troopers. what happened? i did say that. it's friday september 4th, 2015 and i have some very mature cohosts. squawk box begins right now. >> live from new york where business never sleeps, this is squawk box. >> good morning, everybody. welcome to squawk box here on cnbc. i'm becky quick with joe kernen. andrew is off today. our guest is mike. he is senior columnist at yahoo! finance. we also talk about what happens with drones. the potential damages and things that might be happening with this. all of our fears have come true.

this is the crash of a drone that interpreted play at the u.s. open last night. the police department is investigating and there was an arrest made and we'll have more on this story coming up in a little bit. first check out the u.s. equity futures. if you thought things were calming down and we were getting back to normal with the return of school, forget about it. dow futures down close to 170 points this morning. s&p futures down 20 points at this moment and nasdaq looks like it would be down by about 42 points. joe welcome back. >> thank you. at least it didn't have a canister of anthrax attached to it. >> that was the concern one of the players at the court said. >> not this time. >> not this time. >> it's also a few hundred yards from laguardia airport. >> there was no arrest made. that's my question is how do you track down the people that were doing this and turns out they were able to in this case and i

don't think you should have any drones out there for just consumer use. >> put an eye out with those things. >> if you put enough rotors couldn't you sit in the middle of one of those and fly around. >> i think so, yeah. >> like a vehicle. >> no. >> no. >> like the people make super computers out of the video game consoles? if you have enough power. >> if you can just hover, are we not thinking about what's going to happen? is that where we're going to be? >> the jetsons. >> you can't have a lot of idiots flying through the air space. >> these aren't going to be hunter killer drones. jetson sound effect drones. let me start here.

>> thank you. today's big market story, the big market story is we're puking stocks again this morning but as far as the background stuff it's the jobs report for august and we're 2.5 hours away from that number. the economy likely added 225,000 jobs last month. if so they better go up a quarter the unemployment rate dropping to 5.2%. that would be a near 7.5 year low. >> do you think they absolutely do it? >> i hope they do or you'll owe someone $10,000. i offered. i'm already back pedaling madly but we did it on air. boris was here and it was the day the market was down 600 points in the morning right before it opened down a thousand. i said i bet you $10,000 that they don't raise rates. but i'm massively back pedaling because he never took me up on

it on screen and i'm terrified i'm going to lose. >> they don care. they don't think it matters to wait a couple of extra months. >> i they they got to get on the board. >> i think that a good number here probably lifts the odds maybe about 50% depending on what the market does. >> we've seen data play. >> and as you say approximate they don't think it matters that much if they have essentially a hawkish inaction and they say we're not doing it now but we think it's going to be this year maybe that's the same thing in their book. >> we haven't introduced you. >> i did introduce him. >> your mike santoli. so you're differ. >> i'm different. i'm new york. he's chicago. >> you might be, although he's very handsome, you might be better looking. >> i'm not going to argue it and santelli is what i hope you

mean. >> i'm mixing it up already. >> rick's a good-looking guy too. you're not going to get me to pick sides. anyway i missed you. i'm glad you're back. >> i guess i'm glad to be back. i am. i came back. don't we have a three-day weekend coming up. >> this say big day because of the jobs report. every month we say it matters. this time it does because of the fed. we can count on a lot of talk about the fed today. reuters is reported from this weekend's g-20 finance meeting will not urge the u.s. central bank against rate hikes. emerging market players raised red flags against the timing of interest rate moves. the imf was talking about this too. a warning that they do not think that central bank should raise rates at this point. >> verifone systems with better than expected quarterly results but it's current quarter forecast was short of consensus

estimates and put it on the stocks. gap shares are taking a hit. it's overall comp store sales dropped 2% last month. the big problem in 11% decline at banana republic. >> have you seen what's in banana republic. i walked by and thought there's not a thing in here i would buy. >> i've had my surrogates scouring the malls but yesterday i heard it was like -- i didn't want to know about it but like i was not around and i hear it was around five hours. five hours of -- >> shopping. >> being there, yes. >> yeah. >> back to school stuff. got to look good. >> got to get ready. >> did you do that? when you were going back to school did you need outfits and everything? >> yes. >> like a sophomore in high school you need outfits. >> girls need these things, yeah. >> i guess so.

>> i don't know what the damage was but i don't want to know. >> don't look. >> shares of royal caribbean boosting to 25%. but doesn't look like much is happening with that stock right now. >> let's get a check of the markets. we are are down once again. dow futures looking like they would open down. yesterday the dow was down by 23 points but lost a rally of 200 points over the course of the day. s&p futures down by 20 points and the nasdaq down by 42. you had some markets open and some closed. straight to europe first. right now you saw red arrows there and in japan the nikkei was down by about 2%. the kospi down by 1.5%. you still have the shanghai composite closed for holidays and expected to open again on monday.

wti down by 36 cents. 46.39. we saw a build in prices yesterday but 46.39 is where wti stands right now. check out the ten year yielding 2.121%. in the currency markets the dollar is down across the board. remember what happened yesterday? you saw the ecb commented that sounded dovish. this morning you're still sitting at 11135. if you want to take a look at gold prices, this morning down by a dollar. $1,123 an ounce. >> it's been done. >> what's been done. >> guy flying on a drone. >> are you kidding me? >> no, took 54 rotors. >> that looks like home -- the guy with the balloons all over his house. >> it does. 54 reuters. only for ten minutes on a battery charge and you can see -- >> would you go up in the air on

a battery charge. would you kill me. >> he's only about 10 feet off the ground but hopefully i'll try it when it gets a little more sophisticated. >> this could be one of the most widely watched job reports in years. we say that every month. >> this one we mean. >> at least as far as the fed is concerned. in an interview late yesterday seasoned market watcher told cnbc it's the unemployment rate. the employment rate that we should be watching. >> if we see it tomorrow morning i think the odds of a fed increase in two weeks goes way up. >> we'll talk jobs in just a second but i don't know whether you're an expert on risk parity

positions and some of these technical things but fundamentals are one thing but what's happening in the market recently is, according to some, a convergence of four different trading strategies that caused people to do things or really computers to do things based on prices and based on being out of whack with where the structure of the strategy should be and there's supposedly some selling left but have you read about risk parity and commodity trading advisors and trend followers and volatility? it sounds like science fiction but we need to know about it to explain these vie len moves in the market. >> people are looking for an excuse of what's causing this. >> you're not familiar with the technical things i just talked about? so then all right talk about the employment report on friday.

>> okay. so i think the key is really the consensus is at 220. i'd like to see a pretty good number because we need to get the fed to get this out of the way. we're talking about a quarter of a point move here and we're not going to see a staircase move by the fed after this first move. it's going to be a big long extended data wait and see so the market has to get this out of the way so we can focus on earnings. we're looking for 3% growth next year but earnings for this year stayed stable at about $120 for the s&p so we're sticking with our 2100 target in the s&p. we just have to get through this unbelievably gut wrenching volatili

volatility. people are watching what he's saying because he's been right a couple of times but not every time. >> he's been trying to get his arms around quantifying how much of what we're seeing is this activity. what it is is a lot of these strategies that attracted a lot of money that we're trying to manage volatility positions and one of the key things that's fouling up the model for these funds is treasuries wouldn't have rallied the way you would have expected treasuries to rally in the huge risk off move we had in equities and commodities across the board and that at least on paper makes people think that they have to continue to sell equities and reduce risk and basically buy protection into these moves and i do think it matters. it's definitely been animating the day-to-day jumpiness but it's one of 12 clusters of factors and you have these

strategies blowing up. >> and etfs unwind as well but you likened it to portfolio insurance because people thought they were protected and every time the futures went down it was this horrific circle. volatility trading, commodity trading which are trend followers and risk parity which he referenced that when you have money flowing from china you have certain risk parity positions and when that starts going the other way everybody is unprepared. the bottom line is this guy says there's another 100 billion or so that needs to be unwound in the form of selling and it could happen over the next 1 to 3 weeks. >> which sounds like a scarier number than it is. you don't know how much leverage is attached to that.

the footsteps how loud they're going to be if they go through the market if it goes off this way. i do think once everyone is fix sat fixated on these things it is probably there but you never know. it's for people to step back and say am i a buyer of a market that doesn't shake everything off. >> that's my question. after you get through this, does the market step back up? was this kind of inflating prices before? and i don't know what happens. or are you left at lower levels and that was the real normal? >> i don't think there's a lot of indication that these strategies were going to the upside but you have a really low volatility. 6 or 7 months. >> you could see it. >> so you have a lot of energy built up and that's getting unleashed right now. >> 3:30 every day.

but now if i go out i'm talking gamma hedging all night long with a cocktail. go up to each person at the party and say how about that gamma hedging. >> and everyone is going to go is there anyone else here to talk to. >> that's what they do anyway. with all of this set aside and i don't ask people to call bottoms but your a dip buyer. you have certain positions you would add to whenever there's weakness or you would sell on strength? >> no we're buyers but again the market probably has to test one more time. at the end of the day, if you're an endowment, a pension or family that's retired this 4% burn rate or spend policy at institutions is critical to this

whole conversation because if the ten year is 2% and you go to a low volatile risk off trade how will you get to your 4% spend policy or if you're spending 4% of your capital adds a retireee you have to have risk in the market. you need an 8% return on your other assets to get to a number that gets you to the spend policy. use your cash to upgrade stocks that were too expensive earlier in the year. we could still see 2100 on the s&p next year. the big problem is next year anl literatures are at 132 dollars in earnings. if we only have an economy that's growing let's say 3% globally it's hard to get to 10% eps growth. >> if china gets worse it's

going to be harder. we dodged a bullet because it's not open. it's hard to use china to explain what happened in our stock market. >> you can't. we went from that 7 month period where stock prices moved way less than the fundamentals did and other asset classes did to a period where stock prices are overreacting and we're scrounging for the story. >> we have to go. thanks, rich. >> good to see you. >> good to see you santoli. >> you too rich. >> when we come back this morning, a drone crashes into the stands at the u.s. open interrupting tennis and creating a lot of concern. we have that story next. plus the controversial former greek finance minister tells cnbc that a 10-year-old should have seen that the bailout was wrong. first as we head to break, take a look back at this date in history. ♪ a number. insurance policy has

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that market was down by about 2% overnight. red arrows in europe once again and it's playing out right here in the united states. >> making headlines as we referenced before, the drone crash interrupting the u.s. open last night. it hovered over the stadium before crashing into the stands. the drone broke into pieces and luckily the seats were empty and no one was injured. the new york city polic department has made an arrest. a new york city teacher. perfect. faces charges of reckless endangerment and operating a drone in a public park outside of a prescribed area. >> as mike pointed out it is right next to laguardia too. right next to the airport. >> another reason they have the roof closed. >> attention all you star wars fans the new movie is still months away. 116 days to be exact but disney released it's marketing force. they held special retail events. our cams caught the fans at the

flag ship toys "r" us store at flag ship square. look at the dancing. joe is that you in one of the suits? >> no. might be andrew. let's see. >> wow. >> i'm going to let this go for awhile. i don't like those moves because you know why? because i want to do them. switching gears china might be the global market fear right now but don't forget about greece. the country's former finance minister sitting down with our colleagues on squawk box europe this morning and seema mody joins us with the highlights. almost fireworks seema. >> greece's former finance minister telling cnbc in a first on interview in greek party including syriza is capable of implementing a reform and fiscal agenda that would stabilize the economy saying even a child could see why the greek bailout

was not going to work. >> a 10-year-old with basic mathematic skills would know if you had an unsustainable debt and you tried to solve it by pretending it's a problem with liquidity and piling up on it the largest loan in history on conditions that would shrink the income from which the old and new loans would be repaid a 10-year-old knows that cannot end up. >> he also says greece's economy is imploding and that he will no endorse the former prime minister alexis tsipras calling the political situation toxic. he also weighed in on the migrant and refugee crisis taking place here in europe. more than 20,000 refugees arriving on crease's shores this past week alone. he says europe should keep their doors open and share the burden saying europe has lost their soul. for more on our interview and his controversial comments head to cnbc.com.

>> thanks. the political buzz story of the moment, donald trump, we'll tell you about his decision to take the pledge. plus, his foreign affairs pop quiz, next. but first as we head to break, a look at yesterday's s&p 500 winners and losers. you are looking at two airplane fuel gauges. can you spot the difference? no? you can't see that? alright, let's take a look. the one on the right just used 1% less fuel than the one on the left. now, to an airline, a 1% difference could save enough fuel to power

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good morning and welcome to squawk box for cnbc. we're approaching 6:30 on the east coast. i'm joe kernen with with becky quick. our guest host is mike santoli. >> today's big august story is the august employment report. we're about two hours away from the big number. forecasters are saying that the economy added 220,000 jobs last month. that would be up slightly from july but again those are very strong numbers if we see that coming in. if it happens the unemployment rate is expected to drop to 5.2%. if that's the case it would be near 7.5 year lows and that would create big issues for the fed to look at what's happening in the markets if you want to look at the futures this

morning. that's going to be the decision they have to take. red arrows across the board. dow futures down to close to 200 points this morning. the nasdaq is down by 50. >> donald trump signing the gop pledge to back the party's nominee and not go independent. john harwood was there. he joins us now from washington. it's not legally binding i don't think is it? >> no. >> i just heard one quote and that's as long as i'm treated fairly i won't rip up the pledge. can you rip up the pledge? >> of course you can. >> then i don't understand why it's significant. >> i'm with you joe. he has the capacity to take down the republican nominee if he were to go for an independent were he not the nominee. republicans are fearful of that. fox tried to get him to commit to that when he went on their

debate and he wouldn't do it. yesterday he did. here's how he explained it. >> the best way for the republicans to win is if i win the nomination and go directly against whoever they happen to put up and for that reason i have signed the pledge. >> but joe i'm with you he could change his mind at any point and you could make a good argument that the most significant things that happened in donald trump's campaign yesterday were not signing this pledge. it was two events. one the interview he did on a very consecutive radio host who focuses on foreign policy, he seemed not to understand some of the questions that hewitt asked him and secondly you had that episode with a protestor that had a sign ripped out of his hands that went after the guard that took the sign away and the guard hit him in the face. that's the kind of thing that in the long run even if some aspects of them thrill your

supporters may not be helpful to your campaign. >> i don't think he was necessarily trying to pose gotcha questions because he is involved with trying to propekt the united states but i think that that interchange is not going to hurt trump. it will probably help trump. most people, you could name the top two terrorists if you're lucky. >> but most people are not running for president, joe. >> i know that but he's a business man in this country. he's going to obviously have someone that he appoints and hopefully that's his strength. he knows how to pick the right people to deal with these issues and when he said the gentleman that visited putin a couple of times. that's more than i know about it. and i remember hermann cain and i think who's the president -- i

still don't know. >> but you notice that hermann cain didn't become president. >> ben carson had the same issue with hugh hewitt and when i interviewed ben carson a coup of months ago in one of my speak easy series carson said that hewitt had tried to trip him up. it had been a gotcha game. i went back and listened to the hewitt interview and hugh hewitt, is first of all conservative and second of all intellectually honest and a very fair minded person and he walked through that with carson and said i'm not trying to do this but i want a gauge of what you know. he did that with trump yesterday and also with carly fiorina and she aced the exam and was much more in command of the situat n

situation. i don't know that it will have an immediate effect but overtime incidents like this when you really get to the series phase of a nomination fight can have an impact. >> right. >> but you go way down in the weeds. if you were to go in some of the other soviet republics to ask any candidates who was running the countries. unless they're cramming for a sat course. we have to be real here. >> no and to trumps point that you have people advising you on that, that is true. >> although maybe his campaign needs an advisor that told him that before he went on with hugh hewitt because these are questions you would expect to have. >> well then you better -- you're going to spend all your time studying everything under the sun. what about, okay a guy is taking

the fifth. i didn't hear anything about that. i was watching cbs news. i didn't know it happened. they didn't mention anyone taking the 5th on cbs. they wouldn't mention anything like that but then i finally understand the difference between colon power had -- he didn't have a personal server and anything that you generate on your end obviously won't be classified because you're generating it so all of that stuff could have risen to the level of being classified info but of course none of it would have been classified when you wrote it. once that was explained to me it was like, wow, the clintons, the language that you use, they really know how to work it and i don't know if this ends well, john. >> well, i mean, you're right but not every e-mail from a

secretary of state is classified by definition. >> i know. plenty of things in there probably work. i've heard rumblings that it's going to be a scary thing. that we're going to find out that people knew and had access, some of our enemies had a full look at all of these things. is that going to come out john? >> that's what the fbi is looking at. they're assessing, a, the general level of security of the server. was it much different than what alternatives would have been and b was it hacked by foreign governments. we know the state department nonclassified system was hacked. a lot of people presume that hillary clinton's server was hacked. she has said it wasn't. the fbi is going to sort out the truth from the assumptions. >> andrea is interviewing her today too. that should be interesting to watch and i'm sure she is going

to ask, maybe not gotcha questions. >> she'll ask tough questions for sure. >> yeah, exactly. all right and jeb seems to be getting more -- what would you call it? energetic or confrontational. >> fooisty. >> look, i think jeb is exhibiting some frustration with a campaign that is not unfolding in anything like what he expe expected donald trump is the antithesis of jeb bush. he's showing some exasperation. i talked to some republican strategists that think he's not looking good in these exchanges. we're still in the prelabor day period and once people start advertising in a heavy duty way,

i think there is a different filter both for campaigns and for voters when you start getting to the fall and in the weeks leading up to iowa. so, you know, how different is it going to be? i think it will be different. i don't know for sure. we'll be seeing and of course in two weeks we have got that cnn debate out in the valley which is chapter 2 of the big show. >> and jeb is going to be on. governor bush is going to be on with us on wednesday john and we're going to talk economy and 4%. whether we can still do it in this country. what the specific plans are and try to sift through this. there is a lot of stuff i'm talking about. this is all i want to talk about. and this is the forum to do it john. stuff not related to cnbc. >> immigration, whether you

speak spanish when you're -- whether it's okay to speak spanish. >> i'm looking forward to your conversation. >> no, we're not going to talk about it. we're going to talk about cnbc stuff, all right? >> got it. >> you might not be that interested because it's going to be -- it's not going to be which agencies you shutdown or anything like that. you'd love that. that wasn't a gotcha question either was it? >> opps. >> opps. see you later, thanks. >> when we come back, copy cat european villages to skyscrapers. these are cities you have to see to believe. plus what this tells us about the real story on the chinese economy. plus a quick check on what's happening in european markets right now. it's a reflection of what's happening in our futures but right now the dax down by 2.1% and the cac in france down by 2.2%. stick around we'll be right back. our vet speak dog. you're a dog, right? our vet speak dog.

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welcome back. we have been talking a lot about china over the last several weeks. the slow down in china hitting the real estate and construction sectors especially hard where the massive move to urbanize the population lead to the building of hundreds of new cities. they range in everything from copy catting european villages to half empty sky crepers waiting for people to move in. wade is a journalist that lives in china and is also the author of ghost cities in china. we talked a lot about these ghost cities but you've seen them up close and personal and explored a lot of them. what did you find? >> i found that -- i mean, i spent about two years traveling around china visiting ghost cities which probably should be called new cities because that's what they really are.

basically at the end of the 90s china set out to urbanize the country and essentially they pretty much redid almost the entire country from ghost to ghost and the idea was to move the economic big cities of the countries to utilize the entire capacity of the country so what i found in a lot of these new issues were cities that are just being built. they're still in the process of construction and in the process of development and most of them are at a midpoint of development. these new cities are generally built on 20 year time lines so they would say well in 20 years we would have 80,000 people living here or 200,000 people living here and as of right now every new city in china has not eclipsed this time line. >> you know, we always think that if you build it they will

come. what happened? why aren't there more people there? >> it's more if you build it -- we will build it and we'll make them come. china has ways of moving people into these new cities. when china first goes out to build a new city or massive urban development project it's a boom. it's a massive money maker for the governments. at one point, land sales alone were accounting for roughly 40% of some municipal governments revenue. so building these new cities was essential for a lot of municipalities in china and now that they're moving industries into these places and getting them to function like real cities is the challenge. a lot of time what is china will do is move in universitys and stay toned enterprises and just

try to get an economic pulse going and once that happens people do start to come in because when new residential properties go on the market they sell very fast in china so you go to these new cities and you look at these mass i have arrays of hundreds of high-rises and they all appear to be empty but almost all of the departments have sold. a lot of them are sold to investors that hope to flip the properties but a lot are sold to people that tend to live in them some days. 30% of new housing in china are are sold to people planning for an impending marriage. >> how come they make some of them look like disneyworld. it looks like epcot there. >> yeah. that's the thing. a lot of these new cities are in competition with each other so they try to go for

monumentalization. a lot of them are local government officials projects so they build them to be different, to be extreme, to get attention. so many cities are building new cities and new urban development projects so they had like famous architects come in and build some of the strange looking buildings or they'll build a lot of the residential areas in like european styles or, you know, include other futuristic buildin buildings. basically they're just to get people to buy properties and to get investors to pump money into these places. >> wade, the skeptics view is that the strategy of building these cities is to almost make work. it was a lot of real investment that was to keep the local economies going and the premise

that people were going to move there wasn't bearing out in many cases anyway and an empty apartment building dunlt age very well so this might not be very good economics. is that not true? that there's genuine population movement that's going to make use of this? >> it's both. it's going to stimulate the economy. china has 80 million construction workers alone. so building these new cities is kind of like part of the largest economic stimulus plan the world has ever known which is like eisenhower's interstate system. it keeps the wheels of the economy spinning and a lot of these were state driven and state funded and didn't have very good plans for how are they going to get people to move in but by the same token these places aren't just being built

to boost gdp and people actually do move into thelda and many of them actually become viable live in centers. >> thank you for joining us today. we appreciate it. >> thank you for the pictures. >> no problem. >> all right. coming up, twitter nearing the end of its ceo search but can the new leader turn around the company's fortunes and the stocks fortunes. but first as we head to break check out the squawk box market indicator. the yield on the ten year note right now 2.128%. 2.128. it doubles germany. almost triples it. can a business have a mind? a subconscious. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul?

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leon cooperman, wall street legends, decades of experience, charting the course for the future of investing, helping you profit from the next generation of wealth. "squawk box", conversations for the next 20 years, tuesday, 7 a.m. eastern, cnbc. facebook's whatsapp announcing it now has -- >> what's up? >> now has -- really -- that's the -- okay. combined the ad with the what's up? 900 million users. up from 800 million in april and up from 700 million at the start of the year. >> whatsapp? >> important because whatsapp is another nearly billion-user service now for facebook and it could use it to make money. >> whatsapp? >> under pressure to announce -- this is whatsapp, to announce a permanent ceo and holding a board meeting to discuss the progress of the search, after a

rough summer for the company's stock and for the company as a result. the big, steep drop down to 28, well below its price, slower user growth. i guess i shouldn't say i hope it is gone some day 'cause i do look at it, i look at the fee, i don't like -- >> looking at it this morning. >> i know. i know. i know. i don't know if i want to live in a world everybody looks at screens all day long. here is how management shakeup could affect the stock, victor anthony, we tried to get you here today, victor, did you say can we just skype? you ever leave your house? in the basement somewhere? never leaving? hopefully we're not headed there how's it going with twitter? any scuttle but tbutt coming out how the search is going on? >> i spoke to many twitter employees. they love jack. think it is phenomenal. >> they like his beard?

>> they like him. i like your beard. i don't like his beard very much. something livid. like a squirrel pop out of that thing. it looks like, what, have you seen it? >> yes. there's a picture on screen right now. >> what is that? i mean, you know, looks like one of the red sox when they are in the playoffs or something. that is -- anyway, a good-looking guy. he don't need to do that so they like him but i thought he can't be two ceos at once, can he? >> vel to step down. the other place? >> the other place. from square i do. think that has to happen. i do think they need to make a management decision fast. >> is he the right guy? >> i think he is. i think he is. eventually, i hoped they brought someone from outside a new, fresh perspective. from speaking with employees, they seem to be coalescing with him, they like his vision. they see him every single day internally it looks like the employees are satisfied with him being a ceo. if he is there every day, is he already basically stepped away from his functions at square? >> a good question.

that would imply that, clearly it would. so i think he essentially those step away. >> when i get an ad, i know -- i only follow 100, 120 people, and i try to cull that as much as i can. >> okay. how many follow you? >> not that many. 60,000. sorkin's got like -- a lot more liberal people on twitter, obviously. so, i'm trying to cull it down. when i get an ad, i'm angry and i will never buy anything from an ad i get and i hit that x that says irrelevant. and sometimes even worse, it's obnoxious. how are they ever going to make money from me? how is twitter ever going to make money from me, ever get a dollar out of my wall that's goes into a revenue at twitter? >> a work in progress at twitter, targeting relevancy, it is -- i think it's a work in progress, facebook, twitter, all the social networks. over time, i think it will improve. >> twitter got the money for the ad you just ignored.

>> but aren't they going to finally figure that out, it's not working? >> direct response mail. >> brand name. >> they paid for your eyeballs, joe. >> you occasionally tweet, you provide free content for them. >> but they don't really want that. >> one of the issues, not that they have to get away from this idea it's just kind new synthesis. >> people realize there's no pay back -- they are not going to pay for the ads if they don't get any return for what they are paying for. >> i think the roi is okay at the moment. >> improving. improving. from advertisers i speak with, they are getting a better return. there was a hiccup in the earlier part of this year, things improving on twitter. >> your money is on dorsey? >> i think initially, like i said, i really wanted someone from outside to come n >> you think the street likes dorsey? >> the street just wants a permanent ceo. i think -- >> yeah. >> i'm -- i'll be okay with it. >> thanks so much. >> all right. thank you. when we come back, more of

this morning's top stories, big issues, count down to the jobs number and what we are seeing in the markets a lot of red arrows this morning. looking at dow futures down in triple digits. 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 it 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. add new business services with at&t

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the countdown to the jobs report is on. it is make or break data for the fed's interest rate decision and could be a big move every for the global markets. top strategists from bank of america and citi will tell you what to expect. fears about china's economy sparking global market turmoil. and alan greenspan says there's more pain to come. words of wisdom from the former fed chair straight ahead. and listen up, all you "star wars'" fans. >> yeah! >> it is force friday. new "star wars" merchandise is in store as disney begins

cashing it in on the next "star wars" franchise before it hits theaters. we will take you to the toy store as the second hour of "squawk box" starts now. ♪ >> live from the beating heart of business, new york city this is "squawk box"." >> cincinnati band, right? welcome back to "squawk box" here on cnbc, first in business worldwide, i'm joe kernen along with becky quick. andrew is off today. liesman is here. >> why did you hit him? >> i don't know. >> it was like a serious about hit that wasn't just like a love tap or anything. >> it was a bro punch. a bromance. >> because football season is now going and you got the jets going? >> felt close to you for a second. >> you know, it was -- >> it was a moment for both of us. jobs friday. >> for you anyway. >> it is less than 90 minutes away from the august report.

52. we going to 52? >> think so 52, 51. >> what is your work showing you? >> i don't do work on the unemployment rate. my snub 221 on the private sector and kiersten chang, the producer, randomly added for me the government number and i came one 229. >> 229? >> yeah with random addition like everybody else does for the government, because for reasons unclear, the government can't count the government. >> the averages 220. and that was -- was that last month we made fun of the average, they were just winging it? >> they were spot on. i was within five last month. >> 21 last? the average was 215 and hit 215. the guys that make up the number looked at what the -- >> other guys did and made that up. >> the actual -- the ones that make up the number for the government, what the poll forecasters said. basically. u.s. equity future at this hour. ugly. again. and i hate on a friday when it's

down 185 before the market opened. >> because you don't know what's gonna happen. >> recent front -- it goes down -- you know, 4, 500 suspect what it used to be, obviously, only 3% or something. when it starts out weak like that, no one's really selling in ernest. read that thing i sent you. >> i'm gonna. get a piece of data here i didn't v >> that's where we are. nasdaq's down 45. the s & p is down as well. arm lot is riding on the jobs report. i don't know what the market wants at this point. do they want -- >> i don't know if it is. >> a farm number that says, okay, raise rates? >> they never do. they would all rather have zero. >> don't want a weak number either. you think, oh, boy, the problems of the rest of the world's economy is catching up with us. >> i hope it doesn't get that bad instead of -- nice to have good good. >> good news is good news. >> i wish people could focus on just the idea that more people hired and getting paycheck is a good thing. >> good news. >> right. >> good for stocks, good for

earnings, good for the economy. it's good for people's lives. >> especially when we're importing this inflation, too. >> exactly. more hiring is good and a reason i think to own stocks, depending on valuation. don't start recommending stock purchase. >> it's been a pretty good metric to have to followed macronumbers up. but in general, has been something that has led you to more wealth. >> you don't know whether stocks are cheap or. >> i do not know that. that is true. everybody else here at cnbc does stocks. i don't do stocks. i'm the janitor here. the guy that does windows u don't get rid of the guy that does windows. >> we have experts that will talk us to about it in a moment. look at what happened in the asian markets. they also slid overnight. japan's market was open and down by more than 2%. actually finished at the lowest level in more than a week. shanghai composite remains closed until monday, the hang seng was open and down by half a percent. in korea, the kospi down by

1 1/2%. europe, the dax down by 2%, the kak. italy, stocks down by 2.4% and the ftse in london down by 1.7%. political news, gop presidential candidate donald trump pledging that he will not run as an independent if he fails to secure the republican nomination. that pledge is not legally binding but it does serve as a loyalty check after trump was the only candidate at the first debate who would not rule out a run on a third party ticket. trump said that he received nothing in exchange for the pledge, other than assurances that he would be treated fairly. check this out, all you die-hard "star wars" fans out there, there were people lining up at midnight for toy store openings. this was the scene at the toys "r" us in times square last night. uh-huh. people there dressed up in character, all waiting to buy toys based on this new movie that doesn't come out for another 116 days. the force awakens has its fans ready to go. joe? what -- for more on what to

expect from the august jobs report, steve liesman, the aforementioned gentleman is here and did i steal your thunder here at 229? >> i don't care if you stole my thunder i want to not steal my minute and a half they allotted me for this discussion. >> goes ahead. go ahead. so, guys? a particularly complicated report and i want to explain why. the issue is several economists think that august is a number that often gets revised upward, reported weak but revised higher in the month ahead. here is the chart you can see here? 2010, no month has been more upwardly revised than august, according to moody's.com and a couple guys here that middle bar there with the upward revision for 2010 between the first report and the third report. but here's a number to think about, 155,000. that's the number that would keep the three-month average of job growth at 200,000 because the prior months have been strong. the federal reserve will take a longer review and that number

below 200,000 but above 150 could be efficient to keep a central bank rate hike in play this month. there's been a surge in job opens and goldman sachs point out that consumer households finding jobs plentiful out there, all of which point to folksily decent or big number. more to it. fed officials will be watching these extreme market gyrations and likely unwilling to hike into extreme market volatility. one more thing that i find very curious, fed chair janet yellen hasn't spoken since july 16th. it would seem really odd for the fed to enact its rate hike in nine years without a speech from the chair setting the stage. >> why? >> it just is not the way things have been done. greenspan and bernanke, would have done it, i think in my memory, come out and given a speech that would have said, hey, guys, this is probably on the way. >> like hiking before you hike. >> that's what they did. they wanted to prepare the market. but that leaves, folks, my interview with chase chair stan fischer the main message from

the fed leadership and that said go if this number is good today, from what i could tell. >> something like what you see this morning, another 200-point decline in the futures before we open, we don't know what's going to happen at 8:30, don't know what's going to happen to the market, a three-day weekend, a lot of volatile that rides into it, how much does that weigh? >> i think you were gone one of those days, joe and i had a conversation, down 100 is now down the new ten. you know, it's not a big deal anymore with these market swings. and joe sent me a piece about some guy's been predicting all these market gyrations with anti-gamma trade. >> in the last half hour. all the risk parity stuff. stuff i don't understand just yet. do you get it all? >> no i just know that it's akin to portfolio insurance, going to protect everyone in 1987. it didn't work. >> everybody on the same side. >> exasperate it had. >> exacerbated it.

>> i know. i want people to think i don't know. >> 200 on the line for market gyrations. >> exasperating, too. >> fischer expects this things to calm down. a little calm. doesn't mean just down. >> keep saying they don't have the intestinal fortitude to do it, making feet of claim. >> goad them into hike. >> i will show you! >> we will show joe. there is one little thing about that sort of in line with that, they have this whole operational thing they have do to hit a rate. >> not gonna do it? >> pessimistic? >> no, i want them to i sort of hope they will. but they always take the -- it's so much easier to keep the candy coming, isn't it? >> i would have felt great if yesterday the federal reserve announced janet yellen going to give a speech next week, then it would signal -- signal and tell us -- but just kind of weird to go into this monumental momentous moment without -- without a speech from the chair.

>> a quarter point. a quarter point. >> it costs money to borrow money. >> let's bring in a couple of experts. ethan harris the co-head of global economic research at bank of america and steven whiting, global chief investment strat xbris at citi private bank. i wonder what does happen with the markets today, steven? if we look at a number of 220 to 250 to even 300,000 increased in jobs and the unemployment rate falling to 5.2%, how does the stock market react? >> i would prefer to see see a strong number. i think that confidence in the american economy growing through these international challenges is a better thing for markets and gettinged fed out of the way with an initial tightening would be better news for world markets i think. >> better news long term. what is the knee-jerk reaction? >> i think even today a stronger number would be better. i think a good possibility we won't know the real employment number until two months of

revisions. unfortunately, i think the thing steve pointed out, the fact there has been no speech from chair yellen means they haven't made up their minds yet, that the reality is that international markets are, you know, showing signs that there may be a threat and they want to wait as long as possible to see if there's any substance to that threat. these are things keeping their options open for this particular meeting. >> even if things calm down the next couple of weeks, where do you put the calculus? >> think if we get an okay number here and the calm market, they go i think they are set up for hiking rates but they are not going to go into this kind of market. if they met today, no wait fed would hike interest rates, there's too much volatility in the markets and there's no rush here, not like inflation's running out of control and they have to manage that but people need to keep clear here. this is a tactical issue for the fed. do we go in september and -- or do we go in october, december? not a question about whether where they are going to go the economy is very much on track. it's a question of whether you

really want to hike into a stock market correction. >> what if the stock market -- "masters of sex." >> what? >> i love that behind ethan. [ laughter ] wasn't really -- >> you're happy -- >> wasn't really pointing at you, but that gray hair works for me. i will -- i will tell you that. >> yeah. >> if a lot of the -- what we are seeing is due to these technical players that are set up wrong, because they had their risk parody a certain way. so the fed decide s not to rais interest rates based on technical mom. on the stock market. >> not the whole story. >> may not be indicating a slowdown in the economy, may not be indicating anything in china the market ran up to how many mandate does they have now? how many mandates do they have now? >> wait a second, you are looking at some very weak data, china, very bad policy in china, destabilize their stocks. >> this is the united states.

>> yeah. and if i'm fed, i do want to kind of take a look at that and decide whether it's a problem or not. now, if they were in a position where they were falling behind the curve and really need a hike, then i would say they look -- >> measured by inflation? that may not -- talk to greenspan later, a bond bubble globally because of this and asset values totally inflated beyond what people should really be taking on in terms of risk. that's not -- that's not a -- you got only inflation? the only thing to worry about? >> i take the other side of that but by threatening to hike, the fed's already taking the air out of the high yield market and out of the levered long market. so, they have taken out of the count, they are starting to chip away at those issues. as they continue to hike, presumably those markets correct a bit further. >> i don't -- i don't think the fed's behind the curve.

they thought about -- talk just like -- [ overlapping speakers ] >> china has to spend $400 billion and they are not that successful. all the fed has to do is speak one wire the other and they have this dramatic affect on markets a huge difference in credibility between the two countries. >> for now. if they continue to not rise, do they still have a fed? >> this is part of the issue, that you're seeing a very large market reaction of the world to pining potential policy changes in the united states, being on hold seven year, china marriaging its currency, tiny gradual changes for ten years, the adjustments in the world to these things are showing really, really outside affects because we have held and now we are waiting for an employment report after five years of 200,000. we need bun more data point.

these sorts of points keeping policy non-cyclical, for all of this, has created some financial instability. that's why we are seeing all these data effects in the market. >> never be on the fed. >> steven, ethan, thank you both for coming in today. steve, see you in a bit. >> a little bit. uchblts sticking around? >> giving a speech against opt case against the delay. we will have the headlines. >> the case? >> against a delay. 810. >> the case for raising? >> exactly. you expect that from jack. jack smart guy. we want to hear what he has to say. >> all right. coming up, global markets in turmoil, especially year-to-date. what should you be doing right now? richard kang says now a good time to buy china but may soon be a great time. then former fed chair,able greenspan, joins us on the health of the global economy, today's jobs report and former u.s. controller, david walker,

sounding the alarm about possible government shutdown coming at the end of the month. he will join us on set. stick around. o oil rigs look the same. can you tell what makes them so different? did you hear that sound? of course you didn't. you're not using ge software like the rig on the right. it's listening and learning how to prevent equipment failures, predict maintenance needs, and avoid problems before they happen. you don't even need a cerebral cortex to understand which is better. now, two things that are exactly the same have never been more different. ge software. get connected. get insights. get optimized.

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the shanghai and shenzen markets closed for a holiday, worries surrounding the health of china's economy and the ripple effects continue to mount. joining us with his thoughts on what's happening with asia in the broader emerging markets is richard kang, former chief investment officer for emerging global advisers. richard, we -- in talking about your upcoming interview, we talked about it might be a good time now but might be a better time later. so you're not necessarily saying the worst is over in terms of the chinese stock market then? >> certainly not it could be a lot worse. but when i think about the growth story in air shark it's still pretty good. still waiting to see if the er riffry around china, korea, taiwan, the asian markets continue to get hit because of their trade with china, but i think not a time to sell, better time to accumulate your cash and build your shopping list.

the way sentiment works, go back two, three, four years, china was slowing from those incredible, you know, gdp numbers that who know what is they really with were, what most people -- the worst case scenario i think they thought was about 7 1/2 or 7% and now, most people think that's -- they are not anywhere near that, if you look at the actual underlying strength. and now, people seem overly negative. back then, couldn't imagine below 7. now, i don't think people think there is ever going to be a recovery. where are we in terms of sentiment. is it now overdone on the negative, the pessimism for the china economy? >> good question. if it's sentiment based on numbers, based on what a cfa analyst would do based on studying annual reports and economic growth, it's kind of a tossup. i see the stock market in china truly being a gauge like a voting machine and the numbers that we see on the stock market,

like a poll that you see on tv and the poll is for a country about a one-party system, not like you are seeing trump versus someone else, it is just one party. and the voting looks like it's not very good. you can't vote for someone else but you can basically talk with your money and i think that's what's happened so far and we know that the vast majority of investors in the asia market, the local market in shanghai and shenzen are local. very few have rq fee or stock-connect aid lou witness much the people inside china are voting and not voting well that's why the chinese are showing aircraft carriers, airplanes, this kind of thing to show them we are still a strong country in china, 'cause not so many people there are happy. >> when's the big -- they already had the big parade. yeah. what do you think the actual underlying gdp is now, still at least five you think? >> i honestly don't know, but i

think the market has more than corrected enough to say it's not anywhere near 7%, however, it's still the second largest economy and not like the u.s., europe or japan you have a large economy and a large stock market. this is a large economy a small stock market. whatever you see in the stock market, first of all, for the vast majority of your viewers don't have access to it unless they are state pension plan, you know, has an allocation to china. so, really not like they have to panic. the only question is for those who do have ate lou witness to get in there, should they be prepared for an allocation there, many index funds going to do the next months or two >> the overbuilding of whatever you're talking about residential housing or zombie fact there is are still churning out concrete even though they are not using the concrete for anything, will that be sold up, the overcapacity and then it wouldn't just sort of be something hanging around the

neck of the chinese economy? will it be sopped up or something that's going to come, definitely going to be a flushing sound at some point? >> that is something that has to change. we know that gdp is not just based on cap x but consumption and other factors f they don't really change that like you said, then people there can see it. having traveled there over a long period of time, you see a pace of life grow and people very excited to join the rest of the world in terms of a world of real capitalism. you can see now that there is real concern. i was -- the guy on the street, i was invested in real estate, that didn't work out well. i was invested in the stock market that didn't work out well. what's next? for them country cry to another party to be voted in and say we will fix this so then government has no choice but to fix this and to be competitive in a world market and that's why they do something with their currency and why they are building up military to protect their cities. the glove the do what they have do unfortunate the actions they have been taking have been quite poor and it's another example of

government intervention really not doing well in terms of impact to the market as they would want it to be. >> seems like in terms of economic growth, we are closer to the lows than we are to the highs. i mean, if you're down at 4 -- you didn't venture a guess, but obviously, come down much further than people thought it would and sooner or later, that's gonna turn around, would you think h >> just look at the rest of the world. the u.s. is the only one looking to raise rates. everyone else is dropping them. i'm hearing in canada, they just had recession for the first half of the year. i don't sense anything changing here in terms of central banking policies. so, if the whole world is that way, china's just moving with everybody else, on the u.s. who is moving a little bit the other way. >> all right, richard kang, thank you for your time today. appreciate it. >> thank you. >> okay. when we come back this morning, we have got some squawk sports news for you. tell you how jim harbaugh's first game as the michigan head coach turned out. we will be right back. eeep bre

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welcome back to "squawk box" this is cnbc first in business worldwide. we have got a lot of stories front and center this morning, among them, bp downgraded to underperformed from neutral, bank of america, merrill lynch. cat people lar outperformed at rw bared. the stock down by 1.4%. look at shares of gap also under pressure. the retailer says its overall comp store sales dropped 2% that last month, that missed the mark. that had to do with banana republic, same-store sales decline of 11% at banana republic stores, more than

overcame the big sales, increases that they see at old navy. take a look. that stock gain 2.3%. >> what would have made a difference at banana republic for you how did you know you didn't like it? >> i looked through the entire thing, couldn't believe it, very beautiful display. i didn't want a single thing in it. i looked at some and thought, wow, you couldn't pay me to wear that a giant mustard sweater that was -- >> boy. that's bad. executives in banana republic watching, going, oh, my god is horrible. >> think when i saw the numbers last night, reading the numbers. >> figures. >> nothing i wanted in there. >> you know i'm going to talk squawk sports news now. it was a rough start for the jim harbaughish are a in michigan football. the wolverines lost to utah, 24-17. going to make for a bad university of michigan survey, right? someone wrote in last week that i really believed that.

yeah. has nothing to do with the students. 24-17 on the road in salt lake city. the deciding play was a fourth quarter interception that utah nickel back justin thomas ran back for a touchdown. in other highlights from college football's opening night, second-ranked tcu beat minnesota, 23-17 and south carolina beat north carolina, 17-13. you from low dennis miller? he has been all over goodell? >> no i think i do follow him on twitter but i haven't seen what he said. >> he said tim tebow suspended four games for inflating hopes in philadelphia. not football. [ rim shot ] coming up -- did you watch any of tim tebow last night? >> no i did not. >> and giants were playing the patriots. matter would have been a great night. but they didn't. so i didn't. anyway, the strength of the

global economy -- but -- but -- >> this game will better? >> yes, first game, nbc brady and the steelers, thursday night. and i think goodell, i think he is not unhappy. he tried to do it, you know, had to make a good show of it, but doesn't bork. >> think donald trump in him? >> i think it all worked out. he tried to do it. >> staying away from the game, won't be going because he wants the focus to be on the begin. >> good. alan greenspan will join us, says there's a lot more pain in china still to come, we just heard from richard kang. we head to break, take a look at u.s. equities futures down but not out.

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we are counting down to the last jobs report ahead of the fed's september rate decision, more on where the u.s. economy could be headed, we are joining now on a cnbc exclusive by former chair of the federal reserve and president of greenspan associates, alan greenspan. great to see you, mr. chairman. it's been a couple of quarters, but you're looking well. >> thank you very much. not much has changed in those quarters. >> that's what i was going to

same remember when you said we needed to change our -- what we show on the screen to show the ten-year, we took your advice and it hasn't changed since. >> i'm glad you did. i find it useful. >> so much to talk about, so little time. number one, there are so many disspratt opinions, diametrically opposed about things, talk about china in a second, let's talk about now whether there is -- if do pay the piper, there is a global bond bubble that has been orchestrate orchestrated by central bankers, comes home to roost, not in a horrific way, but maybe all stuck in this larry summers sec claar stagnation, we have let this get out of hand. >> i must admit, i'm a little

bit baffled by the fact that 25-basis point move on the part of the fed is going to have a major effect on economic activity across the globe. the real problem nothing to do with monetary policy, i grant you, crucial issue short term, it's fiscal policy. if we don't resolve the fiscal policies that con from the this problem, confront this country, and the rest of the world, monetary policy will become utterly irrelevant. the thing that bothers me most is the fact that we are running a very large increases in entitlements caused by both parties in the united states. both have been afraid to touch the third rail of the politics, namely, entitlements. if you touch them, you lose.

and so what we are dealing with here is the one chance we have really resolving this issue and then perhaps getting back to monetary policy, which is a minor consideration, relatively speaking. we would get took a point where, if we matched up to the simpson boles basic recommendations of a few years ago, we would be in much better shape now and we could have a legitimate discussion about monetary policy. but i find it baffling that we have fallen into the position where the major issue is whether a few basis points in an overnight rate by one central bank is going to be all-determining. >> well, the people that said when you depend on monetary policy this heavily around the world for so long and you don't see any consequences in terms of inflation and you start thinking

that, wow, there's -- this is working and there's not going to be any negative consequences, but now we are seeing that you're addicted to it. the globe is addicted to it. it's so hard to move up a quarter and we have had people, smart people on the day say, oh, no way we can move up a quarter with the stock market showing signs of volatility, as if that suddenly is a mandate as well. but now we are living it, we can't get out, we are in here, we checked in but now can't check out. that is where we are left at this particular stage. we have to take the longer term view. what's going to be happening, it is going to become very obvious in the next few months that we are running major budget problems, but we used to have just an entitlement program, which is a big problem in itself. about you now having a military

expenditures problem on top of that when we look at what we are doing at this stage under existing sequester, we are taking the repair -- the maintenance structure of our military and bringing it down to a lower level and all the policy discussion is going in the opposite direction. and i could not observe, i think it was yesterday, that president xi made an incredibly long speech without mentioning the united states with respect to the 70th anniversary of the end of world war ii. remember, that war came to an end officially, battleship missouri, general macarthur, holding the proceedings. and i did not like the sound of that it suggested that the huge

military that china was exhibiting yesterday is supposed to be a threat to the rest of the world, even though the rhetoric was very conciliatory. now, i don't know whether or not the major problems, which they did not foresee, economic problems, is going to divert them. i can't see how it can be otherwise. but we have a lot of problems in this world and i wish we had recognized that supposing we solve the 25 basis points, supposing we got through it, that is very -- very first -- the very first beginnings of trying to get out of the mess we're in. >> chairman greenspan, you know, we look at what's happening with the federal reserve and the quandary that it's facing right now in the short term. one of the questions that's constantly being asked is can they raise rates next year in a political election year?

we know that president hw bush actually said that he thought it was the fault of the federal reserve policy, that he didn't bin a second election. can the fed raise interest rates next year without looking like they are being politicized. raising rates is not going to be a political issue, it is not raising rates if you need to what you're referring back in the george h. w. bush era was the fact that we raised rates seemingly inappropriate time and turned out to be the right thing to do. but the fed cannot be looking at the political calendar. if it does, it's going to run into trouble. the fed is going to get criticized, no matter what we do and i don't think that we serve the issue of the central bank by worrying about the next election or who's running where and who

can criticize. i'm not saying that we are all not human, but you can't be driven by those sorts of forces. >> mr. chairman, just back to china for a second. we have seen a lot of stuff about zombie factories and ghost cities and might be a good reason to get the military complex running in high gear tloevgs something for it rather than empty buildings and concrete that they can't use. but does the state-controlled economy -- have we seen the negative parts of that come home to roost now? are we already at the bottom or is there something much worse to come when you try to have a -- you know, central planners allocate capital? >> well, strangest thing about -- remember, we went dung

xiaoping in 1978 turned the structure wholly around and led it through a number of yearsby has been picked up by xi and we had, in a sense, if you look back, perhaps the most dynamic capitalist economy in the world through all of those years, they unraffled. and indeed, they are now sitting with very substangly market-oriented economy and the reason why they are having troubles, they are not prepared for it and the bay they handled the stock market break is indicative of the fact that they are not doing it the way it should be done. . all right. okay. so, i have often said that, still capitalistic, even though they do seem to -- they make their mistakes like everyone does. all right. as far as the u.s. economy, we have talked many times about what's holding it back and i

guess you industrial the same been. even larry summer, i mentioned stagnation, got him to admit if we were to do some pro growth things, whether he likes infrastructure with interest rates here, but even tax reform or regulatory reform, we are not doomed to sick lar sag nation the rest of time but i don't see anything that indicates we are ready to do anything positive there. >> there's only one thing we need to do positively and that's reform the entitlement system. we can forget everything else. if we can do that, all the pieces will -- could come into come right basically where we want them, the difficulty is it is an extremely difficult political problem because nobody wants to touch it. and if nobody toughs it, it is going to continue to rise toed to 10 parse year and it's been doing that since 1965. i think as i recall, the total

of entitlements in 1965 was less than 5% of gdp. it is now 15. you cannot move 10 percentage points of gdp from consumption -- from largely financing investment, which is what the data show, country do that without expecting capital investment to go down and productivity to follow it down and the type of stagnation we are beginning to see and i have seen really since 2009, that type of stagnation is not going to go away until we resolve this problem. >> man, nobody is really talking about it much anymore. i'm glad we did today. chairman greenspan, thank you much hopefully, we will see you again soon. mrs. greenspan has an interview we are watching today. when we come back, more of the biggest movers ahead of the opening bell. your stocks to watch, that's coming up next. also, at the top of the

hour, our panel experts is ready with final predictions ahead of the jobs report. stick around. "squawk box" will be right back.

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the dow futures are down by 180 points, s & p futures up by 21, nasdaq down by 45. we have seen worse levels with the dow down 200 points. we will continue to monitor it only 45 minutes away from that all-important jobs report. when we come back this morning, congress has until the end of the month to agree on a new budget and the funding of planned parenthood could be a big sticking point. former u.s. controller -- controller general, david wake, will join us on set to talk about the odds of a government sh shutdown in less than 30 days. 1 laptop, and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.

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next week, congress gets back to work and they better unpack fast. the government shutdown is looming at the end of this month as a new fiscal year begins in october. david walk certificate former u.s. controller general. he is also senior strategic adviser for price waterhouse keepers and join us with more on the budget battle and the looming shutdown. great to so you. great to so you again. >> i wish we had something better to talk about maybe something more optimistic. we are looking at another massive problem in washington. what happens? >> i don't believe we are going to have a government shutdown because it would be absolutely idiotic to do. >> that hasn't prevented things in the past. >> doesn't mean logic prevails in washington, but the fact of the matter is one of the reasons that donald trump is doing so well is because washington is so dysfunctional. s's playing all these side shows, full, not even with the real problems. planned parenthood, there's a real issue there i mean there's a difference between whether or not something is illegal,

immoral and unethical. those are very different things. but the idea of shutting down the government over that issue is absolutely makes no sense. i don't think it will happen. mcconnell said that it won't happen and i don't believe it almost >> shutdown aside. we just spoke with alan greenspan who pointed out while we are so obsessed with the fed it is not monetary policy that is the problem it is fiscal policy every where. and that's what caused that >> that's correct. gone from trillion dollar-plus deficits down to $400 billion deficits and people are celebrating. what we haven't done is haven't addressed the real drivers. we haven't addressed demographics, social insurance programs, so-called entitlement program, haven't addressed health care adequately, we haven't recognized the risk of interest ray. interest rate risk, our number one risk. and so we have to engage in several things, comprehensive tax reform. we have to reform social insurance program. we have to be able to invest more in infrastructure, we have to rationalize our defense spending based on current and

future threats rather than past threat, all things need to be done that remain to be done. >> what needs to happen with health care, the administration would say, we have put our plan in place? everyone has insurance? >> the answer is health care is growing faster than inflation and faster than the economy and we haven't hit the big wave yet. what we have to do is recognize that we do need universal health care that's appropriate, affordable and establishable. that is preventive, wellness, catastrophic protection, will do more for the poor will do more for the, you know, more the misabled, do more for veterans, the vast majority of the population that should be the basis. you have choices to get more if you want. we have to focus on quality and cost. we are still spending two and a half times what other industrial nationed and getting below average outcomes, by the way, same thing on k through 12 education. the problem is not money. let's recognize, yes, we need universal health care but not to be able to focus more on value, we got to control costs more, because we cannot afford to

sustain what we have. >> what percentage is discretionary spending and what percentage now is entitlement? >> mandatory spending is about two-thirds of budget. >> so 66% and we don't talk about it anymore and we sit here and talk about all what to do with the 34%. we get the 66% under control, quo do everything. >> you know what it was 100 years something that three%. 100 years ago, mandatory spending was 3% of the budget, roughly two-thirds. >> i haven't heard anyone talk about -- in fact, i'm not sure -- i'm not sure our managers want to talk about like don't talk about it, it is boring no one cares about entitlements. >> not just the federal level, the state level. the states serious problems with their retirement health care with their pension plans. >> when interest rate goes up a little, we might start talking about it again. >> that is our biggest risk, our biggest risk is interest rate risk, sometime adding debt, debt-to-gdp is too high level off the next several years and

take off again and when you end up adding debt and you start having increased interest rates, the fastest growing expense in the federal budget is expected to be interest expense growth. and what do you get for interest expense? >> nothing. >> nothing. >> yeah. so, that's not an optimistic picture. you think that washington is going to figure this out quickly? >> the question is who is our next president going to be and is our next president going to make this a pry or sit in i think the president -- presidential candidates need to focus on three things primarily, how are we going to grow the economy, how are we going to create more opportunity and generate jobs and how are we going to put our finances in order? there are a lot of other important things, national security is important, foreign policy is important, immigration's important, a lot of these things are important, but if you don't get those three things right, quite frankly, the other things wouldn't matter that much. >> david, thank you so much for coming in, we need this message, constant reminders. to see you again soon. >> pleasure. >> like a politician tie? >> no, man this is george

washington university. i'm a professional, not a politician. >> all right. thanks. coming up, big jobs report about 30 minutes away, a make or break data point for the september rate decision by the fed. our panel of experts, and i use that term loosest possible sense, is ready for nothing -- is ready for the last-minute prediction and reaction when the numbers come out. we will be right back. can a business have a mind?

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the number in a month, just 3 30 minutes away. could a rate hike be in the borns? we will parse our numbers with mark zandi, kevin heats, jim paulson's take on the data and what it meanness for the stock market, all just ahead. plus, the hollywood of the south. how atlanta has taken the spotlight for jobs in the movie industry. the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york. this is "squawk box."

welcome back to "squawk box", everybody this is cnbc, first in business worldwide, i'm becky quick, with joe kernen it is jobs friday. we are just 30 minutes away from the number of the month. make that 28 minutes away. check out the futures in the meantime, because the street is reacting nervously ahead of this. we don't know exactly what's creating all of this but we are watching the dow futures down by 190 points below fair value, s and p down by 22. nasdaq down by 46. check it out in europe, the same story there declichbs 2% for many of the major markets. the dax down by 2% as is the cac and the ftse 100 down bay 1.6%. >> and here are some of the stories that we think investors might be talking about today. poll forecasters say the economy likely added 220,000 jobs last month, up slightly from the 215 in july. the unemployment rate is seen dropping to 5.2%. we will get the final answer on what the numbers are at 8:30

eastern, like 28 minutes away. and with just two weeks before the next fed meeting, investors maybe listening for more clues on what these guys and gals are expected to do. richman fed president jeffrey lacquer speaks before the opening bell this morning. his topic, the case against a further delay. >> in other words, the case for raising. >> raising. exactly. like this veto. >> the double negative. >> the override the -- yeah. in corporate news, facebook's what's app. i guess they are not going to do it. thank you. announcing it -- has -- you wanted it? >> yeah. come on. >> now has 900 million users, a gain of 200 million people since the beginning of the year. this is important because whatsapp is another -- >> whatsapp. >> there you go >> billion user service. thanks, mark. >> i saw you this morning, watching earlier, you were actually visibly irritated by

that. >> yes, ma'am >> no. >> whatsapp. >> you fell for that? >> i did. >> anything i appear to be, i'm not. >> you're not? >> no. >> i should have known that after all these years. >> sociopaths operate? we don't really -- we need to look at other people -- >> joe was really upset. >> no, no. i have to look at how other people react in certain situations and try to mimic the, you know, actual emotional response i should v >> unless you leave the closet door open that does drive you crazy. >> i don't like that. >> ondoesn't like like anything out of order. >> i don't like social media. that is a true response. >> only 60,000 twitter followers. what is that about? >> i don't know why they follow me. >> 'cause he keeps blocking all of them. >> you don't really have to -- i don't care whether you do or not. >> a busy morning ahead and this week's rough ride for the market seems to be continuing. dom chu standing by at cnbc

headquarters, a look at the week that was. dom, a lot of people like it forget this >> i do follow joe's twitter feed because he puts up his vacation pics on there he was in europe, put a lot of those up. >> that's true. but i regret doing that, because that -- those are really 1 percenter type of vacations? what if they say they can't go to europe? >> certainly not a griswold. >> i have a cousin like cousin eddie. i love that guy. wears white shoes. >> i should look into that let's talk about the markets because we are just a little bit away from that most important jobs report since the last jobs report. but again, let's take a look at the dow the last couple of weeks w he know about the volatility from last week. this time around so far, since the 31st down 115, down 470, big day for that one, but then up nearly 300, up 23 points. on balance, moving by about 900 points on that kind of closing

basis. very volatile, not as much as it has been the past couple of weeks. nothing keep in mind, volatility shrinking. here's where we can see it the volatility index, the vix, one way trades use to gauge about how much fear there is, how much movement, volatility, swings in the market. remember, we are about 25 right now. we were double that on an intraday basis back on the 24th, right around the height of that market turmoil. volatility, yes, still elevated, but comp pedestrians were. now, if you take a look at which sec stores done that well, you can see again there, 53 here become on the 24th. if you take a look at the sectors that have stood out on an outperforming basis, all of them are down, right, so far? telecoms that held up well, down half a percent. consumer staples down 1%. health care and utilities, the two that have taken the biggest hits, utilities, very much an interest rate play. remember, they move kind of inverse to the way interest rates move. health care is interesting only because the third biggest sector in the s and p 500 and a leader

the past couple of years showing weakness and that turmoil this week. now, of course, jobs day, just throw some stats out there for you, data partners crunched the numbers on jobs day and what the stock market typically does over the last five years. 67 occurrences and yes, the s and p will finish up 57% of the time but joe, on average, it's pretty much nothing, flat, just about flat, no movement on average over the past 67 jobs reports for the s and p 500. so, that could all change but remember, it could change because this is the most important jobs report since the last jobs report. guys, back over to you. >> you know, when it's a big jobs day and, you know, we get to you do one of these things and you do all that and then the answer comes up flat, do you -- do you feel incumbent to tell us that that was the answer, dom? do you think that's something we needed -- can't you just say, you know what let's just -- we don't need -- think of something else to talk about?

>> i could tell you that it was just gonna do nothing, right? i could just say it but some people want to see what the numbers are going to be what the occurrences were, just some of the background behind it i could have just said, joe, flat out, don't expect fireworks on average, the stock market doesn't do much. >> could you have said might as well turn on "morning joe", 'cause nothing's going to happen on cnbc. why don't you just say that next time? >> you should turn to cnbc. >> the "today" show, at least make it an nbc property you are driving viewers to >> we will tell, the reason why you want to tune in is because i will tell, we will tell you some of those types of things like don't panic, you want to hear that nothing is going to happen. >> okay. all right. good. good comeback. all right, dom. get to our jobs report panel this morning on this all-important jobs report. mark zahn i did moody's an likts chief economist. did you do your adp thing this week? >> you weren't here. yeah. 190. number one golf course in the country. >> where's that?

>> new jersey. believe it or not. >> really? >> pine lands of new jersey. didn't even think about that, so imagine jix and incredible and my game is just so sharp. >> nothing happened when you were gone. >> okay. our own steve liesman, cnbc senior economics reporter is here. kevin hasset, the director of the american enterprise institute's economic policy policies and eric camden is the president of the center for american progress. and it's funny, because american enter prize institute, center for american progress you two could be working at the same place. and yet, it's almost like -- >> huh? >> american in both. >> yeah. yeah. the twain shall never meet. i actually know what it was on wednesday but why don't you tell us again? >> yeah. >> forecast for today? you don't have to give me your number, we will do that later. >> oh, okay. how was it? >> it was oh 190. 190 k. throw in say 10k for government, 200 k. that's where we have been for

three years really. you know, somewhere between 200 and 250 k for the past three years. so nothing fundamental in the economy has changed. >> you go up in september? >> if i were -- yeah. we >> you would? >> yeah. i would assuming the market doesn't completely go haywire here in the next couple of weeks. >> through go again. kind of sounded like reagan, didn't i? there you go again. the market? the stock market? >> markets. markets. >> broadly? the fed has to do that too? price stability. growth. >> full employment. there's inflation and there's financial stability. >> fairly stable. stable enough for a quarter point, isn't it, kevin? >> yeah, absolutely. i think the problem that we have right now that the fed has man knewered us into thinking that monetary policy is kind of like luke skywalker attacking the death star f they don't drop the interest rate increase at just the right time, we are all gonna die and they have got to get us off that dime. we have got to move away from

that. so, they need to move this month, i think that's why today's numbers are so important. we got a 250, then i think everybody is sure the fed is going to move. a 150, think everybody is sure they are not going to move. i think that's really bad police for us to be. yeah i think that i'm expecting lower end of the range. >> kevin, hold that thought, be with you in a second, steve what? >> fed president jeff lack we are comment out at this time saying the real side of the economy calls for higher interest rates. this is the speech we told he is going to give on the case against further delay. he says it is time to align our monetary policy with the economic progress that we have made recently. he talks about recent market volatility, what's going on in chain 1/2 the direct affects of that volatile right quite limited for the u.s. economy and monetary policy and says the fed has a history of overreacting to financial markets and how they -- when they get into these sort of gyrations. back on the u.s. economy and monetary policies, the labor market no longer warrants zero interest rates, negative real rates are inappropriate for the

current economy and then talks about what is going on, business investment is rebounding, housing looks to be healthy. and he talks about the danger of staying too low for too long, saying if inflation can build up before it's apparent in the data. just one more thing about this upcoming number, he says a one-month blip won't alter the labor market or the monetary policy. >> give neera a chance to talk. neera, we haven't had a democrat or a -- i haven't counted all of them or progressive or liberal, not a single one from austin goose boy to larry summers to just right down the list that thaits fed should raise at this point. and i'm just wondering, have you seen the benefits anywhere that makes think that -- there's no inflation but you would hope -- >> we still have stagnation. we still have real challenges. we still have slack in the economy. and so, i think that activist

position is to raise rates. that's why i think it's fascinating, we are in this moment where we have global anxiety about china. we still have a lot of slack in the economy. they will look for wage growth in this jobs report but when we really haven't fundamentally seen it. i think it's kind of the conservative position to hold course. i am concerned about raising rates at a time were there is anxiety about the global markets and will have impact on global markets when we start raising rates and i don't see this as the time to move. >> a 52 employment rate, which is some would say, think that was the average for the bush years, gw. and the clinton years, think 52 was the average. so, there is something called a normalized interest rate environment and it is certainly not zero. you have no trepidation about never starting on the way back there? >> i think we should start on the way back, obviously, but the

economy should be going on much further cylinders when we have some i think the challenge we have is we -- we don't live in normal economic times. you know, there are a lot of fundamentals in the market, but really fragmented. we have productivity. we have productivity gains, we don't have wage increases matching those. live in a time a lot of these things have to raise serious questions about what's happening in the economy. >> stay with us. we will have more. everybody will get a chance to talk. becky, read this it is -- october is coming. it is. zombies, wear wolves and superheroes, atlanta has become the holly wad of the south. that means jobs. we will take a look at the city's film and television boom after the break. and as we head to that break, check out the futures once again, just about 16 ghoins for the jobs report. you can see right now, dow futures down by 160 points,some and p off by 16 1/2. stick around. we will be right back.

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atlanta is the home of the hit shock "the walking dead," on this jobs friday, we look at one state's efforts to make the tv and movie industry the star of the economy, see it as a way to add georgia's residents to the cast of employees. mary thompson joins us more with the eue screen gem studios in atlanta. mary, good morning. >> good morning to you, becky. georgia is working to become a lead player in the tv and film industry. currently it ranks third behind california, new york in tv and film production, earning in the nickname, y'ally wood, hoping to lure shows like "the walking dead" and "antman" to fill until georgia, a generous and transferrable tax credit can reach 30% for productions spending more than half a million in the state. here is lee thomas of georgia's state -- film and tv office. >> most of these companies, they are not going to have income tax lie bullet in georgia. what they do, they sell them to individuals or corporations that have income tax and that's how they monetize them. >> the credit kicked in in 2008

and the industry's taken off since then. the state estimating its economic impact tobds 6 billion this fiscal year, up from half a billion dollars in 2008. in fiscal 2015, 248 productions were shot in georgia, result 1.7 billion in wages paid to over 24,000 people directly working for the industry. but as eue screen gem studios chris bagwell tells us, georgia's film industry needs more supporting players. over the last five, six years in georgia, there has been periodically shortages of qualified labor for the film and television production business, and particularly in a few areas like electrical, construction, grip, and some of the art-related areas as well. >> so concerned that a shortage of workers could possibly stifle growth in the industry, the state is launching a new program to certify and train workers looking to get into the tv and film industry and those looking

to transition into the tv and film industry. we are going to have more on that coming up on "squawk on the street." joe, back to you. >> you know, they have a zombie, like, training camp outside atlanta? >> they do? >> yeah. >> are you suggesting that i go there, joe? i mean, it's really a neat thing, they put a lot of, you know, makeup on you to make you look, you know, like a -- >> have you checked this out? you gonna go? >> i would like to -- i would -- i don't know. no, mary, i just -- just -- just random thought that i had that they do have -- >> i was -- i was -- i was waiting for "the walking dead" comment from you, actually, joe. you know i would be afraid to say that to you because when you come back at me, you are much meaner and lower than i am. so i'm not gonna do that >> no, no i'm really not, joe i'm not, joe. but i think i was thinking ahead, i knew you were gonna do that >> i know. i would not try to -- you or your sister, i wouldn't fry to -- i'm afraid of both of you.

anyway, thank you. and you -- you haven't seen any of fear "the walking dead"? you didn't see the guy in the school? >> no i go to bed -- >> did you see what happens -- >> i can't watch it. >> you didn't see what happens what happened to the drug dealer? >> i'm not listening to you. it's slowly happening in l.a. . slowly, the signs of -- they have no idea what the world is -- >> la la la la la la la la la la la la la la la la la la la la la la. >> no it is fear the walking dead. coming up, predictions from our jobs and all this will be irrelevant if is there a zombie apocalypse. and then the number of the markets -- the number of the morning, the markets and fed paying close attention to the data, just minutes away. gentleman plus, a quick programming note ex20th anniversary of "squawk box." can you believe that? we are kicking off the celebration on tuesday. we have some of the smartest people in business to give us an exclusive look, not just at what we have done, but also how

things are going to play out in the future. we will start with leon cooperman, mario gabelli and black rock's rick rieder, here with a conversation about investing the next 20 years. the week rolls on, more market titans and heavy hitters join us, jim chanos, bill ackman, governor jeb bush. the party will start here tuesday, wins it's labor day. very late tuesday. start at 6 a.m. eastern. >> you are watching "squawk box" on cnbc, first in business worldwide.

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welcome back to "squawk box", everybody. we are just six minutes away from the jobs number. why don't we get our final predictions now? mark zandi is moody's chief analyst, steve liesman is here. rick santelli joins from chicago. rick, we haven't gotten a chance to talk to you this morning, why don't we start there? first of all, give us your predictions, second of all, tell us what the markets are shaping up for. >> think many are getting to the boiling point with regard to fed policy so i'm going to go 212 on the number. i won't make a claim on the unemployment rate. i happen to agree with one of the most recent statements by

janet yellen az to its accuracy. i guess she did have the epiphany, maybe it was several years late. i think you want to watch europe in terms of rate direction, now that of course, they have reupped the baz zook ka, potentially. they haven't learned qe lessons from the and why or japan. that's pretty much my story. bhafrnl do you think very quickly the market wants to see? there's a very strong number, dos that mean futures go up, good news is good news, do futures actually continue under pressure, if these at case, because they think the fed will be forced to raise? >> i used to love answering that question but think it'spatch lo reinforced, trying to reinterpret the data and fed's reaction in the marketplace, how big or small they want their investments to go this time, i take a buyer beware. i have no idea what the market wants. everybody wants the market to go

up. but i think what i would like is the calibration for central banking in the united states to get more in line with the reduced growth but ever growing economy. >> run through our prediction. mark what is your? >> 165. >> based on adp 190? >> consistent, technical reason a seasonal ajudgment problem with all, alls comes in very low because of seasonal adjustment issues, gets revised higher. here is a statistic, the average revision from the initial report, third report, two months from now, since the bls changed its sampling techniques back 14 years ago, is 75 k. >> okay. better run through this quickly. steve, your prediction? >> 198. 198,000. >> i'm at 200. just a little bit more than steve. >> neera what is your number this month? >> 215. >> 215. got rick's number already. anybody want to throw

unemployment number thought as well? neera, 5.2? >> 5.1. you're 165 and 5.1? >> yeah. yeah. the underlying growth in the economy hasn't shifted at all, only a technical reason. the underlying growth is still over 200 k. >> we will stick with these numbers and find find out the real answer in a couple of minutes. >> we will have that in a couple of minutes. the august jobs report number, we head to break. take a look at u.s. equity futures. they got a little better. they have. down 200. now 151 on the dow. 18 on the -- wall street. not rattled. at all. no. not at all. not at all. i mean, look at the day. sir. sir. what went right? what went right? everything. thank you. with threat intelligence, behavioral analytics, and 6000 experts, ibm security will help keep you out of the news. my dad's company wasn't hacked today. cool. you are looking at can you spot the difference?

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all right, everybody, let's get straight to hampton with the number. >> 173,000. august non-farm payrolls increased by 173,000 jobs. the up employment rate is 5.1%. average hourly earnings increased 0.3%. that 5.1% unemployment rate is the lowest since march of 2008. but of course, the headline number was below the consens consensus,ing? in the neighborhood of 220,000 jobs. in august, only 140,000 private sector jobs created. we did have significant upward revisions for june and july. a total of an additional 44,000 jobs added for those two months

that were not previously reported. how did we get to 5.1% unemployment in the total number of employed increased by 196,000, however the unemployed decreased by 237,000. job gains, health care and social service plus 56,000 combined. professional and business services, up by 33,000. food and drinking places added 26,000 jobs. jobs significant job losses, manufacturing lost 17,000 jobs in the month of august. mining lost 9,000. average hourly earnings now stand at 34.6 hours. the same as in february. but that particular number is the lowest since december of 2007. the labor force participation rate happening in at 62.6% for the third straight month, however, the u 6, so-called real unemployment rate is now down

10.3%, the lowest since june of 2008. even with this 173,000 for august the labor department tells us average job gains over the last three months stand at 221,000 back to you. >> truth. >> all right, hampton, thank you very much. let get our reaction from our panel, zandi, you were right, you were almost on the nose with everything you called. >> becky, this was a low number. but it was a great report, right? so, add in 75 k or even 50 k. >> for revisions? >> mark, just real quick, manufacturing hours revised up in july and remained constant in august, 40.8. so that manufacturing sector, vehicle sales, we talked about that. >> the entire time, while hampton was going through the details, while steve was digging through some of these numbers, this is a very strong report, as you are just saying, look at the 5.1% unemployment level, the real number. >> the revision and going to get big revisions to the august number. we know that.

it was the unemployment rate. it was average hourly earnings. here is the big thing, the number of hours worked, i think, steve, right increased? >> i have 34.6 from 34.5. >> last month from the previous month. so, this is -- the job market, by all accounts, very, very stroke. 23wu6r7b8g9 21 the average for three months? >> production workers was on stand. >> revised august up then 221 is the basil level of what the three-month average has been? >> then they ought to go up. >> what do you mean? >> three-month average now -- [ overlapping speakers ] . say the underhe were lying growth is 200 to 220 k, double the rate of growth in the working-age population. double. >> you're ready, right you just changed, ready? all right. >> i think it's greater optimistic about 170,000, which is below market prediction.

i am glad you-all are but i still see reasons for anxiety when we get a lower-than-expe lower-than-expectlower-than-ex t lower-than-expected like. this >> neera, done all your progressive things wanted dous the past six years. should be happier. >> had a wage problem in the country for 50 year, love to try to solve that problem. >> so what would be the threshold for you there's always always something going on in the world. what exactly would it be? >> it would than the economy is -- people throughout this economy actually feel the benefits of economic growth. so, some real wage growth for the bottom 90%. i don't think that's lot to ask and we have yet to really get there. >> go ahead. >> and i think that's -- i think that demonstrates a slack in the economy. that translates to slack in the economy. >> just a couple of things.

steve go ahead >> the three-month average, 211,000 26r7b89 21. >> if you just add the -- with the revisions. didn't have to do much. you get revisions to this, still doing 200,000 the unemployment rate declined for good reasons, if you look at what happened. it wasn't a participation rate story. it was the -- let me find the numbers here, the workforce was kind of constant mine 234us 1,000 employed up by 196, unemployed 237, unemployed on a three-month decline here. and then i look at job growth. it was fairly broad based here. goods producing was down, the opposite what adp came up with, not smoke the strength in manufacturing that you are. but this the service sector, retail was up, transportation up, you have had upward, leisure and hospitality screaming at 33,000 and 30,000 the last couple of months. then government has been up, a new factor, up 33,000, revids up

21,000 a little bit more government hiring, probably a seasonal thing as well. >> let's talk about the market reaction to this rick, think i saw that the futures shall the dow futures immediately jumped down 180, down 125, back down 180. >> yes. no. they definitely improved a bit. becky, i will need your help here for a second. i want to ask our esteemed panel, everybody raise their hand who thinks the fed should raise rates in september. becky, i can't see, so -- tell me how many hands are up. >> hands around the table, you guys all saying no? >> he said esteemed. i'm not participating either. >> so, nobody -- [ overlapping speakers [ overlapping speakers ] >> three hands up, i can't see neera and kevin. wait, kevin has his hands up, neera does not. about four people. >> because i'm hearing all this praise for what is the second lowest headline number in 19 months, but it's all just absolutely terrific. you can't say terrific unless

your hand's up, would be my -- >> yeah, is your hand up, ridge? that's enough for you to raise it. >> my hand has been up for four years. my hand's been up for four years. the bottom of my arm is more suntanned than the top. farmer's suntan. this is central bank tan. >> you get that both ways, too you still think that the actual employment picture is awful but you want to raise rates. >> you know, i think it is awful. and i think 2% plus growth is awful. but not awful enough to warrant zero. so you're right. yes. what we have here is a recalibration problem for all all you "cool land lukers" out there. >> what happened to your slice for a second? i get it. very strong number, at least if you're looking at the unemployment number and what rick has been pointing out, steve's been pointing out,

mark's pointing out. >> navigating a difficult place now the world economy isn't doing so well. china is way worse than people think still. there really could be some kind of developing market debt crisis in the fall and that's got markets really spooked. on the other hand, the u.s. economy had more momentum going into this report than we thought after gdp revision and so on i think they are about a difficult place but pretty confident this number is strong enough, especially the unemployment rate, to get the fed to move and i really think we need to stop this rent control and bond market we was been engaged in and try to move back to a kind of normal economy. if we do that, i think a sigh of relief economic rally. >> steve? >> two great indicators to look at, postnumber market gyrations drive by on the computers and hal is out there working. >> all computers, steve. >> yeah i know, it's not folks, but we wait for folks to take over the computers after the numbers. >> the maintenance guys.

>> the janitors running the show here. no offense to the janitor. look at the -- but look at the -- and then look at the two-year note, which is my favorite barometer, rick, feel free to comment here. with than two-year note is in and around 70, it speaks to me of a market that is expecting a fed rate hike. it moved up from 65 to 70, and then look at the euro. futures respond. you had a little bit of postnumber volatility. >> what we saw originally was people saw the low headline number and they thought, bough, the low headline number of jobs. >> let's have a conversation about what is an acceptable amount of market selloff in anticipation of a rate hike, right? the fed answers some decline. you country get away with a rate -- with a quarter point hike with zero effect on the market. there's going to be some affect. if wend up, and i have stayed this for a long time with a 10% decline in stocks and the fed begins to reverse its course to me, that's pretty cheap cost. >> 10% a garden variety typical

correction on a reversal, build another base, joe gets his strong hands. >> all the expectations they were going to raise rates. this has gob to be baked n >> saver be plays it like charles prince place it you keep dancing until the music stops. >> don't have a chair to sit in. >> there will be some reaction. but very modest is a lot. one of the most important points, this is tactical, september, october. >> strategically, they are going up. >> so how big a deal can this -- what kind of impact? >> the market seems to think it s. >> steve, steve, there's a really good opportunity for the fed here, too, because it is baked in. if they were to go less than 25 basis points and given how low the interest rate is i think there's a pretty strong argument to do that, then that can be

positive news by the time they move, went 15 basie points and said we need to get off the zero, the economy hands this. >> if i could respond to that what fischer said to me in jackson hole, we will be adjusting slightly and probably wait a while before doing something else. that's sort of the same thing you are talking about, kevin. >> right. >> economy so darn strong, clothes 15. >> clothes 15. >> rick, thank you. neera, kevin, mark, steve. >> thanks, becky. >> thank you gays all. >> when is the meeting, steve? >> september 16 and -- a wednesday/thursday meeting. so you can plan your night out. >> what is the date today? >> 4th. >> oh, my god, 12 days -- oh, 12 -- oh, man. zandi, huh? ample all right to talk about. >> yeah. >> there is -- i mean, oh, my god. we just -- never too soon to start hyping that game time decision really. probably still is after seven years.

>> crazy. >> still not sure. still not sure above stall speed. >> jim paulson of wells capital management gets in the mix, what investors need to watch as we head into the labor day -- he is a guy we really need to listen to about if intermediate and near-term stock --. and why stop what you're doing to find a bathroom? cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision,

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welcome back to "squawk box." look at the u.s. futures after the jobs report that number came in -- the headline number lower

than expected. 173,000 jobs created versus the 220,000 the street had been expecting, but it was the unemployment number and everything else in the report that the markets reacted. >> unemployment rate 5.1%, hist toer clirk incredibly low level, why a lot of people thinking this will force the fade happened, make them raise 25 basis points. the market's reaction to that was to sell off futures even further. we were looking at down 150. we got the numbers, at this point, closer to down 190 for the dow. s & p down 21 points, nasdaq by 42. fair to say the futures have been in negative territory all morning long, seen numbers down by as much as 200 points, but this strong jobs report is not helping the picture. >> right. it should have. >> right. >> worried about global growth. >> economy, things catching up. >> not these guys.

>> let check our other headlines this morning. bank of america getting a green light from regulators to use its own internal models to compute the capital requirements. other big banks received similar approvals and as dick bove points out, good news for the stock, focus on other things including the split of the chairman and ceo role. check out shares of bankamerica now relatively flat. joe? >> get more reaction to the report. jim paulson, chief investment strategist at wells capital management, up -- i guess -- that's not your thing necessarily, the jobs report, but all in all, what do you think, jim? nch>> >>. this isn't just about the fed raise interest rates soon, i think it's a fact that the ball the is somewhere today never been in this recovery, so is the economy. we're the a crossroads. the whole premise of what's driven this recovery, what's driven the stock -- bond mark sets about to change, that's because we are headed to full

employment. we are going to be at an employment rate within months and totally changes the premise and fundamentals of this stock market until now. this market was driven basically by being able to grow the economy up till now without negative consequences. it just sopped up unemployed resource, didn't create wage or price problems, cost push pressures, didn't erode profit margins shall didn't need -- necessitate a rise in interest rates, challenge the valuation of stocks or bonds and a whole time we had the great liquidity friend, the fed, underneath it. all that's going to change. and that's what the -- that's what the market is struggling. we get fall employment, we will see the pressures, margin pressures and if you have to raise interest rates, you challenge the entire valuation profile of both the stock and bond markets, liquidity friend is going to go bye bye. i think that's what this is about. this is about the financial

markets finding a valuation level which can sustain a very different environment going forward than what we've had up till now. >> do you think that the chaos we have seen the last couple of weeks have been that or think that's this morning's reaction alone? >> i think the chaos -- >> -- everything else. >> think the chaos of the last two weeks, becky, i really do. that's really what's underlying all this. >> that's bit concerning because that suggests a permanent downshift versus what other peoples are writing are technicals. >> we fix china, we are good to go. i think we have to find a valuation level, investment sentiment level that can support growth with negative consequences. >> you think that's long way below where we already are? looking at corrections where we stand right now. >> yeah, i guess we have got another down leg. i don't think its a bears but maybe break 1800 yet and scare people a bit more.

that's my guess. the biggest issue going forward, becky, my points, it is going to be productivity. if we can't raise productivity, this economic recould have ripped the stock market run is going to end soon, we are going to run into cost push pressures that will necessitate rate hikes. if we can res sur recognized productivity, we can elongate the recovery in the bull run, we can mitigate the cross road pressures we will face with rising productivity. that is going to be the most important issue going forward. can i just make one more point, investment-wise, kevin hasn't made this point, think a good one. i don't recall another recovery where the u.s. has been in such a different position relative to almost everyone else in the world. while we are heading over the crossroads into full employment, no one else is. so, right now, i think commodity prices may be bottoming. we may get a global bounce. if we do foreign markets, just all good for foreign markets,

but going to be conflicted here and i think we could see a big delinking in performance between the u.s. and overseas. >> you have been thinking about commodities for a while, but the classic thing, you didn't even see any irony in what you wrotet you wrote. you said the entire premise of the bull market we've been in has been an entirely recovery. >> wage gains and the economy is going to be going. you'd better sell. that's how warped this whole game is, jim, now that we're finally crossing over. >> i agree, joe. but think about the premise that we've had most the time. most of the last four or five years, we have been rising against a constant worry that the world was going to end at any moment. and now people are finally comfortable it's not. i think wall street will have more difficulties? >> to get 20 times earnings, profits better go up. and profit margins, you're not

going to get it to stay where they are. that's why it probably works out. thanks. >> thanks. >> that was not very positive. >> no, but it's interesting. if you remember, that's even what gates and buffett said last year. where the market stands depends on interest rates. up next, squawk's big plans for the big anniversary. it's our 20th anniversary coming up. and we have a lot coming up in the next new months, and don't miss warren buffett at 11:30 eastern on tuesday. what the fed will do now as a result of the report. september's rough start for the markets and much more. "squawk box" will be back.

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>> this fall "squawk box" turns 20 years old and lots of folks from the world of business, politics and beyond are sending us their well wishes. that is a taste of what's to come. over the next couple of months, we'll bring you a parade of some of the smartest people in the world to help us look ahead and take a trip down memory lane. next week wall street titans. our conversations start tuesday with investing legends with lee cooperman and mario gabelli. rick reider and jim chanos joining us. jeb bush will be here to talk jobs and taxes, and we wrap up with bill ackman. this is the tip of the iceberg for what is a 20th anniversary to remember.

i can't wait to get things started next week. >> have you seen some of tthe -- some of the pro moes? >> i've seen them. >> i got a little misty. they're talking act our show. >> it's fun. we get lucky. we get to talk to incredibly intelligent people. >> competitors. a lot of people watch and it's grat f gratifying in. >> you've been here. >> dog years. 20 is the new 10. did you see how i walked up the steps? 20 is the new 20. i think it's just from doing, i walked a lot the last few days. what was that guy on the left? is he the retiring chancellor of some -- when did i turn into blake kerrington? >> you're distinguished. no. >> i've got to get a haircut otherwise i could be a running mate for a certain presidential candidate because we have the

same hair. >> well, no. no, not if you're thinking who i'm thinking. you'll find the content on our website on "squawk box." check out the futures this morning. a lot more pressure. >> they're down and make sure you join us. watch monday but we won't be here, but, oh boy, down 265. join us tuesday. "squawk on the street" is next. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with simon hobbs and kayla. cramer and david faber are off today. 173,000 is the jobs number for august. futures have been well into the red all morning long. amid a big sell off in europe. bond market seems to think the jobs data is good enough