i think the economy is soft. i think in the following months things will improve because i think they'll be politicalization. and as a result they will improve. >> how much below 4.7% is structural? i mean, monetary policy can't help it any way. so it's really -- >> might hurt it though, which we decided. >> all right, that does it for us. >> i'm voting for larry. >> happy weekend everybody. join us on monday. right now it's time for "squawk on the street." good morning and welcome to "squawk on the street." i'm david faber with jim cramer. we're live from the new york stock exchange. carl quintanilla is on assignment this morning. the ball is now in the fed's court. may nonfarm payrolls up only 38,000, that was the weakest performance since september 2010. it was of course well below the forecast for 158,000 jobs created. march and april payroll growth was also revised downward. we are now at 116,000 jobs over the last three months in terms

of average. take a look at what this is doing to the markets at this point. well, you know, we've -- we came back yesterday. you can see we are looking for a slightly lower open as of now. european markets already in session. and on the closing end of their day you can see kind of a mixed session over there. this is where we may see the most move is in the ten-year note yield. you might expect of course the expectation the fed's going to move now in june has fallen dramatically. will it even be july. there it is, the yield now 1.72%. we've been sitting of course a good 10-plus basis points higher than that until this number came out. weighing on the may payrolls of course were job losses in construction, mining and manufacturing. even without that verizon strike, payrolls would have only increased by 72,000. you may recall verizon had 34,000 employees on strike. the unemployment rate though fell to 4.7%. now, that is due in part to

people dropping out of the labor force. average hourly earnings rose 0.2%. we're talking, jim, about 458,000 people leaving the work force. >> yeah. >> so you get this incredibly low unemployment rate which then starts to make you wonder about labor shortages in a sense and whether we'll see wages go up, but so many different questions here. >> other than the fiat by minimum wage only -- sorry to read like this, also referred to as involuntary part time workers increased by 468,000 after showing little movement since november. people, you know, you don't want to pay them full time, you have to give them minimum wage so you cut back shifts. >> yep. put this in perspective, we have a three-month average now 116,000 jobs a month well below the six-month average of 170,000 and 12-month average of 200,000 a month. job growth clearly slowing over

the last three months. easy enough to say that. the question is what are the reasons. you heard austin offer up the idea that perhaps productivity suddenly surging again after a lull that has lasted quite some time. >> yes. >> perhaps that's one reason. you mentioned the minimum wage going up in many different areas. >> it's not political. >> no. in many states. i've listened to allen krueger talk about that. there's a point at which it's not clear maybe 12, maybe 13 where it starts to really be a problem in terms of job growth. but we don't know the answer. >> no. >> one thing we can of course opine on is what the fed will do with all of this. >> sometimes i've been wondering where are all those job losses that come from oil and gas. when you see revisions down month after month, you realize maybe they were slow to register those. but when you have schlumberger lay off tens of thousands, halliburton lay off tens of thousands and never see it in the numbers, now you see them in all sorts of manufacturing.

you want to know is it digitization. did it all come home to roost in a four-month period? i mean, that's hard to believe. >> hard to believe, but i think your point on oil and gas is an interesting one because we have sat here and we've been dealing with this low oil price now for well over a year. and the con come by nant decrease in production and yet wondering when those numbers given how much of a positive it was for employment over the last let's call it seven years. >> and this is what you're seeing. i think a lot of these categories that they use don't really jibe with oil and gas. it's like where are the oil gas, are they in mining, whatever, but the pipeline business has fallen apart. . dozens of pipelines were supposed to be built and you hired those workers and they're gone. crude by rail, that's an industry that's dying. interesting rail note today that is a little too bullish for me. you had retail, david, that really was quite weak.

i mean, that was -- you know, this was the macy's, kohl's number. >> right. >> you had a home depot number that wasn't as strong as we would have liked. i still think that one can come back. i wonder about all the things we heard from jeff bezos whether it be drones moving things into walmart warehouses, whether it be assembly line jobs -- >> these are trends that take place over a period of time. they don't necessarily hit in a very short amount -- >> i totally agree they're not supposed to, but it does feel like a salesforce.com economy. which is that salesforce is -- what's the point of salesforce in all the contracts? it's to make it so there's no one between you and the customers. like secretaries. >> right. >> frictionless. and when you see the contracts that they get, i'm not saying that marc benioff is antiemployment, just being -- i'm trying to be as apolitical as possible, but it does seem to be a lot of things came home to

roost at the same time we're finally seeing oil and gas companies belly up. david $50 a barrel, $49 a barrel, everybody held on as long as they could. there are 20 counties in this country that can make money. a lot of these guys come on and they're speaking bank of america clients. >> understood. >> they either get the futures to -- get oil to above 50 so they can sell crude in an efficient market or they basically are stuck. >> not sure what to make of the 458,000 people who left the workforce. that takes the participation rate down to 62.6%. that's just off kind of its lowest level we've ever seen since we started to keep track of it. >> look, i mean, obviously with the kind of precision we had -- >> a lot of people retiring. do we have a lot of people sort of heading off into retirement suddenly? >> the next president or this -- >> baby boomers -- >> have this done where you have

revisions that are radically -- i mean, this is like a real economy. we have data that can track the pair of shoes i bought and where they are yesterday. but they can't -- can we put amazon in charge of this? >> once we have chips and everything. >> artificial intelligence predicting what i'm thinking and we can't talk about what happened in april? >> maybe the labor department should use watson to tell us what -- >> that's not such a bad idea, believe me. but this is embarrassing. again, could we be this wrong? we track everything in this country. >> it is a survey. >> but we can't track jobs. anyway, i don't want to lose sight of the minimum wage. i know that is not what, you know, that is a highly charged political issue. when i have all the ceos on from restaurants, they don't want to hire on the coast. it costs too much money. are they political people? no, trying to make the quarter. >> just trying to make a buck. speaking of making a buck, let's talk about the banks here. they had been fairly decent performer recently on the idea that rates would move up and

their net interest margin would therefore benefit. this is going to hurt, one would think, given it's going to take down the possibility of a fed hike any time soon. >> yeah. >> i'm sure we're going to have plenty people come on and tell us, give us their take but that coupled with comments from fed governors talk about potentially capital moving up in terms of equity capital by 2018 also going to take a bit of a hit on the banks. the big banks. >> when you look at the rates today and how dramatically they've gone down, it's not going to cause a new rush in mortgages. there's not a lot of houses for sale. remember, we're down to four months of houses. it's not going to reignite. but what worries me is that capital, the idea they need to raise more capital is not -- that was in their budget. >> they are very much capitalized. we talk about potential utilities, return on equity the idea you'll see regularly going

above double digits now becomes even more difficult to imagine. and i wonder, you know, jamie diamond quoted saying about breaking up saying of course not, it makes no sense. but i wonder if there's going to be long-term frustration on the part of stockholders with these extraordina extraordinary anemic r.o.e.s. >> in the '80s and '90s we owned these stocks for their yield. i remember when security pacific gave you like a 7% yield and then gave you nothing. bank of boston, nothing, because obviously those yields were too high. but then there was a consistent 4% to 5% we get from the nation's bank. these are all subsumed by obviously every other bank. you run into why you want to own these. and you can cut numbers across the board this morning. you have to cut numbers. >> you do. really. >> you have to. you have to because the models indicate -- you know, the models were about a couple hikes. and now if you get a couple hikes, the economy will be so

knocked off kilter given what we just saw that you cut numbers. >> we were doing 200, 250 a month. why weren't they raising then? >> i don't know. i mean, i think they were caught up with china in the last year. and, you know, we laugh but most of the people i deal with hedge funds think china's a house of cards. i don't think china's a house of cards. >> i know you don't. >> i believe there are many different reasons why we didn't and they weren't wrong. but i think a lot of what happened is, you know, overseas. i mean, we are the most expen expensive place to borrow money other than countries where the current currency's -- >> well you have over $10 trillion in negative rates. >> try getting those rates. let me tell you. >> i'll try. >> i've been trying. >> have you? >> can't get them. >> can you get a negative mortgage? >> you can't get jack. you can't get a mortgage in the whole country of italy. trust me. >> got to pay cash. >> you can't get a mortgage. >> speaking of europe and jamie

dimon, j.p. morgan chase ceo says a brexit would be terrible for the uk economy. and he delivered to employees in appearance with uk finance minister george os bourn saying if britain votes on june 23rd to leave the eu, it would mean fewer jobs. >> so if for today we can service eu companies here freely with systems, technology, research, investment banking, sales and trading. we can do it here. after a brexit, we cannot do it all here. and we will have to start planning for that. i don't know if it means 1,000 jobs, 2,000 jobs, it could be as many as 4,000. and they would be jobs both all around the uk. and as you know the most important for me is we're going to take care of our people. we're going to take care of our people and take care of our clients. i don't want you to worry about it, but when you vote you should be thinking about something like that. >> it's an interesting message mr. dimon was delivering. i mean, the chances people put i think brexit at this point are obviously lower than 50%.

but i don't want to weigh in on exactly what they are. >> no, we know that issue involving try not to be part of a continent that is -- >> right. has to do with borders. >> yes. borders. go back to the brexit -- the uncertainty, the uncertainty of the political environment, obviously most of the ceos i talk to offline -- no one wants to be nailed as a democrat or republic republican, just business people. i got to go back, you go over the making of -- let's bring it down just to really where it should be. the making of a hamburger. >> okay. >> at any of these fast food places. >> okay. >> three people has to go to two people. you take away the person who puts the roll on top of it. this is true. you've got to get rid of that person. you need robots. this is what's happening. and it is happening that fast. it is happening.

four restaurant chains on in the last month. you know what they're talking about? they're talking about we can't -- you know, we can't find people or we don't want to pay for them. >> but those are two different -- in a sense the world you're describing is one the unemployment rate skyrockets, we're at 4.7%. now, the participation rate is more or less an all-time low. >> you replace people with robots. look at these drone stores. do you think these stories are about how fast they can do things? >> it's all coming. we talk about it every morning here when we get outside of our sort of daily rundown and we talk about the big issues, we do talk about this automation, robotics, a.i. and all the different ways humans are going to be replaced. not to mention autonomous driving chrks to me is the biggest threat to employment. i think it's the nurnl one profession of men in this country is driving something. >> well, i come back having been to almost every single oil patch. when you're at these oil patches, i mean, they were just beehives. people, unskilled workers making

really good dollars. and where are they? you know, pipelines in this country in the 1930s principle source of employment. they were a principle source of employment in this country until they stopped. >> which is a problem. particularly why in the northeast we're paying a lot more for natural gas. >> the williams deal. >> yeah. speaking of employment the largest employer in this country, private i think it's still walmart, that company's having its shareholder meeting today. we'll check in as that gets underway. also ahead goldman sachs chief economist jan hatzius on today's jobs report and the impact it could have on the fed. let's look at futures as the market tries to understand what's behind this number. more "squawk on the street" coming right at you after this. t of the north face, we are working on the prototype to match customers to gear. watson, let's give it a try. say it's mid-june and i'm backpacking in yosemite. of our 353 jackets, i can recommend nine. watson, what if it rains? there is just a 3% chance of rain,

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walmart's annual shareholder meeting getting underway right now in fayetteville, arkansas. retail giant already making news this morning announcing it will partner with uber and lyft to test grocery delivery. that is set to begin later this month in denver and phoenix. i have been to that meeting. it is a raucous affair held in a large arena with celebrities coming out, a lot of employees and many shareholders, but it's

not your typical annual meeting by any means. >> so who does the lyft, uber, who does that replace? what does that do? thinking again of this theme of employment. is this displacement -- >> or does this help? potentially create. >> i was thinking create. but does it create? when you look at that number go back over the number i read about the involuntary, those are people who are shifts. these are people employed for part-time economic reasons. i hate to be too an ek doal about it, but i own a bar, david, i can stamp that ten times over, people want a shift. new york is different it's a very expensive place. we have also seen "the washington post" series about how the jobs are not being created in smaller towns anymore. there's just a lot of things going on very fast. and when i deal with the technology companies and all the chips that are -- amberella

about -- bring in that layoff people. broadcom though, which is actually going to be very, very big, qualcomm is part of an economy that is growing. by the way, i know people do get concerned about apple, there's very positive commentary about apple in the broadcom conference call about how they're gearing up just to quote great executive, expect a very different picture for our wireless segment. strong sequential growth mid 20 range start of a ramp from a large north american smartphone customer as they transfer to their next gen -- >> little positive. >> foot race against amazon when i think of walmart, but destroy the competition too. dollar stores are all over these areas too. again, it's about people not making enough money. you saw employment, people aren't making more money. >> no, back to walmart for a second as the annual meeting begins. you've become fairly positive. >> i have to be. >> as they try to fight off

amazon -- or fight off, trying to claw back potential share from amazon. >> scale. >> and the grocery business is one key part to that. >> they're playing to scale, a game they can win, by you texting you want certain groceries, they bring it to you. they can win by having managers have less turnover. remember secret of costco has been far less turnover because they pay people better. this is like the henry ford $5 day, but recognize losing good people to other places so pay more. he's making a lot of smart longer term moves that are paying off short term. >> there you can see the comparison between walmart and amazon. that sort of puts it -- that's just over a year. >> in fairness walmart, remember, he lowered the boom and the stock is now back to where it was and then some. >> no, it is. >> he's quite an impressive figure. i know he's not a promotional figure and i know he really did feel many ways that, you know, he didn't drop the ball -- or drop a bomb. remember he came on our network

twice. >> he did. >> came on "mad money" to explain things. can we talk about stock market for a second, marge undergoing major shift last few days. consumer package goods, if you yield 3%, david, stock is going up today because rates are down huge. obviously when you look at the dollar, well -- >> the dollar is coming down. of course with the prospect of a fed rate hike. >> that's fabulous for international companies. what i'm saying is odd as it is setup is not bad. except for banks. 83% of companies actually winners in this scenario. we can't lose sight of that. >> i know. we'll never get off zerp, ever. >> i am so reluctant to be political because it doesn't make you any money. if oil were to turn here, we'd have like a bang up day. >> well, we may. we saw a big turn yesterday. we got a lot more coming up here

though of course including cramer's mad dash as we count down to the opening bell. speaking of that market, take a look at futures. you can see that we are still looking for a down open right now but it doesn't necessarily mean we're going to have a down day. more "squawk on the street" straight ahead.

all right. race quickly to a friday of course on a short week with the unemployment number today impacting trading, jim. we got a mad dash. >> i want to stick with the theme and just be able to shoe horn stocks. union pacific upgraded today by morgan stanley as a hedge to the eastern rails. norfolk southern started with a sell. we know very well company but

people feel it's not well run enough. i say it's the top line problem. it's coal. when you look at these employment -- coal is going away at a speed we never thought could happen in this country. it's going away. jobs are just going away, and coal towns the jobs are going away with it. let's not forget we have a major industry that impacts a lot of states that's disappearing because natural gas. >> right. >> not global warming, natural gas. so union pacific, by the way, if you go to mexico, david, i got a place in mexico, there's a union pacific train that goes by three times a day taking cars, nafta cars. >> from mexico here to the united states. >> this is a great play on mexico and the strength of mexico. >> what was the news on it today? >> morgan stanley says they like it. they say it does have -- it's very well run company. and i've had them on a number of times. this is a good hedge. but it's coal that is such a factor in layoffs. the railroads, when you look at the number of people they employ, norfolk southern in fairness they had such a decline

they actually did well, but norfolk southern is about laying off people in order to be able to deal with the decline in coal. >> decline in coal. >> you can't move coal by anything other than rail. >> all right, we're going to be talking a lot more about jobs of course given that is one of the key stories of the morning. a lot of other stocks to keep an eye on as well, in fact, softbank selling even more alibaba than it originally did. we'll bring you up-to-date on that. we've got the opening bell about four minutes away.

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you're watching cnbc "squawk on the street." we're live from the financial capital of the world. the opening bell is going to be ringing in about 40 seconds or so. i know what the key to this market is today. jim, i don't really think i need to ask you, it's questions about unemployment, it's what the fed is going to do. i would argue. >> and i've got to tell you, remember, anything that yields 3%, david, that is -- this is

what's going to happen again. you're seeing coca-cola. okay. coca-cola is what people will reach for. they will reach for jnj. and they started yesterday. >> and there it is. the opening bell for this friday over at the headquarters of cnbc. you can see our realtime exchange as it starts to get itself together here at the big board jim mentioned coca-cola european partners celebrating the merger of two international coca-cola bottlers. very enthusiastic crowd of coca-cola employees. at the nasdaq state street global advisors and fixed income allocation -- >> spirited. >> spirited coca-cola crowd. >> talking about burger wars, forget that. weak dollar play. it's a watch mcdonald's, watch jnj. >> okay. >> these are the stocks, remember, money managers don't say, ah, they say, okay, bonds

are not going to give me that so i got to go into this class of stocks. consumer packaged goods. now, they will flee the financials, but remember it's only a handful of financials that you really -- that dominate that business. >> that's true. >> i spent a lot of time bank of america. they've got an unbelievable app. unbelievable, but that's about being able to be -- have frictionless, again, no branches. these are the type of things i'm saying the adoption. if you talk adoption is so rapid that it will impact your employment numbers. >> it may, although it's not as though these big banks are throwing opening branches all over the place. that's the question we always have. why so many branches. >> we have to watch the semiconductors because the semiconductors do take their lead from broadcom. >> let's talk a little about that. symbol avgo. >> a brilliant acquisition. >> up this morning after earnings. >> this is about both old and new combined the companies, this

company was just an apple play. broadcom is not. broadcom is big switching communications play. david, all these buildouts we talk about for telcos, you need broadcom. >> you do. >> i was shocked you need 5g, i was shocked they got broadcom so cheaply because mcgregor is doing such a great job. they recognized there was a moment in time being caused by worries about china. they went in and bought it. by the way, same thing with nxpi, went in and bought free scale. number four auto semi, number five auto semi, put them together, number one auto semi. >> do you know how many chips are going to be in a car -- endless. >> i wish those chips were made in america. but some are. it's not the way it works. like i said, you're not going to

see the market crater if you had consumer products 3% yield bid, but you need to see tech take its cue from broadcom. >> right. as we had anticipated of course the financials are weak as we noted. jpm, bank of america, citi, goldman all down somewhere between 2.5% and 3.5% this morning on the big banks. maybe not just because the likelihood of a fed tightening is a bit off but also this idea 2018 even more is going to be required in terms of capital, equity capital at some of the banks. >> j.p. morgan killing. >> just read top of "the wall street journal" today if you don't know what i'm talking about, the fed talking about that or at least that possibility in '18. >> and it is a long day. let's not forget because the banks can cast a pall on anything. weak dollar, favor international. watch that coca-cola.

that will be your tell. that will be your tell. because that yield is good. i just like it because it's right in front of us. but muthar is giving you a great deal. >> i want to talk about softbank and alibaba. that was an enormous transaction. softbank has sold what amounts to $10 billion worth of alibaba stock just in this week a variety of ways. the key one being $6.6 billion raised through the issuance of this equity linked convertible. the convert is linked to its alibaba shares. in three year's time when you buy this convert it converts to those alibaba shares. they exercise the green shoe went up another $1.1 billion. that makes it the largest equity markets transaction globally this year. it's the equivalent all the

total equity linked issuance in the u.s. and it's also largest ever mandatory exchangeable globally and the largest ever equity linked transaction in asia. so you get the spurltives, it wasn't just 6.6 billion through the convertible, it was also of course $2 billion right back to alibaba. another 400 million to the alibaba partnership. and 500 million to the sovereign fund gic and then 500 million to -- $10 billion dollars. >> going to turn out they were too concerned about the tax man? >> i don't understand the question. >> well, yahoo should be selling. >> oh, well, no, yahoo is not selling its alibaba stock. >> no, but let me back up. the alibaba financials, the whole notion of the disclosure. >> well, last week we got this notice of at least the s.e.c.

taking a look. you do wonder a bit about timing, although frankly this softbank deal they've been working on this for months. >> right. i worry accounting irregulari irregularities because they have never produced an upside for me. this is a bit of a motivated sell. >> it is. there's a lot more behind it. they got a six-month lockup at softbank and does change the approach and seams of the company to a certain extent, but they're still an enormous holder of alibaba, something like 27% or 28%. your point on yahoo so much we focus on sell of the core business of yahoo, really what people should be focusing on is what is going to be left, which is the alibaba stake. how is that going to trade? what will be the discount of that company and its holding being alibaba to the value of alibaba in the marketplace? that's all you need to know really. if it's 85% of the value instead of 80%, that's more of a delta

than whether they get $4 billion or $5 billion or more than that for the core business. so many people focused on that core business when really the key is what's going to be left behind. >> that's because the variant. we have the $2 billion to $8 billion range people talk about. it's interesting because the journal is regard as $2 billion range, the $8 billion is bob peck so to speak, i don't want to pin down bob because obviously fluid situation. but it's verizon. verizon, david, this is the kind of stock -- att is up nicely today. verizon is down 11 cents. verizon will be up because verizon's a bond and people are going to have to get income somehow or other. the savers don't get, no, savers have to take a little more risk. they go to verizon versus 30-year. >> i know. and there's a dividend yield on verizon of 4.45% right now. all right. let talk a bit more about the employment number we got at 8:30 this morning. the labor department reporting

again that just 38,000 jobs were added in may. the unemployment rate went down to 4.7%. joining us for the first reaction from the obama administration is white house press secretary josh earnest. mr. earnest, nice to have you. this 38,000 number has got some people concerned. it's also 116,000 average over the three months -- last three months clearly lower than what we've seen over six months or a year. is job growth slowing down in this country? and if so, why? >> well, listen, david, i've been reacting to jobs numbers at the white house here for more than seven years. and what's true today has been true in the past, which is we don't get too excited when the jobs numbers are better than expected. and we don't get too disappointed when the one-month jobs numbers are lower than expected. what we're taking a look at are the longer term trends. over the last six months we have seen wage growth above 3%, that's a positive sign. job growth has been over 150,000 jobs over the last six months or so, that is a positive trend.

the reports of people who are seeking jobless claims have been below 300,000 for more than a year now the four-week moving average. the longer term trends continue to indicate that our economy is resilient and continues to be making a strong recovery from the worst economic downturn since the great depression. the president has some ideas about what we can do to strengthen our economy. >> yeah, of course. another long-term trend has been the departure of people from the workforce. we had 458,000 people leave the workforce, which is the reason why the participation rate went down and hence the unemployment rate actually went down. i mean, we're at 4.7%. is that a concern to you though how many people seem to be leaving the labor force? >> again, this is a number we monitor here. and the longer term trend been has actually been positive. we actually put about a percentage point on the participation rate over the last six or nine months. we're giving a little of that back in this one month's jobs report. but what we're looking at are

longer term trends and they continue to indicate that the united states economy is the strongest most durable advanced economy in the world. and the question i think for -- that americans are going to have to be asking themselves at the end of this year is are we going to build on the progress we have now, are we going to build on the momentum or tear it down? and there will be a pretty robust debate not just here in washington but all across the country about how to move our economy forward. >> hey, josh, jim cramer here. we've got some interesting revisions down. i just want to talk about the methodology for a second. labor department, terrific, off and on tv, but when you see these numbers and they're so off, do you ever think, you know, maybe we should switch this over to the federal reserve for instance has a great group of statisticians? or do you bring in some of the people who an oracle, a salesforce that really know how to keep data minute to minute? because i think the numbers themselves are a bit embarrassing that they could be so off. you guys are perfectionists, we're all perfectionists, in a new age this doesn't seem to

make sense to me. >> jim, what i think is true is there's extraordinarily volatility even in these monthly numbers. we went through a phase early in the presidency where it seemed like every month the revisions to the previous month's reports would be upward, but yet what the media understandably is looking at is most recent data. so there is sort of this regular pattern of underestimating job growth. and that was a source of some frustration among people who work in the building behind me. but look, i think there obviously is other data out there that's relevant to assessing the condition of the economy now and the trajectory of where it's headed. and i think that's precisely why we need to look at more than just one metric and more than just one month's numbers. we need to be looking at longer term trends. so certainly this month's jobs numbers is instructive, but it can't let us be determinative in terms of drawing our assessment on the economy. we need to look at the longer term trends as it relates to the job market but also the longer term trends when it comes to retail growth, the housing sector. there are other signs of

strength in our economy and it's important to factor those in to a broader assessment of where things stand right now. >> when we talk about longer term trends, mr. earnest, we talk out years from now we talk about growth in robotics, growth in artificial intelligence, the growth in so many things that will no longer require humans to do them, i mean, that becomes a scary proposition when you talk about the broader job market in this country, doesn't it? >> well, there is no denying that our society and our economy is changing and is being profoundly impacted by technology and by the fact that our economy is increasingly globalized. and that's why you've seen the president at the forefront of advocating for things like improved job training, free community college education, look, a generation ago getting a good high school education and going into the factory in town was a great way to get a good middle class job, to raise your family, to save for retirement. but that option is not available to nearly as many people as it was before. so we need to be thinking creatively in the future about how to prepare our workforce for this global economy that's going

to be influenced by technology also why the president's been a leading advocate of the transpacific partnership. if the u.s. economy and u.s. businesses and workers are going to be competing on the international -- in international markets, then we need to be looking for ways we can level the playing field for american businesses. so let's go out and cut deals with vietnam and other countries in southeast asia and put pressure on them to raise their environmental standards, raise their labor standards so we can start to level the playing field for american businesses and american workers. let's also make sure that american businesses and american workers can get access to the vietnam economy in the same way vietnam businesses have access to the u.s. economy. that's a win-win for the u.s. economy. it's a win-win for u.s. workers. it also is a way for us to cut taxes, 18,000 taxes that other countries impose on u.s. goods. >> glad you got the vietnam in there of course given the trip earlier this week. finally, the man who's a presumptive nominee for president for republican party, donald trump, of course who opposes tpp, just tweeted a few

moments ago, as he tends to do, terrible jobs report just reported. only 38,000 jobs added. bombshell! final question, get a response from you, mr. earnest? >> listen, it's not uncommon for me to be asked about tweets from the presumptive republican nominee. he's certainly entitled to avail himself of the first amendment and share his views. i think what smart analysts of the economy are taking a look at right now are the longer term trends not just as it relates to the job market but also things like growth in retail sales, improvement in the housing sector, improvements in the manufacturing sector, and the question really is going to be for the next president, for the american people as they choose the next president is are we going to build on the momentum that our economy has built up, or are we going to tear it down? and i assure you that we look forward to having that debate over the course of this year. >> we appreciate your joining us, mr. earnest, thank you. >> no problem, guys, thank you. >> all right. josh earnest, press secretary for the white house. >> all right. >> yeah?

>> i don't know. still going over the methodology. i can't believe that i can track a package that day every single second but i can't track jobs. wasn't really asking about the volatility so much. >> the labor department you got to talk to. >> it's time. i mean, it's time. you mentioned watson. i'm saying there's a lot of technology companies that do amazing things and broader end of the government sounds like this is one they haven't obviously really done a good job. >> speaking of a guy who is on top of every single data point, bob pisani on the floor. more on what's moving this morning, bob. >> good morning, david. you can't gill the lily, certainly big disappointment particularly revision but market response very modest. take a look at the banks. there's the big concern of course we're down on the ten-year yields, but elsewhere look what's happened to commodities. base metals like copper are up and the metal stocks are all up nicely today. so you've got moves up in

freeport mcmoran doing well, commodity stocks all up about 2%. i think the important thing here is that's a big help in that sector here. overall pattern fairly typical when you miss on a jobs report. cyclicals, consumer discretionary, all on the weak side, defensive stocks doing better. this is what happened, we asked the 31 times since 2006 we had a big miss on the nonfarm report, this is exactly what happens. you can see exactly this. consumer discretionary, industrials down, noticeably utilities flat. meantime markets holding up very well. look at the leadership, advanced decline line has been strong, the russell 2000 is at a six-month high, the nasdaq at a six-month high and the s&p 500, 2% of an historic high. that's been a source of a lot of angst with people that we can't get over the new high. but bear in mind this is fairly typical. i asked my fan runs the independent advisor for vanguard investors, one of the best investor newsletters out there, how often this happens, since

1957 the s&p 500 has spent 37% of the time within 5% of a new high. think about that. 37% of the time we're in 5% of a new high. the important thing is that's normal. in other words all this hand wringing about 2%, why can't we get over it, this is normally where we are. watch the close here, we're flat for the week, believe it or not. we have moved higher in the last hour every single day this week. and, guys, this would be a very good test to see if that pattern will hold. david, back to you. >> thank you very much, bob pisani. well, the bond markets of course as you might expect quite busy this morning. rick santelli at the cme group in chicago. rick. >> so many huge moves going on, david. of course the huge move today, the big drop in unemployment to 4.7. of course we refrain from bragging about that when you take the report in its entirety. and we look over the vast number of people that just aren't part of the system of counting. and jim cramer and everybody else is right, there needs to be

a better way. tracking packages is a private sector issue. tracking people is public sector. draw your own conclusions. look at intraday two, unbelievable. now look at it from may 1st. look at the same dynamic from tens. look at it from may 1st. but here's really in my opinion the charts that you should pay the closest attention to. look at intraday 10-year bund. notice the low yield intraday. now, intraday is the roller coaster, where you get on and where you get off is what counts. we traded down to six basis points, seven and change is the historic all-time low as you see on this chart starting in april of 2015. but it isn't only the 10-year bund that intraday was in record low territory, it was the 9-year, 8-year, 7-year, 6-year, 5-year, okay. the more we see improvement in the lower unemployment rate, the more we create jobs that are questionable, the more the fed's in play, the central banks are

in play, the more negative everything gets. this is a cycle that's going to be hard to break. foreign exchange, holy cow. look at intraday of the dollar and intraday of the euro versus the dollar, 111 handle to 113 handle just like that. david, back to you. >> thank you very much, rick santelli. coming up, goldman sachs' chief economist jan hatzius joins us on this morning's weaker than expected jobs report. "squawk on the street" be right back.

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and together, we're building the store of the future. digital works for retail. let's talk about how digital works for your business. there's a look at the dollar index. there you can see it's down as rick was just talking about. will we see a bid maybe of multinationals to a certain extent, unclear, although they have not been performing that badly. as you can see it's kind of been stable. >> yeah. >> now it's down. >> year over year do final people stop talking about it. >> i know. we have stop trading with jim coming up. i order b14. i get b14. no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride.

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else. anyway, gogo lost some orders in new american airlines batch of planes. when i've had them on many times you can get netflix, so this is about netflix, david. >> right. it's about getting your broadband and being able to stream on your flight. >> also insurrection by the way -- >> you are harboring a serious grudge about that super bowl. >> that i missed it? >> yeah. you were. >> i said how could there be in this day and age i can't stream -- he said i'll give you scores. >> who's flying during the super bowl? come on. >> it was the only time to see my daughter. >> that's a good reason. >> plus it wasn't like the eagles were in the super bowl. no plane for you if that ever happened, but i don't see that happening. >> trainers said the other day giants won two super bowls since 2007, why do you tell me that? what about the phillies? they've stopped winning. >> so have the mets. >> the last of my revolution, i'm doing this revolution change

of the guard retail i don't want to reveal who it is but it's very exciting. we've done a bunch of them. i know it's been a truncated week, but it's great. i apologize i don't have a great answer for the employment number. >> i'm not sure anybody does. >> i don't want to pretend i do. sometimes things are puzzling. that's why i felt the methodology, i thought that the man from the white house might be as skunked about the methodology as i am. >> i don't think the press secretary's thinking about the methodology. >> no, i know. >> he's going back to talking points on vietnam and trip and tpp. he's not thinking about methodology. >> defense to vietnam. the fall of saigon to defense orders. >> old saigon 1975: have a great weekend. >> you too, man. doing anything special? >> no, not a darn thing. >> really? >> yeah. coming up though -- >> i'll give you a call. >> yeah, i will. maybe he's got an answer, jan hatzius going to react to this morning's jobs report, goldman sachs chief economist and live report from walmart shareholder meeting in arkansas. we'll be right back.

good morning and welcome back to "squawk on the street." i'm simon hobbs here with david faber and mike santoli.

carl and sarah are off today. meanwhile, on the markets bitter disappointment this morning for many that the economy only generated one quarter of the jobs expected by the market in may, 38,000 nonfarm positions. falls on the stock market cushioned by the expectation that the fed is now less likely to raise interest rates this summer. but bank stocks are taking that on the chin. on the foreign exchange market severe pressure on the u.s. dollar, the euro, the uk pound and the japanese yen rocketing higher as the greenback takes a pummelling. we have breaking economic data. ism nonmanufacturing for may and factory orders for april both are out. let's get to rick santelli in chicago at the cme. rick. >> absolutely. let's start with factory orders. for the month of april they were up exactly as expected up 1.9. we did get a subtle positive revision to last month from 1.1 to 1.7. now let's get into the more juicy data. april final read on durable goods 3.4, what's fascinating here is a lot like michigan the

preliminary read gets thrown out. what was that? 3.4. so we ended up matching that. okay. let's get to may isms, shall we? the most recent spat of data, 52.9. now, 52.9 is pretty notable. i've been ciphering here. it looks to me like -- i have to go all the way back to february of 2014 to find a lower number at 52.6. that's quite a while. how far back do we have to go to get under 50? all the way back to january 2010, in case you were wondering. let's go through some quick internals, shall we? on the ism nonmanufacturing, that's the service sector number, the new orders moved from 59.9 down to 54.2. on the employment, which we just had today, this number nailed it, why? it was 53 it now stands under 50 at 49.7. so my opinion the nonmanufacturing service sector biggest swat to the economy. that number is definitely weaker than expected. we are seeing yields come back off the low yields, but there's

been sizable moves to the downside. but really you want to watch europe. they have negative rates all the way out. and if you look at the ten-year, bund, it is trading negative rates out to nine-year, it's trading around 7, 8 basis points. intraday it violated its all-time low yield as did most of the curve all the way back towards the five-year sector. and that is a tremendous force making our very low yields look a lot less low on a relative basis, hence the term the relative value trade. simon hobbs, back to you. >> thank you very much, rick santelli. the burning question of the morning of course how much of a game changer is today's employment report miss? steve liesman has more at hq. morning, steve. >> simon, i'm hearing a lot of stuff here about this report, shocking, surprising are the numbers coming from wall street analysts as anxiety grows about growing economic weakness just beyond the jobs report. one thing it says to a lot of economists all agree on not june for the fed. barclays writes even more.

they go the may employment report also poses risk to our baseline outlook for a september rate hike and increases likelihood that any subsequent move by the fed to raise rates may not happen until december. so put it off a couple months according to barclays. cnbc did a little calculation this morning, this is the eighth worst forecasting miss by the street since december 2003, 145 months, we went back as far as back as our data goes. a miss of this magnitude usually but not always comes with a bounceback the next month relative to the three-month average. not a lot to hang your hat on especially when you look at these numbers. nonfarm payroll 38,000, three-month average crashing to 116. not too long ago it was up near 200,000. unemployment rate falling but mostly because people left the workforce. not a very good sign. labor force participation ticking down to 62.6. average hourly wages not too bad at 0.2%. year over year they're about 2.5%. here's where the jobs aren't. usually we do where the jobs are.

this time it's where the jobs aren't. information, that's your verizon strike. so you can probably add back 35,000, 40,000 to the number. it's still a weak number. temp help can be a leading indicator of where the jobs market is going. that was negative. construction inexplicably negative since we've had positive construction numbers from a lot of different sources. and manufacturing that has been weak. it continued to be weak. it was positive job growth in retail, professional business services as well as leisure and hospitality. bmo capital markets says assuming employment rebounds in june and britain opts to stay in the eu, the fed is probably on track for a july move. the data has to be good if that's going to be true. and over at ubs they write a weak payroll report raises some questions but one report is unlikely to dissuade the fed from two hikes this year. this is a cautious fed that's shown it will side on standing pad or remaining low amid uncertainty in weakness the fed unlikely to hike amid a jobs report that raises substantial questions about the strength of the jobs market and the broader

economy. at least the fed is going to seek clarification, as all investors will, that this report is maybe an anomaly relative to other economic data so far pointed to better growth, simon. >> you know, steve, you know as well as i do many people regard the employment report as in essence a random number generator, just sheer probability means sometimes it's going to do strange things. if you were able to put it to one side and you focused on the unemployment rate falling to 4.7%, which is a bigger fall than people expected, what does that tell you? >> you know, that's even more of a random number generator, simon. >> okay. >> we had a six-month trend of people entering the workforce. this reversed it in a very strong way, half a million people left the workforce. we've been up 2 million year over year, you have to be very careful with these data, take a step back and average it over three months and the job market is okay. but clearly has down shifted. and what we have to figure out

what that means for the broader economy. >> okay. thank you very much, steve. it's going to be a busy day all around, i think. >> sure. >> let's get more on what's going on founder and ceo of ds economics joins us live and david kelly chief groelobal strategist at j.p. morgan funds. david, what is your reaction to this figure? >> obviously these a weak numbers. i think one number doesn't make a trend. i think one number is enough to put the fed on hold here, but i would caution everybody that there's a lot of statistical noise here. for example, nonfarm payrolls not seasonally adjusted have gone up by 1.7 million in the last two months. in other words, they normally jump a lot in april and may combined. they just didn't jump quite so much this spring. you know, is that a change in seasonal patterns not catching properly? i think so. the labor market is not that weak. clearly the pace of payroll jobs had to slow down. we were adding 240,000 jobs from

october to march, an economy barely growing over 1%. it had to slow down. i don't think in reality has slowed down quite dramatically as these numbers suggest. >> david, what is full employment? at what point do you say this is about as good as the economy can get on this sort of monetary policy? i mean -- >> oh, i think we're pretty close to full employment. i think it's hard to add good quality workers at this point. you know, the average unemployment rate for the last 50 years is 6.2%. we are at 4.7%. that is a low unemployment rate. >> diane, what is your take? >> you know, on the unemployment rate i think it is important that there's a debate within the fed and what is full employment and this really challenges, although it is only one month and i agree with david that you have to take it into larger context, still a body blow for the data dependent fed because it says don't in june, obviously. i think a larger issue here is what is -- who's right at the fed? is there slack out there, can we reengage these workers over the

longer haul, or are we really sort of pushing on a string and seeing wages more fundamentally accelerate? given we lost a lot of high wage jobs to the verizon strike this month and we were still able to maintain 2.5% wage gains, nothing terrific, but maintain that pace of wage growth i think is very important underlying you're hearing a lot of ceos are accelerating. >> let me pick up this point on the verizon workers that were on strike. even in the bls, everyone in the news release that they come out with they talk about the 35,000 figure. this is not really 38,000 plus 35. the expectation was that it would be 200,000 give or take less those workers. in other words, the headline figure on expectations already factored in that we'd have the deduction from the verizon strike, did it not? >> actually, i had a much weaker number, so i wasn't expecting that. i was expecting closer to 130,000. >> right. >> but even then we're still off 100,000, so let's face it any way you cut it it's bad data. i think one of the interesting things is there's two things

going on, we've got the manufacturing sector continuing to contract. i agree construction will probably get that back, that looks a little bit of an anomaly and we'll get that back with those verizon workers. and remember the threshold for the fed unemployment gains for a rate hike is lower than that than sort of the market expects. they're comfortable with about 100,000 and 70,000 or so with the verizon strike, we're not that far from it. so there's that difference between not only is where the momentum going? we are down shifting a bit. the fed expected that. the question is can we get to a level they feel like we're regaining enough traction to raise rates. and i think that's important. the other issue is in retail hiring has slowed. and that's another place where it was a big job contributor in the first quarter. it has now slowed quite dramatically. and we know secularly we are moving away from bricks to clicks. real estate doesn't mean what it once was in that sector. >> david, with all the caveats in mind about not overreacting to a single number, there's a buying panic in treasury bonds. we have the yield on the

ten-year back down to 1.7, all the yield related stocks are rally because of that which is perhaps why the market is not selling off more is this just a new world? in other words, can we see the yield complex remain in favor and people just buy these things up and assume much lower for much longer until further notice? >> i don't really think so. i mean, what i'm looking at right now is demand. looks like consumer spending is going to grow about 3.5% pace in the second quarter, better trading numbers and housing numbers, if we pick up in momentum, remember revision to all the gdp data in july. that could be substantial. so i think later on this year the economy's going to look a bit stronger. and i think the fed is going to have to reengage in raising rates. and with long rates this low, i don't really think they've got much further to go down. i think they have room to go up. >> david, if you were to look at what's happened recently and why the figures might do what they did, the elephant in the room is clearly the election campaign

which has moved up a couple of gears. it clearly absorbs a lot of people with a very robust reaction from people. at what point will we be able to tell if the election campaign six months away from a decision is actually impacting these figures? how will we be able to get facts on that, do you think? >> well, i think the way to look at it is for example on wages with a 4.7% unemployment rate, i'd say this is a pretty tight labor market. but the rhetoric is there are millions of people unemployed in america and people can't find jobs. and if people believe that, then workers won't demand higher wages and employers won't grant higher wages. so i think the election campaign is actually diminishing consumer confidence and holding wage growth down. >> i disagree with that. i actually think what we're seeing here is the secular shifts we've seen building over decades. if you look at where the participation rate just took another blow, where it had improved, gen x and younger baby boomers the people tend to be most angry right now, tends to

be white men, we can look at the labor numbers on that category and you can see why they are so angry and disenfranchised. they are experiencing a different economy than what the overall aggregate figure suggests and that's why we're seeing what's happening. so i think there's sort of the elephant in the room is the fact that the labor numbers, the employment numbers are still showing us that the economy is not all healed. in fact, we have a long way to go to regain anything we've lost. >> it's a big day and good to see you both. thank you. diane swank and david kelly. coming u7 on the program, walmart kicking off annual shareholder making big announcements including new grocery delivery program. we'll take you live to the big dance. plus a deep dive, big miss on the job reports means now for the state of the economy and of course when the fed will actually raise interest rates. goldman sachs chief economist jan hatzius will join us live on cnbc.

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and james corden was the surprise celebrity emcee for the event. he came out and introduced board chairman with quite the zinger. take a listen. >> the next man coming to the stage is married to rob walton's daughter. but that's not how he got his job. it's not. stop it. it isn't. he got his job because he worked really, really hard. >> as you can imagine there was a lot of laughter for that one. andy grammar was the first surprise musical guest and there are several more to go. all week walmart has been hosting both employees and media from around the world focusing largely on initiatives and multibillion dollar investments in its in-store technology, e-commerce, employees and operational cost cuts all allowing to cut prices further so shoppers can keep getting the lowest possible prices in store and online. the goal of course is to help walmart grow share against

competitors like amazon. but while walmart's u.s. same-store sales have groan for seven straight quarters, it's e-commerce sales growth rate has decelerated seven of the last eight quarters and the ceo has said that growth is too slow. today, walmart announced it will begin testing using uber, lyft for online delivery of groceries. shop online and request the drivers deliver directly to the shopper. that standard fee online is $7 to $10 and that remains the same for consumers. they won't be paying any more for those uber, lyft drivers. the walton family does still hold 52% of the outstanding shares which means all of the 11 non-retiring board members will get re-elected plus the addition of stewart walton, the newest member to join the board and none of those shareholder proposals are expected to pass. simon and all y'all back to you. >> what about the uber lyft

delivery connection here. is that transformative, do you think? or just a small pilot study to show they're on it? >> reporter: so in the beginning it is just a small pilot study, but four big retailers like walmart, that last mile delivery is really, really tough, particularly for grocery. because obviously you have to think about things like refrigeration, delivering when the customer is going to be home. you have to trust somebody else to pick out those groceries. so the online ordering part is easy. walmart's already been doing that with pickup locations. they're going to have 50 markets that offer that by the end of the month. they say it's going really well, but actually delivering it is tougher. it's very hard to do in less dense populated areas, which is most of the areas walmart serves in the country. so it's a pilot, but i think there could be some learnings to move it forward. they already do it in the uk, but that's a very different landscape as you understand. >> yeah, and a different brand name. finally, did marissa mayer who of course is on the board of walmart, which we hear so much

about, did she turn up today? >> reporter: yes. yes, yes, yes. and the board members are sitting in the front row and they were introduced one by one by greg penner, the actual voting hasn't happened yet but we know most of those ballots of course have already been cast and we'll know results later. but marissa mayer, also founder of instagram here as well. >> good to see you, court. busy day. >> reporter: thank you. >> live from the walmart shareholder meeting, staff meeting perhaps more accurately. coming up exclusive interview with jonathan tisch. we're talking hotel growth, tsa, much more. stay with us. my mom loves giving me advice. she even gives me advice...

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the major ceos gather in new york this weekend for biggest deal making get together of the year. as they do so though data continues to indicate growth is slowing across the u.s. hotel industry. and of course this morning's disappointing jobs number may only add to fears that businesses will further dial back their travel expenses. the host of the nyu hospitality

conference is of course jonathan tisch, chairman emeritus of the u.s. travel association. good morning. >> good morning, simon. >> nice to see you. >> always good to see you. >> big weekend. >> big weekend, we start sunday, conference itself monday and tuesday. as you mention we attract the biggest names in lodging. we have hilton, we have marriott, arnie sorensen focused very much on the merger happening in the next few weeks. we'll have 1,500 people at the marriott in times square talking about the current state of affairs in the lodging industry. >> and we will be live from that conference. >> i know, you're broadcasting there on monday. >> it's an important indicator. we'll talk about the general economy in a moment, but as far as the lodging industry is concerned, you have a split between what the stocks have done, what the analysts and the investors fear and an industry that still tells us everything actually is okay. it's not as bad a split as it

was in january, but still a huge issue. where are we on jobs and fwroet? >> i think everything is okay. yes, we see what the analysts are saying. and we see the price of the stocks, but business is still good. and our industry combined with the larger travel and tourism infrastructure still has the ability to create jobs. but we have to lessen the barriers to make it difficult for people to come here. we have to make sure that we are focused on infrastructure in our country especially as it relates to travel and tourism so people can get through our airports, get to the destinations they want to. and continue to have support from whichever administration is in d.c. so that we will continue to create jobs. >> you very often make that case at the beginning of a conference when you've made your investments. you rationalize where that money should come from? >> look at laguardia, starting very soon public-private partnership, you can make these deals happen. we need to rebuild our infrastructure or other people and other countries are going to

take our travelers. >> can you help us about what is going on in the broader economy at the moment? a day like today when people are so worried about the lack of job growth. maybe it's just a one-off this month or is it a broader problem, do you think? >> certainly if you look at retail, they're suffering. but that same consumer is spending as it relates to travel. they still want the experience of getting on an airplane, going with their family, attending a meeting, group business is still very strong. if you look at our group properties, they're doing extremely well because of the strength of the group traveler. >> the group area though is the one area that if ceos are going to cut back on, they're going to slice, is it not? >> historically that has been the case. >> my question is in a day like today moving forward what do you think -- >> we haven't gotten any cancellations today. >> no, but ceos look at what's coming maybe they're focussed on the election, travel, business travel is oftentimes the first thing to go.

f >> we have a new hotel opening in orr lan don, on the grounds of universal studios. 1,000 rooms with 115,000 square feet of meeting space, the forward bookings are very, very strong. >> you're going to have most of the industry together, what is their posture right now regarding nontraditional lodging, airbnb, all these other thin things? are they having a measurable impact on the industry? >> certainly depending on the market the impact is stronger, depending on the price point the impact is stronger. so you're having a sense of cities like new york, which may be getting to an overbuilt situation very quickly because we've added some 30,000 rooms in the last ten years. there are 20,000 new rooms in development or under construction. so right now we're at about 109,000 rooms. airbnb is having an impact in new york. you're starting to see it in markets like miami. miami's impacted by the strong dollar, by weakness in south american currencies and south

american countries. so it depends on the market, but it is definitely having an impact on the industry. and when you start to see the megs gas get even bigger, marris and starwoods, i would think their philosophy would be how do we combat the shared economy we live in and move forward together as a stronger, larger company. >> john, i'm somewhat surprised to hear you think new york could potentially be getting near overbuilt levels. i mean, what does that mean in terms of your strategy and/or anybody else operating in the city. you're in a good position to talk about it. >> physically we're in a great location. we've got a great product. but what you're seeing in new york over the last couple of quarters is negative rev par growth. we still have the numbers in terms of travelers, some 60 million visitors this year in new york city, but negative rev par growth, so we're not able to raise our rates. and at the same time our

expenses keep going up. labor, energy, taxes. so there is pressure on the bottom line for those of us operating hotels in new york city. >> do you worry at all about a trump presidency in terms of if he follows through on closing the borders to a certain extent or alienating certain people who might have otherwise traveled here? >> we in the travel industry believe in secure borders but open doors. we want to ensure that people, their families if they want to come to the united states, we have to facilitate travel so they can come here, enjoy our amazing country, spend money and create jobs. we do that by more people coming in, not less people coming in. >> so many questions but we have to leave it there. thank you. >> thank you, simon. >> have a great conference. >> thank you. >> jonathan tisch from loews. the economy adding just 38,000 job, less than a quarter what the market had hoped for. we'll get reaction from goldman

sachs chief economist jan hatzius next on cnbc. thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? you do with comcast business. it's reliable. just like kung pao fish.

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i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. dow down 136 points. welcome back to "squawk on the street." time to get the latest news headlines with sue herera back at hq. good morning, sue. >> good morning, simon. here's what's happening at this hour, everybody. france hosting top diplomats from the west and arab nations, including secretary of state john kerry. they're trying to organize a peace conference by year's end, which would restart israeli-palestinian peace talks. french president francois hollande delivering the opening address. iraqi forces continuing their push into the isis-held city of fallujah. officials say they have secured its outskirts. iraqi officers say the large number of civilians leaving the city are slowing down the military operation because it limits their air strike capabilities.

a vigil was held thursday night for a ucla professor killed by a former graduate student. hundreds of students gathering to remember professor william. the shooter claim ed he had stolen a computer code. and teaming up to produce bottled version of tevana tea. the ready to drink tea will be available next year at supermarkets and convenience stores. and that is the news update this hour. back downtown, david, over to you. >> all right, thank you very much, sue herera. let's get back to that all-important and disappointing jobs number, 38,000 jobs created somewhat bleak picture perhaps for the fed before its june policy meeting perhaps casting doubt on the u.s. economy as well and of course potential rate hike. for more joining us exclusively at post nine is jan hatzius, chief economist at goldman sachs. before we get to the fed, jan, what do you think happened? why did we fail to create near as many jobs as people anticipated? >> i think there are two possibilities. more likely one is this is an

outlier because it's not really consistent with vast majority of the other indicators we're getting. we're not seeing a spike in claims. we're not seeing a big deterioration in household view the job market. we have seen some weakness in some of the employment creation indices for example in the nonmanufacturing ism, but in general this looks like a big outlier and that is my baseline. of course it also raises the possibility that we really are seeing more of a slowdown and that al at a minimum the fed will have to wait to raise rates. >> do you have concern about economic growth? >> yeah, i mean, i think what you can say is that it wasn't just one weak number, if you look at the seasonally adjusted may number, but they also revised down prior months. i mean, that's sort of a consequence of how they do seasonal adjustment when they find a very weak front month

number some of that gets distributed back. but, yeah, the message from the payroll number is quite weak. i mean, hours were fine, wages were fine, household survey is more split. small employment gain, but a drop in the unemployment rate. >> yeah, that's because 458,000 people leaving the workforce. that's a very large number as well. >> true, though you'd seen big increases there until a couple months ago. i think you can say some of that is probably payback. what's interesting is that if we were to find over the next, you know, month or two, that this payroll number really is an outlier and otherwise the economy is still doing, you know, fine, still creating jobs. and the only net change is that we have a significantly lower unemployment rate, that actually would be i think an important development for the fed. but right now there's more uncertainty. >> you know, jan, maybe one benefit of this weak number is we no longer have to resort to this fear of the british vote about exiting the eu as one reason why the fed might not

move in june. it really is about the u.s. data right now. is one more payroll report in early july enough to give them the data they need to make that call in july? >> i think it may well be. it may well be, i mean, we have a 40% probability, you know, judgmental probability that they will go in july. i think we do need to see though not just in the next payroll number but also other indicators between now and the july meeting that this really is an outlier. if that doesn't happen, then they will wait longer. >> janet yellen speaks on monday, i think. >> that's right. >> we should get further clues then. where are we as far as concern with the labor market? is it an ongoing test each month, or actually crossed the goal post? in other words if we are at below 5% in the unemployment rate, is the job done as far as employment is concerned? i think they're on record as saying 100,000 job growth is all that we need demographically. that would be a normal state of

affairs, which of course the three-month average. in other words what i'm saying is when you see the dollar move like this, is that move perhaps unwise and the fed is still going to hike rates? >> i think that's a good question. i mean, i think for june the answer is no, they won't hike rates. but i think it's a good question more broadly whether what we're finding here is partly that we're just basically at full employment. i think the indicators on that are a little mixed on balance i would say we're not quite at full employment, involuntary part-timers and marginally attached workers still at 9.7%, still a little on the high side, wage growth still somewhat below normal level. >> many you may not be able to right the ship. >> you can't be absolutely sure that those -- i'm just saying my baseline would be there probably is still some slack, but it's possible that we're partly finding that we're just running out of, you know, the sort of employment gains that you see during a recovery?

>> is there a figure on full employment? a percentage rate? >> our estimate for the just the unemployment rate leaving aside all the other indicators is at 4.7%. >> so we're on full employment. >> on that one measure, yes. but there are these other measures. >> does that mean we're going to get wage growth then? even above where we are right now? >> i would expect it to pick up somewhat further. we're now running about 2.6 if we take an average of all the different indicators, not just average hourly earnings. i think that probably will move up further and still has a little bit of ways to go before we're at normal. >> spend a lot of time talking about the way jobs play into what the fed wants to do. trying to get something more done for other reasons outside the labor market? do they want to build up a bit of a rate cushion in some sense? >> you mean in order to be able to cut again? >> for what they believe is a version of normal to keep the financial markets from getting over confident that we're going to stay near zero for a very long period of time? >> i think the main reason is they want to basically achieve a

soft landing. they want to transition to basically trend employment growth roughly at the time when the economy hits full employment, maybe probe how far you can go a little more. but i think that's the main thing. the other things are lower down on the list. >> let me ask you one final question, if the election were to impact job growth in this country, as a fact based analyst, what facts would you look at to confirm that was happening? >> i think -- i mean, i think it's going to be pretty hard to really find that conclusively from what the indicators look like because at any given point in time you never really know with 100% certainty what's going on. but, yeah, if you had a sharp decline in confidence, and that translated into a weaker labor market number, yeah, you'd say this could be a factor. >> jan hatzius, thank you very much. chief economist goldman sachs. coming up, j.p. morgan chase ceo

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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. fidelity -- where smarter investors will always be. j.p. morgan's ceo jamie dimon warning on brexit this morning speaking to some of the bank staff in the uk alongside the uk finance minister. mr. dimon sent a warning that the bank could cut up to thousands of jobs in the uk if it votes to leave the european union on june 23. >> so if for today we can service eu companies here, freely, with systems,

technology, research, investment banking, sales and trading, we can do it here. after a brexit we cannot do it all here. and we will have to start planning for that. i don't know if it means 1,000 jobs, 2,000 jobs, could be as many as 4,000. and they would be jobs both all around the uk and as you know the most important thing for me is we're going to take care of our people. we're going to take care of our people, and we're going to take care of our clients. i don't want you to worry abt, but when you vote you should be thinking about something like that. >> of course all five of the big u.s. banks operating in the uk are known to be considering their position. j.p. morgan for its part has 16,000 employees in six countries in the uk. with the dow now down 109 points, let's send it over to rick santelli in chicago for this morning's exchange. rick. >> thanks, simon. you know, history's a funny thing. we had a great discussion on "squawk box" this morning about the conditions for a tightening by the fed, well, they've never tightened under current conditions. whether it's the slide in growth, all the various

variables that of course the fed considers. maybe, you know, anybody ever try driving by looking backwards going 60 going forward? you know, we have to quick looking backwards. and we have to quit having policymakers pick and choose based on historical extremes. in other words, just because we've never had this setup to raise rates doesn't mean we shouldn't. there's a lot of things we've never seen before with regard to history. the negative rates, the balance sheets of all the central banks, the quantitative easing. let's even break out the bank of japan from other central banks, they're now one of the most valued customers in a lot of exchanges because of how much they are buying. the eurozone, it goes without saying they have negative rates almost everywhere you look. what about those extremes? if we could look towards history and say we've never had these conditions for raising rates, why do we create all these conditions we've never seen before to fix it and we don't

ever consider refraining from those? makes no sense. let's look at a little common sense. okay. ought to be put in a trash co compacter. data dependent, long measure of time, they have trapped the federal reserve. let's all be a bit frank here. okay. we have a spiral going on where the expectations of central banks trump everything. you get a negative data point like this, everything moves huge. you get more negative rates, listen, you think major financial institutions, you think jamie dimon who was just on that clip is going to do better in negative rates? you think these unhealthy banks in europe are going to do better with negative rates? this spiral is crazy. it's crazy what's going on. we get negative expectations, we get numbers, we see markets move on what the fed's and central banks will do, that makes rates more negative, it makes outcomes

more negative. and it brings it all back. and we keep going deeper and deeper and deeper. data dependent ought to be tossed because there's a lot more at stake here. and i know central banks they probably have their hearts in the right place, they don't want us to experience any discomfort. well, let me see, if we keep going negative in rates, if you have a pension, you're going to have discomfort. if you have a mutual fund, you're going to have discomfort. if you have money in the bank, you're going to have discomfort. it's just a matter of who's whats this comfort time hits. >> well said, rick. coming up on the program, warriors living up to their name as the defending nba champs beat the cleveland cavaliers in game one. how much did it cost to witness the rematch firsthand? you've got details next on cnbc.

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finals? >> yes. >> and how much in each venue? >> both venues are over $1,000 which is the second time we have tracked that. last year was the first, and oakland is about 1,7p 00, and cleveland is about 1,200, and so cheaper in cleveland, but still expensive. >> and $1,700 for golden state and oakland and how much up? >> just over $1,500 last year in oakland and so it is surprisingly up in oakland and down in cleveland. last year in cleveland, it was $1,400, and $1,200 for this years, and you would think the other way, because the big three are back for lebron and you would think they have a better shot. >> but somehow the novelty for cleveland has worn off after the drought. and looking at the arbitrage from the bay area to cleveland to fly is $400, so it is equal? >> yes, if it is an opportunity to see a clinching game if

cleveland, yes, it is a possibility, and you might want to save your dollars if you are a warriors' fan and want to see it. this is obviously huge, bi bird-johnson, 2016. and the nba is thrilled with the ratings through the roof, and the prices are right there as well. >> and the e foe no, ma'am na and everything coming together for golden state, and not just the team being great, and curry breaking out the way he has, but the entire tech universe has decided to embrace this team, and so much money behind it from that angle. >> absolutely. the owner of the warriors is really a kind of the model of the tech entrepreneur mogulle team owner, and there seems to be no limit for the warer yos. they wob last night, and we will see if they can kind of see it through, and get number two for the bay area. >> and you also track what it costs for each arena just to get in. and to basically, the cheapest ticket in the secondary market? >> yes, and the cheapest ticket in each market is $500. and it is interesting that while the averages are higher, to

get-in is the same in each market, and so it is still not crazy, i geuess on the relative basis to get to the game, and snit the very back and be part of history, and we atticiq, we look at seat smart and others that we brokerage to, so it is a wide range and good idea to shape around, and if teams like the cleveland team continues to lose, it will be varying. >> any particular section? >> the cheapest value ticket is $200 so it is 1,100% increase relative to the face value for anything of the game. >> and giving up a few seats in an nba ar rena versus a super bowl, but going back across the sports whether it is the world series or the super bowl and how does this ran sfk. >> for the super bowl, you won't see anything below the $1,000

averag average, and for the nba finals, that is the upper end of the range, and the ditto for the nhl stanley cup finals are both below, san jose and pittsburgh are both below $1,000 averages. and the nfl, because it is one game, it is so hyped that $1,000 is a big deal, and in the nba, $1,000 is a lot as it is in the nh lsh nhl. >> and in the nba and the nhl, you won't get a lot of the corporate group travel the way that you do with the super bowl? >> well, a little bit more in the nba, because it is star-driven league, but the nhl is a local rt sport, and nhl is the best attendance rate if you look at all of the sports in the course of the season, the highest fill rate of any league, and so it the fans all season that have been seeing the team play. >> do you think that it will change over time, and the profile of nba corporations will change as the value moves to tech firms? >> sure. >> to the point that you were making earlier of the people embracing a local team. >> well, it depnds where it is in oakland and san francisco, absolutely.

and cleveland is trying to figure out what is next after a tough few decades here. and lebron is a big shiny hope, but on the jobs market, the unemployment rate is up, and oakland's is down, and so it may be explaining the price disparity. >> if we get to the game seven courtside, what will that run many me? any guesses? >> well, you could spend $25,000 without trying too hard. >> okay. simon, you are up for that. >> okay, david. >> we will put it on simon's. >> and that game would be in? >> that would be in oakland. >> yes, the game one. >> okay. >> thank you very much. tracy lawrence from tickiq, appreciate it. time to go over the jon fortt for what is coming up on "squawk alley ". >> well, simon, continuing fallout from the dismal jobs are report, and what it means for the economy and tech, and we are at walmart's shareholder meeting and it looks like uber and lyft

are going to be delivering the groceries, but it is not all about u.s. share, and didi from over at china is going talk to us about what she has planned strategically. all of that and more is coming up on "squawk alley." or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade.

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. welcome back to the program. the big news this morning is that the economy only added 38,000 jobs last month less than 25% of what the market expected. we are off of the lows on the dow, and partly because the fed is thought less likely to raise the rates this sum me, and where you are seeing the move is on fixed income and notably foreign exchange where there is a massive pummeling of the dollar which is sending the euro and the sterling higher and the japanese yen, which is a problem, because it adds more pr pressure on the european central bank to ease and go further into the unchartered territory the send the euro in the other direction, and that is in itself going to wash back removing arguably some of the price incentives with the lower rates here. it is a complicated situation, and not the merriest of situation, but that is what it is, and so we hand it over to

kayla and the squawk team. >> meanwhile, it is 8:00 a.m. in fayetteville home of the walmart shareholder's meeting and 11:00 a.m. here on "squawk alley." ♪ ♪ when i'm feeling down ♪ so i turn around ♪ oh, baby don't care no more ♪ i foe this for sure good friday morning, everyone. carl is on assignment, but jon fortt has made his way back to post nine. glad to see you. >> good to be back. >> and also this hour, we will have mike santole and business insoo insider and founder henry blodgett, and