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. we'll talk all about that.

our road map will begin with the jobs number and hiring in america. what it means for the economy that donald trump is about to inherit. and president-elect's deal with carrier reverberates. is this a new rule book for american business. and a different sort of leadership transition. starbucks founder howard schultz stepping aside for a new ceo but staying at the company. a lot more on his role and the future from our interview this morning. but, 178,000 jobs were added last month, decline in the unemployment rate to 4.6 comes as many people gave up looking for work, average hourly earnings up 2.5 year on year and those numbers come ahead of the fed's december policy meeting as the president-elect is pushing ceos to keep jobs in the u.s. what a week we've already had here, jim. what stands out to you on the numbers we just got? >> i was actually surprised the hourly wage for this month minus 3 cents. what that says is there's some jobs being created. but again, it's this issue, are they high paying jobs? are the jobs just kind of

subsistence jobs? health care plus 28,000, so those are good. not a lot of construction. i think that the makeup of the employment numbers five months from now will look very different. they'll be many more jobs that i think will be fossil fuel, oil and gas related. that does not necessarily mean they'll be united technologies kind of jobs. meaning i don't think every ceo is going to wake up today and say i got to not offshore. people have offshored. it's almost impossible to put that genie back in the bottle. >> oil and gas related to getting it out of the ground or pipelines or everything? >> i think permitting is going to be much easier. i think getting it out of the ground actually at these prices with $50 with average price that halliburton or baker hughes gotten, you make a lot of cash flow. banks are up not just because of interest rates but criticized loans will be better. i guess what i'm saying is we've lowered the break even so much in this country they'll be a lot of hiring back in oil.

those are manufacturing jobs. very important. >> there's five states where the unemployment rate has gone up since '09. and it's north dakota, it's wyoming, it's utah, it's louisiana. it's oil. >> russian and brazil -- we are now going to be for the first time we're an exporter of natural gas. do you know how many jobs that's going to create providing get pipelines down? texas is no longer producing as much natural gas as we need, but ohio, pennsylvania, you're going to see that accelerate because the president of the energy and regulatory commission are not going to stand in the way. they're going to encourage building pipelines not unlike fdr in the 1930s. >> what do you think of the economy as we just teased that trump is going to inherit? is there low hanging fruit here? because we got record highs in stocks, unemployment -- >> there's both low hanging fruit and uncertainty. you'll see a stock trading underneath called workday, wday. they're talking about uncertainty, brexit,

presidential election. then see five below, ulta, i know this is just anecdotal but saying, listen, post election things are really good. but that's the same thing pvh said. pvh is in every single store. post election is really good. i don't know what's rearview mirror here. workday did say going forward there could be some issues. workday is going to bring down the whole cohort, salesforce down off that, all the companies that went down when linkedin and tablet data blew up february '05. you'll see tech go down but retail go up. >> we've already been seeing tech go down specific to workday they said substantial billings deceleration was seen. they blame deal slippage early in the fourth quarter due to global uncertainties, whether it's brexit or the presidential election or pending elections in other countries, but, guys, the violent rotation out of technology and yesterday -- it had been big cap tech, but yesterday they got to everything.

i mean, semis were down as much as 5%. qualcomm, amat, texan, nvidia, all down dramatically. and this rotation by the way i'm told at least by people who do this for a living having spoken to a number of my guys this morning is not over. they don't think it's over. >> no, it's not. >> it's going to keep going. may keep going for quite some time. >> you know, i think you mentioned comments on workday, i just want to go over again what happened in february. it was watershed, could be like this. workday stock fell from 64 to 54 when linkedin and tablo data. service now downgraded today by piper, don't forget salesforce dropped from 67 to 58. you're going to see and this is over several days they didn't bottom. you're absolutely right. this is day three of what could be seven-day, eight-day, at this pace it can't be 20 days. >> this repositioning will go on

for a time. far beyond threats about leaving the country really having much more to do with tax policy. >> yes. >> which we should get to. but, yeah, facebook sub 115, that hadn't been seen since july. >> no. look, these stocks -- these are companies that are going to do well with or without the administration. and what you want to do is if it's a pro-growth administration, you sell this, you buy caterpillar. yesterday caterpillar gave a halt, why was it halted? one of the reasons was business is just not good. okay, so how much was cat down? >> it wasn't. >> it was up more than 60 cents. didn't matter. >> which is why the weird thing with the dow up yesterday, right? >> dow was up nicely. >> and everything else getting crushed. >> dow's up two days while the nasdaq is down 1%. that hasn't happened two times in 16 years. >> well, you know, march 17, 19 -- you know, march 17, 2000 to april -- talk about april 30th of 2000.

you had the s&p go up and the nasdaq go down. that's what people are going to talk about, david, the redemption's in health care. the redemption's in techs really incredible. hedge funds got it wrong again. >> mutual funds. >> right. >> these high growth technology companies were well owned, still continue to be. also by the way you have a lot of the crowded shorts so to speak which were up. and then you had de-risking going on, at least according to again to some of the people i had a chance to speak to in the last day or so. how long does this keep going, jim, i guess this continues to be the question to carl's point about the nasdaq diverging so dramatically from for example the dow, or even the broader market. i mean, financials are still not well owned. >> no, they're not. they're very underowned and not that expensive if you're going to get de-reg and see interest rates go higher. they didn't go lower today. kind of flat to up. but what's important is just one last thing before we go to starbucks, what's important is it took seven days to get over the linkedin workday,

linkedin -- >> and now workday, right. >> and then by the way the acquisitions started. remember that's suddenly marc benioff started kicking the tires. linkedin in interested in twitter, demand ware got a bid from 24 to 27 and buy, bingo, marc benioff buys for 75. click got taken over too. so seven days in december, not may. that would be kind of political. >> yeah. then there's starbucks of course announcing howard schultz will step down as ceo. going to be succeeded by president and c.o.o. kevin johnson. schultz will become executive chairman and focus on the company's high end coffee shops. earlier on squawk jim asked schultz about the leadership change. >> 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 a very 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, 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 at starbucks coffee company. howard schultz 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, and i'm here to help and support. this 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. >> well, you know, when i first heard the news i said, damn, i've been the biggest supporter of this thing ever since howard came back, been a supporter the whole way, travel trust own it forever, didn't want this to happen. after listening to howard this morning in that excellent interview by andrew, after knowing kevin johnson for a long time at juniper, knowing that there are technology issues about throughput knowing the

reserve could be another leg, i feel better. and howard's 63. he did not say, listen, i'm resigning to tweet and that i don't like trump. he said i'm staying on. i'm going to be -- i don't know, i felt good. i felt good. point-blank if this stock goes down two, three bucks, they'll be in there buying stock back. you'll regret you sold it. >> andrew sorkin with schultz and johnson in seattle. you were in the room, you got a good sense of body language and of course asked again about his plans politically. he appears to say he's all in at starbucks for the time being. >> yeah. i think it's -- oh, i don't want to say -- i think it is for at least the time being if not longer. he obviously has grand plans for this premium reserve of brand in the roasteries. we're here at one now. i spent time in the starbucks headquarters yesterday with the employees as this was disclosed to them and to watch both the

tears and crying and applause and all of it. but the other revelation that i think certain investors appreciated but i'm not sure the public completely did is that kevin johnson has in all intents and purposes on a day-to-day basis been operating this company already. they had put this plan in place over the summer to some degree had telegraphed that the succession would move ahead. i think the timing of course is something that has caught people by surprise. but to the extent that the company's going to be managed in a very different way at least in the short term, i think you're looking at a company that will be managed very similarly. these are big shoes. when you watch howard walk around the office, you can just see people of all levels they look at him in a different way. and those are big shoes to fill. it's going to be a cultural change. you can see it. but it was also remarkable to watch the embrace that kevin got yesterday. if you hadn't been embraced

before by the employees there in a way that i have to say was, you know, as an observer of these things it was quite emotional to watch. >> you know, andrew, when we interviewed him the last quarter, starbucks, we didn't interview howard. we interviewed kevin. i mean, at that moment i guess we should have just seen it coming. why did kevin -- why was kevin put out as the public face? i guess howard was doing more signaling than we even realized. >> right. there was an article in the seattle times. it's actually a funny article to read today back over the summer talking -- actually the headline is howard schultz to step back. and almost reads as many of the articles do today chrks is to say that -- and that's why i was saying i think there are certain investors on wall street, some of the biggest ones who i think did see this coming. but i think for so many of us who have been fans of howard schultz and he is such an iconic leader, it's just so hard to

imagine a company that is built around an individual like that to think that he is leaving. but as we've said, he is not leaving. and, jim, your question about how that management is going to work and how involved, i think he's going to be as involved as ever in terms of his ideas. i just think he's not going to be as involved in terms of some of the meetings and other things. i asked him by the way, yesterday morning we were having coffee and i said, he gets this report, he wakes up at 4:15 every morning and gets report of all of the stores all over the world. i said are you still going to read the report. he looked at me and he said, well, i hope i'm not going to read it, but i probably will. i don't think he's going anywhere any time soon. >> yeah. and the words guggenheim, they are losing an irreplaceable merchant. and even johnson admitted there's no point in trying to be schultz. >> no, but i've got to tell you if you asked me what the biggest problems at starbucks are, i don't think they've really fully ironed out the mobile order, the lines are too long, the throughput's not good. they got to roll it out.

kevin johnson, i don't think there are probably four or five people in the world that would be better figuring that out than he did given his role at microsoft and juniper. known him a long time. if you're going to figure out throughput, you're not going to be a coffee man. coffee man doesn't -- i mean, i got this great coffee guy, he can pour coffee really fast. you're talking about thousands of stores. and they're doing mobile order and they got to get it down better worldwide. kevin johnson may be even better than howard at that. that's not a slay at howard. that's a tech job. >> got it. >> andrew, before we let you go, let's listen to that answer he gave you about his would-be, some say, political aspirations. >> everyone wants to know whether you're laying the groundwork, not necessarily now, but perhaps four years from now to run for the big office. >> andrew, i am all-in at starbucks. and that is my focus at this time. >> jim, your reaction to that. >> you know, i think howard's

going to have more room to be an ambassador. an ambassador, a global traveler for starbucks. remember, he -- he's like marc benioff, starbucks is a company that has an ethos and it stands for something. he's always said that. i think he has more opportunity to do that. when i pushed him on the idea that this is going to be more of a kind of a world view where he'll be able to think big and do things, take on trump with tweets kind of thing, no, he's saying he's not going to do that. howard does have ambitions to try to make the world better. and i think he's in easier shape to do it as executive chairman. he said, listen, the company's always going to be part of the dna of the company. but i think he's got more of a chance to be an ambassador. >> yeah. >> oh, geez. >> no, i think you're right. and i'll be curious to see what he's doing in two years. >> interesting that you say that, because i know for instance the roasterie in shanghai opens next year. he's all in on that. but will he be in on the roast

ris of 2020? >> two years into the trump administration i'll be curious to see. >> although our producer sally shin sees schultz2020.com is taken. >> really? >> yeah he's going to have to pay up. andrew, good stuff. good to see you, andrew ross sorkin in seattle. when we come back reaction in mexico to trump's deal with carrier. we'll have a live report. and jason furman on today's jobs number, what he thinks about the president-elect's job growth strategy. take another look at the premarket. dow up 15 of 18 and hanging onto that 10% gain for the year.

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call today. comcast business. built for business. president-elect touting deal with carrier to keep jobs in the u.s. our michelle caruso-cabrera is at one of carrier's plants in monterey, mexico, to see what the reaction is like there. good morning, michelle. >> reporter: well, it's negative, carl. one local official in the region said suddenly the united states is acting like the banana republic that they have long criticized with a president and a president-elect or politician trying to direct capital to various projects, something that they're trying to abandon here in mexico. mexico is getting more competitive as it embraces the

private sector more. it's one of the reasons why carrier was going to expand here. they've already got four plants here. they've got approximately 3,000 employees, according to local officials. and that was supposed to go up to 5,000. now it's only going to go up to about 4,100 they say. i spoke with the local official in charge of trying to bring as much foreign investment to this area as possible. he says in the wake of what president-elect donald trump did to carrier, he's called all his contacts at all the american companies to see if they were planning on reducing or if they were going to end expansion plans. he says so far he hasn't heard from any company that wants to change. he says, listen, when donald trump was on the campaign trail everybody said, oh, that's just donald trump talking because he's on the campaign trail. now, in the wake of the carrier deal he thinks otherwise. >> this is a learned lesson the united states. the president -- president-elect

trump have made a lot of declarations that i think nobody believes that he is seriously on his actions. mr. trump is telling the truth. >> reporter: there are many, many american companies manufacturing here. you can look at the graphic we've created. just driving around it becomes very obvious the american presence, caterpillar for example has a very, very large presence. they've got a big showroom. and then you can see they've got some manufacturing facilitying here. wages here much lower. average manufacturing wages in the united states per hour according to the conference board, higher than $37 last year when you include benefits. here in mexico it's less than $6, guys. so mexico very competitive. that's why some of these jobs -- many of these jobs are leaving. >> it's so good to have you there to give us a view from the ground, michelle. we'll be coming back to you later today. our michelle caruso-cabrera in monterrey. one programming note, jim will talk exclusively to greg hayes,

ceo of utx monday night 6:00 p.m. "mad money," a lot of questions for him. >> greg's certainly on the firing line. i think he can handle it. because i've seen him handle it before. >> yes, we have. >> you know, i know the president-elect said he's a great guy. greg hayes is a businessman. >> he is. and a straight talker. which we always appreciate. i'm looking forward to that. >> straight talker. >> yes, he. >> no one as straight talker as he is. >> i think we agree on that one. when we come back, cramer's mad dash, final opening bell of the week. if you missed it 178, we're back in a minute. so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me? anywhere you want to go! the market's hot!

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all right, we only got a couple more minutes before we get to the opening bell so we'll do a seated version of our mad dash. what are you focused on? >> a lot of activity, positivity, ulta last night reports plus 16% same store sales. i was looking for lower. 11.1% growth in transactions, 5.6 growth in average. here's what's important, that stock went -- just got killed. why? because they had guided 13% to 17% eps. they took it up dramatically to 26% eps growth. david, if there is a retailer that can keep up with amazon, it's the company that makes it so that you can walk outside, get your picture taken with a selfie and still look good, it's ulta salon. they take care of your face, your hair, mary dillon is fabulous. >> and it can just keep going? >> the store count --

>> over five years, grant it a little bit of a rough spot last few months. >> 949 stores going to go to 1,400, 1,700. david, when you're out with cosmetics, all they say selfie generation, the moment they step outdoor and don't look perfect, forget about it. ulta, and by the way dot com fabulous. christmas sales they've already told you things were good. i remember when they said it was promotional before mary dillon got there. successful black friday, successful cyber monday. you got to look good when you step outside. never know when your picture going to be snapped. >> keep that in mind, carl, for when you're out with cosmetic executives as i know we all are so often. >> all the time. by the way upgrade of jcp at b of a. >> balance sheet not that good -- >> any trump administration tailwind for the consumer. >> yes. again, everybody has said post election things are good

although there's downgrade secular change out of athleisure into denim. i know, david, you probably embraced that change. i have not. >> let's get the opening bell and the s&p at the bottom of your screen. at the big board today, energy company enel americas. at the nasdaq, neurocrine biosciences. a lot of special today about whether or not the reflation trade is losing steam. gundla gundlach, bill gross, tom lee today saying expect 3% to 5% payback in january. >> look, i do think oil's went too far. look, if caterpillar's telling you basically don't buy our stock, i'm not saying caterpillar don't know what the heck it's doing. j.p. morgan has a very good note out today talking about which are the trough multiples for the internet stocks. they're saying facebook can be bought, they're also saying still too expensive. i look at workday and i know

people don't identify workday as an important company but workday is one of the best run companies in the world. a software service company that's been instrumental in really digitizing and putting on cloud human capital management and financial. and when they say that brexit g8, when they talk about the election, they're not saying, hey, listen, things are about to get better right now. they're saying things aren't better. and that is going to put a chill -- that is a tough conference call. >> they also said they hope it will be isolated and short lived. >> david, what scared me the most is when the word hope was used. hope shouldn't be part of the equation. i don't want to hear hope. i want to hear we're okay. salesforce a few weeks ago said these are not issues. but anneal bush ri is fabulous. and he felt that he had to drop the bomb. there was that moment when you said, listen, i feel i got to point this out. and i had to say why'd you point it out, raise forecast, but guys

did not sell raise aggressive guys, but it's expensive and you have to be perfect when things are expensive. it ain't perfect. >> i'm looking at the biggest losers for the week, right? top ten. are they done as you said yesterday being used as a source of funds? >> nvidia had strongest beat on percentage basis of any company in the nasdaq or s&p. i thought they did an overlap there but stronger. that one to watch. that stock did go up 30% on the day it reported the blowout quarter. so you're talking about a retreat to the 60s in order to get to where it was before reporting that transformational quarter. i think that stock line in the sand there will be mid 70s. if it reaches that, then it just doesn't matter what you do. >> mid 70s on nvidia. >> i think the stock frankly -- i'm using workday going back to

4-5, the linkedin tablo data, nvidia day three, we're at day two, day two today, that maybe monday afternoon it could level out. but boy, i got to tell you, charters in there saying to me you don't even know how bad nvidia is and i said well you don't even know what nvidia is. >> we're watching gap today, which comes in with comps down one in november. they did see better results in the second half of the month, but back down to 24 and change. that's going to be the lowest since october, mid october. >> yeah, some of these companies like express, these are just existential crises, right? it's this combination -- >> i'm with you. >> remember, you had to take those classes? i tried to take them in french, i got blownout. i dropped the class fast --

exactly. but most of the mall based stores were bad. okay. most of them were bad. but a lot of the other non-look at this f-5 call last night, f-5 is a new retailer great growth that said post the election business got better. remember what manny said, pvh is target, walmart, kohl's, macy's, jc penney, he said last two weeks were extraordinarily good. i think black friday's going to be good. i think we got rear view and post. ken langone on this morning saying, listen, people feel better. but that's not reflected in the big workday contracts coming out of france and britain. let's get to the jobs number, labor department this morning if you missed it reporting 178,000 jobs added in november. unemployment rate drops to 4.6, that's the lowest in almost a decade. joining us first on cnbc this morning with reaction from the obama administration is jason furman, the chairman of the

president's council of economic advisors. good to have you back, jason. >> good to be here. >> 4.6 is a heck of a number. people wonder why then wages were 2.5 instead of 2.8. you got some answers? >> first of all, i've been here eight years, and it is really exciting to see that number 4.6. i didn't think i'd ever see the unemployment rate that low. it's fallen more than half. it's because we've just created these steady jobs month after month 15.6 million of them in the private sector. in terms of wages themselves, you don't want to look at any one month's wages, you had an unusually high month in october, november it fell a little bit. for the year as a whole we're still tracking well above inflation, well above the pace before we came in office. of course we'd like to see more wage growth, but that's been another, you know, good part of the labor market overall. >> jason, jim cramer, i'm sure you share to some degree donald trump's trepidation about companies moving their workers to mexico. when nafta was formed, the peso

was a 4-to-1 ratio, now it's 20-to-1, is that fair? how do you compete with a country where it's $2.50 an hour and our workers are making $22. how do you get mexican wages to go up to make them less competitive? >> there's two important ingredients in competing successfully. one, we need the american economy to be as productive as possible. you know, more education, more training, more infrastructure, a tax code that works for our companies. all of those things make it really attractive to produce in america. and then second, you need to make sure you have a level playing field for trade. that's why, for example, we were really pleased when mexico passed a new labor law that's going to help raise wages in mexico, help create more parity in the labor situation there and here. and you only do that by working together on trade agreements like tpp. >> jason, it would appear that the republicans given that they are going to control all three

parts of the government are in a better position to enact corporate tax reform than your administration was. what are your expectations there? and what do you think the outcome will be in terms of some of these topics we're discussing? keeping companies in the country, igniting growth, are you a believer that lowering the corporate tax rate is going to be a positive? >> i think there's a lot of potential for our economy in corporate tax reform. we have a system that's broken. the president for years now has been talking about how to fix it. we've made a bit of progress in our discussions with congress, but didn't get to, you know, final legislation. would like to see that happen. but what's really important though is you don't help one problem, which is our corporate tax code, while making another problem worse, which is our medium and long run deficit. that's why it's important that any tax reform really is revenue neutral. then you'll help our economy with the tax reform and won't hurt it with the deficit.

>> this carrier story's getting a lot of attention, jason. is the administration embarrassed or impressed or chase i chasing by with which the speed trump was able to cut some kind of deal with the company? >> look, the president is happy any time you can save a job. he's also happy about what he's done on the auto industry saved a million jobs there. he's happy about the 800,000 jobs we've added in manufactu manufacturing since 2010. and to do that you need a really broad range of economic policies, not just one-off actions. but, you know, nothing wrong when you save any jobs. >> jason, what would the president think about putting a tax on goods that come from companies that move to mexico? is that something that you think is a good idea? >> you know, we shouldn't be using the tax code on an ad hoc basis. what the tax code should be about is creating a level

playing field. and with a level playing field i think our companies can be successful. there's aspects of our international tax code that reward you for production overseas, we should certainly be ending those. there's aspects that make it harder for you to maintain global supply chains. we should try to clean those up as well. so we need to reform our international tax system. i think if we do that you will have, you know, more good jobs in the united states. but you don't want to do it on a one-off basis. >> jason, i'm not sure if we'll see you again on jobs friday, but you've been coming on for years. we always appreciate it. and we look forward to talking again soon. >> been my pleasure. >> jason furman with the council of economic advisors. david. thanks, carl. going to do a little faber report here. yeah. pandora, the online radio service, which is consistently resisted calls from some of its large shareholders to consider a sale has recently shifted its posture and is now open to selling itself, according to people familiar with the situation. the company is indicated a willingness to engage to its

long-time suitor sirius xm. and sirius is expected to pursue that overture by seeking a deal. it is very early, one person referring to it being basically the first inning of this process. and there's no assurance that pandora will find interested parties let alone reach a deal. but the change in posture is notable for a company that has stumbled in execution during recent quarter while remaining steadfast in its dedication to remaining independent. pandora's recent openness to a deal is due to what i'm told largest shareholders, all three have made their frustrations with execution known to pandora's chairman recently. while the company staved off a proxy fight from corvex, which owns 10% of its stock last year, the window for nominations opens only two months from now on february 1st. given prospect it would lose a proxy fight and corvex's willingness to initiate one, it's not unexpected pandora would choose to follow desires

of largest holders. sirius made no secret of interest in pandora. less than a month ago i was speaking with liberty ceo greg mcfay, also sirius chairman and he continues to think there's interest. >> we think the free space is still very attractive space. we talked about how we'd like to find a way to participate. i think the streaming business, which pandora seems to have doubled down on is a very unattractive business. so there are parts of pandora that could be attractive and parts we'd have questions about. >> and one of those questions is streaming. pandora is going to be rolling out its new on demand streaming service. and ceo tim wester gren will be in new york promoting it next week. sirius will be presenting at the ubs media conference, of course that leaves open the possibility it once again will be asked and make clear it does have some interest. one key question for pandora and its advisors is whether any other potential suitors for the company emerge given its relatively small size, it's not a big bet for companies whether they be google or apple if they

actually have any interest. now, earlier this week pandora cfo did cancel an investment conference. this was only a few hours before being scheduled to appear. the company cited a conflict. did end up sending stock higher on the day. the company had no further comment on that conflict as you see pandora shares up a lot. always want to stress here, guys, early, early, early. can't say it enough. in the old world i inhabited for so many years, i would probably not do a story like this in the new world of journalism, i wanted -- >> can i just explain why such a big story? listen to me. i know these guys. they didn't want to sell. >> no. >> this is a big change. don't minimize your report. >> change is key fact over 25% of their stockholders right off the bat are telling them you got to do it. there's a change there. they weren't all unified until

recently. and that gets the attention of a company particularly when you're two months away from a window opening on nominations. it gets your attention. so you say, okay, maybe it's time we've got to engage and see what's out there. sirius we know is interested in walking through the door if it's opened. and the door's now been opened. >> here's something that won't happen. this is a $3 billion company. tim cook will not pick up the phone and spend $4.5 million, which is pretty much a rounding error, to buy a company that will tack on five points to a stock. >> why won't that happen? >> because they don't think like i do. because i'm about trying to get stocks higher. and short and long term jeff bewkes, great american, because i've often debated with them but telling you stock is five points, but they don't want to do it. >> it's a rounding error. it's what they spend on beats. >> it would be twice what they spent on beats. >> spotify lingering oult there too. >> buy that too. grab them all. do you think antitrust is going

to care? but you need the revenue stream, you need the service stream. immediately vaulted to a fortune 75 -- what are you laughing about? >> i'm looking at the stock price. >> what did you think was going to happen, go down? >> you want people to understand what's going on, but at the same time listen there'd been an indication of interest previously from sirius at maybe 15, but trading up this quickly very early. first inning. >> first inning. but the first inning of the game started which they're willing to sell. i thought they were totally not willing to sell and no one was going to do a hostile. greg maffei is not going to do -- >> i'm glad we do this in realtime, i bounce it off him and he says good. >> bounce it off me. i'm crypt nite. >> by the way, i watched "batman versus superman," it was the worst thing i ever seen. had to be the worst movie of the year. >> workday and f-5 -- >> indecipherable.

it was 10:30, one of those quick let's see what's on. >> remember 10:30 i was just getting to the lynn and ian reed -- >> were you still having dinner with cosmetic executives. >> another tired night football, did you see? >> i didn't see that. >> we're late getting to bob. let's get to bob pisani see what's moving. >> bat man versus superman not only indecipherable, it was mean spirited. i think that was the worst part of that movie. remember, the s&p is down 1% this week. that will be the first decline in three weeks although the dow is up thanks to stocks of course like goldman sachs. big price stock here. take a look at sector's defensive tone, that's the way to describe it. utilities, real estate, consumer staples the ones beaten up since the election. industrials just turned positive. they were negative. banks which were the leaders and have been they're on the downside. so flipped around a little bit here. a lot's been talked about the rotation that's been going on. but if you look we've got numbers now for the month on the big etfs and the fund flows are

very clear here. there's money going into very broad etf funds. the s&p 500 and the russell 2000 have seen notable inflows. people are putting work into the broad market. their also putting money into very select sectors, specifically the banks and financials and industrials. this makes sense. it's reflected in the stock prices we've been talking about. at the same time, they've been pulling money out of very clear specific sectors. they've been pulling money out of emerging markets. they've been pulling money out of gold. and they've been pulling money out of defensive sectors, the consumer staples in particular that has seen outflows rather noticeable. i know $1 billion doesn't look like a lot, that's a lot for the particular sector in the etf group. in the last week there's been another more specific development, we've talked about it yesterday, there's been money coming out of techs. look at the smh, that's the one to look at here. that's the big semiconductor, look at that for the week. there you see specific declines. there's been notable outflows.

people pulling money out specifically yesterday from the group. semis yesterday we talked about this ad nauseam, all down, most of these losses you're looking at were yesterday. the thing i would point out is this makes perfect sense if you need a source of funds. jim has mentioned this as well. this is the group that has the biggest gains this year. so these four stocks, if you look at the gains for the year, nvidia was up 160 -- this is after the losses yesterday. qualcomm, micron, all of that notable gains. again, this is including the losses that we had yesterday. so few yo ed noo a source of funds because you want to buy industrials and materials and banks, it makes perfect sense to use semiconductors partly as that. let me move on, one point on ulta, the numbers jim mentioned, eps growth 26%, comps 16, the guidance of the comps 12% to 14%, online sales up 59%. they have an omni channel

customer, they're buying instore and they're buying online. jim, i don't know if this is the best retailer in the business, but up 50% so far this year. incredible numbers they just put up. right now the dow largely on the flat side down 20 points. back to you. >> it is the best. and the fact that it's only up $6 is telling you way too much. should be up $16. wow. >> you were in there early. let's get to the bond pits. big day for macro. rick santelli is at the cme. rick. >> good morning, carl. well, we know over the last couple days there's been two forces that have aided and abetted some of the trendy moves like higher rates, that of course is the run-up towards the big event with regard to the employment report. and also some of the volatility and the issues of mario draghi, renzi referendum, ecb, now we look at the two-day charts, we can see the first one is coming out of the market a bit. we could say a lot of things about the number, talk about low

variants in many of the numbers non-farm payroll headline, but one thing we can't deny whatever premiums we've pumped in for the most part have come out. the day is still early. but here's much more macro interesting charts. let's look at the month of november for some key sectors, key areas here. the reason they're important is think of a whole room of children all copying each other's homework. you're going to get roughly all the same answers when you're the teacher grading it. now what happens when you put all those kids in a cubicle, what happens now to those test results and the answers? well, i think we're at the phase where the cubicles haven't been erected yet. look at november 1st of 10-year, look at the pattern. look at bunds, look at the dollar index. look at the dollar versus the yuan, all look pretty mump the same. one thing we know for sure, the political landscapes effects on markets and central banks effects on markets is going to undergo some radical change in the future.

and many ways led by the u.s. so a lot of these charts probably aren't going to correlate as nicely. exactly how we break away from that is going to be anybody's guess. but consider the dynamics of the moves higher in rates and the stability of the dollar, most likely those are pretty good clues. carl, back to you. >> rick, thank you very much. rick santelli in chicago. let's also get to morgan brennan for news on elon musk spacex. >> that's right, carl. the spacex scheduled to return to flight later this month in what would be the company's first launch since that falcon 9 rocket exploded back in september. so december 16th is the day a falcon 9 will deliver satellites into low earth orbit launching from california. this is contingent upon the faa's approval of spacex's return to flight. so this comes after month's long investigation into the cause of that september 1st fiery explosion on the tarmac at cape canaveral destroyed a satellite

going to be used by facebook and the cause of which elon musk told you, carl, has never, quote, been encountered before in the history of rocketry. so december 16th planning to go back into space. >> morgan, thank you very much. when we come backstop trading with jim.

> time for cramer and stop trading. >> i mentioned earlier if nvidia could shakeoff workday, but the key to this market is amazon. this stock has been straight down. still not reached its bottom, it did a few weeks ago, but judging by what retailers are telling me amazon's having a fabulous holiday season. if this stock can hold, if this stock can hold, key member of f.a.n.g. by the way, not diamondback energy, the selling in nasdaq may have run its course. they're all in amazon. they love amazon. they being these momentum guys who just say, hey, you know, amazon down 14% you want to buy it. so watch amazon. that's going to be the stock that matters. not ulta, as much as i love

ulta. >> no, but grow technology, big cap growth technology which has just been getting hammered. >> and i think this company's having a great quarter. let's see. >> can't wait for monday night's "mad money." >> holy cow, greg hayes. it's going -- >> i like that. i like that. >> some guys are straight shooters. i got a straight shooter president-elect, got a straight shoot shooter united technologies ceo. >> see the op-ed in the journal today saying job security in the end depends on profits. you yourself would take numbers down. >> i'd take two pennies off this. two pennies per share this monerrey move. >> off utx. >> absolutely. there's a bombardier plant right next to me my house in mexico, those jobs should have been in the united states. i think the president-elect ought to be thinking about companies not just u.s. companies but how about all these foreign companies that

make benz, beamer, they make their plants here and send them up here. whatever. >> there's part of the reform of taxes includes this idea i think of an excise tax or something along those lines. i'm not sure how to refer to it, that might do that, right? so it's going to be america first tax system. >> exactly. >> this is the key by the way for so many executives trying to think about what's coming because it's going to fundamentally change businesses. >> true. i'm going to break form, i think people should buy "no true glory" by bing west. this is the story of general mattis. you want to know who just became head of pentagon. >> he's still got to be confirmed. >> just get the book. "no true glory" supposed to be played by the way -- in the movie, supposed to be played by harrison ford but movie never got made. >> no longer around to play him, right? trump himself said he is the

modern patton. >> great show. great show. >> when we come back, we're going to talk more about the trump transition with congresswoman marsha blackburn of tennessee. and jan hatzius on the jobs number and fed. don't go away. ways wins.

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♪ good friday morning. welcome back to "squawk on the street." i'm carl quintanilla with kayla tausche, david faber at post nine of the new york stock exchange. big news day as the jobs number comes in at 178, just about on target. unemployment to 4.6. but we're watching wages. starbucks the other big corporate story. and then oil finally taking a breather after a crazy week up about 0.3%. road map begins with a surprise appearance announcing pick for secretary of defense and strong warning for companies planning to leave the united states. as we said 178,000, we're going to break down the jobs number, tumbling unemployment rate and what it means for the fed straight ahead. and starbucks howard schultz stepping down as ceo but staying with the company. more on his role and his future. but first up,

president-elect donald trump back in new york this morning with scheduled meetings to include goldman sachs member, heidi highcamp. trump took a victory lap of sorts holding a rally for supporters in cincinnati. but earlier in the day he was busy touting his first accomplishment as president-elect. and that is the deal with carrier to keep 1,000 manufacturing jobs in the united states. he also took the opportunity to challenge other u.s. companies who are considering leaving. take a listen. >> 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 different states and all of that, but leaving the country is going to be very, very difficult. >> that was the president-elect yesterday evening. in other news this morning, starbucks chairman and ceo howard schultz is stepping down becoming executive chairman of the company. current president and c.o.o. kevin johnson will take over in

the chief role at the company. and andrew ross sorkin sat down with an exclusive interview with both howard schultz and kevin johnson this morning and joins us now with the highlights. what a conversation, andrew. >> hey, kayla, thank you. it was a fascinating conversation. specially for me to speak with both of these gentlemen. iconic howard schultz handing over the reins to kevin johnson. he's tried this before, a succession plan, he left in 2000 only to return as the ceo in 2008 and of course to remain there until now. we asked him why this time is different. >> this time around i've got a full-time opportunity in terms of building the new starbucks reserve brand, my faith and confidence in kevin. it's a completely different situation. the wind is at our back in terms of the quality of the business, the equity of the brand and how we're doing in china. so the opportunities in front of us i think are so strong, they'll be no issue whatsoever that will be even close to what happened in 2008.

>> we also talked politics and the impact of the trump administration, both on the markets, starbucks stock price and on starbucks itself. >> i need to separate the prospects 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 terms of building market value and building shareholder value, it's been primarily based on our ability to execute, build shareholder value and balance profit 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. >> the news, all of this coming a bit of a surprise, at least the timing of it, in terms of his transfer of power. we will see where it all goes.

we asked him whether he may ultimately actually pursue politics himself, something he says right now that he's all-in on starbucks. but i think it's a question we will continue to have to ask. guys, back to you. >> you got that right. thanks so much, andrew. andrew ross sorkin in seattle. meantime, president-elect celebrating his carrier win at that rally in cincinnati yesterday. for more on that we're joined now from washington by former bush white house political director cnbc contributor sara fagen and with us at post nine kerry and obama presidential campaign advisor, author of "the best worst president." good morning. sara, we talked to jason furman about carrier. he said, look, any time a job is saved it's a good thing. on the other hand you have the journal today basically decrying this ad hoc intervention by an incoming president in private enterprise. so what do you think? >> well, i think this is a huge win for donald trump. maybe right this sets a bad precedent and you have many companies now coming to the

white house looking for special deals and ultimately that's not sustainable. however, you know, donald trump is credited with saving 1,000 jobs in an economy particularly in the part of the country that is -- has felt the pain of these jobs leaving to other countries. and that's a huge win for him. and it's a huge mandate. when he's dealing with members of congress, i think, what he's shown before taking office is that he's getting done what he said he was going to do. so i see only upside for him in this deal. certainly politically. >> mark. >> well, i'm happy that 1,000 jobs were saved. but as steven retner wrote in "new york times" today, this isn't necessarily trump bringing back jobs to america. this is jobs leaving the united states more slowly. you know, what trump is doing, he's a negotiator, he's incentivizing companies to threaten to move jobs overseas in order to get pork incentives.

carrier got something like $700,000 a year for the next several years from state tax incentives in exchange for this deal. so it is not just a problem being ad hoc, but no man no matter how big the bully pulpit is going to stop the tide of globalization happening. and so, you know, this will get mileage for him politically, there's a great narrative, there are great visuals, one-man hero sort of standing up for the little guy. probably more mileage than barack obama has gotten in 80 plus months of consecutive job growth. but from a practical matter, from an economics standpoint, he's not doing america any favors. >> obviously you're talking about the price tag of the ability to keep those jobs, mark, in indiana. but sara, if you're a governor of a state that has manufacturing jobs where companies have either already planned or have threatened to move jobs, what are you doing with your budget? where are you trying to find money to keep these at home? >> that's a great question,

sara. and i think a lot of these governors are going to find themselves a little nervous relative to dealing with trump and what's going to happen and is trump and the administration going to get involved in things in their state. and they may be left with the consequences. however, i think what you'll see most governors do particularly republicans is push him to get this corporate tax reform, broader tax reform done. because if tax reform -- if the corporate tax rate falls to 15 or even something slightly higher than that, 15%, what you're going to see is a lot of these jobs are not going to move because people moving companies to canada or canada buying american companies and taking advantage of the tax differential, we're going to see a lot of that go away. >> yeah, but sara -- >> look at the broader bigger picture here. >> look at who donald trump is stacking his cabinet with. former goldman sachs folks, people who have been resisting these types of tax reforms that disincentivize offshore investments or investments in

offshore labor. i don't think a lot of people for every photo op he gets with a stunt like this, and legitimately slowing the tide of exporting jobs, i think he's getting a lot of flak from wall street. and i think a lot of his base, the sort of white working class people in the midwest and the rust belt, are frustrated. they're hearing from their radio sort of conservative radio talk show hosts that donald trump is selling them out by stacking his cabinet with people like this. >> kind of feels like the opposite this week though, right? >> yeah. >> i mean, this is a -- there's celebration in the rust belt. you don't see that? >> look, there was a "new york times" article that reported on this. you can say what you want about "new york times," but they interviewed a man who was at carrier whose job was saved and he said, look, i don't know how long i'll keep my job. i think it's a good thing that donald trump is making an effort, but he was more saying when he was more realistic i think than the president-elect of the united states when it comes to global trends and the way manufacturing is going right now. >> there's a lot to be said for

building optimism right now in this country. and for people to start to feel good. and many members of the country particularly there have not felt good. and with respect to the cabinet appointments, look, i haven't always been a trump fan. i've been pretty critical of him throughout the campaign. but he has selected, i think, very bold choices. and he's done it very quickly. and i think, again, that's part of why we're seeing, you know, many people particularly when the republican detractors take a second look at donald trump -- >> sara, could i just jump in though? i mean, feelings are important. it's important for people to feel good. but feelings are pretty fleeting. and i think that as soon as these feelings wear off -- >> yeah, but optimism breeds more optimism. >> -- coal miner in kentucky or somebody working in an auto manufacturing plant in kansas not having their job saved, their economy, their local economy isn't rebounding the way they're reading about in these news articles. i think when that realization kind of sinks in and the

feelings fade away, i think donald trump has a hard sell to make to the american people. >> i don't know. i think this success makes it more likely he's going to be able to get something done. i agree with you, one-off deal isn't going to change the trajectory of jobs leaving the united states. but if a massive corporate tax reform package is in fact passed, that will have a huge and broad impact on jobs in kentucky, ohio, pennsylvania and everywhere else in this country. >> we'll see if he can -- >> we'll see if he can work it with his republican majority to pass that. that's a long shot. i give him credit if he does it. >> well, feelings are nice but don't help the people who work in corporate tax. so we have to wait for actual policy. sara, mark, have a good weekend. >> thanks, carl. programming note by the way, jim cramer is going to talk exclusively with greg hayes, he is the ceo of carrier parent utx on making that deal with trump. that's coming up monday night on

"mad money" at 6:00 p.m. eastern time. when we come back, jobs in america holding steady at 178,000. the unemployment rate falling to its lowest level in nine years. we're going to get analysis on that from goldman's chief economist jan hatzius in a moment. they are the natural borns enemy of the way things are. yes, ideas are scary,

and messy and fragile. but under the proper care, they become something beautiful.

speed always wins. especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second. you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. the health oflt economy in focus this morning. 178,000 jobs added last month with the unemployment rate

tumbling to its lowest level in nine years. steve liesman joins us with more on that and a closer read at the nfp report. steve. >> thanks, kayla. an unemployment rate that's lit a bit of a fire under some of the inflation hawks out there, plus a good payroll number. 178 coming in, spot-on or just about where wall street was looking for it. here are the numbers 178. three-month average right around there, 176, but the plunging unemployment rate down from 4.9 to 4.6 all in one fell swoop, modest average hourly wage gains but a big month in october and participation rate ticking down but still remaining up above lows 62.7%. john riding at rdq, he's a little exercised about this. he says people aren't focusing enough on the unemployment rate. the fed hike 2004 to 1.25% with a higher unemployment rate and a lower core inflation rate than it is right now. take a look at the u-6, which is the broader measure of

of course these are seasonally adjusted, the actual gains are up in the 80,000 or 90,000. and just for programming note, guys, tomorrow bill dudley -- sorry, monday, bill dudley we'll be talking to him in the 10:00 hour. he's the new york fed president. we'll ask him about changes in the fiscal stance and change in monetary policy and what this 4.6% unemployment rate should mean for the outlook for policy and rates, kayla. >> all right, thanks so much, steve. we'll be watching for that. for more on the jobs report, let's bring in diane swonk, founder and ceo of diane swonk

economics and david kelly, chief global strategist at j.p. morgan. david, i'll start with you. some this morning have been scratching their heads at how the unemployment rate could fall to 4.6% when the participation rate only ticked down. what do you make of the various moving parts in this report and what it says about the economy at large? >> well, i think the fall in the participation rate is something we've had going on for a long time. it's mostly demographics. there's some effect of more people with felony convictions falling out of the labor force. we've had that going on for awhile. but i think the really interesting thing is we didn't get any wage growth even though unemployment's so low. i think what's going on is there's a big difference between the numbers and perception. people think there's this army of unemployed people who are out there going to steal their jobs if they ask for a wage increase. but that's really a ghost army. they don't exist. so at some stage perceptions in the labor market will improve. >> steve just made the point, david, that we had strong wage growth in october, so maybe it

was time for employers to take a little bit of a breather. and then you also have the quit rate at an all-time high, which you can't deny that is usually an optimistic sign for the u.s. employee. >> oh, yeah, i think things are definitely getting better, but the problem is there's been this political perception that there are millions and millions of people that work in america and the labor market is a disaster and it's the opposite of that. but i don't think people have really gotten to that point yet. so as people feel better about the economy, understand that there really aren't many available employable workers out there, i think we'll see stronger wage growth. >> i was just having an ongoing debate with one of our viewers, and i pointed him to nfib's hard to fill component. but that's not the message that's out there right now. >> no. in finance reality is reality, perception isn't reality. so i think perceptions will change and evolve once we get past the political season to understanding just how tight this labor market is. and it's not all good.

it's because there's the baby boomers retiring, it does mean it's very tight. >> diane, this particular survey was taken just in the days after the election in november. how do you think the perception of the u.s. economy and the outlook of companies operating here to hire more workers has changed since then? >> well, we've seen sort of divergence. i think one thing that's important first of all is on the wage data, yes, we had a strong october. there was some unusual factors in the november number. a huge deceleration in wages in utility sector. we've had an unusually mild season where people aren't using air conditioners in the hot areas and not using heaters in the warm areas of the country and that suppressed wages in that sector quite dramatically. an unusual quirk. we also saw drop in manufacturing wages along with another drop in employment there. that is about to reverse. so i think this is a real transitory issue. in terms of the perception versus reality, look at the difference between the overall unemployment rate and the u-6. as steve mentioned came down to

9.3, but still a percent higher -- almost a percent higher than it was in august 2007, the last time we saw this low unemployment rate. and that gap really underscores the stress. what we're seeing is consumer confidence is up. they are feeling a little better. i think there was a relief after the election that it was a peaceful transition of power. on the company side though, and that's where i'm spending most of my space with ceos in the fortune 100, fortune 150, a lot more uncertainty about where policy is going forward and what kind of hostile environment they'll face either both at home or abroad, whether it be taxes, penalties, how they do business. they're very uncertain about how the global economy's unfolding and policy in the u.s. as well. >> diane, i know in the november report we do get some seasonality in the fact that there is usually an upswing in retail hiring. >> exactly. >> are you seeing enough of that to tell you retail is still going to be employing at the levels it has been for the past few years?

>> we really are seeing the movement from bricks to clicks here. the decline in retail employment as steve laid out showed the movement online. thanksgiving was the first time ever that more consumers actually went online for the black friday thanksgiving, cyber monday sales than they actually went into stores. and i think that really that foot traffic loss in the stores is having an impact. we already know there's going to be a lot of store closings announced for january and february. so this trend, secular trend in retail does not reflect weakness in consumer spending. it reflects the shifts in how we spend. and that's a real restructuring in the retail sector we're going to see play out over the next several months. >> all right, diane swonk, david kelly, thanks to both of you. appreciate it. >> thanks. when we come back, italian citizens heading to the polls this weekend. will it be the next political surprise of 2016? we're going to break down the referendum over there, go live to rome in a moment.

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you can even enroll right over the phone. don't wait. call unitedhealthcare or go online now. ♪ italian citizens head to the polls this weekend voting on constitutional reform. the referendum being seen by many analysts as the most significant european political event of the year, perhaps even

bigger than brexit. our julia chatterly is in rome and brings us up to date on what we can expect. julia. >> reporter: thanks so much, david. let me start by explaining what this vote's all about. this referendum is about streamlining government here in italy. so we're talking fewer senators, centralizing power here in rome and ultimately ushering in a period of more stable government. so that's important for italy because they've had a whopping 63 governments in just 70 years. it's important for italy, but why do we care? we care because prime minister renzi has offered to resign if there's a no-vote this weekend. that's what's expected, a no-vote and renzi resigns and then we're talking about political uncertainty at a critical time for the country. because we're all focused on what they're doing to address

the fragilities in the banking sector, now, just to throw more fuel on the fire, the country's finance minister today said if the no-vote wins it's going to keep more pressure on the banks and that's going to mean more trouble trying to raise capital. and we've got one of the biggest countries' banks here trying to raise capital just in the next couple of weeks. so we're going to be focusing on this, just so summarize if the no-vote wins this weekend, watch the italian banks but also watch the european banks for spillovers. and at the same time if we get a brexit like surprise and actually the yes vote wins, given all the pressure heaped on them, expect a rally potentially in the banks across europe on monday, guys. >> thank you very much, julia chatterley for that update. beautiful shot there. i would assume that's the coliseum, kayla. >> that is indeed. that is not a green screen. that is the real thing right there. julia, we'll talk to you a little later on. coming up on "squawk on the street," goldman sachs chief economist jan hatzius is with

us, his take on today's jobs number and donald trump's economic message. that's stragtd ahead. so what else is new? how's your mother? umm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got...

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good morning everyone. happy friday. i'm sue herera. here's your cnbc news update this hour. secretary of state john kerry paying a visit to pope francis at the vatican. the two men met in the pope's study and chatted with the help of a translator. kerry is in rome to participate in a mediterranean summit on security. former secretary of state henry kissinger meeting with chinese president xi jinping in beijing. xi saying his government was closely watching post election developments in the united states. he also mentioned that he has held a phone conversation with president-elect donald trump. australia will spend nearly $1 billion over the next five years to improve the well-being of the great barrier reef. it's an attempt to stop unesco from placing the site on the

endangered list. and a new $4 million l.e.d. lighting system was unveiled at niagra falls. the lights are environmentally friendly using about half the power as the old system. visitors from around the world can now enjoy the dancing, changing, beautiful lights. you're up-to-date, that's the news update this hour. carl, back to you. sue, thank you very much. with that strong jobs number this morning and the unemployment rate at its lowest level in nine years, many are expecting a december rate hike. joining us this morning at post nine in a cnbc exclusive to talk about the numbers is jan hatzius, goldman sachs chief economist. jan, good to have you back. >> nice to be here. >> you thought it would be 90%, now go to 95. >> over 95. >> over 95. so pretty much a done deal. >> i think pretty much, yes. >> does today's number change anything about the tail end of that? what happens next year as well? >> i think it supports the idea that they will, you know, keep going in 2017. our expectation is three hikes next year, currently they're

signaling two. i wouldn't really expect them to necessarily change that, you know, in two weeks. but i do think that ultimately, you know, we're at full employment, i think. and we're still adding 170,000, 180,000 jobs a month. so we do look like we're going to overshoot somewhat. which is okay up to a point, but i think overshooting full employment by a lot raises the risk that ultimately you see an overheating of inflation and more risk of recession. >> what kind of number would that entail on unemployment, for instance? what's overheating? >> i mean, our estimate of full employment is 4.7% for the unemployment rate. of course there are a few other measures of labor market slack. they don't always tell you the same thing at the same time. but if the unemployment rate fell, you know, into the low 4s with nothing else, you know, moving the other way, then i think there would be a labor market overheating. >> a lot of fed officials when

they've been speaking on the record have acknowledged the strengthening dollar and the complications that could present for the fed and the dent that it could potentially take out of gdp. how much are you modeling for that? >> well, we certainly do focus a lot on financial conditions. and the dollar is one aspect of financial conditions along with the rates markets, equity and credit markets. i would say at the moment we're actually getting a little bit more help from financial conditions than we did for example a year ago. despite the recent modest tightening in financial conditions, we're still in an environment where i think we're having sort of a neutral impulse whereas a year ago we had a pretty sharp negative impulse. by our estimates that took away about a percentage point from gdp growth. so i think it's important to recognize that history. but, sure, if we saw a very large depreciation, very large increase in rates, that would be a reason for the fed to proceed

extra cautiously. >> you also say your analysis suggests mr. trump's policies might act as a modest drag on global growth. why? why won't tax reform and some of this deregulation automatically spur growth like people are talking about? >> so our numbers, and obviously there's still a lot of uncertainty about what will actually be implemented, we do get a small boost in the short term, but then more of a drag in the longer term because we're building in some of the more supply unfriendly policies on trade and immigration. if those don't happen and you only get the fiscal components, then i think it would be net positive. >> i mean, the trump administration and its treasury secretary nominee have made it clear that tax reform is going to be the priority in the early days, both corporate and individual. can you give us aularity on wha to see on that front? these are not going to be small changes. these are going to be seismic

changes. >> i think they're going to be sizable changes although it's unclear as whether it's going to be as sizable as the trump campaign plan or the ryan plan. >> or may end up being a lot of ryan plan. that's where a lot of the leadership's going to come from. >> it may be, but all of this has to pass both houses of congress. >> it does. although reconciliation could make it much easier. >> that's true. but you need pretty much all republican senators onboard, probably. cbo is already projecting a 3% of gdp deficit on average over the next decade. i think that's going to limit the size of the package we're ultimately going to get. i do think there's going to be a package. it's going to be tax reform, but also a reduction in tax rates and an overall fiscal easing. i'm just not sure it's going to be quite as large as some of the numbers we're seeing at the moment. but, you know, that could be wrong. we'll find out over the next few months. >> if people are trying to price in lower taxes for companies making them more competitive but

also more domestic production perhaps making them less competitive, which wins? what's the net outcome? do we know? is there a way to find out? a way to guess? >> well, you mean -- >> taxes get more competitive. >> right. >> more competitive overseas, but labor costs may go up because they're being pushed to do more here. >> yeah. i think it all depends on the extent. i don't think you can give one answer to that question. i mean, i think the point is that when you're at full employment or at least very close to full employment, then it is going to become harder to see a net -- large net boost to the economy because even if you get stronger demand, it will ultimately lead to higher interest rates because the fed does need to act against that. >> same thing has been said about infrastructure, right? new deal in the 50s, new infrastructure plans were implemented. it didn't move employment until

wartime spend started to happen. would the same thing happen here? >> well, i think back then you were very far away from full employment in the 1930s. so, i mean, there were a lot of other issues with the new deal of course. but i think in this case where things differ is that we are close to full employment. nobody knows exactly what full employment is of course. when i say our estimate is 4.7% unemployment rate, we're not sure about that. that could evolve. you know, we're constantly looking to sort of update that number. but i don't think we're far. >> everything you're describing though is inflationary which would lead me to think rates are going to be perhaps higher than we anticipate. i mean, we're at 2.4 or 4 today on the 10-year, roughly around there. are we going to stay there? are things going to move up appreciably on these variables? >> we do think interest rates are going to go up, that's true at the long end and shorter end where the market is obviously fully priced for a december rate hike. but it's still pricing less than

two hikes for 2017. we think it's ultimately going to be somewhat more than that. so i agree with you, i do think rates are probably still going to move higher from here. >> jan, good to have you. so much to talk about. you got to come back more often. >> thank you. >> jan hatzius, joining us from goldman. >> good to be here. coming up, former chairman of the president's economic council ed lazear. and president-elect and business conflicts as he heads to the white house. "new york times" columnist jim stewart joining us to discuss.

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president-elect donald trump back to transition meetings right here in new york today after that quick victory tour to indiana and ohio yesterday. it comes as there are mounting

questions about exactly how he plans to separate his vast business and branding empire from his new role as president of the united states. our next guest says the president-elect could follow the example of one foreign leader, italy's silvio bur-- always interesting making that connection to burlesconi for nine years. >> longest serving italian prime minister. i want to make it clear i do not think he should follow the model, but the parallels are striking. he was a billionaire when he was elected, he did not divest his ownership stakes. he resigned all of his position, said he had no day-to-day role of any of the companies and handed management over to his adult children. does this sound familiar? well, what happened? one scandal after another. it was unending. and by the way, his personal

fortunes soared. there's been a lot of looks at this. two big things, blatant conflicts of interests in the regulations he controlled over his companies, but even more than that businesses and people curried favor with him by patronizing his businesses. a serious academic study found that companies with interest before the italian government shifted over a billion dollars in advertising to berlesconi owned media channels during his tenu tenure. >> and clearly that's a concern when it comes to mr. trump. it's not as if i won't have anything to do with it, my kids will run it. but to your point, how many dignitaries are going to stay at that trump hotel in washington that might not otherwise? there are so many other ways they can do things that will benefit the business. >> it's incredibly unseemingly where we have delegations parading through openly talking abtd how they want to do a gesture to impress trump by staying there and booking, you know, conventions and taking up the ballroom. that's horrible.

i mean, really given thought to this because i sympathize in a way with trump. it's kind of too bad he has to have a fire sale maybe, but i honestly don't see anything short of divestiture that's going to solve this problem. >> it's interesting because normally you would think that financial disclosures would be the way that you would track how much his net worth had benefitted or his businesses had benefitted from something like this so you could potentially hold them accountable. do you expect any traditional financial disclosuredisclosures? do you expect congress to hold his feet to the fire on this? >> look, we're in a whole new world here. i don't have any expectations. i would hope so. i would certainly hope so. because transparency is the only way there will be any checking of what's going on here. that was a problem in italy. he said i'm not having any dealings with the business but then meeting with people like rupert murdoch and discussing it. who knows what he talked about with his children. if trump wants to vielolate the

spirit, it would be very easy and without disclosure we won't know. but i think, you know, a depressing thing in the italian example is the italian voters never really seemed to care. he got elected three times while these scandals were in full tilt. and trump and pence have said, oh, the american people don't care and they knew this when they voted for him. number one, i don't think people were thinking about this when they voted. it was overshadowed by so many other issues. and then number two, the united states is not italy. i mean, this could go on in italy, but you know, he was a laughing stock, he was shunned -- >> it's possible they really don't care, just like they did in italy. his entire base this is not a priority for him. there are other things that are more important. >> i think it's probably true that there are other things that are more important, but if he doesn't deliver to some extent on the promises that are important to them, coupled with major scandals like this, then i think that would be a serious problem. in other words, i think it would be a mistake for the trump team

to take any encouragement from the fact belusconi got away. >> he never did to kayla's point release his taxes. he's not going to. >> i don't think he's going to. but then we're going to be faced with an italy-like situation. which several people said to me, can you believe that we're even having this conversation? one guy said, well, i guess we should be happy if he's berls coney and not musolini. big shakeup in the news howard schultz stepping down to be succeeded by c.o.o. kevin johnson. schultz did weigh in on that exclusively this morning in "squawk box." take a listen. >> kevin and i have been together almost ten years, seven years serving on the board, two years for ceo and president, and what was clear is kechb's ability, his skill base and experience in my view is he is much better prepared to really manage the global operations of

the company than i am at this stage. >> credit suisse with a note out just now, the bench is strong, but there's only one howard schultz. is that true? >> well, that's indisputably true. i think he's a charismatic leader. he's done a fantastic job. he was there before, came back, turned the company around. record speaks for itself. he's not exactly going away. i think their offices are interconnected. he's still focusing on the high end coffee brand. so i don't see -- and i think he has done a good job of finding someone that can slip right in. you know, they're not the same people. he's not trying to be another howard schultz. maybe this is the right transition for the company at this point. >> although it happened once before and didn't go particularly well. i think that's a concern for investors when he did step away and of course came back and able to right the company after some missteps. >> i would say the glass is half full here. he probably learned something from that experience and i don't think he is stepping too far away this time. you know, we'll see what

happens. he seems to have confidence in this successor. >> how much of a lead do you think starbucks has over other more ar tisal coffee brands, but he says he's leighing the company in a good place with little competition. >> i went around and did some tasting and checking it out and i was incredibly impressed big company like that how nimble they were at meeting the challenges of these new artesnal coffee makers. mcdonald's also have been doing a great job, but they've been so much slower to move. how starbucks managed to do that, i don't know. but they've been successful at taking the trends and incorporating them into their stores. >> i love when you do first person shopping for suits, trying on coffee, dressing as disney characters, that's your forte. >> i enjoy it. >> jim, it's good to see you. >> good to see you. >> thanks so much. >> coming up on "squawk on the street," the former chairman of

the president's council of economic advisors ed lazear is with us. his reaction to today's jobs report and unemployment numbers and what economy president-elect trump will inherit. much more ahead. stay with us.

now let's get to rick santelli in chicago with the santelli exchange. rick, good morning. >> good morning, and thank you, kayla. i'd like to welcome ed lazear. ed, my employment day first of , what did you think of the data points today paying close attention in your answer to, of course, what's going on with the drop in the unemployment rate, the rise -- drop in labor force, the rise in those not in labor force and particularly from 2.8 to 2.5 euro for yofor year over. >> you hit them all. in some sense it's a boring report. i guess that's good. what it suggests to me is based on the numbers you pointed out we're basically at a peak right now. the fact that the employment rate went down is a combination of two things. employment went up a bit and labor force participation went down. hours were flat. the employment rate, which you know i always like to look at, the ratio of jobs to number of

people in the working age population was flat. wage growth was slightly negative, so that's not a great thing. doesn't look like we're taking off. doesn't look like a booming labor market. it really look like we've kind of peaked out. so kind of, you know, okay, stagnant, unfortunately stagnant at too low a level. >> you know, something interesting happened yesterday. of course mr. shults, head of starbucks stepped down, and i noticed on my train ride home looking at the charts and the aftermarket, the market dropped. we had an election in this country on november 8th. it's a lot like, you know, we're getting a different guy to run the country and we've seen big market appreciation. your thoughts there. >> well, i guess the way i would think of it is this -- we've had a very weak recovery as you know, rick. this is something you've pointed out many times on your show. and the question is whether change will remove the

impediments to economic growth that we've seen in the past. this has not been a particularly pro market administration. we've had tax increases, particularly tax increases on capital, which is not a good thing. >> you're saying the barrier to improvement was pretty low. >> that's right. i think that's right. so, you know, whether this stuff will play out as we hope it will, you know, remains to be seen. but certainly removing some of those barriers i think is something that the market is seeing as a positive right now. >> all right. ed, let's go off the track a minute here. what do you think -- >> okay. >> we have a 4.6 unemployment rate, the lowest since august of '07. so one of the pillars is more than satisfied with the fed. what's the issue with the other pillar? >> right. well, i think -- >> and what about prices? >> the other pillar -- yeah, of course. i mean, the other pillar is whether they are anticipating significant inflation. you know, there's still not a lot of indication in the short

run that there is significant inflation or inflationary pressure. there's been a little bit more in recent months but nothing dramatic. so the question is whether we'll see anything in the future. i think what they're concerned about is having some leeway to do monetary policy in the future. they're way behind the curve as you know, as you've been talking about for two, three, more than that years now, trying to get interest rates back up to a normal trajectory and trying to do that in a relatively rapid fashion without somehow putting a major damper on the economy. so that's where they are right now. they're going to move i think -- there's very little doubt they're going to move. >> would it be fair to say, then, ed, that right after the crisis we were close to 10% unemployment. if you believe the numbers maybe they won that pillar. would it be fair to say most of their energies and thought and most of their actions are aimed towards trying to get a little bit more inflation in the

system? is that a fair statement? >> yeah. i think it wouldn't be so much that they want inflation. i think i would put it that they're totally unconcerned about inflation and have been for many, many years. they've been primarily concerned about employment. and rightly so. yoenl again, we know that despite the fact that the unemployment rate looks like it's 4.6%, we still have way too few workers employed right now relative to where we should be. so that's been their concern for a long time. and, you know, i always think that janet is concerned that, gee, you know, it's still been a weak recovery, fortunately we had decent growth last quarter but it's been a weak recovery and she doesn't want to send us back into a 1938-style fed-induce ld recession. so i think that's the big concern for them and they ear not particularly concerned about inflation. >> so, ed, if president-elect donald trump came in and the first thing he did was say i'm going to add an additional 20% tariff on everything that comes

in this country, what would happen with inflation? >> well, first of all, i sure hope he doesn't do that, but if he were to do that -- >> go up or down? >> yeah, okay. hang on. all right. so i would guess in the short run what you'd see is a moderate increase in prices, 1%, 2%, 3%. the main effect would play out over the longer run where you would see a deep increase in prices. >> i don't care about the long effect. basically, we would then jump over the hurdle of a 2% threshold for the fed, correct? >> that's true. right. that would be true. >> and freeman, what did he say about inflation? it's first and foremost a monetary issue, is it not? that's what he said. >> absolutely. >> monetary phenomenon. >> that's right. yeah. >> tariffs aren't a monetary phenomenon, are they? are tariffs a monetary phenomenon. >> no. this would be a real increase in prices. this would be a fall in the standard of living because

things would be more costly in real terms. this would not just be a renumbering in the sense of freedman. this would be a different kind of phenomenon you'd be talking about. ? and people that wanted to buy, you know, silverware, furniture, cars, that probably wouldn't change, the price would change, they would have to hire for workers in the country, wouldn't they? >> well, the question would be -- you know, i think -- >> listen, we're out of time. i'm only doing this -- i'm only doing this to play with you because, you know what, this president's going to kick the models and when we look at some of the requirements in government and agencies, i'm not sure that we look at the right tangents. i think it's going to be an aggressive four years coming up. listen, we have to go. kayla, back to you. >> all right. >> thanks so much to rick santelli and to ed lazear as well. as we head to break, jim cramer has an exclusive interview with greg hayes, the ceo of carrier's parent company, you nighted technologies, monday night.

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welcome back to "squawk on the street." oil prices taking a breather but still in positive territory, over there are$51 a barrel. the market sees optimism that they could reach an agreement. but there is skepticism not only because the cartel has to stick to what it promised but the russians have to agree too. watch the prices closely. >> jackie deangelis. 8:00 a.m. at starbucks headquarters in seattle, 11:00 a.m. at wall street, and "squawk on the street" is live. ♪