profile help with the super bowl halftime show adding beyonce to amp up the star power. now are they backing her up or are they still first? it's friday, january 8th, squawk box begins right now. ♪ >> china's exchanges opened without the circuit breaker system and this may be the more important part here. the pboc set the yuan a midpoint higher after devaluations really sharply hit the stock market

coming off the worst ever start to the year. the dow and the nasdaq falling to direction territory down about 10% highs to the summer. we are looking at a rebound this morning. check out the u. s. equity futures and the nasdaq up by 33. >> forecasters expected to see an increase of 210 in december. michelle girard will join us with her predictions in a few minutes. november wholesale trade numbers comes out at 10:00 eastern time followed by november consumer credit at 3:00 p.m. and san francisco fed president and richmond fed president are both

speaking about the economy so we'll be doing all of that but 8:30 is the big moment. >> we'll see. wouldn't you rather have the china jobs number? it seems more important at this point. >> how big would it be? >> i don't know. they're adding 8 million jobs and they're expecting 17.5. they have five times as many people. >> 1.3 billion. >> a million jobs a month. >> maybe a million jobs a month but since they're now more private sector oriented than we are here and their president seems to be more interested in -- >> ha ha. >> no, they may be doing better. they have embraced -- >> i'm not so sure that's the case. >> all right. >> let's check on. i can twist it. it doesn't matter what it is. let's check on the markets this morning. okay we're up 132. it's the worst start to the year

in history. so it's bouncing but at this point there's no fwauguarentee it stays there. maybe it accelerates. maybe we're up by the end of the day or maybe it doesn't hold. i don't know. and i'm not convinced that the jobs number at this point matters as much because i think it's been in focus that it's a lagging indicator. with everything that's happening in china. >> do you know what i think matter with the jobs number this time around? the wage inflation. if you're look at numbers that start pushing toward 3% that makes it much more difficult for the fed to not continue to raise rates. >> also interesting in the downward move and the overall rate finally ends or goes the other way and we reach full employment and the wages start going up and a lot of people say it's not necessarily optimal, you know -- we had a guy yesterday making the point that that -- >> but, you know, considering that oil is $33 we know that the globe seems slower than what our

job additions every month have indicated. so it's a lagging indicator. if things get bad enough then the jobs start going down based on what we're seeing right now. so we always like to say it's the most important number of the month and it is. >> but we're probably going to have at least two or three more jobs reports before the fed decides again what happens and it will take more time for the most recent indicators we saw in december. >> but it's not about what the fed is going to do anymore because at this point, yesterday we talked about maybe they don't raise the next two or three time ifs the markets were to stay this shaky. i don't know whether robust growth here allows them to continue on. maybe it does. >> it's just an additional piece of the puzzle we're trying to put together right now. >> lawrence of america is here. at 8:00. we'll have a flag and stuff like that. >> he believes in america. >> he does. >> he does. >> he does. >> he does believe in america.

>> he's a person who, in fact -- >> he's a friend of mine. >> one out of two people -- and we may find out by next month whether he runs for senate too. >> exciting. >> all right. there it is. 131. we'll see. europe was up less than 1%. in fact, france is down. come on. that was crazy yesterday. a guy with a meat cleaver and fake suicide belt. what's the point? is that cop suicide? is that what that would be? if you walk into a place with a meat cleaver and fake suicide belt? wouldn't you say i'm trying to kill myself? >> potentially, yes. >> oil bouncing a little and it's down. 33.23 but, you know, the ten year at 215 yesterday.

it's up a little today. 2.18, 2.19 but that's amazing. we are in tightening mode. dollar, 109 on the euro. gold has been a stand out. been a long time since it was a stand out but we're right around 1100. >> joining us now with more. she's not sleeping, she's not eating. she's everything we have. she's a one woman operation with what's been happening lately. eunice yoon is joining us in hong kong. did they throw anything at it? do you know? they threw a lot and only got 2% or was it yuan stuff they decided to focus on. >> well, everybody was suspecting that the government had come in with money to try to prop up the markets through state backed funds.

that's one of the reasons they're expecting we'll see a little bit of a rally but there was relief among many investors at the end of the circuit breaker system so those factors helped to lift the spirits today in the markets. the mood is still jittery. a lot of investors are saying they're not entirely convinced. many are saying they're far from convinced that the government has a handle on the stock market and as you noted the main focus has been the weak yuan. there's been a lot of downward pressure on the currency and the central bank confounded many investors when it decided to guide the yuan higher after more than a week and a half of guiding it lower. now the government was trying to rally sentiment when late in the day the security's regulator had said that they're going to continue with their plans to approve initial public offerings but they're going to do it at

what they call a rational pace. so a lot of people took that to mean that it's going to be a bit more arduous and slower and on monday we're going to see a lot of economic data over the weekend and continued weakness so that could be a factor that effect trade next week. >> i don't care that i show how much i don't know. are are there employment numbers that come out every -- do you try to do -- does china try to do an employment report? should we believe that number any more than the gdp number that we have coming out? >> well, they have unemployment rates that come out but it's not necessarily so regular and also they tend to focus on urban areas so it's something that we see that comes out and is

obviously very important to the way the government and the leadership makes decisions because one of the factors that the leadership has continuously said hopes to guide their decisions is just how many people are employed. so that's important but again like so many other things that when you look at bits of data in china there's just not a lot of transparency and that's what creates uncertainty. >> but you don't get an actual number of jobs added or lost in a month. >> not as transparent as you guys. >> how are your facilities over there? i think we're going to expand -- i don't know. are you satisfied? you got some nice -- do you have a nice make up room? do you have a green room? >> i'm on vacation. i've been on vacation the whole week. i was supposed to be on vacation this week. i was taking a break from the beijing smog. so i'm not really supposed to be here and then all night -- yeah,

exactly. i'm here on vacation. >> enjoy the vacation. >> it's not relaxing but i'm really interested in what's happening. >> oh, yes. that's your story and you're sticking to it. thank you. >> exactly. >> see you later. >> for more on the global market slump and today's rebound we're joined by gina martin adams. she's equity strategist for wells fargo securities and leland miller that's the president of the china beige book and how are you feeling after all the ups and downs. >> not great. it seems very deja vu and breaking through support levels so our expectation is that until china sort of stabilizes we're likely to continue to experience a great deal of volatility in the u.s. but this is probably another buying opportunity.

we do see earnings growth recovering as the year goes on. hold tight and stick to your guns and wait it out. >> we talked to people that watched the transports and say that they're worried that what has been an industrial slump to this point bleeds over into a recession this year. sounds like you're not convinced. >> we're not but it's something that we're watching for. we dug deeply other into the competition of the ism and non-manufacturing survey as well and it signals it a lot more than reality. you say what is really going on in the economy we're still strengthening and showing some growth until that blended res t results below zero we'll assume we'll in good shape. >> until china resolves itself this is something that will

continue to move around. >> this week is about -- there were economic indicators. this was about the stock market. this was about the circuit breakers. this was about pending sales everyone thought was going to flood the market. this wasn't even about digesting the economic weakness which is there. our q-4 was the worst data in four years. so people not even starting to digest that. it's a much smaller issue than the broader economic weakness and the markets have just started digesting that. >> that's why it's been so closely watched. it made people nervous that the chinese government is seeing extreme weakness and trying to get out ahead of that. >> you have to learn don't play around with the currency. if the stock market crashes so

what? but if you're moving that band in a way that you're convincing people of devaluations coming bad things can happen and i can tell you from about a thousand conversations this week a lot of people thought we would wake up this morning to a 10 or 15% devaluations. now leaving aside that that was never likely if you have the markets thinking that way bad things are going to happen. >> we're arguing about whether they should or shown let it float, if it's a reflection of a weak economy they can try to cover it up but that won't be papered over forever if they allow this currency to weaken they can get it going. the big threat is not pushing it from investment, but they can accomplish this. if they keep weakening the yuan or signal they'll do it in a

greater way. >> it's weakening, they're keeping it from weakening and it's costing billions and that's part of the foreign reserves they're spending to do it. you're saying they should continue to spend the money to keep it strong if they want to transition to the new type of economy. if they let things go without supporting the yuan, it would probably help in terms of growth but like you said the average person -- >> it's not going to have a consumer. >> do you worry that they're depleting their foreign exchange reserves too fast? a lot of it is already called for. >> they have $3.3 trillion and it's already there. >> it's leading that way and it's there. >> people don't know what the exact numbers here are but if they have to keep it relatively strong at the same time the story of 2016 is not a story of the yuan but the dollar.

>> it the impact the future of china this year. >> you would tell people to stand on the sideline. >> where's the buying opportunity. >> we're saying continue to add to your conviction positions as long as they're high quality desen momentum. >> as long as you're under 35. >> yeah we're going to continue to see this volatility occur in the first quarter. that's our base position but if you have a longer term time horizon this looks like a good

opportunity. what point would you say get out if you need the money. >> this is the shorter term correction and longer term bull market. >> i don't one here is anywhere -- have gotten any closer recently. >> right. >> thank you both for coming in. >> when we come back the countdown to the jobs report is on. the number that could move the markets when it hits the tape at 8:30 eastern time. rbs chief u.s. economist is going to join us on the set next to break down what the number mace look like and in the next hour two smart market master black rock is going to join us and weigh in on the jobs report in this week's market turmoil. we're back in just a moment. turns romantic

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welcome back to squawk box. a few stocks to watch today. gaps december same store sales missing expectations. the retailer blamed challenging traffic trends, especially in the old navy brand. the stock down now about 40% in the last year. also bed bath and beyond earnings beating wall street estimates but comp sales fell in

the last quarter and guidance is weak falling on that news. >> but we don't buy things. >> we just look. >> looking. >> urban outfitters with 2% comps overall. that stock trading higher. >> it's bed bath and beyond. >> what is the other piece of urban out fitters that does well. >> anthropology. >> and speaking to the container store, we spent time there as well. >> look at that. they all look the same though. >> i actually have been there. >> it's a good place. >> revenue and same store sales there. >> and we should tell you that alcoa closing a 269,000 ton per year smelter in indiana. this would bring u.s. aluminum

output to the lowest level. it's battered by falling commodity prices. steve is nodding his head in the negative. >> it's supposed to happen the other way. all of this cheap energy and gas is supposed to be a boom like alcoa and hasn't happened. >> and your last stock this morning, samsung electronics with a mild recovery but is warning of a tough year ahead. the company is dealing with a continuing slow down and cooling semi-conductor prices and we'll see whether that impacts joe's favorite stuff which is apple. >> alcoa back to 8. running as fast as he possibly can trying to get the stock. >> i don't know what you do in that situation. >> we saw him a year ago in davos and the stock was 17 or so. look, back to 8 where it's been. if you look at a ten year chart that's the low end. >> getting overwhelmed by china that's the marginal buyer not

buying like it used to be. caterpillar and deere. any of the stocks. >> what would you rather turn around? alcoa or yahoo! >> or macy's. >> i would go -- well i think i'd try alcoa. i'd try everything over yahoo! >> i'd take yahoo!. at least it sounds cool. alcoa is like aluminum foil. >> you don't think there's a shot there. macy's then. >> macy's yeah. >> that might be best. >> i'm sticking with terry. >>er the have the best of the bunch. if anybody can turn that around. >> let's get more on what to expect from the fed. following the global sell off and once today's job number hits the tape, michelle girad joins us on set. chief u.s. economist at rbs along with steve. we just heard that another huge issue is the yuan that the fed

has to consider as it's deciding what to do with monetary funds. >> blames me for all of this. maybe you can take some of the heat. >> that's the 19th mandate. >> 22. >> you know, i'd have to say steve's got something there. we talk so much about how the dollar -- >> it is your fault. >> no, the dollar is obviously on the fed's radar screen and to the extent that the dollar strengthens it has them worried about inflation which is really what's baffling them now. why isn't inflation firming as certainly wages given where the hay boar market is so all of the concern about inflation and getting to the target but the one currency that i think is most important when we think about u.s. consumer inflation is the yuan because we import 40% opp of our non-auto consumer goods from china.

so areas like apparel and household funnishings as the dollar strengthens you'll see downward pressure on the prices so that does, i think -- we're so focused so for long on the euro and what the dollar euro was doing but in terms of actual u.s. inflation which the fed is focused on now that's the currency you have to be watching. there's something there to that. >> yesterday, michelle, one of the main characters on cnbc went on one of his famous rants about how the federal reserve is essentially at fault for what happens in china. because all of this adjustment going on and i got a call from a guy after that said yeah this is not the same as '07, '08. it's different in that it's the adjustments happening. >> a famous cnbc ranter. >> there's two. >> it's a famous cnbc ranter. >> it wasn't cramer. >> rick, that's his name.

rick. that's his name. >> there's two ranters. >> thanks, joe. >> but here's the point i'd like to make. it's not a question. the fed for more than a year has been out there warning people that they're going to hike. stanley fisher has given three speeches on the notion, emerging markets you better get your act together because we're going to hike. all of you guy out there in the carry trade you better look out because we're going to hike. so the fed comes along and it hikes and it's the fed's fault thousand market reacts. >> no, yes and as you said how about even in september how about when we thought all they were going to go and they gave you another pass. >> but the market fails to adjust. i'm not defending the fed but i'm defending the fed. >> the fed has been -- >> far be it for you. >> i think the fed has been very transparent on this one. the bottom line is though is that what's bothering me more about the fed is the fact that

they have allowed the market to at times -- they have been almost too complacent or really sort of giving into the markets because they're worried about the reaction. at times they haven't done prehap what is they needed to do when they needed to do it. reinforcing bad behavior in the way of the markets. >> that's what stan fisher may have added to this mix here is that he seems to care a little bit less about -- >> now he did say to me on wednesday, look, we want to do this without creating a mess in the markets and i think they do this by giving warning and following through and doing things. you know, the fed doesn't -- i don't think it's going to be pleased with what's going on right now but at the same time yori don't think from a policy standpoint they can do more than telegraph and deliver. >> and then the other thing too, we're talking about a quarter of a percent increase. even under the fed's guidance

we're talking about interest rates moving from 0 to 1%. this is not the kind of moves that really should be -- i think, threatening or worried about threatening the expansion. >> but we're now talking about a much more global economy and much more global world that's more tightly connected and the currency fluctuates and currency moves based on these minor interest rate hikes could have big ripple effects that play out not only overseas but also on our shores. >> you're right but the bottom line is the best thing that the fed can do is send a clear message about it's frame work and then to act on policies that they think are appropriate for the u.s. economy. it sort of has to sort that out and i think where we get into trouble is when the fed pays too much attention to factors that are beyond their control and then creates confusion because we're not sure what the fed is looking at and ultimately that undermines then the markets in the long run. >> with we just talk about the

jobs number. we'll get what looks like a strong number today. 200,000 plus and looks like the u.s. economy is doing okay. so. estimates are down below one. our cnbc update is still at 1.5. it's going to be a weaker fourth quarter than we had previously and the main issue is not what's happening domestically. it's all from overseas. joe said earlier and i don't agree with you on this. i think jobs are a indicator so are is there some big difference here? why are jobs growing so strongly and why is the economy looking smou so much weaker. >> the fourth quarter is going to look soft but we're coming off of a lot of strength. if you look at the performance of consumer and business spending in the u.s. we are growing at better than 3% so i think economy is better than it gets credit for. what we talked about here is it feels like though we should be

doing even better when you look at how low interest rates are, how much stimulus is provided. that's the level of frustration. why there's a perception that we're not doing that well because to only be growing even 3% when you're growing at 0% interest rates that's why there's a perception that we're not doing better. >> if markets or some markets at least some of the time are able to discount into the future things that are happening, doesn't that by definition make indicators lagging? >> yes. that's an interesting point. >> but at the same time joe -- >> are you going to say what you said to santelli's face or are you going to take -- >> oh, rick? >> some guy, crazed maniac. >> he's going to be on with you later. >> later. >> so you're talk smack about him. >> it's not smack. i was just asking a question.

>> the other word. >> what's your other word? >> oh, talking -- >> it doesn't rhyme. >> no but it start with s. >> smack. >> ends with -- >> smack. >> yeah, smack. >> joe should write songs. he has a low tolerance for what rhymi rhyming. >> it's just too crude. you shouldn't substitute vulgarity for witt. so don't try it. >> you know for me that's tough. >> just forget it. >> the sounds of silence on the set. when we come back, words of wisdom on china. we'll talk to jp morgan's asia pacific vice chairman. one of the world's most mpowerfl women.

she joins us next. and look at s&p 500's winners and losers. ♪

♪ >> welcome back to squawk box

here on cnbc. first in business worldwide. take a look at u.s. equity futures now indicated higher this morning for the first time in quite awhile but well off the highs in the morning after a rally in china overnight. for more we're joined by the vice chairman of asia pacific at jp morgan chase. thank you for joining us. trying to help us sort through what's going on. the thing i want to know given where you're based and everything that's going on is how tied do you think the real economy of china is is to the stock market there? >> you know the economy and the markets of course are some what correlated. in the recent days of trading we have seen the worries actually began with a weakening chinese economy. so as people begin to worry about economic growth and profit growth, you have seen markets weaken basically throughout the second half of 2015. but as markets began to sell off again at the start of 2016, now

a lot of market commentators and investors are beginning to worry what the real wealth effect willing on consumer spending and service which is have been a bright spot in the economy. so in the recent days there's been reinforcing of the weaker economy and weaker market performance. so at this juncture we need to stabilize the markets first and also we need some signs of recovery in the economy as well for the market recovery to be sustainable. >> when you say stabilize the stock market which of course you need to do the question of course is how do you stabilize the stock market and what is the role of government in that and to the extent that you think it's an interventionist government what that ultimately says about the market and how going forward given the volatility that frankly perhaps some of the steps the government has taken already are ultimately going to have in the future. what do you think the next time there's a leg down, what do you

think the government does? >> well, you know, today's trading has been relatively encouraging. some calm has returned to the markets after the circuit breaker mechanism was suspended late last night. supposedly there was government funds buying into the market today but i think if you look at the chinese market, the structure is very different from the u.s. market. retail investors play a huge role in china. so when a market downturn happens like it did in the last few days, the hurt mentality really kicks in. so for the market to recovery and really perform on a much more rational basis we need to have a lot more institutional participation. in china, you know, 90% of the trading is done by retail investors so at times the trade canning appear to be erratic and irrational so one of the medium to long-term projects for the central government in china is to introduce more rational

institutional investors into the chinese stock market. >> one of the questions we had asked in an earlier segment is really about the foreign exchange reserves and this idea that there's $3.3 trillion of reserves which sounds like this astronomical number but there's real concerns among some that that is depleting and depleting much quicker than people really appreciate and some of that 3.3 number is already accounted for in other places that we haven't really put a number on. >> well, you know, china's foreign exchange reserves amount is the largest in the world by far. of course it has come down by several hundred billion dollars in the last six to seven months. in the last recent data we have seen a decline of $108 billion in the month of december. so there has been some draw down of the forex reserves so some of the money was used to defend the chinese currency. now if you look at china's

overall balance sheet, overall financial position it remains quite sound. in other countries, reserve numbers are much less. especially in emerging market. now going forward what's going to happen to the overall balance of payments? we have a current account surplus for sure but in term of capital outflows we also have chinese companies investing overseas and individuals taking money out and we also have money coming in. all of these factors contribute to china's overall foreign exchange position. so we may continue to see the 3.33 trillion number come down but i don't think that the pace of the decline of the foreign exchange reserves will be quite as dramatic. so it's not the major worry for the market now. the major worry, basically, number one is currency. number two is when we're going to see the stabilization in the stock market. and number three, what is a long-term projection for profit

growth and economic growth. >> okay. fair enough. thank you for joining us this morning. we have to leave it there. we appreciate your perspective. >> all right. coming up, dennis will join us with his read on the digital start for the year for the markets. south korea blasting propaganda and pop music over the border. we're going to tell you what they're playing when we come back. here's a hint. ♪

welcome back to squawk box. us equity futures at this hour. they're looking up this morning. before we get that jobs number. things seem to have stabilize at least overnight in china for now

but not nearly where they were a couple of hours ago. nasdaq up higher and s&p 500 up by six points. >> the british government wants south korea to cool it with the k-pop. they resumed propaganda broadcast that they are booming across the border. they could be heard 12 miles from the border they're so loud. it's part of their retaliation for that bomb that was set off earlier this week. in the past the south has irritated the north also by broadcasting k-pop songs like the one by this boy band big bang. the british government is urging south korea to exercise restraint. but if they really want to annoy people. forget about the k-pop. we have our own suggestion for a song they might find more annoying. it will never get out of your head. it will be stuck in my head all day but i can live with you.

you guys probably can't. ♪ it's a small world after all ♪ >> they use your song to be the most annoying thing you can think of. are you happy for the publicity or are you like wow, we're really annoying? >> spell the name right of the boy band. >> it's an international incident. >> and that's you. >> right. >> i don't know that you're not proud of that. is that a proud moment? >> yeah. >> this morning in addition to all the market madness we want to take a moment to celebrate a big milestone for andrew. last night was the big premiere for the new show time show billions. andrew is one of the writers and one of the executive producers on this. one of three. it's a labor of love he's been working on for a long time. lots of stars and big names in the business world walking the red carpet here in new york city. an amazing night. i'm sorry i couldn't be there. >> you were working. >> i was trying to be there. >> there we are. >> there's andrew.

>> that was right. that was the cnbc camera. no we had a great night last night. my co-creators, i don't know if we'll get to see them on the screen. they're also the show runners. they killed themselves over the past six months to make this show amazing. more than six months. the past year. it was a lot of fun. >> the show is amazing. i loved it. >> you can get it on demand at showtime. >> but it begins 10:00 p.m. next sunday. not this coming sunday but next sunday on the air. >> is that the 2nd episode or the first. >> that will be the first episode so you can get a sneak peek now which is what you saw. all sorts of business people came out too. anna wintor. and paul giamanti plays the head of the story. >> i don't like the people that served what i would have had to

wear to do that, you know? i don't know how to tie a bow tie and it was -- you were giving me the pigs in a blanket instead of the crab. >> they had some really good -- i was eating some spinached. they had cream spinached. >> they are those -- >> excuse me. >> i didn't say anything -- >> that's code for what donald trump said about what we're going to do to china. >> yes. so we had a lot of fun. >> i just to say it is amazing. i have been kind of laughing because at points he even said to me at one point that he thought this character was based off of him and i said wait until he sees what his wife does. >> and his wife was there too. my mother was there to see that scene too so it was all very complicated. >> were you sitting next to her? >> i was not sitting next to my mother. i have a very pure mind. >> i'm not going to tell you -- >> would he be envious of what

he's not get organize disgusted? >> i don't know him well enough to know. >> i think i'd let it all hang out. >> a lot of fun. >> your friend as well. >> you know dave. >> i do. >> okay. >> congratulations. >> thank you, appreciate it. >> congratulations. >> and you went to a premiere for too big to fail too. premieres are part of your thing. >> we're trying. when are we going to do a fictional version of the show? >> this kind of is it, right. we're in a bear market now according to dennis gartman that joins us next to talk strategy in today's jobs report. a lot of people there asking about what was going on in the markets. that was the whole thing.

welcome back, watching the futures, dow down by 63 points, looking up by more than twice that amount earlier this morning. s&p futures up by close to 5, nasdaq up by 17, and still green arrows, but issue obviously, unclear on where we are headed today. not even through the course of the a session, but even before we get to 9:30 a.m. let's bring in the founder, editor, and establisher of the letter, and you are convinced we're in a bear market. what tells you that?

>> a number of things, becky, vacillating over the last couple months, but i keep a simple index, my international index of about ten of the larger stock markets in the world, and it made its top back in may 25 of this year, has not made a new high since. the u.s. stock market vacillated, tried to get a new high, couldn't. one after another, whether it's the dax, the ftse, cac, our stock market, clearly, what's happened in china broke trend lines, all failed to make new highs. one at oofter another, this occurred, and opening several days of the year has broken whatever last residual hope the bulls might have have. i think we started in a bear market. that -- things can last for six, seven, eight, nine, ten, 12 months and already highs were

down 15%, down 5% in the u.s. with another 10% to go down on the downside, i think the propensity in all markets or economics is a study of people's propensity to do something. i think after what's happened in the opening week, propensity of people to step up and buy has been reduced. the propensity of people to step up and sell has been increased. you are on the side of being bearish. >> when did it start? when are you dating it? >> dow and nasdaq are already 10% off. >> yeah. >> we have to time if to 10-12 months, did it start six months ago? >> joe, as i said, my index, my international index topped out 5th, and, again, that's -- that's a compendium of ten markets, making a high back then. that's awhile ago. if you missed the bottom of the bull market back in 2009, you were still early. if you missed the top of the bear market by five or six months, you may still be early.

this is -- we're several months into it. the chart that's showing on the screen right now shows you that we have failed in the dow to make a new high for the past several months. i think we have to pay attention to. i think this could last for another six or seven months to the downside. >> dennis, to this point, part of the reason stocks have been fueled so high is because people said there's no alternative, that the market, if you don't like stocks at this point, do you like cash? other things that are worthwhile places for your money? >> oh, i think you like cash more than you like anything else. i think cash will be a wonderful safe harbor. perhaps you should own a little bit of gold. perhaps you should own treasury debt securities. you'll lose money on those two, but you make enough in the earnings to overcome that, but i think cash is paramount. cash is not a bad investment if things are going down 5% or 6% this week and you've owned cash, you are well ahead of the game. cash is probably the best place to be.

>> okay. dennis, we always appreciate talking to you. thank you very much for joining us this morning, and we'll see you again pretty soon. >> thanks for having me on, becky. >> cash, cash, cash. all anyone talks about, cash, money, cash, right? billions. >> capital preservation. we heard from several people this is the year for capital preservation. >> coming up, two squawk market masters weigh in on the brutal start of the year, blackrock up next. stick around.

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tgif, rough start for 2016,

but china takes action, stabilizing for now, but it all could change when the jobs report hits this morning. we'll break it down with two squawk market masters. tech investing in 2016. last year's top platinum portfolio manager is telling us names she likes this year. she's a fan of social, shopping, and search. her top picks straight ahead. before you throw your next pizza party, think twice about delivery. efj issuing a warning about the pizza box. >> who ordered double cheese and sausage? >> right here, dude. >> we're hot, spicy, and we always deliver on time, the second hour of "squawk box" begins rights now. live from the beating heart of business, new york city, this is "squawk box." welcome back to "squawk box"

right here on cnbc, first in business worldwide. it's been a wild ride, of course, this week on wall street. the dow off to the worst start ever, and it's never been down more than 5% over the first four sessions of any year. the dow and nasdaq fell in correction territory, but all hope is not lost. in 1991, we should tell you, the dow dropped 2.4% in the first four days only to finish the year up 20%. >> no kidding? >> you. >> thank you. >> talk about what comes next. >> there's the hope. >> with china's market in shambles, driving the momentum, investors turn attention to the jobs data this morning in 90 minutes at 8:30, and that could change everything all over again. we'll see. wall street economists expect the non-farm payroll number to be 210,000 compared to 211,000. the unemployment rate expected to dip below 5%, and as becky

mentioned, you know, wage growth is going to be key to be watching on all of this. >> once again, we are creating based on what happens in china, really, and more news from china overnight. china's central bank guided the yuan higher after scrapping that well received circuit breaker mechanism. joinin joining us now with more on china's moves -- civilization's 2,000 years old, and you should not stop markets from trading, should you? has anybody learned that yet? >> i think they are sort of learning it, moving with half performs, part of the problem, you know, not committing entirely to market forces, which is keind of opening the door, bt not allowing them to control things, the whole conundrum over here, but, anyway, they managed to surprise investors here because, as you said, the central bank had a guided the

yuan higher, after days of guiding it lower, and especially after the day we had on thursday where the government had guided the mb downwards, the biggest adjustment seen since august. that probably -- the move today probably contributed to the more posttive sentiment seen in the stock market with the shanghai market and shenzhen market ending the day up because of suspected government buying through state funds. also, there was quite a bit of relief the government decided to end the circuit breaker system. still, the mood very cautious, jittery, people are not entirely convinced that the government has a handle on the stock market situation. also, there is still a lot of concern about the weaker yuan. the government trying to ease things up. the csrc, the securities regulator, late in the day had

said that they are going to continue to press ahead with their ipo process, and approving ipos, however, they are going to make it much more what they say rational, which people take to mean is going to be a slower process. one of the things late in the day, there was a bland statement, or just a statement by the central bank where they are trying to -- you could tell they are trying to drum up sentiment, and they said they are going to make the yuan much more international. they are going to liberalize interest rates. they said they are also going to continue to with their prudent monetary policy, but all the statements have been made in the past as what i call a policy by pronouncement, where the government tries to say something that is not really different from what we've seen in the past, but they just want to make investors feel better and reiterate these comments. guys? >> okay. thank you, and continue to enjoy your vacation. we do it differently here.

we don't go to work. anyway -- >> it's a vacation to be speaking to you guys. >> vacation from a vacation. that's from what about bob. anyway, joining us now with more on the markets -- no, that was a vacation from his problems. mike santoli, senior markets commenta commentator, cnbc, guest host, and bob, vice chairman at kissinger associates. was that a bull market mustache, and now does this signal anything that -- is that why you shaved it? >> let's hope not, otherwise i'll grow it back over the weekend. >> you know that mustaches are cyclical. they were out for 15 years, and now nthey are coming back in. >> i've never be a slave to fashion. >> you haven't? you have to be contrary.

do you have a view whether to stay long in the market? >> we are going to stay long the market. we have to recognize, of course, there's a new set of risks, talking nonstop about chinese growth, and now we are talking about, you know, that ham headed manner in which china is intervening in markets, and how they attempt to reprice currency. they are new dynamics, a policy on uncertainty. most of the uncertainty we focus on has been about the fed. when will the fed begin the process of normalization? we have a complicated factor with regard to chinese policy, and how to implement that over the immediate term. >> we saw you earlier this week. today seeing stabilization, it's a little bit better it's not just opening down 800 dow points today or something, right? >> yes, i think that's right. although, you know, we got to a point where you really would have needed incremental data surprising news overnight i think to have a true washout

today. it's tentive out there. it's good that we're not sort of unhinged entirely, but short term, markets are oversold. i still don't think fridays are a great time to sort of assume that it's over. there's nothing -- pointing to the 1991 example. we don't look back at 1991 and say, wow, that was telling us something, but we were also in the process of coming out of a recession. these situations are utterly different. it's the growth outlook. it's what china can do in terms of exporting deflation, and stealing growth from the rest of the world, which does not have it to spare. that's the big concern. >> bob, you know, stock markets yield, but we have you on because you're, like, a brilliant diplomat, and you had unbelievable positions in goldman sachs and in the government. were you in the state department? >> yes. >> under hillary? >> yes, under hillary. >> you did not ensegender the ms just so you could be good for

tv? you got north korea, that didn't work. they want the deal iran got. that's why they are probably, you know, blowing stuff up over there. where do we start? >> we can unravel that. >> i'm needling you. >> there's a lot of troubles. >> the world's dangerous. >> yes, dangerous, and very unsett unsettled, and china, which is interesting in the sense that we in the u.s. realize that the government can't control markets. for a long period of time -- >> do we? do we? >> well, we know no one can control the markets. >> do we? >> do we try? yeah. >> the fed. >> cannot successfully control them. in china, there was an illusion for a period of time that government could control or government could control markets, and i think one of the big changes now as a result of what's happened over the last six to eight months is that

there's a recognition that they cannot, that it is very difficult to use circuit breakers and other things to control markets, so the psychology of these markets getting way out of line and becoming very disrupted had a big impact. in addition to that, you have real problems in other areas. you have weakening growth. not just in the manufacturing sector, which we need, but also in services, and in consumer goods. you have a weakening rmb, yuan, which causes people to consider and engage in capital outflow, a big problem, and you have a weakening market which we've seen in the summer and now again, and weakening global economy, which is very important because a lot of what china does internally depends on weaker markets, and that, in turn, leads to weaker markets in emerging economies by chinese goods because they can't sell as much in the way of commodities to china, so you have a

reverberating series of effects going on all playing into a scenario of volatility and downward movements in the markets. >> any time we would have had you on in the past year, on any given day, now we're focused on china, fixated on china, all about china. if it was earlier in the week, it was north korea. a couple weeks before that, it would have been saudi arabia and iran. >> yes. >> what are we going to be talking about two weeks from now, you think? >> well, that's the trouble with the world we face and reality we face, that there are various elements of instability of different kinds in different parts of the world, and we had seen china for a long time as a stabilizing force. during the last asian energy -- well, crisis and commodity crisis and market crisis, china was actually a stabilizing force. >> right. >> now china's incuring its own

problems internally, the currency issue, the growth issue, and the markets issue, and they are all are causing a lot of instability in the region, and then to add to china's problems, north korea goes and explodes a bomb. that's the last thing chinese needed. >> all our problems. >> right. >> delivered to the west coast. in terms of what you are looking at. the fed, is it less of a -- whether they go every couple months, next 12 month less important than the other things now? >> first of all, i agree with bob, look, there's a lot of things to worry about, but the world is always dangerous. it's not necessarily just danger in the last three months. >> now a multitude of danger. >> now we have more instability. the thing i think about with the fed, joe, is that, you know, we basically spend so much time kind of posturing when the fed would begin the process, and now we have to worry about the pace of fed rate hikes. to me, i still think the fed is deliberate in how they do this.

i think they will be very measured. the worse thing that can happen, joe, is what i call monetary calvinism, policy predetermination, like, look at the dots, and fed decided we're going in a predetermined matter. >> they've never done that. >> they have not, but did you listen to fischer, they talk about dots. forget about the dots, focus on facts on the ground, the macroeconomic backdrop, and also the inflationary risks. >> mike, for a brief moment, we thought stagflation, the worst for markets, but you need inflation for stagflation, don't you? >> you do. for deflation. inflation for deflation. >> the commodities can't get any worse, can they? >> well, you know, they -- they are historically bad, but in 1998 when oil made a low, it was at a 25-year low, not a 12-year low. we're at a 12-year low now. they can be worse, but not incrementally worse in the m

magnitude for stocks or signaling a bad economy. i think these can get, you know, worse, just because we don't have a cushion of nominal growth after 4 or 5%, that would allow you to absorb that, and all the things we talk about would be easier to shrug off if we were in a different point of the cycle. >> you still writing stuff? >> yes. i'll send you a link. >> $100 oil and s&p of 2,000, that's 20 times. what would the s&p, just directly comparable, what would it be at $30? >> ratio? >> it would be 600. in the depths of the crisis, it was 656. no reason to think that? >> no reason whatsoever. >> really? >> no. nothing about that ratio that matters. >> what about this -- >> he's been talking about it for two days. >> for an ounce of gold, you could buy a decent suit. >> right. >> that's -- and in andrew's case, you need 3 ounces of gold. those tom ford thing, what do

you want? >> i don't wear tom ford suits. >> you see people wearing them. you want one. >> i admire them. i, you know, we talked about my cheapskateness. >> you get three suits for $200. oh, no, that's -- >> wait, oh, simms. >> sunday morning. >> whatever happened to the commercials? >> who is the other guy? century 21 i'm into. and can you explain why you recommend synthetic over cedar? "super food?" is that a real thing? it's a great school, but is it the right one for her?

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welcome back to "squawk box," everyone. the retailers prominent among this morning's stocks to watch. check out bed, bath, and beyond, matching estimates with quarterly profits of $9 a share, but the current quarter projections below the street forecast, and that stock off by 1.85%. the container store lost 4 cents a share, they cut the forecast for the current year, and that stock is down by almost 20% this morning. also, shares of gap, it's said its comparable store sales down 5% in december, bigger than expected decline. sales fell at the flag ship chain as well as banana republic and old navy chains, down by 8.5%. federal reserve watching what's happening this week in the markets as investors run for

cover. jeff rosenberg has more, chief investment strategist at blackrock as well as steve leisman. hello to both of you. >> good morning. >> second round now. >> yeah. >> you're here all morning. >> all morning because of the jobs number coming up. we're trying to build excitement for this. it's not as big a number, right? in terms of -- u doni don't wan reduce your ship already. did you say that already? china's numbers. >> the question is how much do you care about today's number, how much do you care about chie s that? >> it's about china, but they are giving us stability this morning as reported. perhaps, you know, the market focuses on one thing at one time so maybe this morning we'll get a little focus on the u.s. economy. >> have we overdone the china thing? >> no, no, it's a big deal. it's a really big deal. i don't think we've overdone it. it was in august, flash in december, starting the year on

it. that's entirely appropriate, but it's not the only story, so this morning we have to pay attention to what's going on in the u.s. economy, particularly, we're going to get a view on wage inflation, and wage inflation talks about the other side of the risk. everybody's outlook for the year was you had three scenarios, the china risk, and the other that's not getting focus, wage inflation in the labor markets are tighter than the fed anticipates, and maybe you start to see wage inflation show up and the fed is behind the curve narrative. that's not the focus in markets today, but -- >> what's your expectation? behind the curve? >> no. i think the fed is vulnerable if you get this wage inflation picture. now, base effects means if you run at month over month levels around .2, there's a 2.8 year over year print. that's a big number when we run at 2%. the focus is really on the deflationary fear and china, but

if you could see some stabilization there and you see a couple of months of wage inflation, you could start on that. >> just the populist tone here, an economic one, i think. it's not inflation if wages are going up. commenced with productivity and inflation. that's a number that's a normal number. it's not an inflation problem as in they are going up more than they should, and they are going up in a way that creates a problem for the federal reserve, a potential spiral of inflation. i think we use that term "wage inflation," like, that's bad. we don't want people's wages to go up. we do! that's good for the economy. >> of course it's not bad. it's very good. the issue for the market is that, remember, the fed is telling you there's going to be four hikes this year, but the bond market doesn't believe that. the bond market prices two to three. the issue is not that wage inflation is bad or good. of course wage inflation is good from the economic point of view, but the markets do not price that in. you have a big shift in market pricing if you start to talk

more about that wage inflation picture, and it's also key here, talking about wage inflation, not broad based inflation, and they say the labor markets are tight, whether that passes through to broad based inflation is a longer run process, but it's about whether or not the assessment by the fed of the labor markets is proven to be wrong. >> jeff, hold on. just -- i don't know whether we're global enough now. we are more global, right? have we imported -- never imported a recession, right? can't import recessions, but export recessions, we slow down the rest of the world. did we get a recession? >> so, no, but -- >> could we now? china big enough for us to import a recession? >> yes. but be clear on what the transition mechanism is. >> no. >> it's not the fundamental economics. that's why steve is shaking his head. the economics of the united states does not depend on china, it's the other way around, china depends on u.s. our dependency is on financial market conditions, so if you have china and the fear of chinese stock markets,

everything we talked about this morning -- >> the whole market goes to hell. >> spilling over into the u.s. stock market, and you get a major correction. what's that do to the u.s. economy? damages the economy through the confidence channel, right? the american consumer is fueled by confidence. >> i just want to interrupt, joe, because you're on to something, which is i think we may disagree on american exceptionalism, which is true with economics. the united states, right, exactly, the largest -- is the least globally dependent big economy in the world. i think bob would back me up on that. we are not the price taker. >> yeah, but -- >> america -- >> 45% of the s&p 500 -- >> that's a different story. the stock market is a different story from the u.s. economy. >> the u.s. consumer side is in the stock market. >> it's positive for the u.s. consumer in general. >> it's a big issue. >> it's a big issue. >> more than the macro economic issue. that's the big thing that american companies depend on,

demand abroad. >> exactly. the fed -- >> i don't know where -- >> the fed in the portfolio, the transition mechanism, how does the fed post-crisis support the real economy? through the portfolio balance channel. >> this is a huge issue. it's a difference between the economy and target right here. the economy -- the market -- is not necessarily the economy. >> can the pizza box be dangerous to your health? i had to get to that. time now for today's aflac trivia question. what is the most commonly used web browser in the u.s.? the answer when cnbc's "squawk box" comets. ohh ah ah aflac! aaaaf-lac! ta-daa! he's not a very good magician. he paid my claim in just one day.

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e. now the answer to today's aft aflac traivia question. the answer? google chrome. the fda banning free substances used to keep your pizza grease from escaping the box. without those, that's a problem, if you have nice counters and stuff, it can get stained, a nice granite or something. >> yep. >> translator: agency says three

chemicals used as oil and water repellants on the paper and paper board could cause cancer, there's cell phones, shoes, backpacks, electronics, tents, and firefighter gear contains the ga chemical as well. don't worry, it's not meaning the end of delivery pizza forever, just prompting the need for some serious creativity in creating new boxes. if you pick one up too, put if in your car, if you had a car. >> it's cancer. >> yeah. >> everything causes cancer. >> watch out for my leather seats. >> sugar causes cancer, come on. >> makes you fat, that's true p. carbs do. when we return, it's a jouungle out there, and amazon is a stock you want to own. we'll find out why in minutes, and el-erian is here to talk

about the jobs data. take a look at u.s. equity futures. dow to open up 116 points higher. back in a moment.

welcome back to "squawk box" here this morning, first in business worldwide, and we're now an hour from the december jobs report, expecting to see 210,000 new nonfarm jobs, but the big thing everyone's watching for is wage inflation. also, cosmetics maker, avon, cutting unspecified number of global technology jobs after hiring hp enterprise to run tech operations. avon expects to save up to $19 million annually as a result. the european union granted unconditional approval for fedex to acquire tnt express.

u.n. regular laters approved the deal in november. joe? >> saudi arabia thinking of listing shares in the state owned oil company, according to a report, the crowning prince said a listing could take place in the next few months, and officials say the company is worth trillions of dollars. >> a lot of opaqueness. people don't know about the capacity. opaqueness, capacity, people don't understand. >> yeah. trying to privatize. >> people are questioning the timing too. >> i don't think it's worth trillions, is it? >> interesting thing is they are trying to privatize it and get money monetize it because they need the money, now, for their own budget, but they have to diversi diversify. that's the problem. they'll use some of the money for the budget. >> if they can keep everyone happy, all the unemployed young people, buy them off, do they

have the money to continue to buy them off on an arab spring in saudi arabia. >> i don't think so. the tensions within the house that we've seen, they have their tensions in yemen and with iran, but the big problem, though, from a financial point of view, is they are used to giving out a lot. they can't continue to do that. >> need a strong saudi arabia to justi offset -- >> and stable. need that most, important to providing money to people, but they need, and have not done it as rapidly as they want, the last king pushed this direction, more diversification, and they have -- one young people -- many of them well-trained, but they have to develop diversification because oil is not going to sustain their revenues. >> here we are propping up a regem with a certain breed of radicalism. >> we need stability. >> with respect all 19 hijackers from saudi arabia?

we're constantly going to be in positions where you're wondering if what you're doing is the high ground. moral high ground. >> i don't know about the moral high ground, but there's word from yemen, and the hijackers, but, basically, the problem is this, that we need, on that part of the gulf, that side of the gulf, stability. they provide it. we're beginning to have to help them, not by giving them money. we sell them a lot of arms, but if they need to sell stock and they can do it in the right way, meaning a lot of transparency, a lot of due diligence on the part of buyers. >> saudi arabia, iran, and we shifted our -- >> well, the problem is that we need to have good relations with iran. iran's powerful, but we need it in the broader context, not undermining the relationship with the sunni side, and, so far, that area, the sunni area in the region, has begun to deteriorate. that's a problem. >> as far as the markets go, it's been a bumpy start to 2016 with the dow and nasdaq both

dropping into correction territory. investors search for safety. joining us to talk about it, the hummer copartner's founder and managing partner, and she was the top managing portfolio last year. great to have you on set. >> thanks. >> we've seen technology leading the way lower through many of the sessions, just in the early days of 2016, and that's the time when a lot of people step back, saying, wait a sec, i have to reassess. that's not what you are telling people right now? >> it's interesting when there's a lot of volatility, watching cnbc, experts say, you know, sit on the sidelines with tech. i still think it's really hard for investors to understand these tech companies, and, you know, what they do, who are the great ones, you know, what's the role in the economy, and technology is 5% of the gdp, so it seems small, but the effect to technology is much bigger, especially in theme of the

digitalization of the economy, which is in process right now. >> when it comes to the famed stocks, facebook, amazon, netflix, google, a lot of experts have come on saying, look, big winners in 20 sa, so take some of the gains right now and step back. why are you so convinced some of these stocks are the best to own right now? >> amazon's a great example. people focus on amazon as a retailer. last frill when they disclosed segmentation of the revenue with aws and the retail portion -- >> cloud services. >> exactly, cloud services, people were shocked at the size of the cloud business and then forgot about it. q3 that number was, you know, a huge number, twice the number of quarter of a quarter. >> when you think about the cloud business, though, is it propping up the retail business in terms of where the money is coming from? so the question is, do you think -- i mean, do you -- two things, do you think they split, i wonder if you could split the

company, and, two, do you think that the retail business really does become profitable with the whole strategy is we make this other business sort of support the other thing? >> well, i'm not sure the strategy is one supports the other, and i'm a big supporter of jeff besos, a brilliant leader, single minded, not driven by themes or whatever, but driven by opportunity. he's probably one of the greatest opportunists seen in the tech industry. i do think that the retail part is a challenged business forever because he wants to be the low price seller, the fastest deliv deliverer. he's moving the bar further and further ahead leaving lots of retailers behind. the cloud business is just in its infancy. it becomes -- if you talk to a financial services company here in new york and you ask how much much their software assets they have in the cloud, it probably

would be single percentages. it's going to be a lot more. it will be more over the coming years so amazon is weaving its way into all enterprises. it becomes electricity. you can't pull it out or turn it off. it becomes a really, really long term powerful workhorse for that company so if it will be bigger in my mind. >> microsoft, you like the innovation right there now too? >> i spend a lot of time with customers. exciting customers like chief information officers. over the last six months, i hear a lot more than ever that azure is part of the forward going enterprise infrastructure strategy, and i didn't hear that six months ago. i heard maybe we've got dot net

or office 365, but not azure. if they are moved into major enterprises, it's like aws and the cloud for amazon, and it is the foil to amazon. back to amazon again, people love and hate amazon on the retail side. the same thing's going to happen on the cloud side, and this benefits microsoft big time. >> also, sales force is another one, salesforce.com is another stock you like. you say that mark benningoff is a joyous force in silicon valley. what's that mean? >> well, he's a big caricature. he's become himself, so to speak. he's everywhere. you don't really see jeff out and about. you don't really see sacha out and about, but you see mark everywhere. he's, like, you know, the ring master of the tech circus so to speak. >> big party in davos he was

invited to. >> exactly. >> i thought about going to his. >> it's friday night, i think. >> he talked about needing the brand, though, like, he wants to advertise and market the bran and get out there. >> yeah, he's in many ways old school. you know, where in old school is, you build belt buckles, you wear it and show people the belt buckle versus the opaque leaders like the google team or jeff besos where you know they do something big, don't know what it is, they don't tell anyone ahead of time, they don't know everyone by name. mark can walk into any room and have a conversation with almost everybody about their specific product, their customer environment. he's an amazing guy. when it happens in san francisco, it takes over the town. they pulled in a cruise ship to house more of the people, and,

you know, my guess is probably mark we want on the cruise ship to greet them. he's very unique in addressing the industry. >> whether the manufacturing sector is addressing technology quickly as they should be? we have a problem of lagging manufacturing sector. address the link between the two. >> the answer is no. it's happening slower. if we look at industry by industry, financial services industry is the last most recent industry to sort of realize, you know, we have to get this digital thing right, or venture capitalists fund all ala cart companies to start unbundling our businesses. that has not happened in manufacturing. there's nothing for them to fear yet other than their own lack of growth. internet of things changing that rapidly. you know, certainly, the ability

of the linkages and changes in the value chain happening in other industries is just starting to happen in manufacturing, but the answer is really not quite yet, but it will come. mckenzie said 18% of the digital opportunities across all industries have been worked on so far. you have a lot of work to go to really take advantage of all the technology that we already funded at venture capitalists out and put in the consumer and supply chain's hands. >> we go to the -- isn't friday the russian party? >> thursday night. >> i think it's friday. >> friday. we have to go first to -- >> i'd like to get caviar first. >> you do? >> i do. >> yeah. >> multiple choice question, this company gets to a trillion

dollar market cap first, a, app apple, b, google, c, microsoft, d, somebody else. >> oh. public market cap? >> yes. >> google, apple, microsoft, or somebody else. >> oh, i love the question. >> i do too. >> google. >> that's what i think! >> you take the tiger. >> why? i'm not against apple. i love tim cook. i think he's a genius. >> i'm taking d on that. i get the rest of the field. >> that's how you do basketball too. >> i was ali baba's prediction, and jack ma said a trillion yuan. >> he's already there. >> what about the warriors? >> yes, unbelievable. >> i know. >> nobody's over 6'9", are they? they are midgets, but fast. >> i know. unbelievable. >> you watching college hoops

too? >> i usually watch college at march madness. >> i'm early this year. >> who do you like? >> xavier. >> okay. >> because i'm from cincinnati. but there's other good teams. the guy from lsu, have you seen him? >> no. >> ben simmons, a freshman, going out immediately, better than magic. >> we have to go. >> thank you. >> thank you. >> good to see you again. >> behave yourself in davos. >> yeah, andrew. try. >> i'll watch. >> we'll try. we have to get to commercial. we are live, of course, go to cnbc pro on cnbc.com to get the latest, find the portfolio and additional analysis from the managers. joe? >> rothschild -- >> your mind in the wrong place. >> joined by allianz's chief economic adviser.

i got a good one. >> i do too. >> yeah, yeah. >> yeah. >> the dow starting with a record fall, down more than 5% during the first four trading sessions, it's the worst ever start to a year for the dow and s&p, and we're less than an hour away from the first jobs report of 2016. will a positive number get markets on track?

joining us now on the squawk newsline is allianz's chief economic adviser. we asked a few people today, will china be what we talk about this week, a month from now, six months from now? is that what we talk about? what's dictating your thinking on financial markets around the world in. >> >> caller: short term is china, joe, but markets realize that central banks can no longer repress financial volatility, and they are pricing to new volatility pair dime, and it takes time. any time something happens around the world, it takes longer to restore stibere stabi what we see with china today. >> churchill, irritated me he said this, but said that americans will eventually do the right thing after they tried every other thing, does not work, and then they timely do the right thing. maybe we finally let markets

determine policy rather than vice versa, but we are forced to do it. central banks will not bail us out forever. is that a good thing that we finally get to the point where things get to clear themselves based on the way it should happen? >> caller: it's a good thing central banks are starting to normalize, starting with the fed, realizing they cannot artificially repress volatility. what's not a good thing, joe, is we're in the going the other things that need to unleash the productive capacity of the economy. ideally, central banks normalize in the context of other things being done, both by governments and by companies to make sure that we can improve fundamentals to validate asset prices, and that's not happening yet. >> my ideas are different than yours, since i've known you for a while. you want, like, i don't know, more government spending and infrastructure, right?

you want a bigger role of government. i think it gets out of the way, get regulations out of the way, and corporate tax rates low e and that's the way to do it. that's just us, but it's funny, the rest of the world is private sectorizing quicker than we are like china, aren't they? >> caller: people agree we need to reform the tax system, particularly corporate taxation. there's too many antigrowth elements. >> right. >> caller: most people agree there is scope for private-public partnership in infrastructure. we need to upgrade our infrastructure. most people agree we have to deal with the excessive indebtedness and do something about student loans. >> yes. >> caller: a common element of agreement, but we are not moving on those, joe. >> there is common, and we're not doing any of that. we're doing some crazy stuff, you know, we got -- well, never mind, but we are focused on things that are not as important. we have -- what's your number for unfunded liabilities in the

country? 100 trillion? >> caller: no. these are things we are not coming to grips with. >> how much is it? 100 if you take medicare and social security, that's not $100 trillion? >> caller: yes, but as much as i like to worry about the economy, don't forget the good things. there's a ton of cash on the sidelines, employed in productivity activities, that makes a huge difference. there are incredible innovations going from firm sector specific to being economist specific. you know, there's a lot of good in the economy. i view it that we come into the t-junction, the path we were on, that of central bank policy is ending, and we have two possibilities in front of us, and neither of them is predestined, and what the private sector does and what governments do over the next few month decide what we do. there's nothing predestined now.

>> training wheels come off, and we start going faster and ride really well, or you get where you are going too slow and barely get the bicycle's wobbling left and right. training wheels coming off, we'll sing or swim. >> caller: because we cant maintain them forever. central bank policy is less effective. look at china. they are trying to intervene, but they are less effective. that's important. it's not willingness anymore, but issue of effectiveness. central banks are less effective many years after the crisis. >> thank you. check back soon. >> caller: thank you. >> it's a good picture, but i'd rather see your, you know -- >> your shining face. >> tears from the jets. >> joe, i'm coming in with new books in over a week. >> oh, you are? over the jets yet? >> caller: not yet. go bengals. go cincinnati. >> by the way, i got a copy of the book. looks great. >> really? >> yes. >> caller: thank you. >> great cover.

i started reading it, anyway, we'll see him soon. thank you. when we come back, new sugar alternative guidelines, see, joe, what it takes to get fat or not, and the great larry kudlow with the start on the year, and if the jobs report turns it around. more ahead, and "squawk box" returns in a moment.

for the first time, a limit on added sugar. the federal government releasing

the latest dietary guidelines, updated every five years. for the first time, government suggests that americans limit amount of added sugar to 10% of daily calories. huh, i have to eat a lot more of everything else to keep up with the sugar. that's 12 teaspoons for a typical 2,000 calorie diet. >> a lot of companies upset, a lot of food companies have to change. >> we were wrong about the salt, so go back up on the salt. we're sure we're right about this, so go down on the sugar until we tell you five years from now, go back down on salt and up on sugar. >> can we disagree on carbs. >> what do you tell people quickly for 2016? >> i want to go back to what was said, i think that we cannot rely as much on central banks as we have in the past because they can't sustain growth indefinitely. we have to do other things. tax reform is important, particularly important, and judgment is infrastructure.

we've squandered the period. we really need a natural strategy for developing infrastructure, both to create jobs and also to make our economy a lot more competitive around the world. also, the student loan issue. we want competitive students, but we don't provide them the wherewithal, and impose a huge burden on them making life difficult. >> bob, thank you. coming right back, a check on the markets, things looking up, what happens in the countdown to the jobs report. we'll get the number at 8:30 a.m. eastern, a lot of things could change between now and then. back in a moment. flr

countdown, december employment report minutes away. saying the economy is losing steam or signal better times ahead? larry kudlow leads the all-star jobs panel in america straight ahead. the good, the bad, and the ugly. ♪ the bad and worst start for the u.s. stock market ever, the ugly, losing $2 trillion in a week, and the good, bull market may still be alive.

>> i want my armsman. >> you've been mostly dead all day. >> big night for billions last night in new york, a star studded red carpet celebration for the new series about to take flight on showtime. >> the moment i let someone in a government office telling me what i can or can want buy, i may as well close the shop, and i'm not closing the shop. it is friday, and 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" here on cnbc, first in business worldwide, i'm becky quick, and we're 30 minutes from the december employment report. they expect to see an increase 210,000 non-farm jobs in

december, and unemployment rate ticking down tenth percent to 4.9%. the numbers, of course, hit the tape at 8:30 a.m. eastern time. >> china breaking from circut breakers and selloff. the market there finishing slightly higher, did not give back much of the losses from the week, though. china's exchanges managed to open without the circuit breaker system, and the pvoc, this might be more important, set the mid point higher for the first time in nine days. there's what we were left with, up 2% after losing at least seven one day and eight the other day. percent. and the u.s., the dow coming off its worst ever start to the year. the dow and nasdaq now falling to correction territory, and global stocks now lost $2 trillion in the first few days of this year, but we're looking at a rebound this morning so far, when we got here, up 60 on

the dow, and s&p's up 13, and nasdaq called up 36. in europe, muted gains including a loss in france of a quarter of a percentage appointment and up a little in germany and england and italy down a little in spain. >> outside of china and the dow's record fall, oil prices have been a major story this week. wti and brent dipping to lows not seen in more than a decade. a quick check on prices this morning. looking now at wti crude at 3 33.76. >> let's get now to the jobs panel, larry kudlow, cnbc contributor. any announcements today? >> pleasure to be here. >> that's what i thought. >> how about that. >> that's what i was talking about. joe, chief economist at deutsche bank, not running for anything. >> no, but i second larry. >> okay. good. no comment either.

keep us guessing. and peter, chief market analyst at the lindsey group, and looks like a chestshire cat, markets killed, fed's fault, and he said that for years, right? you think this is the beginning of the end? is it going to continue or seeing the worst? >> well, i think it comets at least in the headline index, and there's been aset bear market in six months in equities, obviously, in high yield credit, and there's no coincidence that the feds started the beginning of the taper, and a lot of market indexes back to where they were in late 2013. >> today, a few stocks to watch, throwing away segment, but bed bath & beyond, and macy's, and caterpillar. you say the idea that maybe that the market sells off here , there's individual names down 40

and 50%. >> right. the question is does it affect the megacap names immune. it's started to. people are paying attention to the valuations of amazon and facebook. it's great, but do they want to pay the same multiple for the asset. >> larry, you are here for the hour, but, joe, you will be here, but, joe, what's the most important thing -- central banks, chinese central bank? where are you looking? >> it's part of it. the problem, joe, is it's come down to expectations, and psychology is bad, and what the fed has done over the years is suppress volatility, and it's forced investors into classes in a way, shape, and form they shour shouldn't have been in, and we're unwinding it, unfortunately, unwinding against the backdrop of a strong currency, putting the u.s. manufacturing sector in recession, and an economy that can, at best, at best, grow 2%,

not a shock absorber, reenforcing market's concerns how you value things, as peter said. the outlook is dicey. i think they can -- i'm worried. >> if this, though, was as bad as it gets, you say the fed did the right thing, only if it gets worse would you say the fed screwed this up. you got to give something back. >> i think the fed should have raised rates when people like me, very bullish, marked the forecasts up, and it was a couple years ago. if you raise interest rates in an environment where people are uncertain about the outlook, you hurt, not help confidence. it's not level of rates, natural rates. these are all like academic concepts. the real world, people are uncertain. they see the dollar rise, the global economy softing and fed's raises rates, they are nervous so you disengage. the political backdrop is bad. there's no chance of any type of fiscal response this year, larry knows better than i, but i say close to zero. >> you know, i love the suit.

>> thank you. >> i love the suit. we're going to go tie shopping. i'm not sure. >> my wife gave this to me. >> must be a little tie. >> oh, i didn't say that. i didn't go near that. >> i don't think we're going through recession in the u.s. yet. i do think people should watch profits. we're obsessing about china, obsessing about a lot of things. profits are the mother's milk of stocks and the life blood of the economy, they were for two years, and in recent years, they have been dipping down. i would keep high on that because it's not good for stocks. hang on. i think some of these fed big wigs ought to keep their yaps shut. fischer and williams, good interview by steve, asking the right questions, but what they

were talking about, no inflation, lots of anxieties, talking about jacking up the fed's fund rate. next three years, i could do without that as well as the rest of the word without that, and the rest of the point is this, joe, china taught a lesson now -- >> joe or joe? >> any of you. it's a generic statement. china is getting ears pinned back because of resistance to free market policies. they are so big and reserving market so big that they cannot control the yuan anymore. let it find its own level. >> really? >> it's called price discovery. >> that's scary. >> the target, they can't control it, those days are over. the more they try, the worse they are going to get. get -- that -- my advice to china is let free markets rule with your currency and your stock market and you'll heal faster than people think.

>> where does it go? >> down. down. >> how far down? >> i don't know. doesn't matter. it's not important. look, it's down about 6% net net net net since what, august? fine. that's not a big deal. the economy's slowing. investors are leaving. >> that's what i mean. the economy underneath. >> capital's light. speculation's light because the market was overvalued. all i'm saying is, look, here -- you're running china. not bad, becky, you're running china. okay. currency's falling. what do you do? prop it up by selling dollars in treasuries? you go in heavy deflation. >> yeah. >> if you sell treasuries, you take money from the system, that's deflation. on the other hand, if you come in and let the markets settle, let the markets settle it, you have stimulus of the it's slightly inflationary. people don't have this story right. the thing to do is nothing. stop the circuit breakers. stop trying to control the

currency. by the way, make an announcement that you're going to stop financing these state owned enterprises which are a deadweight around the chinese economy, and they are pour iing billions and billions, and that's why people are getting out because they see how stupid. i thought we were past that. they are still doing it, those guys, they are like the governors in new york, illinois, and connecticut. you're still doing it. you talk the game, but you're doing it. that's what china is. why is that? historical revolution. >> joe, he wants china to let things fall where they may, but you want us to control interest rates over here? >> no, i hate that. i hate that. >> problem is, look, here's the thing. we talked about this before we came in about the curve, and the problem with the curve is when it doesn't work, but the bigger issue is the fed don't know what to replace it with. you're talking about not targeting rates, so you target

the money? problem is we can't define it. there's a shadow system. >> going back to johnson, in the mid-80s, what did they say? let market prices determine the direction. >> let market prices determine it here. >> probably where it is, if not lower. >> fed has done nothing. >> they shouldn't. these guys go out there -- >> why would it be at zero at 5% unemployment then? >> i know. but 5% up employment means 6% inflation. didn't happen. that's why joe said the model's broken. of course it is. there's one model that does not break. it's call the free market. listen to it. listen to it. mr. fischer and mr. williams on tv. the interviews were great, but it was the responses that i hated. guys want to raise the fed funds rate more. >> for three years. >> we're growing at 1% with no

inflation. they are out of their minds. >> you were a fan, i think, after the financial crisis, some of the steps the fed took. >> the first one, yes. the rule of central banking, stop the crash, lender of last resort, yes, absolutely. beyond that, fiddling, no. no. >> okay. >> running an economy, no. >> not just fiddling, but a deep dive with qe multiple rounds. >> did it help? >> no. >> did we get the 4% growth promised us? >> no. >> what did we get for all that? what is it, $3 trillion? >> doesn't create anything new that wouldn't have happened on its own, but makes it happen today rather than tomorrow. >> people who like it say we performed better than anyone else. >> oh, hells bells, i don't know what that means. for the past 300 years we've done that. other than letting markets operate, can we please cut, slash the corporate tax rate for

large and small businesses? all right? stop beating up on them. cut the rates. large and small. easy repatriation, joe, bring the $2.5 trillion back home. >> don't look at me. >> sorry. go back to tim cook who got it right when charlie rose accused him of evading taxes. he called it, quote-on-quote, political crap. all right. i'd run him for president. >> charlie rose? >> no. cook. >> kidding. >> i love charlie rose. >> you do. we know charlie. >> we know all about chary. i'm just saying cook, i don't know. they got the most cash in the world in the history of the earth, whatever, stop picking on me. >> pay more taxes, and it's not enough according to -- >> thank you, thank you. that's the point? >> anything else? >> i want to say thank you, joe. >> it's the tie, and i like the purple tie that larry's got. i got a bunch of them. i still don't think there's recession. i have to be clear on that, but one point on profits, look at profit margins, they lead better

than profit growth, and they are telling us we got some issues. >> i agree with that. >> that scares me. >> you and you saying that, john, our pal, same story. you are vibrant. >> you're a great american. >> so are you. >> thank you. >> always were. >> so is peter. >> thank you, larry. you're the best. >> thank you. this is nice. thank you. peter, larry, you will be sticking around. okay. we have a lot more coming up, the good, the bad, and the downright ugly, one way to describe the markets this week. the scary stats from the first four days of trading next, plus, searching for the silver lining, one positive nugts from the crazy weekend. did you get the lottery ticket yet? $2 and a dream for the power ball, and you are more likely to be struck by lightning while being attacked by a shark. the crazy odds next. >> e yes. >> plus, stick around, the jobs report. >> can't win if you don't play. >> the big number, back in a moment. flr

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you got a better chance of being killed by an asteroid strike, having an iq of 190 or greater, or giving birth to quadruplets without the help of fertility treatments. >> nice, nice. i want to buy one of those. time now to look at the weak, good, bad, and ugly, dom chu walking us across the wall. you have the wall there at cnbc headquarters? >> i do, and, yes, buying a power ball ticket for saturday's drawing. let's talk about the bad in today's market here, again, we've talked about the idea we're off 5% in four days to start 2016, worst start ever, yes, we know that much. we talked about $864 billion shaved off the market value of s&p 500 companies according to the dow jones indexes, but looking at the companies of interest, and how much, look at alphab alphabet, losing $24 billion, that's part of the fang,

remember the facebook, amazon, netflix google thing, and apple, not part of the fang, but still the biggest company out there, lost $50 billion, just to put that in per special circumstancetive, that's, like, netflix disappearing from the s&p 500. among the names here, i will point out, though, joe, if you look at facebook, it's down 19 billion in market value. netflix is now flat for the year, so, total, that facebook amazon netflix google fang stock group lost $75 million in market cap in four days. back to you. >> funny you mention that. i'm looking at a thing on twitter, why certain apple analysts cut price targets. they have guys there. 133 from 142, another 125 from 130, they are well above where it is, obviously, they are all, you know, like sheep. this guy, 132 from 142.

another goes from 160 to 146. rbc went to 130 from 140. people wonder why i gave the dpguy a hard time yesterday, sticking with the 200 price target, he looks me straight in the face, are you doing your clients a service or just studying the company's operations to know everything about it with no idea what the stock's going to do? that's fine, but don't make calls on it. coming up, the super bowl is a month away, and pepsi is adding star power to the big game. that's next, plus, final predictions on jobs report. "squawk box" returns in a moment. you're watching "squawk box" on cnbc, first in business worldwide. 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.

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welcome back to "squawk box," everyone, beyonce is performing in halftime in the super bowl, con firing the 34-year-old is joining cold play during the show. the last time beyonce performed in the super bowl was 2013 when joined by her destiny child's band mates. it takes place on february 79, and i read none of the performers are paid for anything more than their accommodations and maybe getting there. >> because the money is in how

many people go down load the song, right? >> paid by the inch of clothing they wear? >> no, because they would be wearing more if that was the case. >> oh, maybe that wouldn't be such a bad thing. >> that's why janet jackson did not make money. >> i'm old fashioned, i'll shut up. >> i remember that. >> yeah. we all do. >> we're all for it. here, aren't we, andrew? >> which part? >> i'm with larry. >> less is more. i'm with larry on this entirely. >> you heard that expression. >> listen to her. >> such a prude. >> no, no, cultured, adult. >> you got your kids watching at the table with you too. >> that's true. >> put the clothes on. >> love this. >> my kids watch "american horror story," i mean, they are 13. >> no. we're at the point of no return, next, it is the december jobs report. we'll have the final predictions from our panel. as we head to a break, look at the futures, things have stabilized a bit today, and, in fact, we're back at the futures, dow up by 136 points. s&p futures up by 14, and nasdaq

up by 40. "squawk box" will be right back.

♪ welcome back to squa"squawk box," everyone, minutes from the jobs report. nonfarm payrolls expected to be 210,000, and unemployment rate expected to be 4.9%, and watching the futures this morning rebounding after a horrific week, worst start to a year in history for the markets. s&p is up by 16, and nasdaq up by 41. the jobs panel has final predictions, larry kudlow, and peter, and steve, and rick santelli here as well, and, rick, you, quickly, what are you looking for? >> 218,000 would be my call on the unemployment rate. who knows. i'd rather guess the participation rate, i think that remains the key, and it really

camouflages the true nature of unemployment. >> okay. steve, you? >> 175 with 165 from private, and randomly added 10. >> unemployment? >> no goes. >> larry, how about you? >> i'm going with a buck ninety. there's an error margin of 100,000 on either side, but i go with a buck ninety. >> stab at the unemployment rate? >> i've been trying to stab the unemployment rate for 30 years, it's a worthless piece of junk. no, i'm like steve. >> not an official estimate, but i was going to say 190, and for the full year, average 200,000. >> again, wage growth is one of the things we're watching too. a number for that quickly? >> well, just the consensus on year over year basis, expected to be 2.8%, so on that, it's the best in a while.

>> a few seconds from the jobs report. we'll watch what happens. the market's going to be watching closely. we are seeing strong green arrows today, not relative to the losses, let's get to the number. >> 192,000 up 292,000 in december, unemployment unchanged at 5%, average earnings down a penny to 5.24. payroll growth totalled 2.7 million. that's compared to 3.1 million in 2014. sector by sector, professional and business services up 73,000. construction up 45,000. health care up 39,000. now looking at revisions going into last year, october revised up to 307,000. november, revised up to 252,000, taken together, that's a 50,000

increase in jobs in those two months. the staff here at bls says go back to december of 1999 to find a calendar year change greater than last year and this year. they also tell us that they have no reason to think that unseasonably warm weather in december had any measurable effect on jobs. that's the news from here, guys, 292,000. back to you. >> thank you. we've been watching the futures, futures went from up 140 to up better 180 orphn knee jerk reactions to this news. >> you said maybe not. >> how did i do, joe? lowering expectations, and that created the policy. >> tell us how you came up with 175? >> my model plus or minus 50,000 every month. that's the story. it's -- can i tell you what happened here, off -- so far off, a global warming joke.

>> i get it. >> you don't have to make a joke, it is a joke. >> 34,000, a good number, the service economy powered ahead up 230, but the construction number up 45, interested in what was said about their -- the bls saying there's no weather effect here. i think there's a weather effect here. several people have said you can be plus or minus. it still does not explain what's going on, because the upward revision to the prior month at 250, at the 290, suggests the underlying trend of job growth is not weakening, folks, but strengthening, and then the ano, ma'am -- anomaly on top of that, i heard a lame, lackluster week distressing average hourly earnings, this anomaly continues of growth in the jobs market, but not a lot of tightening or

strength in wages. >> did you get an hours worked? >> average 33.7. >> percent? >> unchanged. >> so you're -- your average hourly earnings up 0.1%. i don't want to make life difficult, but i use a 12 month change in hourly earnings times the change, 12 month change in average hours worked, which gives me a proxy for wages, and then i subtract zero inflation. >> see what happened in the household? work force surged. 466, and the employed in the household surging up 485,000. >> you said -- >> it's unchanged at 9.9. >> how do you explain this, we talked about headed into a recession, we're not, but what

do you take the numbers? >> a spotty story in the sense we don't see any evidence of business investment, which is supposed to be the premier job in wage creator. we have not had that. actually, we've not had business investment for 15 years for help's stake, but numbers are strong, no denying it, not a partisan issue, objectively, they are strong, and the sum consumers chug along, enough income minus zero inflation, minus falling gasoline prices so consumer spending is carrying the economy. >> larry, you recommend a quarter point fed funds rate with 290,000 jobs added. out of line you're insane. the idea that -- the hiking thing going, and they are

thinking about it, and i'll tell you it's 250. >> i'm echoing joe here. and you didn't do this. sarcastically. >> if prices slow, continue to fall, if the cluster capital continues to rise, and global growth slows, is this sustainable? because we know labor market numbers are lagging indicators. i hope it continues. i'm not going to call 2016 on november and december. >> can i just add, zwroe, what i was trying to say before -- >> yes? responding to me. >> i don't believe the federal reserve should make policy based on labor. >> it's inflation?

>> yes, sir. >> really? >> i don't believe -- >> larry -- >> let me finish this. i'm an old jack kemp ronald reagan guy, okay, try this on. >> okay. >> more people working as long as they are relatively productive is a good thing, not a bad thing. >> okay. >> now -- [ applause ] >> thank you. i'm a growth guy. now, if the market -- if the markets are signaling soaring gold, soaring commodities, soaring oil, then i say the fed has to act. that's not happening right now. so, look, if we're growing at 2% nominal real gdp and you get good employment numbers, let them. let them. >> larry -- >> let people work. this country needs to work. the fed should not take their stupid ivy league models and stop people from working. >> larry, you got all the guys like joe and miller saying that -- >> no, no. >> it's just off the charts in terms -- >> steve, if you -- >> hold on, i'm characterizing what you say. >> if the other mandate is price stability, does it matter if

it's 1.2% inflation if it's stable? 1.5% inflation? you got to get to 2%, and oil is totally skewing everything lower, and that's the reason. >> i don't think so. i'm sorry. >> why are you dirty malinvestment? the reason we're not getting long term investment by cooperations is because they buy back stock and doing mergers. >> no. it's because nobody -- there's no incementives to invest long term. it's because all the cash is going overseas, and we're over regulating. see, joe, the fed has power. this is milton friedman. >> who? >> the fed has power to control the money supply a little bit, and that's the inflation hook. the fed cannot generate real gdp. the fed cannot create business investments. the fed cannot create productivity. look, just let people have their jobs. >> agree. move on for a second, peter, 292,000 after 252,000. we believe, because larry is right about the free market being a wonderful, wonderful

thing, that employers in general are not stupid, how do you have, as weak an an economy, and people hiring workers? is it stupidity? >> obamacare, dodd-frank. >> rick said it. >>. >> it's all government. >> yes. >> if you're an employer, and you made hirings in november and december, that does not reflect the opinion of six months, but reflected activity in the prior couple months, therefore, that's why it's a lagging indicator. hires come at the end. this can't continue, i'm not saying, but saying if the global growth story continues to deteriorate, job numbers follow at some point in 2016. >> 29,000 people hired in leisure and hospitality because of obamacare, that's right? how does obamacare hire in leisure and hospitality? 45,000 in construction because of obamacare? >> it holds back things.

not helps things. >> i'm saying there's 292. >> it's a good number. >> how do you do 1.5% gdp on 292? >> less productive. >> last december was extremely cold, and seasonal adjustments change in the year. >> i'm with you, 50,000 on climate, on the warmer weather. i still got a problem with 250,000, which, by the way, is more than double the underlying trend rate that the fed raises -- >> rick has a disadvantage because he's not here, but his number was closer than yours at 219. what are you saying in the wilderness there? >> i think we're going to have a great jobs market and we're going to have a mediocre 2% economy. steve, i know you're trying to create arguments here, but it's a simple concept. >> no. >> wait. if you're creating a lot of jobs, and it's not translating into wages, growth, or productivity, those are the only

issues that truly matter. less productive because i see banks hiring compliance department because of the rules, obamacare, health care, maybe your kids are not old enough. my daughters are. it's not a good thing. young people do not like it. all these issues are weighing on us. we have 94.2 million now not working. it's the largest number in history that's not seasonally adjusted that are not in the labor force anymore that could be in the labor force. all of those issues, we have a work force that is too small to leverage up all the good things in the economy, and let's also not forget that we have small groups of people in every country, capitalists or communists that think they are smite enough to set the number. >> this is a bad number? at the end -- >> i didn't say it was a bad number. >> all the things you said -- >> it's not a bad number. >> 292. >> it's 692, i'd rather have

10,000 jobs and 5% growth. >> it's still bad. your glass is not half empty, there's a hole in it. >> what's the participation rate? >> there's one hole, not in the glass. >> what's the participation rate? >> give me a second here. you make your statement. >> the under employment rate is what we call it, the u-6 -- >> it's a big -- >> running twice to u3. >> 3 million to 5 million people under employed. >> that's the problem. >> it's an issue. >> having said that -- >> how do we solve that? >> the productivity issue is key. >> the fed should not interfere if the job market is improving. the fed should not fear prosperity and growth. more people working is not inflationary. it's not bad. it's good. what we should think about as per rick santelli is why productivity rates are low and why profits are turning over, and what's the long term

capacity to grow. that's why i come back to corporate taxes. >> larry, when you talk about that, somehow there's something politically incorrect about voicing the true concern. >> i know. >> why are there not more people at the fed studying that in particular? if we have half growth, look for half pricing pressures, and maybe they would get closer because, joe, i've been saying for years, there's nothing magic about 2%. 2% is pulled out of thin air. if we have 4% growth and 2% pricing, we have 2% growth, so it makes sense to me. >> all i'm saying, all i'm saying, rick, my friend, i love you, all i'm saying is the jobs story is okay. let's celebrate more americans working, but i'll say to our friends at the federal reserve, just because more people are work iing doesn't mean it's goi to cause inflation, and it doesn't mean you should snuff out progress on the economy. >> doesn't mean we get it every month. >> that's correct. >> a great american and huge dove, larry kudlow. >> numbers are numbers.

>> god bless you. >> you need a raise by now. >> go up by two percentage points. >> steve, thank you. >> rick, thank you. peter, larry, stick around for the rest of the hour. >> people tackled me for 30 year, i don't care. >> we love you. the stock market struggle is real, down 5% in the first quarter trading sessions, worst start ever, but is the bull market over? that discussion next, especially in light of the new number, and as we head to break, check out the futures, you're looking at the dow opening higher r 183 higher. back in a moment. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits.

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welcome back to "squawk box," everyone, the non-farm payrolls at 292,000, well above the street expected. the unemployment rate is 5%, but you see how it played out in the markets. today, we were looking at the markets up by 130 to 140 points above, the dow, that is, before the number, after the number, we are up by 185. this has been a morning when we bounced around quite a bit, people trying to figure out what they think about the route this week. we saw futures up by the gains cut in half this morning before the number when we were up by 70 points, so we'll keep an eye on it. s&p up by 22, and nasdaq up by 50. >> we'll continue to try to figure out what to make of this, get reactions of the jobs number, and jim paulson, joining

us now. good morning to you, sir. >> good morning. >> good news is good news, call it it that for a day? >> well, you know, andrew, i really think today's report highlights where we are at here. we crossed into full employment last year, and the market's been struggling ever since, and i think the day's report reflects this struggle. if growth remains too weak, if china's story is for real, the target has a problem because earnings will not hold up in the weak economic global environment we got. you can't pay 19 times earnings for weak earnings growth. on the other hand, if we pick up, this is a fantastically strong number today with big job gains and still no rise in unemployment rate because the participation rate went up. wonderful across the board, and no wage, but the problem with that is that being at full employment, i bet you anything that fed expectations for rate hikes just went up. >> right. >> so if we get too good a growth, that's also bad.

the -- >> why? >> the stock market's in a box. >> james paulsen, why is good growth bad? why are more people working bad? >> well, the premise -- the -- i'm not saying it's bad for main street, larry, not at all, but the -- you think about the premise of the bull up until the end of 2014, the whole premise for the bull market was that we could grow the economy without creating any negative consequences for the financial markets. we could grow with zero interest rates. we could grow with no increase in inflation, grow with a constantly accommodative fed. that changed in 2015. now growth has negative financial consequences as well as positive. >> hey, jim -- >> increases sales but raises interest rates and challenges profit margins, costs pressures issue and takes away the fed.

that's what we are dealing with. >> okay, jim, you want good news or bad news? >> he gave us both just there. >> i want to ask what you want about your calls? >> oh. >> as far as the markets, the stock market goes, you were better than anyone else last night from the very beginning that it would be tough, biggest gains we'd get. >> that's the good news. >> a flat year, but i don't know anybody who has been more wrong about commodities than you. >> right. i agree. >> how did that happen? >> i agree, joe. >> you're still saying they are ready to take off. it's been the biggest bear market in history, and the entire time you said we were ready to just wage inflation, commodity prices soar, and you missed it by a country mile for commodities, wow. >> i agree. i agree. look. we've had -- i had people look at the commodity collapse, joe, as a really odd situation where it got collapsing commodity prices in the middle of a recovery. in fact, in three of the last

four u.s. recoveries in the country, we've had a sizable collapse in commodity prices comparable to today right dab in the middle of the recovery. commodity prices bottomed out in july of '77, right in the carter recovery. they bottomed out in july of '86 in the reagan recovery, they bottomed out the end of '98, early '99 in the dotcom recovery. in every case, joe, once they bottomed, the recovery lasted for several more years, the economy accelerated rather than weakening, and core inflation accelerated within months of the bottom. bond yields went up. >> larry didn't believe that. >> i'm reacting to that history that it's more likely that we accelerate and have rate and inflation pressures than the other way around. >> a strong dollar over the past three years has really kept inflation down. the mix here is strong dollar, lower tax rates, stronger

markets. thanks for doing this, dad.

so i thought it might be time to talk about a financial strategy. you mean pay him back? so let's start talking about your long term goals. knowing your future is about more than just you. it's how edward jones makes sense of investing.

let's get down to the new york stock exchange. jim cramer joins us now. do we want it to bounce nicely today, jim? >> you know what?

it wouldn't be so bad to be able to make it so some people who don't want to be in it can get out. i see too many people who just say i can't take the pain, here is your day, people. here's your day. this is the day to get out of your pain situation. i would rather take a long-term view, resign to short-term pain. this, too, will pass. those who have been complaining to me that i'm too constructive, here's your day. see you later. >> so sell the rallies, that's what some people are saying. >> we have good employment growth. i thought larry kudlow was so spot on. listen, is it so bad people try to make extra money? we have gotten to the point where good news is bad news. i don't like that. the fed, if they would just stop talking. i don't care. just stop talking. make it so we can focus on business. the chinese are obviously phonying up the market. there's nothing i can say about them that shows that they know of any idea what they're doing. they make it up as they go

along. i want the people who are scared and frightened and high anxiety and think it's 2008 to say i'll see you later. i'm tired of you. you haven't done any history work, you don't have any knowledge. this is a great time for you to leave. >> good for you, jimmy. good for you, buddy. >> larry, you and i know long-term optimism has worked, inflation is down. job growth is coming back. we know these are good. larry, if people are unhappy with what's good, you know what they do, they should leave because they should be in cds and enjoy those great gains. >> jimmy, you know what? these fed guys should stop yapping and bad mouthing everybody. >> larry, i wish you were running the fed. >> kudlow and cramer. cramer and kudlow? we could bring it back. >> he is smart. always was and still is. the smartest guy in the market. >> excellent. thank you, jim cramer. we'll see you in a couple minutes. next up a big night for billions.

that's what we'll be talking about when "squawk box" comes back.

this morning we want to

congratulate andrew. last night was the premiere for the new show "billions." a lot of stars walking around the red carpet in new york. the show premieres a week from sunday january 17th on showtime. check it out. it is amazing. >> brian kauffman and dave lavigne were the co-creators with me. they did an awesome job. everybody about an awesome job. it was amazing last night. >> they're -- the show -- >> the show runners. >> nothing to do with the show. >> as a show runner. >> executive producer. >> we have to go. >> good for you. >> bernie sanders, man of great integrity, closing in iowa and well ahead in new hampshire. so, maybe we'll have some stock market socialism on the way. i think he's even further out than andrew -- you won't agree

with bernie sanders on socialism, would you? >> i'm not a socialist. >> i never thought you were. he said you were. >> you said it last time he walked on the set. you said upper west side liberal. >> that's different than socialist. >> have a happy weekend. right now it's time for "squawk on the street." good friday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. december jobs goes out with a bang, adding 292,000, positive revisions. futures on the upswing after the worst ever start to the year. europe holding in after that tense session in china shanghai closing up 2% as reports say the government did come in to buy. watch bonds today and oil. our road map begins wi t