happy fourth of july. happy independence day. join us on monday and "squawk on the street" is next. good morning and welcome to "squawk on the street." i'm david faber along with sarah simons and carl hobbs. carl quintanilla and jim cramer have well earned days off. we are set up for a potentially higher open and decent days. we opened this week with a significant down draft. the ten-year note yield on this employment number we got, let's take a look at where we stand. the yield a bit below 2.4%.

almost a week having gone by we are two, four six. we are now 2.389. let's get to our road map this morning. as you expect it starts with the employment number. a steady increase in jobs added last month. unemployment ticked down to 5.3%. perhaps some worries as the participation rate slowed. >> as we head into the weekend, no deal insight for greece. finance member is threatening to quit if the vote is yes. we will get information live from the market. deals continue in health care and paypal buying zoo. here are the numbers for the jobs. nonfarm payroll, up 223,000. gains in april and may, revised downward. the unemployment rate fell to 5.3% a seven-year low.

the labor participation rate declined as low as it has been since '77. wage growth stalled. average hourly earnings came in flat. later this morehour, we are going to look at the obama administration's numbers. we sat down here. he said not so great. >> not so great on the headline number. a little disappointing. still under 2000. they called it a goldilocks number. not too great and not too awful. we are going to hear a lot about this labor participation. that is the share of working age people in the labor force going down to 62.6. 432,000 people dropped out of the labor force in june. that was a surprise. it is moving in the wrong direction. >> for many people the question will be what the fed does now or the fed speakers, whether they continue to see that a september rate hike is still on the cards despite the fact that many think it won't be. we are going to talk to those in goldman who broke rank a couple of weeks ago and suggested no

rate rise possibly until december increasingly, that's looking like the view. >> another thing that the fed always watches is the wage. we had seen improvement. pretty flat in june. up 2%. that's pretty much been the average we have been seeing in this recovery. is it good enough for the fed? last press conference janet yellen said there has been improvement in the labor market but things could get better. >> we are getting close to the level where they feel like inflation could start. >> it is arguably not there. >> you don't want to see it going down because people are dropping out of the laborce. >> it is not necessarily the right reason. i will be curious to see what mr. paris has to say. some are speculating what is behind that 16-19-year-olds and minimum wage hikes in various

states. perhaps that has kept people from entering the labor force. >> or boomer is retiring. >> we talked a lot about disability in the past as well how many people are on disability. >> let's chat more about the jobs report and how it is going to impact the market. we are heading for the worst week in three months even though futures are pointing to a higher open. dan greenberg with us as well as ethan harris from bank of america, merrill lynch. are we being do sour and down beat about this report or is it really sort of not that great? >> it is a weak report relative to expectations. it is not a terrible number. 223,000 is pretty good. the trend growth in the labor force is about 150,000. so if we keep getting 200 plus payrolls, we get a steady improvement in the unemployment rate. the unemployment rate dropped for the wrong reasons. it dropped because the participation rate fell. that's a little disappointing.

wages were flat which is a pretty disappointing number there. i would say two out of three are bad here. >> the question dan greenhaus, i guess, is yes, weaker than expected but weak enough to take a 2015 rate increase off the fed? >> exactly right. it was not a great report. 225,000 jobs is roughly what we were looking for and that's what we got. to your question i would imagine ethan would agree. one report of any, an employment construction report, doesn't move the fed's thinking materially in one direction or the other. they work in trends. they work on the median term horizon. in that regard the jobs report is part and parcel to what we have had lately mediocre. that keeps the fed in play. >> we did have some excitement when we got certainly may at

280. that has since revised down. the bulls are suggesting that the economy is accelerating and earnings will come back in the second half of the year and the market make gains. it is not immediately obvious that that may be the case. >> let me be clear. earnings didn't go anywhere. the first quarter earning season was great, except for energy companies. the second quarter is probably going to be decent except for energy companies. i know you can't do that. you shouldn't exclude any part of the bargain. let's not pretend there was this wholesale decline and the quarter was terrible and everybody was jumping off a cliff. it was really concentrated in one area f we look over the last six weeks, the data has been surprising in the 2-1 ratio.

the employment rate goes on the negative side of the ledger. the fed does have to look at the broad array of data. if we get the same data we have got in the last six weeks, the fed will hike interest rates. >> i agree with that as well. >> that isn't the goldilocks scenario we were talking about. >> i think we have seen an acceleration to an above-trend growth, which is kind of a goldilocks scenario. what is the good news the fed is only heeking if the data continue to improve the way they have over the last six weeks. there is no real inflation in the pipeline the fed can go as slowly as they want to. better growth without any serious inflation problems. i'm bullish on the equity market. i think this report doesn't

really charng really change that. >> to your point about trend isn't it a little disturbing that jobs were reduced by 60,000 if you look at the revisions. most of the 223,000 job gains in june were in the service sector. >> it certainly is disappointing. ethan mentioned some of the disappointing parts. revisions is another area. we are minus 60,000 jobs. that's not good-bye any means. the last few months are certainly not as good as we thought. you are exactly right on that nt front. the fact of the matter is that the economy is doing much better in the second quarter than it is in the first quarter. we are tracking somewhere around 3%, which is not bad. it is not quite the bounceback that you saw in 2014. pretty darn good considering what happened in the first quarter. there is a separate conversation about how much the fed can or should hike and whether they should or can hike at all.

in regards to that second point, i imagine ethan doesn't disagree, they can hike rates. whether it is 25 or 50 basis points remains to be seen. i would think the data reports at least marginal policy. >> if this jobs data doesn't alter your view or fed policy, we are heading into a weekend where the greeks could vote no to the current bailout package that could start the wheels in motion to them leaving the euro. would that change your tune about the fed's trajectory on interest rates? >> i think the next weekend could be very messy even if they vote yes. if they vote yes, you have turmoil in the government and it is not clear who is going to make the deal with europe. it is going to be very messy. i hope they vote yes. that will at least give the rest of europe a reason to hold a life line out to greece. i don't think this will make a

big difference for the fed in september. i think most of the greek issue will be resolved by september. europe has a good buffer against the greek crisis. we haven't seen european markets hurt very much by this. i would expect turmoil in the markets around the greek exit. i don't think it will be a systemic event that carries over into september and really affects the fed decision in september. >> wow, that's optimistic. you can leave it there. ethan harris and dan greenhaus. good to see you both on jobs and greece of course. >> let's turn to greece where clearly the countdown is on to sunday ace referendum and whether the country or voters should accept the bailout terms. our chief international correspondent, michelle caruso-cabrera is live in athens with the latest. the rest of the euro zone should have shot down the dealings with greece. i guess the focus becomes

totally on opinion polls and what's happening locally with the politician within greece now. >> the other european leaders have said, yes, you want a referendum go. for it. there is a poll that shows the yeses in the lead. despite the criticism, not enough time to prepare, one week tonal debate the question is way too complicated. preparations are underway for this ballot when it comes to getting them printed up organized, boxed, shipped out. municipal workers have been preparing. the frames for the voters are on a truck to be sent around to the actual ballot. i have it here. this is the question. it looks enormously long because it is. should the plan of agreement be accepted which was submitted to the european commission and

central bank on june 25th 2015 and comprises of two parts which constitute the unified proposal? the first document is entitled reforms for the completion of the current program and beyond. the second preliminary debt sustainability analysis. clear as mud right. you can, if you want print out these documents. even when they are in english, they are in greek. you need a ph.d. in bureaucratic akron nicks to understand what is being talked about here. the question is unclear. it is being read by the yes supporters as listen this is about whether or not we want to stay in the euro. it is being read by the rest of the guys this is a vote about whether or not you want to stay in the euro. to the noes the government keeps saying no this is just about us getting a better negotiating position. the rest of europe is telling them, that is not the case.

a lot is riding on that. what is the next step? europe maybe gives them another life line. >> michelle whatever you think of the greek prime minister he is very clear in the way he often communicates. he is a fairly good or atore. why do you think they made the question like this do you think? >> because he wants a certain outcome. do you want more austerity measures, you get a no. if the question is do you want to stay in the euro you would get a why he? if you wanted clarity, he could have asked that for sure. when you see the poll numbers when they ask about how are you going to vote on sunday, the yes yeses have the lead. when they ask all of these same people, do you want to stay in euro regardless of the measures 74% of the respondents say yes.

it could be that he is looking for something that is less than clear, a little unequivocal. not so unequivocal, basically. >> it is so hard to tell also from the polls, michelle. thank you very much. we will continue to check back with you through the day into the weekend. we have breaking news on b.p. it has announced a settlement with four states and the united states over the 2010 gulf oil spill. it will pay $18.7 billion over an 18-year period. check out shares of bp running up following the settlement aflouncement. now announcement. now, shares are up about 4%. this has been going on for so long. i feel like they have been in settlement talks for years. >> tesla getting a nice boost. also ahead, the labor secretary,

thomas perez on today's employment report and the road ahead for job creation and, of course, wage growth. let's take another look at the futures and where we are likely to open. we are slightly lower. still up 23 points on the dow when we open in a quarter of an hour. here at the td ameritrade trader group, they work all the time. sup jj? working hard? working 24/7 on mobile trader, rated #1 trading app in the app store. it lets you trade stocks options, futures...

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tesla announcing this morning it has delivered 11,507 model model "s" sedans. up 52% from a year ago. ceo, elon musk for 55 deliveries this year. we would have to ramp up the growth rate to get to that goal including launching the new sport utility vehicle. >> it is 21,500 for the first half. >> stock's up. investors cheering on the idea of their batteries and what they will be able to accomplish in that realm, if you will. >> a large contingency of people

question the valuation. >> what about all the publicity and the idea they are opening one a day and yet they are not charging for it for the line is arguably too long. >> i haven't been on any of those lines. i don't know. >> they were impressed about that. >> i haven't driven across the country yet either in a tesla. >> i did -- i was trying to remember. i did see them a number of places out west on a recent visit. >> there you go. there you have it. i'm sure that has been settled. we can move on. >> since march when the stock bottomed it is up 40%. >> these numbers only helping that. what's first and foremost on his mind this morning? he joins us as we count you down to the opening bell. after the jobs report comes in a little bit weaker than economist predicted. the dow looks set to open 31

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we have about 7:30 before the opening bell on this thursday. it is our last trading day, of course of the week given the holiday tomorrow. let's bring in art cashin. yesterday, i posed a question which is no longer valid, which is what if we get a really hot employment number. 223. not too hot, some too cold.

some say the participation rate is not what they had hoped for. what is your read? >> i think that is a problem. there was a enormous dropout in the hundreds of thousands. it is i think going to bother the fed a little bit. i am still in the camp of no rate hike this year. i think, look they have several things working against them. as much as they say we don't care about what's happening offshore, they have to care about what's happening offshore. the imf and the world bank have both cautioned, please wait until next year. to fly in the face of that. if something comes up they risk all their credibility. so i'm not sure that they will do anything. >> they could communicate that properly, it might help the dollar a bit in the sense it would be a bit weaker and help on corporate earnings as we head into the second half. >> i think they will have a little problem communicating it.

i just think that they have a set policy now. i think fisher has convinced them that they have to tell the market that anything could happen at any time so that they are ready. you watch speaker after speaker, people used to be outright doves and some leaning hawkish. everybody has the same thing. september is not off the hook. things can turn around. i think they just want the markets to be slightly uncertain. they are achieving what they want. >> what is your prediction as to what we walk into monday morning in your eyes? >> i think that you may wind up with a yes vote possibly even a resounding yes vote. the pain in greece is astounding. we don't do justice to it seeing it from afar. there is hardly any money around. i think michelle pointed out the other day that they are only using big bills.

the equivalent of a $100 bill. they are being done. food is being hoarded. they are canceling medical procedures, because they are out of things called sutures. the people are being more and more upset. they are becoming more upset with mr. cyprus. >> i think that's what ms. merkel and everybody else are hoping for that they can put mr. cyprus behind them. they think he is a little bit of a hothead and difficult to deal with. i think if they come in and there is a yes vote now, he is very intrigued with power. he will do anything he can to avoid re-signing. i think merkel and everyone else believes if they get a decent yes vote he will be gone. >> that would be good for the markets. >> i think it would be. that would lead to some greater sense of compromise and then we will move on to china. >> there you go. i know. a lot to talk about there.

important stuff, actually. art, as always thank you. art cash shin. the opening bell is coming up. labor secretary, thomas perez is on this morning's job reports. all that when we come back.

you are watching cnbc "squawk on the street." the opening bell is going to be ringing about a minute from now. i always turn to jim and say, what's the key to this market? i won't do that to you, sarah. of course the key today is going to be the focus on that unemployment number or the employment report i should say. again, art cashin saying i am not going to see a raise from the fed this year. others certainly disagree. >> and greece and the big uncertainty going into the weekend over the referendum. and art raised china. i think that's an important point as well given how much destruction we have seen in the last few weeks. >> just this week alone, really incredible. the government tried to is step in and see what it could do. it failed to do so.

the economy not as strong as some would have me believe from what i'm hearing from some of my people on the ground. >> i won't go kneeinto details. >> our last trading day of the week. you can see a real time to change. a bit more green on the board. reacting to that employment number. over here at the big board energizer, manufacturer of batteries celebrating spinoff. shrink to grow. over at the nasdaq a genetic testing company celebrating its ipo today. we are going to speak, by the way, with the company's ceo in squawk alley. that's obviously starting at 11:00. >> energizer just spun off into two different businesses a household products business where the names and brands of the batteries will be one and the other will be more of the personal okay product. it owns hawaii tropic sunscreen

and shavings. they announced a first-time dividend and the plan to purchase shares on the back of the spinoff. another big split we are watching closely is that of hewlett-packard. splitting into two fortune 50 companies. an important filing in terms of giving people a sense of the capital structure. some quick things to share. we know the revenue numbers for the most part. hewlett-packard enterprise $55 billion. total assets $65 billion in a fiscal year that ended october. they posted $57 billion in revenue. hp reported about $21 billion in sales in the u.s. 5 billion in the u.k. not a similar exposure from hp inc. it is considered the parent company if you will. splitting into the pcs and printers and all the other businesses of the company, an

enormous split that continues but is moving along right on the mark to happen sometime in the late fall. probably november time period. we have a deal this morning that we did not yet mention, which is centene buying health net. if you are unaware of centene, you are probably not alone when you take a look at the company's price stock and the increase of the enormous market val crew. it gives you a sense of why it is now worth $9 billion and can do a deal for health net for $6 billion creating a multinational health enterprise with more than 10 million members and service revenues of $37 billion. the deal itself 2825 in cash -- excuse me. .622 of centene common and 2255

in cash which has been the rule. they are using $2.7 billion in financing to help finance the cash portion of that. it is a premium. you can see centene, the acquiring company here is reacting positively. >> they are medicaid focused, these two. 6 of the 10 million are actually within that area. as, of course we have another of other larger mergers. >> it is the largest medicaid managed company but only a minor market apparently in california where health net has opinion growing radically. soft savings sinynergies about about 150 million. that seems to be what the investors are reacting positively to. >> looks like we are higher across the board. the best performing group right now is utilities telecom, not far behind on the lower yield. the reaction to a somewhat

disappointing jobs numbers, buying treasuries yield comes down selling the u.s. dollar. that's the weaker dollar. >> a growing realization that the rake hikes are moving further out. >> from september to december. >> art cashin saying he doesn't see it happening until 2016. energy shares coming back. they were the worst performing group yesterday. crude oil closed at a low. >> production has continued somewhat unabated particularly from those companies that are obviously involved in hydraulic fracturing. their break-even point came way down. they were able to shave significant amounts of money from their costs and therefore production more than people had anticipated let's get back to our jobs number this morning. we are now joined by the labor department, the secretary of labor, himself, actually.

223,000 was the addition in nonfarm pay roles. the unemployment rate to 5.3%. to get reaction from the obama administration, we are joined in a cnbc interview by labor secretary, thomas perez. >> good to have you. >>s always a pleasure to be with you. >> the concern seems to be about the low we haven't seen since 1977. your reaction? why are we at 62.6%, down substantially from 62.9% just a month ago. >> it is important to know a few things this. the labor force participation rate over the last 14 months has been within a very narrow band. 62.7 to 62.9. the last month is just outside that band. this has been like this for a while. also important to understand that when you compare to 1977 our population is much older now. that comparison is slightly misleading in that sense.

the other thing rkts we, we always monitor labor force participation. it is important to understand what did happen last month. this is not a case of people that got discouraged and stopped looking for work. if that was the case i would be worried about this data point. what happened is that june is the highest month of inflows into the economy. it is the function of the fact that people like my 19-year-old daughter, they get a summer job. what we saw last month was that there weren't as many people entering the labor force. so the pace of entry wasn't as great and that may be due to the fact that the collection period for this data was a week earlier. i also suspect it has something to do with the fact that a lot of schools, because of the weather, had to end later. one month doesn't make a trend. we will certainly monitor this closely. i'm very heartened by the fact that this isn't about discouraged workers. this is about the pace of entry

largely into the workforce, about young people. >> some are speculating, mr. secretary, that minimum wage hikes in a number of stalts may be impacting the ability of businesses or the willingness to hire these 16-19-year-olds. i see you laughing. i guess you disagree. >> the calamity hollers will look at any data point to say minimum wage doesn't work. washington state has the highest minimum wage. they have had the highest minimum wage for 20 years. there is no evidence that having a high minimum wage in washington has taken down growth or employment in any way. that has been disproven time and time again. what we need to do is lift wages. that's why the president is going to be talking about an overtime proposal. since the end of the recession, more people have been working overtime. the president wants to make sure they get paid. managers used to be middle class jobs. as a result in no small measure

of regulation put in place by the bush administration that gave more leverage to employers and less leverage to workers. workers have been taking it on the chin working 60 hours a week and effectively getting paid for 40. that's not fair. that's what the president is going to talk about today in lacrosse, wisconsin. >> there are so many points to pick up there, mr. secretary. when you describe what's happening in washington this is surely a huge country with very many different labor markets in which maybe they can deal with the minimum wage at a certain level. maybe they cannot. isn't the lesson from europe. i appreciate that this country is not there yet but you run the danger of creating insiders and outsiders in the workforce. those that are inside the workforce, to get the minimum wage and their overtime paid but because of the way in which employers react, they take on less people and there are others that are increasingly locked out. would you not accept that as a theoretical possibility even if you were to claim to see it now.

>> i don't look at theoretical possibilities. i look at facts. the fact of the matter is we have now had the best two years of job growth that we have seen since the end of the clinton administration. we have had 64 consecutive months of private sector growth to the tune of 12.8 million jobs. that's not theory. that is fact. that's because the president continues to move forward with a broad-based economy, a broad-based plan of recovery. we're seeing this in every sector. you look at business and professional services for instance, these are good jobs. not only are the quantity of jobs continuing to grow. you look recently and you see great growth in the quality of jobs that are being created. >> mr. secretary, obviously, there has been improvement. you are right to point that out. there are millions of americans that aren't feeling this.

6.5 million americans are working temporarily for economic reasons. why are these numbers so staggeringly high compared to the improvement we have seen in terms of jobs growth? >> when you look at the long-term unemployed we have 1 million less than we had a year ago. people working part-time for economic reasons. they are working part-time and they want to work full-time. that's down by over 900,000 as well over the last year. we are not where we need to be. i agree with the premise of your question. there is no one here spiking the football. we work best as a nation when we feel the team. there are folks on the sideline. that's why the president is fighting hard to get a long-term transportation bill. you look at construction jobs. we have room for improvement there. the best way to move the needle there is to make sure we have a long-term infrastructure bill. we know how to move forward and do even better.

the challenge here is getting the bipartisan support, getting in particular the support from the republican leadership historically. infrastructure has been bipartisan. this is dwight eisenhower's system. the two major thing i think about we should do in july are, number one, pass that transportation infrastructure bill long-term and we need to talk about overtime that put money in people's pockets and address the issue of stagnant wages. >> real quickly. i know we have to go. the chamber of commerce says that your overtime plan is not going to guarantee more income but will negatively impact small business and drastically limit unemployment opportunities. i have ten seconds to respond. >> that's so incorrect. when you work extra, you should get paid extra. you shouldn't be forced to work 20 extra hours for free. that's what overtime is about. >> mr. secretary, as always

appreciate your joining us this morning. labor secretary, tom perez. let's get to bob pisani. he has more on what's moving given that employment number and the impact it has had. >> a very mixed open. that's because there is a lot of debate about what these numbers mean. particularly the wage. a lot of people feel this may be the reason to delay a rate hike in september. let's show you the scorecard. payroll was modest. wages was a definite miss. year over year we are only up 2%. durable goods was a miss. ism was a beat, construction spending beat home and auto very mixed picture. a lot of people feel the wages were a real disappointment. we saw the ten-year and the dollar drop. you want to see how confused people are about the futures. they dropped, they rose they dropped going into the open. they are modestly to the up side. that's a pretty confusing

picture. you can see this in terms of the sector movements at the top not surprisingly with yields down. i think sarah mentioned this. you see utilities and telecom as the leader. when they are down they compete. they are on the up side. that's emm. better when the dollar is weaker. your weak sector are the bank improved today. these are particular regional banks that have done very well on the rising interest rate environment. mod es modestly under pressure today. let's move on to china. another crazy night in china. this is a regular occurrence with what's going on. we saw the shanghai and the shenzhen exchanges, for example, both move about 4% to the down side 4% or 5% to the down side. i want to show you what the shenzhen stock exchange has done this week on a daily basis. we have seen the shenzhen and the shanghai today put up what's

going on for the week hear from the highs to the lows. monday, 10% range from the high to the low. that's 10% on a daily basis, not on a yearly. tuesday was another 10% from highs to lows. wednesday was 8%. today is 7%. you could say, at least it is not as volatile as it was in the beginning of the week. bottom line it is pretty severe numbers. they are trying to figure out what to do. they had been trying to curve them. they don't seem to know what to do. ideas floated to stabilize the market turn off the ipo spigot and allow chai need pensions to invest in equities make it more open to foreigners. cut interest rates more. the main thing the government twoonts wants to do is make sure there are not as much intraday swings in the market. thank you very much. i wanted to weigh in on the deals that are or are not

happening in hmo land. we spoke about a deal involving centene and health net. i wanted to tell you that anthem and cigna, in on and off again talks. anthem making a bear hug for cigna. cigna rejecting that. much of this focusing on social issues and disagreements in terms of the leadership of the company. the companies are back in talks. that's not clear how much progress there is being made at this point in terms of the talks between the two companies. they have reengaged to a certain extent. as you might expect the focus of those talks is believed to be on the same social issues that doom their ability to reach a deal. economics was not the keep part of the differences between the two. as i said $184 a share from anthem. for cigna was the offer.

69% was in cash. 34% in anthem shares an offer of three board seats as well. you may recall there was issues about david cordoni, a frequent guest here taking over immediately as a ceo and the fact that anthem did not want to move down that road. you may recall in cigna's rejection of anthem it said your insistence that one person joseph swedish, assume four roles, including chairman of the boar, ceo president and head of immigration was disconcerning and risky. why would they get back together? their share holders want them to. they have a shared shareholder base to a certain extent which have been making it clear they want the two companies to try to reengage and see if they can find common ground here. some of the share holders telling me they do believe mr. cordoni would be a reasonable choice as ceo for the combined

company, not that that isn't necessarily something that might have happened in other previous iteration of the potential deal between the two. it seemed to be something mr. cordon any wanted to happen immediately. we will see if they make any progress. wanted to share the fact that those two companies have reengaged talks. they had a meeting on tuesday. there may have been some follow-ups. it is not just bankers, antitrust overhangs this. we have a newly muscular deal d.o.j. ftc, not to mention this electroluxe purchase of g.e. one can only imagine how long potential deals will take to close. if we get 5-4. we are 5-3. we are still waiting to see whether we will get that deal between humana and aechlttna. we come in expecting to see something but we haven't yet. >> cigna is up 64%. one of the best perform formers.

let's go to the bond pits rick santelli. a lower yield and a weaker dollar rick? >> we are calling it steeper, lower, longer. steeper, the yield curve. five is what you want to pay attention to. fives versus tens two-day chart. see the steepening on the knee-jerk reaction to the 8:30 number. you can see it clearly in fives versus 30s as well on the two-day chart. why longer? steeper means longer. it is hard to defend the fed is going to tighten any time soon because the yield curve normally would be flattening? it doesn't matter if flattened rates move up or down. normally it would be rates up generically but up more aggressively in the short-end. if you look at a ten-year note yield, you can see the steeper, lower, lower rates. it isn't only us. it is the boon as well. they did a very similar

maneuver. also a similar move. here is where things get fascinating considering we have a holiday and the rest of the world doesn't. greece has a referendum. they didn't pay a whole lot of attention until about a half hour after the number, the dax. with he were getting ready to open up our market. the chart we all should be looking at the most truly is the shanghai composite. this chart starting in april, granted, they are up strong on the year. wow, even with the stimulus going on this is the chart to pay attention to. it is kind of your barometer of global economics with regard to trade. simon hobbs, back to you. hey, make sure you watch an hour from now, simon. we are going to have ed lazear former head of the advisers and an interesting spin on today's data points. in the meantime today is

ostensibly the last chance for investors to position before the big weekend in greece if that is required. we are up 53 points on the dow. joining us on the phone, the partners group, charles dallara. mr. dallara was the point person for the big private restructuring for greek debt some two and three years ago. he knows personally many of the key players in the current battle as we see it. what would you tell investors that are trying to get a view get a position on what is happening in green and where sunday is likely to tell us? >> good morning, simon. obviously, we are in an extraordinarily complex and i would say unchartered territories for greece and for europe at this point. the referendum is very hard to call. my own presumption is that we will likely end up with a small majority of a yes vote that would be a signal that the greek

government should go back to the table and negotiate further with the euro zone with the imf. of course that's not necessarily a foregone conclusion. what is unclear whatever the outcome of a vote simon, i think the key issue here is it seems to me who will be leading the greek government at that time. that is very unclear. the finance minister has said he will re-sign. the prime minister has signaled implicitly that he will unlikely remain in charge of the greek government, at least not in this current form. we could see a new coalition with him at the helm. a lot of uncertainty presales. i do think the odds continue to be reasonably good. following this referendum, whatever the outcome, there will be a resumption of negotiations and the odds of a deal during the course of the first three weeks in july are still not that low. >> what is your assessment and, again, i would mention you know many of the players in the

finance ministry level here. what is your assessment of the fact that the euro zone has now gone so quiet. angela merkel is saying and, indeed, the dutch finance minister this morning, we are not going to talk to you until we get this referendum on sunday. is it a belief that there could be some sort of raging change there? is there also a hardening amongst them that they are prepared to let greece go. i appreciate they want to appear they are saying that and they might do that. do you believe that they would actually pull the trigger. >> simon, i still have difficulty believing that chancel, merkel and some of the other leaders of europe are ready to pull the trigger on a greek exit. i think this is more easily although not certainly, more easily interpreted as a tactical move to see who will be running the greek government. it is no secret they have not found it a particularly pleasant or rewarding experience to work with the current greek

government. i think we are seeing a short-term tactical consideration that suggestion, let's wait and see the outcome of the election. maybe we will no longer have to deal with prime minister cyprus. >> i think it is interesting that some very strong leaders, world famous economists have come out in op eds and told the greeks vote no in the referendum. they put the onus on the europeans for strangling the greeks with austerity. do you think that's appropriate? >> we heard from bernie sanders who made a statement to the huffington post also opposing this referendum. he says it is unacceptable that if they have refused to work with the greek government on a sense i believe sensible plan? the pensions of the people in greece should not be cut. do you think it is appropriate to hear from left-leaning

economists about how the greeks should vote? >> two points i would make there. i reflected on this myself. i have been asked by many flends friends to weigh in. i have thought it is not appropriate for a nongreek citizen to express a viewpoint there. more importantly, it is crucial that the greek people take a long view of what's at stake here. the referendum is enormously confusing, highly technical inappropriately framed to be quite honest. i would suggest we all leave it in the hands of the greek people to decide how to vote on the referendum on sunday. we can have our different views, of course. i understand those economists to are very frustrated by the imf program. i share some of the perceptions about the shortcomings of these programs. i think it is one thing to criticize the program. it is another thing to step in and tell the greeks who you to vote, which i don't think is

appropriate. >> we'll see how we go. sunday is the day. >> charles, nice to see you. charles dallara, joining us there on greece. >> it is of course jobs friday on thursday. more on that next. so you're a small business expert from at&t? yeah, give me a problem and i've got the solution. well, we have 30 years of customer records. our cloud can keep them safe and accessible anywhere. my drivers don't have time to fill out forms. tablets. keep them all digital. we're looking to double our deliveries. our fleet apps will find the fastest route. oh, and your boysenberry apple scones smell about done. ahh, you're good. i like to bake. with at&t get up to $400 dollars in total savings on tools to manage your business.

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good morning. well come to squawk on the week. eye simon hobbs with sarah asa aison and jim cramer and david faber are off today. the dow up. >> the data keeps on coming. let's get to rick santelli at the cme with breaking news on factory orders. down .5. we ended up with two scoops down 1%. last month, revised lower from

minus 0.4 to back to september to find a lower number. down 3.7. there is a new number when you strip out transportation. we call it factory orders core. that was up 0.1. not necessarily a solid read on factory orders. we see 238. it closed last week at .242. last week 2.47. even though they are down, they are not down a lot. >> rick santelli the dow still up about 36 points. let's get more reaction on the stock reorder numbers and, of course, the biggy, today's jobs number. our senior economics reporter steve liesman, also in chicago at the cme. loved your two-shot with both of you. now that you have had some time

to digest the jobs report how disappointing is it? >> i don't think it is that disappointing. are you hearing a lot of disappointment out there? i am hearing guys say it is a good number in context. that is numbered very much in line with some other data we have god which is that the manufacturing sector does not look to have picked up since other parts of the economy since the winner the consumer side and other parts of the economy. let's take a look at the mixed bag up 2.23. almost double the rate needed to soak up excess supply. the good news sort of ends there. average hourly wages, unchanged, just at a time when we thought we were maybe breaking out here on wages. labor force participation rate ticking down. it is widely unchanged for the year but going the wrong way

here as a bunch of people dropped out in the month of june. the revisions downward 60,000. not too concerned about that. you took last month from 280 down to a still strong 254. looking at where the jobs were almost all in services. that raises questions out there. professional business, health care retail up a pretty strong 33,000. like that um in, temporary help also up stronger. what's missing between construction manufacturing and goods production it is only 5,000. it doesn't even make our list there. we have seen some other indicators that maybe there is jobs growth. let me give you some commentary. they are saying today's report is unlikely to change fedex expectation since we think they will hike later. they point this out.

neither greece nor china have done much to curb the enthusiasm american businesses for new workers. another chart, ticking down towards the low at 29 basis points. there is just one fed hike built in for this year. that could come in september or december. i have a bet with my guy, santelli. rick says it is not going to happen this year. i think they get one in but it is might close right now. >> it's a little bit of a disappointment because expectations were really high going into that number. they were really ramping up specially with a slew of positive data points. >> i think that's right. i agree, the adp number was better. we were getting some talk on the street with a whisper number that could have been stronger. we may yet get it in the revisions. i was very surprised to see no construction workers in that adp number showed almost 20,000. plus you know what's happening in housing.

they can't build houses without people as far as i know. so i'm a little bit surprised to see that right now. >> just to keep everybody on board, when you flush that quote there, i think it was from pantheon that said 5.3% as an unemployment rate is dangerous for the feds. is that the view that it is inflationary or becoming inflaegs naryin inflationary despite the whole debate about the participation rates. >> it is getting close. if you project it forward by the time the fed meets in september, you could be 5.1 or 5 when the fed meets in september. that would suggest behind the curve there. >> steve liesman joining us from chicago. jp kelly joins us chief global strategist and dan -- diane swunk. what do you think about this data? >> it is a glass half full. the compilation should goes that new grads are doing well in getting jobs.

even though the labor force participation rate plummeted from may, may was the outlier. we saw teens in particular did not go into the labor force. they have been crowded out by older workers taking low wage jobs. we are worried about their soft skills going forward. i do think it is important to note we are still above a year ago on that labor force participation among teens. the wage number is largely reflective of something that steve pointed out, the lack of manufacturing and construction jobs. i wouldn't be surprised with upper revision. we do have vehicle production coming through in july that usually doesn't happen. it helped the july numbers. i think the fed is in a bit of a precarious position. the risk of a delay is still rising for december. >> to be clear, is this a solid month in the way that you define it? >> that glass is half full.

a solid month of job gains. the details are not as good as i would like. that's something we have to acknowledge. >> david? >> well i think it is a solid report. i think the key thing that jumps out, we continue to have this structural labor supply problem. even 200,000 jobs doesn't sound like a huge number. it is enough to push the unemployment rate down or continue to push it down. i think that we're at 5.3% right now. the fed felt that we would be at 5.3% on average for the fourth quarter. yet again, the unemployment rate is falling faster than they thought. i will be very interested to see the index in july. why aren't we seeing any real wage growth here? we may be seeing growth in compensation elsewhere. this shows enough labor market tightening tightening. because of the further tightening, i think they will

raise rates in september and twice this year. >> one factor that is not getting a lot of attention is the energy price plunge continues to cost american jobs. mining lost another 4,000 jobs in june. that brings the total to 71,000 since december. when does that stop and turn around, given the fact that we have seen crude oil rebounding here a bit. >> and then of course it goes back down a bit. i think what we are going to see is we have seen the losses in the mining sector are starting to dissipate. that is the issue, that they are going to dissipate and move to zero. they won't be adding jobs. what we are starting to see is the flip side. finally, the benefits are materializing. you are seeing retail and leisure and hospitality hiring. vacation is up and consumers are dipping into their pocketbook and willing to spend a little on discretionary purposes. many of the mining jobs were very high-paying jobs. that's where wages have decelerated quite a bit. noting the point about the

employment cost index. that's a really important issue. much of the increase in the employment cost index, at least in the first half was due to fees and commissions alone. we saw the largest outlier in that sector that we have seen the history of the data. that's not likely sustainable. we need to see more increases. i am a little bit worried about how high that unemployment cost index stays. we would like to see it warmer rather than cooler. >> before we have to let you both go, i want to come back to the point that david made. very firmly nailing your colors to the mast on interest rates. you thought there would be a rate rise in september and a second one before the end of the year? >> yes. >> we seem to have a lot of people that think it is pushed way back. i think goldman is a one before the end of the year.

art cashin is suggesting possibly none this year. what are you seeing that they aren't? >> i think the fed members are clear. if they see further market tightening, they will raise rates. it is not that they are missing something. they are paying too much attention to if you had fund futures market. i believe the fed funds futures market is being distorted by the cash market. because of that i don't think it is an accurate predictor of what they expect. i think people are looking saying nobody expects a rate hike. i think people do. the problem is i believe the unemployment rate could well be 5.2 or 5.1 by september. they have to get going at some stage. we have the easiest military policy in place in a economy. >> it is a big day. great to have you both diane swonk and david kelly. >> thank you greece in deadlock until sunday. the company's finance minister

threatening to quit if there is a yes vote. we will talk to former secretary of state about the risk involved. "squawk on the street" will be right back. s the life behind it. ♪ those who have served our nation have earned the very best service in return. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life.

the countdown is on in greece. on sunday voters will decide whether the country should accept bailout terms. cnbc's international correspondent, michelle

caruso-cabrera is live with what could be a historic weekend, michelle. >> reporter: absolutely sarah. the day after, we have learned that the ecb is going to reconvene the governing council to decide what to do with the emergency liquidity to greece. whether or not they get more cash so you can get more money out of the atms. they are going to be looking to see the outcome to make any decisions about what's going to happen next. just because there is a yes vote doesn't necessarily mean we start to see the banks reopen next week. there is a lot of political things that have to happen first before that. in the meantime the country is in full campaign mode. posters are going up throughout the city. if you want to learn some greek this morning, the no posters say oxi, it is not pronounced oxy. it is pronounced auhey, greek for no. yes in now is nai. you see those in a lot of the

but stations as well. there are campaign ads for both sides on television throughout the day. we are also seeing it on facebook and twitter feeds as well. if you are trying to send somebody in greece via money gram or something, they are not going to work. if you have a college student who is vacationing or backpacking. you can't get money to them and you can't get it out either. >> i want to point out the significance of what you are clearly making out there, the european central bank will discuss the emergency funding to greece on monday. the dutch finance min ser said if there was a no vote the euro zone could no longer support greece. the european central bank won't increase the amount of liquidity. it could cut liquidity to the

central banks and bring them down. that's the implied threat in what you are saying i believe. >> reporter: that's absolutely true. there is a whole legal process the ecb goes through. it is way to wonky to put on television. the indication of what you are saying is absolutely true. if there is a no vote here on sunday, the banks are going to struggle even more dramatically. if there is a yes vote then there is some room for movement. banks open monday tuesday, maybe not at all next week. there has to be some political movement as well by whoever is in charge. it could be very bad. >> it's sort of hard to state how much of that is going into the weekend. michelle caruso-cabrera thank you. joining us now ambassador robert kennett, now, senior international consul with wilmerhale. it is good to get your perspective on a day like today.

how do you think about just what is at stake for the euro zone and greece? >> i think it is a momentum weekend. there is both an economic and political dimension. i think the markets and the european institution are ready for either result. we have to recognize that european leaders tend to trust the greek voters more than the current greek government. we have to anticipate that anything that happens next week pivots off this vote both internally in greece and more broadly in europe. >> the question as to how the united states. obviously, the united states is powerless when it comes to this decision and what happens next. clearly, secretary lui has been on the phone with european leaders. president obama made a few remarks about it earlier this

week. what do you think is going on behind the scenes a conversation between secretary lui and his german counterpart or his greek counterpart, what does the you states need to tell the europeans ahead of this vote. >> i think this is a decision for europeans in bilateral channels and in the g-7. the u.s. can express its views. i hope that they are saying -- that is the u.s. government is saying that a europe is strong that is unified, that is outward looking is in the interest of not just europe but the united states and globally. i think the europeans have made clear they would like to keep greece in the euro zone but mrs. merkel said yesterday, not at any cost. i thought the toughest words coming out of berlin were from

the italian prime minister who enforced the notion this agreement can't be at any cost. at the end of the day, greece is going to stay in the european union regardless of whether it stays in the euro zone. the preference of the leadership and the u.s. government would be for greece to stay in the euro zone. that requires a clear statement coming out of greece that this is supported by the greek people regardless of what the current government's position is on the vote. >> at the same time, the financial times reports that a very determined angela merkel is now turning the screw, in a sense taking revenge for the fact that he dared to call the referendum making the greek prime minister squirm refusing his desperate efforts to return to the table. also, a desire that the greeks and the greek establishment take the euro zone seriously, which arguably until this point, if you look at how they flayed

around, this he have not. >> i saw that same story. i thought it overpersonalized mrs. merkel's reaction. the one she is taking today is the one that germany and so many others have taken since this criescy began. even with what mrs. merkel said yesterday, if you look at what italian prime minister renzi said, look what i have had to do look what others have had to do tough political decisions on pensions and taxation. how can we tell the greeks they don't need to do what we have already done. people tend to focus on germany. i understand it. it struck me yet, there was significant uninimity of vote that they want to keep them but not at any price.

>> it comes down to who are the greeks angry at angry at their own government and the prime minister angry at the imf, angry at the germans? how do you predict the vote goes? >> it is really hard to say. my feeling, sarah, is that anger animates demonstrations. i think when people get in a polling booth and clothes the curtains behind them a sense of calmness comes over them. they understand the importance of what they are doing. i think they are going to think not so much about the anger and whom to blame but what is greece's future? i personally think greece's future is stronger both in europe and the euro zone. i hope that's where the greek people come out. i tend to think that's where they will come out. ultimately, now, we are to the poent of nations, u.s. and europe reacting on the voice of the greek people. i think it is actual will i a good development. >> ambassador, thank you for your time. ambassador robert kimmitt

joining us. tesla delivering a record amount of cars in the second quarter sending the stock harder. elon musk the ceo is staying cautious about the financial results. what should investors do with the stock? will it hit its targets? more on that when we come back.

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the high today after the company delivered more than 11,000 vehicles in the second quarter. phil lebeau has more on the details. a pretty good reaction. it is all about the second half of the year phil. >> it is the second half simon. that's really what people are focused on in terms of whether or not tesla can meet expectations. this stock has been moving higher steadily over the last two or three months. if you take a look at this chart, and we will you will see it has been moving higher. in terms of the second quarter deliveries tesla reports deliveries on a quarterly basis. they simply give a whole number. they don't break it down by regions in terms of u.s. north america, asia etsz. the 11,507 was a record quarer. it beat 750 to 1,000 vehicles the number a lot of analysts were expecting in terms of deliveries in the second quarter. the key thing to focus on with

des la tesla is the overall target. it remains at 55,000. if they can hit that target and deliver 55,000 or exceed it this year then it will be real interesting to see what happens with the stock. delivery is going to ramp up in the fourth quarter. that's when we start to see them really starting to push the production rate for the model x. the first deliveries start this fall and quickly. take a look at shares of tesla. it has flotnot been at this level since last september. a lot of people are saying what's the next catalyst? we will have the model x. the first delivery coming in the fall. simon, sarah back to you. >> thank you very much phil lebeau. quite a rise from the march low. phil lebeau will be joining us to talk about what he thinks about today's jobs reports and what is ahead for the economy and the federal reserve. we'll be right back.

welcome back. i'm jackie deangeles reporting from the nymex. 69 billion cubic feet right in the middle of the range traders were expecting. prices were slightly higher on this report. now, they are moving a little bit lower. remember gas has seen a nice pop, almost 5% in the last alone. this doesn't move on the fed or the jobs report or the dollar. this is a weather-driven trade. here is what we know.

temperatures have been a little bit on the mild side. we also know total storage is in good shape. we know the producers are coming out with more and more nat gas. we are stuck at this 2.83 range right now. that's what traders are watching here. now, over to you sue herera with the cnbc news updates what's happening at this hour? we start with the u.s. capital police giving the all clear at the navy yard coming after a report of shots fired and a lockdown but nothing was found. a csx train carrying a toxic industrial material derailing and catching fire in eastern tennessee. 5,000 people have been evacuated from that area. authorities say several law enforcement officers had to be decontaminated and are now in the hospital. the train was carrying a substance used in industrial processes, including the making of plastics. it is the largest settlement with the single entity in american history. b.p. saying it will pay $18.7 billion over 18 years to help

settle civil claims in connection with the deadly deepwater horizon oil spill. the 125 million gallon spill happened five years ago in the gulf of mexico. the spill-related costs have passed $42 billion. >> one of the world's richest people planning to give away his $32 billion fortune. the saudi prince saying he wants to give it all to charity to build a better world of tolerance and opportunity for all. his estate will be pledged to his charitable organization. a very generous move. that is your cnbc news update this hour. now, back to "squawk on the street." welcome back to "squawk on the street." we are following the big news of the morning.

the u.s. economy adding jobs. the unemployment rate falling to 5.3%. some concerned about the overall participation rate. so are all those numbers going to change expectations in terms of a rate hike in the fall? joining us now exclusively is jan hatzius. is it going to change expectation sns. >> i don't think significantly. our own expect tagation is that december is the most likely liftoff date. september is a possibility. this report doesn't really change that significantly. it was a mixed report. some aspects were a little more conducive to a rate hike. that's the drop in the unemployment rate and the drop in broader measures of underutilization. there are some questions about the statistical reasons for that, because it was driven by a sharp drop in labor force participation. with he no we know sometimes those moves month to month were a little noisy. there were some weaker aspects

as well. >> is that a surprise in terms of wages? >> it was a little lower than we thought. we are looking at all of the different wage indicators. we are seeing tentative evidence of acceleration but this was a step back. >> can you frame the 5.3 unemployment rate. it is a seven-year low. >> yes. >> how much lower can it get until we get to full employment? is 5.3% really a good thing when it is being driven by people dropping out of the labor market? >> on the first question the unemployment rate itself is probably not that far away from a full employment rate. maybe .25 to .50 percentage point at this point. what's important is that there are other aspects of labor market slack that aren't captured by the unemployment rate. people who are unvoluntarily part-time employed and also

people that have dropped out of the labor force for cyclical reasons and might come back if labor demand continues to improve. i would say the overall amount of labor market slack is greater than the unemployment rate would suggest. i think if you look at what janet yellen has said in the last few months that seems to be her view as well. now, is it a good thing if the unemployment rate declines because of declining participation? the answer is not as unambiguously so. that's certainly true. that's one reason i would discount this latest drop in the unemployment rate. >> very importantly. you moved back your expectation since we last spoke. you mentioned to a december rate hike from the fed. why would they hike in december and not in september? >> basically, because it seems like they are not yet sufficiently convinced that the two tests for a rate hike have been met, which are further improvement in the labor market

and reasonable confidence that inflation will move back to 2%. we think by september, they are likely not to have met that test but by december we think they will have met that test. >> what will happen by december? >> basically, passage of time. i think things are getting better. i think we are moving towards full employment and 2% inflation. it is at a very slow pace. we think the confidence is going to increase an the next few months are going to bring more evidence of it. we are just not quite there yet. >> you don't buy the argument that the federal reserve is going to hold off until there is some sort of resolution. it could push the fed farther back. specially now with the fed telling us it is watching international developments. >> i would say that is not part of our baseline. our baseline would be that the grease greece issue by the time the september meeting rolls around isn't going to have a big

impact. the baseline is one scenario. i think there is a risk in fact exactly what you said will happen. by september, greece is actually a major factor. if it is a major factor it is going to be a reason for waiting. >> what does it mean for the european economy? >> it was just in sort of a nacent recovery. does that get setback? >> probably not significantly. our economic ex pexpectations for europe are reasonably positive. things are gradually getting better. the distribution is pretty negative. it is possible that things get worse and you do get more concerns about the periphery more broadly. that is going to have a bigger many pact. >> >> the markets are incredibly calm. you will understand if greece defaults what happens to i ahuge amount of loans in central banks and whether they have to recap tallize

tall talize. are the markets right to be so calm in the face of what might happen? is that a logical position to be in? >> they are pretty calm. i wouldn't say they are entirely calm. we have seen a decent amount of volatility. there is certainly a lot of moves up and down on a daily basis. it does seem that greece headlines have an effect. i think you are right there is certainly no sense of panic. there is nothing disorderly. again, i think they are right in terms of the baseline. the baseline i think, is that greece, while obviously a hugely important issue for greece itself, isn't going to have that much of a spillover effect on the rest of the periphery. you can't be sure. >> do you predict the ecb, the bazooka, the ecb cue program will have to expand. >> basically, probably not. if things were to get, i have no doubt that the ecb will respond with additional's is the purchases or whatever it takes to stabilize the euro area as a

whole. >> jan, we appreciate you joining us up next ed lazear will weigh in with rick on today's numbers. plus, a holiday weekend clearly is almost here. find out why that independence day barbecue is going to cost you, david, more money than it did last year. squawk in the street will be right back.

one well-known stock has lost half of its value this year. we will tell you what it is and how to trade it. more "squawk on the street" coming right up.

when you do business everywhere, the challenges of keeping everyone working together can quickly become the only thing you think about. that's where at&t can help. with the tools and the network you need to make working as one easier than ever. virtually anywhere. leaving you free to focus on what matters most. welcome back. about a story we brought you earlier, the resumption of talks between anthem and cigna. the stocks are moving in various

directions. nondramatically. cigna up 2%. now, about 1.3. anthem shares are down. interestingly, shares of humana are down the most at over 3% perhaps because there had been some hope that cigna would submit a bid for humana. as i reported a bid earlier, there were meetings earlier this week between executives of both anthem and cigna for which, by the way, anthem had made a $184 a share bid that was rejected by the company. they came public in the so-called bear hug. not based as much on economics as it was the social issues involving its current ceo and david cordani to have the top job at a combined anthem/cigna. an overlap in the share holders. they have been encouraged on both sides to re-enter negotiations and iron out some sort of agreement that deals with the social issues and who

will take over as the ceo of the combined company. my sources indicate it is hard to say how much progress has been made. the two companies are back in talks. that's why you have seen the stocks move up. >> with the dow almost flat for the session overall, let's send it over to rick santelli. it is of course jobs thursday here on cnbc. rick? >> simon, it sounds so strange to say jobs thursday. i want to welcome ed lazear. thanks for taking the time out of your holiday schedule ed. >> great to be with you, rick. thank you. >> happy 239th birthday to america in a couple of days. ed, what did you think of the number? you can go through your thoughts in the various areas. pay particularly close attention

to keeping up with the population and seeing how that number needs to be adjusted to be accurate. proceed. >> that's exactly the right thing to be thinking about. if we look at the headline jobs number, it looks pretty good. the question is pretty good relative to what? if we were at full employment, we would say this is a great number. we are no the at full employment. the question you raised and the fed is looking at how do we decide when the labor market is actually in a strong situation and when it is not in a strong situation? the best way to do that again, coming back to what you said earlier this morning, rick, is to look at the employment rate not the unemployment rate. what's the employment rate. it is the proportion of people who have jobs relative to the working age population. that's the bottom line. that's the number you want to be thinking about. that number this month, was 59.3 and it ticked up a little bit last month, back down to 59.3. it has been pretty much stuck there for the past half year.

the problem is what that says is that while we are growing jobs at a rate slightly better than population growth we are not making much of a dent into that at all. so when you were having a debate this morning and you were discussing how many jobs do we need to keep up with population? it is an easy calculation. all you do is you say, what's the target employment rate? the target employment rate should be about 61.5% of the population working. why? before the recession, with he had 63.5%. now, we art 59.3%. we have to adjust for demographics. get you up to 61.5%. that's where the 5 million jobs that you mentioned earlier this morning come from. we are down 5 million because if we had 61.5% working, we would have 5 million more working than we have right now. that's the way to think about it. >> excellent. now, let's move in another direction. when i look at average hourly earnings on a month over month, they were flat.

on year over year they were 2%. we have had some moments, whether it is gdp or wages where we have seen pops. it is really a sustainability issue, dig down more on wages and how important that is and what it is currently telling us. >> absolutely. >> wages are another indicator of exactly what we were talking about earlier, which is the overall, underlying strength of the labor market. generally, what you see in a recovery, is that employment picks up first and then you see wage dproet. when growth. when you are in the strong part of the recovery, wages start to grow. we really haven't seen that. on any strong basecyis, we haven't seen that. we are really not seeing any strong pressure upward pressure on wages and what that tells you is that the labor market while not in terrible shape, is still not growing at the rate necessary to bring us back to full employment.

>> if you were janet yellen and company, stan fisher mr. dudley would today's job report change the macro notion that no matter how much we want better numbers, the numbers we have certainly don't seem highly correlated with zero interest rate policy. ten seconds left. finish it up for us sir? >> i think exactly what you said. the numbers don't dpif you any reason to raise rates but there is no reason to keep rates low. i don't think it is doing very much to induce the economy right now. i think basically what we see is the long-run situation. keeping rates low isn't helping very much. >> there could be unintended consequences down the road. ed lazear thank you. sarah, back to you. >> very in sync with you. up next a rocky road for the technology sector during the first half of the year. so what should investors be prepared for as we enter the

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welcome back to the "squawk on the street." the worst-performing stock in the s&p 500, western union.

analysts over at evercore isi cut their rating from a hold and the price cut to $20, from a prior $23, saying the deal between paypal and zoom pose as threat to western union. they all dabble in this industry in money transfers. a big deal for one of the players on the electronics side. we're going to move to technology. always one of the most talked-about sectors for the market. what should investors be watching for? josh lipton live in san francisco with that. good morning josh. >> good morning sarah. in the first six months of the year, the tech sector of the s&p 500 basically flat. so what could jump-start tech stocks in the next six months? three big themes for investors to watch. one tech giants will keep doing their very best to sell us new devices. no product will get more attention than apple's new iphone, which tim cook is expected to unveil this fall. >> we had the early adopters buy

the new form factor. the new iphone 6 and 6-plus now it's time for the later adopters, i think they'll continue that. there's so many older iphones still in use. >> now a second theme to watch, tech companies splitting in two. ebay spinoff of paypal scheduled to be completed on july 17th. and hewlett-packard is on track to split on november 1st. now they are hp stock down hard this year. but bulls say it's still a buy, in part they argue because these two companies can raise more debt for dividends and share repurchases. finally, how will recent changes play out at twitter? costolo is out and dorsey is in. and google with a new cfo at the search giant, ruth porat will be in the spotlight. investors wait to see if google returns some of the $64 billion in cash to shareholders. google stock in the green so far this year but down 10% in the past 12 months. simon, back to you.

>> a misty morning in san francisco, josh. thank you, still one more chance to strut down the alley before the holiday weekend. jon fortt sheer with more. >> we'll be talking facebook, a strong move they're about to take versus youtube. and mike gereman of 9-to-5 mac is here with a ridiculous detail into the next iphone and transportation secretary anthony fox will be live with us on "squawk alley."

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. well independence day is just around the corner and new data says the average american family will spend more this year than they did last year. with us of course to break this down the burgeoning cost of barbeque is our own jane wells, who is of course barbequing. as she tells the story. >> well it's never too early for hamburgers and hot dogs folks, especially going into this weekend. the average family this weekend going to spend almost $350 when you put it all in. that seems crazy. but that's what they're saying up 5%. saying we're going to eat 150 million hot dogs. 190 million pounds of beef. the good news ground beef prices are starting to come down. not much but down. the usda said they reached a peak of 4.71 an average a pound

in february and down to 4.65 in may. and cattle futures are starting to come down even though the restaurant association says we're heading into peak grilling season, after the fourth of july prices should decline. beef production in the west especially here in california 15% of the nation's capel inventory is in drought areas, which means feeding that cattle will cost more because you're going to have to buy hay, you can't grow it or there's not enough rangeland. speaking of dry conditions i created fireworks this morning on "squawk box." california has had 50% more fires, january through june. however, there's not many places that are canceling their fireworks displays phantom fireworks tells us they put the safe in sane. as long as you're smart. don't be an idiot. i tried not to be an idiot. they expect fireworks sales this year will grow not only in california but nationally because the 4th is on a saturday

and finally -- according to wallet hub we're going to spend a billion dollars this weekend. on beer. back to you. >> celebrating the foolish rejection of benevolent british rule. >> of course you would say that. >> happy 239th anniversary of freedom from britain. >> yes. >> stay safe. if you decide to blow up more fireworks in your back yard there, jane wells, for us on the fourth of july story. just want to point out what's happening in the markets. we've lost some of the early gains, although the dow is still higher at this hour. up 13. nasdaq has dipped into negative territory, while the s&p is digesting a weaker headline number on jobs than economists expected. >> it wasn't a great report was it as a whole. >> but not a disaster. >> let's send it over to alley.

last one before the holiday weekend. >> thanks simon. good morning, it is 8:00 a.m. at facebook headquarters in menlo park california 11:00 a.m. here on wall street and "squawk alley" is live. we could keep rocking out to tom petty, but there's too much to talk b. joining us is jon steinberg, ceo of the "daily mail" north america. here for the hour is our own david faber and here as always kayla tausche. let's start off talking facebook. the ceo mark zuckerberg addressing twitter c