dent profits. >> folks, i think that kind of brings to an end this wonderful fabulous discussion. i'm andrew i'm not going to cut you off but that's it. larry, always an unbelievable pleasure to once again -- >> i love it. >> trump -- >> more fun than i have a right to have. >> thank you. >> on monday join us then. time for "squawk on the stree.". ♪ >> it's friday, baby. good morning and welcome to "squawk on the street." i'm david faber, along with jim cramer. we are here at the new york stock exchange but you are looking at a live shot in rio where the opening ceremony is just hours away. and carl quintanilla there he is, he's made it live and he's going to join us in just a few minutes and he's looking good which i'm glad to see. all right. we start, though, with the breaking news here in the u.s., adding 255,000 jobs in the month of july. the unemployment rate holding

steady at 4.9%. most of those gains coming from the private sector with 217,000 added. revisions also up for the last two months. a net gain there of 18,000 jobs. let's give you a look at futures and see how the markets are reacting and you see all up and rather sharply at this point. jim, it was a good number by most ways to measure it, i would argue. i'm curious to what your thoughts are. 75,000 more than expected, let's call it above at least the consensus, somewhere around 180,000. even the participation went up slightly and we're averaging 190,000 jobs over the last three months, and i believe the six-month average is roughly the same. >> look, sometimes you get these numbers, when they're bad you say it. you say geez, that economy is not that strong. that's the judgment. when they're good, you have to reach the opposite and say the

economy is a little stronger than we expected. >> juxtapose that with the gdp number we got. >> well, i don't know. this is a number that says the consumer could be good. i happen to love the job dispersion, 70,000 professional and business. that needs to be a very hard hit area remember and i thought digitalization would have wiped that group out more. health care, 43,000, nothing you can do, financial activities up 18,000. that's interesting. that had been an area hard hit. post-great recession number. this is what you thought could happen. >> well, it had been happening. there had been a concern that the number of jobs added, the average has been going down. right. three month, six month averaging declining. this is moving us back towards where we've been. >> the numbers are bad we say listen, they're bad. when numbers are good people want to come on air and say they're inconsistent or tricked, they're not -- look, don't look through it. now, the -- you still get -- still at the point not making more money. i mean it is interesting that you have, you know -- there's

very little additional income for the people who got jobs. i mean, you're talking about 8 cent increase in average wage earnings but i expect the consumer stocks will have good data. >> a lot of consumer stocks are the stape else that have high paying dividends have been getting high multiples because they're like bond proxies. in this market do i want to keep buying those names when technology to be fair had a good earnings quarter compared to the rest of the market. >> you know i like technology. 1.5, not freaking out on the 10-year, but it's been technology, it's been terrific. technology has been terrific. but the consumer stocks have been -- the restaurant, retail. >> understood. >> we're stuck with the realization that may see reports this week, coll's, nor strom's, jc penney's. this is an amazon number. i want to buy more amazon off this. >> you mentioned the 10-year, we saw 1.53. rate hike odds, e-mail write-in

from our friend peter, 32% to 40% by year end. >> a bit under the banks. i think jpmorgan will go through 66 on this. the stock has been a strong stock. i think bank of america goes over 15. start getting closer to book value. >> the banks are a berbry of the idea we may get a rate hike -- >> more money. >> net interest -- >> where you want to buy today that and the consumer stocks you're willing to take the risk on that will not get hurt. maybe buy some of the insurers that have been hurt. don't want to buy met life. they seem not to pull the trigger correctly on the bond portfolio. >> life is a tough -- also the annuity business these guys have. >> glad you said that. >> the annuities. >> i mean, i think the market is wise to that and i think i like chub. i think they have a better book of business. and i know i've been telling people in my travel trust i'm going to buy this one, but i lofl travelers herep. >> you love travelers.

>> travelers is the one in 17, when it goes to 120 on this number. this is a number that is going to impact stocks. now, don't buy the opening. opening will be too robust. long day. friday. >> long day friday. >> that's never a thing -- >> seems to be a rule that the initial reaction of a jobs number tends not to be the final reaction of that jobs number. >> get rich carefully, long analysis of the first hour, very bad hour to trade. just very bad. inconsistent with what can happen. i think you have to look and say that banks do work here, the insurers that are not annuities can work here and the consumer stocks and just you can do consumer spend and make some decisions. the consumer is all over the place. when i look at the activision number, they had a new game. i always have to look at my nephew plays these games. >> yes. >> overwatch has $500 million in sales from 15 million players. take two, the nba game that's very good. they have a grand theft auto. i think it's funny, one of the

great guys in the business, grand theft auto is a great franchise, not a franchise i let my kids play. >> oven now because they're both adults? >> both kids are playing pokemon go heavily. >> are they? >> one daughter is in italy. when i was there three weeks ago they did not have pokemon go but i'm told the whole city is upside down. >> they just -- >> charmander, is at -- >> right there. >> my kids are saying that you see it in italy. >> which is rather -- wherever it goes, it just goes. >> yeah. just goes right into the coliseum and crawl all over 2,000-year-old ruins. >> want to find gym and apparently the coliseum was a gym this week. the coliseum. wasn't built in eight days. >> end this week with the gdp number in the rearview mirror with today's jobs number with earnings season moving past us, good amount to come but a lot -- >> next week is a very light

week on earnings. >> give me your sense then as to sort of how you approach the equity market because we've filled in blanks. >> right. >> well i would tell you that this all my life, if you bought tech stocks during july and august, you were simply not an investor. you didn't understand how this cycle of the economy works. europe goes to bed during the summer months the american companies don't order because it's far from the holiday season. david, this is the strongest july/august i've seen in terms of orders for tech. strongest. whether it be sirius logic, it didn't seem like it from corvo but when you look at what -- how intel only down a buck and change and nvidia having incredible orders, gamin and auto chips, broadcom, incredible orders, texas instruments, amazing orders, orders for the iphone 7 hearing better than expected. tech, consumer tech, internet of things tech, those work.

autos seem to have peaked and that's a problem. i was with a major executive yesterday, major capital goods executive. what area is the strongest in terms of coming back. europe. >> really? >> europe. asia never got that bad. europe. asia has been consistent. the china is switching to the consumer economy. everyone is very concerned that china switch to the consumer economy is what really happened as opposed to and then with the no dumping to the united states here. tech is going to work here. i feel awful recommending a tech stock in august. >> speaking about europe but we have to get to south america. >> where? >> brazil. >> we have to get to brazil. >> do you see how strong the real is? >> i haven't. >> year over year. >> maybe carl can tell us about that because they are gearing up -- >> rio. the olympics. talking about real. >> the ceremonies of the 2016 summer olympics. >> oh, yeah, rio. >> there he is, carl has made his way and has a lot to share

with us, of course, from rio. good morning. >> oh, my gosh, guys, real is up 24% versus the dollar this year. brazil best performing stock market of the year. welcome to rio, guys. we are here in olympic park opening ceremonies tonight. all day today and for the next two weeks we will talk about how important these games are to the world of sports, to the world of business, and yes, to the brazzon economy which faces political upheaval and economic challenges. the torch today been here since wednesday but made it ways past the christ redeemer statute. run in part by a native of brazil. nissan busy, announced new production here, new concept car. we caught up with goem briefly and start by asking him about the u.s. car market, the numbers we got earlier in the week. and whether these incentives in the business are propping the consumer up. >> what you're seeing is a kind

of stabilization of the u.s. market taking place. i don't think anybody is betting to another significant growth next year in the u.s. market. you will see something stable or around 1% of gross next year. so it's very typical of other period of time where when this period of recovery ends up and start to stabilize the market. you have much more incentive activity, so it's a very classiccle situation. >> >> as you know in terms of brazil, deepest recession in decades. auto sales here, guys, down 40% in two years. gohsn believes if we're not at the bottom for the brazilian economy we're close. >> this is due to the fact that decisions are being made and people trust that this team in charge of the economy knows

where it's going, has a policy and want to get there. i think it's going to be slow, brazil has a lot of challenges to face. if this continues without any doubt the car market, which is at 2 million today, compared to 3.6 million three years ago, will be geared toward recovery. >> important insight there, guys. tonight, of course, opening ceremonies, 7:30 eastern. 6:30 central. only on nbc. later on this hour, guys, we'll hear a little bit more from ghosn about brazil's readiness and whether or not with all this economic and political distress, they can actually afford to host the kinds of games that we're used to. more on that later in the hour. >> carl, of course, you've been there i think a little while. i'm curious what your experience has been like so far given all the concerns we've heard, whether it's about the readiness of the venues or zika, or security? >> you know, i would rank zika near the bottom on the list of

concerns. it's winter time here. i haven't seen a mosquito yet. i think that's been largely overblown. the story has become north american as you now know. security will be an issue. i mean, they've had to host these games on a fraction of the budget of sochi, a fraction of the budget of london, so i think people definitely have their eyes open going into these games, not from a health standpoint, not from a pollution standpoint but security is something you can't take your eye off. >> we will be seeing you shortly. carl quintanilla in rio, very exciting. exciting for the opening ceremonies tonight on nbc. >> a couple things we have to talk about that are kind of ironic. russia had gone off the radar screen. russia starting to come back big, the ruble. there's stengs, obviously, i don't want to get into the politics but russia a strong point of the quarter. india a major call out in this quarter, china, other than capital goods has been a call

out. imagine if we get trick back. holy cow. remember when that mattered. >> i can't. >> latin america is a disaster. some guys down, citi is going down to argentina. venezuela is not a country. >> you hear the music. a quick commercial break. >> and then bristol-myers. >> says right there. bristol-myers and merck we will talk about them. it is actually never good news when a drug and a -- fails to reach the end point certainly when talking about lung cancer. but these two stocks going in opposite directions. a closer look. also take a look at futures and don't forget jason furman will join us for a first look at the jobs report, we got a lot more "squawk on the street" after this. bchl

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. we have some big moves premarket for merck and bristol-myers. bristol-myers is going to be down sharply, after announcing that a lung cancer drug that it has been developing failed in a late stage study. merck is rising because investors feel its own drug could benefit from

bristol-myers' failure. i mean those are huge moves. >> well let me explain -- >> merck is having a significant impact on the dow. remember it's a part of it. it is a price weighted index, not a market cap weighted index. hence statistically insignificant i like to point out and that qwhy it's up more than the s&p this morning. 42 points alone. to the news itself, check mate 26, trial investigating the use of opdevo as a mono therapy didn't meet the end point with patients previously untreated noncell lung cancer. merck has something that may be doing better. >> i'm not going to sugar coat that. my friend adam that writes for the street by far is unbelievable. i want to point out more die of lung cancer i'm reading this piece, more die of lung cancer than any other other cancer type. number one, second why lung cancer considered the largest

and most important market. peak revenues for this drug were going to be 12 to $15 billion. that's a top three drug. okay. top three drug, what i was looking for. 12 to $15 billion, maybe more, one of the reasons i've been talking endlessly about bristol-myers. because this drug is so, so important. trudeau, i regarded as not as good a job as merck is going to the floor for the biggest cancer market. >> we should point out these drugs are already, in other words, they treat other cancers. >> has been a nation drug, let's not minimize -- >> they try them and then try them in additional cancers against the chemotherapy to see if there's an actual -- >> every cancer they try. remember, this is the drug that made bristol-myers into a different company. it was no longer a kind of an interesting drug company. the hottest drug in europe, arguably. okay. as opposed to like anti-cholesterol. but i have to tell you, david,

that i am stunned because the success rate of this drug has been amazing. so to see this in what i'm going to say was a given, we all thought this was a given, that's how we arrived at a $15 billion estimate, which is why this company got re-rated as almost like a biotech. now i got to put pen to paper. people will be let down but i don't instantly have whether bristol-myers is a buy, but i am shocked, like everyone else, and by the way, everyone else in the medical community. because this was the first line. this is what you took when you got -- this is the most unfortunately, the largest cancer in the world. >> i know. >> sounds like -- >> merck has their -- >> it's the biggest. >> merck's previously announced its own trial that had shown -- >> when they reported their last quarter the reason merck stock looked like punk numbers wasn't bad is the key true to line. it's a good drug. this was the hope. by the way, i'm sad about it because having had relatives

that died of this. >> of course. the same. >> this was the drug. this was the drug. and it didn't work. and it is -- when they held the stock, i was -- i just thought for sure it was they were going to say this is first line and it's big and i -- i'm as astonished as everyone else. i cannot give an off-the-cuff answer about whether bristol-myers is a buy because i know what institutions were in there betting that this was going to be maybe the biggest drug of all time. >> well a huge market cap move, both ways here. >> correctly. >> and will be following it closely. up next jim's mad dash as we count down to the opening bell. there is a look at futures as well and you can see that dow benefiting from the move up in merck. more "squawk on the street" after this.

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about seven minutes before we wrap up the trading week here. where are we headed on our mad dash? >> fireeye, a stock a lot kept saying it's a natural to be taken over, because of cyber security. david, it will not be naturally taken over because today they actually had a very good analysis of why they have a giant -- munster shortfall frankly and kevin mandy the ceo, says when we're responding to only five compromised machineses rather than hundreds or thousands it does not require full-court press for remediation, attackers don't come back. too many one off, ransom cyber hacks as opposed to giant home depot like. they come in the forensic specialists if you don't have the giant attacks you do not have -- >> does this mean corporations are doing a better job of protecting their networks? >> no. >> it doesn't.

>> they would say that's what happened -- they say they own, again, i thought it was candid, that their own sales organization was weak. they didn't execute well. but the bad guys are now about ransom, not about giant hacks. that's a change. and i thought this was really interesting. they don't need to dot giant forensic if you only have a small-scale hack but they did say that perhaps people are a little more comfortable and don't need the great -- they don't need the great threat prevention and investigation. they're happy for the good. i thought that was -- i don't know if you like that. saying you know, you don't need us, you don't need the blue chip. go down to the red chip. i'm not sure if that is such a good -- they have language, organizations opting for good enough versus best of breed. i didn't like. i don't know if that's the case. use cyber security, do you say -- do you say listen, you know what -- >> i know. >> let's just go -- spend a little less. >> yeah. >> i have to tell you, remember, you don't pick up the paper and

read about the giant hacks and that was fire eye. it's the ransom hacks, like listen, pay us and we won't release the data and those happen constantly. >> they do? never talked about. >> all right. we got about five minutes before the opening bell here on this friday. you can see the floor starting to get a little crowded. >> merck is going to add about 64 points to the dow. >> it will. >> we'll have what that dow does when we come back.

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local & global. open & secure. because no one knows & like at&t. you're watching cnbc "squawk on the street." we are live from the financial capital of the world. the opening bell will be ringing in about oh, a minute and a half or so. this is when i do turn to you. >> i have to say it's bristol-myers just because it is -- there's going to be a major rerating and -- >> the question what is the key to this market, that means today what will people be focused on, tend to have a lot of sentiment one way or the other in terms of moving things in a particular

direction. of course bristol-myers as we just discussed down sharply on the failure of one of the key drugs but in being a treatment for small cell lung cancer. >> that's the biggest market so let's not -- people say oh, what is that. who does that. that's by far the biggest market how you can get to the outside. some people are saying $18 billion number. >> in annual revenues for this drug. >> that this is going to be -- you know, just gigantic. there will be an opportunity at some point. i don't want to make it sound like this is the end for the company. that is untrue. it's a very good company. >> you have really enjoyed and liked bristol-myers. >> some of it -- >> as we watched the crowd around that stock as it gets set to open. >> cancer, very, very hard drug, very hard drug treatment and they had it. we all thought. so i just want to be careful. i don't want to say be glib and say, buy bristol. that may turn out to be the case but i can't do that. that's not right. >> and again we're talking about a company with $126 billion market value. so when you take 18, 17, 18%

away you get a sense as to how much market value is being lost today. >> but it will cause people to go to other stocks in the group, but don't be glib. i am urging myself not to be glib about it is what i'm saying. >> there it is the opening bell for this friday. taking a look at the s&p 500, real-time exchange back at our headquarters in new jersey. here at the big board, san tan der of chile celebrating its 20th anniversary, nasdaq, fogo de ciao the brazilian restaurant chain celebrating the olympics in rio. >> you deal with the banks. notice in all the lines the consumer number credit surging. we don't talk about that. there's been a lot of consumer borrowing. more than there used to be. that's part of this trend too. i think that people yesterday were saying that home depot sales have been soft. home spending is dramatic and

home spend is bringing contractors back, some of the labor shortages i have seen by the way are in road building, in construction, so there's jobs being created, 70,000 professionals and business, that had been the epicenter, because white collar workers who turned 50 were endangered species. maybe that can change. that's who we -- i don't know privately when i talk with you we don't hate each other off screen. i often say what happens to all these people, david, who are digitized. what happens to all those assistances cut out by the salesforce.com. >> and we hear about it so often at companies seeking efficiency, that you know well, i cover well also, that are eliminating these jobs as a result of being able to -- >> kellogg. >> right. >> kraft heinz up a lot. >> kraft heinz. >> they come in with the zero base, cut out of all conceivably expenses, maybe cut more than they should, some say. >> that's who i was concerned about. i'm still concerned about.

talk about with jason. but this 70,000 fresh home business was a surprise to me. >> listen, this, of course, again, if you're just joining us, the big story of the morning is 255,000 jobs were added in the month of july. that was about 75,000 more than had been anticipated by the people who try to come up with what they think the number will be. private sector was ahead. adding 217,000 jobs. versus an estimate, 170,000. so it was a good jobs number. >> dollar stronger. >> 4.9% unemployment rate stays where it's been. >> the insanity here there was a time when 10-year would have been down two points. >> yes. >> yields would go up. >> yes. >> yields are ten ticks. yields are the bonds are going down very little. >> and yields are not up great deal. >> yeah. >> and what seemed to increase the likelihood that we do get a fed rate hike prior to the end of the year. >> right. but the world is envious of this number. you have to understand that, you know, a lot of people saying carney didn't act fast enough.

well, we don't know how fast their economy is going to roll over but we do know that there's something very good happening here, just doesn't show up in the darden or macy's numbers but shows up in the amazon numbers and it does show up in the -- in the cell phone numbers. >> right. >> shifting costs here. your cell phone is a major part of your cost structure now and the cell phone spend is up. tim cook did say that july was the biggest number for the app stores. that's the spending is changing. the patterns of spending are changing where people spend where the jobs are created is changing and it's happening rather rapidly and a lot of wall street guys are too old to see it. >> maybe. unless you kids. >> hope the jobs are being created. every time we sit here and talk about the future of autonomous vehicles i'm left wondering what's going to happen to those jobs. various people will tell you how many years it is away and it could be quite some time away but it does seem inevitable and yet those who always say yes but technology always creates more

jobs than it eliminates. >> i'm not buying that anymore. creates a certain number -- too much intellectual fire power required in a lot of jobs and when you go out to -- i like to go out to silicon valley four times a year to hear and you don't -- the people who work there who get those jobs, the school system is not producing enough of them. even if you have the best school systems, within those school systems there are not enough people smart enough to work at facebook. >> interesting -- it's probably worthy of a national debate. >> when i got out of school i god the job at goldman, ten interviews, questioned whether i was smart enough, are you smart enough to work at goldman. this is what the conversation is now at facebook but it's about the science and tech. did you take those hardest courses and do well? and those courses are beyond most people in this country even if they had the best elementary schools. >> this has been a subject, of course, that we have discussed with jason furman in the past and if we want to get back to today's all-important, that's written there, all-important, it

is certainly important -- >> i know. always struggle on that. on the heels of -- >> important 225,000 jobs added. jason furman joining us now with the reaction from the obama administration. of course he is the white house council of economic advisors chairman. always nice to see you. i would assume there are smiles like the one on your face right now given this jobs number from this morning. >> people are happy and they've been happy for the 70 straight months that our economy has added jobs. that's the longest streak on record. this is an indication that our economy is still moving ahead strongly and we are most excited that over the last year, we've seen the fastest wage growth we've seen tied to the fastest wage growth since the financial crisis. >> now there is -- has been some concern that perhaps emile rated a bit by this report the average number of jobs, look at it three months, six months has been declining versus last year. are you encouraged and do you expect that is going to continue in terms of the trend that seems to be set where we're coming

back? >> i mean here a's the way i think about it. we need about 80,000 jobs a month to break even on the unemployment rate and have participation rate tracking demoggraphy. we've been exceeding that and that's consistent with the fact that we've seen our participation rate basically stabilized in the face of a democratic headwind and our unemployment rate has been broadly speaking drifting down. the reason we are creating so many jobs last year and the year before because we still had a high unemployment rate and we needed to bring it down. as the unemployment rate gets lower the number of jobs we need to keep our economy strong, is going to be a little bit lower. >> jason, jim cramer here. always good to see you. >> good to see you. >> the professional and business services added 70,000 in july including a lot of architectural engineering, computer system design. the -- at the same time the financial activities rose 18,000. these areas had been very hard hit.

is this banks and company -- construction companies rehiring people? because i had thought that technology had replaced a lot of these jobs? >> yeah. this job growth this month was pretty broad based saw it in a variety of sectors including those, whether the robots will take all our jobs before i got on. we have a couple hundred years of experience with this question of whether technology is going to replace jobs. and the answer to a first approximation is no, it won't, but it will create new job opportunities. i think it brings challenges and worth us taking seriously the pressures on inequality, pressures on labor force participation but wouldn't worry about the scenario of wholesale job replacement. >> i'm worried. i mean, i got all these guys talking about autonomous vehicles and truck fleets. driving is the number one professions for men in many states of this country. why shouldn't we be worried,

longer term, you will be gone by then, about that? i'm not convinced that all those jobs will be somehow replaced and to jim's point, we certainly needed a much more highly educated work force if we are going to relace them? >> i think we need to take that seriously. look at the advanced economies. you see different employment rates. some countries employ a large fraction of people, some less. that's even though everyone has the same technology. so it's important to make sure you're helping people find jobs, creating demand for jobs by, for example, investing in our infrastructure, creating more jobs for men and women throughout our economy, in that manner. i think we need to take it seriously. i just wouldn't, you know, panic. i think the types of answers we've done before, the basic things of invest in infrastructure help people find jobs, those can help us cope with these changes in the future as well. >> okay. just one thing that i just don't know whether this is -- always want everyone to be hired put

you have been trying hard to control health care costs. do we -- we hired 43,000 people in health care employment. is there ever a moment where you say okay, when does that number stop going higher because that's a huge part of the federal budget, which we know is we're most concerned about that could spin out of control in the next 30 years? >> if you look at health costs as measured by the pce, they're growing at the slowest rate they've grown in 50 years. 50 years lowest inflation in health care. health premium growth is a lot lower than it was in the decade before the affordable care act. and that's, you know, good news. our focus isn't on any particular target for employment or growth. what you want is to get the most quality for your dollar. we really are making progress on that. >> jason, as always, appreciate your joining us first on cnbc with a reaction to that jobs number. jason furman, of course, chairman of the white house council of economic advisors.

>> thanks for having me. >> sure thing. bob is on the floor with more on what's moving this morning. >> mostly we're up due largely to the good jobs report. wage growth 2.6% year over year a bit on the encouraging side. not surprising when you get these kinds of numbers, you see banks move up. 10-year yields moving up usually has a positive effect on the bank stocks. take a look bank of america, morgan stanley, citigroup, jpmorgan, goldman sachs up 2%. your market leadership groups, sectors, financials, subsectors banks doing well right now. we're getting the tail end of most of the reporting season. all the exploration production companies reporting commenting on oil. eog last of the big exploration production companies. bottom line smaller than expected loss and the trend is all these companies are the same. spending is down, but production is still high, still producing a lot of oil because they need to. they need the cash flow. they're all cash flow negative. so guidance for production is on the upside.

they will drill more wells towards the end of 2016. by the way, they got an upgrade over at deutsche bank. you can see the chart here. they're going to increase production. by the way 10% a year, even if oil is $50 they will increase production, they will increase 20% if oil at $60. production levels not dropping. move on and talk about kraft heinz facing the same problem all the big companies are facing in the food space, that is limited revenue growth overall. they did a number above estimates. revenues were in line. lower input costs. all a good thing. they announced a dividend hike, one of the dividend darlings, already 2.7%, above the s&p. a lot of people love it for that. see that off of the 52-week high here. the same problem with all the global food companies here, organic sales, down. they can't get them up. the volumes are on the downside as well. they did have some higher prices. that's helping a little bit. but you see difficult to move the needle when you're this big.

finally a lot of talk about how slow things are. it is august. the s&p very narrow rage, dow 1.3% range in the last ten days, pretty small. but keep your eye open. a lot of big names doing very well. tech in particular are doing very well. take a look at some of the social media names, for example, this quarter. so your zynga and alphabet and pandora, facebook and twitter, all up rather nicely here. double-digit gains for the most part in them. the big software names are doing well. microsoft, hit a 16-year high yesterday. not a historic high but 16 year high up double digits. big data, new relic, service now, splunk, all doing a little better and finally, david, i would note all of the big biotechs your regenerons, ahuman na, all doing well on top of that. there is things that are moving even in a slow market. back to you. >> yes, they are things moving including bonds by the way, bob. for that we head to the bond pits at the cme group in chicago

where we're joined by rick santelli. rick? >> well, thank you. and i think one week charts are appropriate. look at a one-week chart of 2 what you want to pay attention to is how the short end rates definitely popped up aggressive. very darn close to the top of the five-day trading range and keep in mind, we closed at 66 basis points last week in 2s, trading at 69, we closed at 64 yesterday. so you're up on both metrics. one week of 10s, 10s definitely pop but they didn't pop as aggressively. we closed at 1.45 last week in 10s, 1.50 yesterday, we're at 1.54. bunds, this is very interesting. one week cart same dynamic, everybody is linked at thep hip on so many levels but boy, not nearly as aggressive. keep in mind that yields are a bit lower than a minus dozen basis points they closed at last week. maybe up with of the chart's most scrutinized today is december fed fund futures.

if you look at it since the beginning of july what you want to realize is like any other short-term instrument like a t-bill, when the price goes down, you're basically raising the yield. easy to understand, right. as the price goes down here what people do is through a calculation they raise the percentage of tightening when it goes the other way and rallies, price goes up, it is lowering that. we see that we're not at the lows. so we've had higher percentages. one week of the dollar index, bang, zoom a chart that's aggressive. relative value trade. thank carney, abe, thank kuroda, driving the strength in the dollar. now how cool, carl, in rio! >> rick, thank you so much. when we come back we're just hours away from tonight's opening ceremony. plenty of anticipation but worry over things like security, pollution and a lot more. is rio really ready? a closer look when "squawk on the street" continues live from rio.

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♪ welcome back to "squawk on the street." live from rio. opening ceremonies just a few hours away now. a lot of excitement here at the city. but, of course, as with most games, lot of questions in advance about infrastructure, readiness, security, especially when you consider the stress that brazil has been under, the worst depression in 30 years, huge political instability crushed by commodity prices. we did talk to carlos ghosn yesterday about himself a brazilian whether brazil can pull these games off on the cheap. >> in general, i am i'm brazilian so i know what i'm talking about, brazilians are

slow starter and fast finisher. okay. so if you think the photo in the middle of the games, say oh, my god, these guys are never going to finish anything, but they are fast finisher, okay. we've seen this movie, we've seen it at the world cup, we will see it here again. so, the fact that it's taking place at the moment of heavy recession, doesn't help. okay. because i mean some of the fast finishing can be a little more difficult because of that. >> certainly that's the hope of a lot of people here in brazil, guys. it's estimated brazil's going to spend about $5 billion on these games, by comparison london spent 15, sochi where putin had huge motivation to put on a big show, spent $22 million. so as a result, jim and david, you're seeing a lot of last-minute preps, still training some security people. one thing we've noticed here, guys, a lot more scaffolding instead of pouring fresh concrete.

so the legacy issues we talk about with every games what will they do with the stadiums for years after the fact, and in this case, won't be as much of an issue because they didn't have the time or the money to put down fresh buildings, so to speak. >> yeah. carl, i saw you tweeting that as well a few moments in terms of the scaffolding. are they fast finishers? they're out of time now, aren't they? >> they are out of time and they've had to do a lot of -- i think, david, most games sort of project a sense of strength or triumph for the host country. in this case it's going to be a lot more about creativity and determination, tenacity, for instance, they've had to import police forces from all around the country. the state of rio had to get a bailout to pay its police salaries which were back in arrears. so you're going to be seeing a country, think very creatively, trying to think on its feet, and try to prove to the world that

developing economies can host a big international event. when they won the bid back in '09, this country was on fire. and it was the developed economies having the trouble. i always say it's like you bought a new house, and then you suddenly lost your job. you have to start thinking very creatively as a result. >> carl, want to go back to something you said because zika has just i don't know somehow gotten into the conscience this week. first of all the wrong season, second, they've done a remarkable job eradicating it. athletes, do you think the ones who pulled out will look back and say, what were we thinking? >> i think early on, this spring, it was a true concern. i do think as we went on into the early summer, athletes were using it, especially golfers, as a reason not to go when, in fact, it might have been more lucrative if you catch my drift to stay with the tour. that's my opinion, but it

certainly has not been a concern since we've been here. that could change. we haven't seen it. >> yeah. a very interesting, of course, no mosquitos. it's winter. carl quintanilla in rio, we will be seeing you in the next hour, of course, with "squawk on the street." up next it is stop trading with the man next to me here in new york city. where there aren't that many mosquitos either. this is a mobile trading desk, so i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices. the market's hot. sync your platform on any device with thinkorswim. only at td ameritrade.

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it is that time. >> i wanted to talk about munster beverage up huge. but i have to focus on priceline. kayak good, open table good, booking.com up 30%, cash flow $1 billion, up 38%, china strong. we would like to spend more money on facebook going forward from ceo boyd, spain called out as a strong market, david. this was a remarkable quarter and a lot of people felt the travel and leisure was being hurt. my hat off to these guys, a well run company. >> and losing their ceo. that was a strange exit. >> they got -- they got a core group of businesses. expedia didn't have the strong

quarter. >> and trip adviser didn't. you're not booking on trip. you can but apparently people are not. >> but priceline is one of these companies that we often sell short because i think the wall street analysts are so rich they never use it. they don't know how good it is. >> a lot of business is international. >> yes. >> what do we have tonight on "mad money"? >> a couple shockers about what i think you should buy. one is a retail name and people are going to say wow he's sticking his neck out. doing a lot of work on it. >> you do a lot of work on a lot of things. >> i'm not going to reveal. >> we will have to watch. >> thank you. >> at 6:00 tonight. have great weekend. >> you too, buddy. >> try to relax. >> really? >> spend time in the garden. >> i'm gardening. you will have to see the pictures. >> i look at my twitter feed to see your pictures. >> david, this is the jersey beefsteak weekend. they're coming out. i'm going to campbell soup and make them change their whole formula. >> all right. >> well coming up, not speaking

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here's an idea: replace yours today. [light instrumental music] ♪ good morning. and welcome back to "squawk on the street." i'm sara eisen here along with david faber at post nine from the new york stock exchange. carl quintanilla with us from the olympics in rio and he will join us very shortly. but first let's take a look at the markets at this hour, a celebration of a better jobs report for the month of july, both wages and jobs coming in better than expected. revigsz higher to numbers in may and june. the dow is up now 154 points. s&p 500 up 0.7% and the nasdaq o outperforms up. crude oil down 1.3%. >> i see that. our road map start with a beat

for july, the economy roared ahead adding 255,000 jobs. we're going hear from the former president's council of economic advisors, chairman ed lazear and goldman sachs chief economist jan hatzius straight ahead. >> the road to rio, carl is there and will join us with what is to come as the opening ceremony gets ready to get under way. >> and take two interactive beat the street with help from its grand theft auto franchise. we will speak with the game maker's ceo strauss zelnick. >> but first straight to the day's big number that july jobs beat, boosting stocks, the u.s. dollar, and u.s. treasury yields this morning. weighing in on the data and market reaction david kelly at jpmorgan funds as always, and joe, chief u.s. economist at deutsche bank here at post nine. david, we keep saying good news is good news and it's because it was in the not too distant past where a good number, a good jobs number, would make stocks sell off because everyone was worried

the federal reserve would raise interest rates. have we gotten over that fear of the fed? >> well, the problem is nobody will ever expect the federal reserve to raise interest rates until they actually do so. they've proved themselves so dovish through the cycle that it seems like we can get good news without having to pay the penalty of a fed rate hike. but, of course, i think the fed raising rates would be positive right now for the economy and markets. but yes, overall what this says is the labor market is a picture of health right now, very good numbers on wages, on payroll growth and really no reason for interest rates to be as low as they are. >> a picture of health, joe, you were getting a little worried about this economy. you weren't too optimistic lately. does this change your view at all? >> not really. i mean the job numbers are excellent, no question, gdp has been weak, unemployment hasn't moved for ten months. gdp has grown 1% over that time. the data today suggests we're still probably growing 1 something this quarter. so the strong employment numbers

mean productivity is very soft and, therefore, corporate profit margins are under further pressure. this is not a long-term sustainable phenomenon. >> on the other hand, better job growth and sustained job growth which is what we're seeing, the three-month and six-month average move up, i think this is the best two-month stretch with june and july would suggest better consumer spending should filter into earnings. >> maybe. the problem you have is the consumer if you look at the trend in consumer spending it's been around 2.7 prior to an oil crash and then 2.7 last quarter, year on year. no real shift. if, for example, the economy were to improve as you suggest, better income, stronger consumer spending, and that thesis plays out and helps pockets of the equity market you come back to the issue of the fed and the problem is the fed is telling us its terminal rate is 3 and the market at 1. i'm not convinced that the fed starts raising rates that's good for the equity market. i think we relive what we saw last year early this year. >> david, what's your read on the fed and how they take this

number into consideration as to the possibility of a rate hike before the end of the year? >> you know, i think joe is being too pessimistic on the u.s. gdp growth. the key thing about the year of gdp we had a huge inventory correction. inventories were shrinking in the second quarter and that means going from here for the next year, inventory growth will add to economic growth. so i think the clouds are basically clearing here in terms of the inventory correction, worries about brexit and other issues. i think growth will ramp up into 2017 and should be enough, if nothing goes wrong, should be enough to tilt the fed towards raising rates in september and then again in death. i think we will get two rate hikes this year after all. >> what about joe's view, david, which a lot of investors share, that it would be bad for the equity markets if we do get that fed interest rate hike and we had a preview of that, based on what happened last december and early into this year? >> no, not really.

you get a temporary effect. what's happening is interest rates are very low in terms of both fixed income and cash so if the federal reserve raise rates and that hurts the bond market it's going to funnel more money to the equity market. when you raise rates from low levels that helps the equity market. only when you raise rates from higher levels it hurts the equity market. >> what about david's point about inventory? >> yeah. >> too negative? >> no. i've gotten gdp exactly right. the thing is inventories are part of the equation, but look nominal gdp growth over the last four quarters is 2.4 the weakest four quarters since q1 of 2010. not just inventories, weak capital spending outside of energy, you have a he gotten an economy that i argue is unbalanced all being led by the consumer, and there isn't one period in u.s. economic history where growth accelerates in the eighth year of the business cycle and margins are under significant pressure. maybe we can get back to 2%

growth, but boy, it seems like we've got a lot we could and should worry about. >> our economy is always led by the consumer. your point is even more so now. >> but you have, david, recessions like 2001. even 1981/82 where consumer spending year on year numbers never went negative. it's always about the remaining 30, 35% of the economy and i look at the corporate sector very high debt to income, and weak profitability as being a sign -- something to worry about. >> even if the economy -- >> i think -- >> sorry. >> i think the profits are beginning to bounce a bit first of all, and second of all, servicing debt, corporate debt, is easy at these low rates. i don't think that's a drag on corporate sector. the main thing there is no excess in corporate spending right now. investment spending is very low. i don't think it's going to fall from here. >> david, the thing is, i don't see how you get a good profit number for q2 given the fact that growth was 1%. nominal barely above that. see how the q2 numbers are so

good we'll get the numbers -- >> the margins, and in another month. look the margins, corporate profit margins peaked in the third quarter of 2014, and every post-war business cycle the peak in margins has led a recession. >> i think this is a -- yeah, but this is a very unusual cycle because of the way the federal reserve has modified slowed growth. >> it's true. >> very slow expansion but could be a very long expansion because of being a slow expansion. >> we're also more vulnerable to shocks and we have no ability in monetary policy to respond to things because rates are so low. >> how refreshing to get two differing opinions. thanks, guys. >> thank you. >> a story right now. with the dow up 152 points. the olympics officially kicking off as 10,000 athletes descend on rio, brazil. carl is there at the center of the action and joins us now. good to see you. >> the opening ceremonies, of course, tonight. you mentioned the 10,000

athletes, 554 of them american. 7:30 p.m. eastern time, 6:30 central on nbc. michael phelps, the most decorated olympian of all time will bear the u.s. flag in his fifth olympic games. he's never walked in an opening ceremony. of the russian athletes, 271 of the original 389 are still cleared to compete. of course raising more concerns about the ioc's commitment to anti-doping. and then, of course, there are the athletes who are simply not here at all golfers jason day, jordan spieth, rory mcilroy, basketball player lebron james, and steph curry. obviously for various reasons choose nothing to the come to r rio. the opening ceremony we're told operating on a tenth of the budget of the london games, is being billed as the sexiest opening ceremony in olympic history. you can expect a lot of fireworks, lot of history about brazil, even some celebrities including gisele bunchen, tonight, only on nbc.

>> of course. gisele is going to be part of the ceremony. thank you. we'll see you in a bit. when we return, zillow posting huge gains in revenue for the second quarter but it wasn't all great news after announcing losses at the company due to massive legal costs. we will get through that report. speak exclusively with the ceo, spencer rascoff coming up next with the dow up 154 and the s&p 500 up.75%. ♪ 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. fidelity -- where smarter investors will always be.

show you where we are on stocks, sharply higher led by financial consumer discretionary and technology following that better than expected jobs report, 255,000 added in the month of july, 75,000 more than economists were looking for. two negative sectors utilities, david, and telecom. >> shares of zillow group down about 6% or so this morning despite what were strong revenue gains for the second quarter. the company did announce reporting losses due to significant legal costs. joining us now exclue lisively explain is spencer rascough generally positive reviews on the quarter but one of the key questions your guide down in ebitda guidance for 2016, at least below a number of estimate out there from the analysts who follow you. why? >> it was a beat and raise quarter.

raised revenue for the full year by 5 million, ebitda for the full year by 10 million. i think you're looking at a stock up over 100% over the last year. so doesn't surprise me that it's taken a little breather. you know, we take a long view, we went public five years ago with a $500 million market cap and a successful ipo and over the last five years we've appreciated to about $7 billion. i'm proud of the record of shareholder value creation and five years from now we'll be prouder. >> that's great. didn't answer the question which was, why is your ebitda guidance lower than previous estimates? >> ebitda guidance was higher -- >> according to the analysts that follow you? >> i don't know. you would have to ask them. we raised our full year ebitda guidance by $1$10 million. >> which is below at least i'm looking at morgan stanley, i'm looking at oppenheimer, everybody seemed to be higher and now all speculating or saying you're choosing to invest some of your savings from lower than expected legal costs into the business and growth. that is right? >> that's -- yeah, that is

right. so we're saving around $25 million or so foregone legal expenses and took about half of those and let it drop to the bottom line, raised ebitda, and took about half of those savings and invested in the business in product development and people and advertising. we view ourselves as being still in growth mode and it's -- at this point still a revenue growth story and not an ebitda margin maximization story so we're taking some of the profits and reinvesting in areas we think will pay off. and i guess some of the analysts wanted more of those savings to drop to the bottom line than we're prepared to do. >> as we have followed your growth story a lot of that has been driven by the base of agents growing very fast which i know you have told that story here on cnbc very well, but it looks like as the business matures, it looks like you're going instead to increase the spend for agents. is that a sustainable revenue growth path? >> you're right. we're much more focused on higher quality agents than simply any agent advertising on the platform. and so the total number of

agents is actually declining little bit which we're pleased with. what we're doing is because our traffic is growing quickly, the leads to the real estate agents is growing quickly, this quarter up 50% year over year to around 4 million and we want to make sure those 4 million end up in the hands of great agents. the strategy to focus on great agents not just any agent. we believe that strategy is paying off and our premier agent revenue growing 30% year over year, an acceleration of how it used to be growing the last couple quarters. >> on a related note as you go from start-up mode to mature company, i wonder if that makes you more vulnerable twists and turns of the macro economic data, housing market data which hasn't been at least in a straight line. >> you're right. house ing is slowing a little bit. zillow economists say in q2 home values up around 5.4% year over year and we're forecasting about 3% rate of appreciation over the next 12 months. a slight slow down, a return to a more normal rate of appreciation. we haven't seen that impact our

business at all. eat her on the consumer traffic side or real estate agent advertising side. housing is slowing a bit. >> spencer according to comp score, you're capturing 67% of web and mobile and 78% of mobile real estate. i mean i don't know how much more you can capture of a market. i would assume you guess the market has to grow or can you take those up higher? >> yeah. i mean four out of five people using a smart phone to look for real estate information is using one of our services. and we do think it can go higher to answer your question. that's why we have hundreds of software developers building new products and features to grow our audience still still. that audience leadership position is critical. we think advertisers follow audience and we have the largest and most engaged of shoppers and expect to continue to extend that lead through product development and advertising. zillow brand is extraordinary, and true la is extraordinary. we think both can become household names and look for us

to invest in product and advertising to grow awareness and that audience. >> on david's question about profitability, you're preparing investors for a longer term story of higher margins. can you justify how you will do that? >> sure. we told investors we expect to have about 40% ebitda margins at squall. when revenue is growing in the single digits, not in the 30% range, then we'll have a lot of margin expansion at that point. and so it's a slow and steady march. last year around 14% and this year guiding to 16% margin on a path to 40% margin but for the near term anyway we want to grow revenue and audience because we think that will create more shareholder value rather than take all the margin potential today. so that's why we invest and we have a good track record of making investments that pay off years later. >> finally, sometimes people like to focus on when you are replacing an auditor which you're doing, effective after you report your 2016 financial statements, deloitte is taking

over. why did you make the change some. >> yeah. we switched to deloitte. every couple years we do a review of major venders for things around cost and culture fit with our team and we decided to switch auditors. nothing to see here. no disputes between us and our auditors. we're filing the 10 q as ordinary today. we just switched to find a team that we connected with better and keep an eye on fees. >> i appreciate your time, spencer, as always. >> thank you both. >> appreciate seeing you. spencer rascoff, chairman and ceo of zillow. >> when we come back on the show the former chairman of the president's council of economic advisors, ed lazear on jobs and then later goldman sachs chief economist jan hatzius, their take on the strong jobs number is straight ahead. a look at where we are, the dow up 156 points. s&p 500 up 15. the nasdaq up now over 1%. merck is leading the dow. much more ahead on "squawk on the street." ♪

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welcome back to "squawk on the street." on this jobs day friday. let's get over to rick santelli in chicago at the cme group. rick? >> thank you, sara. i would like to welcome my jobs friday guest ed lazear. thank you for taking the time. >> pleasure to be with you, rick. thank you. >> all right. let's just go through kind of, you know, all the data we've seen thus far with respect to digging down on the number. average hourly earnings, work week, average work week, your thoughts on all of that, understanding that the month over month metrics on both of those, shows that the read that we had today on earnings and work week, were the second best of the year. the first best being january an especially on the 0.5 increase in january for average hourly earnings. the high water marc was 0.6 in january of 2015.

these aren't bad data points. >> absolutely. no. this is -- if you look at all the numbers and take them at face value, this is a very good jobs report. no doubt about it. the fact that average weekly hours are up by 0.1, i always make the point that that's the equivalent of about 350 to 400,000 jobs, so that's a big deal. as you just pointed out, the wage growth is good over the year. it's been about a little over 2.5%. so, you know, it's not -- not terrific, but it's still showing significant wage growth. that's a good sign. the one thing i would point out and the reason i say the face value issue is that one of the things that -- >> i was wondering. >> we should note, all right, so one of the things we should note is that we've had a lot of volatility over the past three months. if you look back two jobs reports ago we created 25,000 jobs. this month it's 10 times that. when you see that kind of volatility it causes a guy like

me to be somewhat suspicious something else is going on. the obvious prime suspect here would be seasonal adjustment. so if you look at the nonseasonally adjusted number it actually fell this month. that's not supplirprising. the point is a lot of the mix is being created by the seasonal adjustment itself and i'm a little bit skeptical that we've got that one nailed. so my guess is it's a bit smoother, less volatile than it seems in real terms and that what we're seeing this month is probably a bit of an overstatement what we saw in the past, probably a bit of an understatement. so that would be my one word of caution. >> obviously, a lot of attention to the jobs jobs jobs report for two good reasons, there was a time in our financial history when good jobs report usually were accompanied by ongoing increases or at least holding steady on productivity and all of this showed up in gdp. >> right. >> all those transmission lines are broken. >> right. >> what's more, we also look at

jobs jobs jobs because janet yellen and company have always used this as one of the temperature readings that they monitor as to normalization of rates. i still find it impossible to thing that under 5% unemployment isn't good enough for normalization but that train according to many op-eds you've written, the most recent in particular, is that that train has come an gone and you think janet and yellen and company know they've made a mistake so in the final comment how do they deal with that mistake? >> well, the problem is, they're about five years behind the curve in terms of their past behavior if you look at what feds have done historically and when they should be raising rates. the unemployment rate dropped from 10 to 15%. that's when you're normally raising rates not at the peak. looks we're close to the peak. not going from 5% to 0% unemployment and the issue is what do they do and i guess the best you can hope for is better

late than never. the problem as you mentioned earlier rick is that the rest of the world is not in sync with what the fed wants to do. everybody else is loosening, the fed is going to be in the situation where they're forced to tighten because they've been so low for such a long period of time. and, you know, credit markets, to a first approximation go across the world. we got a bit of a problem there. they're going to have a tough path over the next few months or next year or two actually. >> thank you for your comments. i know you had to rearrange your schedule to do this and i'm sure our viewers are thankful you did. i remember what my mom and dad used to say, just because everybody else is jumping off the cliff doesn't mean you to do it too. janet yellen, stan fisher, maybe you ought to think about that. sara, back to you. >> all right. hope they're watching. rick santelli, thank you very much. coming up, another economist take here, goldman sachs economist john hatzius on how the july number will impact the

fed. plus, take two interactive reporting an earnings beat. we speak with the ceo strauss zelnick about what is boosting his bottom line. much more ahead, stay with us, you're watching "squawk on the street" with the dow up 140 points.

good morning. i'm sue herera. your cnbc news update. donald trump making a rare admission he was wrong in his claim that he saw a video of a u.s. cash payment going to iran. he tweeted that the plane he saw on tv was u.s. hostages arriving in geneva after their release, not the $400 million payment the u.s. made to iran being delivered. a georgia man faces criminal charges after his twin toddlers died after being left in a hot car. 24-year-old asa north charged with involuntary manslaughter and reckless conduct. his 15-month-old twin daughters found unresponsive in a hot suv

on thursday. efforts to resuscitate them failed. protesters from the british arm of the black lives matter movement blocked the main road to london's heathrow airport. video shows the protesters lying down causing traffic congestion before arrests were made. carter fans in japan have a chance to take advantage of the strengthening yen. the luxury retailer will give a 10% discount for all of the products starting today to reflect currency fluctuation. that's the cnbc news update this hour. david, down to you. i don't think i could afford it with the 10% discount. despite everything no there's always hope. >> there's always hope. hope springs eternal. >> exactly. >> there's always currency fluctuation. >> that's right. >> i know. >> sara bridges ngs in currency. why wouldn't she. >> thank you. >> sure. >> the big market is that stellar jobs report the u.s. economy adding 250,000 jobs king the six month average job

creation to 189,000 jobs a month. the question remains, though, does the data work in favor of a fed rate hike in september. for more on the numbers, what they mean, joining us exclusively is jan hatzius the chief economist at goldman sachs. typically here, but this time far away in london. always good to have you regardless of where you are. what's your take? start off with the big question, does it increase the likelihood the fed move before year end? >> i think so. we raised all probabilities a little bit for september and cumulatively for the year. we still think december has a higher probability than september. but we do think it's ability 1 in 3 that there will be a hike in september. i think you would need to see pretty clear evidence in the fomc minutes that at the last meeting, they considered can it a live possibility. we'll hear from other fed speakers and another employment

report before the september meeting. i would say the odds are against, but by less than before today's report. >> you know, earlier we were spoking with joe, for example, who has a negative outlook given the gdp numbers we've seen, citing any number of reasons, including margins for corporations, having hit a peak some time back. where are you overall in terms of what this job report means, jan, for the broader economy? >> yeah. i mean i'm more constructive. i would say gdp numbers are pretty noisy and in the u.s. we have the luxury of so many high quality, higher frequency indicators that give us taken together a better sense of where the economy is than the gdp numbers. so we construct a composite indicator or current activity indicator that basically summarizes monthly and weekly readings. that picked up to 2.3% in july. generally it's been picking up the last few months and i think

that's probably a reasonable gauge of where the economy is. margins have been weaker for sure and i think a lot of that has been due to the decline in energy prices. the energy sector has been particularly hard hit. i think we shouldn't forget that there is an upsetting benefit from the decline in energy prices for the consumer and the consumer has been quite strong. so i think if you only focus on the negative impact of this basically distributional shift on the corporate sector and ignore the positive impact on the household sector you're missing part of the picture in my view. >> jan, this was the first real jobs report that we got after the brexit vote, surprised everyone. britain voting to leave the eu. there were all these fears and predictions from economists that it would impact confidence, that it would hit growth and that plays into hiring decisions. does this suggest that perhaps those predictions aren't going to be as true, not just in the u.s., but globally?

>> well, i think in the uk, we are seeing a significant slow down in the economy. we do think it's ultimately going to be a recession, albeit a mild one, but i think you're right. outside of the uk we haven't really seen even the sort of milder spillover effects we had expected so if you take the euro area, for example, where, of course, the effect should be bigger, i mean even there, it's not obvious in the economic data that there's much of an impact. and i mean in the u.s. and elsewhere it was never plausible we would get a significant impact. even those sort of smaller fears have not been realized. so i think what we're seeing is that brexit was a very significant economic event for britain, but it was quite localized. >> quickly, some of the trump folks, david mallpass, official adviser was on "squawk box," saying yes, better numbers and participation ticked up but it

is historically low. the participation in the labor market. is that a reason why people aren't feeling the better job growth and even better wage growth and feels a little miserable out there? >> i don't really see it that way. i think the decline in the participation rate that we've seen on net since 2007, at -- as of now, is overwhelmingly due to structural and demographic factors. the aging of the population. it is true a couple years ago, the participation rate was also partly low for cyclical reasons. i think that cyclical gap is now mostly unwound. and i also think that if you look at how people feel about the economy, when they -- when they are asked about their own personal situation, the response is actually quite positive. so i mean it's true that there is kind of a negative narrative about the world and about, you know, whether the country is on the right track.

you know, that's certainly true, but i think when it comes to more tangible, you know, assessments of how they are doing themselves, people do feel the better economy and the better labor market. >> we have to leave it there. thank you. as always. of course jan hatzius chief economist at goldman sachs. >> let's go from london to rio. send it out to carl for a look at what's coming up. >> hey, sara. it's the topic everybody loves to talk about before every olympic games. what is the housing like? we're going to talk about that, the good, the bad, the ugly and the luxurious. when "squawk on the street" continues live from rio. trolling for a gig with braindrone? can't blame you. it's a drone you control with your brain, which controls your thumbs, which control this joystick. no, i'm actually over at the ge booth. we're creating the operating system for industry. it's called predix. it's gonna change the way the world works. ok, i'm telling my brain to tell the drone to get you a copy of my resume.

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check out shares of take two interactive taking off today. first quarter revenue. the company behind grand left auto, surging 13% versus last year. losses at the company are shrinking due to more customer downloads of games instead of buying actually disks. and joining us here at post nine in a first on cnbc interview, is strauss zelnick take two interactive chairman and ceo. welcome back to the show. >> thank you. nice to be here. >> nice to see you. so grand theft auto 5 and the nba game that drove the quarter? >> that did drive the quarter among other things. our catalog was big in the quarter as well and grand theft auto on-line another record-breaking quarter despite our expectations there would be moderation, people continue to be engaged. >> grand theft auto 5 i believe is 3 years old. >> still driving growth. >> it is. >> when does the next one come out? >> we haven't talked about any future releases for rock star

games yet and we've taubtds about what's -- talked about what's coming in the next year. >> o of the titles that analysts are talking about is battle born, which seemed to have disappointed. your competitors over watch, outer watch? >> over watch. >> activism blizzard did better, do you attribute it to that? >> it was a competitive release and battle born did receive great reviews an the consumers like it and we're providing content, adding virtual currency but there is expectations and we were candid about that. i think one of the great things about enterprise today we are positioned to weather the things that don't go as well as you want. we said our strategy is to be the most creative, efficient and innovative and that includes getting things wrong now and then. so the good news we seem to have gotten battle born right creatively, haven't gotten it right commercially but we keep trying and we had a good quarter. >> what does that mean? you got it right creatively but not commercially. what do you need to do to make

it more competitive in the marketplace? >> that's what we're working on. dropping in new content, dropping in virtual currency and tuning up the engagement. one of the things that's changed in the video game business with on-line play, is that we can actually iterate in real time and used to be like a movie, you know, you paid your money took your chance you were done you moved on. today in the video game base the consumer can be part of iterating and inproving what we're doing. we launched stage two, for example, and that's a free to play title now. had been a pay to play title and we can iterate the content in response to customer stated needs and desires. that's a sea change for the entertainment business. >> you can respond quickly. >> you can respond and make things better. >> yeah. one would hope. everybody is talking about pokemon go including cramer you probably ran into on your way in here. >> i did. >> and his kids. augmented reality is this something you're focused on and everybody needs to be in your industry? >> we are focused on it and

focused on what augmented reality can mean, virtual reality can mean, we're also more importantly focused on business model changes whether that's title for smart phones, tablets, preto play models -- free to play models and we cover those basis and there's more to come. i think pokemon is less a story about augmented reality, which is tested by the group that brought us pokemon go before, and more about the power of nostalgic ipo once again brought to life and we do have the ability to do that. we have 11 tight les that have sold over 5 million units, 60 titles over 2 million units, a lot of wonderful ip and what we felt in the free to play and mobile space is the intersection of new technologies including ar which we haven't brought to market yet, with beloved ip is where the sbeets spot is and that's what -- sweet spot is and that's what pokemon go. >> do you think it's a fad or has real staying power?

>> the best forms of entertainment are both. we have -- we -- you know, over a long period of time there's staying power or we wouldn't know what pokemon is. the express of the title, you know, i don't think that will be a very long-term experience. >> what about your move to digital? we were talking about the fact that you and your competitors have embraced this, and it's making up a larger chunk of overall revenues. where are you on that versus where you want to be? >> well, where we want to be is where the consumer is and whether that's a physical disk or digital distribution is irrelevant although we do have a higher margin with digital distribution. it's a good thing as we move in that direction. for full game console sales, you know, that's still 80 to 90% physical goods and retail distribution is a key partner for us. for pc sales, 90% is digital distribution, for catalog well over 50% digital distribution. so great opportunity to be where

the consumer is in the world of digital distribution, a storefront in every home, a great opportunity for margin growth. that said we don't get to decide what percent is digitally delivered. the consumer has to make that decision. >> i know that number has been moving up for you along with the stock up almost 30%. good to see you. thank you. >> thanks for having me. >> strauss zelnick the ceo of take two interactive. well, it certainly has been a bumpy road to rio filled with security concerns, building delays, and outbreak of the zika virus. the olympics opening ceremony getting ready to kick off tonight. the question is, is rio ready. carl quintanilla on the ground in rio and joins us now. it is showtime, carl. >> it definitely is that, sara. we'll see that show begin tonight at opening ceremonies but it does seem like before every olympic games there is this media and athlete freakout about housing. 10,000 athletes descending on the village over the next two weeks. a lot of them posting some issues. take this australian basketball

player andrew bogut who tweeted a picture of him fixing his own shower curtain with the #iocluxuryhousing. in sochi the hash tag was sochi problems. that's what happens when you bring tens of thousands of athletes and media to a city at one. team usa, men's basketball staying on the silver cloud, a lux ru cruise ship -- luxury cruise ship at the port of rio, the men's basketball has not stayed at the olympic village for the past six summer games. they say the alternative accommodations give them a better chance to prepare for the games, sometimes the attention from fans makes it difficult to get ready. sponsors, they are footing the bill for the team composed mostly by nba professionals who will try to defend their gold medal from 2012. of course opening ceremony tonight a we've said earlier today, 7:30 eastern time, 6:30

central on nbc. we're expecting a lot of fireworks, and once we get all this preolympic drama out of the way, sara and david, we can get to the real reason we're all here that is, of course, the games. guys, back to you. >> yes. very much looking forward to the beginning. i know there's some women's soccer already but of course the real beginning of the games. >> yes. >> carl, thank you. did want to update an merger and acquisition story on the anti-trust front this morning. word involving anthem and cigna. recall the government, of course, is opposing the anthem/cigna deal and aetna's plan to buy humana. the cases have been assigned to the same judge. that's no longer the case. both companies arguing we need this done as expedition shusly as possible and thereof we like this judge because many people believe the judge will be a favorable one for the companies versus the government given his previous track record but in this case, it is now going to

anthem and cigna find themselves with a new judge it does appear. aetna and humana will get to trial sooner. no real response in the stocks. they're all trading at huge spreads at this point. but the court deciding that given scheduling and the need for expedition and everything else, they will assign anthem and cigna to a different judge. when we return, donald trump announcing key members of his economic policy advisors. we're going to grade the team next. (lionel) ♪it's peyton...

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>> they are moving in different directions this as they announced a key cancer drug that already failed on a late stage study for treatment of nonsmall cell lung cancer. the name of the drug has become a foundational treatment for cancers but in this case and unexpectedly so it did fail in it's aggression. which is nontreated advanced

lung cancer. contrast that with merck and they have announced previously it was seen as some what beneficial in terms of studies that have been done for that treatment of the same cancers. so merck up rather significantly though not as much as earlier this morning but that's having a beneficial impact over all and it's a price rated impact and bristol meyers lost the market cap for treatment of what is unfortunately the most deadly cancer out there at this point i believe and conceivably represents a very large market opportunity. >> that's what you're seeing in the stock. adding 22 points to the dow. on politics, donald trump announcing his economic policy advisors today ahead of his agenda on monday in detroit. john harang getswood joins us in

washington with the latest. what do you make of the name? >> well, it's not the a-team of republican economists but it's something. let's step back and talk about what we know donald trump unveiled about his economic plan. last september he put out a tax plan. the main features are top personal rate of 25% top business rate of 15%. 0% estate tax. it's the biggest tax cut ever proposed by anyone in a serious candidate for office. now they estimated it would cost $10 trillion on to the deficit. now donald trump asserted to me it wouldn't increase the deficit at all. literally no one in the business world of economics believes that so now trump advised an economic plan. the investor john paulson,

harold ham and steve moore. conservative economists that worked in past administrations. they're going to propose a plan that we're told will have a smaller addition to the deficit. maybe as small as $3 trillion but we don know that yet. we do know that some of the a-team economists from past republican administrations are not for donald trump. i had an exchange this morning with the head of the council of economic advisors under president george w. bush. he said donald trump will not get my vote. i have republican friends that think there's nothing worse than doubling down on the balm palm hillary clinton policies for four years but they are wrong. he's not on the trump train and we'll see what he comes out with specifically on monday. whether that makes a difference. the problem for donald trump is that apart from the immigration wall and the ban on muslims which he has altered to some

degree he hasn't shown any particular devotion to any policy. so whether the policies he announces will influence voters it's yet to be seen guys. >> it strikes me of the 15 economic advisors they are all male. i wonder who hillary clinton is going to put on her team. >> we'll see women at the very least. it's also interesting to note the presence of of course a lot of ale estate hedge fund and the private equity. is trump still talking about getting rid of the carried interest tax break. >> yes, but the carried interest tax break wouldn't mean very much in a world with rates as low as he is proposing. right now the reason carried interest has hedge fund managers and the spread between the top personal rate and capital gains rate. he would and receive on that. >> that is a very good point.

>> just quickly here, how he is going to bring up more corporate tax rates and especially people that are failing the impact of economic recovery that we have had, what is her message going to be and who do you think she's going to have on her team? >> i don't think lower corporate taxes resinates with those not doing well. certainly resinates with the business community. hillary clinton is promising no tax increase for the middle class and we expect her to come out with the tax cut. they put out an ad earlier this week that promised he is going to raise taxes on the middle class. she is actually doing the opposite. >> john, harwood thank you very much. the dow is up 150 points almost and squawk alley is coming up

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♪ welcome to squawk alley for a friday. i am here in rio where of course the 2016 summer olympic games are about to begin. opening ceremony tonight, $1.1 billion in ad sales. 10,500 athletes coming to these games. 554 of them american. the young