fed's plans to hike interest rates. how can they? it's friday, december 2. "squawk box" begins right now. >> live from new york where business never sleeps, this is "squawk box." >> good morning and welcome to "squawk box" here on cnbc. i'm melissa lee. along with joe. howard schultz will become executive chairman, current president and chief operating officer kevin johnson will take over as ceo. much, much more on this story in just a moment. and later we will bring you a first on cnbc interview with howard schultz and kevin johnson. that is coming up at 7:30 a.m. eastern time. >> stepping down, but he's

spearheading a new way of re-energizing the brand. >> if you thought starbucks was high end at $4 a cup, this is higher end. >> i need detail. so coffee will be more expensive, right? will it be better? >> maybe you're paying for the experience of it. >> there is a lot to do in starbucks already. the music, used to be cds. apple messed that up. but you got i didn't gwi-fi and. >> all day for -- >> if you have a man bun, you get a discounts, right? don't you? >> have you tried that yourself? >> one of these days. >> a fake man bun? >> one of these days on october 13s, i'll have a man bullpen. but first it's jobs friday. forecasters expect an increase of 180,000.bullpen. but first it's jobs friday. forecasters expect an increase of 180,000. unemployment rate expected to

remain steady. down about 14 or so on the dow, down about 4 on the s&p 500. and then the nasdaq down 24. in asia overnight, i did see japan after a big gain pulling back, but not giving back all those gains. down half a percent. european equities were weaker. sometimes they change by the time i get in here. but some were down over a percentage point like in france. germany down not quite, but significant losses. we'd feel that here. a quick look at crude. it continues to trade above 50. an brent all the way up to 53.45. president-elect trump kicking off his victory tour in indiana and ohio yesterday. trump surprised the crowd in cincinnati by announcing he will

appoint james mattis as secretary of defense. eamon javers will join us in a moment with more on that. and french president hollande will not run for re-election. first time since world ward 2 that a french president will not seek a second term. the socialist president faced approval ratings as low as 4% amid political turmoil and a stubbornly high unemployment rate. a primary in january will decide which left wing candidate will stand in april p's presidential election. >> what about irish coffee? >> the starbucks competition, how much more high end could it be. >> what about zambuca? >> we can ask him. >> but the way i look at it, supposedly the brand needs refreshing. or they want to extend what is an unbelievable obviously success story. and maybe if he is stay to go spearhead that, it's almost like -- remember when he came back when things were not -- i

mean stock was really in trouble then. he came back and re-energized the entire company. >> 2008 to the present, stock up more than 500%. >> he came back and did it founder came back and absolutely -- >> and we have seen that in the past with steve jobs. >> not the always. >> not always, but we should also remember if you're going to use the analogy of steve jobs, should you also remember that apple's stock hit a record high after his death and during tim cook's tenure. >> that's true, too. >> and then entereded ea period stagnation. >> which we don't know how that will end up either. but if he was retiring to go off on a yacht somewhere, it would be different than spearheading this entire new effort. i would want him to do that, too. it's almost like if you have a right hand man that you think can handle the operations of the existing starbucks, this is fine and you put the visionary out. >> otherwise a cloud sort of -- the new guy, kevin johnson,

could feel shackled. >> yeah, it's not your typical retirement. elsewhere -- we will talk about that because andrew is town the down there. he has both guys. wells fargo has changed its bylaws to split roles of ceo and chairman. it requires chair and vice chair to be independent directors. back in october when john stumpf stepped down, stephen sanger took over and tim sloan became the ceo. latest move locks in the separation of those roles for future appointments. shares of wells fargo not to go much this morning, but closed somewhere at 54 and change yesterday. back to the top story of howard schultz stepping gown as c down as ceo. kevin johnson will take over as ceo. starbucks shares moved lower.

joining us to sdiscuss what it could mean, jeff, let's kick it off with you. joe and i are were talking about this. it's not just the case of an iconic ceo retiring, stepping away, he's actually not going to step around and this iconic ceo is still going to be sort of in the wings. are you afraid for kevin johnson and his ability to actually be fully a ceo? >> it's a challenge. you're right, we have seen some major challenges. and what a coup you've had this week in terms of having wilbur ross and steve mnuchin breaking that news and sorkin and cramer ready to go with the starbucks team. hats off to cnbc. but, yeah, there is something here that i think deserves headlines, but i think there is less here than meets the eye.

this man is not going anywhere. does anybody not position that ralph lauren is still driving what is happening at polo? michael dell has come in and out. there is a cat forethategory thr to as generals -- >> so is that good or bad? do we want him behind the scenes or do we want him to let kevin johnson do his thing? >> it can be a good thing. phil knight yuundermined bill perez at nike. sadly phil's son passed away, but he got a second wind and the board said a culture fit, but they never could explain why. but michael dell, steve jobs as you mentioned, many, larry page came back. many times they have done a fantastic job. when howard came back in, they had taken it from stock was $9,

$10 and up to almost $60 now. it's put a remarkable comeback. revenues were about $10 billion now more than twice that. but it also was 2008. nobody was doing well then. and many ever the thiof the thi howard said held do, they didn'tdidn't and he blamed predecessor. they didn't slow things down in the romantic view, they used technology to speed things up. >> so i want to get the shareholder side of it, bill. nobody will knock starbucks. it's one of the greatest brands created on the planet. and under schultz, stock up by more than 500%. but in more recent history it has been a troubled franchise. they missed sales target for the fourth consecutive quarter. they cited election uncertainty. they have yet to meet the promise much at least 5% same store sales growth. is this the kind of management

quote/unquote change because as jeff said, it may into the actually be a change that you as a shareholder want to see? >> well, let's not forget that this is a legal eaddictive drug that they sell. and i haven't heard anybody mention ray kroc. ray kroc retired from mcdonald's in 197 # after buying the stores in 1961. and so really what a t. all comes down to are systems and processes if place# after buyin in 1961. and so really what a t. all comes down to are systems and processes if place4# after buyis in 1961. and so really what a t. all comes down to are systems and processes if place after buying in 1961. and so really what a t. all comes down to are systems and processes if place to support this bland with rand with an ad product that has become a social magnet. by the way, i think you're leaving out a couple of two for one stock splits on that price from the lows in 2009. i think the stock was fep and i think it's split four for one since then. so it's been quite a stock.10fe i think it's split four for one since then. so it's been quite a stock. and think it's split four for one since then. so it's been quite a stock.

we've owned it since the fund exited, and it will be nine years old january 2. so you have a business that creates massive free cash flow and massive returns on equity from this addictive legal drug. and i would agree that it would not be the first company like this that struggles through a period where ray kroc or walt disney or howard shuttle hands the reins to other people because it's kind of his baby and it's hard when you bring in a-sitter and parents still are at home for a while. >> you can pull it off. bill gates worked it out with steve ballmer. took a few years, but now at an all time high. at intel, founders never crowded the successor. they stayed around in an ambassadorial way. there are some generals that

return. they're not that upset about their chance to get back in. and howard has done that. this is not the first time by the way everybody should know this and reminding jim perhaps coming up and this is the second time that they have gone through this as -- >> right. so -- >> it was a planned succession. but howard schultz is a master architect. and he is the orchestra conductor. and he can't just walk away. and his moon shot activities -- >> i want to get to the question that share shoulders are facing. and that is a stock price authentic till the election when the stockshoulders are facing. and that is a stock price authentic till the election when the stock got a jolt to use the coffee metaphor, had been down 10% for the year until the election about th

election. so is this the right team to turn things around, bill? >> it's the exact team that was there before with the exception of the ceo. the people there with all the way through, the people 30 years of history, are kevin ryan could be the right guy, of course he's been on the board for more than half a dozen years. and 6% of their payments -- their orders are now mobile. >> bill being i wbill, your per investor. >> valuation matters dearly. and what happened 2007 through 2009, price earnings multiple came down to the point that if you really had the guts at the height of the financial crisis, could you pay ten times earnings to buy the business. reason we don't have as big a position in the stock is it's hard to own something at a 30 times multiple. and this is an older more mature

company. it's got great future in front of it. but that multiple put as risk in there and i think that's kind of what you're getting at. this is not a value buyer's pick. it's a momentum stock. and therefore the risk is that you wake up in about 10 or 15 years, you have a 20 multiple instead of a 30 multiple. and whatever earnings growth that you get the next ten year, success of the stock will be reduced by the contraction of the pe multiple. >> gentlemen, we have to leave it there. thanks for your time. appreciate it. and a programming note, howard schultz will join us with kevin johnson live 7:30 a.m. eastern time right here on cnbc. >> don't think there is any alcohol. >> in the new -- >> in the old ones they serve alcohol at some stores. >> but the experimental, 15,000 square feet, i mean -- >> that is like a big box store.

>> yeah, 5,000 square foot house is pretty big. so what is a normal starbucks, like 2,000? >> in new york they're very small. >> in a lot of places. and 15,000. but the coffee there -- >> it's another experience. >> about bbut will it work. >> in this environment in which populism was really the message of the day, you have to wonder whether or not a coffee chain that is serving $12 cup of coffee -- >> millennials weren't involved with the populist movement. they're still petting their puppies and everything. but this is really amazing. also wants to be be the willy wonka of coffee. so you can imagine -- remember that was a cool place in both movies. >> so you might go. >> i don't know. roast my seasoown?

i don't know. we'll find out. but some people are saying is this the type and place for that to even go more upscale. >> are you tone deaf to what is going on in an environment where even just the average american is seeing food deflation, people are used to paying less and less and less for food. so will you get used to paying $12 a cup for coffee? all right. president-elect trump revealing his pick for secretary of defense after a busy day in indiana and ohio. eamon javers joining us from outside trump tower. kind of interesting watching some of it last night. i'm told general mattis doesn't love that name, mad dog, but president-elect loves that name. and it was funny, krauthammer said if someone does something like iran keeps on harassing our naval ships, you can always say, you know, if you keep doing that, we'll bring in mad dog.

and just having that name ready -- >> it's a helpful name. >> but he supposedly doesn't like it that much. >> especially if you're a marine corps general, that's the kind of nickname that a marine corps general should have. and he's also known as the warrior monk. he's never been married. he's viewed as a thoughtful leader. and a favorite saying is engage your brain before you engage your weapon. very quotable guy. but we were waiting for this pick all week and finally last night donald trump let the news out of the bag. here's what he said this ohio last night. >> we are going to appoint mad dog mattis as our secretary of against but we're not announcing

it until monday, so don't tell anybody. had dog. he is great. >> so don't tell anybody except the entire national tv audience. we should also talk about companies and what donald trump said in his trip to indiana yesterday where he made the announcement that that carrier plant that was the focus of so much rhetoric on the campaign trail will actually be keeping 1100 jobs not sending them off to mexico as planned. it was a big moment for donald trump. and he said that other companies and other ceos should pay attention to what he's doing there. here's what he said in indiana. >> companies are not going to leave this country and workers will keep their jobs. and they can leave from state to state and they can negotiate good deals with the different states and all of that, but leaving the country will be

very, very difficult. >> so you have to say this was a big political win for donald trump going into january. sends a signal to his supporters that he is going to exactly what he said he was going to out on the campaign trail in terms of keeping jobs in the united states. ceos will be left to sweat out the consequences of what this means for them and what this new relationship between the president of the united states and corporate board rooms will be like. but for now, it gives donald trump a lot of momentum going into january. >>have to go, but a lot to think about here. carrot stick approach is the best one, use the carrot, obviously not the stick. and i hope some day when you say there are consequences to leaving, i hope those consequences are that you're giving up the opportunity to work in the best place for business where capital is treated best, where you're rewarded and it's the greatest country.

i hope the consequences aren't necessarily punitive or tariff, but just that you're missing out on a place that is so contusedu to good business. >> it's not clear what the consequences will be, but i think for the workers at carrier, they don't care about the philosophical debate about whether government should intervene and what the relationship should be. they care about the jobs. and that's what the people who elected donald trump care about also. so he is playing very much to the base and also some undecided voters who rpt sure who this guy was, he is sending a signal about what he will do and so different from the way barack obama handled the interaction between bush and his own presidency. obama people very much at that latter part of 2008 said we only have one president at a time. that was the mantra. they held back. donald trump very much seizing the limelight from barack obama, very different style, tone and

way of operating. >> yeah, i saw the commentary -- i love the word sniffed. they sort of sniffed at saying yeah, this is a good thing. but they weren't that excited. populism kind of got the republicans where they are right now to some extent. so if you're not a purist, you can have hillary and all the democrats still in power if you like it that way, or at least feel the tone of the country and go with it a little about that. >> old saying in politics, you got to dance with the girl what brung you. and donald trump is dancing with the girl that brung him. from maybe we don't have to be -- anyway, this is all for future discussion. can't do it here. but thanks. coming up, we'll get you ready for the november jobs report. what it could mean for a december rate hike.

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the jobs report will hit the tape at 8:30 a.m. eastern. and here to tell us what to expect, michelle girard and joe zeitle. so many richard bernsteins. is it coming out today, honest to god? >> it is. >> weren't you just here? wasn't it monday when you were here? >> exactly. it's been a month since we last talked about jobs. >> last one seemed a little more important. >> in many ways doesn't it feel like the wormtld has sort of

changed. >> have you been on since the election? >> yeah, we talked two weeks ago. >> we did sort of a symbolic high five. which is rare around here. no one saw it. good may >> maybe it didn't happen. >> yeah, so maybe it didn't happen. but back then, it was influencing the election. and the fed, we were at 1.8 i think on the ten year. so now could anything change the fed at 2.4 on the ten year and elections? >> that's what i'm saying. does it really matter. the market is fully priced in not only for december, but looking ahead, they're starting to understand that this is -- we will have a very different interest rate outlook than we had prior to the election. and the market is focusing on the potential for better growth, higher interest rates. what happen as in terms of today's report i don't think will change anybody's opinion about where we're ultimately

probably going. >> have you seen rich at all since -- really? >> yeah. >> is he surrounded by golden retriever puppies? does he have a lot of play-doh, is he coloring? >> not quite a delicate snowflake. >> you were okay, right, you're not necessarily simpatico with all the other -- >> we might share the symbol like high five off camera. >> markets anticipate things, but you would hope eventually things fall this to place. >> yeah. >> will they fall into place do you think? >> we think so. if we're looking 6 to 12 months out, we're looking at an environment where number one profits growth continues. we're already seeing profits growth. we're well off the trough in corporate profits. we're seeing a pretty good reflation of earnings. number two, we're seeing inflationary pressure. and number three, we can't discounts the possibility that this new administration will

provide the stimulus package or increment talalley lower taxes. all those conducive to outperformance. and i think leaders within equitiesalley lower taxes. all those conducive to outperformance. and i think leaders within equitiesy lower taxes. all those conducive to outperformance. and i think leaders within equities will tiffin to be energy, financials, small caps. even technology. he we think that these economically sensitive sectors will continue -- >> what is wrong with tech right now? >> it's really gone crush and i think it's the notion of this trade war. >> really? the whole reason why tech is getting crushed is because of a fear of a trade war? >> we struggle to understand it, too. >> no boost from repatriation of profits, those don't offset that fear? >> you would think so. you also have pretty good underlyings growth in the tech sector. so for us it's a little bit of a surprise. and i think the more that you hear president-elect trump talk about this wall or whatever, there is almost this direct correlation between that and tech getting hit.

so for us, we're not scared off by the headlines. we think the odds of a trade war are hopefully pretty low because our history tells us that they're not good and hopefully someone would share that with trump. but these cyclical sectors will outperform the more defensive bond proxies like your telecom, utilities, your more defense iv areas. >> so did either of you -- because i'm hearing stuff from, you know, there are certain sectors of the gop or republicans or people that are private sector free market types that look at yesterday and really do call it banana republic type rhetoric, we're keeping jobs here, not letting you leave. if you start completely shutting off the free flow of capital and rain, that is antithetical to free market -- i've even coined the term like a neo capitalist.

i can make a case because shareholders, management and ceos have benefited greatly for ten years because of the fed or whatever. and i could almost say i'll give up some profit margins to help bring up everybody else and increase the prosperity for all of our citizens. rather than expanding the safety net and unemployment insurance and welfare and food stamps. maybe the government expends some power and capital keeping -- is that the wrong thing to do to try to keep it here? >> i think obviously as you said companies have benefited. >> and shareholders. >> and workers haven't. and i think that's what has gotten us to the point we're at today in terms of when you look at the trump victory. it explains a lot of it. ultimately i think you want to create -- >> is it dangerous what you hear though? >> you want to create a culture that companies want to stay

here. >> carrot, not a stick. >> exactly. so to me that's most important. >> let's say every one of our manufacturers go to a place where it's $2 an hour. and we don't have make a single thing in this country, but all of the corporations are really profitable. >> what if we were in a time that it was the textile mills that we're save something at what point do you say that this is intervention and interfering with the national -- >> and you end up distorting capital where it should normally go. >> where you're restricting either capital or labor, it leads to higher prices. >> but if you got no one to buy -- the corporations are great, they have maximum profits and everybody is doing great, all the shareholder, but the workers are still stuck. >> but here is the slippery slope. it's the smoot holly tariffs. that was a republican senator and republican congressman who drafted the bill ultimately signed by a republican president and it led to like the biggest trade war anyone had ever seen.

it was way back in the 1930s, but for a good history, watch ferris buehler's day off. ben stein plays the professor, giving his lecture. >> anyone, anyone. >> exactly. >> you don't want to let the enemy i don't think -- populism got the republicans -- or at least some pop uhe wriulist rhet republicans in. they could be mitt romney with his 47% on the outside looking in with nancy pelosi and elizabeth warren and hillary clinton and bernie sanders in charge. >> i ultimately do think and now i sound like kudlow, growth cures a lot of ills. but if we could get the economy growing in a faster -- i think that a lot of the it is content

a it is contents that caused us to turn more inward could be -- >> thank you. coming up, first brexit and then trump. will this weekend's italian referendum be the third surprise of 2016? what it means for the european union next.

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with e*trade. i'm in vests and as a vested investor in vests i invest with e*trade, where investors can investigate and invest in vests... or not in vests. sign up at etrade.com and get up to six hundred dollars. welcome back to "squawk box." time for the executive edge. we are talking about the power of pop uhe limulispopulism. brexit and then trump's victory. the next country to face a critical vote, italy.

julia chatterley joining us with more. >> reporter: well, as you pointed out, the whole point of this referendum was ultimately to try to streamline government here, centralize power, and ultimately usher in a period of more stable government. and that is desperately needed. italy's had a whopping 63 governments in just 70 years. it sounds pretty simple and it would have been if prime minister renzi hadn't effectively turned this into a confidence vote the by saying he would resign if the no vote wins. and that is now looking most likely. so this would be fine if all parties hadn't galvanized including the five star movement and trying to use this as a way to oust him. the big fear has been what happens in a worst case a their y a 2345scenario and we go to fre

elections. >> people are angry becausethei scenario and we go to fresh elections. >> people are angry because no one fulfills what they are looking for in a politician. because the five star movement, they look like amateurs while the other parties, they are very good at politics, but they use it against the italian country. >> right now let's be clear, the risk of fresh election feels pretty small, but takit is a ri other leaders are watching closely. because this is not the only vote we have in europe. the austrians head to the polls this weekend. we have the french elections of course next year, as well. and we heard last night francois hollande the current president now isn't going to run. he was very unpopular, but it's a point to watch. we also have germany, the netherlands. and populism and the protest vote is likely to be a critical

factor in all of these elections. so it's about way more than just italy. >> thank you, julia chatterley from rome. coming up, it is jobs friday and we're talking employment and silicon valley. we'll talk to an investor who made big bets on yelp, yammer. and a quick check of the european markets. julia had been talking about the uncertainty and we're seeing that in the red across the board fo particularly in the ftse. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally.

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it's jobs friday and while silicon valley is known as the must be for innovation, could it be a prime place for creating jobs? joining us co-founder and general manager of social capital. great to have you with us. somehow donald trump seen in silicon valley as possibly creating the environment to which jobs could be created?

>> well, jobs is a big topic of conversation everywhere and it's a big topic in silicon valley. and you think about it, we are building automation, a.i., things that will displace jobs in years to come. and uber's acquisition of the company called auto it is places the 3.5 million truck drivers in the country sf. >> we were talking in the break how automation destroys more jobs in offshoring. and here we have donald trump saving a carrier plant which is great for those carrier workers, but is there a fear that perhaps the same phone call could be made to another company which is thinking about automation saying don't automate, save those jobs instead? >> yeah, well, if you look at let's say tesla, tesla makes cars in silicon valley.

a lot of robots, a lot of automation, but also a lot of very skilled people. so the order of 20,000 people making maybe a 20th of the cars of gm, but a tenth of the labor force. so automation hasn't completely displaced the jobs required to build cars in california. >> and we've seen enough examples of buggy whipped employees being put out of work and eventually comes back with a much greater -- you know, the creative destruction, we've seen it happen again and again, we can't stop it, but i understand the near term pain that will happen when automated trucks, do you know how many -- >> 3.5 million drivers. >> and how many states have that as one of their major -- so i don't know how we navigate this. are in enough engineers and code writers to take up the slack and everybody will be writing some stupid social net working code? >> that's not the world that we

want to create. so if you think about it, our mission at social capitalist to advance humanity by solving the world's most difficult problems with technology. and that's just not words. it's very important to large pools of labor. so a couple things that we're doing, one is we are tapping into the labor markets that have been untapped before. so people who don't have full-time job bes, who could have some sort of job as uber drivers. one specific company we're involved with is home hero which provides elderly care assistance to elderly, it matches folks willing to do the part-time job. and that is 94 million people in the country who are unemployed but could have some sort of employment. so they're not even in the labor pool market today. so that is would be side, tapping into these pools of labor that exist that people don't employ. the other side of it is how you bridge the skills gap, how you take people who their jobs,

those tech jobs, and how do you get the light tech skills to do those jobs. so companies like treehouse get the three month tech degrees and get people into tech jobs which are not necessarily at tech company, but at like in any industry any part of the country, inside of tech company, but also outside the tech companies. >> if peter teal walks in to a restaurant in, i don't know are somewhere near stanford, will he be booed or what will people do? is he ostracized? it's a little weird that the hot bed of innovation in this country was so anti-what you would think of as free market principles, private sector principles. is this it that they love the c capitalism that they have lived off of or why would so many -- eric schmidt, go done the list. why are so many in bed with

people who support bernie sanders, elizabeth warren, hillary clinton? >> it goes against the beliefs of capitalism. we're the most capitalistic society of them all. >> then why is eric schmidt got a hillary clinton -- >> i think it has to do with progress. we fought so hard as a nation, as a people for progress, and silicon valley represents progress. and i think if you just question progress -- >> progressive ideals because a lot of progressive ideals are till th actually regressive. >> as a muslim american, progress is like the right to exist is questioned, that is not progress. and the right for skilled labor from other countries to not come -- >> so a social agenda has kept silicon valley for the left? >> our job is to flatten the world and provide opportunity for all. and if we can't do that, if there is any sort of bigotry involved, it makes it hard for us to do this utopian view of the world.

>> you acknowledge though based on what we know right now this, could be fantastic for your industry. >> absolutely. >> that's too bad that you have to pick and choose i have this on one side of the political spectrum, but they have all these negatives and this or the other side and they have all this -- >> i think we say social progress is greater than some tax cuts. i think that is like the overwhelming belief in silicon valley. like that is the long arc of history will be on the side of social progress. and capitalistic success will follow. >> thanks. >> thank you for having me. coming up, speaking of social, the marijuana business is one of the fastest growing industries in the country and the number of people it triple. kate rogers is in denver to tell us where the jobs are. that's next. coming up, the final jobs report of the year. it's a make or break number for the fed's rate hike plan. and it could help determine if we get a santa claus rally this

year. >> don't tell him what you want. he's a liar. you disgust me. how can you live with yourself? >> just cool it. >> you sit on the throne of lies. >> the number and instant analysis, coming up at 8:30 a.m. eastern. okay, so you launched r bank's app. now what? how will you keep up with the new demands of today's digital economy? the fact is: some believe they won't need a traditional bank down the road, so at cognizant, we're helping banking and financial services companies think digital, be untraditional, and reimagine what the bank of the future can be. our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. we're creating new platforms across channels so customers can effortlessly invest, borrow, lend, transact-wherever-whenever they choose. and we're digitizing the way banks run,

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there's one industry that is

smoking hot in america. kate rogers joins us where pot is growing jobs. hey, kate. >> reporter: hey there, joe. that's right. marijuana business daily estimates that retail sales will hit about $5 billion this year with an economic impact of between $14 billion and $17 billion now over the next four years those numbers could surpass $44 billion in terms of economic impact. we are live here today at the dispensary medicine man in denver where the owners are quick to cash in. but finding a knowledgeable and professional skilled workforce is a challenge. cannabis has been a gold mine for medicine man. william started a small family business and now runs nine separate marijuana-related ventures. he's planning to expand. >> we have very unique problems for this industry as it's growing and coming from the black market into the light. and every problem that exists is another opportunity for an

entrepreneur to make that problem go away. >> reporter: the industry offers a myriad of job seekers from plant cultivation to manufacturing, retail, and management. about 150,000 people work in cannabis today according to analysts and they expect the opportunities to expand in the coming years. given eight states passed ballot measures to legalize marijuana in varying ways on election night. >> with the new states that legalized, we're going to possibly triple retail sales in a couple years. that's going to have a massive impact on communities and states as this kind of trickles throughout our economy. you're going to see the creation of at least 100,000 new jobs, maybe double that. you're going to see thousands of companies start up as well. >> reporter: now, to get a job in the industry, it is not enough to just like pot. they'll start you at around $13 an hour. if you're in a key management

role, you could be bringing in six figures. one thing they pointed out, post-election night of a donald trump presidency raises questions how this might be regulated in years to come. over to you. >> thank you. and thanks to kate rogers early out there. >> you know what is feeling the impact of increased pot sales? >> increased twinkie sales. >> sort of. >> doritos. >> depression on beer sales. beer sales in these markets oregon, washington, and denver metro have underperformed the overall market year to date by 260 basis points. so people are buying less beer in the place there is legalized pot. >> certainly no reason not to have a beer -- >> with pot? i can't speak from any sort of experience. >> i'm talking about things i read. president barack obama and the first family have lit their final national christmas tree. the 94th annual christmas tree

lighting took place last night. they took stage to light the tree. the ceremony was full of musical performances including kelly clarkson and james taylor. an l.e.d. lighting system was unveiled at niagara falls. they are much brighter than the old ones and use about half the power. that's gorgeous. >> a little hey 19. you know that song? >> you're way cooler than i am. now to sports. tiger woods made his return to the course yesterday. playing his first tournament in nearly 16 months after recovering from back surgery. tiger was on fire early at the hero world challenge in the bahamas. he was tied for the lead after the first eight holes but faded late putting a ball in the water. tiger finished at 1 over par in 17th place in a field unfortunately of 18 players. is that in atlanta? i may know that course.

but he's 41, i think, isn't he? >> somewhere around there. >> physically if he, you know, is healthy and everything then you got to get the mental. got to get the confidence back. i don't know what to think. i don't know what to think of whether he wins more majors or not. i hope he does. because he's great for golf. coming up, our guest host this morning will be ken langone cofounder of home depot. he'll weigh in on the trump transition. then or news makers of the morning, the outgoing and incoming of starbucks. "squawk box" will be right back. my business was built with passion... but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. with it, i earn unlimited 2% cash back on all of my purchasing.

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keeping jobs in america, president-elect trump touting his deal with carrier. >> i just want to let all of the other companies know that we're going to do great things for business. >> reaction from a man who knows a thing or two about job creation. ken langone. jobs friday is here. the buzz on the street about the data and a preview of the numbers straight ahead. and stirring things up at starbucks. howard shultz stepping down as ceo. we speak to him and his replacement kevin johnson on a first on cnbc interview as the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, this is "squawk box."

>> welcome back to "squawk box" here on cnbc. i'm joe kernen along with melissa lee. talking to ken langone. andrew is in seattle this morning. he's going to be speaking with howard shultz. i wondered where the heck you were. and kevin johnson of starbucks. you don't have to check in with me but would be nice to know things. ken langone also is here. cofounder of the home depot. >> nice weekend coming up. >> you got the executive branch, legislative branch, scotus. any reason not to be in a good

mood? >> i think what he did in indianapolis yesterday was brilliant. i understand what the feelings are -- >> whoa, whoa. >> i understand why we don't want to have a managed economy by government. hold on. this guy is the first time i can think of of a small number of people. all politicians talk about how they want to save the world and i've got to help you and they proceed to go on and do nothing. this guy god bless him said you know what? i know about these people. i don't know if i'm doing the right thing or not, but i'm going to go out there and help them save their jobs. >> we're going to have like eight minutes where we just unleash you. meantime, let me talk about the futures for a second because it's the top of the hour. got to update people.

>> go long america, okay. >> down 19 on the dow. >> here's what's making headlines this morning. new figures out show how much investors have soured on bonds. they pulled from taxable bond mutual funds over the past week. the most since june. and saw $2.1 billion. pimco will pay $20 million to resolve government claims that have misled investors. unclear about the performance of its pimco total etf on the total return fund. pimco neither admitted or denied the findings. and not all brick and mortar retailers are hurting. ulta is up 6% after providing an upbeat forecast. starbucks stirring things up

on the corporate level. andrew ross sorkin joins us with more on this top story of the day. andrew? >> good morning. we are in seattle this morning. howard shultz, the iconic leader of starbucks announcing he's going to hand over the ceo title. that's going to happen effective april in 2017. kevin johnson, the company's current president and coo is going to take over from howard in that role. howard shultz is going to remain at the company as the executive chairman. he's going to be in charge of the company's growth project known as reserve. we're actually in a roastry right now. this is part of the premium coffee brand. we're going to talk about that. he's also going to be responsible for continuing the social impact projects that the company is pursuing. kevin johnson of course a long-time board member of starbucks and a member of the technology community. worked at microsoft and was a former coo of juniper.

the stock went down in the aftermarket after the news was announced. it's recovered. it's down about 3% right now. we're going to talk to both of these gentlemen in an exclusive interview at 7:30 eastern time. lots to talk to them about the decision, how it came to be, and where this company is going. and just a personal note, after this news broke yesterday, i had an opportunity to spend time at starbucks' headquarters and saw both of these gentlemen talk to the company's employees. and it was one of the most emotionally fraught meetings i have ever seen talking about what business can do and what business can create. to see so many employees crying and saying thank you in ways that just were remarkable. i know you have ken langone in the studio, a founder of a company who's created tens of thousands if not hundreds of thousands of jobs. in a very similar way here. but the emotional outpouring was a remarkable thing. i hope we have an opportunity to

talk about that. we're going to talk to both of these guys at 7:30 a.m. eastern time. >> you have a good feel for what a 15,000 square foot, like, upscale place would be? i thought sambuca -- is there alcohol involved? >> we're -- >> go ahead. >> we're in the roastery right now. maybe we'll show you around. it is a willy wonka-like factory here. all about coffee. it's a remarkable thing. it really brings to life what starbucks is all about. and you asked about alcohol. i don't think they have it in this location, right? howard's over there. it's not in this location. but they're building one like this in new york that will. >> brought up alcohol like five times. >> five times from 6:00 a.m. to 7:00 a.m. >> i work at 6:00 in the morning. i was just wondering how you make it that much better.

>> and more expensive. >> irish coffee or something. something with whipped cream and sambuca or something. i don't know. >> i'm going to show you the drink. i was having an iced nitro. >> and how much it costs. >> how much did my nitro cost, guys? what's the price? i said it was too cheap because it was that good. but $6.50? $6.50. >> for an iced coffee. >> i'll show you a glass of it in just a little bit. >> and you've pointed out many times you don't part with things easily from your wallet, right? it was good enough where you'd spend that? >> i'd spend more. it was that good. i told howard shultz the prices in this election actually were too cheap. >> i hear the reason you love to go out west was because you heard i was going to be on the show this morning. >> it's ken. >> is that right? >> what'd you say, ken? >> i said i hear the reason you went west was because you heard i was coming on this morning and

you couldn't take the abuse. >> not true at all. ken, separately, the sorkin family including my family need to thank you because we had that eggplant the other day that you dropped off. it was spectacular. thank you for that. >> made with these hands. >> howard shultz is here. he literally like a barista just handed it to me. this is the nitro. it has nitrogen in the coffee. he doesn't have a mike on but he's going to come back in just a minute. and this is -- it looks like a guinness. >> so it has nitrogen in it? that's cool. that is -- wow. and you have an iced coffee every morning on the set. so you are the source on this. >> i'm going to have to try to get one like this though. >> andrew, great job. we'll be back to you. it's pretty cool that -- >> that he made -- howard shultz made him the coffee himself. >> and we had the two cabinet guys on a couple of days ago. and now this. this is good. it's good. and it is jobs friday.

you were saying that. >> what? you're hitting me again. >> you were saying how we had the cabinet guys. >> it was extraordinary. can i just say you're slipping here? you got starbucks on, there's no coffee if the place. you got langone on, there's no two by fours, no hammers. you used to get the good stuff. >> we're not an advertising platform. >> you used to get the good stuff. quayle used to arrange it. >> is it all about payola with you? >> a decent cup of coffee is all i want in this world. >> we already talked about the jobs report and said we're at 2.4% already on the 10-year. >> i came in early, i wrote this wonderful discussion. do you want to hear it? >> i do. >> thank you, melissa. bless your heart. we are looking for a generally strong number amid what is a declining trend. we're looking for 180 is the number. 161 is what it was. unemployment rate seen at 4.9% unchanged. we're looking to see if people came into the workforce or not.

average hourly wages up 0.2%. it's been something that's been going up over time. maybe the mix of jobs, better wages from employers. the three-month trend, though, has been coming down the last couple months having hit a high of 2.33%. the trend was well above 2,000,000. low claims along with a possible actual weather bounceback from october where hurricane matthew may have paired october gains by 30,000. also several reports that retailers even bid up wages. only a weak number would derail the december hike and maybe even then not. >> no. markets moved. they're lucky. so they don't have to actually decide. >> they'll do a quarter. and what i'm watching is it's a -- the next one has looked to

be june/july right now. i want to see if that moves ahead. >> thank you. >> my pleasure. got an intro here. all right. we're going to intro our discussion. i don't know if we need this, but let me read what they came up with. donald trump's appearance at a carrier factory in indiana yesterday drawing the spotlight from some recent drama over his cabinet appointments. back to his focus on jobs. >> companies when they say they're thinking about leaving this country because they're not leaving this country. they're not going to leave this country and the workers are going to keep their jobs. and they can leave from state to state. and they can negotiate good deals with the different states and all of that. but leaving the country is going to be very, very difficult. >> today's guest host knows something about jobs and thinks wages will rise under a trump presidency. ken langone, the cofounder of home depot is here.

and to free market purists, they were disturbed yesterday. i've used that term, don't let perfect be the enemy of the good. if the republicans hadn't had a populist tone, hillary clinton would probably be in the white house right now. and they wouldn't be governing. so the working man in the united states came back to republicans -- working men and women came back to republican. at least they're in a position to govern now. are we a banana republic because we're going to start managing? >> no. i see beyond the event. number one, trump has to understand and he will no doubt about it, trump needs to understand we don't have a managed economy. we don't say to companies you can't go and you won't go. all right? that's scary. i think you push this all the way and you say he took a little situation, a thousand jobs, and he made it a symbolism of honoring his word. okay? i hope we don't take any more out of yesterday that be that.

going back to the philippines, i shall return. the fact of the matter is i marvel at the number of politicians that want to help thousands upon thousands and millions of people. i know your pain, this has got to stop. i'm your guy. the thing i see here that excites me is that he's not going to forget how he got into office. whether it's creating an environment. the most exciting thing i see here is deregulation. regulation is strangling. i'm surprised yesterday he said he was surprised that people are more worried about regulation than they are taxes. guess what. regulation is a regressive tax. you pay it whether you earn money or not. income taxes you only pay if you make money. i think give this guy a chance. look, he's an entrepreneur. we know he's an entrepreneur because how many times has he come back from the dead? and this is what i'm excited

about this guy. he doesn't quit. he doesn't give up. you realize the energy this guy burned in nine months and how he campaigned? he was tireless. and the resonated. he knew his market. and he won. so on the other hand -- when romney made those remarks in march, i gave him the benefit of the doubt he was speaking his mind honestly. but in back of my mind, i had the thought maybe this guy is setting himself up to be drafted. because back in march, trump didn't have it yet. and it was a free for all. what he did in the last two weeks he's got to be ashamed of himself. where is the self-respect? the horrible things you said about this man and now you're willing to go to work? >> used to love this guy too. >> oh, i raised a lot of money for him. guess what. the right thing happened.

but where is this sense of how can i say these things and then have this man as my boss? but it goes back before that. in '12 with great fanfare he announced trump's going to support them. he took the man's support and barely four years later he's saying what an evil guy he is. he's a flimflam artist. i'm paraphrasing. but this is what's wrong with politics in america. this is why i'm excited about trump. and by the way, the thing this morning lee raymond would be fabulous. i mean, right now based on the names that are out there, i pray to god they pick bob corker. i know bob corker. he's a fabulous human being. henry kissinger said the most important things in foreign affairs is trust. i think if bob corker and by the same token -- i know rex better than lee. i do know lee. from exxon. these are good people and these people don't need a thing. if they did it, they would do it for the good of the nation.

and i hope as i said if he's got these kinds of people in their sight, plus i like what he's done so far. i am concerned about elaine kho chow. is not going to allow a vote on term limits. okay? now, here we're right back to where we started. forget what the american people want. we're going to do what the hell we well please. if he does that and he defies the will of the american people that want term limits, if he's going to defy the american people, he deserves what he gets. it isn't like it's going to rush right through. but if this is what the american people want, then damn it give it to them. >> all right. we're going to talk about that and we're going to get back to,

you know, how you bring back jobs. and what is fair game for the government to be involved with. it would be nice to use a carrot instead of a stick. be nice to make it so attractive in this country that people want to keep stuff here. >> right. >> i've involved to the point where shareholders and ceos, everybody's done well for the past ten years. you've done well. the workers have not. would it be the end of the world if profit margins were ten basis points lower because suddenly you're seeing some movement from the ground? i sound like -- >> let me say it a little differently. if we don't address income inequality in america, we're going to have social instability. okay? that's how important it is. >> if the government has to grease the skids somewhere, wouldn't it be better to keep all these guys employed rather than put them on unemployment insurance? >> what we don't know is how many jobs are going overseas simply because of the rate of taxes. >> right. maybe that's -- maybe it's a carrot. much more on this straight

ahead. meantime when we return, donald trump touting an agreement with carrier. michelle caruso-cabrera is at a carrier plant in mexico speaking to workers there. but it is jobs friday. we are right now indicated lower but a lot can change in an hour and ten minutes' time. "squawk box" will be right back. , or fill a big order or expand your office and take on whatever comes next. find out how american express cards and services can help prepare you for growth at open.com.

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president-elect trump visiting the indiana carrier plant where jobs will remain, some, instead of going to mexico. >> i will tell you that united technologies and carrier stepped it up. now they're keeping -- actually the number is over 1,100 people which is so great. which is so great. >> michelle caruso-cabrera is at one of carrier's plants in monterey, mexico to see what the reaction is. i'm glad you're down there, michelle. but since you are the author of yourn i'm right. i wish i could talk to you about what we should think about this as well. because i've evolved a little bit. i don't know whether you'd be

simpatico. but what's going on there? >> reporter: it bothers me a little bit. but we'll discuss. no surprise what happened at carrier yesterday. front page news here in monterey, mexico. the headline says trump's anti-mexican endures. the reaction here is befudd befuddleme befuddlement, amusement. the governor here told mexicans they shouldn't shop in the united states which is very common to show their economic power. the local economy minister suggested the united states was suddenly acting like a banana republic the way mexico maybe acted 20 or 30 years ago with a politician telling corporations what they can or cannot do. now, local officials say there are approximately 3,000 carrier employees in the area. and they think that's going to go up. their understanding is this new plant is going to open. it's going to rise to 4,100 employees even though that number was supposed to be 5,000 employees in total. there are hundreds and hundreds

of american manufacturers in this region. take a look at some of the names. bridgestone, caterpillar, pepsico, whirlpool. why does this happen? wages. take a look. according to the conference board manufacturing wages hourly last year the the united states, $37.71 per hour. compare that to mexico, $5.90. and that cost is going down because of the peso. the peso getting hammered every day. but it's been going down for two years. in dollar terms, wages here declined last year by 12%. it is infrastructure, improving from here. and finally, joe, this country is embracing the private sector in a way it didn't for many

years under socialism. so the regulatory environment is getting better as well. mexico is competitive. that's the underlying issue. and donald trump can't fix it by going from going company to company pressuring them. there's other issues here. >> yeah. i hear you. we know what we have to do. we have to make capital and we have to make the united states more attractive and do everything we can to make it more attractive to keep them there. thanks, michelle. but that was depressing just listening to that. programming note, greg hayes is going to join someone at some point. let's get to andrew in seattle with what's coming -- they rolled -- there. you can see where he's going to be on jim's show. what's up, andrew? what's coming up? >> joe, we are in seattle. coming up the big interview of the morning. howard shultz the outgoing iconic ceo of starbucks along with the new incoming ceo of the company, kevin johnson.

we'll speak to them after the break. as we go to that break, take a quick look at the futures. we're back in seattle in a moment.

welcome back to "squawk box." we are live this morning in seattle with the big news of the morning and the big interview of the morning. howard shultz, the iconic leader of starbucks, announcing that he is going to hand over the reins of the company as ceo to kevin johnson. that's going to be effective april 3rd, 2017. we have both of these gentlemen with us this morning to talk about this momentous decision. good morning to both of you. congratulations, kevin, on the new title and the new role. and you're not going anywhere. you'll remain the executive chairman. we're going to talk about that. so many questions this morning about this decision, your decision to hand over this title. how did this happen? why and why now? >> thank you for being here, andrew, and thank you for being in the roastery. as we discussed yesterday, kevin and i have been together now for almost ten years. seven years kevin served on the board. two years as our ceo and

president. and for the past year and a half we have coauthored the strategy of the five-year plan of starbucks. and what was clear was that kevin's ability, skill base in my view he is much better prepared to really manage the global operations of the company than i am at this stage. >> you said that yesterday. what do you mean by that? you don't think you're equipped to do it? >> i think kevin's skill base and his experience, he is much better prepared than i am while i can take advantage of what i think is an enormous growth opportunity for the company in leveraging the equity of the new brand, the starbucks reserve brand, the roastery, on a global scale. you mentioned were under construction in shanghai and new york. just announced tokyo. there's two more coming. we're building a new growth platform in starbucks while kevin will manage and integrate technology in ways that i think will really advance the opportunity for starbucks.

in ways that i am not as well versed. i think kevin has been at my side for two years. there's no better person, no better leader. and what you saw yesterday at the company meeting, you saw the response i got. but the response he got, the respect and admiration that people have for kevin. >> speak to the timing. some people suggested you had set this up. those on wall street who were focused on it understood that a succession plan was in place. i don't know if they understood necessarily the timing was going to happen now. why now? >> and let me go back to how this evolved coming out of our skre strategic plan. there are three strategic objectives. one a around elevating the brand, the second is elevating the customer experience, and doing those two things allows us to amplify starbucks as a destination. we delivered that strategic plan and discussed it with our board in may. and coming out of that may board meeting, howard and i sat down and said how could we best focus

our individual capabilities and contributions to help make that plan come to life? and that led to the set of organizational alignment, announcements we made back in july and the way we set my responsibilities and howard's responsibilities. sop it evolved from that strategic plan. >> you've tried to accept back before. this is not the first time you've tried to. what is going to be different now? >> why are you bringing that up? >> no. and by the way, we saw what happened and then you had to come back. to the extent there were lessons learned from that experience. >> i think there were two things. on a macro level, i left right at the beginning of the cataclysmic financial crisis and starbucks had a very difficult time navigating through that. we did not have the quality of the team and the resources we have now. we didn't have the leader. i think on a personal level, i don't think i was as emotionally prepared to lead the company.

this time around i've got a full-time opportunity in terms of brild building the reserve brand. the wind is at our back. how we're doing in china. so the opportunities in front of us i think are so strong, there will be no issue whatsoever that would be close to what happened in 2008. >> how hard was it for you to decide to do this? even in the past 24 hours. >> you know, something like this, it doesn't hit you until you actually say the words. you prepare for it. you put yourself in a position to say the words. but when you're in front of everybody and you make the announcement and it's real, you realize you've crossed over the rubicon. and i really am at peace with it. the company has never been better. i've got a great partner who i trust with kevin.

i'm in a good place. >> there's a special person back east known as jim cramer who has been following the company for a long time who i know has a question or three if not more for you. jim, let's bring you into the conversation. >> howard, even kevin in the conference call last night said you were one of the world's most iconic leaders and entrepreneur. why would i want to own this stock of starbucks if the man i most identify with starbucks is only the executive chairman and is working on a division that may or may not pan out even as i know that kevin is a strong leader? >> well, you know, starbucks has been in business now for 45-plus years. you know, i'm not putting myself in the class of tom brady or any other athlete that has been at the corner stone of success on a team sport. but, jim, this is a team sport. it has always been a team sport.

i've gotten more credit than i deserve. the company has a large base of fantastic leaders. and i'm not going away. i'm going to add value in the areas that i think are skewed towards my entrepreneurial creativity and dna. i'm going to support kevin when he needs it. and the company's going to continue to perform at a high level. i have no doubt whatsoever that starbucks the foundational elements of the equity of the brand, a customer experience, the pipeline of innovation in both product and beverage and in terms of technology and what the roastery and reserve brand is going to be. this is a great time to own starbucks. if i look at the stock price, you know, i'll probably regret saying this on air but i think the stock is undervalued. >> fair enough. howard, i'm just trying to figure out whether your role will be -- i know you want to come in all the time. i know you are being involved with a particular division that

you're excited about. but do you think you'll be more of an ambassador? do you think you'll be able to speak out more? do you think if you don't like something that president-elect trump does, you're freer as an executive chairman to speak out than you would be as a ceo? >> well, jim, i have not had a problem over the last couple of years in trying to demonstrate what i believe we all have a responsibility to do. and that is demonstrate moral courage with regard to how many people in america are unfortunately being left behind. and the issues that we're facing as a country. i don't think my role and responsibility executive chairman and voice are going to change. i think starbucks continues to need to use its scale for good. its platform. and i think as i said two years ago, i strongly believe that businesses recognize that rules of engagement has changed.

and support the communities we serve. >> kevin, just a quick one. i'll back out, andrew, after this question for kevin. okay? >> no, no, please. >> kevin, i've known you for many years. i knew you at juniper. let's say i was interviewing you now to be the new ceo. not that you'd been there a long time. i would say what is your experience in consumer package goods or is the issue with starbucks the lines, the through put, the technology? because the coffee's darn good, but we can't get it fast enough and throughput is the most important thing i see for a problem in the domestic stores and maybe international. >> that's a great question, jim. i point to the fact that i've been on this journey with starbucks for nearly eight years now on the board. been eight years in march of 2017. i've been intimately involved with the management team and coauthoring the strategy for the company here over the last two years.

and operating every part of the business. well, if we look at the five-year strategic plan we outlined. it is the most ambitious strategic plan in the history of the company. in order to execute against that, we've got to do many things in parallel and we've got to do them very well. and so my ability to be a great partner to howard and take all of this great vision and the strategy we have and figure out how to land it in a way that allows it to propagate globally and elevate the brand, elevate the customer experience, and ultimately amplify starbucks as a destination. that's what i intend to do. i have great confidence in my partnership and relationship with howard. i have great confidence in our leadership team. and i believe in this strategy. we're going to make it happen. >> kevin, when you were speaking to some of the employees yesterday, you acknowledged something that was very authentic.

that when he asked you to take the job, you went home and you said to yourself, can i do this. meaning actually can i do this. when you ask yourself that question and you think about the challenges ahead, what is it that you worry about? what is it to the extent if there's anything that makes you anxious, i imagine something must in terms of something that you want to accomplish in this role? >> well, i think, you know, anyone that is being asked to step into this role would recognize this comes with great responsibility. and it is following someone who is an iconic entrepreneur and leader. and i think this would be something that anyone stepping in this role would have to consider. how do you step into that and knowing that i have to be authentic and lead in my way. i can't try to be howard. i'm not howard. howard and i share many things in common, the values, the way we think about the business. the preeshs for the mission and

what this company stands for. but we come at it with different -- through a different lens because we have different life experiences. so acknowledging that and knowing that i need to lead in an authentic way. i need to trust in my partnership with howard and i need to leverage this world class leadership team we've assembled. >> first new thing you plan to do and one of the big questions is same store sales. what do you need to do to increase that number in a meaningful way? what's on tap? >> same store sales, a big part of what's powering it is the work we've done to extend the in-store experience to the digital experience and how mobile order and pay is helping amplify that. you look at mobile and pay. that is only deployed in company operated stores fundamentally in north america. we are now building that capability to extend to our license partners. to extend to other geographies. that's a big unlock. if you look at this growth agenda, we're going to have to grow more in the area of food. we've had great from how we

deployed for breakfast sandwiches. but the next frontier is going to be can we crack the code -- >> we've tried food before without real success. what have been the missing ingredients? >> been a huge success for the company. if you look at where we were and where we are right now, our food sales and the attachment of food in the morning has been a significant driver. the question now is can we take advantage of multiple day parts and multiple needs? i think we'll be able to do that. >> you're going to spend time on the premium business, the reserve business. we're here in this roastery i call it a willy wonka emporium of sorts. how can this move the needle for the larger business? >> i tried to explain that on the conference call. let me slowly kind of walk you through that. i hope we have the time to do that. so in many other industries, the fashion industry, the automobile

industry, there has been segmentation at the upper end in which businesses and brands have been able to go up in their core business. what we have created here in the last two years is a significant immersive experience that not only takes coffee to a new level, but there's no retail experience like this. it has far exceeded our expectations. it has four times the average ticket of a typical starbucks store and has become a primary destination for every tourist in seattle. we now believe that we can take elements of the roastery and bring it down to a different type of store about 4,000 square feet, twice the size of a starbucks store and build reserve stores in the same theme of roasteries. we also believe there'll be 20 to 30 roasteries around the globe that will shine a halo on the entire company. we'll have reserve stores in this brand and then we're going to integrate into existing

starbucks stores, reserve bars. all of that will add incrementalty, drive comp store sales, create separation in the marketpla marketplace. now, while i'm doing that, kevin and his team besides managing the global business and growing the business will take the same level of initiative on the technology side and integrate a pipeline of new innovation in terms of customer facing technology within the mobile ecosystem. and so a year from now, a year and a half from now, the company will be completely transformed both at the high end and in terms of consumer facing technology. the last thing i'd say the is and we haven't discussed it is what's going on in china for starbucks. there's no western consumer brand that has accomplished what we have on any level let alone our scale. 2500 stores in china. we're opening more than a store a day. we're going to do that for the next five years. i think china's going to be

larger than the u.s. 600 million middle class chinese coming into the marketplace. and we are positioned so well to take advantage of that. so this is a wonderful time for the company. and i think i'm going to get an opportunity myself to take advantage of what i do best while kevin is managing the business. >> melissa in new york has a question. >> by the way b i was in hong kong a couple weeks ago. i love the red bean scones. i always have them when i'm in china. i want to ask you because you've been a vocal supporter of hillary clinton in the past. since the election there's been a real optimism in the stock market for prospects of the u.s. economy. gauging your stock price, investors feel the same way. since the election, up 7%. do investors have it right? should they be more optimistic for the pros pektpects of the u economy and therefore of

starbucks? >> well, i need to separate the prospect of starbucks from the trump administration and the momentum in the stock market. you know, if you look at the success we've had in building market value, it's been primarily based on our ability to execute, build shareholder value with social impact. i'm not spending a lot of time on the cause and the effect of the trump administration. obviously we all want the president-elect to do well, but starbucks is going to have to do what we do based on the things we can control. >> do you feel that the starbucks brand is at odds with the administration and donald trump? the reason i ask is there have been boycotts of #trumpstarbucks or boycott starbucks as it relates to trump people asked baristas to write trump on the cups and scream out the name. and just what the starbucks brand represents at large.

>> i don't think on any level that the brand or what we represent is at odds with the president-elect or his supporters. 90 million customers a week are going through starbucks stores and i assume many of them voted for donald trump. we feel very strongly as a company that our role and responsibility in addition to making money and building shareholder value as you know is to demonstrate a level of social impact in the communities that we serve. we as a company, the board, me personally, kevin have been deeply concerned about a number of issues. social issues. that for the most part have not been addressed by the republican administrations in the past. and hopefully will be addressed by the president-elect. i think that as we go forward, we will have an active voice in

demonstrating what i've said before. the moral courage to address things that we think are important to the promise of america and the american dream. >> ken langone back in new york has a question for you. ken? >> how are you? >> i'm very well. nice to talk to you and nice to see you. >> you and i are supposed to get together pret si soon with jim meade so i look forward to that. >> i do too. >> let me first of all congratulate you for the company you founded and the way it's running, the way it's operated. let me try -- let's both of us try and push aside our political and philosophical differences. let's talk about one thing that we can say is created by a bipartisan effort. and that's public education in america. if we want to close the income gap, if we want to really be -- address the issue of income inequality, we need to understand that we've got to prepare these kids better than they're being prepared globally and around the world. but also in america.

and i think that there's no doubt in my mind if you look at hard numbers since the education department has been founded in 1978 or '79, public education has only gotten worse. when we talk about qualifying people for opportunities, we need to have them have the basic tools to succeed. and i think here's an opportunity for me a conservative, you a liberal, and people like us to sit down and say okay let's push all this aside. let's come up with an approach that's going to be good for us. because very frankly, the only thing of any enormous value are the 360,000 wonderful people who work there. they're the heart and guts of this. anybody can build a big box. anybody can buy inventory. all of those things can be done. the genius of home depot and i guess i'm being proud to say i'm part of it, all of the people that are there is our people.

that's what separates a great company from a company that's not so great. and i think, howard, you go into your stores and it's manifest there as well. but we have got to together as a nation do better in what we're doing to educate these kids because it's getting worse and worse and worse. and one of the things i'm excited about -- hopefully you'll have some more time now that you've turned over the ceo role -- that people like you and me can sit in a room saying forget about what we believe and don't believe, just the numbers and how to fix them. i hope you're going to do that. and i congratulate you for handing off the baton. by the way, i love your stock. i think it's a great company and i think it's got a bright future. >> can i respond to that? >> please. >> first off, coming from you and what you've accomplished over your career and what home depot still represents in america, i'm humbled by that and i really appreciate it.

i think what you've just described unfortunately we did not see a lot of over the last year in terms of the lack of civ civility and lack of respect in the campaign. what you've just describe sd a level of civility and common language to address a very serious problem. if you look at the problem we have today, the education issue is deeper than just education. we have almost 6 million young people in america who are between the ages of 18 and 24 labeled as opportunity youth. the majority of them are african-american and hispanic. we have one out of six in america today that is -- goes hungry every single night. which unfortunately your station in life is beginning to define whether or not you have access to the promise of the country.

what the country needs more than ever before is a level of m unity, of inclusion, of civility and people coming together over a common goal. and i think the subject that i would talk about mostly is a level of compassion and empathy that we need to try to recognize that the only way our society and the promise of america and the american dream can continue to exist is to ensure the fact that those people who were at the lower end have the same opportunity that people have with the right zip code in america. and i think that's the question that unfortunately is being answered today in a negative. and i think i would look forward to sitting down with you and others in a bipartisan way to address this issue so that we as business leaders can recognize that we can make a difference and address this issue and not wait for washington. obviously the dysfunction and the polarization we've seen for years hopefully is not going to

continue. but what's been coming out so far is not as encouraging as one would hope. >> amen to that. i want to -- jim cramer i know has one last question then i have a final question for both of you gentlemen. >> howard, it's got to be difficult for kevin. you're an executive chairman. you're not a chairman. that means you'll be intimately involved. you're staying on in an important mission. how will you really let kevin have the reins? because an executive chairman is in there doing exactly what a ceo could do if he's not careful. >> no. jim, i can't let you get away with that one. kevin johnson starting in april is going to be comprehensively all in the chief executive officer of starbucks coffee company. howard shultz is the executive chairman to support whenever kevin needs it. he is managing the business. he's managing the team. he's setting the strategy. i'm here to help and support. there should be no

misunderstanding whatsoever. and kevin johnson is well equipped to take the company to the next level. and that's going to be a wonderful opportunity for our shareholders. >> and let me just add to that, i think it's a gift having howard as an executive chairman. he and i have developed a relationship over a decade. we've worked together nearly eight years at starbucks. the last two years -- >> what do you go to him for? you guys have a door between your offices. in this new role, when will you open the door and walk? >> we talk to each other multiple times a day on a wide range of topics. every time that door to my office opens and howard pops his head in, there's going to be a new exciting adventure ahead. >> final question and you know i have to ask it given that we're talking about education and policy and public policy. everyone wants to know whether you are laying the ground work not necessarily now but perhaps four years from now running for the big office.

>> i'm all in starbucks at this time. >> i imagine you'll be asked that question again in the future. gentlemen, thank you both. congratulations on the new job and we really appreciate you spending time with us this morning. >> thanks for being in seattle. >> thank you. and i want to thank jim cramer for his brilliant questions as well. guys, i am going to send it back to you in new york. >> all right. thank you very much. great interview. coming up, street reaction to our exclusive interview with howard shultz and kevin johnson. plus more from ken langone. we are less than an hour away from the november jobs report. "squawk box" will be right back. y when growth presents itself? to win, every millisecond matters. y when growth presents itself? both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision. because no one knows & like at&t.

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jobs in america. breaking news this hour. we are just minutes away from the last employment report of the year. and the final jobs number before the fed's rate decision. we'll bring you the data, the market reaction, and instant analysis from our panel of experts. 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. langone is grilling austan goolsbee. you miss a lot. we need a -- i think maybe a web feed where everything goes. there's no commercial breaks. i'm joe kernen along with melissa lee. andrew ross sorkin is in seattle spending the morning with outgoing starbucks ceo howard shultz and incoming ceo kevin johnson. our guest host this morning is ken langone. chairman of invamed associates. we're counting down to the jobs report. forecasters expecting increase 1068z 0,000 nonfarm jobs. that's up from 161,000 in october. the unemployment rate now expected to remain steady at 4.9%. ahead of the report, the futures are marginally lower. down under two points on the dow. down just under one on the s&p. the nasdaq down about 12.

treasury yields, at this point we got the 10-year now 2.42%. and joining us for our conversation this morning, american enterprise institute's kevin hassett. and austan goolsbee who, you know, you always think i give you a hard time. and you sat down -- >> i never said that. >> okay. so you sat down and immediately what was your question, ken? he wants to know whether -- what do you mean? has austan learned anything? >> forget about this election. it happened. it's over. it's done. we won. >> i agree. >> okay. >> he told me he couldn't win, trump, a hundred times. even more than tom hanks or george clooney. you told me absolutely not. >> i did. i did. i was wrong. >> i have a whole amount. >> how do we work together on what i consider to be america's biggest problem? which is the lack of quality education of public schools in

america? help me out, austan. your man came in eight years ago. look at the numbers then and look at the number nos u. i'll take the blame for george bush for what he did. >> we need to invest more in education. >> no. we need to get better results. >> and better results. >> 30 developed countries on earth. we're ranked second how much we spend on student and we're 28th on results. we're spending the money. let's forget about labels. let's just talk about the problem. >> okay. >> george bush didn't help it and certainly your guy hasn't helped it. >> under both of them you have seen improvement in different parts. >> then why aren't the numbers better? you're a scientist. you're an economist. >> if you look and say share of 25-year-olds with a college degree. we used to be number one in that measure. now we're 18th or 20th or

something. it's that we started growing slower and slower and -- >> wait a minute. i'm in the trenches. this is the difference in me and you guys in front -- >> you don't need to getted a homin hominin. >> to say continues to get worse. let's not put a party label on it. let's not blame any sector. >> okay. so what do you want to do? >> or kevin, the american enterprises. you guys are supposed to know how to do this. >> i want to do with stan druckenmiller and jeff canada and williams are doing up in harlem. we're holding our teachers accountable for results. i know i got a great education. not because of the building i went to but because of the passion and the enthusiasm of the teachers. okay? >> so my friend and trustee will

be any boss of -- >> i don't know. >> if you look at what she's accomplished in education policy over the years, it's just wonderful. and her view is not to create a world where the teachers -- but to create options for students. i think that federal policy has moved in that direction and it will do more now in the next four years than it's done in the past because there's someone who believes in school choices leading the department of education. >> explain to me the naacp coming out opposed to charter schools. help me with that one. i've talked to prominent democrats who say we can't understand it. >> clearly they have a lot of members that are also in teachers unions and then they have people who they represent different schools and they made the call. >> let's start with that. okay? so let's not worry about who gets the blame. >> can i insert myself? i'm sorry to interrupt you, ken. this is a topic that deserves

the attention and we could talk about it ad nauseam. but we are expecting the jobs report in 25 minutes. choose your own adventure, what will we get and what will the fed do in response to that, kevin? >> well, i think everybody thinks the fed's going to give us a hike. and -- >> in terms of trajectory of future hikes. >> you know, i've got this model and i'm right at 190, a little above consensus. i think that the economy is looking pretty solid. i think that president trump is inheriting a position that's really pretty solid. if they have a lot of the policy changes they propose next year like the tax cut, the economy will heat up from there. my view is this is the first of many fed moves. in part because they're going to have to offset the policies. since he controls congress, they've got a heck of a lot of

legislative potential. they're coming up with plans for that legislative potential. it's looking to me next year could be one of the best years we've seen since we've been talking about this on "squawk box" here. >> you're that optimistic austin? >> until that last sentence, i was like this is the worst month for me in a long time. then i just found i agreed with almost everything kevin said. but at least he said that last sentence i could disagree with. i think is the 0 -- i was going to say 194. i kind of agree with that. >> he's doing the price is right thing. >> we have now been doing at a clip of 2.5 million jobs a year which is a strong clip. i find it -- if you think that donald trump is going to generate more jobs than 2.5 million a year as obama did in his second term, i think that's a mistake.

i think they're going to try to juice the economy through tax cuts to high income people and say, oh, it's going to trickle down. it's going to generate high growth. i don't think that worked when george bush did it in the early 2000s. i don't think that's going to work now. i think what we're going to see is a big explosion in the deficit. with far less bang for the buck. >> won't the tax cuts really juice earnings and therefore boost everything else? >> choose the corporate sector's profits. i think the fed is -- look. you've already seen inflation expectations. inflation, the world of inflation is coming back. the fed is going to start raising rates. there are some pluses. there are some minuses. i think the white house will find out relatively soon that arguing that rates should be higher within a year you are going to see them saying why is

the fed choking off the recovery? >> you can think of it as a horse race. the fed's going to be the first horse out. the fed is going to lift rates and the horse is going to start running and all of the deregulation is going to come out. they're going to be pushing in different directions. i think that the fiscal policy moves are so big and so smart that i see coming that fiscal policy is going to dominate and that you should start seeing north of three instead of being stuck in the twos. because the fiscal policy is so good. talked about the corporate tax plan the house has which is similar to the stuff that candidate trump talked about on the campaign trail. and also it's good -- the business side of it is a good plan. >> if you did it revenue neutral so you broaden the base and loadered the race, i could totally get on board with it. i don't think they're going to. i think once you start to broaden the base, people begin objecting. then it will be an old fashioned cut everybody's taxes.

>> you don't think we're in regulatory hell right now. that loosening up for -- for every -- the last eight years we've -- the number of regulations has absolutely exploded. and some of them are absolutely useless. >> do you not recall the same people including you saying -- >> going to go back to financial crisis or something? >> go back even further. they were. they said bill clinton had put in all these regulations choking off the economy. they said if we deregulate the financial sector, there will be a huge boom. >> let me -- >> there was not enough capital. it wasn't regulation. it was not enough capital. >> you think the cost of capital is not low right now? >> that would have saved it. >> let me say the economic staff puts out a forecast for every country in the oecd. and it doubled for next year. ratcheted up a percentage point. and then when they said why,

they said because of the election. they said because of the election, austan. they think trump's better than clinton for growth. >> you average 1.75% for eight years. that's so far below this country's potential. >> if trump is better than that, i'll be thrilled. that'll be great for the country. it'll be great if he can create more jobs than obama did. i'll be extremely happy. >> you don't think that we're going through a period of insane regulation in this country? let me give you a for instance. the industry that's been hardest hit by the internet is the -- it's high value, low weight. it's accommodated by cost. our justice department ruled that it's anticompetitive for office depot and staples to get together. they're both struggling. and as it is now, they will both

go broke. and yet the wise people in the justice department said you cannot -- even if it means that together they have a shot at survival. i'm not sure they'll survive anyway. but where the hell is common sense with a decision like -- there's something inherently wrong in a system where you apply cost that can only be described as a regressive tax? because with regulation, you pay whether you make money or not. >> you're kind of all over the map. >> you're damn right. you know what it is? it's regulation. >> so joe and i have had this conversation multiple times which is let's say when they pass obamacare and you said that the 50-person employees, if you're under 50, the mandate does not apply. so if you're arguing that the mandate is a killer regulation destroying jobs, then you got toex plain why do we not see

different behavior from over 50 and under 50. why do we see the same pathologies of companies sitting on their money compared to the united states. why is the u.s. growth rate the highest of the advanced world, not the lowest? you guys are just -- you're not -- i have. and -- >> think of small businesses. >> and there are many regulations we could get rid of, streamline, or get better. but adding that our growth rate has been low because of excess regulations is just -- that's a religious fact that you're basing that on. >> not so. >> let me give you an example. i don't view myself as that kind of religious. so the epa carbon regs, they're response to climate change and the court order to treat it as if the greenhouse gas is pollution under the clean air act. they put out all these regs that

make it prohibitively costly to use coal anymore. nobody's been investing in improving coal burning furnace and nobody's been putting in new -- and that could be a policy objective they definitely had. but the coal industry, like -- joe, didn't they drop 80% in value, coal stocks last year? they're up now after the election. but the point is that -- >> it's misleading. >> no. that's a perfect example of regulation causing a big effect. >> that is -- hold on. >> that's all i'm saying. 80% drop. >> as you know, the overwhelming majority of what happened to coal producers is that the cost of natural gas got extremely cheap with fracking and the discovery of shale. and that is what killed the market of coal companies. and it happened before clean power rules. so how can you blame that? >> how about metallical? you know my problem, there's

been too many damn academics in the kitchen in the last eight or ten years. >> on that note, we've got to take a break, guys. a changing of the guard at starbucks. you'll see what howard shultz said about the coffee giant here on cnbc. stay tuned. "squawk box" will return here on cnbc. but today, maybe it can. i am helping 1-800-flowers find the perfect gift out of trillions of combinations. and working with the new york genome center to find treatments as personal as dna. and i am helping sesame street make education unique to every child. hello, my name is watson. working together, we can outthink anything. hello, my name is watson. is it because so many go after it the same way? chasing after short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view,

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today's top corporate stories, howard shultz announcing he will step down. he joins us in the last hour with kevin johnson. andrew ross sorkin is live in seattle with the highlights from that great interview. andrew? >> thank you, melissa. we are in seattle. howard shultz announcing his plans to step down as ceo. that happens april 3rd. we asked howard why kevin. >> i think kevin's skill base and his experience, he is much better prepared than i am while i can take advantage of what i think is an enormous growth opportunity for the company in leveraging the equity of the new brand, the roastery, the new reserve stores on a global scale. >> and howard shultz of course

has tried to step back before. he did so once before coming back to the company in 2008 as the coo. we asked why this time was different. >> on a macro level, i left right at the beginning of the cataclysmic financial crisis. starbucks had a difficult time navigating through that. we did not have the quality of a team, the resources and capabilities that we have now. we didn't have the leader. and i think on a personal level, i don't think i was as emotionally prepared to leave the company and not meddle at that time in my life. >> now to help us break down this news and make some sense of it, r.j. help us through this. what did you think of the announcement yesterday after the market closed? >> i was surprised by the timing. i think the company set this transition in motion this summer when they reorganized the

executive positions but the timing caught me off guard. i thought this might have been something we see a year or two down the road. that being said, i think listening to the interview, i walked away a lot more impressed with kevin johnson. that's the question everybody has in their mind. it's obviously possible to replace somebody with the retail acumen of howard shultz. i thought he did a good job on the retail side. i think it's jim cramer who asked and he accurately answered about the digital wheel. i think the company is well ahead of the curve on that end. i also think howard's point about the deeper bench is true. if you look at this bench right now, everyone positions they have whether it be matt ryan john culver, you know, they've got a really deep bench. all these guys are at the top of their fields. i like that this company is a deep bench and well positioned for the future. >> starbucks has its investor day in new york next thursday. what do you think you need to hear or want to hear?

>> yeah, i think we just need -- to my point, i think we need to see kevin johnson really assert himself as a retail leader. not just somebody back on technology. i think that's got to come and be apparent. show the market how he's going to drive same store sales. i think that is the key question on investors' minds. but they've also got to talk about some of the long-term growth initiatives. obviously howard will talk about the roastery and the reserve stores, but also things like international consumer package growth, china. some of the secondary brands. i think those all have to tie together. so what they're going to do to drive same store sales, that's got to be first on their mind. >> how do you map out the reserve piece of this business? their efforts and what howard's going to focus on in terms of the super premium component here as we talked about. we're at the reserve roastery.

when you try to map out what that is for the company. >> i think it gives the impression this could be successful. that the retail experience, a lot have not invested enough in making a compelling retail experience. can really drive traffic. i think these takeaways from these stores and also opening a new roastery. and also the reserve premium bars with existing stores. i think that can add a level of excitement that other retail brands can't match right now. i think that's a worthwhile endeavor. the question is how quickly you can ramp that up. i think the numbers there are between 20 and 30 roastery occasions. i think that seems about right. if they can hit the numbers we talked about last night on the call, talked about twice averaging net volume out of reserve stores. i think they can drive a lot of growth out of that. certainly positive for the story

longer term. >> thank you. always great to get your perspective. appreciate it very much. back to you, my friend. >> thank you, andrew. coming up, the final countdown. we're going to get you set for the november jobs report with predictions from our all star panel. and then the number of the month. market reaction and instant analysis straight ahead. i don't know the final election results might have been the number of the month, but this is important. "squawk box" will be right back. which allergy? eees. bees? eese. trees? eese.

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take a check on the futures markets. we are seeing positive signs out of the s&p and dow. nasdaq is of concern. it is on track for the worst week in ten months. we are looking at a five-point loz here on the nasdaq. the last jobs report of the year minutes away. what it might mean for the fed meeting. stay tuned. we're going to go to break because i don't want to hear joe sing. ♪ the final countdown >> this is cnbc.

♪ sing it. come on. commit to it. >> you can't unhear that. >> welcome back. we're moments away from the november jobs report. let's get final predictions from our panel. austin, we start with you. what are you expecting? >> i'm expecting 194 and the unemployment rate drops by a tenth. >> we're so close. sorry, joe. i'm at 190 and about the same drop. >> rick santelli in chicago, what are you looking for? >> 233,000. >> whoa. whoa.

steve leisman? >> i'm at 179. >> holy christ. you guys talk to each other. >> what you mean? 179,000. >> 179,000 to 233,000. >> i run a model on the private sector and random number for the government. hey, my margin of error, five in the month of september and three in the month of october for the record. but i'm due for a bad one. statisticicly. >> the picture has improved throughout the morning. by just a few points. but the nasdaq has of course been under pressure for the past month here. we'll be watching this picture closely as well as the bond market faces its worst november. right? $1.7 trillion lost in the global bond market in the month of november. so we could see pressure there as well as we get these numbers. >> if we only could get the nate silver 538 forecast. >> there's an 85% chance the the

number is -- >> he was -- >> he was the most in terms of pro trump. >> and yet everybody's -- >> outside the labor department, hampton is going to bring us the numbers in like two seconds if i breathe. hampton? >> 178,000 november nonfarm payrolls includesed by 178,000 jobs. the unemployment rate is 4.6%. average hourly earnings decreased a tenth of a percent. that 4.6% rate is the lowest since august of 2007. private sector job growth last month, plus 156,000. we had revisions. october previously reported as 161,000 revised down toward to 142,000. september 191,000 upward to 208,000. a net decrease of 2,000 jobs for

the two months. how did we get to that 4.6% unemployment rate? basically the number of employed increased by 160,000. the unemployed decreased by 387,000. also a big thing from that unemployment decrease, the unemployment rate for adult men actually fell to 4.3%. as far as job gains in the month of november, professional and business services up 63,000. health care, 28,000. construction plus 19,000. on the downside, retail losing about 8,000 jobs. manufacturing down by 4,000. the labor force participation rate downward slightly to 62.7. the real unemployment rate 9.3%. that's the lowest since april of 2008. long-term unemployed, 1.9 million just under 25% of the total unemployment. back to you.

>> all right, hampton. thank you. wow. 4.6%. that portends really good thing for the party in power in this upcoming -- oh, wait a minute. >> the election's over. >> oh, god darn it. >> the second term is going to go down as one of the great job creation terms of the last half eventual for obama. >> can you concede, joe? i want to be nice to you. >> 178,000. >> yeah. >> my average error the last couple months is in the single digits. >> price is right rules, you missed it. what are you going to do? >> there's a thing called sore winner. >> how many in a row are you now? >> i'm three good ones in a row. i had two bad misses. >> standard deviation was -- >> i was plus/minus 50 in my model. can i just say this whole model developed as a joke. it was a joke. remember when the government shut down, it was a joke.

the government shut down -- no, it's better than that. >> it was a joke. all right. >> the government shut down and the vice of cnbc came to me and said -- he's a big guy here. steve could you make a model and tell us what the government would report. i did it that month and it was within 20,000. then i kept doing it and it's been -- anyway, that's not the important thing. the important thing is the numbers. manufacturing down 4 but construction up 19. that's good. it tells you the residential housing sector is doing okay. service providing has been the nut of this. 156. i would tell you that -- well, that's what i got right here. i come up with a random number every month for government hiring because there is no way to forecast it. i came up with 20,000 because it was the three-month average of the prior. leisure hospitality doing well. temp services doing well. the retail number is interesting to me.

and this is down 8,000. there's an expectation of huge hiring and probably huge hiring going on. but because of the seasonal adjustments they're not quite meeting. i want to talk about austan was interested in how they got to 4.6%. we lost 226 in the labor force. second month in a row you've had a dropout. yet you were down 195. in a generally kind of very slight rising trend when it comes to the workforce. you've had people coming back into the workforce. you've had the participation rate going up. but employed in the household survey, 160. the number of unemployed leading to this very nice -- i shouldn't say that. relative to where it's been, it's nice. it is still elevated 9.3% from what it's been. those unb employed --

>> what are we? >> i fudged that joe because i didn't have it in front of me. i'll look it up. >> there is a theory that matches what's been doing on lately. which is what you get -- >> you're smiling. >> when you get close to full employment, then you don't get big surprises on the upside. because it's starting to be hard to find the workers. but you're close to full employment so the economy's doing fine so you are trying to hire people every month. so if you get a reduction in the variance of the jobs numbers from month to month, then it can be a signal you're close to full employment. and we should start to -- >> don't tell that to president trump. >> they'll have to bring people into the labor force. at 4.6%, you've got to worry about inflation. that's why -- >> the market is worried about inflation. >> what would you do right now? more than expected? >> i bet they won't go more than people are expecting, but i guess they'll go more frequently than people are expecting. >> i want to just layer in joe's

idea on this which is does the market care anymore? when you look at the 2-year already been 1.12% right now, their scope now for the fed to move without being major action. >> i mean -- i think that if they come out in the december meeting and they indicate that the trajectory is going to be faster, that's going to freak the markets out. right now we're just pricing in december rate hike. we're pricing in a couple next year. i think it's sort of the jury is out, a lot has changed for the equity markets at this point. >> this was me story yesterday melissa. how does the fed factor in the change in the market which is a reality for them because it's financial conditions. it's a higher interest rates, stronger dollar, stronger stock market yet the policy that the market is trading on doesn't exist, won't exist for months. and maybe something less than they've already factors in. >> if melissa's dynamic is true

and we start on a series of rate increases potentially even faster than what people think, the dollar's going to go way up. manufacturing's going to start taking some punches. >> let me ask you a question that's not scientifically based. i was surprised the first two weeks after the election of the number of people i know that were supporting the democratic party that have said to me i don't know why i feel good but i feel good. >> ken, i heard that as well. >> i don't think you know many democrats. >> no, no. i heard exactly what ken was talking about. >> i picked up on that too. >> ceos got bullish. >> almost overnight. >> yes. >> and look, folks. i think every -- these well educated economists at the table with all their ph.d.s agree there's a capital factor and it's animal spirits.

the supply side has been constrained because of regulation and taxes or from the democratic side they would argue it's been constrained from the demand side. that the demand has not been there. that if you wanted to borrow money in this country to build something, you could have built it. and there was never any constraint on that. this is where we are right now. >> after you built it, if you don't have a reason to have it -- >> that's why. >> -- you don't build it. >> argument of utilization. >> i wrote about it just before it happened and i think that what i was speculating about ended up being the truth. and so i think we understand what happened. justin wilford put out a paper that the trump effect was going to be big and negative for the market. then trump was elected and it went the other way. the piece that i wrote just reminded that it was actually data from justin's own paper that republicans have always been good for the market. like if a republican wins, the market goes up. and so in the paper i wrote, i speculated if trump is elected

and then he acts like a normal republican, then the market will really celebrate. right? and so the market is nervous that he's going to start a trade war on the first day. but he didn't do that. he's had a great transition. he's picked good people. he's spoken like a sensible republican and the markets are celebrating. >> it's against both the democrats and republicans. we're fed up with the nonsense of these people down there being elitists that we know better for you what you need than you do yourself. i think there's been a revolution psychologically in this country. and i think trump cashed in on it. >> austin, i want to throw you this idea. i was astonished in the campaign hillary clinton never shifted to the right at all. >> she couldn't. >> she continued to run a campaign that she was in a primary versus bernie sanders. so the fear of the market were not her plans.

the fear was that there was never any into it. it's one thing to raise the top tax rate to 39%. which i don't think is killer. but if the top tax rate is infinite, then it's killer. >> i certainly agree with that. but i don't agree with your characterization of what happened in the campaign. a lot of the economic focus of hers, if you remember, was on a different conception. how could we get growth up? it doesn't come from just cutting taxes for high income people and hoping it trickles down. i think the problem that hillary clinton faced is that ultimately the campaign was defined in the negative as you should vote for me because donald trump is not fit to be president. >> i will give you 20 bucks for every time more than five that hillary clinton used the phrase free market. in the entire campaign. didn't talk about it. didn't discuss it.

>> also her argument made no sense. so she's going to give us higher taxes, more regulation. the only positive for the economy was this infrastructure spending which would be a positive. but the net was not a positive for the economy. >> it was a contest of world views of where growth comes from. i would characterize republicans say it comes from absence of government, low taxes, low regulation. and the democrats' version is it comes from investing in your people and your nation. the infrastructure, the human capital, as it were. and there's a big dispute -- >> there's a centrist view that it comes from a balance of both. that it comes from unshackling the free market as well as very targeted, very limited government assistance. >> look. the free market brought us to the party. >> i agree. >> okay. all you could take away in my opinion was either the government will take care of you or the government will tell you what you can do and not do.

i'm sorry. listen to bernie sanders. he made sure -- it doesn't work. it doesn't -- >> kevin, i had an argument -- not an argument, a discussion with larry kudlow and trump's numbers didn't add up. that the tax cut was going to be a huge tax cut, huge deficit increase. and larry said to me, an election is not an omb debate. that at the end of the day what you have is one candidate's going to cut taxes and lower government, another candidate is going to raise taxes and increase government. and that's what people heard. and they didn't engage in a sharp pencil or texas instrument calculator analysis of the candidates' different plans. >> but what we're seeing from the trump team now is they're picking competent people to have the omb debate. so he's actually -- >> i need to do a segment now on dynamic stories. >> saying donald trump is now doing things that are if not

completely the opposite, very different from what he described through the campaign. >> by the way, omb speculation is gary is in the hunt. that would be fabulous. he was a chief operating officer at goldman. you have to understand something about goldman. they're really well run. this is competence. >> i think it's going to be problematic. he's going to look for stuff the government spends on and looking at the p&l on that, he's going to get rid of it. because it's the government. it's just l. >> i'm sorry, gary's a lot smarter than that. >> i'm making a joke. >> okay. all right. >> didn't you used to have a sense of humor? you used to? >> if i'm going to be here with you i have to have a sense of humor. >> on that note, kevin, austan -- >> that was a joke. >> up next, global reaction to today's jobs report. plus much more of our exclusive interview with the outgoing starbucks ceo howard shultz and incoming ceo kevin johnson.

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take a check on stock futures in the aftermath of the november jobs report. we are lower now. we've entered the jobs number with the s&p and dow with a positive open. now a negative open. we're looking at nasdaq about down ten. on track for its worst week in ten months. staggering stat. >> i have no idea what to do with that. >> i think that's the problem. >> no, i don't know -- and i don't even know if we worry about the fed anymore. the market is -- >> right, right. we're moving onto something else at this point. when we come back, we'll head down to the new york stock exchange. jim cramer will join us with his take on today's jobs number and the news of the hour howard shultz stepping down. more "squawk box" straight ahead.

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together, we're building a better california. kevin johnson starting in april is going to be comprehensively all in the chief executive officer of star bubuc coffee company. he is managing the team, setting

the strategy, i'm here to help and support. there should be no misunderstanding whatsoever. and kevin johnson is well equipped to take the company to the next level. and that's going to be a wonderful opportunity for our shareholders. >> we're here live in seattle. that was howard schultz, the ceo of starbucks, handing over the reigns of that ceo title to kevin johnson. he will remain the executive chairman. let's bring in my good friend jim cramer to the conversation. i'd love to hear his thoughts. he has some of the best questions and got so much out of it. i appreciate it, jim. what do you think the reaction this morning's going to be in the markets? >> well, first, thank you so much, andrew, for letting me ask some questions. your interview wu fantastic. a great comprehensive half hour. i feel better. i feel better. when i saw the news -- i heard the news and we got the news and i was immediately very dis appointed because i love what howard's done. he is iconic. but what howard did subsequently in our interview is state, look,

this is how it's going to go. i'm still very much involved, but we do have technology problems. kevin's better than that, better at that than he is. i felt like if you're going to be able to leave a company, do it in this style in stages slowly helping out kevin, i think starbucks stock just like howard said is undervalued. >> so the stock down about 3%. it was down as much as 10% when the news first hit. where do you think it's going to begin the day or end the day rather? >> well it's like i read your piece this morning in the times which is excellent. their natural reaction is, wait a second, he is steve jobs, as you point out. you can't do starbucks without howard. but then you hear, listen, howard's not really going anywhere. many times we've asked him that. i think if the stock goes to 55, 56, that's kind of an overreaction. big analyst meeting coming up. felt very good about the business long term what's going on. i don't know, i mean, you sell it now, you sell it a week from now you say to yourself why did

i sell it. >> fair enough. and by the way, these jobs numbers -- >> well, you know what, bonds -- i want interest rates stop going higher and these momentarily did make interest rates stop going higher. but not the nasdaq, that's a whole other kettle of fish. there's too many tech companies not doing well. >> okay. thank you for that, jim. we will see you, you got utx ceo greg hayes going to join "mad money" later today 6:00 p.m. don't miss that. squawk returns in just a moment.

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our guest host this morning ken langone, we've kicked off old euphemisms about the stock market. i just saw one that says stock market goes down when fear is dictating, stock market goes unwhen it's enthusiasm. >> enthusiasm. >> we also heard about just animal spirits. >> exactly. >> things don't even have to change for people to conjure up some type of buying -- >> there's a genre leaf prevalent across the country that the insanity, and i think i

use that word, the insanity that came out of washington these last eight years is coming to an end. forget about taxes. regulation is strangling america. >> people have said that progressivism is hard to legislate down. if it's going to come, it has to come from the ground up, from people. and when you try to legislate it on top of people, you get a pushback. >> well, you can't manage a society. and you can't manage an economy. and i think, you know, i hope the new president understands that he's not going to sit in the oval office and say you can't move and you got to stay -- >> but you aren't worried about that. >> i think yesterday -- >> you saw this as symbolic. >> all symbolic yesterday. worried about 1,500 jobs, i'm going out there, look what i did. >> on the markets you said you thought the markets should rest at this point. >> i think the market's a little ahead of itself. i think it'd be fine if i it stayed here three, six, nine

months. go sideways. let some earnings catch up, let some dividends catch up. >> do you think at this point that the bitterness on the left there's recounts, demonstrations, senator warren and bernie sanders are both going to go after mnuchin and make it very difficult, you know, they're going to challenge different nominees. do you think that ever -- >> they can challenge. look, don't ask me to rationalize bernie sanders' behavior or elizabeth warren's. they're not going to stop this guy from having what he wants. this guy will fight, okay? and they'll fight with them, the candidates. the thing i think we need to understand is that we've paid a terrible, terrible price for government interference in the last horrible price. >> do you think trump can be -- i mean, if he's divisive, i don't know what we had the last eight years. do you think a guy like trump can heal some of the divisions that we've -- >> yeah, because he won against both democrats -- people forget. he didn't have the enthusiastic support of the republican party. didn't have it.

>> right. >> look at what bush did. look at what romney did. as i said, my eye on romney how can he out of simple self-respect after what he said about this man go to work for him as his boss? >> how long can the republicans keep the average working man on their side? >> absolutely. >> for more than one term. really? they lost them for 30 years. >> fifty years ago the heart of the democratic party was the deep south. >> yeah. >> today it's republican. we have a moment in time to embrace these people and more importantly have them embrace us for the good of the country. we have to be antipolitical. we've got to say doesn't matter who you are, we've got to fix this. doesn't drain the swamp. we're going to stop this crap with bureaucrats, lobbyists, consultants, this has gone on for too long. >> did anyone call you yet? >> no, they don't want to call me because i would be -- no, please, i'm having fun.

home depot is doing fabulous. >> labor secretary? >> nothing. elaine langone's husband, period. >> look what need to be reversed there. >> there's a good example of reverse. >> labor secretary langone. de-politicize -- hold it. bye-bye. >> thank you. make sure you join us on monday. >> see y'all. >> "squawk on the street" is next. >> take care. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. final jobs number of the year, 178,000 roughly on target, unemployment rate to 4.6, the lowest in nearly a decade. wages were below estimates though. premarket is sorting all that out as the dow goes for a fourth week up. watch europe ahead of the italian referendum this weekend. bonds rally a bit on that wage component.