good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin and melissa lee. joe is off today it's jobs friday emphases on friday the july employment report is out at 8:30 a.m. eastern time. we're looking for non-farm payrolls forecast to rise by 180,000. that compares to the 222,000 gains that we saw back in june that number was much stronger than anybody had anticipated the unemployment rate is expected to tick down to 4.3% in july compared to the 4.4% number we got last month. u.s. equity futures, things are in the green the dow is indicated to open up 33 points after closing at yet another record yesterday we're looking at eight days in a row of gains for the dow s&p futures are indicated up by 4 points this comes after the s&p saw its biggest decline in nearly a

month yesterday. that was a loss of just 5 1/2 points the nasdaq is looking like it's indicated up by 6 1/2 points nasdaq now is indicated -- or is slightly lower for the week. we'll see what happens look at what happened overnight in japan the nikkei was down by 0.3%. the hang seng was higher in europe this morning in early trading, right now things are relatively flat. the backs and cac each up 0.1% the ftse is really flat. wti crude this morning below the $49 level. 48.67 a barrel here are the big stories we're watching for you today

shares of yelp are surging after the online review site posted better than expected second quarter results and uped the full year outlook. yelp selling eat 24 to grubhub for 2$287 million grubhub earned 26 cents a share. down 3 cents from a year ago grubhub says active diners grew 25% in the second quarter. the co-founder and ceo, matt maloney, will be on "squawk box" later this morning japanese automakers, toyota and mazda are teaming up to build a $1.6 billion assembly plant in the united states this is all part of a new joint venture between the two companies. toyota will take a stake of about 5% in mazda. the location has not been picked yet, but it is expected to have capacity to build 300,000 cars a

year and employ 4,000 workers. the company is hoping to open the plant in 2021. toyota reporting a rise in quarterly net profit despite seeing a slip in operating income and raising its full year guidance rbs reporting a huge beat. net profits for the quarter tripled expectations coming in at 8$894 million despite the beat rbs is on track for a tenth straight year without an annual profit the bank's cfo saying that has to do in part with a fine u.s. regulators slapped on the company last month of toxic mortgage securities. >> ten years without a profit, wow. the investigation into russian election meddling is heating up kayla tausche has more.

>> reporter: the "wall street journal" is reporting that bob mueller is empanelling a grand jury, this is a tool that would allow him to subpoena documents and receive testimony under oath if there are persons of interest in the russian investigation it's a move that affords mueller and his team a more powerful tool to gather information and is a sign that it is po entertainment initi potentially intensifying ty cobb said he wasn't aware of this and said grand jury matters are tepically secret the white house favors anything that accelerates the conclusion of his work fairly the white house is committed to fully cooperating with mr. mueller. at a political rally in west virginia to mark the state's governor switching to the republican party last night, president trump invoked the investigation often calling it fake, a fabrication, and made up by democrats who have no message. >> most people know there were

no russians in our campaign. there never were we didn't win because of russia. we won because of you. that i can tell you. >> the president also talked about the need for tax reform, the need for congress to vote again on healthcare and the need for infrastructure he had been planning to make a speech today to unveil new trade actions against china, but when news of that plan broke earlier this week, chinese state media responded by saying the country would have no choice but to retaliate. the president's speech is postponed. sources close to the event tell cnbc there is no new date set. as the president begins today, what the white house says will be a working vacation, while the west wing undergoes two weeks of renovations to fix outdated hvac systems, carpet and furniture. that working vacation will go from today to august 20th. >> while you were just speaking, president trump tweeted a story we told you about a few minutes

ago toyota and mazda to build a new plant in the usa and create 4,000 new american jobs. a great investment in american fa manufacturing. we know the president is awake >> we don't know what state it will be in let the competition begin. this is something we have seen, he creates a competitive dynamic with states over incentives to woo these jobs >> another story, the "new york times" is reporting the kushner company said to be under investigation over a visa program, this is the eb 5 visa program that allows foreigners to pay $500,000, invest in a project and get a visa, a green card along the way to come into the united states. was do you know about this >> we don't know that much about this, except the fact that the kushner companies were promotors

of eb 5 visas for a long time. diana olick reported on this this was the visa program that jared kushner's sister was touting to investors in china as a reason to invest in the kushner companies and its real estate projects. this was several months ago. it was reported by the "washington post" it received scrutiny at the time because of president trump and his administration's harsh rhetoric and positioning on imdprags, mi, but for the kushner to tell companies if you can buy your way into these investments, you can buy your way into the company. he tried to distance himself from the company and from those statements and that program. clearly the connection is not lost on those investigating. >> the report suggests it's focused on jared's sister, not him. i didn't know to any extent if this will get related back to the white house or not >> so that would then seem like it was specifically tied to some

remarks she made during that presentation that first raised eyebrows and drew a lot of attention to the fact that not only had they promoted this program as an endry poi entry p real estate projects, but it was going on even after jared kushner was in the white house and they were using his likeness and that of the president to promote it which is not something you gently advise someone to do. >> kayla tausche, thank you. >> happy friday. the countdown to the july employment report is on. joining us to talk jobs is michelle girard and bruce kasman bruce, i'll start off with you you're most optimistic in terms of expectations today. >> we're looking for a 200,000 job gain, a touch higher i think the economy is carrying okay momentum moving into the third quarter. there's a negative on the job number, you're getting strong

job growth without strong product tefity growth. the point i want to make about the world now, the world is doing well the u.s. is growing, but the u.s. is not the life of the party. we're solid but not really the dynamic driving force of what's happening across a healthy global economy what is the driving force? >> first and foremost europe, both western and central europe with the ero being a key driver there. recoveries in a lot of weak em economies, which have been holding us back. japan is also a strong part of the world. the good news is china stopped slowing. china is not picking up here sh, but it stopped slowing >> all of that comes back and help us, which is why you see multi dmash nall nationals doin. >> and don't forget the dollar

what is really important, from a global point of view, it's good that the u.s. is not life of the party. the u.s. is most advanced, it has tight labor markets, one risk we have over the next few years, is that prompts more aggressive fed action, it would not only hurt the u.s. but spill over to global financial markets. >> we have been talking about this since yesterday the global story is really the thing i think to be talking about in terms of the fact that the u.s. is -- just as you say, was sort of plugging along at a solid growth pace for this late in the cycle what's really changed is that the global economy has come on when you think about manufacturing that you were just talking about, the strength of the ism nonmanufacturing numbers, suggesting growth -- the ism numbers for the manufacturing sector out this week, the level is consistent with 4% gdp growth which we're not getting, but a reflection of the impact of the improving global back drop, softer dollar,

the dollar is not as much of a headwind as it has been. i think that's the thing that is changing so much when you think about what could help to keep this u.s. economy going. so many people are always longing what will trip us up it's so late in the cycle. the truth is that the global back drop is a newer factor at this stage to help keep us going. this is sort of the perfect back drop for stock investors looking at this environment, you have an environment where economic growth in the united states is pretty good. but not hot enough to prompt the fed to do anything crazy so we have this goldilocks do you think the fed could be prompted to move by anything you so he out on the horizon >> i think the fed will continually gradually increase interest rates i have a forecast for moving once a quarter through 2018. the markets don't have that priced in. people look at me like that's aggressive it's not it doesn't threaten the expansion. the only thing that would get

the fed to do more than that would be, i think, if the inflation figures obviously picked up. and sort of we talked about it, we've been saying this is the best of all worlds we're growing. not really seeing the inflation pressures. one disappointing thing is for as tight as the labor market is, somewhat surprisingly we're not seeing the wage growth that you would be expecting >> yet that could be a big yet. bruce, there's a story out saying, look, jobs are the hardest to fill since the year 2000 you have a real squeeze and people have a hard time finding talent >> no doubt that we're not seeing the wage inflation we would like to see or normally see with the unemployment rate this low but we're also not getting the product ivity performance. from the company point of view, what's been interesting about the last year, we have a rebound of profits, a pick up in top line growth. margins are not big driver here. as we go forward, you have a

risk that labor markets tightening will put an upward pressure on wages and become a negative factor. you should always look at wages in relation to productivity. in that space we're not looking far outside the lines of what the nornls anorms are. >> companies don't want to pay for workers in a low-inflation environment where it's difficult for companies to pass higher costs through. >> but if you have to fill the johns, y jobs, you have to fill the jobs. >> they have not yet been willing to pay more to attract the workers. they always keep saying your worker is out there. he's just working for another company. in many cases, and companies at this point, i think it ties into the low productivity story and not paying up to induce them to work for them. >> the part of the picture which i think the market has gotten wrong over the last few months, not the idea that inflation is

low, but that we will a sustained move down in underlying inflation over the last few months. you look at the numbers, yes, the core numbers have dipped down you look at the broader picture, the dollar, import prices, business surveys, none of those things have moved down what we'll find in the next six months is not again that we have an inflation problem, but also that we didn't really have a sustained step down in u.s. underlying inflation in the first half of 2017 the market will need to react to that it's consistent with what michelle is saying, that the fed has work to do here. >> in terms of the trend for average hourly earnings, do we see is a break sounds like we could have a break of that in the near future >> i would say somewhere between 4.4 and zero >> well -- >> i'm not sure i wanted to forecast a time frame. >> i hope that we will i do agree that i think bruce is right, the markets put a lot on this deceleration and i flagnfln

questioning whether the fed would move again i think against this back drop the fed has to be as skeptical as we are that this is a sustained move down towards lower levels that create the concerns over disinflationary trends that we saw at different times of the cycle i agree, i'm skeptical about the fact that the inflation numbers are moving sustainably lower i think the market at some point in the second half of this year will come to a recognition that that -- >> and then the fed will have to act more aggressively. >> just not aggressive the markets think once a quarter is aggressive -- >> that will be where stocks head based on that >> thank you two healthcare companies out with earnings. both of them beating estimates,

both of them raising full-year forecasts. cigna earning $2.91 a share for the second quarter, well above what the street was expecting of $2.48. also managed care system well care health reporting a profit of $2.52 a share, compared to the estimate of $2.24. both stocks are trading higher coming up, we have more on the shakeup at uber. the latest on the hunt for a new ceo next and a programming note, on tuesday at 11:30 a.m., wilfred frost will talk to jamie dimon "squawk box" returns in a moment most etfs only track a benchmark. flexshares etfs are built around the way investors think.

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counter terrorism. our goal is to put our collective strengths together to tackle terrorism and extremism if you missed this conversation, ambassador ginsburg said they spent fivedays posting some videos to see if they were taken down, and none of them did goi google said in june they would be more aggressive ambassador ginsburg said he will check in with us again soon. more trouble for uber. the "wall street journal" reporting that the firm knowingly rented defective cars to drivers in singapore. internal documents show the singapore unit bought more than 1,000 recalled honda suvs. the journal says management was aware of the recall. in a statement uber acknowledged it could have done more but declined to say what managers knew uber says it has fixed the problem and has hired experts to respond to any safety recall issues

re/code reporting that former uber ceo travis kalanick has hired a firm to improve its tarnished image. kalanick is paying the reputation management service on his own dime uber is not covering his personal pr needs. that's a lead-in to all of this. the clock has been ticking on uber's ceo search. the company's head of hr told employees it would pick a new chief to replace kalanick by labor day. joining us now is the business editor from axios. what do you think will happen here >> i think the labor day thing is interesting it wasn't we would just be picking somebody by labor day, but they would be in their chair by labor day i don't think they will pull it off by labor day unless they pick an internal candidate

you have maybe the most dysfunctional board of directors since twitter. there's factions that don't speak to one another >> factions on the board that don't speak to each other? >> factions on the board that don't speak to each other. travis needs to fix his image with folks like us and outside, but he needs to fix his image with the board >> there's only eight voting members. how can you have factions that don't talk to each other >> travis and arianna huffington on one side, and mostly everybody else on the other side you had graves and camp who were loyal to travis, they've flipped. >> if they flip back, what is the -- >> he can essentially control the board. >> what is the thought that he will be an active player in the future of the company, not necessarily as the ceo but as chairman or non-executive

chairman, call him a partner of the next ceo >> he has told everybody who he talks to he's coming back. he will steve jobs it, ignoring the fact that steve jobs was fired, took a long time to form another company, came back to save it. he is actively involved. he's on the ceo search committee. he wasn't exactly fired, he was asked to resign. rarely do you have that person involved in the ceo search committee. he asks candidates how will i be involved >> in terms of him being involved in the ceo search, is he blocking everybody coming along or is he looking for somebody he thinks he can work with >> he is looking for somebody he thinks he can work with. but the question how do i, travis, work into your plans scares a lot of people >> it's like how do you deal with it when somebody owns such a large portion of the shares. which is why meg whitman was an interesting choice because she not only had ceo bona fides but had been silicon valley, i think was comfortable enough in her own skin she could have looked at travis and said you're not part of my plans.

>> that's the question is your expectation that we'll be seeing them hire a ceo with a name brand and reputation who is likely to say to themselves, you know what? i'm coming here, i need to started with a clean slate i can't be involved in the past. by the way, historically if you have -- to the degree you think you have a troubling company, you aulglways want to start blan everybody that was there before. if the goal is to partner with travis, which may be valuable given everything he knows about the company and the experience he has, that's a different story. >> right you're looking for the unicorn, the dream candidate who can do both the institutional knowledge is important. this is not just a ceo spot open, there's no cfo, no coo the new ceo has to fill those roles. >> even if you're the person who wants to come in and say i will start with a clean slate, how can you get guarantees of that when the board is split?

>> there's the so-called softbank deal or another investor deal which could recap the board entirely >> is your sense that there are lots of candidates who have taken themselves out of running because of all of this or a lot of candidates have gone through the process and the board and the divisions that you've been talking about, that they've been taken out of the process by them >> i think it's more the latter. you sit there for the interview, both sides realize this is not working. it's not an official job application where you apply, y you're no, no, you're not. >> there's the report that fidelity declined to change the valuation since all of this happened with travis kalanick what are investors saying? >> fidelity when they change the valuation on private companies, their valuation committee doesn't usually have internal financial documents.

all indications are that the business is fine >> we keep talking about the soap oprah -- >> doing fine but burning through cash >> the trajectory is the way you want for a private unprofitabley about the new safe leasing, the stock would be down further. >> because we don't know the films, we're not getting q1 and q2, if the q numbers were good, this is a company running well without a ceo. >> self-driving. >> are you talking 60 billion, 50 billion >> the talk about an outside investor coming in is at a discount of 70 >> how much equity is being talked about to give whoever succeeds travis? that's a big part of this. the expectation within 12 to 18 months the company is going public >> the answer i've been given is quantifiable huge. that's part of the selling point. if you bring in a fortune 500

ceo who is welcome well compens, the upside for uber is huge. >> is there fines, lawsuits, criminality? >> criminality for anthony lewandowski, and there coulding crimin could be criminal issues for travis, we don't know. >> is lyft benefiting in a meaningful way or are we just talking about. >> they're benefiting. >> they're benefiting when it comes to investors or consumers? >> both. >> dan primack, thank you. when we come back, sir martin sorrell took a $30 million pay cut last year but he still ranked as the highest paid

executive in the ftse 2016 he will join us to talk about the advertising business and what he sees happening around the globe. let's look at yesterday's s&p 500 winners and losers (baby crying)

(slow jazz music) ♪ fly me to the moon ♪ and let me play (bell ring) ♪ welcome back you're watching "squawk box" live from the nasdaq market site

in times square. good morning good friday. take a look at u.s. equity futures at this hour it has been a heck of a week dow jones will open higher it looks like, 41 points higher nasdaq looking to open up higher as well. s&p 500 looking to open up about 4.5 points higher. sfwlo sto viacom is beating forecast crediting a strong jump in sales to streaming providers like netflix. the stock is down after the owner of mtv, comedy central and paramount pictures said sale also likely dip in the low single digits this quarter. shares of weight watchers are sharply higher the company reported earnings of 67 cents per share revenue beat subscribers rose over 20% year over year. look at the stock's performance.

a lot of people, i guess, going on a diet. >> you talk about the swings in the stock. it is much more erratic on a short-term basis than it looks when you look at some of these things 14% up >> yo-yo, like people yo-yo on their weight >> since oprah became an investor in this, that's what happened >> if you're on weight watchers, you probably -- this stock is not for you. maybe this is the problem. shake shack sales fell 2% last quarter. the company blamed rainy weather, especially on the east coast. as a result shake shack expects a 2% to 3% decrease in comps >> blame the weather there's twice as many rainy days in the northeast this year as opposed to the same period a year ago >> melissa has a perfect solution -- >> buy awnings, put them outside your locations, people continue get wet while they stand in line i don't see why this is such a

huge conundrum for the company figure it out. president trump just tweeting consumer confidence at a 16-year high, for good reason. much more regulation busting to come working hard on tax cuts and reform in recent days the president has tweeted a lot about the stock market and the economy perhaps really sort of highlighting one of the good things going on in the administration for sure. let's talk about the advertising industry it's adapting to a new world order. algorithms are stepping in for the new don drapers. let's bring in sir martin sorrell. >> am i don draper or an algorithm? >> the futuristic don draper the f >> the future has changed. i think the issue is not that. if you look at our media investments, biggest media investment makers in google, third biggest is facebook.

facebook probably becoming the second biggest this year >> what's the second biggest >> murdoch nexus. that's tended to be flat to up, google continues to grow strongly facebook, despite all of the issues it faces, whether it's on brand safety, consumer brand safety, political brand safety, fake news, fraud, vieweribility, all those issues, they are up quite strongly to the extend that some people in the white house are talking about being a utility and should be regulated like a utility. >> why do advertisers wanted facebook and google -- what do they see there you raised the other issues. things like transparency, whether you know it's happening. >> it's a number of viewers. i was in china for two weeks i saw 31 local companies for two weeks. blocked out my schedule. we did it a couple years ago

and you see -- the chinese economy probably in terms of internet effect is probably the most significantly affected of any of the world people point to the uk and say that's the most significant internet e-commerce committee, wrong. i was in shenzhen, 50,000 people concentrated in that campus. i was on it three years ago, i think the revenues were 35 billion. it's now 75 billion. that's without access to the u.s. market which is 22% of their world market the technological leap that china has made from analog to smartphone is extraordinary. we will to go through several iterations in between. we have legacy infrastructure that prevents the changes rapid. coming up to the initial question, i don't think the issue is the change to technology, algorithms and don draper the big question is where is growth coming from you know we were down in sun

valley, a number of people pointed to the fact you look at the sp &p 500, where is growth coming from? tech and healthcare. you had a couple healthcare companies this morning beating estimates. beyond that, in package goods very little. some of the most noted hedge fund managers. >> where are those companies advertising around the world if the growth is coming from emerging markets, and ad dollars allocated to facebook and google and they are not in places like chin nafrmt. china. >> growth is throw 3%, 4%. very little inflation, very little pricing power most people are beating estimates, particularly in package goods and autos by cutting costs, not growing the top line that's the dichotomy, focus on the short-term that i think std big issue. not the switch to technology

post 2,000 we have been focusing on google, facebook, twitter, the rise of snap we're all focused on that. but this growth trap where the new normal is slow growth. >> but the growth trap that you talk about, we had two economists on this morning talking about the jobs numbers that we're expecting, how the u.s. economy is headed they say the u.s. economy is still trickling along, still doing well, chugging along but the real story has been growth around the world. >> it's improved, but the bricks and the jim o'neill thesis which was made popular a few years ago, the gap between the bricks and the next 11 has gotten much less you look at brazil and the issues it faces, russia with the sanctions, india is the only shining star china, we're waiting to see what president xi does at the party congress i think they're deciding what

will happen at the party congress that's a critical issue. we're waiting to see how that happens. >> i want to talk about platforms. who do you trust now do you trust facebook? do you trust google? >> you say me. >> yeah, you >> i do. i think they made -- they're making very significant attempts just a few minutes ago you saw what u tryoutube was saying >> we saw the statement. >> they are doing it, andrew they are torn, the more they say about what they'll do, the more antsy people get there's a question about privacy versus safety. >> we had somebody who said we tested it ourselves, we put up some extremist videos, and none of them were taken down. >> i imagine your ads are running against those videos >> to be fair to them the aactual actual amount of revenue is

small. it's one journalist -- >> that's what i'm saying. if one -- if one of your clients has an ad next to one extremist video, that's one too many, right? >> absolutely right. so what you have to do is to be as vigilant as you possibly can. can you be 100% certain? the answer is no can you do everything in your power to make sure that mistakes don't happen you can try that with traditional media -- one thing going on here, traditional media are using this to make their point. and there's a big, as you well know, there's a big discussion going on between the newspapers and magazines in particular and google and facebook about the appropriate return they get for facebook and google using their editorial content in the way they do. this will run and run until -- this is not like fake news with us questioning it. >> no. look at it from google and facebook's point of view

they should be very responsive to this issue. when people in the white house start to talk about utilities, regulating utilities -- >> that's a game changer >> right the other thing is amazon is making big roads into sectors. i'm sure on your program you're looking at falls in market cap, the beauty segment >> whole foods is a name that brings -- >> that brought home to people the rpuptive interruptiointerrun >> snap or twitter, which do you like better? >> snap still. >> because >> between the two i like snap >> because it's more effective as an advertising tool or potential? >> it's potentially more competitive as the third force >> would you be long snap or short snap >> snap has come back very

substantial substantially, almost half of what it was. so, the answer is i would be longer snap. our spending on snap will double this year. but it's at low levels, 200 million versus 6 billion, or 2 billion for facebook you're talking about a flea on the elephant's backside. >> sir martin, never enough time >> thank you. a major food chain is testing a rebrand. and it is jobs friday. we're counting down to 8:30 a.m. eastern time, we'll bring you the july unemployment report

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welcome back to "squawk box. time for the executive edge. dunkin' thinking about dropping the doe nnuts part of the name. a new store will simply be called dunkin' the company will try the one name at several other stores a broader change may not happen until next year. given the success of the weight watchers stock, maybe you don't want the donut park. >> coffee is a big part. sand witch sandwiches but you're dunking is in something. what are you dunking it in >> coffee. >> i get your point. check this out a boeing 787 dreamliner traced an outline of its over the united states using tracking software. the aircraft was on an 18-hour endurance test flight covering

22 states with the wings stretching from texas to michigan the tip of the tail touches alabama, the nose is looming over western wyoming this is one flight i'm glad i wasn't on. coming up, it is jobs friday before we get the government numbers at 8:30, we will get a read on hiring from a staffing firm, and a quick check of what's happening in european markets right now. we heard from sir martin, it is a global world a lot of our growth is coming from what's going on over there. green arrows everywhere. back in a moment stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders

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although summer isn't over, employers are already seeing their manufacturing plants for the holiday season joining us for employment staffing trends to watch senior vice president of adepot staff good morning >> good morning. >> we're already thinking about this now we've got four months to go. five months. >> i know. we are it's funny, it's only august, but school's back in session in parts of the midwest, and employers are getting ready to hire >> what are you looking at >> so, we're looking at increased demand for seasonal

workers this year. it's an exciting story so, most of my clients are forecasting about a 10% increase >> and where are you looking for most of that to come from? >> a lot of it comes from the midwest. we're definitely looking at areas like louisville, memphis, chicago, dallas, even arizona. >> what kind of jobs >> warehouse, statistics, e-commerce it's what it's all about. >> and what kind of wages? >> we're starting to see a huge uptick in wages. every one of my clients i'm talking to today is seriously evaluating their pay raise so we definitely anticipate some spikes we're seeing from $12 to $17 an hour >> are you a believer that in this day and age where we talk about retail dying that actually there is more jobs being created by the fulfillment centers and third party resellers that are not counted by the bls >> i absolutely do believe that what's going on in the warehouse sector, especially due to e-commerce, is offsetting a lot

of the job loss in retail. a lot of folks don't think about it, but some of the things that were traditionally done in a store are now just being done in a warehouse. gift wrapping, for example >> and when you think about sort of where this -- where this all goes, is there any chance, you said like there would be a 10% pop, these are all seasonal workers. do any of these guys get to keep their jobs or stay on? >> absolutely. a lot of the opportunities are set to hire and as much as e-commerce continues to expand, a lot of my clients are tiring full time workers as well. >> how bad is it in the department stores? we're just talking about the warehouse jobs replacing the traditional seasonal jobs in department stores. are you see thag right now >> we are seeing a continued uptick in the seasonal work. and in warehouses specifically i think that a lot of the retail workers that historically were working in a mall or in a retail setting are getting used to the demands of a warehouse, and walking the floor -- >> right but in terms of the

requests that you get, are you -- do you feel like you're fielding fewer requests from the traditional bricks and mortars -- >> oh, yes >> okay you are. so you do see that in what you're doing >> absolutely. >> okay. amy we're going to leave the conversation there we appreciate it and, good news >> thanks. thanks, have a great day >> you bet >> all right stocks to watch this morning, gopro reported a stronger than expected loss in the second quarter the company saying it generated most of its revenues outside the u.s. the sales of higher priced cameras rising 13% gopro founder and ceo nick woodman will be on "squawk alley. blizzard reporting better than second quarter results but guidance is below wall street estimates. and kraft heinz deli meets says cost cuts offset weak demand in north america. >> and the white house has asked apple, google and other tech giants to upgrade the federal

government on a private call with major tech companies yesterday top advisers to the president announced the white house would be forming teams to reduce regulation, get agencies to embrace cloud computing. they also want to make more government data available for private sector use the report is still in its early stages >> meantime, justin bieber is breaking into the fashion business the pop star's teaming up with hanes and his stylist carla wells to bring his favorite classic white t-shirt to the masses the line includes seven white tees for both men and women, including justin's favorite super long style, all retailing for about $30 apiece >> super long style? to cover your baggy jeans that aren't pulled up all the way >> there's only so many varieties of a white t-shirt out there. the summer heat is nothing on this ice cream japanese scientists have found an organic way to make ice cream that doesn't melt. and it was completely by

accident researchers were experimenting with a liquid extracted from strawberries that have properties that make it difficult for water to separate leading to the nonmelting ice cream. it doesn't melt. all the time in the world. >> i like the melty part i really do. >> me, too >> it's like the -- i don't know >> we're just old-fashioned around here. when we come back, former fed chairman alan greenspan is going to be our guest at 7:30. we'll get his take on jobs, the trump economy and much more. plus the countdown is on to the july jobs report we're going to be bringing you the numbers and instant analysis at 8:30 a.m. eastern time. that's just about an hour and a half from now. stick around, "squawk box" will be right back.

good morning, everybody. the rally rolls on the dow posting seven straight record closes and this morning stocks are in the green once again. jobs in america, we are counting down to today's big event. the july employment report we're going to tell you what to expect plus a "squawk box" newsmaker, former fed chair alan greenspan will be here with his market warnings. hmm. stick around it's friday, august the 4th, 2017 and the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." good morning welcome back to "squawk box" right here on nbc live at the nasdaq marketsite in times square i'm andrew ross sorkin along with becky quick and melissa lee who is hanging out with us today. joe kernen is off.

our guest host for the hour is joe terranova, managing director, and cnbc contributor we're going to hear a lot from him in just a bit. in the meantime it is jobs friday we're going to get into the employment data in just about 90 minutes from now here's what forecasters expect nonfarm payrolls to rise by 180,000. and unemployment is expected to tick down to 4.3%. in the meantime, based on at least those expectations, of course, the world can change very quickly but right now the dow looks like it would open even higher about 46 points. higher the nasdaq would open higher as well, a little over six points, and the s&p 500 would open close to five points higher >> today's top stories two health insurers are out with upbeat earnings. sizable beats on the top and bottom line for cigna and wellcare health. both have raised full year forecast as membership rolls increase those stocks up about a percent.

toyota and mazda teaming up to build a $1.6 billion assembly plant in the united states as part of the alliance the two japanese automakers would take small stakes in each other president donald trump tweeted about the agreement earlier this morning saying it would create 4,000 jobs and will be a great investment in the u.s. -- in u.s. manufacturing >> >> small business sentiment on hiring is at a nearly 18-year high according to a report from the national federation of independent business small business owners who plan to add jobs in july exceeded those who planned to cut workers by 19 percentage points. that's up four points from june and is the strongest reading since december of 1999 some stocks to watch today, check out shares of yelp the company announcing that it will sell its e-24 food ordering business to grubhub for $287 million. that's more than double what yelp paid for that business back in 2015. the deal will help allow yelp's users to order food online directly from grubhub. yelp also announcing second quarter earnings and revenue that beat analyst expectations

and the company is launching a $200 million share buyback add it all up it's gains of more than 20% this morning for shares of yelp. grubhub shares are down by 6.6%. as for grubhub, the company matched estimates with earnings of 26 cents a share down three cents from a year ago. despite that, grubhub says active diners rose 25% in the second quarter we're going to be talking to the ceo matt la loney. other stocks to watch, viacom trading lower in the premarket. results beat forecasts handily the company credits a strong jump in sales to pay tv affiliates and streaming providers like netflix but here's the problem, the stock is down big after the owner of mtv, comedy central said those sales will likely dip in the low single digits this quarter. that's what's weighing on that stock. andatesy swinging to a profit in its latest quarter the marketplace for handmade goods was able to cut some costs which helped boltster its

results. president trump talked up the wall street rally at his own rally last night in west virginia >> they don't talk about the all-time high stoernl. they don't talk about reforms to the v.a. or about manufacturing jobs we're bringing back to america by the hundreds of thousands >> the president also told the crowd of supporters that democrats are harping on russia because they have, quote, no agenda or vision the dow coming off yet another record close, an eighth straight positive sessions in a row. joining us right now is chief economist at mizuho securities usa. and jim paulsen who is chief investment strategist at the leuthold group and joe terranova is here, he's

a cnbc cribiter. guys, let's start all of this with you, and just tell us where you think the markets are expected things, what the numbers today might mean and just what kind of trends you're seeing when it comes to stocks right now? >> well, becky, i think the market's got awful good gig going where we've got recovery broadened out to all corners of the globe. for the first time everyone's participating and broadened out the main street in america where middle class is participating. we've got a full employment economy, rising real wages, we restarted the corporate earnings cycle. we've got strong confidence among business and consumers and the kick is we can do all of this without aggravating inflation and interest rates. if that's going to continue i think the bull market could continue forever i think ultimately bull market does continue until we aggravate some inflation and until we have

to raise beyond yields and interest rates some more i think that's going to happen eventually but doesn't look like it's going to happen any time soon so i think the bull probably continues through the end of this year. which gets to the jobs numbers today. i think it's less about jobs and it's more about that wage number >> hmm >> if that is going to start showing some life, that will be the first steps towards concern about the equity being highly valued as it is, since we have to move business trades up >> because it would spur the fed to raise interest rates faster than the market is expecting >> right and i don't know if that's going to happen today. but wages have been a no-show. but i do think that there's still a number of indicators here suggesting that there's increasing labor market tightness and i still think over the next year, the wage inflation rate is going to reach 3% and start to change wall street >> so how about you, is that a concern for you? if we do start to see something

that would bring the fed off the sidelines faster than expected >> my first concern is that the president is not watching enough cnbc because he said no one's talking about the dow at all-time highs we're talking about it every day. here we are. we're having a conversation once again. i think the interesting dynamic, which i know you guys are talking a lot about at 5:00, is the relationship of the u.s. dollar and the expectation that nobody had coming in to this year that the u.s. dollar would be down 9% now that's been tremendously beneficial to obviously multinationals but we're also seeing the lack of a correlation where you're getting a lower dollar, and you're not getting the inflation that you would expect. nor are you seeing commodity prices rise. so again i heard you speak before about this goldilocks scenario that part of the equation, and i think it's incredibly important what the trend for the remainder of the year is going to be in that u.s. dollar >> okay, so the dollar itself coming into that steve, let's have you give us your expectations, first of all,

for where you see that wage growth coming. second of all how you see the fed reacting what's your assessment because the street is not anticipating very many hikes in the near future. >> i think the street is probably overestimating what will actually happen it's a world of excess supply of commodities, a world of excess supply of savings. in addition to that one of the reasons why we've been having a global pickup in growth is because the dollar appreciated so much. and the relationship between a stronger dollar and weaker u.s. growth is a lot smaller than the relationship between a stronger dollar, and stronger global growth and as the dollar starts to lose some of its upside momentum, which it has done at very, very critical levels which we're sitting right on top of these days, we could have a continued drop down, probably about 5% to 10% -- >> what's that level >> it's just under -- between 92 and 93 on vxy. and it's about 92.6. and the net result is if it

drops through that level we could have another sharp depreciation, which will then put us in a position where global growth will start to slide. and then that will take a lot of the pressure off the global inflation story. put a lot of pressure off a lot of the other markets that are taking place you look back and say we're ultimately going to be invested, still be invested somewhat in new york, in the u.s., and in addition to that the global excess supply of savings is still greater than yield and even though we have very, very aggressive treasury rates when you look out there in other areas, there's still some attractive yields. we did some very, very large telecon related offerings last week, all of which were terribly oversubscribed and bought out by investors rather quickly, they were good yields, attractive yields, good things to put away, and there's a lot of appetite for that -- >> the rate we saw -- huge inflows in the debt, etf et cetera in terms of the weakening dollar, how much does the fed take a look at that?

does that factor in? >> only to the extent that it translates into inflation. >> okay >> the growth economy we're stuck, we're in this 2% to 2.5% range. the fed for some reason seems to think trend growth is around 1.5% i disagree completely. i think trend growth is closer to 2.25% we're basically running a tren . i think the labor market data is somewhat skewed because of the way the unemployment rate is calculated but i think when you get through the data and you look at it, what you've got is an economy that's running without trend, it's not creating inflation, it's a low interest rate environment. it's a global excess of savings. it's been running flout the year and it hasn't changed and it's not going too. >> steven, i just wanted to ask about the euro rising. and how the ecb manages that because you talked to many investment advisers, the popular premise right now is be in europe over the united states. >> well, i think you're right. draghi has done a very, very

good job at manipulating everything, both the currency and banking system and his yield. and i think the extent to which they are sensitive to the appreciating euro is going to be a critical factor as to what happens. but don't discount the yen, as well doj is going completely in the opposite direction boj has to try to continue to keep the economy going at the end we've got a stronger economy than expected but they can't generate inflation again, they're nowhere near the trend of economic growth is it a big gap? >> okay, jim, i know that you have some concerns about what could stop this rally. but, you also said that it may not happen today it could last for awhile would it surprise you if this rally continues through the rest of the year? >> no, it wouldn't, becky. i still think that -- i still think the 2600 is the possibility this year. ultimately, i think we're going to need a 3% treasury to really,

you know, take the steam out of this bull run. and, we're a ways from that. >> -- keeps falling, down to 2.2% >> i agree i think there is a big difference with the dollar that we've never had in this recovery we didn't have wage inflation when the unemployment rate was north of 6%, because there was too much slack then finally when we broke below 6% in late 2014, we haven't had a sense, because the dollar took off. we have a 20% rise in the dollar precisely when we hit full employment that's different now we are at full employment. we're still growing. and now, for the first time at full employment we've got a period of dollar weakness, and at steve's point i agree with him, i think it's going to break even lower, and we haven't had the situation where you import more growth to the united states precisely when we're at full employment i think we're going to aggravate wage inflation, and we're going to have to reset interest rates.

i don't know if it's going to happen this year but i think it might be an issue for 2018 >> all right jim, thank you very much steve, thank you of course, joe's going to be with us for the rest of the hour >> okay. still ahead, one of president trump's tweets had everyone talking. the president posting, quote, our relationship with russia is at an all-time and very dangerous low. former deputy assistant secretary of defense for russia evelyn park is going to weigh in next and then later former fed chair alan greenspan is going to join us he says he's not worried about the stock market it's bonds that are keeping him up at night. he will explain at 7:30 eastern time right here on "squawk." you're watching cnbc i think that she's a very nice girl... you never got the brakes looked at? oh yeah. no. at cognizant, we're helping today's leading manufacturers make things that think and do automatically.

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war. joining us right now is former deputy assistant secretary of defense for russia, ukraine and eurasia ellen park, nbc news national security analyst. good morning to you. >> good morning. thank you for having me. >> so, where's this all going to go >> well -- >> what does this mean >> i think what it means is, first of all, congress has spoken and congress is an extension of the american people. >> right >> so the american people have said we don't trust this president to handle the russia policy on his own. congress has a veto now when it comes to sanctions the sanctions can be tightened and i think that's really important for your viewers to know it's not just the existing sanctions that they've codified. congress has hinted that they are looking at tightening this even further they've asked for reports -- >> explain this. so we have what congress can do. >> right >> what can the president do independent of congress? that to me is sort of the arbitrage here is sort of what's the distinction in the middle? >> first of all there's russia policy we don't know what the policy is towards russia we have a president who doubts

somehow that the kremlin is our adversary, when the kremlin has decided that it is our adversary. but the rest of his government seems to understand that so the cabinet seems to understand the i.t. folks, so the president needs to be convinced to back some kind of unified policy vis-a-vis russia that makes sense, that's in the american interests. >> right >> we're not there yet congress has spoken clearly that russia's our adversary, we need to stand firm with russia so that we can get russia to cooperate better with us we don't want a could be frontation with russia but the way to deal with this kremlin is to be firm it's not to talk billion cooperation while you're doing nothing. >> you said you think that there's a distinction between inside the administration. which is to say you think the president is on one side, and there are many people working for him that are on another? >> i believe that that's the case the people who are the professionals, first of all, working in the buildings, the pentagon and state department and the white house, many of them are people i worked with before they understand very clearly what the threat is they believe our intelligence

professionals. why? because those people have access to very good information on russia second, the cabinet heads, and the chairman of the joint chiefs, they've spoken on the record with regard to russia now secretary tillerson, he might be the one that's a little bit, he's the most squishiest because he's talk about wanting to talk with russia. but that's his role as diplomat. as long as he's backed up by some leverage, again by a stiff fine, he might be able to get us further than we've gotten in the past >> what do you think putin is thinking right now >> well, putin appears to be telegraphing that he thinks our president is weak through his prime minister because you may have seen the tweet world, in the twitter sphere we saw prime minister medvedev saying, this president is weak. he's impotent i think was the word he used, actually, and so that's a challenge to president trump from the kremlin, saying, hey, you want to cooperate show us that you can do it because right now, they're characterizing the president as having his hands tied by the

congress >> why does the market not care about this >> i think the market would ultimately care most about north korea. and i think when you look at the geopolitical concerns we have right now, that's where the conversations are. it's less about the russians, and it's interesting to me whether the russians would be cooperative in any effort against north korea. but, clearly, the markets, and investment managers, care about north korea and they believe thatis a real threat that this president has to deal with >> i think that's in part because the president has amped up the north korea threat. i worked also on north korea for a long time in 2008. i went to pyongyang when we were negotiating with them about getting rid of the nuclear program. we've been there before. we need to tone down the rhetoric because i think the market was less nervous if president trump wasn't running around trying to fear monger it. >> that's interesting. >> i'm not trying to downplay it >> but in terms of real risk, north korea -- how do you rank them how would you stack them >> i would stack russia as the

top challenge. >> really? >> the russians fried to interfere in our elections they want a weak democracy they are attacking us at the heart of what makes us american, what makes us strong what makes our economy strong is actually our political system, the trust that we have in our system the north korean situation is one where there could be miscalculation but only if north korea thinks that we are going to try to attempt regime change. >> i was suggesting that the conventional wisdom right now is it's the opposite. >> yes >> but look you're in a better seat than i'm in >> yeah. >> i'll listen to you. >> i think the washington conventional wisdom is that russia's the bigger threat however, i was in aspen where the joint -- the chairman of the joint chiefs, general dunford was asked this question and he said russia is the greater threat but right now the immediate urgent threat is north korea. mainly because they're on track, obviously, to have this icbm >> is that because russia's power lies in cyber prowesses? as we've seen potentially with the elections, the interference of the elections, it was all done without a sort of a direct

physical attack. whereas north korea is more of a, i don't want to say event but it's more of sort of an outer possibility in a range >> i think it's because we've seen the risk taking north korea did not try to take down our democracy by interfering in our elections and, the reality is that we know how to deal with north korea how to put that problem back in the box. you basically get them to agree to a freeze in exchange for some kind of inducements, or and accommodation of inducements and threats. with russia they have not only the cyber asymmetric means but they have conventional means they have a huge military. they are the only other nuclear peer that we have. so you can't compare militarily the russian federation with north korea. >> but, the threat of north korea, and its ability now that we realize they have >> right >> to strike the u.s >> we think they're more likely to use a nuclear on us than we think russia is. dealing with a sane and logical actor, even if you disagree with him, versus one that i don't

think anybody knows what he's going to do. >> i see the point there but i also don't think that the north korean leader is insane. i don't think he'll lob a nuke at us. first of all they don't yet have that capability. what we want to do is make sure that we -- >> you think he's a rational actor? >> yes -- >> so no, i know some people who say he's actually much more rational -- >> he's a rational actor i mean wouldn't you do what he's doing? if you know that the united states doesn't like your regime, the only guarantee that you have that the united states is not going to come in and change your regime is a nuclear weapon >> potentially it's a tactical, logical move but you look at everything else the guy has done from feeding his uncle to the dogs to wiping out his half brothers and things along the way. >> yeah, i know. i mean to us it looks kind of crazy. >> yeah. >> but it's all in maintaining power. so as long as he feels like he's relatively secure, that's why the -- >> the minute we cramp down and have china cut them off, the minute we do anything else, you know, that's where we -- i --

how do we pressure him without -- >> that's why you have to have dialogue you have to be firm but you also have to have dialogue so they understand what we want. and i think the chinese can also communicate much more effectively than we can with north korea, and as we say, okay, you're going to have more sanctions, better enforcement of the existing sanctions, and if you play nice and you freeze, then maybe we'll work with china, and maybe we can help them develop economically. >> evelyn, thank you very much >> thanks. >> when we come back why former fed chairman allan green fan is sounding the alarm he wl pln 70 stn. stk around:3eaer

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good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq marketsite in times square we've got some stories that are front and center this morning. including some breaking news >> we do have some breaking news adp coming out with a statement just now saying that bill ackman's firm seeking control of

adp, the company says. adp received a notice from square on august 1st that bill ackman has acquired 8% of the company. largely, they say, through derivatives. they say that mr. ackman requested that adp extend an august 10th deadline to nominate directors by 30 to 45 days and said that he plans to nominate five directors, including himself, to adp's ten member board, and also said that the company's ceo carlos rodriguez, should be replaced, which would put him in control of the company, with six of the ten directors. the company saying that it is, quote, open to constructive input from its shareholders, and it says that the board respects the right of shareholders to nominate directors however adp has clearlydefined board nomination board process and the deadline for director nominations has been public for nearly a year. then goes on to take a couple of

shots at bill ackman it said carlos rodriguez became ceo six years ago and the total shareholder return for the company was 202% they say that is many multiples of perishing's total shareholder return of 29%. >> they are right. >> so the gloves have come off this morning and the company saying that they have a strong and independent board and they continue to believe that it has a balance of independence and leadership. morgan stanley has now been advising the company, and we're going to watch as this balance continues, or just maybe perhaps has begun. >> so you take a look at that stock chart. news of his stake building in adp came out -- >> last week >> a couple weeks ago. the end of july. so we saw that big pop there on the right side of your screen. but this is not the first time ackman has gone at adp he's been investing in adp from '09 to '11 he was advocating for change back then. spinning off assets, rationalizing the balance sheet. so this is another sort of

return to the -- >> and i think a good one. fundamentally a lot of times you'll see bill ackman going after companies that appear to be very cheap and when you look at the charts are clearly sinking. this is the opposite this is a clearly a company that as you look at the stock performance has done incredibly well over the last five years. i laughed when you mentioned morgan stanley morgan stanley downgraded the stock the other day with $100 price on it. >> because of terrible earnings. >> but they missed on the fourth quarter. but i do think here you have to include in the conversation the tremendous amount of short interest >> i was just going to point that out >> in this stk >> in this stock and in this sector adp is now the third largest short in the data processing and outboard services sector behind visa and paypal and has the largest one month increase in short interest for that sector. >> yeah. >> so that may be part of what you're seeing. >> sure. you got to watch it. >> but the other thing to me

that's always fascinating about this is hearing a statement saying that bill ackman told the company that he beneficially owns 8% of the company largely in derivatives and so we're back to the situation of what the disclosures are, when shareholders know it, when you cross various thresholds, and how you can do it without actually owning the equities themselves >> yes we are back to that conversation once again but, andrew, the question is, within that conversation who is listening to it? >> right >> who is actually going to put place -- whether it be tighter regulations, firmer instructions i don't know necessarily if we're -- >> that you would have to tell and by the way we don't know when he did this he wouldn't have had to tell anybody beforehand >> right but as the security laws occurred, the constructive, there's nothing wrong with -- >> fair or unfair? meaning -- as the professional investor that you are, do you want to know

do you see a 5% threshold? a 3% threshold >> a beneficial ownership, right? >> right >> through derivatives >> that's what he's saying >> that's what they're saying. >> -- change in terms of disclosures. >> as an investment manager, what you want to know is what are the rules, and you want to know that others are playing by the rules. he's playing by the rules as they're currently constructed. they're going to change the rules, okay. >> you hear a month later that someone has a stake in this company it's great, but the stock may move but it's after the fact. you're looking in the rear view mirror >> right >> if it's an active campaign -- >> part of it is transparency for the public market, so that other investors understand what's going on. and part of it to some degree is to benefit on the company end, to know who actually owns them >> although a lot of companies know this stuff way before it's ever public because they have their own proxies that are trying to figure this stuff out all the time courtesy movements in stocks, most of them have figured it out

long before. >> a number of these agencies, but it's still somewhat of a guessing game. >> yes to a certain degree. >> we will continue to stay on this story this morning. lots to talk about >> yes, stocks up 3% premarket business roundtable launching a campaign for tax reform today rolling out national tv ads and dispatching ceos to talk about tax cuts across the country. and they're not alone. ylan mui joins us with the big money behind the tax battle. >> melissa, millions of dollars are going in to these campaigns, and they're putting pressure on lawmakers while they're back in their home districts during this august recess, they're trying to make sure that tax reform gets done the business roundtable today is launching radio spots, hitting members of congress and senators on key tax writing committees. they're also unveiling this national tv ad >> we have one of the highest tax rates in the world american companies are disappearing along with good paying jobs. we need a plan to make america competitive again.

>> there is a common theme to all these ads, casting tax reform as the key to faster economic growth. americans for prosperity and freedom partners, those are conservative groups affiliated with the koch brothers were out in indiana last night and they've got their eye on a democrat senator joe donnelly. they've also just announced vice president mike pence will be at their annual summit. there's $5 million coming from the american action network this month alone, and it's committed up to $20 million for their entire campaign. more than it spent on a health care fight however, the opposition is picking up steam, too. not one penny is the name of a new progressive coalition that came out to fight tax cuts for big companies and the wealthy. it's set a seven figure ad buy this month in eight republican congressional districts. so both sides are trying to get the grassroots motivated to provide that energy that will carry this fight forward in the fall back to you guys

>> all right ylan, thank you very much. ylan mui in washington, d.c. all right. let's talk a little bit about what we've been seeing in the markets. while the dow breaks past another milestone, former federal reserve chairman alan greenspan has a market warning not just for stocks this time. this time the maestro is predicting that the bond markets are in a bubble and once that bubble pops it will be bad news for everyone joining us right now with more is former federal reserve chairman alan greenspan. he is the president of greenspan associates and mr. chairman, thank you so much for being here. >> good morning. good morning, becky. >> good morning. tell us what concerns you when you look at the bond markets right now? >> well, if you go back to the time of alexander hamilton, long-term interest rates, government bond interest rates, have never been as low as they are today. and interest rates have no long-term trend.

we go back in to ancient times, and when we could get interest rates, it looks very much like what we have today so the current level of interest rates is abnormally low. and there's only one direction in which they can go and when they start it will be rather rapid. >> you predicting a timing on this people think back to irrational exuberance and get very worried. when you first talked about irrational exuberance with the stock market evaluations it took awhile before the market caught up to that and followed suit >> i have no time frame on the forecast i have a chart which goes back to 1800. and i can tell you that this particular period sticks out but we have no way of nothing in advance one of the actually will trigger. because remember in a bull market which is about to break, two weeks before the price

levels are below the ultimate peak meaning there were more bids than offers. so it looks stronger, just before it isn't stronger and so that anybody who thinks they're going to make forecasts which work all the time are in for a disastrous heading, if i might put it that way. >> fair point. they never ring a bell at the top. never know these things in advance. but, if you're somebody who's kind of reading the warning signs are there red flags along the way? things you might be watching for? >> well, what we do is we take the price earnings ratio, and invert it to look at an earnings price ratio. and you carry this relationship back what you find is that the price earnings ratios are largely elevated at the moment as the

consequence of real, long-term interest rates being abnormally low. we have, for example, you can define the equity -- or i should say the earnings price ratio as the sum of equity premium, real interest rates, inflation expectations, and a few other minor issues but it's an additive phenomenon, and you can see that the major change between, say 10, 15 years ago, and today, is the long-term real interest rates are down and that all has to do is to move up somewhat, and you get stock prices beginning to run into trouble >> okay. so that brings us to the tie to the stock market right now, do you think stock market valuations are fair, or overvalued or how would you judge them or is it simply you can't judge them without looking at treasury

prices >> well, look, equity premiums, which is the major component in the price-to-earnings ratio are about normal i mean, they're not particularly out of line. granted, equity premiums have gone down significantly, but they were abnormally high for a lot of time. that's not where the problem is. the problem shows up very vividly at real -- the real long-term interest rate component of earnings, price ratios is out of line. and when that goes back in to line, markets are changing i don't know when that's going to happen. but it's inevitable at some point. >> mr. chairman, this is joe terranova. you describe an environment where investment managers are clearly searching for yield. in that search for yield, we've created strategies over the last couple of years which are

clearly using passive indexing, and significant amount of etfs in portfolios. does that concern you at all where we are in the cycle, and describing the environment as you have this morning? >> no. because i've been around an awfully long time. you have various different ways of forecasting prices. there's only one -- there's only one strategy that i know of, which works all the time, and that is that stock prices will always rise more than any other prices, because the fear factor in prices is a human nature response, and people who want to sit through markets, in other words, buy and just hold should come out with the best records the trouble is, once the markets start down, people physically

are discomforted, and have to sit themselves back down to the sleeping point, as they used to call it. and if you can get around that, you'll do very well. so, aside from that strategy, i've heard one strategy after another, which is supposed to forecast the markets and they inevitably fail unless they are tied to human nature, i don't know what you get out of them. >> mr. chairman, many investors that i know that even look at the markets today, and say, perhaps just on the fundamentals themselves, things perhaps could be too high, but as long as interest rates are where they are, you have to ride the tiger is what they'll say. what would you be doing with interest rates right now >> what would i be doing with them the result -- you're asking my personal portfolio >> i'd ask both. i'd ask if you were -- if you

were at the fed, what you would be doing and as a citizen, shareholder, what you'd be doing. >> andrew, i obviously, as you know, at the fed for 18 1/2 years. paul volcker never once commented on federal reserve policy, and i will tell you, i thought that was very -- a very much appreciated that. my version of the volcker rule is you don't give advice to the people who come to you >> i don't know if you're going to tell us about your investment f.a.n.g. stocks mr. chairman but i do want to ask you about this notion of the bond bubble. some out there will take a look back at the markets and point to, you know, what you say is a bond bubble. the last bubble that we saw, and say that these were created effectively by the fed injecting massive amounts of liquidity into the system. at this point would you say the fed has the power to ease this

bond bubble off the ledge? or do you think it's more likely that the fed will do something that will cause this bond bubble to pop >> those are the types of questions i don't answer, because they are, in effect, commenting on current fed policy ask somebody else. >> i have a very different question one of the things that there's been a lot of speculation about is who should be the next fed chair. i won't ask you to speculate about names. but i will ask you this, in terms of temperament, in terms of disposition, in terms of the job itself, a lot of people look, obviously, at janet yellen you've heard names like gary cohn out there, and there was a quote just this week from the president saying, the president wasn't sure if someone like gary cohn would actually want a job like this, because he's a bit more of a dealmaker, perhaps, than somebody who wants to necessarily look in a very patient way at interest rates.

what do you think of the role itself >> fed chairman is fundamentally an economic forecastor all policy depends on what your forecast is. therefore the success of your policy really judged on what your economic capabilities are and so as far as i'm concerned, having a forecasting ceo of the fed is the most important characteristic of the job. and i might add, the ability to grit your teeth, as markets go against you, and the pressures, especial rly from the congress, become overwhelming. if you have those two functions well in hand, anybody who puts that pattern to me is fine

if you don't get that pattern, you're going to run for some troubles because you have to have technical forecasting ability, and you can't always rely on the terrific federal reserve model of the economy which is the best of those types of models. but models don't always work and you have to have your own judgment >> chairman reenspan, i just want to go back to the point and make sure i'm not misunderstanding people like you, people like warren buffett don't make calls on the market very often times they think things are either too high or too low and i just want to put a final point on this. the idea that you are saying now that you think the bond market is in a bubble that could burst, not claiming it's going to happen today, but you feel one direction for where this is headed, not to me sounds like an irrational exuberance type of statement.

am i fair in assessing it as such >> becky, perfectly fair do i go back and say -- what i was trying to say in the aei speech in 1986, i believe, the -- '86, whatever it was. at any rate, in any event, what i was trying to say is you never be quite sure when irrational exuberance arises. i was doing it as part of a much broader speech, and talking about the analysis of markets, and the like, and i wasn't trying to focus short-term but the press loved that term and i am sort of now questioning whether it was wise to put it in the speech, because that's the process which happens, and i

think the -- i said how will we know when the markets do that? i wasn't saying that it was going to happen right at that point. but, the tokyo market collapsed when i said it it's not it's a disturbing process because you have to be terribly careful with your words. so, would i have been surprised if the market had cracked at that point no, i would not have been. would i have been surprised if it didn't crack for quite awhile no, i wouldn't have been but, you can't control how the press handles things >> chairman greenspan i want to thank you so much for your time. we hope to see you again soon, and again we will keep track of your words and watch this and we appreciate your warning. thank you, sir coming up when we return, we've got much more on this morning's breaking news, bill ackman seeking control of adp. shares of that company spiking

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we want to thank joe terranova for sitting with us for the hour thank you, joe of course it is almost time here, just about 30 minutes to go to the release of the july jobs report. stay tuned we'll be right back. no splashing! wait so you got rid of verizon, just like that? uh-huh. i switched to t-mobile, kept my phone-everything on it- -oh, they even paid it off! wow! yeah. it's nice that every bad decision doesn't have to be permenant! ditch verizon. keep your phone. we'll even pay it off when you switch to america's best unlimited network.

break news, the july jobs report is just minutes away. our panel of experts is standing by for final predictions, and instant reaction plus we'll find out where the jobs are this month, and in demand gig that involves searching your dna. and later, delivery deal is helping yelp shares jump as much as 20% in early trading. it's selling its food ordering business to grubhub. the grubhub ceo will join us first on cnbc. the final hour of "squawk box" begins right now live from the most powerful city in the world, new york, this is "squawk box. everything is sort of singing and dancing right now. good morning, welcome to "squawk box" right here on cnbc. we are live at the nasdaq marketsite in times square on this friday jobs morning i'm andrew ross sorkin along with becky quick melissa lee has been hanging out

with us today. joe is off take a look at the futures ahead of those jobs numbers that will come in just about a half hour, and of course those numbers could turn in all sorts of directions but as of now, the dow looks like it would open up about 65 points higher. nasdaq would open about 9.5 points higher. and the s&p 500 would open just a little over six points we also have some news breaking just in the last half hour bill ackman's pershing square seeking control of adp on employment day, by the way, maybe it makes some sense. ackman also wants to see ceo carlos rodriguez replaced and leslie picker has been following the story. >> the good thing i have sources that get up early, andrew. >> that's good >> what's clear here is that ackman's first service, and first contacted adp on august 1st. >> right >> i'm told by sources that they met yesterday to discuss this whole idea of extending the nomination window to give him some time to get his five candidates together, and his ceo candidate together

one of those candidates, i should say, is himself >> right >> so the other four candidates. the company this morning put out a press release saying that's not going to work. our deadline has been public for a very long time their deadline is august 10th. we're not going to extend it you know, 0en a list-minute request. and it's going to go forward as planned. so, right now it's unclear i'm getting a no comment from pershing square at this point. it's unclear exactly what they're pushing for. whether other than ceo change. based on discussions yesterday, it seems like the pershing square is looking for just a complete board overhaul and believes that that would be a way to catalyze the stock price even further >> right you did see the comment that the company made about bill ackman's own returns. suggesting that the company's ceo, his total returns were 202% and knocking bill ackman saying that his returns, i believe, they were making the argument

that total shareholder return was 29%. a number i imagine he will take issue with but nonetheless. >> well, luckily for the market, his returns are public unlike other investors so we do have a weekly mark of what his returns are no, it's interesting i mean, as an activist, especially these days, going against the company that has performed well in the stock market you need to really provide the goods. you need to have a set plan in terms of what you want to accomplish with the five nominees in order to get them elected. but it will be really interesting to see how this plays out and if we hear from mr. ackman later today with what those plans might be >> leslie picker, thank you. among the other headlines we're following, yelp shares are skyrocketing this morning. the company announced it would sell its food ordering business to grubhub it's more than double what yelp paid for the deliverance in 2015 we'll talk about the deal at 8:50 eastern time. grubhub ceo will join us

toyota and mazda are teaming up to build an assembly plant here in the u.s. this is part of a new joint venture between the two companies that will include toyota taking a stake of about 5% in mazda. the location for the factory hasn't yet been determined in political news the justice department is turning up the heat on the russia investigation. robert mueller has reportedly assembled a grand jury in washington, d.c. to investigate russia's role in the 2016 election it's a signal the investigation could stretch on for months, if not longer the president's new white house lawyer says he quote favors anything that accelerates conclusion of mueller's work, and that the white house is committed to fully cooperating we are counting down to the morning jobs report. that's coming up in oh, 25 minutes or so. and as we always, we are joined by our esteemed panel. former council of economic advisers and chairman university of chicago's booth school of business professor austan goolsbee reinhart, chief economist for standish phil rogers, former labor department chief economist with

rutgers university and jeff rosenberg who is chief investment strategist for fixed income at blackrock. gentlemen, welcome to all of you. talking about the jobs report in just a moment but before we do, jeff, i want to ask you about something that alan greenspan just told us on our air about how the bond market is in a bubble, there's only one direction, he won't call timing on when it would necessarily happen but he says there's only one way for rates to go. what do you say to that? >> well, look. let's separate the notion of calling it a bubble. which really incites a lot of fear, right? bubbles burst and there's a big set of losses, and i think you're ignoring the role of central banks in the level of interest rates if you're characterizing today's markets as a bubble. right? that's a unique difference and what we're in is that a bubble we're in what's called financial repression and that's where central banks the world over are controlling interest rates look at the bank of japan. it's explicit, they target the interest rate. that's very different than the kind of irrational exuberance --

>> -- you make it seem like with them doing the blowing that this bubble won't burst is it a more controlled way of letting the air out of something? >> well, if you're going to peg the interest rate, and you have the ability and the credibility to do so, then the air doesn't necessarily come out of the bond market it gets squeezed and it gets squeezed somewhere else. where that somewhere else is showing up is if interest rates are going to be pegged and controlled, the volatility of interest rates collapses and where does it go where does all of that uncertainty go it goes into the fx. >> what goes into fx, that's where it's happening but you could also say by the stretch there that it's going into stock market valuations. do you think that's the case or not? because relatively speaking the stock market looks like a way better place to put your money if that changes, and the interest banks -- the central banks say okay we're out of the game, what happens then? >> absolutely. and that was explicit. that's portfolio balance channel. you're going to make bonds

unattractive from zero interest rate policy. you're going to extend that to quantitative easing, get people to take on more risk >> and to make stocks more attractive >> exactly so the unwind there, the risk when you're not having central banks at least in the u.s., and in europe, directly investing in stock markets, bank of japan does, is that you can have a greater reaction to changes in interest rate -- >> but you think it's all going to go smoothly and it's all okay because of big actors who are doing the playing here >> i'm not saying that it's all going to go smoothly and okay. i'm just saying that the bubble conversation around bonds ignores the other major driver for why interest rates are where they're at which is central bank actions. and every time that we've had a fear of the unwind, how do central banks react? they pull back from their signaling of rates rising. there's a very asymmetric reaction -- >> i don't know if i feel better or worse >> i don't either. >> now it sounds like -- >> if you examine the last

bubble that we had prior to the tech crisis, because you specifically reference irrational exuberance it was because the fed injected massive amounts of liquidity into the system, upon the collapse of the russian ruble along with lpcn, et cetera we have to go through history again. but it wasn't able to unwind that why are we sure that this bubble, if we want to call it a bubble, can be unwound because it was caused by coordinated central bank action? will there be a coordinated central bank action to unwind this bubble, as well it seems like it's trickier grounds to navigate at this point. >> it certainly is trickier ground i'm not arguing that that -- that the unwind, or that market reaction to this era of financial oppression and pushing people out, the risk factor is going to end smooth and gradual. the attempt clearly is balance sheet normalization, gradual predictable, the central banks wanted to go that way. how markets react to that very much --

>> so effectively, though, we could still feel the impact of a -- whether or not you want to call the bubble, whatever the market reaction is, and if it is dramatic reaction for whatever reason, it could feel like a bubble bursting. no >> any time a financial market price changes a lot you're going to learn something about somebody's balance sheet you don't know who that is you don't know what you learn. but something will happen. so it never actually goes smoothly i think the mistake in our family with my wife carmen didn't trade more financial repression because the basic message is, governments with big debt figure out ways to keep interest rates low half the years from 1946 to 1979, the real three-month treasury bill rate was negative. but i focus on not the weather, the climate. the potential output growth is extremely slow in that sort of environment, that's an insensitive or people to save more firms to invest less the market outcome is lower rates, any time real rates are low, spreads are compressed around those real rates.

that's where we are. >> i'm going to get to you in one minute bill we haven't seen you in a long time. welcome back >> thank you >> what do you think about this conversation >> yeah, i mean, the chairman is a, you know, very wise individual my former business labor secretary used to say, i think the big wild card for me is the politics how is this administration going to react to this because i think, you know, whether how you define it as a bubble or not, it really depends on how people -- the perception, we're still learning about this white house and how they react to situations, and so, you know, we could see, you know, an unraveling that is, you know, very, you know, good pace. no panic concerns. but you know, still learning >> and austan before we get to the white house, you've got to see how the federal reserve is going to react to the situation and what they'll do? >> yeah, you know, i have a slightly different take, i think, which is i don't think

that the major factor keeping interest rates low is the collective choice of central banks. i think there's a massive savings glut there's more savings than there are investment opportunities at the moment and that is the thing that's driving interest rates down. and that central banks -- >> what? >> like the u.s. central bank desperately has wanted for seven years to start getting back to normal and start -- >> but they can't because -- >> but when they do they cannot do it. >> they can't because of what the ecb is doing and the bank of japan but it all still leads back to central banks around the globe. >> well it leads back to central banks but they're reacting to the conditions they are not creating the conditions. and that is what i think they miss, and at a time like this, we have very low rates the fed says -- >> that's like a chicken and egg argument >> -- and then they roll back to four, then three, then two, well maybe we'll start raising next year >> i mean, so much of what we've been talking about since the financial crisis is this chicken

and egg. what caused it what started it. what gets you out of it. obviously the central banks, though, are the big 800 pound gorillas, all three of them in the room, kind of like following each other and trying to figure out what to do next. right? >> they are following each other. but they're following actual conditions, and let's not lose sight of the actual conditions now, alan greenspan is a smart man. he has been saying for seven years that this is a bubble that is about to pop. and i guess -- >> although i just put in a -- >> the fundamentals are driving things i wouldn't call that a bubble. >> i was trying to make sure that i wasn't verreacting or putting more hyperbole on the situation than he was. so i did ask him to clarify, alan you don't make calls very often, are you saying this is kind of like your irrational exuberance call from back in 1996 he said yes. now obviously irrational exuberance was early, too. he said he can't call timing on a lot of these things. but i think he's looking at it and saying there's a reason that i'm coming out and saying it now based on some of the historical

charts i've been watching. >> fair enough i just think it's related to the fundamentals of there being a lot of savings and not a lot of investment opportunities >> okay. we're going to continue this conversation, and get more from our panel start talking about jobs and that number that is coming up in about 17 minutes. we'll be right back with more on that coming up when we return, jobs friday, that means the next installment of our popular series where the jobs are. this month, there's an opening in your genes. we're talking genetics not your jeans like that genetics genetics, people get your mind out of the gutter. stay tuned you're watching "squawk box" on nbc. hey dad, come meet the new guy. the new guy? what new guy? i hired some help. he really knows his wine. this is the new guy? hello, my name is watson. you know wine, huh? i know that you should check vineyard block 12. block 12? my analysis of satellite imagery shows it

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who knew that phones would starentertaining us,ng? getting us back on track and finding us dates. phones really have changed. so why hasn't the way we pay for them? introducing xfinity mobile. you only pay for data and can easily switch between pay per gig and unlimited. no one else lets you do that. see how much you can save when you choose by the gig or unlimited. call or go to xfinitymobile.com. xfinity mobile. it's a new kind of network, designed to save you money. welcome back to "squawk box. take a look at the futures we are about 14 minutes away from the jobs report we have been strengthening throughout the morning dow looking at 62 points s&p up by 6. the nasdaq looking to be higher by about 8 a lot can change in just about 20 minutes' time we're also watching shares of movie theater operator amc entertainment. that company preannounced earnings earlier this week far worse than what analysts had anticipated. this morning's numbers slightly

worse than those revised numbers. amc reporting a loss of $1.35 a share, one cent worse than expected the company saying it was extremely disappointed by its results. the stock still managing to trade off of those lows hit earl whier this week up by 3.3% >> it is time now to find where the jobs are this time it is in the field of genetics becky quick, not genes kate rogers is going to tell us why genetic counselors are in demand good morning to you, kate. >> hey, andrew good morning genetics used to be a field reserved for rare diseases but the industry has grown dramatically over the past decade touching all aspects of health care as medicine becomes more personalized and now genetic counselors are in demand at hospitals across the country, including where we're live from today. the field of genetics has grown dramatically in recent years, touching alls is expects of health care as medicine becomes more personalized. now genetic counselors are in demand >> as genetics permeates

everything, there won't be enough genetic counselors to see every patient who gets genetic information. >> the nsgc says the industry has grown 100% in the past decade to work as a counselor you don't need to be a doctor but you do need a masters degree, and programs are very competitive. >> they're in clinics seeing patients face-to-face. they're dealing with all different types of conditions from cancer to diabetes, a lot of diagnostic laboratories need jeanette ek counselors >> the roles are key in helping patients to understand test results, and developing a potential plan of action >> genetic concepts are complicated. and it's very important that patients understand them and understand not only what it means to them, but also to their family members >> so genetic counselors on average can make anywhere from 80,000 a year up to $250,000 annually depending on their location, their specialty, their years of expertise some laboratory testing is done on machines you can see behind

me the genome sequencing process can take up to six months for patients to get the results back andrew, back over to you >> kate rogers, thank you for that we always love those segments. >> yes >> a little bit of -- appreciate it coming up, a tale of two stocks one that helps you lose weight, and the other that will help you pack on some pounds. stocks to watch is next. plus, we're just minutes away from july jobs report. final presikzs straight ahead.

welcome back to "squawk box. stocks to watch on this friday morning. check out shares of weight watchers they've been sharply higher after the company reported earnings of 67 cents a share that was 16 cents better than the street was expecting revenue also beating expectations subscribers rising by more than 20% year over year and take a look at the stock's performance this year. it's up 16% today. and, yeah, coming all the way back from single digits. all the way back up to $38 in the meantime shake shack sales fell nearly 2% last quarter. the company blaming rainy weather, especially on the east coast. as a result, shake shack expects 2% to 3% decrease in comp-store sales for the full year. and drugmaker eli lilly saying an experimental migraine drug reduced pain significantly in a late stage study that targeted patients who

averaged more than five migraine attacks per month. lilly plans to file an application in the second half of 2018. two companies reportin earnings beat. cigna earned $2.91 a share well above estimates of $2.48 wellcare health reported $2.52 a share. that kars to consensus estimates of $2.24 cigna is higher by 2% but wellcare is losing ground this morning. >> when we come back the july jobs report is just a few minutes away we're going to get predictions from our panel of experts just ahead. plus instant reaction to the payroll's release when it hits eight minutes. 6 1/2 minutes to go. and later barron's says grubhub may have just solved its amazon problem. we will ask the ceo matt maloney about the company's deal with yelp at 8:30 a.m. eastern time "squawk box" will be right back.

>> good morning. welcome back to "squawk box" right here on cnbc we're live at the nasdaq marketsite in times square it is jobs friday, and, yes, it is now time to get predictions from our panel of what we can expect in just a little over or under right now about three minutes. let's go to vincent first. >> 185,000 >> 185,000 >> yes >> do you want to give us a rate, as well? >> 4.2 >> okay, bill? >> i'm at 177, plus or minus 5,000. >> what kind of -- why the variances here >> point estimate? there's always some uncertainty. >> okay. >> about 4.3 the u-6 that include part-time individuals who want to work full-time. probably around 8.6, 8.7 >> i like you're taking the full

prediction seriously jeff >> so i'm a little bit lower this month, 160. private payroll should be good but we're looking at the government swing 35,000 last month, likely to swing to the other side this month. so head line versus private. but head line may be a little bit on the weaker side >> and you want to do a u-6 too? >> i'll give you an average hourly earnings. miss 0.3 but tough year over year comps so you had a boost last year at this time so, it will be tough to get above 2.5. >> and rickster? >> i think i'll go 201,000 i think we'll be on the north side of 200. i'm not sure hopefully i'll be on the low side these numbers get quite tight and various as of late 201. and i'm not going to -- i'm not going to pick an unemployment rate because i really do think in many ways it's a meaningless measure. >> you want to play the wage game >> yeah, how do we get more?

no, i'm not going to play the wage game, either. >> mr. goolsbee. also in chicago. >> on the way for wages i'm certainly not going to second-guess them. >> austan? >> look, i think 170 i got underbid this month. i think the economy's cooled off a little bit you know, it's still going okay. >> are you playing price is right rules or something here? what's going on? >> if it's price is right rules, i'm in this little sandwich. i think 9 unemployment rate might tick up a bit and we get a big miss on wages. i think the economy is not growing. it certainly isn't as fast as donald trump is claiming it is growing. and i think the immigration idea to cut the growth rate of our labor force in half is a terrible idea for the job market over the longer haul >> finally we have the professor steve liesman and he's got 20 seconds before the number hits the tape >> 183 with 170 on the private

sector and three month average could go either way but average 13 >> and wages >> i don't do wages or unemployment data. >> what do you mean you don't do wages? >> it's not on the model just got a model for plus or minus 50,000 on the jobs number. the best i can hope for. >> okay we're seconds away from that report. hampton's here standing by he's got the numbers >> 209,000 july nonfarm payrolls increased by 209,000 jobs. the unemployment rate is 4.3%. average hourly earnings increased 0.3% 2.5% year over year. private sector job growth. in july, plus 205,000 jobs the revisions for may and june a net increase of 2,000 jobs over what had been previously reported how did we get to that 4.3% unemployment rate? employment increased by 345,000.

unemployment only increased by 4,000. the u-6 rate, the so-called real unemployment rate, unchanged at 8.6% big job gains in three major categories, in the month of july food services and drinking places, plus 53,000. professional and business services, up 49,000. health care, added 39,000 new hires. we did see an increased manufacturing, plus 16,000 construction was up 6,000. no significant job losses, according to the bls in the month of july. the labor force participation rate now at 62.9% a slight uptick because they say the labor force increased by 349,000. with the july report the three month average is now up to 195,000 for the last three months from the beginning of the year, for all of 2017, that monthly average 184,000 jobs per month back to you guys >> all right, hampton, thank you very much.

let's get back to our panel. rick, you win bragging rights. you took 201 and you said you hoped you were at the low end of that you were with 209. how's the market reacting right now? >> you know we are seeing actually a fairly logical response in the marketplace. but there's still time how we see rates ticking up a basis point and a half on tens we see equities, not really moving much. but they're holding their gains. we're up 55 in dow futures we're now up 60. dollar intention has moved into positive territory all very logical responses but i have a feeling as the day wears on, we might see interest rates stay a little bit to the upside but, i don't really hold out a lot of hope for the dollar index to hold its gains. pay particularly close attention on the weekly close to 223 and tens not that it's a huge level but if you look at all the major 10-year sovereigns across the globe the patterns are about the same we've taken out our most recent bottoms, and all of them, except

for tens, and in tens, that's 223. >> 223 okay, right. we'll get back to you in just a moment steve, let's walk through what happened why these numbers are continuing to be quite a bit higher than people are expecting as we head into these jobs reports. >> i think that's a good observation, becky that's two months in a row that we've been on the north side of what is it, 200, and people were thinking on the south side of it towards 180. it's kind of hard to pinpoint the strength here. hampton said that everything was positive that's right but, retail just barely ekes out a gain it looks like, you know, 900 jobs i think is what -- 900 jobs, so you know, give or sick some of the strength looks like it's obviously in the service sector professional and business services a little bit better on temporary health, 14.7 and this big sector that keeps chicagoing along is the leisure and hospitality sector up 62,000

now, the observation i would make from that is in general, leisure and hospitality is a discretionary income item for consumers. if that's part of the economy doing really well you would expect there's a bunch of discretionary spending going on. there could be some seasonal stuff. but when i look through this, guys, i see 40,000 in june, 33,000 jobs added there in the month of may, and now 62,000 government held its own. i was completely with the idea of perhaps a decline there the other thing worth talking about, by the way, guys, is the trade gap narrowing. that should technically, depending on the inflation number, in it flatter. the gdp report here for the second quarter, which was around 2.4. maybe now up again towards the 2.6 area look we're chugging along here and i think there's a legitimate question these numbers are very much more in line to me with a 2.5% economy than a 2% economy. and i'm trying to wean the country off of the love of whole

numbers. 2.5 is really good on a base of 1.8 if that's the underlying potential growth don't get hung up and say oh, it's got to be three i will take 2.5 which is 0.7 percentage points higher, nearly a full percentage point higher than potential growth. i'm done >> austan, let's bring you into this conversation. numbers, better than expected. and again -- >> yeah, pretty solid. >> yeah. >> pretty solid numbers. and we've got to feel good about that >> yeah. >> i think steve raises this issue about leisure and hospitality. if we spin into a kind of an anti-immigrant, anti-foreign cycle, the -- it counts as an export for the u.s., the tourism business, that's a huge bonus for leisure and hospitality industry let's hope we don't go down that road but i do think that the issue that the labor force is expanding is a good one for the u.s. let's not endanger that. but you see in these numbers

part of the solid growth is continued growth of labor force, and at least a bit of an uptick in labor force participation that's definitely healthy. >> you know the other thing to talk about in this report is the wage figure was pretty good. it was right in line with what expectations were. but there's a bit of a fear on the turnover in terms of some of the inflation figures that you were seeing some disappointments. this doesn't necessarily change the trajectory, 2.5, year over year but keeps it at a pretty healthy clip >> is there anything that stands out to you >> so i think there's three things first is we're getting income growth because we have wages, and jobs. that means that june's core number was an outlier. second, to steve's point, we're getting jobs, but we're not getting that much gdp. it just tells you productivity performance for the u.s. economy is poor. trend growth is 1.5% to 1.75 as fast, and third leisure and hospitality, look out the window the dollar's depreciated we're getting a lot more

tourism. and that is an important contributor to growth here >> bill, let's talk about vince's first point is we are getting income growth. we've been talking around and around how come you can have such a tight labor market and not see income growth. if june was an outlier we're actually seeing this, what does that mean for the fed? >> i'm interested in the 12-month change in hourly wages -- >> 2.5 >> okay. and relative to dpi it's a little bit of getting ahead. but, for me, i think that let's look at this recovery or expansion, you know, and compare it to previous recoveries. you know, we are going to quit rates which i like to look at sort of proxy for it people's willingness to kind of go out and search and because there might be higher wages that are opportunities, they're higher, they're higher than they were at the beginning of the rescission, but they're not higher than where they were in

2000 at the peak of the previous recovery so, you know, my concern is -- one concern is, you know, if we're going to really address these issues around wage inequality, or stagnating wages, you know, we've got a really good economy, but it's not tightening enough to where we increase the labor force participation. is this a bangout number in terms of federal reserve, you know, changing their calculus? i don't think so i think we probably need to see a few more months, other than the sort of -- north of 200,000 before we start to see a change in the language and a possibly increase in the probability of the late increase. >> i think bill's put his finger on what the fed is going to be looking at here, which is discretionary -- there's a supremely situated answer to this if you're the fed and you're looking at how much extra slap is there out there in the labor force. we came down again in terms of those not in the labor force i'll get you that exact number again.

94 and change. down by a couple hundred thousand we keep bringing in people, and the idea at the fed is that if you reduce the supply of labor the price should go up that basic economic function has largely failed to work in the past i don't know what you want to call it, several years. is the fed going to say that's going to happen? it's happening now or i need to do something about this right now >> so i think the fed is going to need to see the manifestation of their model, i.e. see inflation move up, rather than down last four months has been sliding they have a theory slap's gone away potential output growth is low we're growing faster than the potential, we're below the natural rate of unemployment they're going to have to see that theory in evidence, i.e. inflation move up. they basically sucked the oxygen out of the room for september. they're going to start balance

sheet renormalization. we're talking about december and what they do in 2018 >> kudlow says look at the employment population ratio it used to be in the nearly 63% now it's down to 60% there's a whole lot more of the population that could come to work which i guess suggests the fed ought to just sit back and let it happen. >> well, i was just going to say it's not called the phillips line it's called the phillips curve so it's not going to be increase for every decrease in the unemployment rate. there's a rate of increase the fed believes in that perspective and they're going to continue on the path of signaling normalization. so i don't think this changes anything it's very strong report. very strong jobs market. >> yeah. i think, several years ago 2014, 2015, when we were averaging 230,000 jobs per growth per month i would have liked to have seen those numbers even stronger to really draw in

high school graduates, minorities, college graduates, but now where we are in the back side of this expansion, i'm comfortable with 180,000, 190,000 per month, because i don't want to see our central bankers get spooked and give ammunition for the inflation hawks. so start to raise rates. and slow down -- >> this is per pet use of the goldilocks environment for stocks, right? >> yeah. >> and by the way -- >> a little data for you for that comment the chance of a december rate hike rose by a grand whopping total of 3 percentage points so at 36% the market is not looking for that quarter point and you know what? if it happens, who chairs. if that's what you do, if you're saying to me, the cost of 200,000 jobs per month at 0.3% average monthly increase in wages is another quarter point hike from the fed, i'd say i

would make that trade any day. >> well, i think one concern i have, though, is that growth is not equally dispersed throughout the economy. right? that you have some communities that, you know, win the expansion -- >> oh, that's true >> that you know they get to participate a little bit earlier, a little bit quicker, and also longer than the work i did with richard freeman back on the 1990s recovery, what we really needed was right, this, 24 month of sort of sustained economic growth to where you begin to, right, see, you know, improvement and gains in cities like newark. like -- >> the question is, is that a monetary policy matter or is that something the fiscal side ought to be -- >> to me it's both >> if there's a substantial downside to maintaining the lower policy for such a long time, and you can address some of these issues through a fiscal policy matter, then i think you ought to probably take that trade. >> but if you look at what's

been happening on the fiscal side, the -- >> right, exactly. >> we've moved in this sort of new approach to sort of gridlock you know, a couple years ago it would have been between or across the aisle gridlock now it's sort of with to me within the, right, the republican party's gridlock and, even though this administration has talked about, you know, an infrastructure project. >> right >> or a projects that would help to raise wages, and but to your point i think, right, the economy we macro economic growth has done its the best job it can >> right >> and now we need the segue of a combination of fiscal approaches >> our thanks to our panel today. austan, bill, jeff, vince, rick and steve. >> thank you >> we appreciate it very much. >> up next more reaction to the jobs report. right now a check on the futures, they strengthened slightly on the back of that we settled in not quite at the session highs anymore. the dow looking at 54 at the open s&p looking at about 5

the 10-year yield, by the way, still holding onto 2.25% we'll talk market strategy right after the break. plus shares of grubhub under pressure but well off the lows the food delivery service acquiring one of its biggest competitors. we'll talk to ceo matt maloney

welcome back to "squawk box. recapping the jobs numbers nonfarm payrolls increased by 209,000 in the month of july unemployment rate ticked down to 4.3% u.s. equity futures we are off the highs of the session but still holding onto what looks like will be gains at the open dow looking to add 59. s&p looking to be up 5.5 nasdaq looking to be higher by 2.5 points let's take a look the what is ahead for the markets after this morning's jobs report. joining us now is dennis debushehr senior managing director at evercore isi what's your determination of the jobs report? >> the way we think about it is the jobs report today change current and effective conditions the answer to that is no it will probably only enhance it as far as the tail 3 wind to the overall market what do i mean by that low expected economic volatility which means low market volatility, low inflation. average hourly earnings a little higher than expected but there's no inflation there

and so by and large, steady cash returns in stocks relative to other asset class. >> i just want to get to a tweet that president trump just sent out. excellent jobs numbers just released, and i have only just begun many job stifling regulations continue to fall movement back to usa that's the latest from the president here in terms of the environment created by this administration, how do you see that helping? >> well, as far as political instability, probably is the reason for dollar weakness and that is, you know -- >> but that's a help that's a tailwind, right >> help the jobs number if we could turn a negative into a positive i guess, that would be one way. but i would, you know, that's kind of a tongue in cheek comment. i would say, particularly about the jobs number, labor markets have been strong and much stronger than i think people are getting credit for. and you have an environment where real economic growth is improving. relatively strong labor markets and no real inflation rates. that's a positive for cyclicals. that's the support for the overall market

and unless you think that volatility is going to increase meaningfully, which the fed is going to do everything in its power not to let happen, especially when global economies are still close to or at the zero lower bounce and you can't afford to have a recession now, why should we expect anything to change in the market what i'm taking away from the jobs report most importantly is financials real economic growth improving, a big capital return story financials should benefit from this on a relative basis >> analysts, a bunch of them are up premarket dennis great to see you. >> thanks a lot. >> when we return, grubhub delivering a deal with yelp. but is it enough to compete with big players like amazon? grubhub's ceo matt maloney is intohere stay tuned you're watching "squawk box" right here on cnbc at fidelity, trades are now just $4.95.

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z. >> it will acquire the platform and this competition is heating up including from players like amazon joining us now is the co-founder and ceo of grubhub good morning to you. >> hi, andrew. >> great to see you. first let's walk through the acquisition itself and what it

means. why did you do this? >> it's a huge win-win for both parties we're be at 75,000 total restaurants. adding thousands in markets they have never been able to offer online ordering in before and we're increasing the quantity but also the quality because we're adding the restaurants that we deliver for. >> were you surprised by the stock market reaction last night? >> it's a lot to digest. there was the partnership and

the acquisitionand the groupon partnership and acquisition and we had a great quarter we have been executing on that. >> there's the operation themselves but investors are trying to understand where the competition clies is just to say where are you and where is amazon are you now take on a bigger player by getting as big as you have now >> i wouldn't say we're taking on additional players. >> or are they going to be taking you on is the way i should put it. >> it's taken a half billion dollars in the last couple of years. you have the uber and amazons that are extraordinarily well

funded there's a lot of activity in the space that underscores the opportunity we have seen for the last 15 years. the deals that we're announcing, the multiple deals we're doing specifically to put ourselves in the crux of the platforms. we have groupon and yelp and multibillion dollar platforms. >> you underscored it but to go down that road you have done three acquisitions in the last quarter. and now e-24 can you see more coming down the

pike these things happen. we're always looking to build scale. scale builds our strength in our market. >> what does that mean for the revenue last year? some are saying 10 to 12% higher next year. are we going to see those results? >> it's going to depend on the begrags itself and how much we can draw out t of it i'm excited about almost doubling the restaurants on the platform that's going to be a huge new miner acquisition tool and they're bringing new diners to our restaurants. >> real quick just to bring bakt to amazon, you woke up when you heard about the whole foods transaction. what did you sunny. >> amazon has not made it a secret that they're excited about the food space they're investing in their delivery and they're investing in groceries

amazon is attempting to take over the world i guess. >> amazon's next target might be grubhub. what do you think? >> i can't comment on anything likeha tt. i'm going to focus on execution. >> thank you it's always great to see you. >> thanks andrew that knows the weather down to the square block. this is a diamond tracked on a blockchain - protected against fraud, theft and trafficking. this is a financial transaction secure from hacks and threats others can't see. this is a patient's medical history made secure - while still available to their doctor at their fingertips. this is an asteroid live-streamed to millions of viewers from 220 miles above earth. this is ai trained by experts in 20 industries. your industry. hello. this is not the cloud you know. this is the ibm cloud. built for your business. designed for your data.

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>> ten year also showing that yields picked up after this and melissa points out that because of higher yields, banks are higher too welcome back they're just doing it. >> they're just joining us about 209,000. of course as we head into the trading day a half hour from now.