14, 15 points right now contributing for the dow, a quarter of the gains. job growth perfectment stronger than expected, what everybody wanted, but not so strong people are panicked about it. this is how i look at things, 28 8,000, the fifth month in a row with 200,000-plus job growth. why is that important? the average is 248. compare to last year, the 2013 average is 194,000. that's job growth, 248,000 is the last five month average, in 2013, we did 194,000. it's getting better, slowly but surely. moving on, what's moving, the dollar immediately popped up, gold dropped a little bit. there's the dollar index popping

up. gold to the downside, strong economic numbers, dollar is stronger, and maybe a little of head winds for certain commodities like silver or gold and plat numb, but i don't think it's going to be great. expect higher than normal volume in the etfs, treasury effs, treasury moved up in the yield, no surprise there, but not too dramatic at this point. tlt, the treasury etfs get moves today. i saw volume at the open there. there's the 10-and 20-year bond. this gets action. this is stpz, heavy volume right at the hope right now. bottom line, the spider, a shortened day today, i think you'll see a little bit more normal activity in some of the efts that are related to stocks. spy and iwm, the russell 2,000. watch those today. back to you. >> thank you very much, bob. the jobs report, as we reported, of course, above estimates, 2 288,000 jobs were created in

june. the unemployment rate also dropping. it is now 6.1%, the lowest since september of 2008. let's get the first reaction from the white house. for that, we are joined first on cnbc by the labor secretary thomas perez. mr. secretary, thank you for joining us this morning. >> thank you, and happy independence day. >> to you as well. a strong number, well-received by the markets this morning, that said, always need to come back to things that people focus on are not as good as the headline appears. there's a good focus on full time versus part him employment. there's more part timers than the last time we saw 6.1 % unemployment rate. love to get your insights. >> this, overall, as you said for the last hour, is a very good report, one of the best reports we've seen since the recovery began. we're now halfway through the

year, and this is the largest growth in six months that we've seen since 1999. this is the 52nd consecutive month of job growth, longest on record, and so it's broad based, professional business services led the way. auto sales are the highest they've been since july of 2006. there's a lot of -- there's a lot of things that lead me to believe we're moving in the right direction, and there's a lot of unfinished business. you point out one issue about making sure that people who are -- who want to work full-time can work full time. that's one issue. also concerned about construction jobs are growing, but they are not growing fast enough, and that's why we need to invest in infrastructure. the -- when we build roads and bridges, we put people to work in good middle class jobs. we recovered only 25% of the construction jobs we lost. we have unfinished business there as well. that's why the president is so

focused on a highway build so that we can get people to work and do the critical infrastructure work supported on a bipartisan basis. the area of part time work, area of construction, two areas of unfinished business, but, again, you know, i think the economy is clearly moving in the right direction, and we also clearly know what we need to do to pick up the pace, and it's to muster the political will to get an infrastructure build to get more money in people's pockets raising the minimum wage. >> secretary, to your point, manufacturing, i think, added 16,000 jobs, construction, only 6,000. people look at the report and say not nearly the gains of some other industries that are lower paying. we're not creating the higher paying jobs in this economy, and we're also, by the way, not seeing a great deal, if any wage inflation, which some are curious about given it does appear there's starting to be shortages of labor. >> well, again, you look at this report and you look at the trend

data over the course of the first six months of the year, the super sectors that are growing include many super sectors that are well-paying. again, professional business services grew the best last movement. these are good jobs. these are architects and other professionals. look at, you know, education in health, you know, health care has been relatively recession proof throughout this. again, auto sales the highest since july of 2006. you know, in manufacturing, the average number of hours worked exceeds 42 hours a week, almost a record high, and so what i want to see on that number is i'd like to see that number go down to 40 hours a week because employers said rather than paying overtime, we're going to bring on more people. that's what i'd like to see in that particular number, but i'm hardened by the fact that we continue -- the manufacturing growth is still at the best pace it's been since 1990. >> what's it going to take to see that then?

you want to see it, i think a lot of people would, additions rather than working longer hours. what does it take? >> continue to pick up the pace of growth, and, you know, part of -- what i hear from employers across this country is, you know, tom, what i most need are more customers. this is a consumption deprived recovery. look at inflation adjusted spending of people at the top 5% of the income bracket since the end of the recession, increased 17%. look at inflation adjusted spending by the other 95%, and it's increased about 1%. people don't have enough money in their pockets, and it's really the -- we know that roughly 70% of gdp growth is consumption, and so that's why we need to focus on measures that put money in people's pockets so they spend it, and that's why raising the minimum wage is a great start, and that's why we have so much business support as well as

support from a ray of other sectors of people on that issue. >> secretary perez, thank you for joining us. appreciate it as always. >> and happy fourth of july. >> to you as well. going to the bond pits standing by with rick santelli, rick? >> an exciting day in treasuries, the epicenter of the digestive process, definitely better than expected jobs data and little discussed drop in the trade deficit. let's start at the top. everyone's talking about the two-year. why? because it gives you a good proxy for the markets for the times of the federal reserve, and even though briefly looking at the chart going back to may of 2011, and you renched it, david, the 35 53 points and the chart moved right, it's now september of 13, but we want to watch it. april 3rd of the five years since these yields. next chart, the tens, april 29

since being here, and more important, may 12th, 266 yield close. if we close above that, it's very meaningful. if we don't, people selling looking for higher rates will be disappointed. years to date on tens minus twos, it's steepening, counterintuitive, and index after all this is up a quarter cent on the year. back to you. >> thank you very much, rick santelli. coming up, breaking down dow 17,000. plus, hurricane arthur causing big problems on the east coast for this fourth of july weekend. former continental airline is going to join us live to talk about the implications for airlines and, of course, for travelers. we're rights back. turbocharged reward can get a $0 card with a new volkswagen turbo. so why are we so obsessed with turbo? because there's nothing more exhilarating than a powerful ride.

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level there. three year closing highs, near 13,000 in april of 2011. move on to here when the eurozone crisis hit around the fall of 2011, the dow got back down to 10650, 17% below where it was months back in april, and here we are today, june 2014, last month, closing within a hundred points of the level, but now, of course, we're all there past 17,000, david, a nice ride, although had bumps along the way. back over to you. >> bumps are follow-up too. thank you, dom chu at hq. a story on tobacco consolidation, a story i followed here for a long time, in fact rs late april reporting on the possibility, of course, on a deal of the participation of bats, 40% owner and dive divestitures take place. deals like this, they come, get

momentum, and then they kind of wane for a while as a result of the level of complexity begin the regulatory impediments, need for expected divestitures, but i wanted to come back to it and, obviously, many other news organizations following this. no shortage of stories about this, but i wanted to come back to it, jim, because a number of sources indicate it is back on track in a significant way. in fact, i said that, not that long ago, but it is weeks away now. >> weeks. >> weeks. again, they have not yet fully negotiated terms, complexity of the deal could mean it's again knocked off course for sometime, but at this appointment, there's momentum pointing to the announcement, and to call it to be safe before the end of the month for a deal in which reynolds buys lorillard. it could be a creep up in

reynolds as part of the deal and need significant divestitures. analysts have a somewhat negative view of it, at morgan stanley, saying the bull price is priced in at lorillard. 68 is the number, and lorillard trading two times over, and well above the 8.5 times historical multiple. in terms of divestitures, their guess, broonds at 7.5% share, and men thrill is key here. as you pointed out many times are e-cigs. >> they are big for lorillard. the market is growing and growing. >> i want to come back again because it's a story we followed along with broader, huge uptick in merger acquisition activity, and this appears to be on track, perhaps, announcing in the next few weeks. >> look the the airlines. fewer players means buying --

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it's that time, time for stop trading with my man, cramer. >> okay. rite aid, it's down because of the short fall in the previous quarter because of a balance in the wage earner, drugs given to them by a supplier. do 3.9% same store sales, looked for 2.6 management. walgreens i like, cvs lagged, up 7 %, but rite aide begin the decline from the high buy rite aid. >> room left for debt? >> yes, dave, they can fix the balance sheet. every time they fix a store in the wellness center, numbers jump, rolling out left and right, a back from the dead, turn around story, and the company is reluctant to speak. i'll speak for them. buy right in.

>> you get a rare night not to have to do mad money. >> i'm going to see pop. i talked about xlf is outperforming because just one point out, but, yes, have a happy fourth. spend time with the family. i'm doing it. >> all right. i'll see you back here monday. straight ahead, former presidential candidate ralph neighborhood nader joining us live when we come back. ♪ during the cadillac summer's best event, lease this 2014 ats for around $299 a month and make this the summer of style. ♪ in a we believe outshining the competition tomorrow

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welcome back to "squawk on the street," the read on nonmanufacturing ism or the service sector is 46 56.0, a little light. we looked for what we had last time, 56.3. look at sub components on a day where we had 288,000 surprise on jobs, 54.4 on employment index, taking out the previous level by two points, was 52 .4, and most significant aspect of looking highway, new orders jumped 61.2 versus 60.5, and that number

fits in 56 because we had that last month before 355.2, from august of last year, a year ago, 57 preponderate 9 9, the best since fwix. simon, back to you, my man. >> the dow is trading above 17,000 for the first time ever. we are joined from the floor of the new york stock exchange, and highly appropriate, bob, we achieved this milestone with blow out employment figures. i think that's really important today. >> it did. it's important to note that one of the major reasons the dow got over it was because of the financial stocks in the dow like goldman stocks, out performed today, and you get a knee jerk reactionings and that's what's happening. not just the dow at new highs, s&p 500 and dow transimportanpo financials are the key here.

heard about the year on the 10-year, up, but not that much, no sense of panic around it. the jobs report is the perfect kinds of numbers. in etf land, they are betting against treasuries. ultra short 20 years. what you buy when you buy this is minus two times of return of the index. treasuries go up 1%, this goes down 2%. this happens on the other side as well. a daily basis, but heavy bottom. that's going on. bet against treasuries right now. buy financials. you see this happening today. this always happens necessarily higher rates, not always necessarily good for the banks, by zion's, regions financial, cma, bank of america, all up. bottom line here, just about perfect, stronger than expected, but not too strong to freak out the bond market. simon, back to you. >> thank you very much, bob. >> all right, echoing the sentiment there seen from the economists's reports say, well, talk about the markets and the

economy. stocks are rising as bob mentioned on the jobs report, dow breaking 17,000, dollars stronger, treasury yields moving higher, picture of the improving economy and labor market and may alter the fed's path forward. bringing in moody's capital market research group, and, john, the only rub here is people are worried about higher interest rates. that's not happening. stocks rising, and that has to be a sign that things in general have improved. >> there was one aspect of the employment report that weighs against the big rise in inflation risk that drives bond yield charts higher, that's the average hourly earnings. that metric is growing by 2% year over year, it's not growing rapidly enough to sustain cpi inflation. >> and therefore not growing rapidly enough to change the federal reserve's policy path forward. >> i look at the employment

report and say to myself, if we have a third quarter where payrolls grow by 275,000 new jobs from a monthly average, in all likelihood the fed is hiking federal funds, not in mid-2015, but by early 2015. >> and that's the read on wall street right now. saw futures jumping, talking about a march increase, 2015? >> could happen in january for all i know. if we have a strong holiday shopping season, that might be the case, but the market isn't having a lot of difficulty with the fact that the federal funds rate might head up all the way to a half a percent buy the middle of next year. i imagine the fed would approach tightening in a cautious, steady manner. >> i wonder if today is not the tail wagging the dog? this is great data. this is not just 288,000 jobs created in june. it's a revision to april that took us above 300,000. in other words, right the way

through the second quarter. we had great data, and that should be the celebration factory i thought -- the factor for most people. particularly if you look for revenues to grow at companies. >> you're going to see revenue growth, profits grow, and as long as you have very low interest rates, you don't need much in terms of profit growth for equities. in report very much makes that first quarter 2.9% reduction of real gdp manager nothing more than water under the bridge, will be a distant memory. >> provided you sustain this in the third quarter and it's not a snap back to the fourth quarter. >> that's the big question mark. is what we're seeing right now simply a recovery from the suppression of economic activity by a harsh winter? does this all peter out in the third quarter? i mean, we've had very good numbers on auto sales. will that continue? >> what do you think? >> i think that auto sales will

continue to grow at a rate that is well above what we had in 2013, but perhaps not close to that 17 million unit sales pace we had in june. >> i was not talking specifically bout auto sales, but the bigger picture. >> real gdp growth averages, oh, about three and a quarter to 3.5%, which i think is good, but we have to remember for the entire year, you're going to be weighed down by the lousy first quarter. >> labor markets tighter than the fed thinks? >> look at wage growth. it's not growing that rapidly. it's not giving any indication of a tightening of the labor market. >> i have 2.2% growth, ank hours rose 46 cents. >> that's the year over the year. that's just inflation. >> the other thing, too, though, the number of people quitting jobs in search of a better job is down by 12 % from a year ago. that does not tell me the labor

market is getting tighter. >> john, we have to understand why this is happening to get to the stainability question. in other words, are companies hiring now at this rapid pace plus 200,000 in the last five months because they see stronger demand? because they see less uncertainty? what is the reason, and what does that say about whether it continues? >> i think what they are experiencing right now is stronger demand, increases in sales compelling them to add stuff, and right now, they are fairly confident this growth will continue. they don't see interest rates rising sharply to such an extent that choke off credit sensitive spending, for instance. i think they are fairly confident. >> do you see and hear animal spirits out there? >> not like in the past. >> that's not the conversation. that's not what they say, is it? >> we don't want to lose sight of the fact that one of the reasons why we're getting the good sequential growth rates and sequential improvements is

because the base we're growing off of is so low. right now, the recovery just turned five years old, but we only have 400,000 more jobs today in the month of june than we had at the previous peak, that being early 2008. by contrast, when the recovery of 1983-1990 turned five years old, we had more than 11 million jobs compared to the prior peak. >> have we permanently lost those, do you think, because of technology changes, because of outsources? i mean, can we get that back? is it a gradual process? it's important for yellen to think she can achieve that keeping rates low. >> i think she'll do so for the time being, but believe me, growing by 27 5,000 a month in the third quarter, that rate hike is closer. >> who gets credit for the jobs report, is it the administration, janet yellen, is qe working? >> is it ceos? >> didn't hurt at all, but i think it's perhaps just a simple

fact that we're finding the release of pent up demand. consumers held back on purchases of housing, automobiles, or whatnot, for so long are earning enough income finally, have confidence in the future, pushing the economy forward more than anything else. >> john, thank you very much, on the jobs report. >> thank you. storms barrelling up the east coast, delays at major airports, and bumpy skies since that united merger. gordon bethune, the continental ceo will be with us next on "squawk on the street." just take a closer look. it works how you want to work. with a fidelity investment professional... or managing your investments on your own. helping you find new ways to plan for retirement. and save on taxes where you can. so you can invest in the life that you want today. tap into the full power of your fidelity greenline.

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helping dogs help people. welcome back to "squawk on the street," shares of pets mart, disclosing a 9 .9% stake in the company. now, in the regulatory filing, the funds said it will have discussions with the retailers's management and share holders and may push for a share of the company. that's up session highs, just off the highs up nearly 12%, david, back over to you. >> thank you very much, dom chu. well, there's a lot of reasons to talk to bob today, of course, the dow up 17,000, reflective of a positive market. you're not like last year, but nonetheless getting stronger, the bob oistein joins us on the phone. nice to speak to you. >> caller: good to see you and talk to you. >> 17,000, make something of it, of course, you, as a

professional, filed the s&p, as do most viewers, but that said, what's behind the rally? >> caller: well, we're in a mer mergers and acquisitions. i don't think the story's in the market anymore, and, you know, basically, the values are up there, but underneath, everybody's in the social media, the shopping stocks, the pe petsmarts, bed bath, low cash yields, few people doing that. five stocks in the last two weeks taken out of the portfolio or expressions of interest. petsmart, live on closing bell said private equity is interested, a company doing five bucks a share, free cash flow, hidden di appreciation with another 50 cents, and we think they are on the way to seven, and if it's taken out, 85, 90, one of the largest positions. underneath the market rs this is a free cash flow yield merger and acquisition market, and

that's where the money will be made. >> right, well, obviously, you're talking about something that i like to focus on, as you well know, and mna is robust and will continue to be at least in conversations i have. let's get to petsmart in particular. you mentioned, it bob, a larger position. and filed with a 9.9% stake, and they own a lot of the stock wanting to talk to management and conceivably puer pursue a s. come back at me with the numbers and why it could go at the current price, and people shorted the stock as well, which may benefit the stock move up today as they cover. >> caller: i cannot understand why anybody would be short a stock like this. 450 in earnings, another hidden 50 cents in free cash flow because of the excess depreciation no longer spending cap. they do not grow 8% anymore, but

growing at 2%. they are on the way to $6, and everyone says the internet puts them out with dog food. they don't understand there's a wide array of services like grooming, day camps, vet care, and adoption. that brings people in there. it's only giving free cash flow at 17 mobile. shorts cover quickly, the stock's going higher, and i believe it will be taken out, and it's a good move. excellent move. >> right. they will not take it out, of course, potentially trying to encourage management to find a a buyer, perhaps private equity, 17 times free cash flow. that's not bad. you know, lbl -- >> caller: not 17 times now. right now. right now it's only 13 times. >> understood, sorry. you're saying at the takeout price you look at it's 17 times. lbos are not a part of the boom, bob, but strategic mentioners

engineered by ceos who are confident and willing to do something and buy another company, but you are focused more, as you are, on balance sheets and free cash flow generation leading to, perhaps, another leg here, in your opinion, and i don't want to put words in your mouth. >> you're right, david. this is going to a big private equity. everybody's paying attention to the linkdins and amazons. that game is over. you cannot value revenue. there's a lot of companies under the network. we had micros in the portfolio. we've had, you know, a lot of expressio expressions, igt, had express, all interest by private equity, and that's going to continue, and i have to tell you something, the next one i believe is bed bath, a company with $5 again in earnings, with two great con cements urn it. the christmas tree, bye, buy baby, dpieting times there, growing 2% -- >> blew up the number, had a

terrible quarter, bob. >> so what? here's a company with cash, and i don't worry about the latest quarter, but valuation, and, by the way, that's the problem out there. everybody is touting quarters. this is not a gambling casino. this is a real company ha has a lot of value. again, bed bad, in the 1980s and petsmart, shocked if it goes for less than 85 bucks. >> the other gainers we have, the truck maker up 5% on the chief suggesting volkswagen may buy it, denying that at the moment, and lorillard at play in the moment. david? >> i did that story earlier today, that's why it's up, yeah. >> the private equity guys are having trouble getting returns, but underneath the markets, there's going to be a lot of good returns for them if they make the right moves. >> some the other, the trading platforms charles schwab,

e-trade, higher, bob. do you think this is a turning point for the retail investor? >> caller: you know, i hope not because if they get too excited, you're probably going to get a major pull back, simon. >> oh, wow. that was a buzz kill, bob, come on! that's very interesting, though. do you think -- >> caller: i go back a long way with david. >> yeah, you do. >> i understand it's like mna, in the last legs of the rally. let me ask you the question, given it's strong and the retail investor may get back in, for how long can the rally sustain itself? >> caller: well, i try to stay market agnostic. to be honest, simon, since the crusades, there's no predicted markets with any degree of regularity. there's values out there, but markets go down, there will be a correction, i say that 100% assuredty. if i knew that, i'd be a trillion their. >> you're doing okay, bob. no fundraisers.

bob, as always, appreciate it, have a great forty. coming up, both lululemon gaining control of their respective companies they founded. a buyout, a sale, a battle for control of the board perhaps? it is funny for now, the east coast bracing, though, for a big storm. travel delays, headaches, the first hurricane of the season. we'll get you an update next. [ radio chatter ] ♪ [ male announcer ] andrew. rita. sandy. ♪ meet chris jackie joe. minor damage, or major disaster, when you need us most, we're there. state farm. we're a force of nature, too. ♪ we're a force of nature, too. he thought it was the endn for his dof the conversation.d...

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well, it's officially a hurricane down on the east coast just in time to rule some people's holiday. the weather channel's reynold is in north carolina where it's a nice day on the beach, but for how long is the question. >> that's a great question, a question that a lot of people want answered, and i tell you from this view point we see, it's dawning. let's show you this shot. we're -- obviously, you mentioned in wrightsville beach, you have a beautiful water, the

white caps, and everything's dark. that's rain moving in this direction. the main part of the storm, the center is chugging its way up the coast, and we'll be hammered with rain, strong wind, and enhanced surf and massive waves at the same time. wind damage is a threat, flooding is another, and a lot of headaches for people, but the threat is the threat of rip currents. backing up a little bit, if you pan the camera over a little bit, there's an ocean rescue team ready and waiting for any problems you have out there in the surf. people are told to stay out if at all possible, but, you know, a lot of surfers want to take advantage of what this storm is going to bring. the hurricane expected to intensify overnight, rough at times, however, into the rest of the holiday weekend, mainly into saturday and sunday, expecting plenty of sun, beautiful conditions, and, today, it's about arthur. back to you in the studio. >> good to see you, thank you for the time, joining us from south carolina. this is a business issue, a huge travel weekend of the year.

what's the fallout from the hurricane be? jiening us now is gordon bethune, former ceo of continental airlines. gordon, nice to see you. this is early in the year, isn't it, to get this? >> it is, and it's unfortunate it's over one of the heaviest travel periods, but that's the way the world works, and we're getting it when it comes. >> you know, i feel as if we rehearsed this conversation so many times over the winter because it was such a long winter and there was so much travel disruption. i came to work this morning to get a flight out to europe this evening, and they cancelled the return flight in two weeks time at 4:45 this morning. is that the degree of sophistication they have they can tell what they cancel tomorrow and therefore what the plane displacement will be two weeks down the line? >> i think at the calculated risk, simon, they handicap it and take bets, and sometimes they are wrong and shouldn't have cancelled, but it's a

handicap in that they do begin their experience in the weather. >> you know, last night on a more serious issue, the department of homeland security said that it had asked airports around the world to increase, enhance security checks for flights coming into the united states. it seems a tough call begin the situation that we've believe there may be these bombs that are undetectable to work through every's luggage and find devices. must be a nightmare request, isn't it? >> well, that would be a very manpower intensive task. i'm not sure that they asked to go through every's bag. in general, though, simon, i think the tsa's doing a good job. i've seen a lot of improvement over the last year or two so if they can for something, had has merit. >> i'm curious. watching the airlines this week, they didn't perform as well as the broader market. delta airlines actually put out a warning yesterday reporting an important revenue measure was below what the street expected.

excess capacity in international markets. what's your sense right now of overall capacity with the big airlines and pricing? >> well, i think it's about where it wants to be, you're right, maybe the international is over played. i was -- we were talking earlier about the four domestic airlines controlling capacity, and that's why they are doing well, but there are a lot of international players that are throwing capacity into the market that affects international revenue, and that's what you are seeing. >> mainly the middle east and asia. gordon, not all stocks are flying. some done well. delta doubled, alaska hawaii, and united has not done well at all in the wake of the merger, really lacking. what's going on there? >> well, i -- they struggle in the beginning. i think they are getting their act together. i got every confidence in the management. directionally, simon, i think they are correct, but they are labor and operational issues that handicapped them. >> interesting.

barrons says american airlines may have 25% upside. which do you think is likely, 25% upside in american or in united? >> wow. you know, that's a really hard one to call, and i wouldn't be good at it. i'm parochial, simon, on american's side, but there's amazing stories and good management, and they well may be right. >> have a great weekend, nice to see you. gordon bethune joining us there, former ceo of continental. coming up. ralph nader's latest thoughts on the gm troubles and facebook's nonapology apology to the users. the dow is breaking through the 17,000 barrier. full coverage when we return. listen up... i'm reworking the menu. veggies you're cool... mayo, corn dogs...you are so out of here! ahh... the complete balanced nutrition of great tasting ensure. 24 vitamins and minerals.

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oo the eia saying we saw an injection over this past week over a hundred billion cubic feet on the money on what analysts were expecting in terms of the natural gas injection. natural gas in the entire energy complex today has been under pressure as the dollar straeptenned following that strong employment number we say this morning. that said, with the injection, we still see natural gas inventories at an 11-year low, although, hurricane arthur poses no threat. a hurricane could see prices serge later this summer, but we

are well below the peak we saw this winter as we saw record injections with all the cold weather well below that peak of over $6 we saw back in february. simon, david, looks like my bet that we're going to hit $5 nat gas this summer with the guys might not come to pass, at least not yet. back to you. >> you have a day job, look on the bright side. if you are just joining us, particularly on the west coast, good morning, a big day for the markets, breaking 17,000 on the dow for the first time ever, on what i think, by all accounts a blowout employment number, creation of 288,000 jobs in the month of june. joining us is the cheech economist and david kelly. diane, what's the reaction to the data? what's the immediate analysis? >> well, there's great data in here, actual weather effects, hate to say that anymore, but we saw some 20,000 teacher jobs

created because the snow jobs delayed when schools were out. that got teenagers not participating in the labor force, 16 and 17 -year-olds and 20 and 24-year-olds. we saw good news on the unemployment rate coming down, but that participation rate still stubbornly low and wages low. meat on the bones, architect jobs and that's good news out there. no wage gains on the downside, and that's what yellen is looking at along with the number of people taking part-time instead of full-time work still hot. >> david, i know you want to default to a conversation about when interest rates rise because it's a theme, and rightly so of the analysis, but just to dwell for a moment in the great news which was the employment both now for a third successive month rs a great second quarter, david. >> absolutely. i think it puts a light to the first quarter drop in gdp.

i mean, we've seen 2% annualized growth in employment so far this year, and the economy is taking off, but as i said, you know, in some notes here this morning, the economy taking off, running out of runway for 0 interest rate policy. >> yeah, we hear that from a number of economists. diane, in terms of wage growth, that's not picked up. the .2%, and you hear the argument, the more we see improvement in the labor market, that trickles down into higher wages, and here five months of 200,000-plus jobs, an unemployment rate not seen since december of 2008, why aren't we seeing higher wages? >> well, there's a couple things. we have the volume of jobs and more almighty on the boeps in terms of new jobs, but we have a lot of low wage jobs created as well, and the people are taking part-time instead of full-time jobs, that's out there as well. that's holding -- and we still have a lot of slack in the labor market, not seeing the participation rate come up, what

you need to see on the dash board of things of healthier labor market. it's very important to understand this nuance because it's -- yellen made clear that the fed is in no hurry to raise interest rates and buying into the secular stagnation argument arguing for lower norther eer n interest rates, and they are buying into it, slow in raising rates and keep them lower longer than they would have in the past. they made that very clear. yes -- i think we'll see a lot of people surprised at how slow the fed raises interest rates. >> david, i know you disagree with that. you said it before, you think the fed will be forced to raise sooner rather than expected, and even if i look at the sort of balances we have now on yields, for just this week, up 17, up 20 years and the 20-year followed through. the market appears to be turning, dave. >> well, yeah, and i think to the larry summers argument, i accept the idea if we got so

broke in the long run, have a slower pace, but we're running out of capacity here, and i think wage growth will pick up over the next 12 months rapidly. the issue is people don't realize that the labor markets improved. if you look at surveys, they think the labor market is weak, but numbers say it's tightening, and employees and employers recognize that, you sigh wage acceleration. >> i have to bottom line it for david. when do you think we've have a clear indicates of rates wages from the fed, and what does that mean for the equity market, and then diane. >> i think we'll get a rate increase in 2015, the equity market moves higher this year, but watch this stage because people should invest internationally. there's less room for upside here in the u.s. equity market. >> diane? >> i would say i would love to see the fed raise rates because that means the economy is a lot stronger. i don't think it's going to

happen. in fact, i want to point out composition of those voting on the fed is the most dovish we've got in years in 2015, and i think they are going to hold off until the latter half of 20 15 to raise rates, a different scenario, hold off and allow inflation to reaccelerate before they raise rates because they want to see meat on the bones, and they need more wage acceleration. i don't think it's going to happen quickly. the wages have been sticky. >> raising so many questions, but we have to leave it there. thank you, both, have great weekends. new developments as both lululemon and american apparel fight with the founders over control of the companies. we are back in hq with more on the developing soap operas. >> nothing like a soap opera going into the week. the founders are not sitting back quietly and taking things in stride. american apparel founder, doug charney, fighting to gain control since being ousted in june. he's handed over his stake and voting rights to hedge fund

general, leading to the spring, and general is now talking to the american apparel board about new leadership, keeping manufacturing he u.s., and continuing to pay a living wage. that's a reversal from the original partnership with the fund. they initially lent stake to charney building his stake, but that plan hit a roadblock when american apparel adopted a poisen pill over the weekend. they are not permitted to move without the funds. it's a risky move. separately, lulu lemon founder, chip wilson, continues the pursuit of strategic options for his stake in the retailer. teaming up with private equity partner could be an option, though i'm told it's far from the only scenario explored, and that every scenario is just a preliminary stage, but, still, fun to think about and a lot of speculation in the market about what could happen. >> yeah, and investers buy it today, up 3%. thank you for running us through

the developments on retail. do facebook users need an advocate after reports of anything goes culture, facebook testing experiments on your profile. ralph nader weighs in on this one next. as we break, take a look at the dow winners in today's session, helping propel the dow past 17,000. don't go anywhere." squawk on the street" will be right back. s, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and e-trade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. call or click to open your fidelity account today. in a we believe outshining the competition tomorrow quires challenging your business inside and out today.

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shares of lorillard after reporting today on a story we've been following for quite some time, potential consolidation of the tobacco industry led by reynolds in negotiation to purchase lorillard along with the 40 % earnings, would increase position, a lot of divestitures taking place here, it's a regulatory morass if you will, so this deal reported on by many has been on and off in ter terms of being on track, but i reported a number of people p t

close to the situation indicate it's moving ahead with momentum behind it and hope to have a deal announced as soon as let's call it the next few weeks to be safe, and that is, as you see, impacted the stock price, although, depending on who you follow, quite positive on it, wells fargo or the analyst that morgan stanley, not quite as positive saying, hey, mull. s moved up a great deal given speculation and 68 would be his highest take out price. >> it's an interlocking weapon. >> there's a lot going on being specific to the negotiation, and then to the other point, find buyers for what needs divested to get past the regulatory authorities, and that was noted by others as well, the potential 30% sale of the spanish operations that you noted by imperial tobacco to give them

money, participates to participate, and they are one of the participants in terms of negotiations. >> the favor of price pop of lorillard. outrage continues against facebook's psychology experiment that the data team operated with few boundaries and limits. is there an upside to this for facebook and its users? on the cnbc news line now, consumer advocate ralph nader. curious your thoughts on the facebook psych logical manipulation. >> caller: first of all, it was done in secret with over 700,000 facebook customers. second, it was a severe conclusion, basically, that facebook was experimenting with all this personal information that people give free in terms of how they get them in various moods by altering the news feeds, pessimistic news feeds,

optimistic news feeds they provide them. i go much more deeper than what the commentary is saying. facebook wouldn't exist with without all this personal information that people give it free. all this personal information identified by personal names is what gives facebook its enormous growth and power. now, why don't we charge them for the information? why don't people on facebook start a movement and internet facilitates that where they say that we are going dob paid for this personal information that you are making billions of dollars from. >> you think consumers -- >> that's the argument. dpl you think users of facebook should be paid when they conduct experiments for the research like this? >> caller: more than that. they should be paid routinely for the information that is utilized in order to get advertisers focused on the customers. so not just by the experiment that you mentioned. that goes without saying. there should be a whole new relationship between facebook

users and facebook corporation. where no longer do they get their, quote, inventory, quote, free. >> facebook apologized for this, sandberg came out saying she was sorry it was poorly communicated, not the fact that they did it. >> pretty lame. >> do we need a stronger response there? >> caller: it's a lame thing because what she and zuckeman are not telling us are other projects that are secret, releasing people's information accomplished by facebook or others underway. we need full disclosure. ? it's not just facebook surely. this is the risk. of the age, our information is everywhere, voluntarily joining facebook, google through gmail, and it's really not just the social networks. >> caller: that's correct. you know, google does it, the others are doing it too, just facebook happens to be in the news now, so we need a whole new relationship between the

consumers of the social network companies, which are making money hand over fist, using our personal information and owning it. >> ralph, ralph, that's not going to happen, is it, you're not going to get 1.3 billion people saying we need to be charged, give us money for access to what we're giving you. how would they connect? via facebook? >> you don't need 1.3 billion. great changes occur when less than 1% are active and represent the sentiments, the opinions of the majority of people so you need just the hard core -- >> if that was the case, surely the nsa would have had wings better clipped. >> caller: another subject, isn't it? right now, social media has got to undergo a property asset revolution, otherwise it's more of this and people will be reduced to information serfs. >> thank you, and it's a debate we'll continue to have in the

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built for business. welcome back to "squawk on the street." yes, america's 238th birthday tomorrow. today we had a very nice birthday surprise with 288,000 jobs, and it's always a pleasure to have jim bianco, one economist that calls it the way he sees it. what did you think of the jobs report, jim? >> i thought it was a pretty average report. now, average, we have averaged 222,000 jobs the last six months. 288 in the last month. pretty much what we've done through 2012, 2011 and 2013. nothing on the up or down side and that job growth produced weak economic growth throughout that period and we continue 0 have it. >> how do we square? listen, i understand that the first quarter isn't necessarily reflective of the entire year. but it is reflective of the

notion of underperformance. okay? so how do we square underperformance in the big numbers like gdp, versus what we see on the jobs front, because we all want to harkin back to a different time where 288,000 jobs wasn't bad, but that's not when the fed had the balance sheet and all the other issues? >> 1980s, coming out of the recession, half a million jobs created. a simple answer. the jobs created are not creating wage pressure, not creating productivity, there's no capital investment. so people are getting employed, but they're not getting employed in sufficient enough numbers to really push the economy forward, but that's why we struggle. a nice way of saying, i guess they're kind of low pay and part-time jobs. >> i don't buy into the notion that we may have, or we need to have, this huge equity correction. tell you why. show a couple of 9 charthe char. pick the date more objectively and pick 2007 for the 14,000 and

dow, look at the return, total return of ten year and 30 year what do we find? >> that the bond market outperformed the stock market. the bond market has outperformed the stock market the last seven years. january 2007, that's when mutual fund investors, equity mutual fund investors starting selling and haven't returned since. sthans period, put their money in bonds. everyone's ridiculed them for the last seven years, and bonds have outperformed stocks. >> last answer. got to go. is the market moving higher in rates because janet yellen will be objective with the strong data or looking at the notion that we are seeing improvement? >> i think it's an janet yellen being objective with the data. it doesn't trust her. >> got you. jim, happy fourth. to the audience, to america, and sarah, it's all yours. no tropic for me this weekend, rick santelli. i'm out here in my indycar race. the pocono 500 is happening this weekend. we'll be live on "squawk on the

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added a twist. added 100 miles more than last year. joining us here on "squawk on the street," outside of the exchange with his car is indycar racer and owner ed carpenter. good to see you. >> good to see you guys. >> obviously, cnbc business network are interested in fact you are an owner and racer. the only one in the series. that's got to be a different ball game. what's this week like as an owner? >> always busy. the weeks for me, when i'm in owner mode. towards race weekend i have to start thinking as driver and an athlete again and getting mentally prepared for the race. i'm excited it's going to be a 500 mile again. the race at pocono hasn't been that since 1989. >> what does that mean for practice, the cars and describers? >> it doesn't change practice. the longer races makes it, adds more strategy, you know, more opportunity to do a good job, you know. more opportunity for people to make mistakes. so the longer races, it makes it mentally more challenging on

people, as a more experienced guy in the series, i feel that is an advantage to me, just with experience, but that's not always the case. >> you've had some good wins late lit. would you consider as an owner expanding your team to more than one car. >> we're trying all the time. the indycar series and racing in general is a sponsorship-driven industry. so growth has to come with funding. but we're always working hard for that. >> and ultra premium, your big sponsor. how do you negotiate the sponsorships? >> being in the right place at the time, a lot of it, meeting the right people, networking and helping them show a return and growing a great business. we have a great relationship fuzzy's vodka. we have a good time together. >> an extra 100 miles, that's 20% longer? >> yes. >> you put your advertising rates up by 20% say, look, we'll be on the television for longer. >> it helps us show a better return. our budget and what we ask for is kind of the same no matter what, but definitely the longer

race broadcasts helps generate better ratings and show us more value. >> what is the fastest speed you have ever gone in one of these things? >> 237 miles an hour this year at indianapolis. pretty cool. >> are you going to try that this weekend? >> i think we'll be about 228 or 229 at pocono. still extremely fast. >> we'll be watching. ed carpenter, thanks for joining us, bringing the car, and be sure to watch on nbc sports network sunday at noon broadcasting live that indycar race. in the poconos. >> the longer race. >> a longer race. very important. meantime, looks like 288,000 is the lucky number, bob caffrey guesses every month and in fact won it two months ago for april with exactly the same number, and again today. the repeat winner unfortunately can't join us today because he's on a flight, but we will be sure to give him his prize. that basically brings us to the end of a shortened week of "squawk on the street" here on cnbc v. a happy, holiday

weekend. a nice u.s. birthday surprise in the form of that jobs number. 17,000 on the dow. turn it over now to andrew, for "squawk alley." >> hey, thank you, guys. good morning. because it is 8:00 a.m. at googling headquarters in mountainview, california, 11:00 a.m. on wall street and "squawk alley" is now live. i'm here with kayla tausche, we are now over 17,000. kind of an exciting moment. i don't know if we'll keep it

up? >> took us 17 months to get here. add 18,000 by january 2015. depends on what the fed decides to do this fall. whether were e can keep up the momentum. none the less, disney and caterpillar, top leaders between 16,000 and now and procter & gamble. >> talk to dan greenhouse in a bit. the good news seems to be good news. i was thinking this morning looking at futures, the good news was looking like bad news because we didn't go up as much in terms of what the market was expecting's looks like numbers are good. meantime, over to phil lebeau with breaking news for us. phil? >> andrew, boeing released its june and 2 it q commercial airplane delivery numbers, in line with expectations, roughly. maybe a little better. second quarter, boeing delivered 181 airplanes, up 7% compared to the 2 it q of last year. 342 year to date. increase of 11%. a lot of people focused on the