2016. "squawk box" begins right now. ♪ chicago, chicago, that town ♪ chicago -- >> live from new york where business never sleeps, this is "squawk box." >> good morning. welcome to "squawk box" here on cnbc. i'm melissa lee with joe kernen. we are live at the metropolitan house for the baron conference. good morning. what's coming up? >> reporter: good morning, i'm here with ron baron. he is going to sit down with us in a couple minutes and the next couple hours, we are going to get to know the companies and ceos inside his massive portfolio. bar baron, a big investor. we are going to tell you about that and his thoughts on the market, what's going on with the upcoming election. before all that, we want to get back to joe with the top

stories. joe? >> okay, andrew. it's friday. you know that. you have great guests. >> it is. jobs friday, too. lots going on. >> you know, we are all very tired after a long week. i'm just going to tell you, take it away, andrew. that's going to be the theme for the next three hours. this is yours. you have the good guests. you have the -- you have broad shoulders, heavy lifting. >> are you mailing it in, jeff? >> i'm not mailing it in. >> sounds like it. >> i'm mailing it to andrew. i'm not mailing it in. i'm mailing it to where it should be. he's got his jacket. let me see, is that white or a blue stripe on your -- >> well, if i was going to have a blue stripe, you know, can we talk about this? sometimes, how much should it peek out, a lot? >> no, no, no, way too much. >> you do it just right. >> leave some to the imagination. >> sometimes there's, really,

right? you have blue on it or just white? >> sometimes i try. >> you never go with the garish, ugly, never do a matching tie, matching -- that would never pass muster with you. >> i try not to. some people do the poof, the poofy ones. that's what it's called. anyway, andrew, we will be taken away on the last hour. you do the first two, we'll do the last hour, which will be about jobs and jobs friday. the october jobs report comes out at 8:30 eastern. the economy is expected to add 173,000 jobs last month. 156,000 the previous month. that would be an improvement. it's forecast to tick down to 4.9%. jobs to remain strong among most sectors.

health care comes out as expected. see what the markets are doing before this, whether markets are really being affected by this or the election. eight straight days. you done see that much, down days on the s&p. three straight months. anyway, there's where we are this morning, down 15 on the dow. the nasdaq yesterday. you know a lot about that. we covered that. >> covered it heavily all day long and the night before. >> then the s&p, which a lot of people now, we think about the dow, it's what people know the number of. 2100 is a big deal. we went through that like hot butter through a knife. >> a knife through bottomer. >> i like hot butter through a knife. >> that's a good one. it could work. >> it's like a rocket surgeon. don't you like watching paint grow? a walk in the cake?

let's look at some of the markets where they were up before. they are all down. they are all red. it's ugly. you know, they are supposed to be up because -- >> why? >> because maybe there won't be a brexit, maybe the eu will be able to survive and it will be good. it was a great idea to begin with, to have a common currency. you read that. this makes more sense to me. you see how many people, now people are mad. people that -- the 5248, this is not your decision. the judge is tony blair crony. >> right. >> the one that did it. 5248 when there's millions of people, one judge isn't supposed to be the one that decides. they didn't plan. they don't know how they are doing it. does it require parliament, does it not? >> this is the first time we have crossed this brunlg and they are going to repeal it anyway. so -- >> it's gonna go to a higher

court. there's courts in the eu that can say something about the other courts. the whole system, you wonder why they are sutuck in the mud. didn't we do these? >> you can skip it if you want. >> nothing happening in asia, but there it is. oil makes you wonder about the global economy, doesn't it? here we are. everybody said above 50. okay. it's off to the races. >> 8% from the weekend. >> back down to 44. maybe it's the bill of inventory, or not just the supply, maybe it's the demand. ten year is below 18. i saw 179. the dollar, the most interesting thing happening there is what happened to the pound yesterday, got to 125, almost there today. finally, gold. that's an elected play. nobody knows what's happening. >> absolutely. >> back above 1300. >> the jobs report is front and

center, a few other items of note. the september trade deficit is 8:30 a.m. eastern time. fed officials are speaking today. dallas fed president and fed vice chairman is taking part in a panel discussion at the imf. among the corporate reports, the third quarter results are out after the probe. we have companies on the move this morning. starbucks beating forecast and same for sales in the u.s., missing targets for the fourth straight period. they say the election is weighing on consumer spending. this is what they said in july. china was a bright spot, not something the ceo, howard schultz talked about on a conference call. >> china produced record revenues and strong growth in q4 and fiscal 2016. there are countless examples over the last decade of western companies and consumer brands that tried, but failed to

achieve relevance in china. >> quick programming note, kevin johnson will be on "squawk on the street" at 9:45 a.m. eastern time. i don't know if you buy this election -- that's what nigel travis of dunkin' said. i'm not going to buy my coffee and doughnut because of the election? >> they are already -- they are amped up enough. >> other beverages. >> the other thing, i don't know if you saw, the latest starbucks christmas controversy. last year, it was red but not festive enough. it was just red. >> not christmasy enough. >> this year, it's a unity cuff with everybody holding hands. on face value, that would be fine. can't we all just get along? in this hyperpartisan atmosphere, it sounds like we are stronger together, which is someone's slogan.

>> ahh, right. now we know howard schultz's previous political affiliation. now it looks like a hillary cup. >> go back to the white cup. you are good with the white cups. >> that would indicate white privilege, i believe. >> gray cups. i don't know. >> the old person, no. gray hair. you can't win. >> no. >> this day and age. am i right or am i right? >> you are always right. >> how you doing? >> we would never have "all in the family today." >> no. >> we have regressed. >> the other day i looked up, a long storestorey, i watched. i look up his favorite joke. on comes rodney dangerfield on "the tonight show" and it was six minutes of rodney dangerfield. could never, not one of those jokes could you tell today.

johnny carson was laughing his butt off. i mean, i had to -- i got so nervous someone might be watching me from behind hearing these jokes about people's weight and just everything. hey, you have to break it up. you have to break it up. the cop walks up. you couldn't do any of those jokes. i started to sweat thinking about it. cbs reporting better than expected results. ad revenue fell during the political events in the summer and competition from the olympics. the xwean is still in the early stages of considering a merger with viacom. it is shared by shareholders. a video game maker raised the full year outlook as players snap up the digital content in a version of world of war craft

sold 3 million copies. >> a few more companies, go pro reporting a steeper drop. the forecast for the holiday season is short of estimates for the newest cameras. gopro fell four quarters. kraft heinz fell and will raise cost cutting targets. las vegas sands fell in the third quarter. earnings beat forecasts thanks to the macau operations. they saw 15% rise in macau, which counts for the annual revenue. >> okay, we are going to go to the big data point of the day. we are taking a look at the markets ahead of today's jobs report. joining us is michelle gerard manager at rbs. peter chief market analyst at the lindsey group. do either of you have kons con

ser nation? >> i think from a global standpoint, we are concerned about china. you know, our analysts in china called the upswing then the last couple months concerned again. they feel klechina is going to e momentum. will it keep the fed from moving in december? it might not be that acute. i have concerned of global growth and have concerns from someone who is normally optimistic. i have concerns about the u.s. economy losing momentum. do mesically, you know, i think we have lost momentum. we are clearly not -- >> you shouldn't be. >> you know, unfortunately, i think companies are, you know, at this point in the cycle, we talked about profits peaked.

profit growth is slowing, it's usually a -- they enjoyed in terms of lower interest rates and the cost cutting, which were so positive for profits. now it's going the other way. labor market is tight. companies are paying more for workers. hard to pass the costs through. as a result, as profit growth slowed, they are pulling back on up ve investing and hiring. a slower growth trajectory. >> are we worse off in terms of the u.s. economy compared to where we were a year ago and is global growth in a worse position? isn't that the standard, the bar we have to go over to be convinced that december is 100%? >> the interesting thing is the u.s. growth rate running at 1.5% is lower than europe. the euro may grow 1.6-1.7.

china is stabilized. we don't know what is organic and stimulated. growth is slowing for years, globally. the u.s., most significant thing this year, we have a leg down. growing 2.5% for years. we broke into the downside. we saw yesterday, productivity zero. for the past four quarters, been essentially zero. how do you get 2% growth with no productivity. the fed, you know, rule number one of the fed, you don't wait until after you reach the target. you should be at the end. >> slow and steady won the race. we hear the recovery can't be measured by age. you get overheated, it causes a recession. recoveries don't die of old age. this is a long recovery, isn't it? aren't we due for -- >> it's true. so much about this cycle has

been different. it really makes the normal cyclical analysis not relevant. in some sectors, pointing to the auto sector, a big contributor to growth. all the industry insiders there and support by numbers believe we have peaked. so, maybe it's not going to lead us into recession. these are sectors that at this point are unlikely to take another leg up. it's hard to find what would give us the impetus to pick back up. peter is right. we have slowed from a year ago. consumer and business demand a year ago was growing over 3%. we have slowed and what are the factors? the other thing we talked about from being over in london, the trend toward less free trade globally and particularly by the candidates in the election. we talk factors and we need things that feel more optimistic that growth can pick up. everything is suggesting it's

hard to find those. again, the move from globalization is another one. >> what do we get today and how do you think that factors in? will the market take a good number positively or negatively? >> the fed wants to raise rates. they want to print 150 or above to give them license to raise. one raise a year is not very impressive. 150 or above, they will definitely raise in december. if they get 125 today, the feds, oh, my god, i can't believe i'm in this position, i raised once in an eight-year recovery. >> we'll say they will raise. the outcome of the election surprises. the fed may have the best of intentions. the market reactions. if we end up with an unexpected outcome and volatility. this fed, once again -- >> not surprising anymore. we'll see. >> not raising is par for the course.

>> right. right. >> the way i think about it, if -- if zero really is a great thing and it should be. if it really worked without any adverse consequences, there would never be a reason to charge money on lending it. what are the negative consequences? you can't get out when you have done it. not only can you not get out, the next time, you have nothing to throw at it to deal with it. that, you know, if they are going to screw -- you know, policymakers always screw things up. if you are looking for a way for them to screw it up, murphy's law means they won't have ammo and won't be able to get out. we have seen it happening two years. >> the negative of what they have done is really now festering. now, the pain from the pension funds -- >> it's like gang green. it does ooze.

>> we have companies that are allocating cash flow to refill their pension funds. there's less money to invest in their business. the negative effects of this is now really coming to the forefront. they are crying at this point. >> that's what i mean. you can just zero, no reason. that's what -- watching janet yellin, any way. thank you. >> thanks. >> thank you. coming up -- thank you. >> thank you, bill. >> coming up, a famed value investor, ron baron, his thoughts on the market, the election and one of his favorite stoc stocks, tesla. will any work get done in chicago today? they are celebrating. "squawk box" will be right back. alpha seems more elusive today.

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welcome back to "squawk box." we are here at the 2016 baron investment conference with ron baron. over the course of the show, we are going to talk to ron about

investing, his stake in tesla and the impact of the presidential race on the markets. we are 20 blocks away from the hottest broadway show of all time, "hamilton." i want to start by asking you about this year's theme, all about hamilton and how you decided this is what you want to talk about during your speech this afternoon. >> well, i saw the show. i love the show. i'm a fan of american history. i realize how little i knew about alexander hamilton, the man who is more responsible than anyone else for making america the way it is today, for writing the constitution, for writing the federalist papers, allowing the constitution to be ratified. he's the guy and he decided we should have initially a confederation of states, fighting. then, what happened is this guy

overendebted. he said what we are going to do is guarantee, we are going to assume the debt of all the colonies and establish the great credit of america. that created the financial foundation for america. we believe in free trade, immigration. we have all these resources and we are going to have a great country with strong credit. strong credit, by guaranteeing the debt. instead of going bankrupt, which they had a chance to do. he said you can't have good credit if you go bankrupt. can i go one more second? >> yeah. >> jefferson was the biggest opponent getting it completed. jefferson eventually agreed and they got it to happen. then we had this great credit. in 1803, we had all this credit and were able to buy the louisiana purchase for $15 million.

$15 million in 1803 for double the size of the united states. to talk about my theory of investing again, that $15 million has a present value of $250 billion. $250 billion for 213 years was from 1803. what was supposing the rate of return would you think that would be? take a shot. >> you are going to do the better math than i am. >> 3.5%. 3.5%. the value of your money falls between 3% and 4%. that's intentional, to encourage people like you, wealthy people to invest. if you don't invest in businesses and create jobs, the government is telling you, you can sit with your money in the bank, but it will work for you every year by 3% to 4%. if you have $100,000 in the bank, and you want buying power, you need $200,000 in the bank.

>> hamilton has really vens to where we are today, in the political season this week where the markets do what they have done. you don't like to think about the short term moments, but we are in a mo menmentous cycle. hamilton and george washington were the most consequential people. exceptional, taking time. he made our country this exceptional country because of what he put in place. he saw the future, no one else did. we have all sorts of problems the last 240 years, we have had depressions, runs on banks, really bad presidents, we had wars, everything that could go wrong went wrong. warren buffett says back to the

beginning of his lifetime, 1930. in 1930, just before the depression, if you went from there to here, 2% a year compound rate of return. 2%. that means six times as much today as it was then. everyone's lifestyle improved by six-fold net since 1930. do i think that's going to happen again going forward? absolutely. the companies we invest in. bar baron, i'm talking too fast. >> no, no. >> the average holding period is 12 years, mutual funds, a year. this is 12 years. so, if you are going to hold something for 12 years, hold for 20 years. the first ten years, 15% avail. the first ten years a modest return. 50%. we were acquiring more shares. we thought things were going to

happen and haven't happened yet. we are going to make the business strong and grow a lot. from 2006 to now, we made six times our money. i think we are going to double again in four or five years. we have a long perspective that sees it through difficult times. >> do you look at the markets this week and say things are on sale, i should buy them? do you say, my goodness, i'm worried where the country is going. >> we have screens all over the place in the office. i don't look at them, i do research. when i see the screens, what is interesting, when i look at the screens, there's changes in stocks every day. what you are looking to do, you see the screen and everything is down 1%, 1.5%, 1.25%. it's the same. everything is down, then the next day it's up. that's not trading on fundamentals, that's trading on the computers. it's not fundamentals. that gives analysts a chance to

make a lot of money. the reason they can make a lot of money and the markets are inefficient, i started in business in 1970. they had fixed brokerage commissions. i did research and saw 100 clients. initially, i was salaried, then i became selling my research to hedge funds. judy, i'm going to drink water. she doesn't want me to drink out of a bottle. i'm going to because i'm thirsty. in 1970, i fixed brokers commissions. then i started in the early '70s. at that time, the commission were fixed, 1% of assets. if you bought 1,000 shared of google, you paid a commission of $8,000. it was good for me to be in that business. $8,000. now, the commission on 1,000

shares of google is $7.95. because the commissions are down so much, you don't have a lot of brokers or analysts. you have tremendous inefficiencies. now people are trading on algorithms. if you can figure out what businesses will be different than today, that's opportunity. >> one stock that is not trading on algorithms or to some degree, but a lot more people are taking their own bets, tesla. you have made a big, big bet on tesla. it is one of the most controversial companies these days. they are going to be on squawk alley later today talking about all this. >> we are going to talk for a half hour between 11:30 and 12:00. >> explain your position. >> when you talk about a big position, we own 1.5 million shares. >> right. >> took us three years, three and a half years to acquire it.

it's a $300 million investment. it's 1.5% of our assets. $300 million is a lot of money, on the other hand, 1.5% of our assets. the assets we can invest in, most are, we have emerging markets, small cap. it doesn't fit in those pockets. where it fits, i have conditions where i can. the reason i do is because this is, in my mind, one of the most interesting companies i have invested in. for my career, it's risky. i have made ten times, 20 times, 50 times, 30 times in a lot of companies. in this investment here, in the next 15 years, we can make 30 to 50 times our money. >> you say it's risky. is it like a lottery ticket? >> no. nothing like that. you are risky because you are dependent upon the factors you can't control. you are dependent upon

legislatures. you are, with tesla, nobody wants dwrou succeed except the people that buy hair product. the government doesn't -- the car dealers don't want you to succeed. the cars don't need service. the unions don't want you to succeed because tesla is remaking the way they make cars. they have to prove they can make them and profitably. >> related to the cash burn idea, so many look at tesla and solar city. the critique is effectively he's using one business to support another, which is more troubling. >> when i started to think about tesla our average cost is over 200 now. when we started to invest and telling people how excited i was about the company and how big they could become, they said how

can you think about that? if they get as many cars as you think they are going to get, 200 million cars in this country. i think they are all going to be electric one day. 17 million produced in this country. i think they will all be electric. if i'm right, there's a tremendous demand for electricity. where do you get it from? the electricity grid is not growing. they are not building new power plants. they cost $500 million and they get a $50 million return on it. they are not getting it. now, what's going to happen? why this is so interesting. this is not something that they are going the pay $5 billion for it and sell it for $2 billion and make $400 million a year. that's not the reason you are buying it. financi financially, it's interesting. that is not the reason you are buying it. the reason is you are reinventing the electric grid. that's a bigger opportunity than

cars. you need to do it because you are not going to have enough electricity for cars. do you know in electric plants, do you know how electricity works? did you ever take physics? >> years and years and years ago. >> you have a wire. you have peak power because you are filling it up with electr s electrons. as you use it, you are picking up one or two at a time. a surge in power, then demand, then it goes down. the electric power plant, the grid is not being used at full capacity. you need more by twice. if you could level load in some way, you could have twice as much power from the existing plants as you do presently. the reason this is such an interesting transaction is they are going to be massive producers of batteries at very, very low costs. when i started, $22,000 for a battery in a car, low teens, it

will be $5,000 within five years. engine kouss $10,000 going up. the battery cost is going down. you are going to have big batteries in people's home and solar power. solar power is like a trojan horse. amazing roofs. >> we talked about it on the air. >> they look amazing. >> they are no longer just those ugly glass reflective things. >> exactly. that's going to start in a year. meantime, what's going to happen is because you are going to have sew l so lor, then the battery saves up power. the reason this is interesting, the batteries, what they are, they are going to be a network. they are going to allow the utilities to test the power network. instead of building the plants, a level load. >> we have to press pause. we are going to talk more with you throughout the program. ron baron is sticking around. still to come, the ceos of idex

lab boyers are going to join us. we are back in a mochlt.

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what are you doing? getting your quarter back. fountains don't earn interest, david. you know i work at ally. i was being romantic. you know what i find romantic? a robust annual percentage yield that's what i find romantic. this is literally throwing your money away. i think it's over there. that way? yeah, a little further up. what year was that quarter? what year is that one? '98 that's the one. you got it! nothing stops us from doing right by our customers. ally. do it right. let's get out of that water.

welcome back to "squawk box" on cnbc. u.s. ek quity futures have been down nine straight days. there's a lot between now and 4:00, that's for sure, including big jobs numbers. let's check on oil. this commodity has been down the past five days and hit the lowest level since september 27. volkswagen is coming to an agreement over restructuring. the auto maker trying to cut costs and boost profits in the wake of the diesel emissions

scandal. they are cutting thousands of jobs and reducing capital expenditures. the biggest events in tv will be owned by the chinese. they are buying dick clark productions. it gives them rights to the golden globes awards, dick clark's rocking new year's eve. the chinese conglomerate has been on a buying spree and owns amc theaters and planning to acquire other cinemas as well. >> it's weird. it's not that many assets and worth a billion dollars. they are known for four or five things. remember our buddy ryan seacrest got involved. worth $1 billion? >> i imagine it's a catalog of shows in the past. isn't bandstand part of dick clark? >> how do you know that?

>> i read it in history books. >> i remember it well. i didn't like it. it was black and white. >> you were a baby. you were barely in existence. >> i remember. the thing that is weird, ever see queen for a day? a housewife gets a washing machine. they would cry. there were three channels, literally. coming up, we are going to return to the baron capital conference where ron baron turns to the biotech industry. coming up, jobs friday. we have a big lineup of experts ready with final predictions and instant analysis. stay tuned for the number that could move the markets and make or break the feds december plans. "squawk box" will be right back.

welcome back to "squawk box." we are coming live from the annual baron conference here in new york city. biotech innovation is happening every day with billion dollar implications for the economy. the medical milestones aren't

possible without materials and testing to make sure the scientific results are true. joining us is chuck, the ceo of biotech that manufactures a variety of medical products from purified protein to analysis tools, a big investment of baron. i don't know you to be a scientist. as an investor, what was it you saw in his business? >> i was a chemistry major in college. >> i did not know. >> i had a ph.d. fellowship at georgetown until i decided i didn't want to do that. i do have some background. we are interested in investing in biotech without the risk of whether someone is going to be successful or not with a product their manufacture. it's clear there is going to be more money spent on biotech research. he going to talk at the meeting. he makes the products necessary, the proteins necessary to do

research on whether a product is going to be good or not. i was asking how often it is once it passes from research to production and is successful, how often is it we are still in the mix? we make a purer product than anyone can make on their own. >> let me ask you this. you do your own rnd. you have been growing your business organically. you have been a bit of a roll up. how do you think about the mix? >> it used to be about a 75/25 strategy. it's reverse now. we have great organic growth going. nearly 200 ph.d.s in an employee 700 in three years. a lot of that to work on as well. the organic piece is just as important. we have researchers. we are close to the university of minnesota. a lot of chemistry.

we are the only biotech in the area. >> when you think about this five or ten years from now because that's how he deals with it. this business looks like what? >> in five years get to $1 billion in revenue. we have good operating margins, roughly 40%. swhak gets you there? talk about the split in the business? >> innovation. mainly innovation. we launch 1500 new products a year, mainly proteins, antibodies used in discovery. >> for those of us who are first year chemistry students here, explain what you mean. >> well, when you are making drugs or tools for oncology or neuroscience, you start with molecules. you need things that are going to work making the drug. we are known for a high quality protein that creates an antibody. they are about using antibodies

in therapy. we are known for that. we have 40,000 products we make. they go in researchers hands for this discovery. it may or may not end up in a drug. it does end up every day in researchers hands. it's a pick and shovel kind of business. >> what do you buy when you make an acquisition, what do you buy? >> it could be instruments. we have been buying a lot of instrument businesses and full solutions. so, use the juice that we make and complete solution for the researcher. thr there are processes like a western blot. >> why is that better? >> because the quality is more, when you buy an antibody, you don't know if it is going to work. it is a tough business. getting that to work in a special way that we intended is very hit and miss. having a process with the instrument that is tuned in ahead of time makes it --

>> dare i ask, do politics matter to your business? to say the entire biotech world in terms of the evaluation, they come under pressure because of the view hillary clinton was going to learn. i haven't noticed if they are doing better if you think donald trump is going to win and no controls on pricing. >> i think we are more in line where funding more than anything else. that's good. >> we want to leave the conversation there. thank you for being here. it's going to be fun. >> thank you. >> i look forward to seeing what takes place in the conference with you. ron baron sticking around for the rest of the show. coming up in the next hour, idexx ceo is going to join frus the baron conference. i'm going to talk to the nonexecutive chairman of trump who has been in the news lately, the publishing company about withdrawaling their offer for the newspaper company.

we are going to have an interesting conversation. back to you. >> coming up, why more than 50 hedge fund employees slept on new york city sidewalks. all for a good cause. details after the break. "squawk box" will be right back.

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raiser. kate kelly joins us from a sleepover to raise awareness for homeless youth. kate? >> reporter: hey, melissa. this was an unusual and cool event. i'm here at the covenant house homeless shelter for youths here in new york city where 18 to 21-year-olds typically live. a number of hedge fund managers gathered here last night and are just leaving as we speak. more than 60 of them sleeping outside overnight as a way to both raise money and raise awareness for the cause of homeless youth. organizer brian arthur finn talked to me about why he got involved with this and how it's a break from the usual fund raising activity. >> whereas an event like this, you know, you're spendsing eight hours here, nine hours here. and you're meeting with the kids and you're -- you know, afterwards you're spending the night out on the streets and feeling what that's like. and it totally changes your perspective on this issue. i mean, to be totally frank,

homelessness is not something i cared about or thought about at all. >> reporter: all told, about $200,000 was raised as part of this event. that will help close to 200 homeless youth get job training and get a job which is the basis of this whole program. covenant house exists in multiple american cities as well as internationally. it's known for providing food, shelter, health care, help with education, counseling, and job training as i just mentioned for kids here in he new york city area as well as many other cities. they have a number of participants that were here last night from major hedge funds and private equity firm. some of the firms that were represented. they also get support from the hedge fund community and a couple of names i heard were blue mountain, deerfield. so quite a unique gathering, guys. a lot of positive reactions this morning as people are packing up for the day. >> is this the first time they've done this, kate? i would imagine this would

inspire those people participating to more action. >> reporter: i think that's totally true. spoke to one of the organizers who's here with me off camera. she said she'll definitely do this again. she and brian helped organize their friends to do this. next year they want to make it a reoccurring event. covenant house has done this with other corporations. i believe they've done it with the insurance industry and others. they consider it a popular event. it's unique. it's not compelling to have to sleep on a concrete sidewalk overnight but it does raise empathy. but what people got out of it was meeting with some of the young people that live here. hearing their stories, hearing what led them to homelessness, what they're trying to achieve by staying here and kind of get on to some career ideas of their own. one amazing young women i met last night wants to be a neurosurgeon and she has full faith that covenant house is going to get her there. >> kate kelly with an inspiring story for a friday. coming up, we're going to

have much more with ron baron. plus the chairman of tronc after the company's failed deal with gannett which means tronc and its name is still going to be around for awhile. and of course the final countdown to the jobs report. business round table president and former michigan governor john engler will be our special guest when "squawk box" returns. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack. with the help of at&t, and security that senses and mitigates cyber threats, their critical data is safer than ever.

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it's jobs friday. we'll talk expectations and what the numbers could mean for the markets, the fed, and even the presidential election. the president of the business round table john engler joins us with his thoughts. that interview is just minutes away. high-profile stocks on the move this morning. gopro, starbucks, activision coming today. and we're live at the baron investment conference in new york city speaking to high-profile investors. in this hour the ceo of ibex plus the chairman of tronc michael farrow is going to join us on the publisher's future. the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york city, this is "squawk box." >> i always thought this meant that the guy -- this is the

cure -- but i thought he was falling in love with someone on friday. but he's in love with friday. and i'm in love with friday. but it's close to monday. >> anything can happen that week. a fresh start every week. >> it's hard because friday night i can't stay up. sunday night i can't get to sleep. when you have the 4:00 a.m. wakeup call. >> i don't have the same problem as you do. >> welcome back to "squawk box" here on cnbc. we all have similar problems. i'm joe kernen along with melissa lee. andrew, andrew is at the baron investment conference with some really nice chand leers. it's taking place at the metropolitan opera house at lincoln center in new york. right? >> we're just blocks away. we're here with ron baron. by the way, we always talk politics, joseph. ron and i have been talking politics during commercial breaks. i don't know if you want to say anything about where you stand

on what's going on in the election. >> i don't want to say very much other than that for weeks now, i am so upset about this election, i wake up every night two or three times, 2:00 in the morning, 4:00, and i go to my phone to look and see what's happening, the odds. because i know that there's tremendous uncertainty that's created by the candidates here. one especially. and where because of that because if the election goes one way or the other, there's going to be a tough time for businesses for awhile. that may be reflected in stocks, it may not be. >> you're speaking about one candidate. >> well, the republican candidate. because nobody knows what the policies are. it's hard to invest when you don't have confidence in who the -- what the policy is going to be. so it's difficult for the economy. the economy could struggle a bit because if that happens. >> okay. all right, andrew.

we got it. we can read between the lines. or the uncertainty of how long the other candidate might be able to stay in office depending on everything else. anyway, we'll have more from andrew -- >> that's the other complicated element of it. >> yeah. the omp complicating element. that could be important too. anyway, more from andrew in just a bit. the futures at this hour are indicated a little bit lower. we'll see. but we do have the jobs report coming up at 8:30 eastern. we're down 13 on the dow. but it's up. nine straight down days in the s&p. here's what's making headlines at this hour. several u.s. senators say the wells fargo sales scandal extended to the brokerage business. wrote a letter to ceo tim sloan asking about the dismissals of workers in the brokerage unit. wells fargo said its sales issues took place in the retail

banking unit. generic drug -- that justice department has been seeking information from companies like epipen maker mylan. carl icahn has raised his stakes in herbalife. he now holds a 23.1% stake. it's jobs friday. and steve leisman joins us with a preview. and of a critical report this morning that will play into the election. what do we need you for? >> i wrote that. >> a critical -- he joins with us a critical report this morning that will play into the election and into -- oh, they won't -- >> they're moving it for you. you're doing great. you're doing great. >> you go ahead. >> you want me to do it? >> please. >> they're your words. >> please. >> you've made a career and

quite a nice living mocking the prompter. >> yeah. >> that's the essence of what you do. >> basically. >> can we show -- there's the prompter. there's joe's sidekick. >> some shows i mock you. >> you mock me as well you mock the people who write in the prompter and who read from it. >> just to show we don't necessarily need it. you don't want to just rely on the prompter. >> i had something i specifically wanted to say. >> oh, this is my read. my read! >> oh, it says joe. >> it just changed. >> a critical report this morning that's going to play into the election and the fed's december election. i wrote all these words. here's what you want to look at. consensus 156,000 last month. i rounded up just barely to 5% last month. it's really unchanged.

it's been in that zone for a year now. average hourly wages reasonably healthy 0.3%. at deutsche bank they write, in our view the bar is fairly low with respect to what the fed needs to see from the october labor data. good job getting that screen done there. that's because the fed believes underlying trend job growth, it's more like a hundred thousand. all needed to keep the employment steady is 100,000. you've seen this moving down. it was generally north of 200,000 until about march. and now it's been mostly run below that mark since then. another trend has been the influx of workers from the sidelines into the labor force. the labor force has grown by 3 million people in the last year. found jobs mostly to put them to work. it's this influx that makes janet yellen say, by the way, you know what? maybe this economy has a little more room to run if all these people are showing up from the sidelines.

>> so what's -- did you do your work? >> i was doing it while you as we're talking. >> what's your work showing? >> my work which was pretty good last month. >> we talked about that. it was a standard deviation. >> i thought we'd talk about it again because it was good. >> because you were so wrong for a few months. >> damning with faint praise, joe. that's another specialty of yours. i'm going to go with 20 on government. 168 -- 173 is the consensus. i'm just around the consensus. >> did you say that and i didn't hear it? >> i did. not listening is also another fabulous -- >> that's good. >> you heard it could be above trend. >> if you take a look at the estimates on wall street, it goes up to 200 or something like that. there's a wide -- and some conspiracy theorists think it's going to be higher. >> because of the government.

>> they said it's because ahead of the election. >> helping clinton is what the theme is. >> i'm not saying anybody has control over any numbers. >> one of the things i've done and not been paid as well as joe for mocking the prompter is defending the economists and put the numbers together. they are good government servants and i would stand up for their reputation and their reliability any time. >> absolutely. >> well compensated but underpaid has got to be your mantra. >> probably it's okay. >> no, but -- >> it's like a mock, you would be good. >> that's got to be your view. not of me. in general. compensated well but you're still underpaid for the great work you do. >> wait, was that legitimate? >> not you. all of us. joining us now business round table president and another person who is compensated but underpaid. former michigan governor john engler. and it's good to see you this morning.

>> good to be back with you. good to be back. >> it's good to be back with you. tuesday. tuesday. and we just heard -- i don't know when you got your earphone in. >> been listening. >> but you're hearing that one candidate's uncertain policies could -- i think the president actually said the other day that the entire future of the world depends on trump not being elected president d. did you see that? he's doing a lot of campaigning. but i saw that headline earlier. you think the world -- will it actually end? would it be wednesday or would it be january 21st after he's actually inaugurated? when do you think the world would end? >> i think we'd have to wait until the inauguration. >> yeah. >> but if we keep pumping out these regulations in washington, it might end sooner. >> exactly. just, you know, looking at what we do know about the disparate policies from the left and the right, it's a little bit weird

to think that maybe less government and maybe lowering a corporate tax rate and maybe cutting back on some regulations and slowing the growth of government, it's hard to think that that would be much less productive for capital than raising the capital gains rate, increasing regulations, growing the size of government. that's the point you would make. >> absolutely i would make that point. you've made it ektively many mornings on this show. we are a rousing what? 1.1% gdp growth the first half of this year. we're just limping along. and we're in a position -- i was over at the german embassy. they wanted to know what might happen in the election with trade and economic growth depending on the outcomes. we're saying, look. we've got a lot of room upside if we get the policies right. and i'd go back to that tax reference you just made. we've got to get the u.s. tax code for business fixed. we're an outlier.

our treasury's not helping on some key aspects. that has to be fixed. a new administration regardless has the opportunity i think in that first hundred days of 2016 to do something we haven't done -- not as far back as the cubs but going back to the mid-'80s since we fixed our tax code. >> i mean, you're a free trader though. you're at the business round table. >> sure. trade has to be a pillar in our view of an economic growth strategy. it ought to include the tax reform. it ought to be trade must be a key component. i think it's more important now as you see china drawing in. i mean, trade flows have been down and they're trying to insource more so we really ought to be getting tpp done. the canadians just concluded their agreement with europe. that's pending business for the u.s. to be talking the t-tip

agreement. we got other trade facilitation pending. all of that should be done at the same time i think the business round table ceos would say, you know, we've got to do a lot more in this economy with the infusion of technology today, the digital economy. that's probably 80% of the job losses that are out there. we've got to retrain and train this workforce very differently. much more rapidly in the future. because we're going to need these workers. workers shortage will be the problem. but it'll be shortage of people with skills. not just bodies. >> you going to go off prompter with this? >> off prompter. >> all right. you sure -- >> i'm just going ad-lib a question here. >> whoa. wow. careful. >> so the markets look like they're nervous because of the rising probability of a trump presidency. do you think they're wrong to be nervous in that regard? >> yes, i do. >> no really. talk to the market. explain why they should not be

nervous in this context. >> something that can be comforting to everyone is senator mcconnell may stay in the majority leaders job. no question ryan will be the speaker. you'll see stability in congress. i also think you're going to get with a new administration regardless of outcome somebody more willing to work with congress on legislation that is designed to simulate economic growth. do not think that's been a primary focus of the current administration. i think that's going to get better. and there are some areas of cooperation. specifically with the trump agenda. i think the regulatory hand is going to come off the bar a little bit. we've been burdened in this past year with just one major regulation after another. they're coming out of labor department, out of treasury, out of epa. they're coming from every direction. and there's no question that has

risen as a concern for business be they large or small. >> but your members are very concerned they're worried on the trade side. and that's why their talks have concerned from germany and europe about this. >> that was very much the concern last night. that concern is everywhere. but, you know, you could say you're going to renegotiate agreements. that takes a lot of people getting in the room. and, look. this is a candidate who hasn't had a lot of governmental experience. i don't know if he's going to win. i mean, i think he could. i'll take nafta. crowne, both candidates have had criticisms of our existing trade deals. but i'm coming from michigan. nafta for the united states has added probably over the recent years a trillion dollars to the u.s. economy. mexico, canada are our biggest

trading partners. it is huge. it's very important. we're not going to tear that up and go back to a time when we erect border barriers with trade on the south and on the north. not going to happen. >> john, you can also -- i mean, governor, the -- let's cancel out trade. on both sides. you got anti-trade on both sides. then go back to corporate taxes then go back to obamacare. so that's such a weird, you know, red herring to say, oh -- >> i don't think that's accurate, joe. >> really? because up -- >> i don't think both sides are equally anti-trade. >> the left isn't more anti-trade than the right? >> i don't think hillary is as anti-trade. >> oh, because she's just saying it about tpp. maybe you can cut through what -- the rhetoric for what she really believes. >> he called it the worst agreement in history. >> all right. >> that's different from what hillary -- >> and she called it the gold standard but then said she didn't like it.

>> remember bill clinton was opposed to nafta before he led the charge to get it ratified. obama led the charge against colombia before pushing to get them ratified. it matters what happens after the election. and past statements aren't haven't been accurate predictions. >> governor, can i ask you a question on the demand side of the business? >> sure. >> the last time i spoke to you, we also spoke with the ceo of ball corp. he samed to indicate there was no slowdown in orders. what we're hearing from conference calls throughout earnings season, if you're taking at face value, consumers are uncertain and they're pairing back spending. we just heard that last night from the starbucks ceo. does this jive with what you're hearing from your members of the business round table. or are those examples outliers in your view? >> no, i think there's a softening. and we've seen it on the industrial side on the capex

spending is restrained. the point about the election, the uncertainty is always there any time there's an election. and it's not just this election. i think it's amped up a lot more, probably, in 2016 than it's been. but i think that uncertainty affects consumers. i think it affects business spending. what i'm hopeful is that we start talking about growth and job creation. sort of every day again. once we get past the election. that to me, the u.s. is poised -- i do think interest rates are coming up in december. i think it can be helpful. and i think we're going to see this economy come front and center. and boy, there's a lot of room to run if we can get the policy right. >> all right. >> great. all right, governor. thank you. we appreciate it. that's a nice shot of you we got. anyway, we'll see you. coming up, unleashing the power of the pet health industry. idex is a leader in pet diagnostics and beyond.

it helps tell vets and caregivers where the pain is. the ceo joins andrew after this break. "squawk box" will be right back. no matter how the markets change... at t. rowe price... our disciplined approach remains. global markets may be uncertain... but you can feel confident in our investment experience around the world. call us or your advisor... t. rowe price. invest with confidence.

♪ welcome back to "squawk box." there is no shortage of controversy in the health care field over drug prices and insurance coverage. but at the end of the day,

everybody wants the best health care for themselves and their families. but there are some family members that you might not be thinking about. non-human family members who can have a harder time getting the care they need simply because they can't tell you where it hurts. we're talking about animals this morning. joining us to talk about all of this, the ceo of idex laboratories. also a big investment of baron. ron baron is here with us as well. thank you for being here. so we were talking during the commercial break. how many animals do you have? >> i have three cats. they're all geriatric cats, 16 years old. they all need health care. >> they've all used your services. >> they're beneficiaries of some of the innovations we brought because we do 80% to 85% of rnd of pet diagnostics. so we're bringing out all the new ideas, the new equipment, the new tests. >> how much do some of these tests cost?

talking about prices in health care, how does it work in the pet world? >> you know what? actually, they'll cost the vet maybe anywhere between $10 and $50 unless you get to the more complex. it's really the medical context of the pet. a pet owner may pay $100 for diagnostic profile. >> is there really an insurance market? >> this is a very small -- couple percent insurance market. it's not like human insurance. insurance would be good but it's basically covering catastrophic -- >> how much do we spend in rnd and how much does everyone else spend? >> we spend 85%. we've spent a billion dollars and our product pipeline has never been more exciting. >> tell us to the extent there are things you have announced you can tell us about.

what's on the cutting edge of the edge? >> so most people think of diagnostics as bloodwork. but as you said, pets can't tell you how they feel. you can't go in the doctor and say, it hurts here. so we found actually there's a tremendous amount of medical information in urine. and we just introduced a urine analyzer. so we call urine liquid gold because of all the insight and voice it can give to the pet. >> the testing you do and the machines and how you approach it is so different than if you were doing this for humans. so there is no crossover. >> it's very different. occasionally you will license technology from the world. so if there's anything out there, we're going to adopt it. forever at a reasonable price we'll get those things and we're going to put it into our pipeline. but yeah, they're different. pets are different species than humans. the other thing is we have a big realtime care segment.

meaning you go into the vet for 20, 30-minute appointment. you get the bloodwork there. you find out what the story is. >> biggest trends in pets? pet ownership. dogs, cats, what's the -- >> so two-thirds of families in the u.s. own a pet. but what's really interesting is as much as baby boomers love their pets, millennials love their pets even more. 56% of millennials say pets make them happier than almost anything else. this is long-term secular growth trend. >> we want to thank you, john, for being here. it's a fascinating business. >> before you go, advantages that we spend more than anyone else in r&d. we have unique things in the past years. gave us a chance to add to our position. made about three or four times their money. since john has been in charge in 2002, increased revenues five

times. five times. >> at 21% per year annual growth rate. >> you find companies like this, these niche businesses that they can't compete against and you invest in them long-term. >> thank you, both. when we come back, we've got the chairman of tronc in the news. michael ferro is going to be our guest in a moment. d aflac pays . aflac! isn't major medical enough? no! who's gonna' help cover the holes in their plans? aflac! like rising co-pays and deductibles... aflac! or help pay the mortgage? or child care? aflaaac! and everyday expenses? aflac! learn about one day pay at aflac.com/boat blurlbrlblrlbr!!!

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welcome back to "squawk box." among the stories front and center, we are an hour away from the jobs report. consensus calls for 173,000 new non-farm jobs and unemployment rate of 4.9%. in addition to the jobs numbers, investors will be paying attention to three fed speakers on today's calendar. dennis lockhart and rob kaplan

have scheduled speeches while rob fisher will take part in a panel discussion. money market funds took in more than $36 billion the past weekend. that is according to funds flow trackers epfr. market watchers pointing to election anxiety as a key factor. now let's head back to the baron investment conference. andrew's got a special guest. >> hey, thank you, melissa. gannett's bid for tronc formerly known as tribune publishing is off the table. that happened this week following months of negotiations that went back and forth. then the financing got pulled. joining us right now is michael ferro. he is the chairman of tronc. we're thrilled to have you back. what a week or several months it has been. it seemed like you were getting very close finally to a deal after saying talk to the hand, talk to the hand. then it ended. what happened? >> you know, we've been in talks

since early summer. we were as surprised as anyone. the financing -- gannett, they were great. they just couldn't get it financed. >> but let me ask you about this. "the wall street journal" has a headline that says tronc got too greedy. which is to say that when the number was lower at $15 and below that you said, no, we're not doing it. how do you think about it now? given where your stock price has fallen to? >> well, the issue we always had, our fiduciary responsibility was known certainty to close. and committed financing. gannett when they were trying to agree with how the process started was that the number one question our board always had was where's the money coming from? so gannett had no balance sheet. even when we were talking to them and being pushed to make decisions so quickly, the real issue we even had is you need to have committed financing until

the end of the day. they never had e the money. >> so you think even at the lower prices, when by the way, their business was not deteriorating the way -- look. this past week we've seen your quarter, their quarter. it's been tough. it's a tough business. i guess i'm just wondering from a timing perspective, had you been able to push them to close and would you have been being -- would you have been better off accepting a lower bid two months ago? assuming they could have gotten the financing. >> so we were talking five months ago. so it was -- they had to get financing together. and you still would have to go through a four to six month closing process with department of justice reviews and hsr. when they first came to us was when we had just got there eight weeks in. i don't know if you remember, tribune publishing at the time had just disclosed material weakness was close to defaulting on their debt. that's why they were hostile in

public. i understood what they were doing at the time. it was just -- that was really smart strategy. but over the last two quarters, if you look at our numbers, we keep improving. we keep paying our our pensions. we keep paying down our debt. >> but the stock price now is literally half of what it could have otherwise been had that deal gone through. i know that -- >> right now it's -- i think you said 950. and price you saw publicly was 15. not quite half. but -- >> was $18.75 not real? >> that was their final offer. but yes, at $18.75 we said yes. we've been saying yes at $18.75 for a long time. we just -- gannett was waiting. they asked us to wait. they had to get their financing in place. >> so what happens now? >> first thing's first is tronc goes back to doing what we were trying to do eight months ago when we got here was go run a

good company, increase our ebida. >> and how should shareholders think about the company? where the stock is now and where it may ultimately be and given how difficult the market place is. >> i think there's more consolidation to happen still. in the industry. we have the brands. and as you've seen constantly time or time, i think i saw a story about hostess today is that if you have a brand, that brand has a lot of value. and we have great journalists, great distribution. $1.6 billion revenue company. >> so you talk about consolidation. gannett in its own statement when it pulled the offer also suggested they want to pursue consolidation. >> i agree with gannett. >> so is there a possibility a different type of deal could

ultimately get done? that it's not over yet? >> absolutely. if it's in the best interest of our shareholders, yes. >> is there any conversation that continues or lingers post-monday? >> right now there's no current conversation. >> and in terms of just how far the business has fallen, yours but i'm specifically talking about the entire industry, is there something even more -- i mean, this almost seems like a step change in terms of the type of news we heard from gannett, "the new york times" company, others in terms of print advertising. >> yes. i think we all saw this coming. but it's your industry, we're all in the same boat. how do we get paid for journalism? right now the people that know how to do this are facebook and google and apple. and we need to figure it out. >> are there more layoffs planned? "the wall street journal" has announced a big round of layoffs recently. >> we don't have layoffs planned right now. it's not even in our playbook right now. we have a lot of things we're cleaning up and efficiencies are

coming, but we came into tribune, there was a lot of room for improvement. >> two other quickies. you own the chicago tribune. i imagine you have to be a bit of a beneficiary of what just took place two nights ago now. >> i'd like to first say thank you to tom ricketts. because yesterday was one of the greatest days in chicago tribune newspaper print history. we still have people -- my wife just texted me. it was about a $3 million day news day for us yesterday. people are still waiting around the block to buy chicago tribune newspapers. it's magnificent. it's great for the chicago community. we need the cubs to win every week if we could. it was awesome. >> and final question. politics. i don't know if you want to weigh in. i saw -- and i don't know how it works, exactly. the chicago tribune endorsed the libertarian. >> that's true. >> e the l.a. times which you also owned endorsed hillary clinton. i think most of the others endorsed hillary. >> yes. >> now that you're in the position, do they ask you?

>> no one asks me. i've never even been in an editorial room on this. we are completely independent, each paper. we thought can we do something different. but each editor is responsible for their team of picking the candidate. so we let them do what they want to do. >> do you want pick one right now? a candidate? you can do your own endorsement if you like. >> i'm endorsing neither candidate right now. just let the public choose. >> michael ferro, we wish you luck. >> thank you, sir. >> appreciate it. joe, back to you, sir. >> okay. andrew, much more from the baron conference in a bit. but first, what does it take to get into cirque du soleil? kate rogers has a preview. hi, kate. >> it takes strength stamina, and extraordinary talent. we'll have more after the break on "squawk box." still to come, the october jobs report. the numbers and full analysis is less than an hour away.

kate moore of blackrock, aaron fine of the brookings institution, and kevin hastert will be here with predictions, analysis, and their latest call on whether a december rate hike is coming. jobs in america, your money your vote edition, starts at 8:00 a.m. eastern time right here on "squawk box." for the holidays. before his mom earned 1% cash back everywhere, every time. [ dinosaur growls ] and his dad earned 2% back at grocery stores and wholesale clubs. yeah! even before they earned 3% back on gas. danny's parents used their bankamericard cash rewards credit card to give him the best day ever. that's the joy of rewarding connections. learn more at bankofamerica.com/getcashback.

♪ for decades, investors have used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet very traditional goals. that's why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. translation? goodbye 60/40, hello 50/30/20.

time to take a break from the circus of politics. the markets and the economy and find out where the jobs are. our kate rogers found them at the real circus. kate? >> reporter: hey there, melissa. that's right. the entertainment industry is poised to grow by about 6% in the next ten years creating 46,000 new jobs. if you feel it's your calling to become a performer, you'll find opportunities at companies like cirque du soleil which hires around 450 artists each year for new and existing productions like curios where we are in new york city. the competition is fierce. if you want to get noticed by a

casting director, you have to get flexible like roman back here in more ways than one. from dancers to athletes to clowns, cirque du soleil is looking to add to their ranks of 1300 performers who perform the unimaginable on stage. >> we're looking for extraordinary talent. we're looking for people who can do something that you do not see in the real life. >> reporter: cirque currently has 19 shows with between two and eight new projects in development at any time. today's ideal candidate is multitalented. >> many roles are actually going now into more of a -- what we call a generalist profile, multitalented, multidisciplinary profile. on broadway they call it triple threat. >> they're more able to market themselves these days. that also means new ways to catch attention. >> there are many that use circus performers. and there are different ways to expose and promote your talent. so on one hand, there are more opportunities for the artist.

on the other hand, the competition has become tighter. >> reporter: as you can imagine, salaries in the industry vary very widely. one expert told us she's seen them as low as $50 a night for a one off production with no benefits to up to six figures with a contract and full benefits at a major company like cirque du soleil. >> that looks really hard, kate. you actually tried this. >> reporter: so i did try it. i found out i am not multitalented. i hooked up to the bungees in las vegas. it was a ton of fun. i got the back flip down but my front flip was pathetic. it is so much harder than it looks. everything was so sore the day after and the day after that. i couldn't believe how strong you have to be. >> it looks pretty hard. i'm not sure it's harder than it looks. it looks pretty hard. kate, you didn't have a chance to talk to any of the clowns, did you? i mean, i just wonder --

>> reporter: no. are you remembering i'm scared of clowns? >> well, who isn't? but i just -- it's very hard for clowns these days. >> they're getting a bad wrap. an upstanding clown being clownish in an up clownly way. >> there's a stigma now. there needs to be a support group for clowns. >> reporter: you know what? the clowns that we met at the new york city auditions were all very professional. they didn't mention having a hard time out there but they also were not creepy clowns. they're having the hard time now. >> in the eye of the beholder. creepy clown is kind of redundant, i think. >> in kate's view. >> reporter: i mean, the scary creepy clowns with the mask. >> with the mask and machete. definitely. that's a little creepy. all right. thank you, kate. >> reporter: those are the ones to stay away from. coming up, we head back to the baron conference for a read. andrew will be speaking to

the -- and at the top of the hour rudy giuliani will be our guest. he's been rumored to be a member of trump's cabinet if elected. "squawk box" will be right back. enjoy your phone! you too. (inner monologue) all right, be cool. you got the amazing new iphone 7 on the house by switching to at&t... what??.... aand you got unlimited data because you ve directv?? okay, just a few more steps... door!

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good morning. we are at the baron conference. down 7% since the development company's investment trust were

pulled out of the financials. by our next guest, his shares have done better. his reits has risen over the past year. joining us now for more on what's going on in the real estate market, jordan kaplan. boy, are you lucky? honolulu, hawaii. isn't that terrific? let's talk real estate. we talk what's going on in the economy. what's happening in l.a. right now? >> well, our markets are very supply constrained. and we've got great demand from our tenant base. the industries in our markets, i mean, everyone thinks in entertainment, right? we have tech. we have a number of major universities. we have a huge medical treatment and research. we have the largest port in the united states. tourism, green tech, and just like for any gateway market we

have our fair share of lawyers and accountants. >> but where's price in terms of real estate in l.a.? >> well, it's gotten back to the numbers, the 2007 numbers. >> we're talking about rents now. >> oh, rents. rents in many markets are approaching those numbers too. so we went through -- you know, a tough downturn after 2008. and we lost -- it's hard to determine how much we lost in value, right? because there were no trades. in the early '90s when they were dumping real estate. but rents dropped a solid 30%. right? but we've recovered if not all of it, most of it. still a very strong uparrow. >> what about honolulu? >> well, honolulu actually through the recession was one of

our best performers. because it's an island market, right? so if you're in one of our buildings, you're not threatening me to moving to orange county. it's 3,000 miles away. but at the same time it's hard to add demand. it's hard to drive demand in. because it's an island. you can't create more price and tenants. >> but to go to our tenants in l.a., we just increased significantly. brought at an attractive price relative to what you would pay at ucla medical center. that was a thousand dollars. they were running from blackstone. they had 60 people, less than 60 people running their properties. the rents that we're signing now, these are five-year rents. >> yeah. they're typically five-year deals. >> three to four. >> and then when we renew, we're getting up 11? >> when we renew, the new leases

replacing the old leases, 30% better economics than old leases. >> from the terminal end? >> from the ending rent to beginning rent, that number is -- >> can i just make a note about one thing you may not have picked up? do you know how you talk about these companies? it's actually fascinating. you say, we, we are doing this. not they are doing this. you say we are doing this, we're raising rates. >> he's the only investor that does that. constantly. and the only investor that i meet with that says we is ron. and he's also the only one that until just about a quarter ago scribbles copious notes out of all of your meetings. he just switched to ipads a quarter ago. you can see all us guys looked relieved. >> i think that's about a mind-set, right? >> it's a great mind-set. >> you mean about -- well, we're investing in businesses as well as stocks. it's not they, it's we. because this is what we're doing.

>> and that's what he says. >> even if you're not a control shareholder. >> i'll tell you -- and more than that, he's not typically a reit shareholder? when i took the company public ten years ago, it's an interesting concept, but you meet with people all day and they specialize in stocks. the we got to the ends we're in new york. i'm like i'm done. and they said you got to meet with ron baron. i said well he's not even like a typical reit buyer, why can't i be done? they're like, no, you want to meet this guy. i met him. he's a very impressive guy. he came into our ipo and he has been in our stock for the entire ten years and increased his position. it's impressive. that's impressive. because when i meet with typical reit shareholders, they will brag about being long-term shareholders and that would be

12 months, 18 months and that's bragging. most of them are in and out every few months. which real estate is a very long run prospect. so they're just kind of trying to market time. market time real estate values which is almost impossible. what do you think the fed is going to be, how is it going to impact your business? >> i don't know whether they're going to raise rates or not. they're certainly talking about raising rates. i do know that in the past when they talked about raising rates, people have thought, well, you know, reits are sort of a fixed income. they have a dividend that's substantial. so if rates go up, right? your dividend is going to have to go up so your stock's going to go down. actually, most of the return has been growth in the stock price. right? so -- and in fact, typically when rates go up, real estate is benefitting. >> final question. politics. campaign. does it matter to you? does it matter to your business?

>> of course it matters to me. >> does the outcome matter to your business? >> you know, i -- look. i think hillary clinton will bring us a good portion of what we've already had. my company's done very well over the last eight years. there's plenty that i haven't agreed with, but the economy has done very well. there's a lot of uncertainty around what i think donald trump will do. and uncertainty in general because we're in the stock market is not good for the stock market. and frankly when he talks about policy, i'm not sure what he says is actually going to correlate well with what he'll actually do. so i can't really make a call as to what will happen. although i'm certainly feeling more secure understanding what will happen if hillary's elected. >> okay. we want to thank you, jordan. we want to thank you, ron, for hosting us this morning. great having you on the show. i know you'll be with elon later on so we're excited to see that.

good luck with the conference. fwook joe. >> okay, great. thanks. we're going to shift gears and take a quick look at wrigley field in chicago. chicago is going to hold a victory parade for the champs today. parade will start at 10:00 a.m. local time and will head for downtown chicago then. and the route will travel along the city's famed michigan avenue before heading to grant park. there are also rumors that the chicago river could be dyed blue to mark the occasion. >> what color is it now? >> i think it's green sometimes finish st. patrick's day. normally it's a river -- is there a color called river? i guess rivers are all different depending where you are. game seven was the most watched baseball game in 25 years. hard to believe that 25 years ago it was more watched. because you always think there's more people and tv sets. 40 million people tuned into the

cubs making history. coming up, former new york city mayor rudy giuliani joins us to talk about the election and the drama surrounding both candidates. and the final countdown to the october jobs report. straight ahead. let's take a look at the futures numbers ahead of the jobs report. and we are looking at implied open down nasdaq with a little bit down, s&p sirge yulely unchanged right now. that picture could change in a half an hour. "squawk box" right back.

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jobs in america. breaking this hour. we are minutes away from the last employment report before america picks the next head of state. we'll bring you the numbers and lightning fast analysis. plus reaction from our panel of experts and what the jobs report could mean for the final days of the presidential election. a special hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box."

>> welcome back to "squawk box" here on cnbc. i'm joe kernen along with melissa lee. andrew is on assignment at the baron investment conference today. and as for us, we're counting down to the october jobs report due at 8:30 eastern. polled forecasters say the economy likely added 173,000 non-farm payroll jobs last month. the unemployment rate is seen ticking lower to 4.9%. the futures ahead of this report are still weak. that would be -- is that what we decided now? nine straight days? they're adding up. but the s&p had a streak of about eight days. never anything absolutely terrifying or huge, but sort of a slow, steady decline. >> like a death by a thousand paper cuts kind of thing. >> little bit like that. we're under 18,000 now on the dow. under 2,100 on the s&p. so we'll see.

and the 10-year got well above 1.8% -- well, what is well above in these low numbers? but we're back below 1.8% on the 10-year. starbucks beating the street on the top and bottom lines. comp sales were up by matching forecasts. starbucks also approving a quarterly dividend increase. that stock is higher by about 1% in the premarket trade. cbs topping expectation. advertising remains strong and was accelerating during the quarter. there you see cbs trading higher. gopro very different time here. steeper than expected drop. and the companies forecast for the all important holiday season. hurt by production issues. that's going to be today's down premarket. and weight watchers better than expected earnings. membership rose 10%. the company is raising full year forecasts and monster beverage missing the mark. results impacted in part by a

stronger dollar as well as distribution issues. european union regulators have suspended the proposed merger between dupont and dow chemical. they have not provided all the information they asked for. a dow spokesperson said they've always expected a thorough review and still expect the deal to close during the first quarter of 2017. >> gopro reminds me of fitbit. who gets caught up in gadgets? doesn't someone always make a better gadget? >> that's the issue. commoditization. >> you're rigi'm right about th? >> you're always right, joe. >> that's a famous laugh. everybody has heard that. now moving to politics. hillary clinton making a final pitch to the voters who head into the last weekend before the election. the latest "wall street journal"/nbc news poll shows the race tightening in arizona, georgia, texas after the fbi announced its renewed interest in hillary clinton's e-mails.

and i'm not sure how tight it is in texas. now joining us rudy giuliani. a donald trump supporter. i spent a lot of time in georgia too. not really that convinced it's that tight in georgia, either, mr. mayor. >> it's not. >> i know that would be a nice narrative, but i'm not sure. >> it's going to be pretty tradition. republican states are going to vote republican. the democratic states are going to vote democrat. and if trump wins, which i think he will, it will be by pulling away new hampshire, pennsylvania, possibly michigan where you've got a lot of ex-car workers who see their car factories now in mexico and where the nafta argument -- the anti-nafta argument probably has the biggest impact. and possibly wisconsin on the corruption issue. states like wisconsin and minnesota, they're pretty honest. so unlike states like new york and california where they're

used to this kind of corruption or illinois, this kind of corruption -- >> illinois, they're like what are you talking about? really this? >> does it surprise you that both hillary clinton and barack obama come from chicago? it doesn't surprise me. >> so will you be in the cabinet if you're right and donald wins? >> well, that's a conversation for donald trump and me to have and not -- >> i'm sure yao had it. >> absolutely not. >> really? you have not to this day he's not said to you mr. mayor i would love you to do "x," "y," and "z." you've spoken out about hillary clinton and how indictable she is. what would you like? >> i'm not going to tell you and i'm not sure whether i know. >> would you like to prosecute hillary clinton yourself? >> i would like to see him elected and i would do anything i could to prevent her from being elected short of something unethical or illegal. because i think that even before

i knew all this, i knew all this. i predicted she would be indicted on multiple counts of exposing national security information. and benefit involved in bribery in the clinton foundation. you look at one or two transactions, ubs where she goes and intervenes with the irs. ibs gives them a speaking fee. come on. you look at uranium. she agrees to 20% of our uranium being sold to russia. meanwhile bill's friends make a million dollars on that deal. bill and hillary make about three. contributors to all of the clinton rico surprise. erickson corporation is the only corporation that gets immunity from iranian sanctions. ki go on and on and list these. >> we just had quite a few people in the last couple of

hours, business people say, but you know, hillary just would be more stable. i know what she's probably going to do. it'll be like the last eight years it will be good for my business and their eyes glaze over. it's almost as if they're saying politicians, we know how they operate. you know what's not going to be good for their business? a two-year watergate investigation of her. >> what if you're really good at things like this? sometimes i think about it that way. >> i also think they discount the fact that donald trump does come from business, is -- does have a very pro-business agenda. he's for lower taxes and less regulations. he's for reducing the burdens on business for growing jobs. he is for a more muscle military, bigger military. >> can we talk about july and

comey and the inner play between the fbi and the justice department? >> sure. >> what do you make of that -- is this era of the justice department? >> i've heard some of this from retired fbi agents. but now i read about it and for a year we've had a war going on between the politically infested justice department which to me is a disgrace. a bunch of political hacks trying to stop basically career fbi agents from doing their job the way they normally would do it. normally a case like this a year and a half ago would have been put in a grand jury. the fbi would not have been ham strung but not having the ability that you have from a grand jury to get the truth out of people. nothing like a grand jury to put the fear of god in someone and they tell the truth and you don't get five versions of it. so they were turned down every time they asked for a grand jury by loretta lynch, by the justice

department. these were all clinton operatives sitting there turning this down. then we have this guy kadzik leaking. that's the lawyer that kept him out of jail. i'd be interested the know what he kept him out of jail for. and this guy in the middle of it tipping him off as to when congress is going to be looking for things. these are things unheard of from the justice department. >> you heard justice department, these are conscientious public servants did trying to do the right thing. and you've got the vast right wing -- >> they're not the appointed. they're the life-long. >> comey is now part of the vast right wing conspiracy. >> every name i have seen of people making decisions not to go forward is a political appointee with a strong background of working for the clintons, working for obama, campaign contributions to the clintons. these are heavy political operatives. not what i'm used to in the

justice department which are extremely distinguished lawyers. this is not the justice department of robert bork and ted olson and -- >> elliot richardson. >> people with strong, substantial legal backgrounds. >> what was comey -- he was -- in july, what was that? was he being justice roberts, i'm not going to go and -- was he i'm not going to assert myself? >> that's as good a guess as anything. he tried to make both sides happen. pi he tried to lay out a powerful case against hillary clinton that she committed several crimes. he said there was no intent but then pointed out the 33,000 e-mails. >> could you have prosecuted that? >> oh, my gosh, yes. the two main elements to improve intent is destroying evidence. well, she destroyed 33,000 e-mails. and what we call false exculpatory statements.

you've got at least 12 lies. how about, i had only one cell phone. she had 13 cell phones and they all disappeared. how could they all disappear unless you've destroyed them? so that evidence is powerful evidence of intent. of setting up the private server in order to evade the ability of either the state department or the public to get access to the place you don't want access to. i would say it is a slam dunk case, yes. i don't think i've ever had a case where somebody destroyed 33,000 relevant pieces of information after getting the subpoena. would seem to me that's like a monopoly straight go to jail card. >> do you have any insight what the campaign might come up with? they had a weird week. now they're out there doing kkk stuff, i guess. >> he's going to destroy the world. >> yeah. that was -- have you ever seen -- i mean, the president is

into this campaign, is he not? >> the president says he's going to destroy -- this is the president who made a deal with the ayatollah of iran -- >> he's into this election, i'll tell you. >> this is a president that probably has been the worst president of my lifetime. deals with iran, took over a world that was relatively stable and leaves us with a world in chaos. he got an iraq that was stable, iraq is in chaos. he had a libya that was stable, libya is in chaos. we didn't have isis when he came into office, he and hillary helped make isis possible. they're in 31 countries with a thousand fbi investigations. you know, comey having to spend time on this is a tragedy because there are a thousand isis investigations going on in the united states that the fbi is responsible for. and there are only 14,000 agent. we're not talking about -- >> we're in your neighborhood. 6th and 51st. so come back. >> i look forward to it.

>> we'll see about the cabinet. stuff has to happen before you're in. >> it sounds like you pirnlly would like to prosecute hillary clinton. you'd like to be on that team if not lead it. >> well, i love going to court. >> sounds like a yes, mr. mayor. >> i never saw a better -- i mean, i prosecuted a lot of cases, i never saw one with more evidence against hillary and her band of coconspirators. >> pretty amazing. i think a lot of people agree with you, but they're still pulling that lever. >> that's tremendous disruption. if she goes into the white house, there's no way the house of representatives doesn't continue this investigation. and now i know the evidence is there. so the fbi wants to get their teeth into this. they're not going to walk away. they're permanent. >> thanks, mr. mayor. still to come, we are gearing up for today's main event. the october jobs report.

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we are less than 15 minutes away -- in fact we are less than 14 minutes away from the jobs report right now. >> mocking, mocking, mocking. >> if i drag this out, i think i can get it to the point where we're actually less than 13 minutes away, leisman. what do you mean mocking? >> you're mocking. >> we need more decimal points on that clock. don't you think we need at least hundredths? really you can't get a clear picture of this without five or six -- >> how can you trade early on the data? >> exactly. kevin haset from aei. and cnbc's chief economist. >> senior economics reporter. >> chief economist steve leisman. >> if you're going to mock the prompter, will you at least read what's in it?

>> your nourm shows 163. >> i'm a little high. i'm at 202. i think the economy is growing a little stronger than we thought. i think there's a little bit of a seasonal depression that will push it back up. so they hired soybean farmers? >> hiring a bunch of workers to produce very little. that's what you look at gdp productivity employment. that story makes no sense. i think the payroll numbers are the most accurate. i think you're going to see output revised up to equal work. >> i'm at 138 right now. it doesn't like the momentum off of adp. i also think that something we've been talking about on this show back to the spring that people are putting stuff on hold waiting for the election to resolve. >> this notion that the seasonal hires may have been brought

forward. and any time you mess we the seasonals, you get an outsized effect. if you look for "x" number to be hired and it's "x-plus," it could be magnified. my metric model isn't going -- >> kate, just go for 300. >> you want me to swing for the fences? i like to be realistic and pragmatic. >> just in terms of the way this usually works. it's the last number before the election. >> shouldn't i put in one just so i can win price is right style? >> i'm at 300. i mean, why wouldn't they? if they could, steve. where are you? >> 153. >> because they can and they don't, joe. >> what? you got to double that. easy. >> 153? >> 306. that's what i would -- just grade it on the curve. >> i think the policy and political uncertainty is weighing on corporate behavior. you're seeing this reflected out of third quarter earnings. i think it's difficult for us to see a huge uptick in hiring

ahead of the election. i would expect once we get an outcome you're getting revisions. more caution in the near term. >> don't you think it's going to be above two? >> 132 and 139 were the october and november payrolls going into the 2012 election. the people who worked for the bush administration who were reading the numbers rigged it to a minus 769. shall i go on? >> i don't think bush had the same kind of people working for him that are currently working. do you really? >> well, did 132 and 149. by the way, it accelerated after that. if you're going to push it up, go ahead and push it up early. >> i'm over 200? >> but you're not at over 300? come on, joe. you can't push me there. >> that's a whisper number. >> if we do get a below consensus jobs report, what is that? it's hard to decide what's a good number and what's a bad number? >> i think if you get into the

mid-100s, 140 to 180, it's a good number. i don't really worry necessarily about a 153. my best guess as being something that would soften the overall outlook and change the reaction for the fed. i think this is a good number ahead of a hugely uncertain election. >> all right. it is possible that all the political hacks are actually at the justice department. there weren't any left for the labor department at this point. >> all the hacks were at justice. >> right? there's only so many to go around. >> didn't you get your ya yas out with rudy earlier? you're done. we're talking with serious economists. coming up, stocks to watch and then the data point of the morning. we'll bring you the numbers from the jobs report. instant market reaction. "squawk box" will be right back.

up next, the wait is almost over. minutes away from the jobs number. we'll get final predictions from our panel and the data info. stay tuned. you're watching "squawk box" on cnbc.

- we had to think a little more seriously about saving money for the future and for the kids and for their college funds. we thought, "well this airbnb is actually a great way to pay those extra bills." - every bit of extra money helps these days. we have a retirement fund of our own and i take a draw on it. i don't want to take too much either because i don't know what life is going to bring to me. i get to keep 97% of my rental price. the extra income i get from airbnb has been a huge help. - airbnb has helped me so much financially especially starting my own business.

san francisco is such an expensive place to live. the way people work and travel is changing. the guests are now able to stay longer, stay five days, enjoy another day in san francisco and spend more money in the neighborhood. my guests are able to extend their stay and spend more money on activities and restaurants. - the extra income that i get from airbnb has been a huge impact in my life. welcome back to "squawk box." it's time for the final countdown to the jobs report. let's get predictions. kate, we start with you. >> so we're at 153,000 as i said. i think we'll have a slowdown ahead of the election and this reflects the slowdown in

guidance we've had coming out of third quarter earnings. >> kevin? >> i think kate and i are already at the right place. i'm at 138,000. again, the election uncertainty. i don't think the market responds. >> 138,000 is that enough for the fed? >> yeah. they kind of have to move in december now. i think so. >> i think it's going to be 202,000. i think there was a strong third quarter. also keep an eye on u6 how much extra slack there is on the unemployment. >> if you're right, aaron, we're going to be like buddies. we're going to be on the plus-200. is that okay with you? >> i'd be thrilled. more people with work. that's a good society. >> no, honestly, u i would think -- who knows. i stopped doing this. i used to put pi. i was stirring things up. >> the prince sign.

>> i had that i drew. i have no idea. you? your work, you actually do it -- >> i've got a model. ends up being the model everybody else has pretty much. it comes out at 163,000. i use ism employment, manufacturing claims the last three months and average them all. >> and the absolute minimum that will still result in a hike. >> i think 125 is the bottom number. >> i want to get rick in before we run out to rick santelli. >> my fed chief. >> 233,000. i looked at all the novembers going back and there seems to be a seasonality. we've gotten lots of numbers is that topped expectations in november. we do get revisions. 233,000 is my number. if that happens, a strong number, fed gets more ground game to do its tightening which it needs to do no matter what the data is. and it also has lots of

implications that seem to fit into the narrative. >> yeah. read between the lines. i know exactly what you're saying. >> because he's in chicago. >> rick, i hope october not november. >> hampton, the numbers please. >> 161,000 october non-farm payrolls increased by 161,000 jobs. the unemployment rate is 4.9%. average hourly earnings up 0.4%. the highest since july of this year. 2.8% year over year. that's the highest since june of 2009. revisions, upward revisions, august. 167,000 revised uptowards to 176,000. september 156,000 revised upward to 191,000. a plus 44,000 additional jobs.

private sector job growth in october, 142,000. leading sectors, professional and business services, plus 43,000. health care plus 31,000. government gaining 19,000 jobs. the only major job losses noted in this report, manufacturing down by 9,000. the only hurricane matthew related item, by the way, the labor department telling us there were some 238,000 people who had jobs but did not show up for work related to the hurricane. labor force participation rate, 62.8%. the u6 down to 9.5%. that's the lowest since 2008. for the so-called real unemployment rate. back to you. >> aaron, i'm adding the revisions to the 161,000. >> and another 40,000 and there

you are. a huge drop to u6 down to 9.5%. that's going to weigh heavily on the fed. >> and steve, you went over. price is right. you can't go over. >> looking for any reason to denigrate my work. >> that means i won. i was closest without going over. >> so you were 8,000 away, i was 2,000 away and you're the winner. >> price is right rules. >> grabs the revisions though, joe. >> so i was 161,0 -- i was 163,000. it was 161,000. two months in a row. let's take a look and show you where the job growth was. as you said i think it's 45,000 to the upside. you know, construction is 11,000 nap is the way we're different from the adp number which showed a decline in construction. manufacturing, though, down 9,000. my guess is that's still weakness in the oil service sector. big factor there.

retail down 1.1% so that looks at the early hiring. i have done some work in the past and will redo this work, that early hiring can precede strong christmas sales. if anybody knows how their sales are going to be, it's the people that do the hiring. we'll take a look at what e the christmas sectors were. where else? temporary help up marginally. finance up 14. >> when they hire too many people and they have a charge in the next quarter because they miscalculated. >> here's my thing. if anybody has a reason to get it right, it's the guy who is do the hiring. more so than the economists. >> there's a structural change going on in how we buy things in terms of onlieng versus store and when you need to make those hires. >> fair. >> to bring amazon opposed to somebody at the store, it's different. >> and if we're talking about retail companies that are also

worried about rising wages which we're seeing that much more in the service sector, of course. this is going to be a segment of the companies that are going to be very cautious about hiring in advance of real need. >> can we go to rick and see how the market is reacting to this? rick, what's happening in your neck of the woods which has a championship over there, my friend? congratulations, i have not had an opportunity to tell you that. >> yeah, no, it was all fun until i got on the train this morning with about 350 extra cub fans all under the age of 20. now, the market is looking at this as a good number. okay? we're adding basis points to all maturities. a couple on the short ends as they go close to 83 basis points. 30s are back over 260. you're 281 -- excuse me. 181. freudian slip in 10-year notes. so the markets are looking at this as a better number than was factors in. i think the big deal continues to be, you know, yesterday the fed balance sheet, they've been unwinding a little bit.

that has put some pressure on the dollars they've sucked up some dollars. all in all, it seems the number is a good number. we want to see what the weekly close is and i would focus on the handle. if it's a 1.8 handle versus a 1.7 handle, we might get some of that momentum back that we've seen on rising long end rates globally. >> rick, do you think there's any concern by this wage number here and i'll get to the panel on this as well. up 0.4%, that's on the high side. that's been -- >> that's a biggie. >> go ahead. >> that's a biggie. lazear is going to be talking to me about that today. most of the traders behind me, when you get the oohs and ahhs on a number, you know it was big. of course it is really all about wages. almost more than jobs. there's a lot of part-time things that get mixed in.

workweek wages and ultimately the number we had yesterday in predictivity if we could kind of increase that a little bit. getting back closer to the right track. >> kate, where do you stand on this? should the fed let this run? the average american worker has been waiting around for a raise for years. they're finally going to get it and the fed's going to clamp down. >> i don't think the fed is going to clamp down. even with the 25 basis point rate rise in december. we're still talking about accommodative policy. i think if all of the inflation pressure we get come from wages, it's a great thing. it's a solid thing for the u.s. economy and that companies have plenty of margin, you know, room in their margins to absorb higher wages. especially if it leads to stronger momentum from the consumer in 2017. this is a solid story. i don't think the fed will have to really raise rates aggressively on the back of that. >> i can't remember the last time we talked about on this show. but you're seeing phillips curve actions. >> explain what that is. >> yeah.

when you get to full employment, wages start going up a lot. that's usually what makes the fed go into a hiking cycle. >> the problem is fed overestimated what full employment was every single time. the last thing in '96 was let it go a little bit. we've gotten low inflation. >> you're a room to runner. >> i'm a room to runner. let america get a raise. >> what about the politics of this? >> for me the headline of this jobs number is there's nothing for the conspiracy theorists today. if we had gotten joe's 400,000 number -- >> say that to joe. >> this number has no effect on the election. >> say that to joe. >> you don't the the counterfactual maybe it was zero. what about someone writing in about the birth death model. added 197,000. >> so the birth death model, i don't want to go through this laboriously but it's done before the seasonal adjusted -- >> when have you never wanted to

go through something laboriously? >> he's made his career mocking the prompter. i make my career talking about seasonal adjustments. >> who gets paid more? >> pay attention to the birth death model? >> i pay attention to the structural amount of labor force and people going in and out of the labor market. we're definitely seeing a shrinking of working age men. i wonder where the men have gone. i think the growth is a positive sign. hopefully once -- whoever wins this election hopefully will get a infrastructure package. we have a lot of people out of the labor market that should be back in. >> some of those people don't have great skills. the question is whether they're stepping out to get retrained or giving up. >> i'm less of a believer that people had skills to dry wall houses. i think we could build some more roads and train lines with the same set of skills. particularly among construction

workers and people who build real things. >> i'm less constructive of that happening because it's going to take some time for fiscal spend. >> it was amazing. >> how many quarters, five, six quarters until people were employed, right? >> so a lot of that accounting for the government accounting is the way the government spends money is absolutely backwards to where the economic activity occurs. and in parts of the stimulus, it was 8%, 10%. most of the obama thing were tax cuts. >> one-third were tax cuts. there's a lot of dispute about the counterfactual. but i do want to get to rick and what's happening on the fed funds market. has there been a change to where you're pricing? >> well, right now it's down a half of a tick. okay? so as the price goes lower, the percentages increase. i wouldn't put much stock ahead

of the meeting. suffice it to say, there's enough girth built in to give validation to the notice they're looking for a tightening. i think a better way to proceed is to look at global rates. look at things like the duration of zero coupon instruments in europe where they basically are at zero when they put these things out in auctions. as these prices go down, it's going to give a leveraged kick to the upside in rates like we experienced in january of last year when we were led down. if you're looking for reasons for the central bank to tighten, the fed funds is just one hair on a very crowded top of a very dense piece of hair. yes. >> i haven't had had the chance to ask you about this for awhile. tell me what you think is now the bottom, the middle, and the top of the range now.

it feels like 180, that -- >> it really isn't. but it's close. you know, we're getting a lot of compression. if i had to draw a road map for the rest of the year, i'd do it as follows. 186, 192, 198 are resistance points. we settled at 227 last year. i would say that if this market continues to get closer to the comment of unchanged. an unchanged tenure is where i'd be laying my money. and what would reverse that, any type of close at this point below about a 155 yield i think would take the upward mobility of rates off the table. >> what was that participation rate? >> it went down a tick to 62.8%. let me get those numbers up for you, joe. you had the workforce decline by 195, employment decline by 43.

these are the household numbers. and the unemployed fell by 152. these numbers bounce around a lot. last month you had 444,000 come into the workforce. these are volatile numbers. >> this survey week is always the week of the 12th which in september was both columbus day and yom kippur. >> and a hurricane up the coast. i haven't seen much of whether or not that influenced anything. in general they don't tend to have big impacts even though the market worries about impacts from the storms. >> we're going to take a break. and thank you, rick. i don't know. 161,000, if that's all they felt comfortable with, it must be really bad. >> yoe, 800,000 -- >> our panel is sticking around. i mean, if -- >> the non-seasonally adjusted number was 800,000. >> if they could only pull off 161,000 -- >> joe's just joking, by the way, america. >> thank you, melissa. we'll hear more from them after the break.

but quick a programming note. thomas perez will -- >> people will think you're serious. you're not. >> labor secretary thomas perez will be on "squawk on the street" at 9:35 eastern. stay tuned. we'll be right back. monday on "squawk box", america is getting ready to head to the polls. and the candidates are making their final pitch to voters. with the election just days away, we'll have a rundown of the issues that matter most to your money, the economy, and the markets. that's monday starting at 6:00 a.m. eastern. "squawk box" will be right back. ♪ ♪ is it a force of nature? or a sales event? the season of audi sales event is here. audi will cover your first month's lease payment

on select models during the season of audi sales event. (bing) our customer is a our 21-year-old female. heavily into basketball. wait. data just changed... now she's into disc sports. ah, no she's not. since when? since now. she's into tai chi. she found disc sports too stressful. hold on. let me ask you this... what's she gonna like six months from now? who do we have on aerial karate? steve. steve. steve. and alexis. uh, no. just steve. just steve. just steve. live business, powered by sap. when you run live, you run simple.

♪ wow. it really is blue. they are dyeing the chicago river blue. like, if you're in alaska, it might be blue actually. >> but here it's a mysteriously murky green. >> they go green on st. patrick's day. >> it's naturally green or gray or something. >> i don't know much about this. i know more about the river in cleveland that caught on fire. but that doesn't happen -- >> didn't they reverse course of that river. >> they changed it? >> i think they changed the direction of it. >> not easy to do. >> that seems like a difficult task. let's take a look at the futures a the jobs report here. haven't seen too much reaction in the futures markets here. but we are looking at a slightly higher reaction.

s&p looking to add more. take a look at the yield on the 10-year note. we had been about 1.78% prior to the number. we are higher on the 10-year yield 1.82% is where we stand. dennis lockhart is speaking now. steve, you have those headlines? >> lak heart says he anticipates gradually rising rates. he's the atlanta fed. t. that's over the next two years. he says there's no pre-program tightening campaign for the fed and will be meeting the pace of job gains. we just talked about that on the table here. rates, he says, will stabilize at a lower level than the past. the housing industry shouldn't be too concerned about that and notes the fed is close to achieving its monetary policy goals. expected fourth quarter growth. and sees continued gains in housing. by the way, i fished that river. there's a salmon run in that river. that comes in -- >> was it catch and release? >> i don't know that. but i fly fished that river.

there's a is a money run out there. >> blue streaks as they dye the river in honor of the cubbies. >> did you see all the pictures of the two headed sharks been born now? >> i did. i fish in the bronx too. sports fishing capital of the world. >> all right. that's nice it's blue. i thought rick was funny. all the people on the train -- >> they stopped ecological conservations. >> don't check your count. >> but the fish are back. let's get back to our jobs panel. aaron, kevin, kate, steve, thanks for joining us today. anything we haven't -- we've got most of the important stuff -- aaron, you have more. >> i think this decline in u6 all the way down to 9.5 % is bi. you've got to ask the question, what are employers doing here when they're hiring all these workers? and they got to be hiring them because they make money. because they produce more output. companies are smart when they're making realtime hiring

decisions. as you go down the labor force and you pull in more people, this gets a chance as kate said to really create a sustained consumer rally. and let's view this as optimistic momentum to unleash the american consumer in 2017. >> the one thing i want to throw in is that we were both below consensus. it came in about where we were. and yet the market thinks it's good news. and so it probably is the u6 that you mentioned that's the good news in this. >> it's a bit of a goldilocks thing. how quickly they would have to move start to change. i actually like the reaction we've had in the 10-year. i think a bit of a steeper yield curve is going to be such a good thing for bank stocks and really would be good for the broad ever market. >> this is important because the market seems to be changing its expectations. there was a period of time not that very long ago that the only thing that would satisfy the market was 200,000. and the economists were saying no, no, you don't get that. the 200,000 is over what the

economy should be producing. it's not commensurate with the growth we have or the workforce. now we're down in this 150,000 to 175,000 range. i guess the three-month average is in that zone. what you're pointing out to me represents a change in represenn the way the market is orienting itself towards the numbers. >> i think it's also the market recognizing that significantly faster job growth which changes the fed's decision in policy path would have impact on the dollar and those were all headwinds to earnings. we have to be in a slow and steady and stable path, something people can really forecast. >> and also at this time where we are just days away from the u.s. elections, i mean, if we had a much hotter number that would have been an added volatility factor going into these elections. before we had one, but now we can sort of put the fed off to the side. we're still on track for a december hike, which is exactly what the markets expected. and now we can deal with the election solely for the next couple -- >> minutes.

>> the market's been expecting the fed will always move at its next meeting for about three years now. and it's been right once. december could mean that it's right twice out of three years. >> just real quick, lockhart made a comment on the current job number called satisfactory, is what he said. take a look -- >> june lockhart? >> yes, i do. take a look at the euro versus the dollar, it has weakened a bit. if you look at 110 right now is where it's trading. and i think that's the expectation is that it's going to be a stronger dollar. >> thank you, steve. nice model by the way. >> thank you for the love on the model. >> you're welcome. >> after getting mocked on the model. >> kate, our thanks to you. when we come back, jim cramer will join us live from the new york stock exchange. we'll get his take on friday's job report. american express open cards can help you take on a new job,

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let's get down to the new york stock exchange. jim cramer joins us now. i don't know what to do with 160. i don't know whether to buy, i don't know whether to sell, i don't know whether it's good for the market, i don't know whether it's bad for the market, bonds, currencies, i don't know. m midland, right? >> we can talk about a flop, but it's the election.

and it doesn't really impact the election either way, then i think it's just something we're going to be glad it's behind us. the election is going to determine so much because obviously we thought ten days, eleven days ago that it was a done deal. and now all people can think about is will there be a federal reserve to react. i mean, the kind of crazy things that you hear about if trump is elected are all out there right now. i think most of them would not be occurring. but i know that this fear factor among ceos is just so great at this point. i wish they would come out and say it so that maybe we could all know where they stand. >> yeah, well, you know, whenever i hear them i always wonder how much of it is, you know, is just honest thought and how much is the gravy train and the crony capitalism becomes more difficult to do. don't you ever wonder about that? >> yes. >> how much is just crony capitalism? >> yes. >> they want it to stay the same because they're so in bed with them already. >> i think there's a lot of

people that have done very well during this period. and some of them have done very well because globalization. and globalization when you hear about jobs being taken away, i don't think that's idle anymore. i mean, i think one of the things that's happened is whoever was going to run and get one of these parties was going to be running on the idea that jobs had been lost. and jobs have been lost. and we can look at this number and say, wow, they gained, but there's millions of people who lost a job. and they're voting one way. >> jimmy, we may be two guys that actually know about zero interest rates and assets being marked up. and we own some assets, and we're flush. but i mean we both of us feel bad that, you know, not everybody else has assets. >> you got to go to these towns with there's nobody. they don't have any savings. and you know they're angry. and there's going to be one of these parties that represents the anger. whether you think the candidate represents it correctly or not. but one party represents the anger. should it really surprise us?

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that revolve around you. now that fedex has helped us we could focus on bigger issues, like our passive aggressive environment. we're not passive aggressive. hey, hey, hey, there are no bad suggestions here... no matter how lame they are. well said, ann. i've always admired how you just say what's in your head, without thinking. very brave. good point ted. you're living proof that looks aren't everything. thank you. welcome. so, fedex helped simplify our e-commerce business and this is not a passive aggressive environment. i just wanted to say, you guys are doing a great job. what's that supposed to mean? fedex. helping small business simplify e-commerce.

you saw bill murray all over the place with the cubs. i once won a contest imitating him syncing happy birthday, happy birthday, dear melissa, happy birthday -- >> you just fulfilled my birthday wish this year, joe. >> joe squawk in the "squawk box" lounge. remember he used to do that on "snl"? happy birthday. >> thank you very much. >> join us on monday when it won't be melissa lee's birthday. anyway, "squawk on the street" is next. good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. last jobs report before the election of 161,000, some upward revisions. unemployment at 4.9, but it's wages that have people's attention up 2.8 year on year, the fastest since the crisis. we'll get into what all that means. premarket is pretty tight. europe can't shake the losses and ten-year hugging 1.8 this