>> have a great long weekend and make sure that you join us on tuesday. right now it's time for squawk on the street. >> good morning, and welcome to squawk to the street i'm david faber. we are like from the new york stock exchange carl and jim have the day off today. let's give you a look at futures as we head into the final trading session of the week. of course coming off the jobs number we're looking for a higher open. european markets you asked and we answer they were higher when i hooked last and they continue

to be. in fact a very good week overall. the ten year note yield hanging in there not really that much of a reaction to those jobs numbers despite the fact that it does appear to be coming down that being a percentage for continued fed tightening as you see wti and brent crude gasoline prices are a big thing this morning growth slowed more than expected stock futures still pointing to the higher open. >> plus a retail bright spot shares of lululemon jumping 6% strong same store sales and strong online sales. >> and hurricane harvey infrastructure hit ports are closed refineries and gas stations are flooded. also new warnings from a flood damaged chemical plant we're going to start with the u.s. economy which added 156,000 jobs in the month of august. that was less than expected as the recovery did appear to slow

a bit. the unemployment rate ticked up to 4.4%. all three major averages in the stock markets at least coming off their first across the board august gain since 2014 and futures are indicating modest gains at the open for this the first trading day in september always tough to say how a market is going to trade off a jobs number this did come in below. >> this was a lousy number the revisions taking back jobs for july and june, 42,000 total was a bit disappointing for those saying that the trend is good the reaction in the market was interesting because the knee jerk reaction was to buy treasuries we saw the ten year move down to 210. the lowest point of the year the dollar got slammed some of that is coming back a little bit and there's something for those that say the economy is doing fine and it's great and august is seasonally week. the three month average is still in the 180s in terms of jobs

construction and manufacturing are high payingquality jobs bu there's something on the economy too there and that's retail and leisure and hospitality barely added and wages barely budged and some of the momentum in the job growth is slowing. >> i do think there's an expected disappointment. this was probably it 6 of the last 20 years has been belocon census and they're often revised up and the market sable to look through it for that reason but also because the market got here before the number down. ten year is down from 2-3 to close to 21. they already discounted the likelihood of a december rate increase from the fed so the markets were behaving as if we were in a slight sort of moderating economy if not a real slow down so i think that's why this number, it doesn't necessarily come as a big shock. a little bit of an up tick in the unemployment rate. also maybe because of an adjustment so i think that it's close enough

the average miss over the last ten years in august is almost 50,000 jobs. so this is what was expected. >> seasonal pattern there. unemployment rate up to 4.4% still historically very low and maybe you find that more people are looking which raises the question of this labor shortage. are companies and sectors finding the skill and jobs that they need. 2.5% year over year. >> that continues to be where we have been almost month after month. 2.5% which is not exactly what people were looking for at least pointing to any real science of inflation, right >> no, for sure. it's not going to end this debate over how much of it is structural and how much of it is higher paid. all the work is leaving the work force being replaced by lower paid younger ones so that's an issue. it's total average hourly

earnings we're at 25 to 30% odds of a december hike. they'll have to start talking up the prospect of a hike in the next few months. as far as signs of inflation that's been what has been missing in a broader labor market recovery which we can say is still on track even though that number missed speaking of movers take a look at shares of lululemon moving higher following better than expected second quarter results last night beating on the top and bottom line same store sales were 7% well ahead of estimates. online sales soared 30% we'll talk to the ceo about this quarter which really stands out after weak miss from finish line, foot locker, dick's, nike,

underarmo underarmo und under armour they say we have a different distribution model they do wholesale and we do direct and we're not necessarily tied to those sort of athletic trends and this is a quarter where they really proved that. >> that's a very high price point. >> i don't spend that because i'm not that athletic but apparently it's a game changer. >> apparently you're saving some money. >> i put the leisure in athleisure. >> how can they charge $100 for a sports bra >> they do they're proud of tin novation and the fabric changes and they're seeing growth which say counter trend to nike and under

armour the men's business, they continue to diverse identify fabrics and launch new campaigns. >> this comes at the end of the week where at the beginning we saw the numbers from finish line it is not a big company but it had a great effect in fact on its suppliers namely nike and under armour which stock has been terrible this year. so on a differ note when it comes to this broad category although sarah would point out they are different. >> they think they're differ. >> and lulu making the case for the people that stood by the stock that they're on the right side of that commoditization curve. also they don't have a lot of stora stores it's not as if they're in shrink mode and they have an area they're getting bigger in.

and grands are what people want. >> international as well as you mentioned very low penetration. they are just starting to really come into places like hong kong and london and some flagship stores. >> if you just do the math on their penetration in canada per capita they still have a tremendous amount of head room that's something that you could make the case for they have a lot of room to expand here as well. >> $100, huh >> $100. >> for a bra. >> have you tried the pants? >> no, i haven't my main exercise is swimming it doesn't require a great deal. >> they're work pants they're for a more sensitive man. >> thank you i appreciate that. laurent potdevin come on, you go back. >> no, the islanders, sure.

>> let's get down to texas and get an update on the recovery effort that's underway in the wake of hurricane harvey scott is with us from bay town and he has an update as well on the refineries of course in that part of the country. this is the exxon mobil bay town refinery behind me and when you come in before sunrise in the morning you see all kinds of flares like the one above my shoulder here and that's the refineries flaring off excess gas and trying to get back up and running and shaking off the storm and there is a lot of that going on a lot of those flares going. that's a good sign but still as of yesterday we had about a quarter of the nations refining capacity for gasoline off line

but then there's also chemicals that are refined here and also just chemicals that are manufactured here. if you take a look at just the kind of chemicals just around houston, something like 2,500 plants that's the plant where the refrigeration failed and they lost their power and tried to load these into refrigerated container trucks those failed and one has caught fire and burned itself out they're expecting hah the that e remaining 8 will do that it's only a matter of time epa was doing air quality testing and supposedly everything is fine but they are keeping residents and everybody else a mile and a half away from the site of that chemical plant

and that's creating a lot of questions about what the danger still is there 300 or so people that are still evacuated that live around there within that mile and a half radius and today at 11:00 eastern time the company is supposed to answer more questions in a conference call for reporters which we'll be listening in on and we will bring you the update but it's just one of many issues and kind of highlights the amount of chemicals that are produced and stored in and around houston,

guys it's 10 cents above what it was before hurricane harvey and analysts expect that to go higher but the pressure on oil does continue and that was the reaction selling oil prices on the idea that the refinery shutdowns would lead to less demand we're coming off of a month, august, where oil was down less than 6% and energy stocks were the worst performer. >> when we come back we'll break down today's jobs report gary cohn will be our guest. we are headed higher this morning continuing what's been a recent trend this week more squawk on the street live from post 9. at the nyse. clients? well jd power did just rank them highest in investor satisfaction with full service brokerage firms... again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too.

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for only $34.90 more per month. call today. comcast business. built for business. the ford numbers a little better than expected still down for the month of august down 2.1%. expectation was for a decline of 2.4% so not as bad as many were expecting. a lot of people will be focused on the inventory numbers that's been the focus over the last couple of months and ford

ends the month with higher inventory than the end of july 81 day supply versus 77 in july. trucks up 9.3% but suvs which is increasingly a focus of where ford needs to improve it's sales down 11.3% we'll get numbers shortly. guys back to you. >> we'll come back to you for that the u.s. economy adding 156,000 jobs in the month of august while revising jub and july numbers both down. we're joined now by john siliva as well as chief investment strategist welcome to you both. john does this slow down any of the very strong momentum we have been seeing in the labor market? >> no, it doesn't actually it's been pretty solid the last three months what i particularly liked was broad based gains in jobs as well as really solid gains in construction and manufacturing so for the overall economy it still is something like 2.5%

economic growth in the third quarter and as you know this is all preharvey so the next couple of months we'll take a little off the table and then one final point before we turn it over to brian just the fact that now it really looks more and more given harvey less and less of a chance of a fed move in december. that's wearing off a little bit. what feels like the appropriate reaction to you? >> well people want to be more bearish. you hear about the 5% corrections in the market. the dollar was weak earlier in the week as you said gold was rallying so i think any time you see a job report above 100,000 in our view it's pretty positive if you go back and look at the august numbers since 1990 the

average nonfarm payrolls is 79,000 and we saw that the numbers in june and july were pretty positive. yeah they have been revised lower but that's just math so i think the employment reports and numbers that we're seeing from the u.s. economy are very strong so they now defaulted to be more bearish and that's trying to be too short-term and yes we are going to van effehave an effectr harvey and the market at the end of the day is starting to be too negative here. >> john, you know we keep askin the question with unemployment down below 4.5% why we're not seeing an acceleration in wage dproeth but sti growth does that tell you there's more slack in the labor market than we have been giving credit for and does this fall into the line of the argument

there's that slack there and it continues to moderate wages and i like the point you made that wage gains are still above the pace of inflation so there's real wage gains for those that are currently working. >> yeah, 12 month change, 2.5% though only up .1% from the month before gentlemen, we'll leave it there, thank you very much. john silva. >> thank you >> well, dow dupont completed it's merger. we have the details as it gets ready to trade for the first time here at the nyse and what's going on behind the scenes

take a look at futures as we told you ten minutes from now we'll be higher. more squawk on the street straight ahead

this morning it will trade as one company and there was complexity involved in the deal itself creating three companies under the dow dupont banner including a leading material science company. the key part was in the agricultural company that brings together dupont pioneer, dupont crop protection and dow agro

sciences among other businesses and also a leading specialty trucks company consisting of a lot of different businesses but if you recall there's been a lot of pressure from shareholders including activist firm trian, third point as well as glenn view all of whom have been pushing the company to reconsider the allocation of the businesses into that portfolio. particularly when it applies to the specialty product company. we will see the product of the review in the not too distant

future but they want it attributed to specialty which is seen as the faster grower. and want it run by the ceo of ta the overall but they're hoping it will be reallocated and it's going to even out coming from materials versus specialty which right now is almost double materials being run by him that's another point of contention of course among these investors and had larry robbins on a month or so ago saying they want him out

investors like this group but we'll see how it shapes out. it's fast moving and complicated. >> the plan is to spin off all of these businesses into their own companies leading with agriculture although some are saying why are you leading with that one we may hear something in the next few weeks in terms of their responding to this pressure from investors. >> what's the time frame for the split? 18 months. >> yeah, 18 months something along those lines. when we come back we'll have white house chief economic adviser joining us and he'll be talk about today's jobs report and we'll get to a bit about tax reform as llwe the opening bell just a few minutes away

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much of an impact. >> no, it's been less of a market mover for awhile since we have been steady in this trend and the bond market already priced in a slow and steady picture the past month or so. welcome to september which is traditionally the worst month of the year for stocks but they said that about august too which was the second worst month and turns out we got a gain for all three of the major averages in august just barely for the s&p but the nasdaq had another strong run. was going to ask you about bio tech that's breaking out and driving the nasdaq. >> this market keeps seeking new engines to keep it supported and get to the next level.

final trading day of the week and the first trading day for the month of september celebrating. over at the nasdaq. >> one fact that's interesting this week is that turns out fund managers actually put in $30 million into u.s. equity funds for this last week and it was notable because it was the first week of inflows in the last 11 weeks. not that much and a lot of it went into utility sector as we

understand it but as we continue to watch this market in september what was it look like? there's a lot of risk factors in september. >> but particularly as it went on and the devastation of harvey was so evident that this idea of connecting debt ceiling raise withed a f with aid for harvey may have helped stocks. >> that was a factor this week as we rebounded toward the highs. there's an overlay of caution. there was a wobble for a couple of weeks in august but you haven't had a 3% pull back even in the s&p all year. you almost got it in august. you did come back now i think it's probably worth keeping in mind we're about at the closing highs for the s&p. 24.80 is the closing high from a

few weeks ago. so basically you rd what you lost in mid august it was really not a significant pull back. the seasonal factors have not really been a great guide for awhile now and yes september is bad, october can be noisy but when the market is already up 10% or so year to date those things ray little bit less scary historically we'll see if that continues. >> much better than expected sales numbers for the month of august and increase in sales of 7.5% general motors picked up a half point of market share a couple of interesting notes here first of all their inventory has come down substantially.

they ended july with an inventory of 104 day supply. they end august with inventory down to 88 day supply. a big cut in inventory as for the industry sales pace for the month of august, general motors will come in at 16.4 million units but general motors increasing sales 7.5% well above an increase of just under 2%. guys back to you. >> do you get the sense that auto sales have bottomed now after a few rough months >> no, i wouldn't say they're bottomed i think we're in the gradual slow, not a decline, a plateau

we're not going to see everybody up and everybody down. we're now into that period where it's plateauing a little bit lower. >> thank you, phil on the auto sales. of course the story of the morning is the jobs number labor department reporting 156,000 jobs were added in august the unemployment rate did tick up it's now 4.4%. joining us with the first reaction from the white house is national economic council director gary cohn always nice to have you. some are disappointed by the number it did come in descently below expectations are you disappointed with 156,000 jobs >> first of all, thainks for having me and i want to extend our thoughts and prayers to all of those in louisiana and texas

dealing with r harvey. look if i told you on inauguration day that i would be standing here on labor day weekend and we'd have 4.4% unemployment and 3% gdp growth you and i would be having an interesting argument you'd probably be telling me those are hard numbers to achieve are you sure you can get there well guess what i'm standing hereand i'll sure we can get there because we are there. we're not disappointed with the numbers and we're not disappointed at all. these numbers aren't just numbers that come out every month we're looking at the trend overall and job growth and job creation and we see a lot of very good momentum in the numbers. the numbers that went down were government we always said government is going to get smaller the private sector is getting bigger we see job creation in the sectors we want to see job creation in. >> i want to hear a lot about that 3% gdp number particularly because president trump discusses it in relation to tax reform i'll point out as you well know

the final numbers on second quarter 16 gdp were 2.9 and the full year is still not anticipated to be near 3%. let's get to tax reform if we can. you bumped into aman javers and you said you're optimistic what does it mean when you say reasonable shot? >> i am optimistic and we have a more than reasonable shot because we need to get tax reform done. if you listen to what president trump said in missouri he layed out what we need to do in this country. we need to be competitive. we need to get a business tax system that makes us competitive to the rest of the world

we need job creation we need to compete with the rest of the world it's way too complex for the average american to do their taxes today. we want to go back to where americans sit down at their kitchen table and do their taxes on a single sheet of paper that's what we should have in america. it's not fair that people can't do their taxes that they have to go out and hire a tax preparer and buy software we spend millions of hours doing taxes and spend so much money doing our taxes it should be simple i want to be ten years younger and six inches taller but that doesn't always come true

simplification does not mean cuts for the higher end of the bracket. those deductions effect the high bracket player so when you simplify you're effecting the high taxpayers the most so we would not agree with that statement. i know that's the conventional wisdom out there but in reality we spent an enormous amount of time looking at this and modeling this as you simplify the tax system you reduce taxes on middle class income payers and average americans and you're actually taxing the high end at a higher rate. it had some ideas out there. but can you give us any more details about what is being passed through congress at this point that makes you so optimistic that it's going to go through committee by the end of the year

>> i think you know as he said yesterday he and i along with congressional leadership in the house and senate have been working quite diligently and rigorously for the last four or five months. really we have been working since december on a tax plan we have been meeting often we have really agreed on a skeleton and frame work for what taxes need to look like and we have complete buy in from the six of us on what the frame work for taxes should look like we're now looking with both the senate finance committee and house ways and means committee to build out the skeleton and deliver a tax plan which we think we can do because we have buy in from the six of us as well as the president. >> how difficult is it to sell the notion that putting a corporate tax cut, corporate tax simplification at the centerpiece is going to translate into jobs? the research isn't all that great. you have after tax profits of u.s. companies already running near record highs and we have the job growth and wage growth that we have. >> we don't have wage growth

think of the situation today where we have a tax system that charges 15 or 20% higher than a european competitor. you start with a 20% disadvantage in taxes so if you're a european competitor you can charge less for your product, you can pay your labor more and you can be more profitable we strongly believe that if we lower business tax rates it will translate into higher wages across the board. >> last time we had a repatriation you remember that. the beneficiaries were investors. it resulted in buy backs and higher dividends it remains unclear that the beneficiary is going to be your

middle classworking person from cutting corporations taxes i get they may not move any longer and certainly we do need more competition i've heard it from ceos for years. but the idea that it benefits the worker how are you so confide confident? >> how does it not the big owners are the public pension funds the biggest owners of equities in the world you can talk to guests you have on your show talk to larry fink and fidelity and they will tell you that the big owners of equities today are all the big public pension funds. they're the policemen and firemen and teachers and civil servants of america today that have their money in public pension funds being managed in the u.s. equity market so yes we're helping americans by delivering returns back to them. >> why don't you move on to another project you're working

on is it true the president calls you a globalist? is that something investors should worry about tariffs can be growth killing? >> we had a very open and robust discussion on trade and the economy and economic growth and jobs we have a very good relationship and we're always talking about ways to grow the u.s. economy and put workers back to work and increase wages that's his mission that's my mission. >> and finally, the washington post today, you clearly stated your opposition to the comments made involving the unrest in charlottesville. do you still feel that the president has confidence in the job you're doing are you concerned that your job at the white house is going to come to an end >> i have a great relationship with the president

we're working well together. we spent an enormous amount of time this week working on taxes. we were out in missouri talking about taxes. we spent time talking about taxes. we'll be out next week traveling and talking about taxes. he and i are spending time working together on all of the big economic issues that are going to drive economic growth and drive wages in this country. that's what he cares about that's what i care about >> all right and a lot of that has to do with taxes and it's going to be an issue that we care a great deal about because of our audience. thank you for your time. look forward to catching up again as soon as possible. gary cohn from the white house. >> thank you. >> optimistic on tax reform. but clearly not disappointed with the numbers feels the economy is going smoothly and we'll see what

happens. and saying it's not going to be tax breaks for the upper end. >> the math shard to reconcile. >> it is especially if a lot of pass throughs benefit a pass through with everybody establishing an llc. a lot of questions still to come including how this will go in the house and the senate for now the bond pitts check in on how fixed incomes are reacting to the jobs number this morning rick, what do you think? >> i'll tell you what, you brought up some good points with mr. cohn maybe what investors should worry about is how big of a bag to put the money in that their equity positions are making. equities love the mediocre number i don't love it. treasuries they love that weak data should put yields down but

the love affair is short if you look at it what's going on on the short end a lot of volatility definitely rates went down but if you trim off that wild little part there it's right over at 2136789 if you look at the dollar index now you're getting into the real issue. most traders watching the dollar index. it also broke rather dramatically and granted it's now up a little bit on the day but it's very significant to look all the way back in the end of 2014 to see even though we're not on the lows we're certainly not getting a good bounce. if you want to see if we can get a bounce maybe you should look at the euro versus the dollar on

the next chart it came very close to 120. 120 is the point, perceforms one brow of the ecb. it hit 120 and that's when the ecb hit the air waves. one week of the dollar index we don't look at it enough. the dollar might be having a tough time against the euro but it's making progress on the dollar yen and overtaken 110 handle back to you. >> thank you very much >> we do animation. >> two weeks and two days. lululemon reporting earnings and we'll speak exclusively with the company ceo. stay with us

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>> as we talk about this move higher to 22,000 like you guys pointed out has been a couple of week span here but some of the traders taking a more positive attitude and reclaiming that level. meanwhile it has been an outperformer as of late and real estate weighing things down a little bit but generally speaking a fairly positive day to start here. as opposed to like i mentioned before september some traders are still talking about this

idea that we have season a seasonably weak two month stretch for august and september. we didn't get that with august but it's a positive trade just 50% of the time we'll see if those momentum gains can carry into september a lot of the catalyst on to the horse rie horizon including tax reform and the interest rate meeting and one more trade to highlight you mentioned about the drivers of the market where is the money trying to seek where the next opportunity will be. so far it has been in the growth oriented stocks. if you look at the chart between the russell 1,000 growth eta versus the value etf it's a big performance. 15% in terms of growth outperforming value. that could be something to watch

here so all of that the valely important. th we didn't gechb get to e so much to come there. thank you. squawk on the street will be right back don't go away. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade.

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where you do business. ♪ ♪ >> an exclusive interview with lululemon on earnings. also a look at stocks. having another strong day after one of the best performances over the last six months and the last year. >> the whole group has been strong ma m macau is the story here. a month of straight gains for the business they love the story because it has the international exposure. there you see wynn tremendous come back from a couple of years ago.

>> high rollers there. pretty broad based rally out of the gate just looking at the individual movers materials, financials and consumer discretionary is the best interesting to see the reversal in the jobs market reaction. both in the bond market and currency market as stocks remain higher. >> there was some talk that there was month end rebalancing in favor of stocks going into today, going into yesterday's close so it's obviously carried over today. >> one of the weaker sectors is pharmaceuticals. they're not not dramatically at all. of course announcing that deal on monday and it's finally taking a breather. as i said we'll have that interview. though the going to want to miss that we'll also of course continue to update you on thoughts about the jobs number, the fed, oh and a lot of other things.

sarah hasn't even talked about the dollar yet and an hour has gone by. >> yes i he. i don't remember. >> hockey players. we'll be right back. over 100 yee the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average?

>> carl has the morning off. let's take a look at where we stand in the markets disappointing job number doesn't seem to be shaking stocks too much the dow is higher piano a quarter of a percent we have important economic data crossing the tape. let's get to rick with the numbers. >> i tell you what, ism manufacturing expecting a number around 56.5. this san august read of course 58.8 that's a pretty surprise 58.8 that really takes me back. 58.8 i'm going back, back to the wayback machine and looks like i have to go all the way back to 2011 yes, 2011 to find a higher

number employment index is important. university of michigan sentiment survey, august, final read what do we have on this number 96.8 96.8 what interesting here is sit takes the mid month read at 97.6 doesn't look as good of course so that's a bit of a retrace and when you look at 96.8 that's the weakest number since july so it doesn't look too bad but do remember beginning of the year we had 98.5.

we're expecting a positive number and we positively didn't get it minus 1.4. construction spending having a hard time this year. this is the 1, 2, 3rd negative month over month change this year we need to do something to improve that a bit david it's all yours. >> i'll take it. thank you rick markets mixed right now. the s&p is up. the nasdaq is down actually. weakness in tech this following the weaker than expected jobs report we got this morning. we did speak with the national economic council director that spoke about those numbers. take a listen. >> look if i told you on inauguration day that i would be standing here on labor day weekend and we'd have 4.4% unemployment and 3% gdp growth you and i would be having an interesting argument

so no we're not disappointed with those numbers or disappointed at all. he is the former deputy labor secretary under president obama. david let me start with you on the broader markets this morning. any change in our overall opinions given this number continued lack of wage growth at 2.5% and unemployment rate of 4.4% >> no, no big change here. i think the economy completely in second gear here. the economy is doing well. we think we could do another 3% growth in the third quarter and the rest of the world is doing really well. all the pmi numbers came in around the world and they're very strong and the global economy is doing well. we think we will get a tax cut

and we will get we think another fed rate hike in december. >> chris, what's your assessment of the underlying strength in the labor market whether there's structural things restraining wage growth and fouling up the traditional models where do you stand on that >> it's an okay jobs report. it's not a great number. there's underlying things but again this lingering issue of wage growth continues to bedevil everyone that tries to address it simply a tightening labor market is probably not enough to lift up wages at this point so it speaks more broadly to the need for other macroeconomic policies or it's a long-term

infrastructure goal. >> you didn't mention tax reform according to the administration the corporate tax rate down to 15 or 20% optimistically does that boost wages what happens with the wage number >> there's a reason i raise tax reform because i'm not sure what's in that plan right now. a sensible tax reform package that provides relief to lower working class middle classworkers i think would have a powerful effect but one that really gained people that pay the estate tax i'm not sure it would have an impact at all. i'd rather see the efforts of this administration be put into infrastructure. >> on that overall question we asked gary cohen about why they see middle class wage earners benefitting from corporate tax reform and he said they'll benefit because their pensions will go up because stocks may

move positively when you bring a lower tax rate and have higher earnings do you think that's the answer i'm just curious as to where you come down on that. because the administration keeps offering different answers as to why corporate tax reform is going to benefit wage earners. >> i think that there's two separate questions we do need to reduce u.s. corporate taxes because that could increase investment spending and push up productive and that could either push up wages or profits both of which are a good thing but there's a second issue here which is really the growing imbalance of power between management and labor we live in this uber society here in this sort of airbnb society where labor is getting itemized you're selling labor by the hour trade unions in the private sector is getting decimated. that's leaving workers powerless. we need more productive growth

and economic growth and what is it making people harder to get wages even out of a growing economy. >> you're right. only a very sharp acceleration in activity would be capable of lifting wage growth. so what does a very sharp acceleration look like >> we have to be realistic about this getting to 2.5% growth and sustaining would be a major win. 3% growth is going to be difficult but also we need to think about immigration laws as well as tax laws we have a labor force problem. that's part of what is slowing it down here we don't have enough people available and ready to work so we need to make sure that we have strong growth in legal immigration to help our labor force grow if we want to get to stronger economic growth. >> gentlemen, thank you both >> thank you. >> we do want to get back down to texas for an update on the hurricane recovery effort.

scott as we keep an eye on this, our chemical plant that sparked the fire and the warnings yesterday. what can you tell us >> this is one of the many st r stories in the wake of harvey. i'm standing in the middle of a four lane highway. this is u.s. 90 that's one of the main routes from houston to beaumont it's closed not because of blooding but the chemical plant. you can see it's blocked off here the plant is about a mile up that way as they wait for these chemicals to burn themselves out as of last night one of the nine large containers full of these chemicals had burned out it was the one that caught fire and it was popping or exploding or however you want to term it yesterday. that one burned out and it's only a matter of time before the other ones do. we haven't heard any updates as of this morning but they're still keeping everybody a mile and a half away.

a lot of people want to know why that is. they have been out doing testing for air quality. supposedly everything is fine but residents around here are impatient to say the least. >> it's a big deal to us because we just went through a pretty serious deal with the storm and this company needs to, they need to leave our community we don't need this crap. >> well if you live anywhere on the gulf coast or anywhere around it you're going to be dealing with chemicals take a look at a map of just the chemical plants just in and around houston some of this is because they're petro chemicals. they come from the same crude oil that makes gasoline and in that regard, 69% or 2-thirds in the country production is off line right now it's the basis for about every

compound out there so that's a big deal in the overall chemical sense but also the issue here about safety and what does this mean, did arkema the company that owns this plant take all the right precautions they're going to have a news conference and there's lots of questions here about this disruption and about whether they were properly prepared. guys. >> adding a whole new layer of risk washington post says 1,300 chemical plants in the state of texas. when we come back, shares of lululemon moving higher on the earnings report last night the ceo will join us eluvexcsi tloi ta ly to talk about the quarter squawk on the street will be right back ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity...

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say hello to faster downloads with internet speeds up to 250 megabits per second. get fast internet and add phone and tv now for only $34.90 more per month. call today. comcast business. built for business. welcome back, nice to see you. >> thank you thanks for having me. >> joining us from vancouver with a bit of a delay. so tell us with all of these beats what did you see in the business this quarter that so many of your competitors across retail and sportswear in particular did not

it's seeing our growth strategy and it paying off and meeting the market at the high end and in the premium segment and being lead by innovation in a world of increasingly commoditized transaction we really differentiate ourselves with innovation didn't understand how you could get away with selling a $98 bra and get agoway with it in a time that there's a slow down in the

industry. >> the overall wallet might t not change but people are really intentional with their purchase, with the brand that they're attached to. they want brands that have purpose. in our men's business we see a big redefinition of what masculinity means for guys not being the strongest, toughest or the fastest but bringing a mindful component to who the guy is and our ability to deliver incredible human connection and innovation resinates with guests new and existing around the world. >> just another one about the category because we saw such poorly received results from finish line and foot locker and under armour, nike this quarter. some of the analysts are writing about an athleisure recession or slow down in the category. is that a misnomer >> it's a misinterpretation of what's going on and how people

want to live their life. we see more and more people wanting to live an athletic and mindful life style i have seen that in shanghai so i think that trend is actually very timeless. it's true for mens and womens. it's true across generations and it's true globally so i think we're very well positioned and again, our vertical model really allows us to control and deliver amazing experience for our guests which is really unique when you look at the rest of the athletic field. >> yeah, that wholesale model especially for nike. the other trend right now among retailers and sports ware companies is going straight to amazon just bowing to the pressure of the relentless growth of e-commerce and amazon. you managed to grow your website away from amazon do you view them as a threat or a partner? how do you view them as a

picture of the overall digital retail landscape that you're growing? >> there's part of the world increasingly commoditized. we're in a very different playground differentiated by innovation and premium product. we're solving problems for for athletes so we're not in the world of commodity at all and that gives us a unique point of view. >> what about physical stores? mike made the point earlier that you don't have as many as many of the other retail brands are you opening more talk us how tlu how you think about the store of the future in what overall has been a tough retail environment specifically for traffic at a time when many department stores and other big chains are closing stores.

>> i'm actually really excited about our physical footprint i see tremendous upside with our physical footprint i'm so proud of what the team has been able to deliver in being incredibly nimble and agile in opening different formats from local 1,000 square foot store in oregon it's been incredible to see how we can adapt to different market and provide digital in places that we're not. >> you mention the growth you're seeing in the men's business in particular which is something that you highlighted many times on the call. interesting also because nike and under armour are chasing the women's part of the business why is men's such a huge growth

area for you and what are you seeing in terms of who is buying it and how they're responding to the innovations? especially around the abc pants which seem to be the highlight of the men's business. >> again we see a real evolution to what guys aspire to be. the evolution of no longer being the toughest or the fastest or the strongest but looking at their life in a more wholistic way and combining mindfulness and athleticism. so they want to be ready for anything that comes their way but there's another dimension that's more vulnerable and courageous and really makes them a better athlete and better father, better leader, better friend and that's really in the sweet spot of who we are. >> what's your sense of an overall level of consumer confidence especially in north koramerica s

we head into the back to school and holiday season it's been tough to get aread from other retail and the macro economic data. >> i'm optimistic. especially when i think about whether it's our assortment of jackets and outer ware we have a lot of really interesting things coming between now and the end of the year so i'm optimistic. finally what are you doing on sneakers we have been seeing a little bit being released from lululemon. this is a tough market dominated by adidas and nike we have seen under armour trying to get into it as well what's the plan here

>> it's a brand that has a lot of categories. and it's just a really good way to see how we kept expanding different categories we're learning and we will be continuing to look at new categories because again i feel like lululemon has a lot of position to play in the active mindful lifestyle. >> thank you for joining us to talk through some of the business and the growth opportunity. the ceo of lululemon joining us from a store in vancouver canada where the company is based.

>> the stock up more than 8% right now. when we come back we'll be joined by the ceo of gulf coast electric company how he's getting texas up and running again in the wake of hurricane harvey plus jan hatzius weighs in on today's job report squawk on the street will be right back helping keep shoppe. this is a financial transaction secure from hacks and threats others can't see. this is a skyscraper whose elevators use iot data and ai to help thousands get to work safely and efficiently. this is not the cloud you know. this is the ibm cloud. the ibm cloud is the cloud for enterprise. yours.

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>> it's expected to delay power restoration for the rest of the week the ceo of the louisiana based company that serves 20 texas counts including harris county where they now have 60,000 customers still without power. thank you for joining us this morning. >> good afternoon. characterized the scale of the restoration process right now. not just in harris county but also your coverage area north and east of there as well. >> correct actually we're in the outskirts of houston in the woodlands,

beaumont, port arthur texas and you have seen the flooding in those areas but first of all our thoughts and prayers go out to all the people effected. these are tragic events and we're all working and pulling together to not only restore power but to restore communities. as this storm has marched through hitting the texas coast and then up through louisiana and mississippi and arkansas we really had to chase it as far as storm restoration. we still have 70,000 without power. 7,000 couldn't get power even if we wanted to make it available to them because of the flooding. flooding has been the major problem. with the flooding we can't get in and even if we did get in to assess what the damage was and

electricity and water don't mix so we have to be careful about making sure that the safety of the public is insured by making sure not only from the flooding standpoint but the homes itself. >> sure. >> is there a way to handicap when you might have access to some of those areas? how happy lid is the water receding in some of these areas? >> well, it's still rising in some areas typically everybody would be back on and we have seen in louisiana where we have seen a lot less flooding. but this will probably be a lot of weeks as we wait for the water to recede but there's a

process we have to go through. the homes that flooded to make sure that the home is safe to take electricity because if there's water in the home or something like that it could still be dangerous. >> you mention you had to chase the storm. as it made it's way up through the other areas. what's the scale of this over the course of your career. how does it look at this point if you cans a s asset maybe the financial impact for your company. >> it's going to be significant. unfortunately there's a little deja vu watching some of the flooded areas. that's 12 years ago to the day and 26 days later we were hit by rita in this storm, at the moment, we would anticipate that at the

most we had about 300,000 customers or so without power. katrina was 1.1 million customers damaged throughout our service territory and rita follows that up with 800,000 along the texas and louisiana coast so it's a big storm and extremely tragic but within some of the things we have seen for us, it's going to be manageable. so it will be significant. i'm not trying to trivialize it in anyway. >> is there any damage you know of to bigger production? you mention substations but aside from getting access to neighborhoods with downed power lines and things like that do you have any capacity compromised? >> we do not we have continued to operate

well we have one power plant where they have access in terms of the roads into the power plant but we have been able to manage our crews there and make sure that they stay supplied. >> thank you for your time and good luck. >> thank you very much appreciate it. >> all right let's send it over now to sue herrera with a news update for us at this hour. >> i do, david thank you. good morning, everyone here's what's happening at this hour congress is working to send at least $5.5 billion to the areas hit by hurricane harvey. that aid package would be the first down payment to ensure recovery efforts are adequately funded texas residents standing in long lines for bottled water. it comes after harvey wiped out the water system in beaumont a

town of 120,000 people they will be without water until after flood waters recede and officials can assess the damage. another confederate statue is gone this time in san antonio, texas. crews taking down the soldiers statue overnight this removal was peaceful. and unleaded gasoline prices hitting two year highs aaa reporting the average national price is now $2.51 a gallon that's a 7% jump in just the past week. prices are surging of course due to those refinery shutdowns triggered bihar have major fuel pipelines feeding the northeast and the midwest have been closed or severely reduced which that is causing the shortages in many many areas we'll keep you posted on that. that's the news update at this hour david back downtown to you. >> okay. thank you, sue when we come back we'll have more on today's august jobs report goldman sack's chief economist will join us ua on the street will be right back th served in the navy. i do outrank my husband,

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>> that was the locon census estimate joining us now is the goldman sachs chief economist a regular here on jobs day welcome back. >> nice to see you. >> we should note you had a pretty accurate forecast 160,000 jobs i gleuess the question is does this weaker number signal a real slowing in the labor market or just seasonality >> it's mainly seasonality and calendar effects august had a fairly long standing tendency to be on the weaker side and it probably broke the number the same is true for the average earnings number and there's also calendar issues to do with the timing during the month. the one thing that was more genuinely weaker was bond rate

edged up so i would say, you know, it's moderately softer but overall it's doing well. >> what about the break down the fact that barely any jobs were added in retail and slez sure and hospitality which are big job creators doesn't that concern you >> pay back for a big inkreez t -- increase retail was softer. so a couple of sectors sending a positive message overall i don't think there's anything to get too concerned about here. >> people keep pointing to signs that there's still cadillac in the may lei boar market. on the other businesses are saying hard to find people to fill positions are we at a point where workers scarcity is going to restrain the job growth on a monthly basis now? >> i don't think those effects

are strong i do think that we're out employment if i look broadly across indicators. but if you look at history it can get through and i do think we'll probably get through and the unemployment rate is going to resume the decline our expectation is that we're going to get below 4% in 2018 but i think that also means that you have overheating. >> we seem stuck at this number. >> it's been weak this year that's true. prior to 2017 we had seen a nice acceleration 2017 has been a disappointment i wouldn't be too worked up about it though because if you look at some of the wage surveys they are still saying that

workers are seeing good wage increases and still some trend acceleration so my expectation would be that over the next six months or so we'll get a rebound in the wage numbers moving toward 3% which i think is actually consistent with full employment if we get there. >> implications for the federal reserve? does the fact that there is very little wage growth or inflation growth at all keep them on hold in december? >> why is that >> we're about 55% if you want to be overly precise about it for december increase basically because the real economy, the unemployment rate is trending downwards. gdp growth was 3% in q-2

tracking close to 3% in q-3. our priortary indicator, all the higher frequency indicators. so seems to me that we're still growing above trend and maybe full employment and i don't think the fed will want to abandon the process. >> still early obviously to gauge any effect from this storm. and beyond figuring out if it has a temporary lull in economic activity i wonder if it's just going to get a pass to a lot of the data over the next couple of months whether it's jobless or otherwise and how that might feed into the fed intentions this is effect if we have weakness in the economy because of harvey. >> wres i think for the next month or maybe two months there will be a number of distortions. it's very early to know how big they're going to be but i do think that you'll probably want to take a lot of that with a grain of salt. from the fed's perspective i'm

not sure that it matters that much because it seems like a september announcement of balance sheet run off is, you know, not a done deal at least highly likely and by the time the december meeting rolls arnds when you have to make a decision i think the data will be cleaner at that point. >> as we move into the fall the discussion of tax reform is going to probably pick up. we have already been starting to have it. one of the key proponents, one of the reasons the administration is behind lowering the corporate tax rate is saying they think it will result in wage growth. >> i do think that if you would get a slightly more stim eula tif physical policy at the margin that's going to support growth and the labor market and ultimately of course that also has implications for wages and

it's more indirectly through those channels. >> you see overall pretty optimistic on the growth picture of the united states given the fact that we're heading into september where we have a few key event risks that could throw us off kilter. the debt ceiling, the risk of a government shutdown. the fact that it's going to be all through congress we don't know in the details of the plan yet the saber rattling we saw it launch a missile over japan this week. do any of these things worry you? >> there's been plenty of events i think some of them have perhaps gone down a little bittel rj -- a little bit. the risk of a government shutdown and serious problems along the debt ceiling look lower. they haven't gone away but they look lower than they did but geopolitical issues are still very much out there and that's

definitely at the risk of turmoil that has not changed >> pretty uncertain there. always good to check in with you. >> the chief economist at goldman sachs. >> the president making his pitch to congress for them to be ready to act on reforming the tax code. >> this is our once in a generation opportunity and i am fully committed to working with congress to get this job done and i don't want to be disappointed by congress, do you understand me do you understand me >> why our next guest says for lessons on tax reform congress doesn't need to look far gym stewart is going to join us on the desk next [vo] quickbooks introduces jeanette

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>> gary cohen telling us last hour that he is optimistic for tax reform being done by the end of this year take a listen. >> we're now working with both the senate finance committee and the house ways and means committee to build out the skeleton and put the muscles on and skin on it and deliver a tax plan that we think we can do because we have buy in from the six of us as well as the president. >> our next guest says if congress needs a tax reform road map it should look no further than it's own backyard joining us now here at post nine, new york times columnist jim stewart. the district of columbia. >> first of all, every time they talk about tax reform there's a

core of success that's impossible you think health care is hard. it's so much worse it's never going to happen so i picked the district of columbia because if the district of columbia that maybe the most left leaning country can do it then the federal government can do it. it's going to go into effect fully in the next year they cut rates and closed loopholes and spurred growth they didn't blow up the budget they have more of a surplus now than they ever had before. it's a textbook case on how to do it. >> they also benefitted from tovr all growth in the economy. >> it's been very positive there and again like always it's a chicken and egg thing. did the tax reform help this did it hurt? did it not get in the way? it's hard to know and you don't get the deep studies of the

small, you know, economic entities like this obviously the flip side of this is kansas which did the tax cuts and it's been a disaster one of the worst economically performing states in the country. >> what's the difference between the two if there is something that you could look at. >> well, the cut part of washington d.c. was offset by substantial loophole closing so it wasn't a huge reduction it was modest reduction in taxes which byty way i think the federal government could also afford a modest reduction if you assume reasonable growth reasonable growth. not crazy growth kansas blew open the budget and made optimistic assumptions about it the governor said this is a shot of adrenaline into the heart of kansas cieconomy and i said tha nearly killed the patient. they to roll that back and raise taxes and there's crazy tax

reform and has not been suppo supported. >> they did not have to deal with the more complicated and politically thorny issue like mortgage interest rate deduction and state and local taxes. what do you think will be the biggest sticking points as we head toward this debate. >> you're right. if you get down to the details a local government and state government has very different parameters than the federal government but the broad principle here which is you provide, first of all you have to have a carrot and the carrot is lower rates for everybody or just about everybody the stick is you take away the incentives and breaks for

certain people they came pretty close to succeeding they managed to tamp that down now the federal equivalent of this as you look, especially at upper income taxpayers you can say over it's a big tax cut for the rich, well, you can lower rates on the rich if you take away their breaks and their biggest breaks are interest deduction, mortgage interest deduction and charitable contributions we're probably not going to touch the state and local taxes which probably will go those are big breaks for them. you take those away you start to add some real revenue in order to lower the things. the other big issue i'm going to address this in a future column, you know what to do on the individual level but the biggest loophole is the very low capital gains tax rate and you can certainly make the case that if you're going to lower corporate taxes substantially then it's fair to tax shareholders that will benefit from that and get a wind fall and tax them a bill bit more. >> the last time we went for tax

reform, it was to the extent, it's described now as a result of years of planning of discussion on the bipartisan basis whether it was bob packwood and bill bradley on opposite sides of the aisle or the reagan admission with tip o'neill now we have a completely republican congress. now these things are difficult. >> they are difficult. and last big successful one was reagan in 1986 i was pleased to see that trum thp week was envoeking the spirit of reagan and going into this i think people don't remember that initially the reagan administration just kind of cut. and that didn't do much. it didn't spur the economy and so they came back to the drawing board and they did what became the more comprehensive reform in '86. they significantly lowered rates for everybody and got rid of a lot of loopholes most of the loopholes have crept right back in. and, of course, one of the biggest loopholes is for real estate and real estate industry and we have a real estate developer in the white house

every once in a while he'll funny way kind of say well maybe i shouldn't be doing this. i don't think it's going help me but let's see. some of the biggest breaks will be taking loopholes away that he benefits from. >> he went on the record hating the '86 format because it did cost him >> again, if you're going to close loopholes, you have going to hurt the real estate industry which has one of the most powerful bodies in the country they did in '86. frankly, to come up with additional revenue, they have to do it again this time. >> we look forward to future columns on this very important subject. jim, thanks. >> jim stewart joining us. let's send it over to jon fortt, right take a look at what is coming up on "squawk alley." >> let's talk high end toys. yes, i do mean that new iphone that we expect to see in a week and a half also, some new toys from spiro arnnected to "star ws. that's happening this year too you know who likes to be in control?

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take a look at shares of procter & gamble they're push ago head of the shareholder meeting against the

major investor from nelson peltz getting a board seat he gave an interview to the enchoir irand making news in that interview by saying this is according to the company, that peltz says he wants to move business out of the headquarters and jobs out of the headquarters of cincinnati. as you know, cincinnati and p & g are basically synonymous i think it is strategic that taylor talked to the local cincinnati paper ahead of this vote cincinnati people are shareholders of p & g and workers at p & g sort of appealing to his side. as this fight continues to heat up and we continue to follow the back and forth proxy fight letters between trian and between p & g, both of them pretty much have strong arguments looking at different time frames of the stock and performance of the company ahead of the vote on october 10th where they will determine shareholders whether peltz gets a seat on the board. >> 40% of the shares are owned

by retail. that may be the case here. they may have the work cut out we're expected to hear or get a white paper, the larger sort of compilation of the thoughts. >> this goes against the points that p & g is making that trian doesn't have any ideas to fix the business this is certainly one big idea when it odometecomes to taking s out of cincinnati. i find it so hard to believe it will be such a major disappointment for the city and nobody in management is talking about that or on the board the stock price is benefitting from all the track and forth when we come back, apple official confirming the event on september 12th as the stock hits new highs. we'll talk to apple employee number 66, what he sees coming down the pike. ♪ ♪

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welcome back to "squawk on the street." the dow trades back above 22,000, financials leading the way with goldman sachs and jp morgan the top performers. financials the best performing s&p 500 sector as well led higher by citizens national

and huntington bank shares even property and casualty insurers are in the green. all state, chubb and aig damages are expected to run into the tens of millions of dollars. they expect ensured losses to be lower since flooding will account for much of the damage now i send it downtown for the start of "squawk alley." guys >> thank you good morning it is 8:00 a.m. at lululemon headquarters in vancouver, canad canada "squawk alley" is live. ♪