welcome back to "squawk box." the economy added jobs but unemployment rose. you did see big revisions for november and december. they revised the numbers sharply higher, the stock market up about 35 points, a move of about 60 points from where we were before. ten-year yield moving up. >> make sure you join us on monday although next week is at&t pebble beach week. we'll do the show from there on friday. "squawk on the street" is next. ♪ fly like an eagle to the sea ♪ >> good friday morning. i'm carl quintanilla with sara eisen, cramer is off today. 257,000. that is the jobs number for january, above expectations, some nice upward revisions to prior months and the premarket pretty strong as a result on the best week for the dow in about four years. check out oil.

has 53 in its sights. ten-year yield approaching 1.87, about three-week high. twitter is up almost l 11% after earnings last night. we veal that exclusive interview with ceo dick costolo just a few moments from now. our roadmap begins with the jobs number and the markets, the economy adding 257 in january, beating estimates, upward revisions for previous months and wage growth better than expected. >> twitter despite disappointing user growth, the stock is up. we'll have an interview with dick costolo on the result. >> pandora, yelp all those stocks moving more than 10% in premarket action. >> the jobs number showing 257,000 nonfarm jobs added last month. beating estimates for november and december revised upward by a combined 147,000. january's unemployment rate ticked higher to 5.7, average hourly earnings jumped by 0.5%

brings it to 2-2 year-on-year. people will be talking about that, participation rate up. the three-month job gain for the psa three months is the biggest in 17 years. >> how about that november revision? 423. that was the best month since may 2010. >> and on private the best month since '97, november alone. >> a surge in job creation in november. you mentioned the average hourly earnings. everyone's watching that to see what the fed will do. that 0.5% is the most since november 2008. when you smooth out the trend on job creation and finally some kind of spurt of wage growth that's going to look pretty good. >> it was the last one. that caught everybody's attention. despite a strong number, the lack of wage growth was something we focused on during that period of time, but where are we now then over the trend again? say that again? >> the trend -- the last three months, what did you say, carl? the average gain for 2014 is 258,000. that is revised higher after those november and december --

>> but wage growth as well you said we were up -- >> 2.2% is the year over year on wages, the best since last august. >> still nothing to write home about. >> correct. just a little above inflation. >> but above expectations. interest, january jobs has disappointed the street nine of the past ten times because there's all these weird seasonals we deal with every time. so this was a nice surprise at least to the upside. >> yeah, like retail layoffs. let's bring in diane swan to talk about the report. you were looking for 2.20 so you must have been positively surprised. this is a pretty good report. >> absolutely. one of the things i think is important is the increase in the participation rate. we looked at it by age category. you finally started bringing in some of those 35- to 44-year-olds who had fallen out of the labor force. they began to throw their hat in the ring. we're looking for is this a tipping point of more people rejoining the labor force. unfortunately, some of the participation was heavily concentrated in low education

categories and part of the reason the wages were a little higher was we kid did have an increase in minimum wages across nine states in january, now have 29 states above the federal minimum. and those states included places like florida and arizona. those low-wage states that have a lot of service sector jobs and that helped to buoy a little on the wage gains there. that's not bad necessarily, but i think it's important to understand that we did have something happen in january that also helped some of those wages firm. >> good point about the minimum wage increases, diane. does that make it less likely the fed will read into this strong wage growth number and get excited about some type of wage inflation finally? >> i think -- they certainly won't say it's bad news. they want to see much more wage growth. remember, they want to see 3% wage growth sustained to get to their 2% target on inflation. so we're still well below that. and as carl pointed out earlier, 2.2%, that's what we've been trending at. the anomaly was december where

it decelerated. that will give the fed a little reassurance. this does not force the fed all of a sudden to do a june move versus a september move. this keeps the fed patient but more pleasantly patient in terms of how they do liftoff going forward. >> that november revision was stunning, best since 2010. december was revised higher into the 300,000 level. how do we get back this in 2015? >> you know, i don't know if -- i hope we do. one of the things i think is really important is if you read these numbers with what we saw in household formation at the end of the year we're finally starting to see millennials spread their wings and fly. the big surge in employment gains, although the quantity of jobs is high and the percent of quality isn't necessarily higher, there is more quality jobs in there as well. business services financial services. business services outside of temp engineers, technical consultants, accountants, those are college grad jobs and in fact we saw household formation at the end of 2014 surge at a 1.7 million units after being below sort of 400,000 for much

of the recovery. that's really important because you finally got those millennials not only some of the older gen, i guess genx trying to get into the labor force, the 35- to 44-year-old, you have some millennials leaving the nest spreading their wing and household formation is key to spending in the economy. and health care spending, the affordable care act, an increase insurance coverage with more full-time jobs feed into health care spending in the fourth quarter and more health care hires too. >> quickly, diane, it comes after a bunch of economic macro misses. does this change the fed equation at all? >> it doesn't change the fed equation at all, but it certainly is one major offset to all those misses we saw in the last couple of weeks. >> higher yields by the way. diane, thanks for your quick analysis on the jobs report. diane swonk. later this hour we'll discuss the jobs report with jason fuhrman, chairman of president

obama's economic council. surely they consider this a win. >> meantime twitter reported earnings last night that were better than expected, a worry more many investors were the monthly active users. yutzer growth did slow adding just 4 million in the fourth quarter. we talked to twitter's ceo dick costolo about that in an exclusive interview last night. >> i would say base on the first month of the year at least,ian, we saw a return to organic growth, coupled with usual seasonal growth in q-1 and product initiatives and growth product initiatives lead us to include that our outlook for the first quarter is back to the trend we saw in the first three quarters of last year. >> what do you think happened in the interim where user growth became obviously i imagine a concern for the company but certainly a concern for wall street? >> well, i think that, you know in q-4 we had a couple specific issues that were our issues an we had our -- q-4 is seasonally

a weak quarter for us typically. it was just a combination of those things i think we saw then. >> this integration, the unforseen bug, has thrown some people for a loop. why would you lose so many viewers on a software upgrade? i've seen memes on twitter, random people there's the 4 million users. how did that work and do you see that happening again? >> well it was actually two distinct things that happen. one, in the upgrade from ios 7 to 8 there's an auto pulling mechanism for safari users that have awe thent kalted into twitter that priestly auto pulled tweets down for them and those -- that was 3 million users. that auto pulling went away in 8. we don't expect to get those 3 million users back as we indicated on the call. the second issue was just a bug related to the way twitter is integrated into ios.

it's not a one-size fits all fix for us so we've been working hard moment we saw that bug on our end and, you know, we've recaptured a bunch of those users but over million as we mentioned on the call did not come back. >> right. it lead some to believe, dick, that if these users were throwing off twitter and not interested in chasing twitter again on an upgrade, maybe it doesn't say the best thing about the stickiness of the platform. is that a concern? >> yeah. yeah. no, not at all. and i'm glad you asked me about that specifically on your follow-up. it is such -- as i mentioned on the call and now, it's not a none size fits all correction. there's actually a number of complex and fairly detailed steps we have to take people through to get them back into that tightly integrated experience on ios if they've experienced the bug. >> i know you confirmed the google deal that had been

reported on the call. i don't think you're giving any terms. i doubt you'll tell us anything about potential licensing fees. but you've been down this road before. why is it different this time? >> yeah. i think there is one big specific difference about the previous relationship we had with google and this new deal we have. and that's because we're now really pursuing this total audience strategy of our logged-in user base that more than half a billion people that come to twitter as a logged-out users who are now starting to organize experiences and content for and our syndicated audience the difference between the previous relationship and now is we'll be able to pull people from google search for events for kind of people and for topics into those immediate logged-out experiences that we think are going to be really compelling that we're going to be able to organize for people. >> some people would love to see google buy twitter and now they're saying because of this deal that's less likely to

happen. any reaction to that? >> well look we love the company we're running. you know, i talk constantly internally about the impact the platform has in the world and the way we're growing the business. so we're excited about the business we've got and we like running it as an independent company. >> all these new products are encouraging. it's an encouraging deal with google. in the end, this quarter was still about weak use. do you disagree? >> listen, we're pursuing this total audience strategy that we talked about. we like the return to growth that we've seen in the very beginning of q-1. i talked about that being -- again, that's only one month, january, but it informs our outlook for the rest of the quarter. >> it's been a little while but anthony had a famous d nashgs went out to the world, your cfo, with the benefit of time, can you talk about what that was all about and did you ever say to him, what was that? >> no i didn't say to him what was that because we've all had

our own experiences with dm fail. hopefully those -- dm fail is when you meant to send a private message and end up sending a public tweet. i didn't have a conversation with him about it. >> some people use it as an example of a platform that is still to some difficult to use. >> yeah. look we've been clear about the fact that we have a lot of work to do to make it easier to use twitter. one of the reasons i'm so excited about instant time line is that it's going to make it easier for people to drop into the platform and get an immediate high-value experience without having to figure out what are the 30 accounts i should follow. that goes for a number of other things across the platform. it's design issue that we know we need to address and we're going to address it. >> there's a lot more we talked about with dick. in the next hour we'll bring you his response to all the management criticism that he's received over the past several weeks including some analysts who argued that he would not be in that job by the end of the year. and just to clarify, that bug in

ios, it was not a bug in ios 8 itself but rather something they experienced as people migrated to that new software. that's the one thing that is still raising some questions this morning. >> right. that's what i -- talking to a couple people this morning that was the question because monthly average usage is not what people anticipated. stock is up this morning but they're still questioning what happened to those 4 million subs. >> there was a lot of people just forgetting their pass words and not downloading twitter a lot, you know, very fast when they switched over to -- >> what do you make of it? >> a one time thing. >> the argument is safari was sort of doing the work for them in a sense, but if you were upgrading and weren't chasing a reactivation of twitter, that does sort of lend to the argument that, well they weren't really that engaged anyway. right? shouldn't have been counted as active users so to speak. that's a question the street

will wrestle with. obviously they like the guidance on user growth stock up almost 12%. >> the interesting phrase total audience strategy, perhaps this new sense of how they're going to measure not just twitter user bus now howe they'll monetize it including that deal with google. the question is that a game changer. google is the most powerful search engine. that content could lead to a big surge. >> not going to see any results right away. we talked not only about dick's tenure at the company from here on out but also the memos he wrote about abuse and trolls on twitter and how the company se they've done a poor job of fighting it, what they're going to do about it now, especially since you've got some high-profile twitter users complaining about how much evil arguably there is on twitter. if cramer were here and i wish he were, he's on vacation or doing some personal travel today, but that's a point he would probably bring up. >> i know it's an issue. >> i'm sure he would be happy to see the gain in the stock as a

twitter holder. it was one of his stop stocks. i wonder what he would say about dick costolo, who he's been so critical. >> i don't think there's any secret on what he would say. >> e got a lot more positive in front of the quarter. >> i guess the larger question still on twitter, carl and i know we have to move on, are they going to be sort of an advertising company in this environment, are they pivoting toward that, or is it a different model that we haven't fully understood? >> we'll see. i think one interesting argument being made today ist it's suddenly no longer about user growth. right? even the time line metric that they might be doing away with here, maybe is this a business that can scale sort of at these levels? does it have to be as big as a facebook, which has a billion more? >> well they did see 97% revenue growth to $479 million from the year before so clearly they can make money without that user growth in the quarter. >> more to come with dick in the next hour. when we come back profit in the state of the travel business the ceo of expedia, shares

falling on weaker than expected results. and the ceo of frontier communications on her deal to buy verizon's wireline assets. premarket looks pretty good here. some fade as that jobs number came above expectations at 257,000.

january nonfarm payroll, 257,000. did you nail the number? tweet us your predictions. the winner will receive the special cnbc earmuffs autographed by all of us here on "squawk on the street." and we do have a winner. we'll announce who that is later in the show. also ahead, jason fuhrman, chairman of the president's council of economic advisers with white house reaction to this morning's job report and that 5.7% unemployment rate. >> meantime, oil continues to be a wild story. jackie deangelis is at the nymex for us. >> another bounce after wednesday's steep selling pressure up 90 cents, wti. the gains we're seeing this morning coming off a little bit. still a buck gain at this point in the day is pretty strong. a couple of factors are helping the price gain. the first would be baker hughes reporting that there is a

decline, leading traders to believe that supply will eventually come down in the this country. also refinery strikes going on their sixth day, union workers rejecting shell's latest offer. the talk will continue next week. this will go into and persist throughout the weekend. but traders telling me that right now the mentality is buy the dip here going into this weekend because at this point they don't want to be short. back to you. >> thanks jackie. we are seeing that bullish price action. radioshack has officially filed for chapter 11 bankruptcy protection. the 94-year-old electronics chain will sell up to 2,400 of its stores to hedge fund standard general, will partner with sprint to operate about two-thirds of those locations. so it looks like locations are still going to be sort of up and running, david. under sprint. >> under the sprint name yeah. obviously we saw service up for them. listen, no surprise here of course. anybody who's followed this company for any period of time now, years, in fact has

knownitis been relatively dire. i don't think they've had a profit in a number of years. >> revenue down every year since 2006. >> wow. >> down 46% since 2010. i think the cover of "business week" said the company that excelled in failure? isn't that what they called it? >> yeah. not a good look. >> some surprising it was not a 7, it was an 11 with this plan with sprint. >> meantime best buy got an upgrade today, speaking of electronics retailers. >> when we come back art cashin, the veteran of wall street, on what he's expecting from today's trading action. we'll count down to the opening bell. haven't gotten to a lot of names here linkedin go pro, pandora, expedia, yelp. we'll look at them all.

just about six minutes to the bell. let's bring in art cashin, director of floor operations at ubs. good to see you. >> good morning. >> nice bead on jobs taking a peace plan to putin. >> the jobs thing was a bit of a surprise somewhat countersbu twif the rig count going down and down and down you would have thought some of those crude-related, fracking-related jobs might have pulled it a little bit the other way. so i think the markets were surprised. we're getting a little upward pressure on rates, and that might spoil the party a little bit or at least put a slight damper on it. >> the last jobs friday for december was almost identical to

this one and the market sold off that day. >> i recall. and the other thing is the january number is notoriously erratic. so i don't know if we'll see revision. but the real surprise was the revisions in the prior months and that was truly surprising. we've got a couple goals to get through here the s&p has got to get through 2064 68 not to get too inside baseball, but they were building a little bit of a head and shoulders an that's about where the right shoulder was. obviously what you like to do then is attack the old high which is around 2094. but first things first, we need to get through that level and try to close above it. so it might be a bumpy opening, start out well and see if we can hold on. >> in terms of job market reaction, the strong dollar that everyone's complaining about is getting a lot stronger right now. big jump in the dollar against the japanese yen. back up to around 119.

interesting to note that oil is actually trading higher alongside a stronger dollar. we have not seen this. >> no you have not. but i think oil is trying to build in that bottoming process. that's why you've had this erratic up-and-down move. strangely enough several other bottoms in oil have seen this kind of wild volatility, 7% moves for five and ten days in a row. so i can only hope that we're reaching a kind of level of stability here and see where we go. >> art, thanks a lot. >> my pleasure. >> art cashin on this friday. opening bell just a few moments away.

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you're watching cnbc's "squawk on the street" live from the financial capital of the worrell. we'll get the opening bell in about 45 seconds. obviously the jobs number is the headliner today with a nice bead, 257,000, some incredible judgment ward revisions for november and december, the biggest three-month payroll gain in about 17 years. wages with a nice bounce but just making up for some weakness over the last couple months. when there's all the earnings we haven't gotten to from overnight, go pro, linked in, pandora will have an awfully tough day as ad revenue growth there slows. expeeld ya talked about radioshack. >> a lot of names to keep an eye on.dia, talked about radioshack. >> a lot of names to keep an eye on. in 12 second when they start to trade. >> get a look at the s&p at the top of your screen. at the big board this morning, easterly government property a reit focusing on government properties celebrating its ipo

today. brau bra voe's new show "best new restaurant," chef and restaurateur tom collichio doing the honors. >> genius. >> on "top chef." big success for him. >> go pro will get a lot of attention. revenue is well above. the c.o.o. resigning and their current quarter profit guidance for a name that obviously had a lot of momentum. >> it was interesting to watch the after-hours action on gopro, because when it came out, told josh lipton over the past quarter our report on the story that it was a gopro christmas, we saw that in the results but then some questions when it came to guidance coming in at the lower end of the range. woodman, though talking about the potential with media. he's really got his eye on the content now that more people own gopros how are they going to be able to monetize that. that's going to be the big question i think for gopro going forward as they continue to sell

more of these cameras and saturate the market even further. >> yeah. linkedin, 61 cents, pretty nice beat by about eight cents. revenue ahead. some people said last night twitter got all the attention, gopro got all the negative attention and linkedin was quietly crushing it pap lot of enterprise a lot of businesses adding the service to help them evaluate prospective employees. >> a lot of that was international. 70% outside the united states in terms of the membership. 347 members. twitter got a lot of heat for not adding monthly users, active users at a fast enough rate. you need users is how linkedin te death fines it. 93 million a month. half of that was from mobile. interesting user growth there. >> we are seeing the banks on the move here david, looking at morgan stanley, bank of america, mellon mellon, metlife. >> it's always focused on net

interest margin getting the fed moving and start to imagine perhaps there'd be more of an interest margin, which we talk about oftentimes, maybe you buy the banks. back to the internet sector, a lot of pain today. yelp down about 17%. a number of downgrades this morning after the company reported its earnings. questions there about, hey, is the service one that i lauded not that long ago, but is the service fully penetrated because their growth rates not perhaps what people anticipated. so that stock is down. grub hub i think came in okay. i think that stock is up. but expedia is another name that is down sharply. currency there sara certainly doesn't help. >> yeah. >> revenue per room night down ten. even though bookings were strong. but we knew that was the currency story going into the quarter. >> you're saying thateeing that with a lot of the tourism companies and the idea there is with the stronger

u.s. dollar you don't have as many international visitors coming and booking to the united states, a big source of growth particularly for these internationally exposed tourism companies seeing how the hotels are adjusting to this because they have been doing so well over the last few years. moody's out with earnings second best performer in the s&p 500 today. that was a beat as well. >> yeah. i was going to say hotels if simon were here, he'd talk about how disciplined the hotel industry has been about not overbuilding. but it was not something people were thinking about a year ago. pandora 18 cents, meets estimates but revenue was a miss and it was in fact the guiding down for current quarter revenue and a slowdown in advertising revenue growth. probably the worst percentage loser of the morning down almost 19% now after the bell. >> also watching buffalo wild wings. i know sally smith, the ceo, was on earlier this morning on "squawk box," somewhat of a disappointing quarter but investors like the look of

january seams which came in very strong thanks to obviously sporting events and also those chicken costs weighed on buffalo wild wings coming in a bit high. looks like buffalo wild wings is encouraging for this current quarter, stock up more than 5.5%. >> i'd be remiss if i didn't mention verizon of course engaging in a lot of asset sales yesterday, over $15 billion worth. we're going to have maggie wilderotter from frontier which is going to spend $10.5 billion to buy wireline asset tuscaloosa-in three states but they also sold another $5 billion in towers assets if you will to american tower. and using a lot of the proceeds of verizon to buy back stock. but an important number of deals there for the company. over $15.5 billion in wireline assets and tower assets. that stock is up with their decision as well to spend a good deal of the proceeds by buying back their own stock.

and verizon, if you'll recall not quite as active as some expected or at least initially in those u.s. options, about $10 billion or so in commitments. >> let's get back to today's big jobs report number. of course the jobs report for january, labor department reporting businesses added 257,000 jobs in the month, the unemployment rate ticking back up a notch to 5.7%. more americans searching for work. let's get the first reaction from the obama administration. join us now first on cnbc, jason furman chairman of the president's council of economic advisers. good to see you. you must be pleased with this kind of number. >> you can only be pleased with this type of number. you saw the jobs numbers you talked about, but you also saw strong wage growth and wages that are now rising at about 1% above the rate of inflation. we'd like to see more wage growth. there's more we can do to make

sure we keep our economy growing. a lot of steps the president put out in his budget this week but january was another in a string of good months. >> i'm going to pick out some of the negatives in this report. number of long-term unemployed, 2.8 million, basically unchanged, number of part-time workers that were part-time for economic reasons basically unchanged at $6.8 million. these aren't kind of slacking indicators that aren't suggesting a lot of movement on the jobs front. >> right. well, first of all, the long-term unemployment rate is down substantially from where it was a year ago. about two-thirds of the decline in the overall unemployment rate is due to the decline in long-term unemployment. but there's no doubt that it remains elevated and that's why there's still more work that remains to be done things like the president's plans for infrastructure would help connect those types of people looking for work with the types of jobs that they need. in terms of part-time, full-time, all of the jobs created in this economic

expansion since we started adding jobs have been full-time. >> jason, can we go out on a limb and say that the participation rate has bottomed? >> you know, it's been in basically the same place since october 2013 up and down a little bit but roughly flat. and that's what i'd expect. you're going to continue to see the retirement boom. in fact, that's growing. the retirement's drag on participation will be increasing in the coming years. but then you have people coming back as the economy strengthens, looking for those jobs as there's more of them and those two are roughly offsetting each other. yeah, i think it's stabilized. >> the bulls want to argue that wages, if we can get more months like this one, that maybe people who haven't been looking say maybe it's time to start again. >> and we are seeing that. but remember just the demographic fact that more and more people are reaching retirement age in the baby boom is taking about three tenths of

a percentage point per year off the participation rate. it's then all the people coming back because of those jobs because of those wages that's moving in the other direction. those two are canceling out so retirement boom on the one hand strengthening the economy on the other, that's what's keeping participation flat. >> jason, i know you don't like to comment on fed policy but we know january net yellin has said she wants to see an increase in wages. now that we're finally seeing it, perhaps we're going to get higher interest rates. do you think our economy is strong enough to handle higher interest rates? >> that's something that, you know, i'll leave to the fed, and they make those decisions independently. you know, what we're focused on is what we can do. reforming our business tax code, using that money to invest in infrastructure expanding international trade, investing in training. there's a whole lot of stuff that's keeping us busy over here in terms of the economy. >> but what about lack of productivity growth? i mean some of the reasons we're not seeing the improvement

in the labor market translating into economic growth and gdp is because we're not really seeing the gains in productivity. why is that? >> it's, you know, growth strength. ed over the course of 2014 but the job market strength. ed at an even faster rate and the difference between those is the productivity statistics you cited. again, in terms of our job, in terms of what the president is focused on, that's just more reason why all the steps i was just talking about are so important. >> one last one, jason. if the president gets his way, i mean, not everybody is predicting an agreement on a repatriation tax or corporate tax bringing money back from overseas, but if they got it what would that do to employment? any idea? >> well first of all, we'd be putting that money right back into american infrastructure $478 billion, six-year plan. that would create a lot of jobs.

second of all you'd have a more efficient international tax system that lets you take that money and -- >> but no projections. >> i don't have a particular projection for it. and the last thing is we need to make it more attractive to informsst here in the united states, and there's a lot of steps we can do, you know to that end. >> all right. thanks very much for joining us as always. fist on cnbc after the jobs report jason furman from the white house council of economic advisers. >> let's get to bob pisani on the floor. >> job growth and wage growth? not something we've seen in a while. i want to put up three major metrics. take a look at the s&p 500, which has been up but was up a little more earlier on. that there's the ten-year note of course the yields moving there, and gold. gold to the downside. the u.s. dollar is rallying. i think that might be putting some pressure on gold. so bottom line here is we see

tocks s stocks generally on the upside bond yields um gold to the downside. we are in the middle of a powerful rally. i want to note that the cyclical part of the economy is doing very well this week. look, energy's up almost 6% materials and consumer discretionary, financials and industrials. this is a very broad base and it tends to be on the cyclical side, the more defensive names are um and not doing nearly as well. the s&p 500 and the russell are now positive for the year. i pointed out yesterday the s&p 500 midcap and there's your etf for it. you can buy an etf, mdy, is at an historic high. that was one of the only indices that hit a historic high. we're not far from the s&p 500. the big question is interest rate sensitive and this is where people think the market might have some problems with rates going up stocks have had problems. you see reits and utilities town but not that dramatically.

there's high yield, hyg on the bottom. that's actually positive. the question is will we see more rate-related selling of treasuries. if you take a look, that's already been happening. look at the tlt, the treasury plus bond etf, a long-term bond etf, it's been down four days in a row right now and the ten-year everybody knows near 1.89%. the bulls have been arguing that equity should do well in general as long as the economy keeps improving, and these numbers are supportive of that. the bears have been saying we don't care. when rates start going up, the stock market has had problems several years now. so both sides i think have some points. by the way, i just want to point out what we're focused on the united states china was down another 2% overnight. i'm talking act shanghai. it's down 4% on the week and a lot of people have been noting that. not a lot of particular reasons for it but money's been coming out recently. finally, david, i just want to note the grammys are this weekend, watched by tens of millions of people. they sell a dhot loth of content

but also the stock market tends to move a little bit. we asked our friends five days after the grammys happened sony comcast, imax all tend to outperform, the s&p only up fractionally in this particular week. grammys not only move records but move stocks. back to you. >> wow, that one's a new one on me, bob. >> we look for odd and unusual correlationings. >> you really do and i give you a great deal of credit. i know you love those grammys. bob pisani reporting from the floor. back to activism of course. it was around this time we watched dupont shares held a little bit later all of us scrambling to understand what it was. they made a decision to halt the stock strangely to announce the appointment of two directors. and as i said yesterday, it did nothing but seemingly exacerbate the tension between dupont and tryan, its large shareholder seeking four board seats, in what is a proxy fight. what is interesting is it puts in stark relief the fact this is

a fight while so many other fights end up settling, if you, will even before they begin. to that i refer to the likes even this week even yesterday, ipg and elliott decide there's not going to be a proxy fight. elliott didn't have to wage one, did they. they have three board seats. pershing square rattled the cage. zoetis. pepsi as well trian has been there for quite some time of course making some noise, the prospect of a proxy fight certainly a possibility. but no. mr. johnson joins the board and that seems to be at least quiet for now. and dow chemical another one where third point wrote a number of letters, certainly the prospect again of a proxy fight was avoided because they agreed to two board seats that mr. lobe, who runs third point, also agreed to. all of this is really the recent trend here when it comes to

xaenls s companies and settlements. many of the companies deciding it's simply not worth the time and the effort to go tru a fight. they look at what sotheby's did fighting to the last minute and losing over three director i think more than that if i recall, to mr. lobe, or the case of darden fighting and watching the entire board be replaced by starboard. they say, hey, why go through it, why go through the distraction and everything else let's just give him a board seat now. in the case of dupont, of course that was not what they chose to do. if he wanted a board seat this summer they would have taken one. they said no and they are fighting strongly. yesterday many people argued regardless of which side you believe in these two directors, jim, who turned around liondell and ed breen, very familiar with spin aufs and splitting up a company as he ran tyco, are certainly superior to the directors that they are replacing at dupont. so that is one we'll be watching

closely in the weeks and months to come as both sides argue on the fundamental viewpoints that they have. dupont continually coming back to the fact the stock has outperformed its peer group, trian remembering they learn less in 12 13 and 14 than they did in 2011 and that the company need better management and focus. all right. let's get some focus from rick santelli at the bond pits at cm action group in chicago. rick? >> thank you very much david. just generically looking at the yield curve, some interesting points daily versus weekly. right now you have tens up seven on day, up 25 on the week. you have five-years up ten on the day, so there's a little flattening, but exactly um 25 on the week. parallel shift. those are big weekly moves. we closed at 164 on tens last week 115 on five. look at an interday of ten, you can see the 8:30 eastern instant

reaction to headline data. you can see it showed up in boon and the dax. it showed up in a logical fashion around the globes a all correlations kind of melted into one at least for that particular moment in time not unusual. now if we want to look at a year to date of tens couple things to pay attention to that the yields should we close at 1.9 or higher would be the highest since the 13th of january. let's go back to europe a second and look at our ten-year yield and subtract boon yield and even though they've gone up ten-year yield have gone up faster. this is a dynamic we've talked about a couple weeks with regard to movement of tens post ecb meeting. the spread is slightly above the magic 150 level, traders continuing to be very profitable paying attention to that spread. foreign exchange euro versus the dollar from an interday perspective, once again the market did what you would suspect on strong headline jobs

growth in the u.s. and the euro but down. if you open it up really to the last ecb meeting it's bumping along. this is a momentum loser for that currency. we want to see where it closes. carl, back to you. >> i'll take it rick. thank you very much. let's get some big news now that took place we mentioned it earlier in the telecome sector yesterday, frontier communications announcing it would acquire verizon's wireline assets in three states. the purchase price about $10.5 billion. here to give us insight is maggie wilderotter, the chairman and ceo of frontier. al pleasure to see you. >> great to see you, too, dave. thanks. >> you've had a great year at frontier. the stoblg has performed well, the company has performed well. but you can't blame shareholders for remembering a deal you did with verizon in 2009 that took your company quite a while to get through, to be kind. why is this deal different from

the one back then, which was an enormous deal then all stock -- why should we view this deal differently or view it through the same lens and say it's going to be all right but it's going to take a long time? >> actually, it's quite a different deal. the deal we did back in 2010 was acquiring 14 states that were really fixer-upper networks. these were networks that were not built out by verizon. they were all copper networks except for a few locations, and it really did take us several years to get those networks in shape to really get competitive in the marketplace. these three state wes ear buying from verizon today are states that are very well cared for from a network perspective. 54% of the network is fios so it's fiber to the home and the maintenance on these networks has been very very good. in addition, they are fiercely competitive in the markets and they have grown the business from a revenue, cash flow perspective so, we see this as a lot different than the assets

that we bought last time. in addition to getting eve an better deal on these assets we also get to leverage our low-cost model and the fact that we've converted off of their systems 14 times with 14 different states in the past. so we have a lot of experience that we didn't have last time around. >> right. and to your point, you're paying less than four times 2014 pro forma ebitda. but, maggie, there are some who question -- these are not contiguous properties. integration always important. you recently completed the integration of the connecticut assets, for example, that you purchased from at&t not too long ago. but given their diverse geographies, does that make this more difficult? >> absolutely not. even connecticut was not contiguous to any of our other properties. if you think about the telecom infrastructure there's really no economies of scale you get from having markets side by side. it works very differently in our business compared to other

businesses say like the cable industry. so we have over a thousand employees in greater dallas area today because we have call center, we have network operations in texas, and down in florida where we're purchasing the entire city of tampa and the suburbs around it we have over a thousand employees in deland florida, which is not very far away again with call centers and support senters. and in california we've done business for many years. we have a number of markets already in california so we have a lot of history in that state as well. >> you've chosen to go the route of equity issuance here in terms of helping to finance the deal. why that as opposed to perhaps taking on even more debt and just paying for it that way? >> well, we wanted to keep our leverage ratio the same. we wanted to make sure that our ratings didn't change because that gives us better financial flexibility. so we do think a combination of some equity and the rest debt is the right way to finance the transaction.

>> what are your expectations in terms of when that will take place? >> well, we will look to go to market in the second and third quarter and get the equity raise done first, then follow wit the debt raise. >> competition, you know, give me a sense here in terms of what you're seeing within the markets that you're currently buying and what gives you the confidence you'll be able to not just continue with the customers there are but perhaps garner new ones? >> well, if you think about it in doubling our size to an $11.6 billion operation, we operate in 28 states today, this will make 29. and if you think about the people that we compete with already, the cable operators like comcast, time warner charter, mediacom, we know how to compete in these markets. you look at our current footprint without these market we have grown market share in over 80% of our markets in 2014. so we will be aggressive in these markets and we will bring our local engagement model where we have local teams in place that get very active in those

communities to really make a difference and pull over business. we also see a huge commercial opportunity in the markets that we're purchasing in terms of small business, medium, and enterprise. so we're pretty excited about it. we have a lot of experience in a competitive environment and we're really looking forward to welcoming 11,000 new employees. >> yeah. that's a lot. maggie, as always we appreciate your time and we'll be watching closely. frontier shares pushing almost $8 a share, up another 3.5%. maggie wilderotter thanks for join us. >> thanks dave. >> when we come back more of our exclusive interview with twitter ceo dick costolo. we'll talk about those who criticize his management style and his future of the company. dow being led higher by the banks as the ten-year works its way back to 1.9.

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>> listen if you're going to be the ceo of a public company, you better develop a thick skin. >> we'll talk to him about how long he'll be at twitter.

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good friday morning. welcome back to "squawk on the street." psi mop is off this week. take a look at the markets, a nice way to end this friday. dow's hanging on to a moderate gain here. but the real story is rates. the ten jere back to 1.9, the 30-year back to 2.5 as that stronger jobs number moves some people's views on the fed. >> roadmap, twitter's user growth slowing in the fourth quarter but the outlook improved. ceo dick costolo under fire recently. what does he have to say about his future with the company? more of our interview with him in just a few minutes. oil's rally, we'll talk about where the price is headed next. and former chairman of the council of economic advisers ed lazear weighs in on the jobs

number. >> jan hatzius will talk about the future of the u.s. economy. >> nonfarm payrolls coming in better than expected 257,000. that was the headline. cnbc senior economics reporter steve liesman is here with more. i love how you get charlie's reaction right after -- >> right away. we don't wait sara. that's right. this is a big deal a game-changing report here. i think what it does among other things it puts that june rate hike back in play. the second thing is it shows how i think if you look at the details, the number we'll to that in a second it shows that the good effects of oil trump the bad effects of oil. and we'll see that in a minute. but first i want to give you those numbers that everybody's talking about. payroll's up 257, looking for only 237. but that's not the big story. the big story is those revisions. i think it's about 140,000-plus 329 and 423, that brings the three-month average to nearly 340,000. we thought it was 288 so, that's a step shift right there.

unemployment ticking up? why? people back into the workforce. average hourly earnings lo blowing away the estimate wiping out the decline in december when you add it together. now, let's look at where the jobs are. goods producings 58,000 that came with good manufacturing numbers in there, but look at that retail number 46,000. that tems us that all those seasonal employee not all of them were fired or not many of the seasonal adjustment expected showing optimism about consumer. oil production just down 1.9 -- 1,900 job lost there, and we did this even with government subtracting. we did have as sara said charlie, the philadelphia fed president, on this morning and he reacted instantly to these numbers. >> the pattern seems to be everything gets revied up so the first tend to be on average too low. i think this is extraordinary in many ways. and another signal that the economy is actually functioning in a fairly normal fashion.

i think that's an important message to get across and we stop thinking about our economy as in some kind of perpetual crisis. >> here's what ubs had to say and a lot of fed observer and economists out there, kind of sarcastic, but don't be out of the office june 17th. the unstated reason is because there could be a rate hike. bank of tokyo says the fed falls further behind the curve when it comes to raitts. and ian shepherd saying patient to be dropped in march opening the door to a june hike. you can see the market reacting right there, a big bump up in the expectation for december 2015 fed funds futures. that's 54. we haven't been there, you can see, in quite a bit. and then tune in on monday guys, monday morning, just want to tell you i have an interview with jack lew that we're going to be able to play for you then. carl? >> steve, any idea of the last time we beat on headline wages, workweek, and revisions? >> no but you've just given me

something to do for the next half hour. i don't know, but you're right. all three of those being up and doing better and those revisions, carl, are power informal that you go into this number with a sense of what the world was, then it kind of like a slip fall out there, the ground moved three feet over there in terms of that average number, plus you had that 700,000 people come back into the workforce in the report. >> all right. yeah. i'm writing town our calendars for june 17th. we'll see if ubs is right. steve liesman. 2008er shares rallying today after the company reported better than expected fourth-quarter results. what investors wanted to hear was about dick costolo's management of the company, which of course has been under fire and of course those leaked memos regarding abuse and trolls on his platform. >> i'd have to say it ha to be an e-mail using crass language that we sucked that leaked

instead of one of my more sophisticated tones. but, look as leader of the company, i have to take accountability and responsibility for an issue that we all are aware across all sorts of platforms is an issue. abuse, digital abuse specifically. i think that it's easy to say, hey, these are complex issues and we're looking to address them in these kinds of ways. but it takes a leader to step up and say i'm going to take accountability and responsibility for this right now, and we're going to start making aggressive changes in the way we think about this to get the team to rally behind the kinds of efforts that we need to put forward quickly to make twitter and all these kinds of platforms a clean, well-lit place that anyone can have an expectation that they can step into and have a delightful experience without harassment or abuse. >> when you say we're going to start kicking these people off right and left when you talk about aggressive change specifically, how will it be

different other than reporting the way you do now? >> yeah. the way it will be different is it's going to be harder and harder to be an abuser on the platform. i think that what you want to do is change the economic equation around so the onus and burden isn't on the person being abutzed to report it but rather the onus and the burden are on people who are engaging in harassment to prove that they should be allowed to continue to use the platform. >> cramer's dream is that there's twitter gold some premium service where your account is actively policed by a human being sort of the way yelp protects certain retailers. is that ever a possibility? >> i think saw a number of great product initiatives that are already under way, that are going to make that possible for -- make it the case that all users across the world will be able to come to twitter and have it be a clean, well-lit place for them without fear of having to worry about reporting abuse when it happens to them but have

it be taken care of for them. >> one last question on this dick. some celebrities had talked about checking twitter less. lena dunham adam levine has said let's make 2015 a year where we crack down on this sort of thing. are you worried about celebrity defections? what would happen if katy perry suddenly said i'm out of here? >> i'm worried about abuse of anybody on the platform. it so happens that celebrities, because they have these large followings, tend to be victims of that maybe more than other people. and that again, is true on all sorts of platforms, not just twitter. i want it to be the case that any user can come to the platform and use it freely and openly without even having to worry about abuse or even having to report it themselves. it should just be taken care of automatically and al grit mally by the platform and we have initiatives under way for that to be the case.

>> let's talk about dick costolo for a moment. >> thank you for pronouncing my last name correctly. >> a lot of people have been calling for change at the top. >> it's an ongoing struggle. >> a couple weeks ago bob peck of suntrust said there's a good chance you'd be gone by the end of the year stock jumps 5%. your reaction to those who want to see you gone? >> listen if you're going to be the ceo of a public company you better develop a thick skin. that's the world we live in. i'm focused on two things. one, making sure that the leadership team here, the people working for me and the next level of leadership under them are working well together and pushing the company forward and improving our pace and quality of execution. and then secondly making sure that i'm taking the time to look out ahead over the next hill and around the next corner to be able to prepare the team for the opportunities ahead of us. that's what you have to focus on as a leader and you have to do

that while pushing all the outside noise to the side and focusing on the task at hand. >> can you sit here and tell me that you will be in this chair on new year's eve? will you be ceo by the end of the year? >> are we going to pick dates that different people think -- different people want to point out and say i am or not going to be here is kind of silly. i love leading this company. i love doing it. i love the team i've got around me. i'm excited about coming in to work every day. and there's nothing i'd rather be doing right now. >> jack dorsey with some high-profile tweets defending you in the past few days, dick. did he tell you in advance he was going to do that? >> jack and i have dinner regularly. in fact, we have dinner at the same restaurant at the same table at the same time on tuesday night. so it's that regularly. so jack and i have had conversations about it back and forth at various times. it was not a major topic of conversation, but in one of the recent dinners he mentioned, like, hey, i really want to send

out this tweet storm about qyz and we went back and fortth on that and i said sure you should do that, make sure, you know -- it would be interesting if we talked act these kinds of things going on in the company right now. >> let's stick with twitter, bring in the lead internet analyst of rbc capital markets. good to see you. >> good morning, carl. >> i thought that was interest, him and jack at a restaurant talking about a tweet storm jack would eventually send in support of dick. what does that tell you act his future? >> i think what it tells you more about his future is what happened with if numbers last night and the stock last night. there's still a user engagement problem at the company, a challenge given the lofty expectations that the management team and dick himself has laid out. they should be growing these user base faster. they may well do that with all the product changes. that's still to be determined. but the ramping is great. >> what did you make of the ios 8 issue? and why shouldn't we believe that's going to come back to bite again?

>> there's no reason we shouldn't believe that. this is the second of the third quarter in a row in which be've had some excuse for sequential disappointment in the ads. we shouldn't have that. this company shouldn't have troe lie on those kind of excuses. they've made a lot of product changes over the last few years but if those are sticking we should see that in accelerating mau growth. we saw it in facebook about five years ago. this should repeat to twitter. if it does stock goes higher, if not, it goes lower. >> i read the transcript of the earnings call and you asked about the deals twitter recently made with flip board, yahoo! japan and i think google also came into the answer. what does this tell you, and is it a different kind of way that you model revenue growth for twitter going forward? >> it's still a bit of a mystery to us and a ton of disclosure other than they've set these deals. it's a little disappointing that they announced the google deal without any details and then say it's still several months away. our sense is that the final deals haven't been locked down.

in the past you would have called that a vapor ware deal. i'm not going to do that. i'll just mention it. the other deals, twitter has a huge platform. there are a lot of people who would like some of that traffic. there should be off-twitter modernization opportunities and they should be able to tap into them. not nearly as attractive as generating that revenue on twitter itself. that will move the fundamentals long term. >> mark it's david. love to go through a couple other names with you real quickly. i can almost do like a lightning round, if you will. >> okay. >> you cover linkedin pandora, and yelp. give me a quick response on each given the quarter you saw. linkedin. >> one to have best fundamentals in the net space, one of the highest growth rates and the metrics did not disappoint. one of our top picks in the space, $300 price target. >> pandora. >> we're sticking with it. pe we think there's a highly asymmetrical risk reward on the stock but the price target comes down. requires a lot of patience to make money on the stock. you can do it from here but the initial results were negative.

>> and yelp is down almost 22%. >> that's the one here i think is most dislocated. i think that tradeoff is least warranted. the revenue results, especially in the kilo cal advertising segment were better than expected. this company also has enormous strategic value in this case spais. this is our topping pick in the small cap space. >> still a top pick even with that huge decline today. >> even more so with that huge decline. >> even more so. >> that was like a lightning round. >> it was. >> finally, mark twitter at 47 expensive? >> yes, but it's got the highest growth rate in the space in terms of revenue and ebitda. it should car tri sector's highest multiple. the risk reward to us just isn't as attractive as some of the other names. we've gone out on a limb on amazon, still like it netflix, still like it google 2, priceline will come up in about a week and a half, that strikes us as having the most interesting risk reward in the space. >> good to talk to you. thanks for your time.

>> thanks. >> up next watching the price of oil. brent crude trading higher today on track for its second weekly gain. brent crudup more than 2.5% but prices are still about 50% below their peak from last year. is there a recovery in sight? bank of america's head of commodity research joins us live. ♪ your dad just kissed my mom. ♪ turning two worlds into one takes love. helping protect that world takes state farm.

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francisco, commodities president. you were bearish on the price of oil. you put out that note that got a lot of attention that wti could be headed to $35 a barrel. you're changing your tune based on the price action of the last two weeks? >> not really. i think the situation remains pretty dire. we're seeing very very quick builds. and i think in a very short run we still can see prices going lower. what's interesting is that the drop in count has been attracting a lot of money into the commodities sector. but i think if you look at the fundamentals of the commodity, they remain bearish. so we are sticking to our view. we retain a bearish bias.

i do think, however, second half of the year and 2016 should be better. but i think the commodity itself will be oversupply the next two or thee months. >> we can still test $35 a barrel? >> still sticking to that. no change on that front. we still see that downside risk materializing because, again, once you run out of storage capacity and we are building inventories at a very quick pace, 7 million, 8 million, 10 million barrels a week we'll reach that point where, you know, there's nowhere to put that oil. and we don't think that supply and demand will be able adjust in the next month or two. we'll need four or five months to make that happen. >> francisco, some people argue the kind of chop we're getting in prices right, 7% up 7% down, is the tell of a bottom. you're saying inventories are going to outweigh that? >> i think so but again, what

we are getting is just a function of opec basically pulling the plug on stabilizing the market. i was with you guys after the opec meet i said listen we'll go down to 50 bucks and it will be very volatile. and i think we've come down with a volatile ride but we still see that inventory bottom or inventory top, rather not being reached for another three or four months. so that remains the view but, you know i definitely don't disagree that the price action is very choppy and it certainly begs the question are we getting to be right. there's no doubt about it. we've rebounded nicely in the past few days. >> later this afternoon, and perhaps we'll get more clarity, the baker hughes rig count comes out from last week but given everything we've seen on rigs and from some of the big oil companies cutting back their spending plans, what is u.s. oil production going to look like for 2015 versus last year?

>> well 2015 we are still going to grow year-on-year and we are going to grow sequentially into the middle of the year. second half of the year that may change so we may start to see production declines in the second half of the year, and that's why the commodity markets have rebounded, because we've had a lot of frankly longer-term investors coming into the commodity space, but as i said before the commodity itself has to find a price in a very oversupplied market and we still retain the view that fundamentals are bearish. it doesn't mean that prices don't rebound into the second half, doesn't mean they don't rebound into 2016 as production declines because the cuts to your point are very deep. but in the short run, the market will see supply running above demand for at least four or five more months into the summer. >> has the demand picture at least improved at all? european data has been relatively strong. i think we have better german factory orders, i know the

industrial data today wasn't that great, but europe's maybe turning a corner china sort of has a question mark. the u.s. though just had a very strong jobs report. don't you have to factor that in? >> yeah. the point we factored that in and that's why we've been arguing for the commodity market to get better into the second half of the year in 2016. but again, i retain the view remember, we are building inventories at a very rapid pace and in a commodity market what matters most is spare storage capacity to get to a premium price. the thing is the equity markets may look through that because they might say, you know, the next couple months, the next three months don't matter that much, what matters is the second half of the year and 2016. and to an equity that is true. but to a commodity, a xhold ti what really matters is the short-run fundamental picture. and that's ultimately what determines the price. so that's the view i'm trying to project. it doesn't mean that we're not going to move into a more

balanced market in a year and it doesn't mean you will not have longer-term sprumts like equities or bonds pricing that better balance. but the commodity itself has to price real supply and demand conditions today in the ground and those supply and demand conditions remain still very sluggish. >> all right. sticking with a bearish view thank very much for joining us. head of commodities research for bank of america merrill lynch with w, theti at $51.61. >> when we come back jan hatzius weighs in on the jobs number. >> january nonfarm payrolls increased by 257,000 jobs. >> were you able to nail the number? if so, you will win these cozy cnbc earmuffs signed by the entire "squawk on the street" gang. there's nothing more romantic than a spontaneous moment.

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welcome back to "squawk on the street." check out these shares.

they released a letter to the company's board of directors calling for it to separate its real estate portfolio into a reit or real estate investment trust, also calling for the revamp of the board to unlock shareholder value. those shares reacting positively up by you can see 4%. back over to you. >> thanks tom. straight ahead on the show goldman sachs chief economist jan hatzuis will be live at post nine with his take on today's jobs report what it means for the economy and what it means for the fed. the ten-year treasury 1.92.

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about an hour into trading on this friday. 7:29 op the west coast, 10:29 on wall street. harris corp. the biggest gainer on the s&p, buying a defense contractor for $23.75 a share, more than $4.7 billion in cash and stock. activision down 2% despite record fourth-quarter earnings. citing the impact of the stronger dollar with the warning. and home depot among stocks hitting all-time highs. hiring is on the rise employers adding 257,000 jobs to the u.s. economy in january. that was better than economists were looking for. unemployment rate ticked up slightly to 5.7%. so should these numbers be seen as a sign that the labor market is moving closer to complete health? joining us to discuss, jan hatzuis, as always on jobs day, chief economist at goldman sachs. good to see you. >> hello.

thank you. >> you were below consensus at 210,000. you must have been very surprised on the positive note from these numbers. >> yeah. we had taken it down to 210 from 250 and cheerily should haven't done, that but, you know i think in general the message has been a good one on the labor market and i think this was a strong report not just in the employment numbers in the payroll employment numbers but also in the household employment numbers despite the increase in the unemployment rate which was due to more people in the workforce. >> we've seen better wage growth, seen it across sectors. there's a lot of improvement this report. it's being reflected in the treasury market right now, yields up across the board. >> yeah. >> do you have to bring forward your expectation that the federal reserve is going to increase interest rates in september? >> i mean i think june is certainly possible and the probability of june has gone up with this report. i think if it had been a weak report even just a moderate one, then i think the

probability of june would have gone down a lot. that said, i still think that, you know, despite the improvement the labor market inflation is 0.7 percentage points below the target headline inflation is probably going to be negative or zero wages, you know, even with this correction of the december, you know, downward surprise, which turned out to be completely spurious spurious, still 2% or a little more than 2%, the same rate we've seen for five years. if you look at all the wage indicators together we haven't made any headway in terms of the growth of wages in five years and it's still pretty far below the 3% to 4% range that janet yellin basically indicated was a normal pace. >> so no reason to think that 2.2 is an indicator of an -- a real sustainable acceleration in wages. >> i don't see it really when i look at all the different indicators together. i mean, there's clearly an

improvement on the employment side and i would expect some acceleration in wages. but i think just looking at the data, it's not really obvious. so, you know, from that perspective, i think the case for patience is still quite a good one. >> the argument would be that we're getting closer to maximum employment, and that the labor market is tightening and it has been. if you look at the trend, in fact, the last three months that number went up even higher. so where are we in terms of where we should be relative to a normal, full unemployment? >> so everything you say is correct. the labor market is tightening. we are getting closer. but all of those statements are changes, right. we're moving towards where we need to be. the debate is still around, you know, where we are in terms of the level of employment relative to nornlmal employment. the employment to population ratio, if you take the broadest measure of employment is still four percentage points below where it was in 2006. you can explain two percentage

points of that with the aging of the population, but that still leaves quite a lot of room potentially, and i think the wage numbers are telling us that -- >> we're not there? >> we're just not that close yet, although we're clearly getting closer, no question about, that but for me also with everything that's going on in the world and the impact on inflation that's, you know coming from other places in the world, i think the case for patience is still quite strong as far as i can tell. >> let's switch you to gas prices. we keep waiting an dotely retail earnings season for those savings to show up in spending. not cheerily evident yet. tug with that and if so when will it be? >> i think it's been evident in some things. we have seen an acceleration in consumer spending growth. fourth quarter was 4% consumer spending growth. it looks like the first quarter is on a decent track despite the recent, you know, slightly weaker numbers for december. the confidence numbers certainly

would suggest that things are improving, and that's something that i would put some weight on as a cross-check on the dollar spending number. >> are you modeling a step up? >> we are, yes. we're modeling and preticketing an acceleration on year-on-year consumption roles by about a percentage point between middle of last year and the first half of this year. and i think whey've seen overall, although these numbers always jump up and town from one month to the next overall what i've seen i think confirms that. >> do gas prices need to stay this low to make that valid or is the savings that we've already seen enough? >> if gas prices don't change dramatically from here you'd see a big acceleration. if they jump back to levels from a year ago that's a different story, but we're not expecting that. >> the there are, you said you haven't been that worried about it, strengthening another 1%

against other major currencies. you've seen every single corporate name basically that does any business abroad mention and blame the strong dollar. the scope of the move in the very short time frame, is it having a worse impact on this economy than you thought? >> well it's having a negative impact on growth and it is also having a dampening i believe pact on inflation. so far i haven't changed my forecast for growth in 2015 because the oil price decline has basically offset it. but if we see continued significant dollar appreciation without further declines in oil prices or something else offsetting it, yeah then that's going to weigh on the growth outlook and we would have to shave numbers a bit. i mean right now we're looking for basically 3% growth this year and also 3% growth next year if there's a further significant move, and we are actually expecting and strategists are expecting more dollar move, then that would be a bit of a downside risk to the 2016 numbers. >> lot of factors to weigh in

that growth forecast. thank you, jan. jan hatzuis, chief economist at goldman sachs. >> when we come back, a flurry of deals this week pfizer smucker's, big heart pet brands staples and office depot. what's ahead for the rest of the year? your mom's got your back. your friends have your back. your dog's definitely got your back. but who's got your back when you need legal help? we do. we're legalzoom, and over the last

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♪ welcome back to "squawk on the street," shares of madison square garden moving higher after the owner of the new york knicks and new york rangers posted better-than-expected quarterly results driven by the entertainment and sports units. can you imagine if the knicks had won more than just ten games

so far? the rangers have won 49, so those shares up by 3.5%. back to you. >> those knicks great entertainment property. wonderful to watch. thank you. pfizer's deal to buy, staples plan to buy office depot, are we off to the races? here to tell us is robert kindler, morgan stanley's vice chairman and global head of maye mergers and acquisitions. a busy week. >> the harris deal this morning. >> is this what we can expect for the rest of the year? >> it did start a little bit slow during the year. but these deals have been in the works for a while. i think the most notable thing about these deals is how well the acquirer's stock is doing. if you look at harrah's today, it's up about 10% on the deal and did that, but yesterday aspear ra, on the other side

pfizer paid a very big premium in that deal. >> 21 times. >> big multiple, big premium, but pfizer's stock was up $5 billion yesterday in a $17 billion deal. so the market likes m&a. >> as it did last year and as i know many bankers would point to talking to other ceos. look how many of the stocks of acquirers are going up. can the question can we expect more of this? was january an aberration? is february going to be more of the rule? >> i think it is going to be a very good year for m&a. all the things are in place for it to be good. of course a lot of this for a long time low interest rates. the biggest driver really is the fact that you cannot get growth without doing m&a. i think this year we will finally see a lot more european m&a done given where the exchange rates are now, i think we'll see a lot more in europe. i think this will be a good year. >> you mean within europe. >> within europe. >> not europe coming here. >> u.s. to europe or within europe. >> or within europe.

one name that's been picking up a lot in speculation of the deal was staples. >> right. >> i ask that because you had a lot of experience with antitrust giving you represented family dollar in that apple between dollar general and dollar tree. what is the deal like staples given the experience you saw for family dollar and dealing with dollar general and the ftc and dollar tree? >> a couple things. first, what's very interesting about that deal and another deal is m&a activism. if you still very well the other deal, that was on the heels of an activist being in the stock. office depot and a staples pushing for the deal. >> yes. >> staples went down. and just for the year staples is down for the year. so there's a lot of skepticism and i can see why there's skepticism given the review of

dollar tree and dollar general. dollar tree is still not done. >> no in fact something this week saying they need more investment. >> it shows that the ftc is looking closely at retail mergers. i think the market was taken by surprise at this. whether it happens who knows but certainly a lot of scrutiny and a lot of time. >> one and two getting together although -- whether it's a marketplace at all or not. >> absolutely. >> you mentioned activism. it still seems to be the story, whether it's m&a or doing what you do advising companies on defending against an activist. i discussed this yesterday and this morning, the rash of settlements. >> right. >> is this a new trend rather than fighting are corporations just going to say okay we'll give you one or two seats? >> here's what i think what the result has been. there's been a lot of settlements this year. i think that's because last year people saw what happened when you went to a full-bore proxy fight on sotheby's and darden. that really didn't make sense to

spend all that time and all that money. but the key thing that's happened this year is activists are putting up really good independent directors. these settlements are involving for the most part putting on truly independent directors, very high quality so it's hard for a company to resist that. now, what's going on with dupont could be the exception. you know we'll see how that battle goes. it would be in my mind very unusual to not resolve that. but we'll see. that looks like the only one. >> that is and it could get a nasty fight but an important one i would guess in terms of whether this trend will continue. >> absolutely. >> what about activism overall? is that going to continue to fuel m&a as well? are we at -- it's been so hot and assets have flowed into activist funds at such a rate one wonders whether perhaps it's gotten too high some of your old colleagues woolry and bronstein are going into it now. are we at a tipping point? >> yeah well you dough have to wonder when lawyers and bankers are getting into it.

but, look the fact is that there may be too many funds out there, so maybe it all won't get the returns but the major players just like major private equity players are going to continue to be pretty active. and what's driving -- i think it's going to be a tale of two things. it's going to continue to drive spin-offs like it did with papal and others. it's going to drive m&a like it has with a couple of deals. but it's going to be generally pretty boring because the fact is people are going to be well advised to settle and put people on the board. >> you never advise activists, right? always on the defense. >> always on the defense. >> a big proponent of settling? is that the advice? >> again, it depend on the circumstance. i obviously have fought and won proxy fights against jana icahn, ron burkle. they can be won. well, if you hire morgan stanley they can be won -- well always have to put a pitch in. >> because this whole interview's not a pitch.

>> absolutely. but i think -- i think most of the time it does make sense to settle but particularly when the activists are putting high quality in the director's office. >> we have to leave it there. as always thanks for your insight. >> thanks. >> robert kindler, vice chairman global head of m&a at morgan stanley. when we come back the former chair of the president's council of economic advisers ed laz lazear joins us.

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xfinity customers add xfinity home for $29.95 a month for 12 months. plus for a limited time, get a free security camera call 1800 xfinity or visit comcast.com/xfinityhome. close to session highs with the dow. let's get to rick santelli. >> i'd like to welcome our guest, ed lazear knows a few things about jobs reports. give me 30 second on your thoughts on this morning's jobs report, ed. >> well it's obviously a strong report, and it is consistent with what we're seeing in other numbers as well. you know rick i always tell you about the jolts numbers that i like, the hiring numbers, and basically we're seeing the the same thing there, an improved labor market, but the one thing i will say we have to remember where we are relative to where we need to be and we're still down

considerably at this pace talking two to three years before we reach pre-recession levels of employment. we still have a few ways to go but moving in the right direction. >> listen the big talk this week was jim clifton, ceo of gallup and his story. i want to cut to the chase. still down about 10 million jobs from precrisis levels even though we've made a nice start to try to get them back. we argue between demographics and the issues but people that say this is only demographics with regard to what percentage of the population is working that isn't the whole story. we see retirees that need to continue to work. we see young people that can't get jobs. what are your thoughts on the structural issues there and how the fed needs to be aware of those and make a decision to normalize rates? >> that's right. even if you adjust for demographics we're behind where we need to be. that's why i said we still have

two to three years in terms of labor market growth even at very high rates that we're seeing over the past three months. we still have a ways to go. so whether you call those structural or not, you know, i think they're structural in the sense that the people out of the labor market are unlikely to return we'll be talking about different workers coming back -- different workers coming back not the same people that's unfortunately obviously because that means hardship for those individuals, but in terms of long-term growth, we have to bring people back into the labor market and we're starting to do that. again, look at the numbers. last year was about 2.5% in terms of gdp growth. that's still below our 30-year long-term average of 3%. even though things are looking better, you know we're still not back to where we need to be. >> all right. now let's use the last minute and a half or so to discuss the escape velocity needed on wages. we just had a smart guy on john, from goldman, and he was

talking about if you kind of blur your eyes a bit the five-year average of wages is pretty much not changed. your thoughts? >> that's right. if you look at the change in wages between 2010 and 2014 we lost in terms of real wages, lost about 3.5%. that's -- sorry, lost about 1%. that contrast with 3.5% growth in the previous four years. so it's clear that the labor market isn't growing in terms low paying industries but op the whole i think most of it is a lack of productivity growth that is essential for wage growth. you don't get wage growth without productivity growth. productivity growth positive but not strong and i think that's the major source of the problem. where does that come from lack of sufficient investment and i blame some of that on tax

policies have been harmful in terms of discouraging investment, move in a more positive direction in that front as well. >> you've written some great op-eds. a great op-ed in the wall street journal today i'm not sure if you saw it it basically points to the exact issues when you have things like how you can amortize your equipment, all the tax credits or issues if you wait until year end to make them retroactive for the year you pretty much destroy any improvement you would have gotten because there was no planning that leads to investment because nobody is sure what rules will be. a few seconds left. ta will have to be your final thought on that sir. >> absolutely. i think we've gone in the wrong direction in terms of encouraging investment not the right direction. we shouldn't be taxing investment the engine of economic growth the engine of productivity and the engine of wage growth. unfortunately, i think what the president has been proposing is probably in the wrong direction. i would like to see us move in the opposite direction. >> thank you for your thoughts on today's report and issues.

back to sara the a the mothership. >> thanks very much, rick santelli. let's send it over to jon fortt with a look at what's coming up on "squawk alley." >> hey sara. we're going to talk more about twitter, that exclusive dix costolo interview from carl lots more ground to cover there. tech movers gopro, way down linkedin way up pandora way down and then finally expedia's ceo, some challenges for them in the quarter, in china, in getting paid by these hotels. we'll get to the bottom of that coming up next on "squawk alley." the jobs report is out. >> january non-farm pay rolls increased by 257,000 jobs. >> were you able to nail the number? if so you will win these cozy cnbc ear muffs. signed by the "squawk on the street" gang. find out if you're the lucky winner next.

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a good time to start thinking about how you want things to be. [ male announcer ] go long™. welcome back to "squawk on the street" watching shares of petrobras, the stock sinking as the company is expected to name a replacement ceo later on today according to the "wall street journal" it could be the head of the brazilian bank.

those shares down by about 10% so far. now the stock had rallied earlier in the week that -- on news brazil's government had planned the management changes. sara, david, it will be interesting to see how this pbr situation plays out. back to you guys. >> thanks for an update dom. we have a nail the number winner and lionel from leonard town maryland. lionel guessed 257,000 jobs. exactly. congratulations. you nailed the number. hope it's cold there because you're going to get very cold ear muffs. how did you do it? >> thank you so much miss eisen. mostly a guess, mostly luck. didn't seem like the energy sector layoffs were showing in the numbers yet, so i was thinking it my be higher than people thought but yes, it is cold here. >> that's always good to hear. you will be able to put those ear muffs to good use. you didn't take it from your own

observations or perhaps business you do or what you were seeing in terms of anything around you in terms of employment to make your guess? >> no not much in the way of substantive analysis. mostly just luck. my hunch was it was going to be higher than what everybody else was expected based on the idea that those energy sector layoffs don't quite seem to be showing up. >> that's a good point. well done congratulations. enjoy the lovely ear muffs. lie yes nel from leonard town maryland. >> have a good weekend. good morning 8:00 a.m. at twitter headquarters in san francisco, california, 11:00 a.m. on wall street and "squawk alley" is live. ♪

joom to "squawk alley" for a friday. nick joining us columnist with "the new york times"." great to see you this morning. kayla tausche out today. jon fortt here at post nine. interesting market session. we're off the highs, but s&p is getting attention. start with twitter, shares soaring after the company beat last night and that is a relief for ceo dick costolo who has been under fire for the lack of a clear strategy to mon