>> 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. as you can see we turned around a bit and we're looking like

we're going to have an open to the day. european markets you ask and we're answer of course they're generally speaking in the green. in fact across the board at this point. we're 2267 briefly break above that mark is down ever so slightly. let's get down to our road map and it does start today's jobs report the unemployment rate is a 16 year low >> president trump's twitter storm focussing on business but a major speech scheduled for today has been cancelled we'll take you to the white house for the latest. >> big tech names with huge

moves this morning on earnings we'll look at all the stocks surging before the bell. >> the unemployment rate back down to 4.3% average hourly earnings up many jobs stifling regulations begin to fall. we have been more or less in line with the average from 15 and 16 there's encouraging signs

as well. you saw employment in food services for instance and restaurants rising 53,000 in july that's been a big contributor. professional services added almost 50,000 in july. health care employment continues to be a bright spot in these jobs reports the labor force participation rate picked up just a little bit but it's been ticking higher which means more people are entering the labor force and the unemployment rate is coming down that's a good sign participation up and unemployment down. >> also wages. five months it's been since we saw that increase. >> we're talking about 2.5% over the year people looking for 2.5%. if it keeps moving in the right direction and you keep having

that with the whole idea, it's not putting downward pressure on it right the worst case scenario would be okay well everyone is coming back in but that's pressuring the wage number lower and holding everything in place but we heard repeatedly they're looking tight these days. >> treasury yields pick up, the dollar shot saw some science of life there it is up a third of a percent. >> just yesterday we were throwing it all out the window. >> 50% chance for december. >> we know the markets are going to move on that and it looks good the futures haven't budged much. the ten year yield has gone up about 2.25% and that's interesting. >> for more, let's bring in the chief u.s. economist at rbc

capital markets and david kelly with us as always. welcome. pretty good-looking healthy report would you complain about anything in there? >> it's hard to. this report check off all the right boxes. >> sizable for the previous month. average early earnings, lovely me trick called wage buy i mean, look, it's interesting the original print was 130 thousandish. she said look we're averaging 160,000 year to date that's more than enough to observe new entrance into the

labor force. we're now averaging 185,000. that's a splitting hairs conversation and that's the idea that the market has to embrace by tend of next year a federal fund rate for just 1% higher by the end of next year and we'll be reducing the balance sheet at a pace of $600 million per year and in that scenario i would expect long-term interest rates

to be higher than they are today. >> it's a good report in the economy. monetary policy is still too easy here. >> yeah. i mean, look, we'll see if the fed for once actually follows what it's mapped out next year but if you look at the 2 and a quarter percent on the ten year. i wonder if the rate there is ultimately going to map inflation and not what the fed is doing on the short end and don't they need to be going up toward 3% on the year? is anything on the horizon and if not why should that move higher at all? >> i don't agree with the premis the work we have done shows that the movements in the short rate are far more important than movements in inflation and most

of all higher rates tom, do you think f that happens, what happens to the ten year? does it move higher to the same proportion that it is now? >> it can continue to happen the last cycle, 425 basis points in the system and what do they do >> i don't think that's going to happen >> think about the last 25 years. core pce, what has it, what

percent of the time has it spent above 2% over the last 25 years. would you guess? >> maybe half. >> it's 25% of the time its been above 2% 75% of the time its been below it's sort of a no brainer. the potential for bubbles then of course that's going to keep the fed engaged. >> president trump tweeting excellent jobs numbers i have

only just begun. >> the idea of restricting immigration we need more qualified immigrants in the united states in order to grow the economy. but right now the economy and markets are ignoring what is going on in washington. >> we'll leave it there, thank you. >> the weaker dollar is having an impact on the data. trade data released this morning. exports rose, imports did not. >> good morning, the president is take an economic victory lap

this morning but also announced a toyota mazda plant and confidence levels at a 16 year high this comes after a political rally in west virginia a state whose higher than average gdp he touted but a platform he used to call the russia investigation totally made up. >> it's a total fabrication. it's just an excuse for the greatest loss in the history of american politics. that's all it is. >> news that special council bob mueller is impanelling a grand jury a powerful tool for process cue tors that allows them to subpoena documents, witnesses and signals a criminal investigation is that intense fieg and potentially lengthening. subpoenas have been sent over john jr.'s meetings with a

russian attorney last year the white house responded and said the white house favors anything that accelerates the conclusion of his work fairly. we should say previous white house investigations also used grand juries and inappropriate relations and dealings also used when asked into hillary clinton's e-mails but as this signals that this investigation could take years as prior grand jury investigations have. now a bill to protect him from potential fire fwig white house. >> thank you we'll check back in. >> we'll look at the bigger movers this morning including go-pro take a look at that. stay tuned

we'll have an interview with ceo more squawk on the street live from post nine when we and messy and fragile. but under the proper care, they become something beautiful.

revenue also came in above consensus. announcing a stock buy back and a deal to sell to grubhub. issuing up the guidance and cost controls including lay offs of the company. go pro ceo will be a guest on stock alley. the go pro e-24, excuse me the grubhub e-24 deal is interesting. they get a partnership where you can order food through grubhub on yelp and that could drive business. >> i liked him saying we need scale in this business that makes sense there's a model in new york city that will work well there but you start talking about the cost to spread this across the country and do it well and being able to go to a

different city now and say hey what is a local restaurant it doesn't have to be a chain if you start to partner that with some of the delivery options for grubhub. >> yes you get advertising money from that way but how can they get into the transsnx how can they have people going on there to buy this is one way. partnering with the third party. by the way, e-24, that's 40,000 restaurants across the country 50,000 orders. >> this feels to me like a lot of wide open space. >> grubhub has been inquizabive. this is above the price paid for

it pretty hefty profit there too. >> signs of something. >> still to come when we come right back here and we're going to explain what is going on with the massive reversal in those shares plus jim stewart on what it would take for president trump to get a 15% corporate tax rate and looking at futures holding their gains after the strong jobs report. dow is up 56 nasdaq 5 s&p 5 will open at 12. more squawk on the street right after this whoooo.

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i learned this during fleet week, okay these guys you should see the boats they have to try to go after some of the guys i had no idea with many of the other things they have to handle and hats off for them. >> we appreciate it for sure we'll see them in a little bit let's talk viacom this morning the stock wants to be down perhaps as much as 2 or $3 which could be a significant percentage decline there it is about 8% this after reporting earnings after the bell yesterday that they were very bullish about certainly on the call and in the press release entering into distribution and data partnerships with the likes of altice usa but the guidance on

advertising is what has investors worried this morning and that's one of the key reasons why that stock is down this is not something unusual it would seem at this point if you recall before they announced their big deal earlier this week it was on monday, scripps and discovery. they came in a lower advertising, domestic advertising number that had been anticipated. it was up over 2%. time warner which is going to be acquired by at&t and didn't have a call but had guidance as well for domestic advertising is going to be a bit lower. i'm not sure of the language on whether we have that or not but they indicated as well domestic advertising weaker than had been for the next quarter or the current quarter down 2%.

that's going on in terms of why the stock is down but why is advertising domestically some what weak? believe it or not a lot are watching news. >> news has been doing very well take a look at your top networks in any given cable networks or cigme segment. women are big consumer of news >> comcast, nbc networks also domestic advertising not strong. >> shouldn't it be stronger then. >> this has been across the board. don't forget the larger issues which is there are fewer subscribers. it is happening. let's call it 2 to 4%. that's 2 to 4% you're going down there in terms of subscription declin declines you have that secular decline

and the chinese partners and there's been a delay in their june payment and as a result we made the result not to book an impact of that deal in the quarter. the chinese helping to finance the slate of films being produced by paramount. unclear as to why. the deal continues to be in effect and they view the acquisition by the times media as a positive. i did want to note that as well. this deal they're talking about positively there's a lot of back and forth between these. a pretty good number in terms of what fees are being paid but there's a lot of back end money that goes back on these

deals i'm told as well so we'll see howell it's doing >> we'll see if they're really going to news. i'm sceptical. i think it's digital. >> why >> i guess but why didn't comcast call them and say. >> but you're telling me time warner and comcast didn't call this out as a source of strength already in their earnings. >> opening bell about 5 minutes away stay with us not just being in the military, but at home. she thinks she's the boss. she only had me by one grade. we bought our first home together in 2010. his family had used another insurance product but i was like well i've had usaa for a while, why don't we call and check the rates? it was an instant savings and i should've changed a long time ago. there's no point in looking elsewhere really.

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and i am a senior public safety my namspecialist for pg&e. my job is to help educate our first responders

on how to deal with natural gas and electric emergencies. everyday when we go to work we want everyone to work safely and come home safely. i live right here in auburn, i absolutely love this community. once i moved here i didn't want to live anywhere else. i love that people in this community are willing to come together to make a difference for other people's lives. together, we're building a better california. >> we're live from the financial capital of the world the opening bell is going to ring about a minute and a half from now i have two macroeconomic geniuses with me this morning. either one of you want to -- >> one thing i can tell you is a theme that developed over this week was a divergence. we talked about the dow reaching a record high.

and neither of the russell 2,000 index of small kaps so some people say that's an alarge barish signal that the dow is a few stocks like boeing and apple and yesterday united health. the dow closed up ten points. >> it's largely track the dollar by the way, how about comments about investing second quarter shareholder letter let me find the verbiage paul singer talking about how what may have been a clever idea in it's infancy is destructive to the growth creating and consensus building process of free market capitalism, david. >> more about the power and influence of etf and index funds in our overall market and

percentage of ownership that they have. they do a lot of stuff out there. all over the place >> over here that's a post secondary education. we get going it's difficult to gauge. >> we can get a sense of the lay of the land right now based on that number and reaction which is to hold steady more or less than the report. looks like the dow is opening higher maybe up to 60 before the report moving higher. >> that's enough to keep

financials at the top of the s&p now. they're leading the charge up more than .5%. technology right behind. so those are two leadership groups that we have seen >> that's the cyclical better growth stock market. yields tick up a little bit. >> the fact that they're still down where they are. >> i'm going to go back to your question, the dollar is the key to this market that's always the case but now the fact that we're seeing signs of strength. that weak dollar helped company profits recover. it's helping our exports. >> it's helping the market overall. it's helping emerging markets. money is flowing back in and it's all of this cohesive trade.

and by the way we're looking at 22,100 there so we're seeing markets move higher while the dollar is moving higher. i love getting e-mails and it says your adp pay statement has arrived. >> you'll have to wait a little while because we're going to do this faber report. we have good graphics too. you'll love them. >> i wanted to mention another story here for sometime. this question as to whether or not when they get the regulatory approvals qualcomm will be forced to pay more for a deal where it already agreed to pay

$110 in cash why would it pay more? 80% or more of the vote of shares would not be successful >> why would you believe that? certainly not. if you're buying it let's call it over the last few weeks when it's trading around there. you believe the ability will be there to garner higher prices as a result of their inability to get the needed shares tendered to them.

at this point he is saying we're going to focus on that when we have to but they may have to nxp is a dutch company just to remind people. >> it's reminding me of the cabella situation. if you have a company i don't know if they're going to be able to change the price there. it continues to get dragged out. they're not doing well this is not there. see where they might start to move on the card business too. >> so we'll see. we'll see on this situation how things end up. again i've been talking about it for months we probably still have a couple of more months to go before it

gets to crunch time but they have significant holders you can quickly get to about 20% of people that at least believe fundamental value of nxp in the marketplace simply based on a multiple and they had earnings a couple of days ago they were okay but would be higher than the 110. >> we'll watch that. and it was a continuation of bottom line beats with pretty strong cost cutting measures helping fuel the profit picture but pretty soft top line numbers. second quarter revenue at draft down 1.7%. the u.s. which is the most important market for craft, about 3 quarters of its sales down 1.2%. volume, decreased half a perk n percentage point lower shipment in cheese, meats, food service this continues to be the story there's so much pressure in the grocery space right now.

we saw these negative sales number in north america. from mondelez earlier in the week and kellogg even though kellogg had a better quarter 2% drop in north america. there continues to be a lack of growth in this sector. they're not getting into the perimeter. >> also you're costco. >> different. >> 6% comps for costco and every investor in packaged foods is looking at kirkland and how amazing that product has done with especially millennials. >> private label is more appealing now. >> whatever all of those words are. >> gluten-free. >> low salt. >> right now it's all about plant based proteins that's the new trend. >> is that a nice way of saying fake protein.

>> the craft stock is up in part because this is not a particularly good quarter potentially a miss at this point. they have margins that are incredible 29% versus like 16% or so at mondelez just to put it in perspective. the market expects the deal to drive tor drive. to continue to drive kraft heinz. it's about the ability to realize more to increase cost cutting. >> cost cutting. >> have to say that many of the analysts i read are positive on the stock. you can't bet against it because everybody is waiting for a deal.

>> i don't believe that would be the case my belief is still that 3-g and it's fun will pursue a different deal than kraft-heinz. >> in food >> it's not clear. they won't do that they always want to try to bring warren buffet along for an investment as well we'll see what they choose to do the expectation is that kraft heinz are try to make a move of some kind. >> colgate has been strong. they beat on sales nein earning

and they also said guidance will be lower than expected traffic fell 4.3%. that's why maybe shares are reporting analysts because they're opening stores in the u.s. and internationally give us a look at what's moving this morning bob. >> happy friday. at least the dow jones and s&p 500 are moving in the same

direction. that's news that hasn't happened in a little while. take a look at the sector leadership it's a little thin banks have been trying to peak out and do a little bit better it's modest. less than a percent. retails trying to and not breaking out a little bit on materials in tech not as strong as anticipated that's a big issue for them. it's interesting other infrastructure projects around the world are doing well there is an etf for that there's an infrastructure etf

that bias fwloeglobal company look at the companies out there doing well they're up nicely. huge italian construction company building all over europe right now. a big spanish airport construction and management company in europe. they're doing well so the global infrastructure plays are doing well they're all disappointing. down again today earnings are too high for the energy companies and that could be effecting the s&p in the 3rd and the 4th quarter. the s&p has flattened out since the third week of july we're not doing too much the smaller cap stocks are having a bigger problem right

now. they were down six out of the last 7 days. we're up a little bit here today but you see that move to the down side. fang stocks having a tough time for the week that's an issue. most down 2 or 3%. apple is the one exception up 4%. semi conductors the big issue. most down 3, 4, 5 or in a few cases roughly 6% finally bio tech also off the highs. we're down about 5% from those highs. let's call it just a little bit of a pause in some of the big momentum names back to you. >> thank you very much, bob. did want to get to that adp story. kelly referenced it earlier this morning. bill ackman showing up again he's outed by adp as opposed to coming on his own offensive. we were told by adp in a press

release issued this morning is targeting the board of directors of the company seeking five seats including the ceo seats. he wants a change in ceo and believes somehow that the company is being undermanaged and would benefit from a change in direction brought about by, well a change in directors and most importantly a change in ceo. one would expect we will get one in the not too distant future. he says i want to talk to you guys i want to get rid of the ceo i want to nominate five directors but could you push your nomination deadline

it's currently august 10th it's not clear why whether or not he is not fully ready with his slate or what would typically be a long presentation as to why he wants to see this change perhaps he didn't want to push it off they did have a meeting yesterday in new jersey that is mr. ackman and senior management of adp in which again he reiterated his desire that they push the nomination deadline a bit and told them that he wants the cfo replaced and pointing out important things one of which we're sure to hear more about if this does accelerate which is hey our shareholder return has been a lot better to yours. take a look at the chart adp is up 202% from november

15 and 16 were difficult years from mr. ackman's fund which was down in success. this year is roughly flat. >> did adp shoot up to begin with and further on this. >> i am always curious as to why these stocks at this point shoot up and mr. ackman is noted as being interested in. why? his track record is very very mixed. as we said he was down sharply in 15. sharply in 16. this year as of july 31st up .9% but when you think about what he made for target many years ago. >> does this tell you something about adp in this case if the investors react by saying maybe this is something that is needed. >> that's a good question. he doesn't seem to be asking for a break up of the company or more significant capital

returns. came after boarders and know what happened there. >> i don't know what people were thinking >> maybe activist pressure in general causes a company to up their game. >> let's get to the bond pitts now. rick. >> good morning, david obviously we had a big employment report this morning

you want to stay on the side you have to have a group technical mentality. many would say it's silly considering they have control and tens are only yielding basis points still looks like the same pattern. she came in long euros just about anything on the last day of last year you're a smiling trader this is early 2015 see we continue to forge ahead even though it is a bit down for a change today and i only mean a

bit. all right. i can't say kelly, kelly, kelly so i'll say kelly, sarah and david back to you. >> that works for us thank you very much. u.s. stocks are rallying on today's bullish jobs report, david. >> yes they are, in fact, we are joined now as well by a guest that we're very accustomed to having on the jobs day however, this was because he was chairman of the council of economic advisers to president obama. nice to have you here passing through. we don't have somebody from the trump administration but these are good numbers as well we have

seen business confidence rise and we saw that again yesterday. hiring intentions with that go up the mood among executives and businesses whether they're expecting tax reform or deregulation which is something that there's some movement of is good doesn't that impact job creation. >> confidence is a strange thing. consumer confidence is way up without consumer spending up on the other hand you're right business confidence is up and business investment was strong in the first quarter and pretty good again in the second quarter so i think it's possible the issue there will be is the confidence ultimately justified?

do we see the types of changes that businesses were assuming were going to happen when they made the decisions one would be a business tax reform that doesn't blow up the deficit. >> what have you learned from that do the models work >> i've learned not to read too much into any one jobs number as fun as it is to talk about that. >> you don't have to work in the white house to realize you can't just read one jobs number. what else? >> what else have i learned? that the most important thing in the economy is productive and that we don't know anything about what's going to happen with it or why

>> that's been a key question for a long period of time now. the slowing capital investment i think is going to not persist and we're going to see faster capital investment going forward. it's that slow down and the difficulty of ideas. just spent a lot more on rnd today to produce a new idea than you used to. it seems to be getting harder to find ideas >> auto sales numbers earlier this week weren't good gm and ford in particular weak any concern that you would have from your macro economic viewpoint that that is a sign? >> that's a little bit consistent with this reversal that we have seen. for awhile it was consumer spending while business investment was really

disappointing. so far in the first half of the year it's been consumer spending that's been on the weaker side while business investment has been propelling us forward i'd rather have the stronger business investment right now because it will help us with our productive growth and with our future but consumers just aren't spending along with the confidence that they express about the economy. >> don't have a person to replace you do we? >> it's just ridiculous that the senate has now taken over 80 days to confirm him. it will be over 100 by the time they get back. previously nobody took more than 55 or so days. this is just a ridiculous delay at this stage. >> we appreciate you be with us. >> thank you. >> president needs an economic adviser to tell him the difference between quarterly and annual gdp growth and other things coming up david cordani on his alrnings beat this morning and heth reform.

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good friday morning. happy jobs day and welcome back to squawk on the street. i'm here at post 9 at the new york stock exchange. carl has the day off today strong day after a strong jobs report the dow is in record territory again. if we close higher, 8th record in a row s&p 500 up .10% and the nasdaq sort of unchanged. wti crude has been lower all week $49 barrel right now. >> let's get to our road map this morning it does begin with those 209,000 jobs created in july what it means for markets, the

economy and your portfolio next. >> speaking of jobs, toyota and mazda teaming up to build a new assembly plant in the u.s. >> plus cigma beating the street the earnings and struggles on the hill to replace obamacare. but first, a good jobs report. >> another strong jobs report. over 200,000 dollars again here are the numbers, 209. comfortably beating expectation which is were 180. may and june up a positive 2,000. average hourly wages on consensus 0.3 a point better than last month. down a tick. 62.9 here's where the jobs were this leisure hospitality sector has been very strong up 62,000 suggests there's

discretionary income out there to spend and this sector is hiring to meet that demand and strong for manufacturing, temporary help sometimes leads the way and retail again just up 900,000 after just 2,000 all of this raises the big question how low can the unemployment rate go. are there enough workers on the sidelines to keep fuelling strong job gains just around 60% of the population is at work right now. a number that's rising since the end of the recession but it's 3% below it's precrisis peak. if that went back to normal it would add 7.5 new workers. if we get this back that's around 4 million new workers so it's a critical factor workers come in off the sidelines. lots of room for the job market to run the fed is going to start worrying about wage inflation. >> which we're not seeing steve. what's the probability of december at this point and is it

surprising that it's not higher? the market seems very skeptical that the fed is going to raise rates. >> only moved a little bit this morning. it's about 36 or 37% this number had traded above 50%. there's a lot for the market to look through here. it's got to look through the very high probability and also the idea that inflation is coming down. the market is not as off side for the fed as it was in march when it was in the single digits. >> i'll take the credit. thank you, steve we'll see you later. >> i was going to say thank you, rick. >> for more on this morning's jobs report let's bring in christian on set with us chief investment officer and diane is with us

christian, what more could you ask for in this jobs report, right? >> it's fine it has been fine for awhile. so i don't think this jobs report in and of itself changes anything our expectation is they do something in september. >> are you talking about rate hike or the balance sheet. >> balance sheet. >> so they start to sell things. >> yes, they start to sell holdings that they have in the balance sheet and the market is expecting a modest possibility that they tighten in december. this report didn't get me over there. >> what about you? >> it's interesting that half of the job gains are in the professional hires and the leisure and hospitality sector millennials eat out more and also in july, that 4th of july holiday in the middle of the month that gave people a whole

week off, that moved a lot of that hospitality spending into the month of july. we'll see that in some of the consumption numbers as well. it's also important to remember that as unique as this seems that wages aren't picking up when there's not a lot of manufacturing wages out there or construction wages, there's no one to work in construction because we don't have construction workers in the immigrant population we once did but this is nothing new. back in 1999 when we hit 8 year birthday mark on the expansion, the same argument and a lot of scholarly work, back from 1999, they were complaining about how tight labor markets were with a lack of wage inflation. >> there's a lot of good points here let me just jump back for a second what were you saying is the reason why you think july has been a stronger month? >> july was a stronger month we saw half of the gains in terms of job gains in both food services, leader hospitality and

professional hires you have millennials willing to spend their discretionary dollar and it seemed to give everybody the week off. >> because i raised it, i don't know if you have seen the same kind of phenomenon but when we're talking about the retail recession and amazon is wiping out the whole sector is it possible that there was softness in brick and mortar in june that was a macro hiccup >> the seasonal pattern has been pretty important over the last few years and july ends up being some what stronger than usual and especially running off of the weakness in the first quarter. the key thing here is to recognize at a while the fed may want to tighten, the current environment is actually very good for the markets you have global growth, you have lack of inflation. so policy remains relatively stable and emerging markets doing very very well and perhaps accelerating that combination i think is very

good for markets and i'm not surprised that we're making highs virtually every day. >> it's sort of hard to get a clear picture of the economy because everyone is in a good move now about this better jobs report but earlier this week, services came in with a big disappointment i think construction was weak, personal income and spending was amiss. so was the manufacturing number. how do you add it all up and square it with what we just saw. another 200 plus thousand monthly jobs report. >> some of it is in the competition of the jobs. seeing a lot in leisure and hospitality. that is a different kind of job. also it's testimony of how tight they are that we were unable to fill those so clearly we're getting tighter labor market and we're also seeing a lot more increases in the number of people testing positive for drugs not surprisingly in states that legalized marijuana those test positive on marijuana

in particular have surged and have been surprising in the drug test is also a market pick up in some of the drug tests we're seeing there opiods is at a crisis. either they're not showing up or the percentage of people actually testing positive for opiod has come off the peek of two years ago. the easier conditions abroad easier financial market conditions easier credit conditions they made a mistake once by letting it go too long in the 1990s with low inflation and low

growth i don't think they'll make that same mistake again. >> my favorite is when people argue that the drugs help them do better on the job but that's a whole other job. >> marijuana and technology there seem to be honest a correlation in hackers the fbi has a pass on it even though it's federally illegal. >> just to put a point on it you were saying you think the fed is going to have to raise rates at the end of the year. christian was saying maybe they go in september and start to sell flinthings from the balanc sheet. you're going beyond that >> come on its a drop in the bucket so they're walking on egg shells doing it carefully so that i think they'll try to move forward on and the rate hike, i still think december is out there. i think this is a fed that will want to have a legacy and it's

going to have regime change. we could have completely different people sitting around the table in washington. >> this is a clean set right here we believe in -- nevermind, thank you for joining us this morning. good to see you. >> speaking of jobs, toyota and nasdaq teaming up to build a new factory here in the u.s. phil joins us with new details on this. >> before the announcement came out of japan people messaged me and said do they really need this facility in the united states the answer is yeah a little more capacity would help given how tight they are when it comes to certain lines that are in demand here's the announcement between toyota and mazda and the new plant built here in the united states a $2.6 billion investment. they have not picked the site yet. that will happen over the next several months 4,000 workers and a capacity to build 300,000 vehicles

half would be toyota, half would be mazda for toyota it already has four final assembly plants here in the united states. it would like to build more suvs and cross overs and have that capacity to do so. sales down 2.5% here in the united states. that's actually a little better than the market overall which is down 2.8%. one reason for that is the fact that toyota's truck sales, we're talking about pick up trucks, suv, cross overs up 8.7% this year shares of toyota moving higher on the news of this joint venture with mazda also take a look at shares of nissan nissan workers in canton, mississippi at the plant down there, they're holding a uaw vote they voted yesterday and vote through about 8:00 eastern time tonight and then late tonight we'll get the results and uaw is looking to organize proximately 3,800 workers.

they have never organized an entire assembly plant from a foreign auto maker they have some pockets of skilled workers for vw in chattanooga but this is an important vote it will be interesting to see what the results are and we get them late tonight. back to you. >> all right something to watch phil, thank you. when we come back, cigna reporting an earnings beat raising the full year forecast the stock is hitting an all time high this morning. but the ceo david cordani is with us talking earnings repeal and replace and more plus we'll dig in to today's bsjo report with jan hatzius squawk on the street will be right back a used car,

let's send it over for a quick market flash. >> we're watching shares of teva farm suit ka pharmacuticals after missing estimates with it's latest earnings and cutting it's forecast as well. several lawsuit firms cut it following that report and the companies earnings also pressured by pricing weakness in that drug business in the u.s. cigna reporting earnings that widely beat expectations while posting revenues that also came

in above forecast. hitting an all time high earlier in the session and raising it's full year guidance as membership ticked up. david welcome back. >> good to be with you today. >> so what is driving this your stock is up more than 30% so far this year a number of the insurers have posted better results. is is it about membership, cost control or what? >> we have grown our revenue and our shareholder return has been about 34%. it's all based on our diverse business we have a global portfolio outside of the u.s we're growing in the mid teens we operate a productive management business to help keep their employees productive and at work and present and our health care business is more of a service oriented business where we align with employers and help stay healthy or return

to a healthy state >> is obamacare imploding as the president claims >> well, we have about 4% of our company revenue today is on the exchanges. and we're in 7 states today. they have been challenging states to operate in where we're functions or working with the health care partners to try to get the best possible outcomes and we expected to lose money yet again this year. we are losing money but we're losing a little less than we expected it's a challenging marketplace in 2017 as we look to 2018 no doubt. >> the president threatened to cut them off he's facing an argue deadline on that front what are your expectations at this point >> well, we're waiting for final decisions to be made so of course in the next six weeksor so the final ruls will

be made in 2018 and we'll make our decision relative to our participation based on that. as it relates to the subsidies as you know the program is designed to subsidize the cost for individual who is are at the lower income brackets. that happens in two ways clarifying the final roles and allowing the marketplace to adjust to that it's a small percent of our business we have been working to make those operate. but the 96% of our business outside of that is performing well today

and secondly working with health care professionals supporting them with information and more actively manage and care for their patients and customers it's working really well on medicare advantage and really well in the employer sponsored marketplace and that's where we expend our energy in the united states there's a ton of bright spots relative to individual engagement and support whether you're healthy, chronic or acute that's what the future of health care is all about. >> i just want to go back to the

issue with the obamacare exchanges. why are you in this business at all? >> we haven't provided 2018 guidance we lost money, 14, 15, 16, and 17 why are we in the business we have a responsibility to find a way to make this marketplace work secondly we have been testing new programs in the market and when you have a collaborative relationship and you work more integrated with professionals, and outcomes, quality good things happen. they're better results is. >> just in the last day or so as you saw they pulled out of

allstates and nevada was the last one so they're not operating anywhere he said it doesn't make sense for them right now we asked about what would happen if they try to change it take a quick listen to that. >> the aca cannot be appealed. they don't have the votes to do it in the senate where they need it in order to repeal the aca. what we should do is fix it so unless we can get a bipartisan solution to do that they won't fix it right if the future of health care does go to single payer that undermines your business model

entirely >> the employer marketplace. 165, 170 million americans that market is delivering a positive outcome we're delivering a great medical cost and clinical quality outcome. medicare and medicaid advantage. it's performing very well. medicaid almost 70 million americans, there needs to be modernization in states evolving programs there like indiana to get better engagement and then individual marketplace with 10 million americans which is important and needs to work and is not functions we need to focus on what is the bright spots working in the employer market and mma and apply those as we go forward and we work to make employers populations healthier and more productive we think that volume proposition

in a vary variety of circumstances and we have been consistently growing our business. >> your deal to be acquired by anthem fell apart mid may. are you still fighting over that $1.85 billion break up fee >> there's on going litigation relative to that we have a tremendous capital position so it will go through it's requprocess we end with $5 billion of cash on hand by the time we end the year and unbelievably low leverage rate to add about 10 points to be at operating capacity so we have a tremendous cash flow and capital position i would also note because of the longevity of that transaction we were investing back in our business for the benefit and we

poured about a billion dollars back in our franchise over that transaction. and we're well positioned to grow thank you for joining us as always when we come back what it's going to take for president trump to get his corporate tax wish we'll break down how to get to a 15% rate with ppw. squawk on the street back right after this one 7 from at&t you can get unlimited data and live tv. the channels you love. your favorite shows and movies. making your iphone into more of a... oh my tv is ringing. hey...i'm in the middle of a...a second iphone from at&t? okay!

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>> the president called for a significant current for tax loopholes. joining us jim stewart, no changes to the tax code. always worth reading you think they can do this and not with the deficit. >> the conventional wisdom is this cannot happen unless you throw the deficit out and don't care what happens but the more i looked into it it is doable. if you're willing to stand up and say we're going to lever the playing field here and you're going to get rid of some of the tax breaks that companies take

advantage of now, maybe you can get to 15 or even start fairly significantly. the biggest beneficiaries is the real estate industry >> as i understand it they haven't got natural plan from the white house and certainly things have changed in terms of the old house ways and means blueprint that we have from kevin brady some time back tom brady. >> let's bring in in trump's ear. they still want to keep them so there's this.

>> i want to point out that first of all when you say we have to get the rate to 15, the pass through rate doesn't have to be the same that can be analyzed we get the corporate rate to 15 there's a lot of benefit from that it makes us globally competitive and solves the pass problem. now the pass throughs. ordinary income rates now so you have a lot of room to move those down before you get to 15 where they would benefit the problem is the further the gap between ordinary rates and the new pass through rate, the greater the incentive for lawyers, doctors, journalists to become an llc and try to get on to the 15% rate which really services income wage, the other problem here is lowering the pass through rate doesn't seem like the economy the way the corporate rate does. llc partnerships were not big capital spenders

so i think it would be fine if they don't get to 15 on that it's probably up to that >> there is a hand full of companies that are actually paying. >> that's another reason why you can pay for the big cut. you can get rid of all the breaks that are enabling these companies. in my head it's like roughly, the app is roughly half.

a little more than half. it's going to estimate cost about $1 trillion in lost revenue but if you get rid of all of those deductions and loopholes you gain almost another trillion so that would be a loss. you have employee medical costs but take the interest rate deduction. if you get rid of the interest deduction you bring back 700 million. now that goes a long way to closing that gap that is pretty close to the 15% rate the problem again is who takes big interest deductions. it's real estate developers. so will trump have the courage to go for a tax cut that almost every economist agrees that actually disadvantages his own business that is going to be it and i hope he does. >> well i know that you'll be continuing to report on it ti tim, thank you. >> thank you.

>> let's send it over now to sue herrera. >> good morning sarah, good morning, everyone. here is what is happening at this hour. australian police say two men facing terrorism charges were involved in an attempt to place an explosive device on an air ways flight out of sidney last month in a plot directed by isis. >> this is one of the most sophisticated plots that has ever been attempted on australian soil. and if it hadn't been for the great work of our intelligence agencies and law enforcement over a very quick period of time then we could very well have had a catastrophic event in this country. >> police in dubai have reopened the streets around one of the tallest residential see scrapers in the world after firefighters put out a blaze that erupted early friday morning residents were forced to evacuate in the middle of the night and large chunks of debris plummeted to the earth below amazingly, no injuries were

reported a new surveyly ihs market finds consumers are willing to pay extra for self-driving cars. according to 5,000 vehicle owners drivers in the u.s. were willing to pay an extra $780 german motorists were willing to pay more than $1,000 for a self-driving car that's the news update at this hour back to you. >> i'm on board with that too. >> i am too. you got it when we come back more on today's jobs report. jan haius tzis here as he always is on jobs day we'll be right back.

it was overall just a touch stronger than expected household employment was quite firm, 345. average hourly earnings, while they halved themselves in recent months this was a solid reading so overall it says that the employment side of the mandate from the fided's perspective is still moving in the right direction. >> that puts us on track in december. >> one more. that's all forecast. that's their forecast at the moment obviously it doesn't have to be finalized until late in the year assuming they do the balance sheet in september and skip that press conference meeting. >> going into the report in terms of where the jobs were, leisure hospitality was a big one. professional services

contributed. a little manufacturing how sustainable is it all? with retail again. it's not performing all that well 900 jobs added in the sector. >> retail is a weak spot that's been true all year. hasn't been as disastrous in the last few months as a couple of the reports in the earlier part of the year and other than that, i would say it all looks quite solid from the demand side but what's not sustainable is to see these kind of numbers with, you know, the unemployment rate as low as it is >> people have been saying that for months though. >> i'm not saying that it's going to stop in the next few months but we're not going to be able to sustain that job growth in the long-term in the long-term i think the trend is probably below 100. >> so what you're saying is we either start adding below 100,000 a month on jobs just because there's nowhere else to go i was wondering where that would take us on inflation ultimately and you probably heard

greenspan's warnings about this bond bubble and everything else and i keep thinking what is the one thing that could hurt that and it would probably look like inflation. >> that's right. so eventually, i think we will put enough pressure on the labor market to get more pressure on wages and price inflation. more confident in the wage part of that. i think the weakness that we have seen in 2017 to me looks like really more of a blip if you look at some of the wage surveys among employers or households, they're still proceeding strong wage growth but on price inflation eventually there would be upper pressure too although that's more tenuous i would think. >> we have been stuck in this for years now. all of a sudden it's an increase on wage which is is great but are you saying it may be a year that that wage number is over 3

and the inflation wages were over 2 and are we going there? >> that's a little high. i think something like 3 by next year seems like a reasonable expectation. again if you look at the surveys, they are actually consistent with about 3% wage growth at the moment on price inflation, i think about 2 in 2018. that's too aggressive. i wouldn't expect that. >> why not if wages were going to be at 3 why wouldn't we have prices? >> the linkage between the labor market and the tightness of the labor market and inflation, this isn't that steep so it's not that strong. i mean it's conceivable. >> why is it that it wouldn't translate. >> basically because there are a lot of things going on in the wage numbers the labor market pressure plays some role but then there's also rents and there's, you know, technology, cell phone services has been an important factor recently

health care services a large extent on government policy rather than labor market tightness so there's many things that can break the linkage between high pressure economy and the price inflation. on wages it's more direct i think. >> on the economy, the atlanta fed widely followed tracking estimates as 4% growth for the 3 quarter. that seems high. are you on board with that >> that's high to me so tracking estimates at this point. especially if you put that much weight on trends that are visible early in the quarter. >> how close is the president going to get to his 3%

>> that's going to have to be evaluated over a longer time frame. i think over the long-term, our estimate for potential growth is one and three quarters that's the fed's estimate and it could be more than that. there's a lot of uncertainty around productive growth. >> always good to check in with you. >> as we get to break take a look at gopro. coming up on squawk alley we'll speak with the ceo on a cnbc exclusive. we'll be right back.

>> let's get out to the cme group. >> absolutely a very special guest. we're talking about some serious brain power here folks i'd like to welcome the professor. thank you for taking the time today. >> thank you, rick >> and see some things that generally seem favorable i want to know what you think of today's data points. >> it's a clever report. what else can you say? it's the expectation which wage growth was even stronger but it was solid. and a pretty good report >> i'm going to paraphrase but basically what this article says is that the inflation in the group of 20, the largest

economies fell roughly so it's lowest level in 8 years this summer and it's deepening a puzzle for central bankers. my question here is pretty simple central bankers can create capital. they can print, they could basically do as they wish on manipulating capital, managing capital but they can't tell people that end up on the receiving end how to deploy it or what to do with it. can you make a comment on that thought, sir >> well, what you say is certainly true nobody quite knows why inflation is as low as it is and how long that will last it looks to me like a big factor is wage is rising briskly you're not going to get a lot of inflation. if you look to the rest of the

world, it's still bringing 10 million people a year each into their city and some of that is spilling over into the global economy. so i think it will change. it will turn at some hasn't yet until it does, we're probably going to see persistent low inflation. >> all right now, having said that, you've written extensively about how large amounts of debt create low growth, low productivity environments for developed economies. is there a way to meld these two together basically what i hear you saying is we continue to do the same thing, and we're all puzzled by it maybe we'll reverse course, although not all banks are thinking along the lines of janet yellen so i guess my question is, what comes next do we continue to have all this debt as the price we pay to have used a very blunt instrument to affect prices that is still

unpleasant in its out come >> interest rates are very low, so the carrying costs of debt is very low corporations have a lot of money, as you said, but thaad can't force them to invest it. that has been a really weak point of this country worldwide. investment has been really low, but if you're not investing a lot, that's not adding to productivity, that's not adding to long-term growth. that is not atypical after a long financial crisis like we've had. it could turn around i'm more optimistic over the long run obviously if we get infrastructure development, lower tax code, it might help. >> you used to be associated with the imf they basically did some research and i've read it, and basically what it says is -- and it had a catchy title -- there is nothing cold about subzero rates so basically what the imf is

saying is negative interest rates have been a success. i've never spoken to one trader anywhere in my life since that's come out i want to hear your perspective here >> i wrote a book and it talks about if you do it right, negative interest rates could be a powerful instrument in a financial crisis but i don't think they've had so much effect in europe and japan that because it comes at the end of a long event in a long time so far i think it's been capping the results. >> excellent, professor. thank you for your thoughts. also i can say after every party there is a cleanup crew. when the cleanup crew comes with negative rates, that's when i want to have you on again. >> i'll be there >> thanks, professor >> all right, thank you both, to mr. rogoff and rick santelli

let's get a look at "squawk alley. >> we got the cpo of gopro, eric wo woodman, coming up whoooo.

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the vicon down sharply this morning, and taking some of the rest of the media companies with it as well down 12.5%, actually almost 13%. the company reported earnings after the bell yesterday, but it is domestic advertising where they're also lessening the ad load so they're taking less revenues as a result of cutting down or having fewer commercials, but it is also the negative 2% guidance in terms of domestic ads that seem to give investors pause. also paramount in china may be contributing as well the rest of the media not doing particularly well, either. fox is down 2.2%, cbs down 1.6%. discovery which did the big deal the other day to buy scripts is down 3.5% this morning, all on this continued concern about domestic ads one winner as always seems to be the case netflix. >> the one benefitting from all

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financials lead the way in the s&p 500. 11 are in this sector. regional banks are a big part of that story that ticker up nearly 2% just this week alone. that does it for this hour's "sidewalk on the street. let's send it to the stock exchange for the start of "squawk alley. b back to you guys it is 11:00 a.m. here on squawk street and "squawk alley" is live. ♪