baby buggy fatherhood put on by seinfeld's wife jessica. >> i don't know if you saw the very sad review larry david on the other side has a play. >> bad? >> possibly the worst review i've seen in a very long time. >> have a great weekend, everybody. we'll see you back here on monday. right now it's time for "squawk on the street." ♪ good morning. welcome to "squawk on the street." i'm david faber with simon hobbs and kayla tausche, live from the new york stock exchange. carl and jim both off today. a look at futures right now. of course, you can see we are, well poised for perhaps what may be a bit of a down open there. as for crude oil, what's the story there? we like to look because, of course, it is so important to markets over the last few months. down yet again. but right around that $50 mark. ten-year that may be perhaps the story of the morning, at least it was earlier, after we got the

jobs report. look that the, 2.20 have not seen that yield at least in a little while. that's what i'm going with. a little while. let's start with the jobs report. nonfarm payrolls above estimates economy adding 295,000 jobs in month of february. unemployment rate ticking down to 5.5% softness though wage growth and labor participation. both weak average hourly earnings were up .1% from the prior month. the stock futures were looking down now. they had initially jumped on the release, so we'll see where we end up in terms of early trading here and the response to this jobs number. >> we have breaking news. it's reported that apple is to join the dow jones industrial average. long last, perhaps as a result of the stock split, that is huge news clearly, for a lot of people. the dow would have done better than it has done had apple been included. clearly it's a sole performer. >> could not have done that before it split 7 for 1, because

it's a price weighted index and throw it off so much. at $126 that's st. louis a big number. always important to point out, as opposed to being added to the s&p 500, for example, where you have so many funds that follow to be weighted. there's not a lot of index money that follows the dow but it's prestigious, nonetheless. >> considering how big apple has become, was it a matter of time before the big of company in the global economy became a member of one of the most traditional, historic -- >> more about the dow than it does about apple. at&t apparently is going to leave the dow as a result. that would surprise some david. >> that will. that's kind of -- again, it becomes a psychological blow. at&t leaving the dow, is sort of hard to imagine in a way. >> others are there, big tech firms there still there,

clearly. >> yep, they are. of course, at&t is not the at&t of old, the old ma bell. almost disappeared really. what at&t is today is the old sbc, which was put together over time. but that is interesting, that that is the choice. any other moves, because obviously -- >> verizon to remain in the dow over at&t. does that signal anything interesting to you? >> eye don't flow whatew know what the thoughts are on those who put it together. verizon is -- no not necessarily. >> given the competition between two companies. >> without a doubt. we've had a number of well-known names leave the dow in the past. actually go on to do extraordinarily well. alcoa comes to mind. >> after a long time. >> after a long time that didn't necessarily belong there for quite some time but when it did fall out, it's something of a blow in terms of psychologically but what it actually means for the company and their performance, absolutely nothing. even the stock prices as we say, again, there's no index money or little against the dow

30, as opposes to the s&p which, by the way, a market weighted index, where apple is the largest single component because, of course, it is by far the largest market cap company. >> you can only imagine what the atmosphere's like at apple hq as you go to the iwatch launch of course, on monday. so important. so many perceptions arguably to turn around. you can bet, probably talk to the compilers -- >> you think -- we'll talk about apple, a shock that we discuss apple. >> the people that compile the dow. >> we'll talk to them. >> hopefully. >> i hope we do. the other big news of the morning the employment report with the headline figure job growth there at 295, we've generated over the last three months an average gain of 288,000. let's bring in financial economist diane swank and david kelly. a good figure. >> it is a good figure we certainly saw a surge in hiring which means people are kicking up their heels and spending

extra money, saving at pump and going out. we saw full-time hires in business services, which is helping college grads to get back into the labor force and should help household formation. that said wages, still lackluster. we did see a bit of imprint of the weather, also on hours worked which declinesd dur the month. >> the fed why they should keep rates near zero. >> i'm not buying -- i still think the improvement in the labor markets and the tightening of the labor market with unemployment rate coming down to 5.5% means they ought to have started moving a long time ago. the fact that wages aren't picking up it may be that the fed can push the unemployment rate down lower, maybe down to 4%, at the peak of this cycle. without seeing huge wage inflation, which is not something i would have said a year ago. it does give them more room to maneuver. looks like you can operate the

economy at a higher capacity level without a wage inflation problem. it's good news for the stock market, the main message that i get from this. >> is it good news david? when you think about the outperformance of the nonfarm payrolls report in december and january, the market traded down both of those times. we saw futures turned mixed after being sharply in the green earlier, before that report. i'm wondering how you see the market digesting this report. what point it will actually be good news. >> well i think the market has to figure this out. but to me what's going on here is we've got an economy that's doing very well labor market that's tightening wages are very controlled and that's going to help profit margins stay high. a lot of cross currents in december and january with oil prices. as that clears away it looks like the economy's weathering this change in oil prices actually doing well and the main message, this economy could continue to grow without too much in the way of wage pressure. i think the fed raises rates but if you're a company, it means

profits should be pretty good going forward because you can control those wages. that ultimately is good for stocks. i think stocks will ultimately reflect that. >> diane, you're a big fan of the fed, a big fan of janet yellen and how she's handled the chairmanship there. can i come back to the point that dave is making they can keep monetary policy looser longer for the lack of wage pressure. stanley fischer said as a result of what they've done the upward pressure on employment accelerating employment, should peak early this year but inflation situation, he says should really reach its zenith in 2016. are we right to be making monetary policy so data depend dependent month to month? >> we have to. the fed doesn't want to move they're hedging the downside risks and the downside risk we're in a global world where deflations a risk out there our inflation is too low. we're still too cold economy, the poor edge is warm they'd

like it to be hotter. this allows the fed to do what it wanted to do and that is allow the economy to catch up. i think david hit the nail on the hit saying the natural rate of unemployment has fallen that's something charlie evans, who is very influential on the fed, has argued. it allows the economy to catch up. the best thing for an economy that's gone through what we have is the age of the expansion to continue to age and get old. it's like fine wine. i always like to say good women, we get better with age. >> wow. love to leave it there. >> let's not. >> david, listen, treasury market seems to have woken up to the idea that maybe we're going to get a tighter labor market. this doesn't support zero -- is there a policy anymore? is 2.2 the right number? >> no it's too low. >> on the ten-year. >> no i get that. i think the yield is still too

low because of the fed moves patience in march and tinting in june or july and ends up 75 to 100 basis points this year it's harder to defend low long rates. i think the treasury market is still mispriced and vulnerable to fed tightening even if we don't see anything wage growth. >> what works best on the stock market now, given where we are? >> i think you -- things like consumer discretionary, more job growth more income growth there. i think technology probably. i'm worried about things like utilities, telecom, reits whereas long-term interest rates go up, yield substitutes get hurt. >> good to see you both. have a great weekend. david kelly and diane swank. >> retail sector getting results this morning gap posting surprise sales decline in february. analysts were expecting more than 1% increase while sales, instead, fell 4%. staples, meanwhile, topping wall

street estimates, reported adjusted earnings of 31 cents a share. big lots results in line with estimates. food locker result, beating the street on top and bottom line. same-store sales stronger than forecast. big lot shares up 2% in the extended hours and foot locker up 4.5%. big lots an interesting story because that was a name that many analysts expected would see a benefit from the falling gas prices if consumers decided to use extra money to spending. >> sure. >> we know they're saving that instead and you're starting to see that follow through in the results of some retailers. >> i would frame it differently. with the exception of foot locker all of the stores are turnaround stories, either turnarounds that have started. big lots up 60% over the month. either turnarounds that have started or come to fruitionen the gap, it's interesting that old navy is the biggest brand, and that's doing okay.

decline in same-store sales highlighted at gap's namesake banana republic 7% 5% declines. wendy goldman coming back to the gap in order to turn that around potentially. >> staples, david, results were mixes for that retailer. no comment on a potential merger. star bird is in that name. pushing for staples to merge with one of its peers. >> no the staples deal is in process. >> right. >> and the question of course what regulators will do there. the key is what the antitrust response will be to mergings number one and two, do you define it as mall-based office retailers or is the market much much larger? >> it does want another deal to happen. >> starboard wrote another letter getting on staples, just about their management. they've sold down their --

that's the key for this company, without a doubt, whether or not this is going to receive the needed antitrust approvals to allow staples to get together with -- a lot of deals out there, by the way, kayla, that are very much dependent on and in question on the antitrust front, whether it be this one or baker hughes/halliburton, our parent company, which they're waiting for, comcast and time warner. go down the list there's a quite a few. >> starboard and staples, appear to be wanting a hammering down on the closure of stores. i think that's what they're saying after the merger goes through. the figures today, bricks and mortgager from staples, actually down 4% same-store sales. staples.com up 9%. if you turn to the regulator and say we're going to close more stores, whether it makes it more likely for the deal to go through. >> it might. but i -- given the preponderance of stores if you define the

market as office super stores there's no way the deal can happen regardless of how many they want to close, that's the case. we shall see. we'll be following that closely. >> coming up we just heard it just breaking apple replacing at&t in the dow. now that's not the 1916 version of at&t when it joined remember? that was the old ma bell. this is spc, was out, came back but a big deal perhaps for at&t. is it a high in apple? i don't know. we'll be talking more about that. also ahead, jan hatzius, he'll be here with an exclusive interview, his take on that number. another look at futures. we looked up. we're now looking down. more "squawk on the street" live from post 9 when we return.

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♪ ahead of apple's big event on monday news out that apple will be joining the dow. the move is effective after the close on march 18th. it will replace at&t whose predecessor joins the dow jones industrial average in october 1916, almost 100 years ago. also apple's johnny iam saying the frequent need to recharge

the iphone is raised it's light and thin that we use it to much, therefore deplete the battery with a bigger battery. talking about the forthcoming apple watch, expected to be unveiled on the west coast on monday. and the journal is reporting that apple pay hit by wave of fraudulent transactions using stolen credit card data tracking them back to breaches of home depot and target. an interesting story, the one about potential fraud at apple pay because there aren't statistics about how frequent this occurrence actually is. simon, it seems that it's a very low brow attack if we can characterize it. >> all i.t. attacks are low brow, unless it's the chinese. >> credit card data going to an apple store, entering that data with the card not present into a phone at the store and conducting a transaction that way. >> into a phone at their -- their own phone at the store?

>> it's unclear. >> in other words, you can steal somebody's credit card data input it into a phone, if the checks are not there to stop that person using a fraud lent number and use that to buy things with apple pay. >> do you have to rip it off the cord? >> i don't think it's the phone, it's the credit card number that can be inputted into the phone to use it. >> at the apple store is the number one merchant for apple pay and that's surprising. >> 50 plus million credit card accounts potentially breached in home depot or target 40 million, the banks are not replacing all of the cards. they're putting you on watch to keep an eye on it. i don't know they're replacing the cards. >> i got a new card after the home depot scare twice. they approached me because you shop there the argument u.s. liability. i thought the most interesting thing is johnny ive interview in the "financial times" today, the most influential designer in the world, talks about the watch and how he likes the idea that the watch is almost something that

carelessly you look at. we'll see if they follow through on that on monday. but he's also of course spoken about how he disalikes the design of a lot of the cars on the road. he drives a bentley, which kind of -- >> does he have somebody drive it for him. >> in this interview with the new yorker, correct -- no "the journal"ist was chauffeured. right, it was chauffeured. >> anyway, points the idea they might design a car. ive would like to do that. coming up on the show art carbon will be here on the jobs report. a blowout jobs figure though it's not going to do anything for the market. opened on the positive side. the white house's response from secretary of labor tom perez's first interview here on cnbc. this is where we are with the futures. more "squawk on the street" right back.

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we've got eight minutes until the opening bell. art cashin from ubs is here at post 9. good morning. happy friday. all right. we get 295,000, a tin-year now pushing 2.2%. june or not june on the fed? >> i have said i don't think june. but i do think the markets are getting not just frightened but possibly terrified that the fed is boxing itself in by repeating the fact that we're going to stay data dependent and then data keeps coming in like this and i don't really want to raise rates but look what i said so

they have to worry about their own credibility now. and they may have certainly take patient out in march, just to maintain credibility side of. whether they move in june or not. >> you know, it's funny, rates moving up. this dollar which you've been very focuses on the euro this morning, 108. >> it's headed for parity. almost no question. and that's -- that's got to be terrifying to any of the people doing multinational business. >> you think the fed's thinking about that at all? >> i certainly hope so. they should be. and this is without raising rates. >> right. that's my point. >> the fear of raising rates that's moving it up. if they start to move up when everybody else is easing the dollar is certainly -- the euro's going to go to parity for sure. >> you really you post two sides of the argument. caught between a rock and a hard place? >> and they've painted themselves into this corner.

you know i think they were attempting to say, don't make me talk about philosophy every time i'm here we're going to start watching things and we'll go by the facts, whatever those facts are. now they're saying wait a minute, not too satisfied with these facts. and you know the other problem for them is that the participation rate is not moving up. that is making the employment situation -- >> tighter and tighter. >> -- tighter and tighter exactly. >> even so last four months have been the best job creation in decades at this point that we're looking at. i'm wondering if you think that looking at the broad set of data, economy's moving in the right direction, does june or september just become minutia at this point? all executives have been saying we don't mind when the fed raises rates because the economy will be strengthening at the same time. it does feel like that's what's

happening. >> two things, people say in the past okay, and i will say to you that this is not in the past. when they raised rates in the past it was not from a zero point basis. i think that will change things around. so i think there's a palpable fear out there, i don't think you're going to find many ceos coming out and saying out front, i'm terrified, but i will tell you -- >> raise their debt at super low rates anyway refinanced. >> when i find myself marinating ice cubes with them they talk about how they're losing sales overseas. >> quickly, you have a birthday tomorrow, which proves you were not here in 1916 when at&t was added to the dow. >> i came a week later, yes. >> it goes out, obviously, it's not that at&t. apple goes in. significance? >> yes. i think it will make the dow a bit more volatile as you have pointed out. it is a dollar-based index. so more highly priced a stock

is, the greater influence it has. these are the credit card companies, almost disproportionate effect. >> it will be splitting, i believe. >> that will temper things slightly. you know you've got an apple in there at a high price. pretty easey to move two, three points. depending on the devisor, that could be 20 points in the dow. it will be tough. and to your point, k.t. the idea that we've had good nonfarm payroll numbers for months what did the stock market do on every one of those days? >> it went down. >> you're right. >> we may in fact be poised for another down day on just that. art, as always thank you. opening bell coming up after this.

you're watching cnbc's "squawk on the street." live from the financial capital of the world. the opening bell will be ring in 30 seconds. as we said right before of course with art, we've seen a number of very strong nonfarm payroll numbers and each day that's happened recently the market's responded by going down. given the composition now on the

real-time exchange at hq looks like the s&p may be starting the day -- >> that's yesterday. this is where it happens, david, and then they move. [ bell ringing ] >> in the last year on jobs friday s&p 500 moved 25.2% to the upside but of course that's an average. recently, good news has been interpreted as bad news for the stock market. so we'll certainly wait to see how that pans out. right now, yeah the heat map is turning majority red. >> we are. by the way, you hear the bell maxpoint interactive ringing it digital marketing provider selling ipo today. nasdaq reactive film promoting social responsibility to young people through film. >> it's interesting we traded in a tight range yesterday but able by the close to make some gains. but that's the first time in three days the market, dave, is

struggling at these levels. as we hit records 5000 on the nasdaq, it's interesting to watch the fund flowsen funds moving into consumer discretionary, at the margin a bit of reluctance overall. >> the best performing sectors, utilities, telecoms some sectors dependent on low interest rates, heavy borrowers, because we haven't seen the sell-off in bonds that many had expected. but that is starting to happen today with what we've seen in payrolls. >> i think utilities have had a rough time over the last couple of weeks. consumer discretionary is the stand around let's have a look at markets -- the stocks that are making gains. bank of america straight out of the gate is a big gainer today. you were up late yesterday talking about the stress tests. there's a bit of concern that goldman perhaps on the return of cash to shareholder. i assume this is a reaction to what happened last night. >> it's hard to parse from the numbers that we saw last night, every single institution that went through the stress test did clear the fed's capital hurdles some including goldman did not

clear with as much a cushion as shareholders may have likes. zions another one, 5.1% the capital level it posted for tier one common equity when the fed was looking for 5%. goldman posted 8.1% for risk-based, where the fed was looking for 8%. when you have that thin of a margin over the top, there's a worry they won't have enough left over to give back to shareholders but it depends how they calculate it what type of return they are look at and what that looks like next wednesday the other financials that have had quite a good start to the year some of the charles schwartz e-trades making gains at the open apple is a top gainer on that news it's going to enter the dow. >> it is. clearly, it is a price-weighted index as we said. art cashin returnerferring to the fact it may have more volatility. but, psychologically, it is interesting to note apple in

at&t out. it's not the at&t that went in in 1916 that became ma bell then broken up at&t itself actually which sold its broadband -- its cable assets if you will to our parent company, some time back helping to transform comcast, eventually merges with sbc, changed the name back to at&t and they go back in the dow. to make that clear. but still a psychological blow. talk of apple is up one of the few that i'm looking at now that is certainly in the green this morning. up about 1.5% although you have google and ebay and twitter among the technology names. after the banks, anything that will help the idea that net interest margin may improve or show up at all which we're seeing this morning in that higher yields on across the board, frankly, as a result of the jobs number goes to help those. that's the only sector i see. jpmorgan, bank of america, citi group, morgan stanley up. >> the more jobs that are

created, the more people in the country are employed the more confident they'll be in spending, their financial profile. you have sort of a two-prong effect to the banks when you have a report like we've seen this morning with some holes in it as art cashin and others pointed out, that wages were softer than many would have liked, hours worked softer as well. but the headline number will serve to help the financials on that argument the economy's improving still and that interest rates could rise this year. >> on that subject of interest rates, the reits are one of the main sectors to be losing today, at helm of the losers is host the big lodging reit. the results continue to disappoint. there's a sell from goldman sachs on host today, one of the reasons it is a top loser. but many reits are in negative territory. as you know bond-like stocks that in an environment where you expect treasuries to be under pressure from the employment

report, and treasuries under pressure now of course for five or six weeks coming through with those yields rising as david said, 2.2%. you expect those reits to sell off. a sell from goldman sachs in this environment has got them moving, david. >> focus on that jobs report and talk more about it. u.s. employers extending healthy streak of hiring adding 295,000 jobs the 12th straight monthly gain above 200,000. the unemployment rate falling to 5.5%. the first reaction from the white house. for that we are joins first on cnbc by the labor secretary, thomas perez. mr. secretary, as always appreciate you being with us. >> my pleasure. >> i know you have to be happy about these continued, strong numbers. i always come back to the few things that people talk about, unof course wage gains. we keep talking about it month to month. what are your expectations as we continue to see more pressure on

wages? >> well, i mean i look at totality of the circumstances. last month was a very good month on wage gains. this month wasn't as good as last month but you see what's happening. walmart raises their minimum wage, t.j. maxx follows suit. you look at the totality of know no inflation or subzero inflation and that translates into progress for the american worker. and you know last year was the best year since the late '90s and this report shows that that momentum is carrying through into 2015. we have the wind at our back and that's good news. >> is there anything from history that you can share with us in terms of what you may have looked at when you talk about momentum or expectations given the number of jobs we've been adding month to month, what that might foretell for future months? >> well ike doesn't have a crystal ball on that but you, again, you look at the last year the quality of jobs are going up. you look at the last 60 months

and you see the sectors have that gained the most number one sector is business and professional services, not too far behind is education and health, which was, frankly, recession proof. you look more recently you see growth in construction. those are good middle class jobs. the average person in manufacturing is working something like 42 hours a week so they're getting overtime every week on average. and so these are good bellwethers, success begets success. and when i look at these numbers and i look at the last year i see confidence that employers have that they can make those investments in workers. and i see more workers who have a hop back in their step. i also see more work ahead. we've got to continue to work on real wage growth and we've got to continue to work to make sure that everyone who wants a job can get access to a job. so again, no one's spiking the

football here but there's an un undeniable tailwind in this economy. >> secretary, february did have a few hiccups, disruptions at ports on the west coast as well as stingy winter weather, as you i'm sure this morning, are all too familiar with. but we didn't see those effects in the morning's report. should we brace ourselves to see those in the revisions? >> we'll see. actually when you compare the weather-related disruptions and i actually looked at the data this morning, a year ago it was literally like four or five times more evident from those winter storms than we see now. you know you see -- there's certainly evidence that the strike in the gulf coast -- in the gulf area of the country may have had some impact on manufacturing jobs down there. but you know we'll see next month. i certainly -- i met people who are disrupted by the port dispute. so it's undeniable that that had

an impact. but it didn't really show up in the aggregate data that we see here in the reports but certainly we'll monitor that carefully. i'm happy that that dispute is in the rear view mirror. >> i mean, just as a point of interest, of course i think we would be 6,000 higher on job growth or employment had we not had the strike in the refinery sector. you are taking credit or been given credit for sorting out what happened with the west coast ports, brokering that deal. what ultimately clinched that? and in the rear view mirror should you have got involved earlier, do you think? >> well i think what ultimately clinched that was their understanding. i told them this repeatedly you're playing with fire. the disruption of this port the ripple effect, is felt far beyond the west coast, farmers in iowa in minnesota, elsewhere. and others in the retail sector who are impacted that ripple

effect, they not only have to restore full operation but now they have to restore confidence. in terms of when we got involved, we were involved starting really last fall. and the federal mediator came in at the beginning of the year. so i our involvement has. ongoing for quite a long time. the federal mediator did a great job moving the ball down the field. when i got there, it was basically first and goal at the 9, what i told them we're going to fix this problem this week in san francisco or the president wants you in washington next week. for some reason there's people who don't like coming to washington. i can't figure that out. >> just before we let you go mr. secretary, there are some republicans who are fairly angry at the judgment that you made on 401(k)s with the fiduciary responsibility but those involved in 401(k)s should put retail customers' interests ahead of their own explicitly. there's a suggestion you should

have worked more closely with the s.e.c. a concern that lower paid individuals could be prices out of the market or we may not get the best deal without you being closely involved. what are you saying about that? >> we've worked very closely with the s.e.c. i've personally met a number of times with chairperson, our staffs have been working closely throughout. we've had numerous meetings that i've personally participated in with industry consumer stakeholders, and you know what this is about? as jack bogle, former ceo of vanguard said, and he's been in the business 60 years, and he said, i learned the following lesson, when you put your customers first, that's not only good for the customer, it's good for business. lawyers and doctors have an obligation to look out for the best interests of their patients and clients, and all we're saying is in the financial context, you know that adviser

ought to do the same and they can do it. so many financial advisors are already doing it. we'll create a level playing field for them. that's what our proposal will have. >> finally mr. secretary, are you concerned about a stronger dollar having an impact on manufacturers and those that focus on exporting for their business? >> you look at export numbers that came out literally yesterday, i believe, you know our exports continue to be up. they've resulted in the creation of 1.8 million jobs since 2009. and export jobs tend to be very well-paying because they're manufacturing, places like boeing, who are going very well in the manufacturing space. so you know we've seen a really good uptick in our exports. we'll certainly see, you know how the dollar affects things moving forward. but the price of oil, our energy advantages, you know folks are

looking, insourcing is the order of the day. you know the products that we're making here are going overseas whether it's that jeep plant in ohio or other places making product for export. >> right. but not oil, as of yet. labor secretary thomas perez, thank you as always. >> always a pleasure. down 89 points on the dow. courtney reagan with more what's moving. >> a couple things to talk about. start with the world most valuable company joining the dow jones industrial average. this is going to happen on march 18th. that 7 for 1 stock split paved wait for the move the first change since 2013 in the index. apple will replace at&t. this change happen as visa splits 4 for 1. this is a price weighted index. apple will be the fifth stock by weight, first goldman, then ibm, then boeing and it joins other tech stocks as the composition

has changed. microsoft, vees in the average. the jobs report s&p futures moved up higher when we first got that news of the stronger than expected jobs report january revises slightly lower, december unchanges but no significant wage movement. feels like the market's worried that the fed is going to increase rates sooner than previously expects. that could be the reason that we're seeing the first drop in the morning. down 90 points on the dow but off the lows. talk about the dollar. the dollar is soaring. set for its best week in six. the movement. s to go higher against the ur roeshg euro, a new 11-year low, below 110. the stress test we're not done this is only level one. kbq raising citi to outperform and upping the price target. some saying goldman sachs narrow narrowly passed. jpmorgan downgrading state

street saying it had the biggest negative surprise in stress capital level. the focus is on wednesday's qualitative fail or pass. morgan stanley note goldman, citi state street zion could be the most at risk. retail, a lot of movers today, first of all, goldman cutting lululemon to sell. yes a new ceo, a new product push. it's not enough to convince that an lift today. gap, disappointing with same-store sales down 4%. the street expected 1.4% for the month of february. they said forex an impact as well as port slowdown. i guess they weren't lying. foot locker big movingment however that belongs to former ceo and not the new one, richard johnson. >> we have breaking news in d.c. let's get to eamon javers. good morning. >> good morning. treasury secretary jack lew has

ritzen written a letter to john boehner, confirming the united states will hit its debt limit march 16th and on friday march 13th the previous workday they'll begin extraordinary measures in order to continue to finance the government on a temporary basis. what jack lew is saying in the letter is that on that day, that is when the united states treasury will suspend until further notice the issuance of state and local government series securities. those are special purchase treasury securities related to states and municipalities. this is a move we've seen before. each time we get up to a debt limit we've seen the treasury department take extraordinary measures in moving money around inside the u.s. budget in order to stretch out as long as possible while congress comes up with some kind of solution to raising the debt limit. incoming -- the new senate majority leader mitch mcconnell said there will be no government shutdowns, no defaults but as we saw last week with the dhs funding fight this can be

bumpier before it gets resolved. >> the 16th is a monday. obviously trying to up the ante there. how will speaker boehner react? >> this is as expected this news coming in. boehner has to figure out how to get the caucus to vote for a debt limit increase. not something republicans like to do. they tradition lil have demand some political price for that in terms of spending cuts on the other side. whether or not they can do that is a different question and they're off the bruising battle over homeland security funding. they had to put through a clean spending bill very unhappy about that. we'll see how that die naming plays into this fight. >> thank you very much. the bond pits. rick santelli's at the cme group in chicago. >> wow, today ms a huge day in terms of interest rates. keep in mind five years last year closed at 65 tens 2.17.

30s 2.75. if you are a long holder of treasuries for 2015 you are now a loser with respect to your profit and loss known as p&l. train day of 5s, 5s and 10s actually, kind of the mid part of the curve. each up close to double digits, close to ten basis points. 2s and 30s up less seven basis points. look at ten-year going back a bit you can see the action on that intradate. but now here's something unique. open the chart up to december we see that we're through year-end but it's really going to be interesting to see if it gains momentum. remember, we settled under 2% last week. now here's something interesting. look at the intraday of bund yields okay? bund yields always always correlate the relative value trade obviously divergence in central banks at issue here.

you can really see it when you put a two-day bund on top of two-day euro versus the dollar. when rates hold up the currency reflects than you can see moving in option directions. look at intraday of the yen. yen -- dollar/yen above 1.20. one-year chart, this is popping so it explains the dollar index strength which is large of late. >> rick santelli. more from you later on. when we come back with his take on the jobs report and when the fed will raise rates, goldman sachs's economyist jan hatzius will join us for an exclusive interview. the dow is down 81 points.

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stocks moving lower, certainly the nasdaq is. let's get over to bertha coombs soon you'll have to share apple with the big board. >> nine months after its 4 for 1 stock split, apple becomes the new dow baby. it's not something that is unprecedented, certainly. not unexpected especially after

apple started issuing regular dividends. i what's interesting is that with apple coming in visa splitting on the same day, it does help boost the tech weighting within the dow. but if you take a look at some of the other nasdaq stocks that have been added to the dow, you had microsoft and intel in '99, cnbc co cisco in '99, that marked their peaks, it's interesting to see whether apple can break that circuit. meantime, other nasdaq stocks on the move today. finisra, the network equipment maker, better than expected revenues. staples, a miss and a warn for the year. and nasdaq 5000 guys month was the last time we saw that. >> just 45 minutes those levels. thanks so much. coming up -- the first round of stress tests

in the books. what's next for financials? we'll have that story when we come back.

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number. plus, what to watch for next week tonight on "mad money," that's at 6:00 p.m. eastern. there's my friend jim, taking a well-deserved day off. back after this. it' ' s fact kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda.

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♪ this must be love that sound in my heart♪ good morning welcome back to "squawk on the street." friday morning on cnbc. i'm simon hobbs, with kayla tausche, david faber. marks in negative territory in the wake of what's a blowout report for the economy. a blowout employment report for this economy. we'll come back to that during the next hour. let's get to our road map for the morning. "new york times" columnist jim stewart weighs in on nasdaq 5000 and why this time is so different from the dotcom bubble 15 years ago. the new way that will allow you to profit from the soaring cost of crude oil storage. and ed lazear joins us live to weigh in on today's jobs number. there is a debate about what the fed will do in response to today's employment report goldman sachs chief economist,

jan hatzius, join us here live at post 9 with his take on the jobs number, what it means for the fed and the market. jobs number nonfarm payrolls coming in at 295,000 for the month of february that beat analysts' expectationsen let's bring in senior economics reporter steve liesman to break down the report. >> wrong word not beating, blowing out, as the jobs market seems to be shifting into another gear here blowing up the models and what people think is happening in the jobs market right now. nonfarm payrolls up 295, the estimate was 240,000. slight revision downward to january, 239,000, december not revised at all. unemployment rate ticking down. average earnings, up 0.1%. 2% year on year. labor force participation ticking down. really interesting places where you look for the jobs. you think this means how those

industries are doing but leisure and hospitality adding 66,000 professional business services. retail adding 32,000 maybe some of that extra windfall from oil money is working its way over into the retail sector. and construction, 29,000. we thought that might come down because of weather but no weather effects seen in this data. take a look here at average monthly job growth over the last three expansions. this is percent change by month of jobs. this is somewhere between the '01 and '07 expansion which was week and '91 and 2000. last two months looking like apgs'91 and 2001. the commentary focusing on the federal reserve, ubs saying the only thing we're losing is patience. over the bmi, fed one step

closer to a rate lift-off. simon, i'm not sure that's the case, but everybody is i thinking that the fed will remove that word "patience" in march en route to a june rate hike where is the wage inflation? where is the overall consumer price inflation that everybody was looking for? >> thank you very much. steve liesman, senior economics reporter. the dow's down 79 points in the wake of that blowout jobs report as steve described. bring in the chief international economist thes rb ss at rbc. good morning. thank you for joining us. >> thank you. >> eric have we massively underestimated the power of what the fed has done and when it spoke about hanging on to all of those assets and the balance sheet itself was powerful should we have believed them more? should they have believed themselves to a greater extent? >> i think perhaps the answer is yes, given what we're seeing

now. the monetary stimulus and impulse that still comes from low yields, from low rates, plenty of money does seem enough to keep the economying growing at 3% plus. we're seeing astonishing hiring. as you say whether we dig through details strength there maybe a point of question around wages which is worth some discussion. but beyond that this hiring has been so strong for so long and it really does not show any sign of ebbing at this point. >> we heard from steve liesman who says all expectations are for the fed to remove the word "patience" from its latest report after its march meeting. do you think the market's ready to digest that this time around? >> i think increasingly the market's going to be -- >> jim. can we offer that question to jim? >> sure. i think that the next rate rise by the fed is fairly solidly now for june. i think that the job data confirm what we've been seeing from client data which is jobs

are increasing and pay is beginning to increase. and i think it's only a matter of time until pay rises come through in the economy which will be quite stimulative. my worry on this data is that with unemployment coming down as fast as it is we may be losing the output gap. so the runway may be shortening. it's a very good recovery this year but maybe only another two year or so of decent growth in the economy-you get supply side constraints. >> jim, it's very rare for you to be anything other than bullish. when you start at beginning of the sentence i was like wow, jim's concerned but then of course it was to lead into the fact you think it leaves us with two years of runway presumably for the stock market to make gains? >> no, that's right. you know the next recession is probably three years away. this job data and this very rapid rate of increase may make it a bit closer. but i think there is still --

it's still a buy on setbacks u.s. equity market. i don't think the u.s. equity market is going to be seriously hurt by the rising fed funds rate later in the year. >> no but if you're talking about a recession in three years' time presumably some point, i don't know 18 months before that that has to be in the valuations, doesn't it? >> that's right. that's right. and it's really that trepidation about when this very long gradual recovery endans the speculation when that hens is really what determines how much further the stock market has to go. but of course even with the likely course of the fed funds rate that may not mean any increases in the ten-year yield which may give some scope in the near term for the equity rating to rise. if i remain constructive about equities it should be a good place to be over the next 12 months. >> eric we're watching that ten-year that jim just talked

about, 2.4, 2.5, the dollar keeps getting stronger euro hit 1.08 today. the rest of the world is not having as good a time as we are. do we follow their lead? do they follow us? >> the dollar hurts in the end. in part because of the value of u.s. exports, in terms of value added and the uniqueness will people buy indian movies instead of american movies probably not because of the exchange rate than does give the u.s. a unique experience in terms of being able to likely weather the stronger cur. i will say, we are starting to see signs of strength economically in europe. some of the other parts of the sworl world. if the fed were to interfere with it all in terms of plans either through currency or foreign demand new york argument to justify delaying from inturn nal perspective.

>> i'm thinking of what you've been saying here. i want to connect two sides of an argument. one hand we have great job growth, an economy on that front if not with wages seem to be booming and a fed that many people argue is behind the curve. it's not anxious to raise rates and will use wages as an argument for that. on the other hand talking about a recession coming in a year and a half two years, three yearsen how does that happen? if you have this great growth at the moment and the fed that doesn't want to put an end to it? >> i think that the way it happens is that you end up with constraints coming in the economy as inflation rises next year and as the fed funds rate kind of normalizes which nowadays will mean something like 1%. normalizing is not the rates we had a decade or two ago. so i think that that situation will lead to a really quite strong economy and that will

then lead i suspect, to fight mild recession. we don't see the excesses that we saw in 2007 '08 that led to a bad recession. eremain positive long term about the u.s. economy, too. nothing goes out in a straight line forever but it feels positive to me. and going back on the currency if you think about the currency much of what the u.s. sells from airplanes to apps to movies is not price sensitive. and for that reason i think the u.s. can stand the dollar strength. >> yeah the point that eric makes about exceptionalism. thank you. when we come back as the nasdaq crosses 5000 a lot of comparisons being made to the dotcom bubble offiester year. jim stewart says the index of today bears little resemblance to what it looked like in 2000. he'll join us live to explain when "squawk on the street" comes back.

♪ despite the blowout jobs report markets are in the red as we've seen thus far this morning, this after the nasdaq hit the 5000 threshold this week. throws levels not last seen since march 200 when microsoft

dominated and the ipod didn't exist, that is a reminder as well of the technology bubble and the bust that followed. but "new york times" school kolcolumnist argues this has to do with capitalism and fally valuations. everybody, you can't blame them looking back when we hit the 5,000 mark. >> briefly. >> but it is different now than that, isn't it? >> in many ways. some not obvious. i interviewed a nasdaq official saying when it hit bottom 2002 i never expected to see 5,000 in my lifetime and i didn't either. but the simple answer is the nasdaq today is not what the nasdaq was before. both the dow, the s&p 500 are far more static indexes. the nasdaq back then had over 4,000 companies. today that's dwindled to over 2,000. i looked at the top 20 then and

the top 20 now, and simple answer is it was still those companies, we wouldn't be anywhere near 5000. but it's completely regenerated, some have died some have come in, some have gone from tiny to huge, like apple, a big part of why it is 5,000 today, and so we have a different index. and i thought it is an amazing snapshot of the transformative power of capitalism in what is only 15 years. it's not that long. >> one of the red flags from 2000 was the fact that the nasdaq was moving up in such a staggering way at the same time that the blue chip averages, the blue chip stocks were reversing. proctor & gamble down 39 percent the week that nasdaq last hit 5,000 whereas now it seem like the major averages are moving in than tandem. will the correction happen across the board? >> in 2008 the correction hit the averages all together. and you're right, the reason the

nasdaq hit 5000 and plunged it was in a bubble we're not look at that now. valuations are different. if there's a correction you're going to see it more across the board. >> are we looking for a correction? >> someday, simon. we haven't had one since 2008. >> it's not an if but just a matter of when it happens. >> unless you see something really bizarre happen i think they will move more in tandem. now there's there still are pockets, though of 2000-type exuberance in the nasdaq and i'm sure other places too. you have storied companies, story stocks, that's never going to go away. 2000 it bam a cultural mania, so many of them that we're not like that today. >> biotechs obviously there's tech companies not yet public that you can argue there's a bubble. what about biotechs? >> it's interesting because of the top 20 companies in the

nasdaq today, four or five are biotechs. there were no biotechs pack in 2000, it was all telecom and internet related companies. the question is is four companies a bubble? i don't think i'd call it a bubble. these are many cases one-drug company, highly speculative huge p/es but have real products. if they pay off they could be home runs. >> many don't have high p/es. gilead traded multiples fairly low. jim, i mean obviously we lived through that time reported on it. you are forced to think about it. dealing with what's a transformative technology or transformative moment, really for our society. >> right. >> ala the railroads, i guess. could it ever have gone a different way? so much capital was thrown at it. but in some ways it felt like you had to go through that period to get where we are now. >> that's an interesting

question. it truly was a transformative technology. all of the pie in the sky people were actually right about that. i mean, some ways they underestimated. the iphone nobody knew the smartphone would be the transformative device it has become. a way that was underestimated. but what was overestimated was who the winners were going to be and how long it was going to take to realize the impact. >> remember the picks and shovels? we don't know who will win but the ciscos of the world, they're the people that will make the money. >> right. >> which proved -- >> cisco did okay but the telecom companies were so dominance back then valuations were incredible and many went by the way side. >> many went under or nothing. individual investors, if you bought an index tied to nasdaq you know over time you're back to where you were. if you actually own the individual stocks and sat on them for 15 years you're still way under water. >> you want to mention apple

getting into the dow? >> yeah apple's a big part of the transformation of the nasdaq. it wasn't in the top 20. i don't know if it was in the tomorrow 100. today it's the largest market cap in the entire world. now it's vaulting into the dow. so that is an example of a company that has neared the transformation in society and regenerated it several to an amazing degree that's gone from near bankruptcy to a pillar of the dow. >> when you see 2% move, you've added $15 billion to the market cap. it is extraordinary. >> it's breath take really is. >> the dow is still a statistically insignificant index given it is price weighted. >> again, apple -- >> good luck with that. >> it's true. apple's a great example of a company that doesn't look overvalued overvalued. it's not 200 or 3400. >> -- $178 billion in cash.

jim, thanks as always. have a great weekend. next storing crude is an expensive business. storage space in the country is practically running out. but soon you'll be able to profit from those soaring storage costs. find out how after this break. the jobs report is out. >> 295. 295 is what i see. >> were you able to nail the number? if so you will win this attache case signed by the entire "squawk on the street" gang. find out if you're the lucky winner later on "squawk on the street."is and wanted one for myself, which i did. its because i had, had a passion. my whole life i wanted to teach myself to build computers. i wanted to build these things for free. i just wanted to do it for the world and you know when you want something, that's what you do the best. ♪ ♪

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call us or your advisor. t. rowe price. invest with confidence. cost of crude oil is soarcushing and now soon a way to profit. jackie deangelis has more on the storage side of oil. >> good morning. that's right. we've been talkcushinging about oil storage. they're store it we could see $60 prices storage increase as

well. leave it to the financial marks to capitalize to trade as well. trader abuzz about the new product it's going to launch march 29th. allows you trade crude oil storage. investor can use it to hedge. the contracts are are auctioned and then bought or sold and the holder can use that storage space when the expiration occurs similar to physical deliver with commodities. the contract originates in the gulf coast. they've explained that curbcushingcurb disconnected from expectcushing to expect to see companies that have exposure to storage to start tradeing the products. if the popularity soars you can see foreign companies hedge fund

get in on the act. we've been talking about crude ol volatility that volatility >> all 31 banks hit the minimum by the stress tests simulate an economic crisis. you're takeaways on what seems to be a first for the stress test where not a single bank fell below that level. >> right. that's true. and yeah good morning. on the quantitative side what we got last night we didn't have banks fail than wasn't a huge surprise in talking with investors and colleagues. thinking there was a chance we night not fet aget a quantitative fail. next week we get the capital

planning side of the test and you have a qualitative. last year the stress test last night, citi group had the largest implied capital cushion of the banks and failed qualitatively the following week weep get a lot of false signals out of the stress test that came out last night. personally i think the big risk on all of the brackets resides in b of a, given the recent capitalist struggles. i think they might be at an elevated risk of qualitative issues and i'm nervous of boa who looks like a winner. >> the market looking at a hlier capital margin than some peers and the stock's up 3. 5%. but what do you see that gives you a reason to believe that qualitatively boa for whatever reason doesn't have it altogether? >> when you think about the setup for b of a, last night it

was perfect on the long side sentiment detear ating, a lot of investors that were really enthusiastically agreeing with the call that we made last week. so sentiment was washed out. and when you had the quantitative results showing the larger capital cushion, not a surprise to see a pop separately. the employment number the nearly 300,000, very strong. that's helped rates. two-year is above 70 bips b of a the most leverage to the short end of the curb. with all of that said as i pointed to citi group in a similar position and had qualitative issues in the subsequent week. what give me concern, what causes me pause, last year b of a got the approval for a buyback. they had to use a mulligan which is the reduction of the

ask, which basically banks are currently working through right now. that happens behind the scenes we don't find out about that until later. then soon after a month after they get the approval they fine an error in capital ratios. >> right. at this point, that's several months in the past. they've been working to fix it. from a trend perspective we don't know what will happen until next week. we're all just guessing. >> right. >> the fed's working behind the scenes to make things easier for regionals. regionals did well better than the bigger counterparts. do you think, quickly, do you think we should buy the regionals at this point? >> that's not a new trend. last year was the same thing. we're seeing the bracket investment bank that have big capital markets activities out of favor with the fed. that's not surprising given what happened in the financial crisis. regulators ten to govern markets by driving with rear view mirror. so i would say that that should remain in effect. it's certainly my operating

assumption and you're right, regionals fare better. the simpler the business model the better the odds are that the regulator looks at it more kindly. b of a, we saw the 10k, adding to the rwas, that takes away from capital, puts them in the lowest relative position. >> the story could change come next wednesday but we appreciate you putting yesterday's news into context for us. >> brennan hawken from ubs. goldman's jan hatzius joins us for an exclusive interview at post 9. "squawk on the street" will be back in a minute.

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good morning. i'm sue herera. here's your cnbc news update. reports that apple allowed big companies to test app on the yet to be launched watch. facebook is one of the companies said to have spent week at apple's headquarters fine tuning their app that will debut alongside the device. google wants to help you save money on your car insurance. the company has announced the launch of google compare. provide comparison shopping for california car owners with other states to follow. costco joining mcdonald's in announcing eliminating the sale of chicken and other meats raises with antibiotics. right now, costco has no target date for reaching that goal. and the national highway traffic safety administration is considering speeding up the

process of replacing millions of recalled takata air bags. looking to increase supply of replacement part business requiring more manufacturers to produce them. the nhtsa estimates more than 17 million vehicles made with the potentially dangerous takata air bags. that's your cnbc news update at this hour. back to you guys. welcome back to "squawk on the street" on this friday morning. february's jobs number coming in higher than anticipated, 295,000 jobs added. 288,000 of those in private sector. goldman sachs had been expecting 220,000. joining us exclusively, goldman's chief economist jan hatzius. 295 a surprise to you. your read? >> a strong headline number. i mean the payroll numbers over the last few months have been

re very strong. i think that overall the report was good though not quite as good as the headlines would suggest. the unemployment rate did also come in a little lower. but that was driven primarily by labor force participation and also jobs gain wasn't quite as strong and wage numbers were on the softer side. when you take it altogether i would say it's a good report but not necessarily anything that is wildly away from expectations. >> the sectors that enjoyed a lot of growth seemed to be across the board, manufacturing and business services toward the top, retail adding 3 32,000 jobs where we expects the port slowdown would impact. >> we didn't see major special effects either from the port slowdown or from the weather, the construction number was pretty good, a little lower than in the last couple of months. leisure and hospitality was good. look at composition of the jobs

grain it was strong. a little bit of impact from the decline in mining employment, you they from the oil sector but otherwise, you know, quite firm. >> people are very worried about what the fed is doing because people know there are lags in monetary policy. fisher said the peak effect on unemployment will be this year and the peak effect from what we've already done on inflation will be next year. and still, they're holding rates close to zero. i mean it's pure to ask whether june or september, people worry they're behind the curve here. >> some worry about that. other people worry that it's not a good idea to lift off at a time when both wage and price inflation are well below where they ought to be in the longer term. so, i think you can make both sides of that argument. i lean towards the side that would be better to wait longer and i think people like chicago fed president evans that argue it's not yet time to lift off.

i think make a very good argument. i expectation is they come out in the middle and lift off in september. >> and do what? what is the profile of the rate rises, do you think. >> they start with 25 basis points in september in our forecast and then they go another 25 basis points three months later. so they dip their toe in the water slowly at first, because after all, it's the first hike in more than nine years, so you want to see how the markets react and what the economy does. overtime you'll see faster increases. ultimately i expect the funds rate to go quite a bit higher than what's priced in. >> to where to when? >> between 375 and 4% by 2018. that's a long time away of course it's hard to have a lot of confidence in the exact path or the exact level. but that is quite a bit higher. >> it does fit in a recession

within three years perhaps. >> well that wouldn't be my expectation necessarily. >> a very high yield in this environment, isn't it? >> it will be in a different environment. i mean in the current environment for sure, i think the case for being -- for being patient at the moment is still quite strong in my view. i think waiting for longer makes sense. but i also think that overthe next few years we will progress on the economic, you know utilization of resources and inflation as well. >> to the extent we have people getting jobs and expect the economy might grow faster as a result, i wonder the fact that 62.8% of the labor force, participation rate is only 62.8%, that equates to about 92.9 million people who aren't working, for one reason or another, many may be retired. does that slow down the expected progress that you might feel from all of these people getting jobs? >> sure, if you had an actual

rebound in labor force participation to the sort of levels that you had back in 2007, that would open up a lot of the additional labor resources. i don't think that's quite realistic because at least substantial part of the decline in labor force participation is due to the aging of the population. >> right. >> you know beyond that i think there's cyclical slack in the participation number. so i think we can go sideways maybe a touch higher on participation in the next couple of years. but we're not going to get all of that back. >> we've never been lower, i mean, since they started keeping records, right? >> you've got to go back a very long time. if you go back to the '70s you'll fine it but it's a long time. >> earnings, companies seem lean. if you start adding to the top line as you're suggest with the type of growth we could get, the employment generation what happens to their profits and therefore the valuation of the stock market. >> i think on profits i would expect profits to you know stay at high levels profit margins to stay at high levels,

the economy's growing at an above-trend pace. at the moment wages are growing at a below trend pace. >> do profits grow at an above trend pace? >> not by very much. little above trend and i think if you look out a couple of years, stability and profit margins i think is a better expectation than an actual increase. >> the near-term conversation for the moment is turning to what language may or may not be in the fed's statement after the march meeting. hearing "patient" could be removed. do you expect the fed to add anything? >> i think there will be language that indicates that june is a live meeting and june is a possibility for rate hikes. so i would expect patient to get modified and probably disappear from the statement. but ultimately i think putting june on the table is not the same thing as actually hiking in june. i think that probably still will come later and our expectation remains september. >> we're out of time.

quickly, you mentioned one 25-basis point rate hike and a subsequent rate hike in two or three months. what does that do to the markets? there's going to be turbulence. does it upset the market or do we sail through that? >> depend on what the data look like. if we have the same kind of economic picture where the economy's growing at an above-trend pace 3% or so we're still adding payrolls at a level somewhere in the 200,000s and the fed does 50 basis points of cumulative hikes through the end of the year i don't think it's a big problem. i think the problem arises if you were to get downside surprises on growth and the fed, you know, was seen to be as unresponsive to the weaker economic information. that's one of the arguments by the people who want to wait until 2016 but in my baseline i don't think it's a huge problem. >> appreciate you joining us on a busy morning.

next on the program, the former chairman of the council of economic advisers ed lazear his take on the jobs number from a gop perspective, live when "squawk on the street" comes right back.

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welcome back to "squawk on the street." i'd like to welcome my jobs friday guest, former chairman of the president's council of economic advisers ed lazear. thanks for taking time this first friday of the month, ed. >> great to be with you, rick. thank you. >> all of the discussions that i'm getting, all my various sources and former trading associates, are trying to reconcile things we see on the growth side and many are looking

for a sub2% first quarter gp. a much less than 2.5% or bit less growth in 2014 with respect to gdp, and good jobs numbers. one area pointing to services a huge gainer. when you break it down private versus government two-thirds was government. things like education, education consulting, those are tied to tax dollars. are we on the right track? can you find a better way to reconcile or square on the growth trend versus solid jobs growth on its very own trend? >> yeah i think you're on to somethingen the issue has to do with the relation between productivity gdp and job growth. and if you look at what happened in the united states during the recession, we continued to have productivity growth but the reason we had it was primarily because employers were cutting jobs and those workers who remained were essentially working harder and making up for those who left.

now that's a good short-run strategy but it's not a good long-run strategy. in the lomgng run you need high investment, high capital expenditure. we tend not to see that in the public sector. talking about education, you don't tend to see high productivity gain there's. i'm in the education sector it's not an area we expect to see high productivity gains necessarily, at least sustained over a long period of time. i think the big issue that we have to worry about for the future how to get productivity up and that seems to be a -- the issue is lagging capital investment. we need to get that moving eight much more rapid pace than we have in the past. >> another track, thigh there were missed opportunities to normalize rates in the past. but now it becomes a tough one. diverging with central banks and we see these numbers and if you look at unemployment rate and don't think it's 11%, you stick

with the apparent facts the fed has to deal with even with the toughness it's hard toreconcile they're not going to have to -- we had a discussion on that-year-older today. >> i'm not a great forecaster of fed behavior but i will tell you that having spent three years in washington, i know that it's easy to have delusions of grandeur in terms of what you can actually do in stimulating the economy. my guess is the fed is recognizing that their act to get things going or keep things going through monetary policy is becoming more and more limited. and so even if they think that the economy's not growing exactly as they would like it to be, they are eventually going to come to the realization that what they're doing is not particularly effective. 0 whether it's june whether september, i think it is coming. i think rate hikes will come because the people on the fed are pretty smart people and going to recognize what they're

doing has limited ability to stimulate the economy. >> the last half minute i know it's an issue near and dear to your heart many of your come padres involved in the economic council advisers and others, i believe alan greenspan in that group, are talking about tpe, trade promotion authority. finish off why this is a good thing and why we need to do it. >> well virtually all of the former chairs of the council of economics signed the letter encouraging congress to give trade promotion authority to the president so that we can further trade. in a nutshell the reason is gdp is very sensitive to trade, if we were to have complete free trade we'd estimate we'd get a half trillion increase over gdp in the long haul. that's a big deal and it's worth doing. both sides of the aisle are with us on this. we'd like to get trade going, aggressive trade agenda is a an important thing for the economy.

we hope we do it. >> sounds like a monthster pear on a low hanging branch. thank you, ed lazear. thanks so much. coming up big changes hitting the restaurant industry as health becomes a growing concern for consumer. how can names like mcdonald's and dunkin' doughnuts stay competitive with chipotle and panera? more on that when "squawk on the street" return. ♪ at mfs, we believe in the power of active management. every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. which leads to better decisions for our clients. it's a uniquely collaborative approach you won't find anywhere else.

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smartphone or tablet from comcast. visit comcast.com/wireless to learn more. costco is joining mcdonald's in phasing out chicken sales with antibiotics. dunkin' donuts is removing a controversial whitening agent from its powdered doughnuts. what do these fast moves in fast food mean for the rest of the restaurant industry? joining us is joe bastionitch, host of restaurant start-up. >> there seem to be big changes here. >> big changes, big companies making aggressive moves to catch up with what's happening in the world with the millenniums and eating habits and what people want to consume and how people want to consume food responsibly know where their proteins come from. a big changing of the tides for sure. >> was it 80 million rotisserie chickens that costco sells a year. a lot.

>> can they do it quickly enough. mcdonald's to say they're not going to use antibiotic treated chickens is an interesting step but how much more do they have to really do to become a relevant, you know, a relevant player in that type of consumption? >> i mean is that what you see as being the fund mental problem with mcdonald's? others would disagree and say you're focusing it on likening to chipotle, for example, way too much. just has to be better at fast food. >> i think it's a question of where does mcdonald want to be. does it continue to want to be a fast food provider and the core business and demographic or does it want to compete with the chipotles or the qsr or the more sustainable and enlightened shall we say fast food companies. >> david faber was chortling there. >> at the video. that guy stuffing his face with a big mac. thought it was an interesting choice of video. would you like me to ask a question of our guest. i can do that also. to your point this is going to take some time. how far is it going to reach,

you know, it's not good to have antibiotics in chickens. human antibiotics by the way. not phasing out chicken antibiotics so to speak. how quickly do you think this will spread across the industry? >> the groundswell is happening now and how people are voting with their feet and millennials those type of people will make different decisions and therefore declining sales in mcdonald's, domestically, but, you know, i think that it will take a long time and i think there is always a market for a big mac and i think there's a percentage of the people who don't care how their beef is treated. there are always that market will always exist. what does mcdonald's want to be? you can't be the beatles and the black keys. you can't be -- >> price doesn't it too? make everything more expensive? >> it does. i think that people always look and cite the chipotle model as someone who's been able to do it all at a slightly higher price point than the traditional mcdonald's value meal. that's like been the big beacon but, you know, again, mcdonald's you can't be the beatles and the black keys at the same time. you have to choose what you want

to be. >> chipotle keeps getting referenced as an example for how to do it right and they have been setting the example for how to treat the food that you serve before you serve it but it's not necessarily healthier. i mean so many bloggers and journalists have written about the fact that the average meal at chipotle is really above a thousand calories. it's a lot of food you're eating when you eat there. >> yeah you're talking calorie counts which is a different thing than nutrition. the calorie counts on the chipotle, you know, offerings are high but, you know, i think again, there is a consumer for each type of thing. i think companies like mcdonald's, burger king the rest of the multinationals need to decide who they want to be and what -- and how aggressively that will -- >> before we let you go, we had a blowout employment report today. a lot of jobs created. one in five of them are within your industry, food and dining and drinking places. >> right. >> what do you see happening to wages there? >> i think we're seeing wage

increases certainly in new york the elimination of the tip credit for a tipped employee starting january 1st which is a big issue. for us throughout the country, wage pressure is a big thing that will affect pricing in all restaurants and i think certain amount of, you know stabilization and normalization in restaurant wages is a positive thing. certainly restaurant workers, although they are a large percentage of the employment population are the lowest paid hourly people and a correction in that is good. really the consumer has to see coming is that correction will be reflected in food prices and menu prices throughout the spectrum from fast food to fine dining. >> all the way up. >> to the top. >> good to see you, joe. thank you for your time host of "restaurant start-up" on cnbc. a special treat this friday morning. kelly evans at the helm of "squawk alley." what have you got coming up. >> hi, simon. great program coming up. banner week for tech. we started on monday closing at nasdaq 5,000 and end with the news that apple replacing its iphone launch partner at&t in

the dow jones industrial average. we're going to talk about that. speaking of apple we've got more detail on the apple watch from none other than jony ive himself that we'll be get to and tonight the unbreakable kimmy some mid appears at netflix. can netflix save the sitcom these questions and more coming up top of the hour. see you then. s. the job jugglers. the up all-nighters. and the ones who turn ideas into action. we've made our passions our life's work. we strive for the moments where we can say, "i did it!" ♪ ♪ we are entrepreneurs who started it all... with a signature. legalzoom has helped start over 1 million businesses, turning dreamers into business owners. and we're here to help start yours. over 20 million kids everyday in our country lack access to healthy food. for the first time american kids are slated to live a shorter life span than their parents. it's a problem that we can turn around and change.

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. welcome back to "squak on the street." gold prices taking a breather down $21, almost 2% on the heels of today's better than expected u.s. jobs report. we could see the lowest close of the year for the gold trade. the lower prices are helping to depress certain mining stocks as well. look at the gold miners newmont the worst performing stock in the s&p 500. down more than 5%. also shares of other miners feeling the heat as well including baric, goldcorp and an glo gold down about 5% today. back to you. >> the headline the 295,000 non-farm jobs were created in the month of february and our nail the number winner is asrat. we're sure to send him this prize signed by the entire

"squak on the street" team unless kayla and kelly don't get their hands on it first. >> that's a pretty good loot. he will be lucky. >> i almost took it home the other day. glad it's still here. >> accidentally i'm sure. all right. simon, thank you so much. it is 8:00 a.m. in apple headquarters in cupertino, california 11:00 op wall street and "squawk alley" is live. ♪ ♪ welcome to "squawk alley" on this friday morning. joining us today is kara swisher, co-executive editor at re/code. good to see you. >> good to see