good morning. it's 8:00 a.m. at facebook headquaters. 11:00 a.m. here on wall street and squawk alley is live. ♪ good friday morning welcome to squawk alley. john forte, kelly evans and i are holding down the fort for the hour. the big story today the u. s.

adding $151,000 in the month of august. steve is back at headquaters and the market seems to be taking it in stride. >> more than in stride. they're in strut maybe. they like this number. they like the idea that it could put the fed on hold but eight piers the august jobs report may not have been good enough according to the market for september hike but may have been good enough for the fed to act in september. sarah asked about this in the last hour. and i want to come one the data i promised you guys. the probability is 20%. that's down 6 points but december 55% which is up 5 points according to our reuters icon which is what we used for our probability which is different than the other ones out there. these are the ones we used. given how robust job gains were in june and july he goes on to say guys, are you there? yes. there we go. june and july it was quite descent but the slower rise hung the fed out to try.

thompson reuters they say combined with a big work week takes the cake for no rate hike in september. and a lot smart guy thinks 55% probability for september. here's the numbers. up 151. 180 was what the market was looking for so plus or minus august was a member revised higher. unemployment rate did not tick down as expected. as was said there hourly wagers up 0.1%. i want to show you where the jobs were. interesting. leisure hospitality up 29,000. that suggest hes disgres nary income. on the part of consumers of 15,000. government has been a laggert here. the problem we have and the problem we had was made clear by that ism manufacturing number

yesterday which was that there were declines in construction and manufacturing. but as reporting and worth talking about that construction number is not construction happening. there is. it may be a lack of skills that are out there. a lack of workers in the construction business. >> worth diving into. thank you for that. we appreciate it. joining us here with his reaction, director of floor operations. art, august is notorious for revision so how big is the grain of salt that you will take with the report we got today. >> secondarily the components looked a little weak to me and not as robust as they had hoped and more importantly the average work week was down and while it was fractional given the number of people in the work force that wipes out far more than the

$155,000 as far as is concerned. >> a fan of the idea of a rate hike but there's so many things in this report that seemed not to change that much. was there any single me trick that you thought moved enough one way or the other to sway you more into one camp or the other? >> yeah. the average work week being reduced. >> i like that as a me trick it is important. >> you don't hear many people talking about it on tv. but i think that particularly yellen because she is basically an employment economist will look very strongly at that so i think it backs them up and the other point that i make over and over again that traditionally the fed and i got this over at deutsche bank has not raised unless the market puts a 70% probability on it. and let the market predict where

it's going to go. >> there's larger questions about the compositions of the job. if the manufacturing and the goods producing side seems to be struggling. it's unusual to see everyone else powering forward. >> and you saw food and entertainment. that looks like low paying jobs coming in. >> the risk of the fed acting too soon is far greater than the risk of them acting later. you have the election going on. you have a lot of things coming up. you're going to have maybe as much as $100 billion in variable rate security going to be repriced in the month of september. so there's a lot of things, if i were on the fed i would want more time to look at. >> what is the credibility issue if they skipped september and all the data appear to be there. >> i think the major credibility

issue is going to be mr. fisher. he said over and over again and if they do not move, i would like to see if mr. fischer descents and if he doesn't then how strongly does he really feel that they should be moving. that would be my credibility issue. >> how long should we be looking at the long-term unemploy or underemployed? it feels to me to feel like we're moving out of this slow growth. you want to see some significant movement in one of those two. >> couldn't agree with you more. >> stuck in a rut and talked about job skills and not getting the right people. that's a heck of a lot of people working and with the demographics beginning to change you have to get started or we're going to start looking like

japan. i couldn't agree with you more. >> talk about the different components of the market reacting to today's news. you had the dollar weaken against other currencies but the dollar index is slightly positive. the yield is rising there on the 30 year. i think what you saw some of the initial reaction was that september looked less likely and maybe september. and also december is out there and that's helped bring the dollar back and lifted yield and the market is uncertain about it. the equity rally is because the equity types believe that september is off the table. >> art, good long weekend to you. >> ice cubes. >> the ice cubes don't have a chance. >> let's get another check on

the markets right now for you. the dow, the s&p and the nasdaq all trying to make heads and tails of what's happening with the economy and the fed but down to a gain of 89 points here. the s&p up 10 and the nasdaq up 29. and of course this are exceptions. shares are hammered after lowering earnings and revenue for the rest of the year in terms of their forecast. it's on track since early june. shares down nearly 20% and gap is also moving lower after same store sales fell 3%. worse than expected and the biggest drop came at banana republic that fell 10%. gap shares down 1.3%. >> all right. coming up a massive recall for samsung after reports of battery explosions. is its new phone in big trouble? plus are tropical storms still reeking havoc on the southeast. what it means for travel ahead of the holiday weekend. mark zuckerberg is disappointed

after facebook's internet satellite blew you yesterday. the awkward moment between zuck and elon musk. more after a break. ♪ there's a lot oflaces you never want tsee "$7.95." [ beep ] fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro n help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.

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call things blowing up for samsung recalling millions of its new galaxy note 7 smartphones after 35 reports of burning and exploding batteries. s samsung just unveiled it last month. they talk about million of movements all week. who comes out on top ahead of the holiday season? >> well, there's only a few that are having a problem but, you know, it's a bad thing but they don't know which ones they are. it's like 35 or some small amou amount. so it's a problem to have to recall them.

>> samsung tried to take advantage of the rumor and it's advertising. i wonder if that makes this a little bit more sweet from apple's perspective orbiter from samsungs. >> i don't know. i don't think it's to happen in this thing. you know, these things can happen. he used them every day. it's a big thing for samsung to have this happen. they're just recovering some momentum after troubles and sales issue and so it's not the greatest thing to have happen and it will garner a lot of attention and if all goes well for them it's to apple's advantage for sure. >> well, what is the extent of that advantage kara?

we have become familiar with this time line where samsung likes to release it's devices about a month before apples to try to get a head start i know you said that but is that going to be switching to apple or do you think it's not natural? >> i don't think so. i think people in the samsung universe. and i didn't switch because there was a battery issue and there were plenty of problems with apple. >> got a couple of friends that switched from it. i wonder if they would have done it. next it's going to appeal the

eu's $14.5 billion demand on apple. there was some question about whether they were actually going to do that. he's going to meet next week to endorse that move. yesterday apple ceo tim cook sounded like a person. called the eu's move total political crap. kara, is this another extended legal battle like we saw questions of sovereignty and billions of dollars, et cetera. >> ireland has come back from a lot of economic downturn. it's been a popular place for u.s. companies to operate. i was just there. so the question is should they be allowed to do it or should the european commission say enough of this.

and they're very aggressive on these issues. on all kinds of issues around u. s. companies and sometimes it feels a little bit excessive. he talked about that and sometimes, you know, people in europe say well, since these are the taxes owed these should be paid. >> someone is going to pay taxes here in the u.s. forever but all of these tax gymnastics are going to catch up with the companies eventually. >> interesting to see tim cook dangling the idea of repatriation to the u.s. but even a one time thing like that doesn't solve any issues. it's a huge opportunity in november. you get somebody in there that can do something more interesting and more appealing on the tax front and there can be a real game changer. >> yeah, i don't think any politician benefits from getting

sweetheart tax deal. it's a giant rich corporation. so it's a mixed bag. they say we're going to bring them back here. so it will be an interesting struggle but i don't think anyone is going to win by saying let's get them tax deals. so that's what they ask for from the governments. gym said a deal is a deal and it kind of it. it should be allowed to do this and then what happens to all the other sweetheart tax deals. it goes on and on. >> sounds like a first world problem but a tough blow for space ex and that was meant for

after ka. i'm deeply disappointed to hear that spacex launch failure destroyed our satellite but we're providing connectivity to so many entrepreneurs and then everyone else across the continent. >> i don't imagine that you ensure a $200 million satellite or that you have a back up waiting in he reserve. it should take facebook a long time to get another one up there. >> what does this to to the promises he made. he was in africa and facebook's plans to cover the internet access. >> a lot of this is through drones. they're trying to apply for a certain amount of time and then internet connectivity but i think the satellite was a key part of the effort although they can still continue to roll out.

he is in africa for this. one of the reasons he is there and watching his travel log is quite lovely if you see him posting on instagram and elsewhere so that was one of the reasons he was there and then this thing closed up on the ground. the e-mail was cold, i don't know if you read it but this is an expensive thing that happened. this is what happens when you put up rockets. this is what happens when you want to two up in space. you have issues around fuel or something blows up. >> i joked on twitter last night, you break it, you buy it, but is this something that spacex is going to owe facebook for or is it coming with the territory of facebook is trying to do something innovative and

it comes with risk? >> i don't know. i was with the head of facebook's pr when it happened. having a meeting about something and they didn't know. they didn't know if there was insurance but i have seen the insurance and things like that but i suspect it's quite expensive and risky in general. and it's getting these things up and i think they really wanted to coordinate witt mark's visits there where he is actively courting the idea of facebook connectivity everywhere around the world. especially where it's not available. >> i would require quite a deductible. >> not only the issues with that deal but the issues with tesla itself but you're related to it.

they were down 5% yesterday. >> this is hard stuff. >> next week he is still elon musk. have a great long weekend. >> up next, breaking down a summer movie season dominated by high profile sequels. a look at the biggest winners and losers and what you expect for the rest of the year. what you expect in just a moment. we're good. okay... what if a million people download the new app? we're good. five million? good. we scale on demand. hybrid infrastructure, boom. ok. what if 30 million people download the app? we're not good.

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>> along with labor at a is the unofficial end when you can wear white without scrutiny. so which fair best at the box office and can warner brothers

capitalize on its harry potter reboot this fall? joining us to break down the holiday movie data is eric davis. >> welcome. >> how much does the summer movie season matter anymore? because we see some movies able to break out really big outside of that traditional window. we see some not doing as well within it as we might have thought and how did it two overall? >> it's still one of the seasons where you drop your big super hero movies and blockbusters. this summer is interesting because the biggest success story with the smaller budgeted movies that double their budgets on opening weekend. i like those. i personally like those movies. >> like the movies with the crazy, creep pi. >> a lot of people look at don't breathe is at the top of the box office. probably going to win again this week and lights out, the

shallows, purge election year. all of them did well moving audiences want to be scared. maybe the bigger is not the better or more attractive anymore. that opens a wider pool for summer season going forward. >> what do you make of suicide squad? rerued horribly but did okay at the box office. >> it's interesting. i love the premise of it and that they're saying let's make a bigger risk and movie all about super villains. could it have been executed better? maybe but a lot of people were turned on to this because critics were so devicive on it and i think going forward i do trust warner brothers that they're going to find some

cohesiveness with these movies that maybe both critics and audiences will like but audiences seem to like it. the fans of this film seem to like what it was about. >> what happened to the thesis that only franchise sequels could do well in this market? ninja turtles, jason bourne. they weren't the movies we were talking about. >> it's telling hollywood to get more inventive with it. we'll still play where you have been seeing the past couple of yea years. let's take what is familiar but do something more inventive and maybe it's r rated and maybe it's different than what we seen before. audiences are are saying we'll go see these movies but make them different. >> does the hurricane help? retailers love to use weather as

a crutch or a boost for them. >> it might they have a nice romantic movie coming out this weekend. it could help for that film and some of the others still playing. i'll be at the movie theater this weekend. >> you have to be. >> yes. >> and toward the end of the year as we look beyond the summer what's the big movie we should be look out for and disney animation which is the first film they made since frozen and we're starting to see the effects of frozen which we have like three animated films that are music driven. a film called lala land is getting a lot of puss around warner brothers with fantastic pastes and where to find them. and warner brothers are trying to find the d.c. universe but

with the potter universe i think they're taking advantage of the that and a champion for that brand. and wels disney right ahead of that in december. >> lots of different things to cover there. we'll see if heat does as well. have a great weekend. >> you too. >> meanwhile the u.s. jobs report having so ill pact on currencies in the sbur penne markets. sarah is here with that. >> we're seeing european stocks rallying to finish the week following in the footsteps all on the back of that disappointing jobs report all tied to the idea that the fed interest rate increase might be delayed. and gains accelerated as you can see intraday right after the u. s. jobs numbers were announced.

we got new numbers showing that european stock loads continue to show money coming out of the stock funds. again last week continuing a trend that lasted for months. the british pound also got a bit of a boost after the release of the u. s. jobs report adding to what has been a strong week for this currency helped by surprisingly strong british manufacturing data and the euro spikes for a short period of jobs but gave back it's post jobs report gains. it's down a little bit against the u. s. dollar. on the inflation front in europe. prices rose.1% in july on a month to month basis up .2% if you strip out energy. this all comes ahead of the ecb policy meeting after recent remarks and kick the stocks on drug pricing.

among the big winners in europe today in london trading that stock is now up more than 40% over the past 12 months. back to you. >> thank you sarah. plenty of rain power outages and flooding as the tropical storm passes over the southeast. what it's doing to air travel ahead of a long weekend with former continental ceo gordon bethune coming up. ecting our brs so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswis chat rooms wheryou can share strategies, idea en actual trades with market professionals and thousands ofther traders? i knowyour brain td my brain before you told my face. mmm,lueberry tap into the knowledge of other traders on thinkorswim. only at tdmeriade.

>> here's your cnbc news update at this hour. the world health organization says zika continues to be a public health crisis. the committee met for the fourth time this morning to hear the latest updates on the outbreak and prevention efforts. broc turner walked out of the jail in california this morning. this after serving three months of a six month sentence for sexually assaulting an unconscious woman. he was released under a california law that gives inmates credit for time served. an oil refinery tanker caught fire this morning in detroit along i-75. according to authorities the driver was in route to fill up his tanker when the tire blew out. it forced the closure of all southbound lanes on the highway. and ups will be increasing it's shipping rates but not until after the holiday shopping season. the 5% hike for ground and air service will take effect the day

after. let's get back to squawk alley. >> thank you. we'll see you soon. now hurricane hermmene causing delays. what can travellers expect as they take off for the holidays? joining us is the former ceo of continental airlines. gordon. >> thanks. >> i was trying to look at this area to see how the storm is shaping up but what disruptions do you expect here over the weekend? >> i think traffic along the east coast will be effected. maybe into latin america from new york but that storm probably will track the coastline and that's a frequent travelled route. >> should people buy insurance on these routes or is that a waste of money? >> i've been in the airline business. >> you'll have delays this weekend. it's going to cause some

destruction. >> you just called somebody and say wait get me on the next plane. what happens to the luggage. >> you miss out on a lot of revenue. that's been part of the problem but they manage that. bad weather happens every year and they put that into the plan. >> is this a problem for an airline like delta and an airline that has a hub in chicago. >> that's true. it's important. and bad weather but at the same time they all fly into the same area so they'll all be effected in some way or another. delta maybe more it's interesting too i saw something this morning on their revenues per passenger mile being down. what is happening competitively

across the airline space? all the stocks performed pretty poorly this year. >> it's a capacity issue and they may have put in a little bit too much capacity given the downturn in the economy. the energy sectors. >> this might go to different things that are happening but look at boeing. keeping it's prices flat. it's not going to raise them. all the indications across the sector are soft except for the fact that the planes are apparently still full. >> it's as good of shape in industry in the united states as it's ever been and they have good management and they're not 100% accurate but they're really close. >> a lot of airlines given the weekend and the weather have been waving change fees for

passengers that decided they don't want to travel. how much will that cost an airline that decides to do that? >> well, i don't think it will cost them anything. and they come back and spend that money. >> can i ask you about scott kirby too? he's moving from america to united and making the rounds and talking about his vision for this company and his excitement over having scott be a part of that. what do all of these moves reflect to you? >> well it says that oscar munos is a strong leader with the confidence to build a strong team of subordinates that may be able to take his place but it's a feather in his cap and he's putting together a really good team. >> it's a tough one too. you have negotiations with the pilots. a lot of people are actually, whether it's at the airlines or

elsewhere able to get pay hikes over the next couple of years. is that a problem or is it good to get these things settled? >> at least at united they have their labor issues behind them. >> we shall see. thank you for joining us. have a great weekend. >> you too. >> coming up, hillary clinton unveiling a plan to address what she calls excessive increases in drug prices. we'll look at what she is proposing. but first, rick, what are you watching today? >> well, i'm watching the fall out of the b jobs report on the markets. whether it's the yield curve or stock market but most of all, i'm thinking about how different the discussions are on this trading floor regarding whether the election should make a difference with what the fed does. they're supposed to be a political. disinterested. we'll talk about a political reality from the fed after the break.

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least. we'll see you in 15. >> we'll see you soon. hillary clinton unveiling a plan to address excessive increases in drug prices. meg joins us live with more of the details. >> that's right. the drug industry trying to figure out what this plan would mean. let's look at the key components as john has been reporting this morning. it targets what clinton calls unjustified price hikes on long available prescription drugs like the epipen. it would create a consumer response team to monitor the price hikes. they would have the power to intervene to make alternatives available including through importation and trying to increase competition and it can also impose fines and what she focuses on here is what she calls outliars. and they might wonder what are outliars. i asked folks what they thought of the price increases would

they call it agreous but not an outliar. they are wondering what would be targeted with clinton's plan. he says people should take this seriously. it's drug price regulation if it happens. it is applied to one segment of the drug industry for a specific purpose but a government body will decide what is a fair price for a drug with the legal power to act. he says while the official focus is nar owe once you create a group with the ability to assess the patients and the power to act the boundaries get fuzzy. that's what folks are worried about here. where are the boundaries. folks aren't taking this

seriously enough. they're trying to figure out what it means. >> and biogen going the other way too. we'll keep an eye on it as we head into the close here. let's get to the cme group now. rick with the santelli exchange. hi rick. >> hi kelly. we're all paying very close attention to this morning's number and that's an oddity that is normal. we have been paying attention to nonpharm and gdp productive numbers. it's taken on added importance because of jobs and how one of the pillars so well intersect. today's number you can call it what you want. it's better than the lowest number of the year which is in the 20s. >> now many said look at the

yield curve. well 80 base points in a two year. 160 in a ten year and 15el in front of the number. two basis points for each. i don't know that i walk away more educated on that but one thing is for sure. how many people have you heard reference the idea that the fed is a-political and make them touch each other there. disinterested? not interested. not driven by politics. i cry foul. don't believe t it. don't believe it for a second and i'll tell you why. let's be logical and really try to be objective here does anybody remember how the baton hand off went after the credit crisis for the 2008 election? it was like yesterday. having the candidates go to the white house. w didn't want to deal with it. he was a lame duck and it wasn't

good. market was hugely volatile. the market would have done what it did in march of '09. look at the reality of the fundamentals. here's my point. if the fed tightens i fully expect and any rational person would that the market is going to get a little bit more volatile. the fed tightened in december. what kind of a january do you remember even though the ship righted itself which is mostly what i remember. so let's look at the candidates. we have barrack obama and his legacy of all the jobs. we have hilary that's talking about a status quo relationship with much of the economics and then you have donald trump the outlier. if the fed raises rates in the september or november meeting before the election, do you think that's going to help the legacy of the current president?

status quo? no. my guess is it will give more to donald trump that the policies all along weren't working and it was the fed holding up the market. to me that's a political rewralty and the a and the p aren't touching. john forte back to you. >> in case you missed it china's commerce industry is opening an antitrust investigation into the acquisiti acquisition of uber's business. it's currently valued at $28 billion. and it's interesting that they're opening up this inquiry. i mean, given that these are two big players in this market. i guess it makes some sense but as close as didi is to the chinese government i have a hard time imagining they'll get slapped this hard with the regulation. >> with all the regulation they

have rules where you can only drive on certain days of the week if you have a license plate that ends in odd numbers and the government would have every interest to cut down on the number of cars on the road and if you can have a company giving people rides instead of buying their own cars it's probably a good thing but they have to look into it. >> it's interesting because uber feels like china is anticompetitive and then china says we'll look into it and see if this is anticompetitive. you're trying to figure out which way around this works and they're also looking into the comcast dreamworks deal so there's thresholds that say they can look at stuff with an x billion yuan business in china and global piz exposubusiness exposure. >> i wonder what commentary will come with whatever decision they hand down? perhaps as an opportunity to clarify their thinking around

this thing. >> unclear how long it will take but we'll be watching. when we come back, replacing satellites can be expensive. just ask mark zuckerburg but might be a solution. satellites that can fix other satellites. we'll take a closer look at that in a moment. in a moment.

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aditi? >> hi there, kayla. yeah, the spacex rocket that exploded yesterday, by the way, wa in cape canaveral, set to carry a commercial satellite into orbit for facebook. supposed to be the company's fist satellite to bring to sub-saharan africa. losing it was a big deal. hundreds are orbiting the earth doing everything from bringing gps into your car to forecasting the weather to relaying communications and tv signal, and they aren't cheap costing roughly $250 apiece, but each satellite only has enough fuel to run for about 5 to 15 years. after that, it become as very expensive piece of space junk. >> if they're in, very close to earth, they put them in orbit eventually they reenltser and burn up. far enough away, a place where they won't bump into other satellites and disrupt the orbital debrie they're in.

>> the first of its kind technology called a mission extension vehicle or mev, extending the life of a satellite up to five years's. >> the mission extension, innovative robotics system is like a jet pack. we fly up, grab on to the back of the sought light and strap on to it, and then turn off their system, because they're out of fuel. they don't have fuel left. we have a full tank of fuel and use our thrusters and propulsion to fly them around. >> then it can move to another. mevs can operate at least 15 years on their own and could save commercial satellite operators hundreds of millions replacing aging satellites. the first customer is intel stat and plan to launch their first mev in 2018. shares of the company dropped because of accounting issues in the second quarter but are hoping projectingprojecting --

like this will help fuel them behind me is and old hangar that housed airships. >> i remember it well. look at lululemon falling hard and on track to its worst day since december. a closer look when "squawk alley" comes right back. there's a lot of places you never want tsee 7.95." [ beep ] but you'll be glad to see it here. fidety -- where smarter vestors will always be. if onlthe signs re as obvio when you trad fidelity's active trader pro heou find smarteeny and it pnt ancaherotect ur potenti pfits.

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shares of lululemon down sharply after posting quarterly results pap key metric including online sales rose 5%. that mistress forecasts of a 5.9% gain. raising earnings in the forecast. in a press release, sale wos have been up higher if we didn't have to have an online warehouse sale. a clearance rack works have done a lot better. >> and actually a bright spot. the question is, can they somehow as they mentioned that being an inflection point, make sure that that continues?

>> does the bloom off the atleisure -- stopped into a lululemon last weekend. don't ask me why, in a mall, bored. but i didn't buy anything. >> in a mall, bored. >> and we were talking about this morning? >> no. i missed that, but it was, for none of the reasons you might imagine. literally killing time in a mall and saw nothing that remotely looked like i should be wearing it. >> gap is also part of that and saw their comps down yet again. one of the last retailers that even reports that figure. >> at least lulu, 45% rally this year, i think. coming off the boil, but gap probably one of the structural issues for now. >> going into the afternoon, kelly, still set up for a positive trade looking at the sectors. even the banks are in positive territory now? >> the question is why? the positive trade because we're taking the fed thing off the table again? but if the banks are doing well and then if we have another saying not so fast, maybe it's not about that at all.

unfair to me how to read the rally. >> perhaps people just don't want to be short going into the weekend. >> the friday effect we see that trade a lot especially for a long weekend. >> could be. risky names doing well. amd up 3% today. doing phenomenally well. >> and noon on the east coast. over to "halftime." welcome to the "halftime report." i'm scott wapner. our top trade this hour, that weaker than expected jobs report and werther it kehether ketherh stocks falling. and with us on-set today is barbara duran, senior portfolio manager with yorkbridge wealth partners. new face and happy to you have. >> thank you. >> all right. begin with the markets. stocks significantly higher after the