♪ live from new york where business never sleeps, this is "squawk box. good morning, everybody. we're easing our way into friday welcome to "squawk box." this is cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen andrew ross sorkin is back been traveling all week. >> a lot of traveling, on the west coast, boston >> makes you appreciate being back it is jobs friday today. the september employment report is out at 8:30 a.m. eastern time non-farm payrolls are forecast to rise by 80,000. that's because of the impact of hurricanes harvey and irma the unemployment rate is expected to hold steady at 4.4%. u.s. equity futures, dow futures indicated up by 10 1/2 pounds.

nasdaq up by almost 10 points. s&p down by a point. this comes after the markets closed at record highs again the longest streak of record closes for the s&p 500 in years, going back to '97 or something >> and it's six in a row, but remember two weeks ago and three weeks ago and four weeks ago, we were saying how many records there were back then this one didn't start until last thursday so the one that takes us back to 1997 it was 130 points yesterday on the dow -- or 113 after all these moves. 22,775, almost 23,000 on the dow. the s&p 2552 and since the election, it's 24%. 25% since the election >> 25% after yesterday >> widely predicted by so many >> if you want to see what happened overnight in asia,

let's look the nikkei was up by 0.3%, similar gain for the hang seng the kospi was up by 0.9% in the early trading we're already seeing taking place in europe, you can see things are mixed. the dax is slightly positive the cac is weaker. the ftse is up by a quarter percentage point stocks are weaker in italy and in spain >> news breaking just earlier this morning the international campaign to abolish nuclear weapons has won the nobel prize. the group was honored for its work to advance negotiations that led to a u.n. treaty in july costco reporting better than expected results, but the stock falling short. the company beat on both the top and bottom lines, comp sales topped forecasts e-commerce sales rose 13%. gross margins slid in the fourth quarter. those were two metrics analysts were watching closely after amazon's acquisition of whole foods that stock down about 2.5% in the premarket

>> nobel week is always interesting. i knew -- there were 350 nominees for the nobel peace prize. there was conjecture that maybe the -- for a while it might be john kerry along with his eu counterpart in the iranian individuals involved in that it would have been interesting if the weekend before certification they gave that out. not weirder than some previous political peace prizes that have been given out also leonardo dicaprio supposedly was one of the nominees i kid you not. out of the 300, trump was a nominee, too >> i like this choice. >> i do, too >> focusing on -- >> there's been some interesting ones in the past al gore, barack obama. i don't know if he was president yet. was he >> i think he was. >> just -- had been in the job for a week or something. it's weird very political

i love -- you weren't here, but we talked about literature i don't know if you saw it i talked about it a month or two ago. "remains of the day" anthony hopkins, emma thompson >> the literary version of it. >> but with anthony hopkins, you have someone like that or emma thompson, you can take a work of fiction that is in print and it comes alive with them. anthony hopkins was amazing in that any way, he won. it's always -- the one from medicine i'm interested in >> you like certain prizes >> the ones that are real. it's weird, someone talked alfred nobel into doing the peace prize. you know his most famous invention, dynamite. >> a counter >> he said that might be a good idea >> a counterbalance. >> i did not know that

that's fascinating >> you have come back with a new attitude something i told you interesting -- >> i'm learning something. i'm being educated >> this could be the beginning of beautiful -- >> could be. >> did you land between the coasts or something? you didn't land between the coasts san francisco, new york, boston. >> san francisco, l.a. >> cambridge >> cambridge, m.i.t. new york >> that's not as bad >> that was -- >> not the peoples republic -- all right. good good getting off to a good start. but it's friday. on monday it all will be back to -- right? >> jobs friday >> it is jobs friday other stocks to watch, yum china's third quarter earnings missed forecasts, though revenue beat

same-store sales rose 6% the fast food chain also the ceo who has led the company since the spinoff from yum brands will be stepping down. he will be replaced by yum china's coo. disney and altice finalized a new programming deal to help espn and other channels in millions of households in the new york city area disney threatened to pull channels from altice's optimum cable services before the two sides reached an agreement. >> that's a big deal in cable land there was a question mark what it would looks like to have skinny bundles without an espn and channels, and whether other channels would get into this skirmish this ends that for now >> for now >> yesterday you could have helped ben silverman was here is a podcast just audio? >> it is at the moment

>> so a podcast that was successful called lure, which is really scary, which i love so for halloween or the 13th -- >> october 13th. >> in video form it will be streaming on amazon -- >> amazon prime offering >> a video podcast >> i think it used to be an audio podcast -- >> they made a show out of it. >> but this is happening more and more gimlet media, a whole series of podcast producers -- >> you could have brought all this -- this is like me telling you about dynamite >> we're all just learning a little bit. >> we all have our own role to play >> was did you pigeonhole me into shopping >> breast feeding and shopping are my fields of expertise >> that's not what i meant you know, i'll be like cam newton that's not what i meant. you're great at this don't get me -- i was not

pigeonholing you into that at all >> sorry this is off-camera stuff working its way on >> you just had another baby, okay >> i did >> by the way, i am an expert at. >> you leave the set at the end of every segment, let's do the jumble where is she why did i ask. and calstrs says they will support the nomination of nelson peltz to procter & gamble's board. the pension fund giant holds nearly 5.6 million shares of p&g. calstrs has been an investor with peltz's firm since 2011 he's going to join us. i hope you're ready for this >> very ready. very excited i've been talking to all sorts of people. >> october 10th is a big deal. >> that's the vote >> they never win, do they >> there's a lot of retail investors in this. >> this is about as close -- i was on the phone with a lot of

people this is about as close as it gets in terms of the way the vote is going down a lot of -- >> nobody will know. sometimes you don't know until 22: 2:00 in the morning. this could be hanging chads. cha clos cha th that close knowing p&g, workers go with management >> management and former management has come out and laid down the line. also we have this from the lead director on the board, he is talking about how they just say that they respect him, they think he's a respected investor, but they're willing to listen to him, they don't think it makes the point he should be on the board. >> i wanted you to get at least -- you don't want do it before peltz comes on. what do you think the numbers

will be? >> legitimately very close >> so not 90-10. >> nothing like that no no three major shareholders, the p biggest of the big you have to get two of the three. so the question is how that's going to go down we'll talk to nelson about all of this. >> okay. we want to get to washington, some ominous words from president trump yesterday after he met with top military officials on iran and north korea. eamon javers has more from washington a man who i saw in boston 24 hours ago. frnls boun last night a cryptic comment from president trump this was after they had given what's called a lid at the white house, so they tell the reporters no more news for tonight. everybody can go home. after that, the white house summoned reporters who remained in the press briefing room and said come in, the president is having a dinner with military leaders. there was a five-piece marine

corps band a formal and elegant affair. the president decided to open that up to reporters, then the president made a comment about what this military gathering at the white house might pre-stage. here's that moment last night. >> you guys know what this represents >> tell us, sir. >> maybe it's the calm before the storm. >> what's the storm? >> could be the calm before the storm. >> what storm, mr. president >> you'll find out so the president saying that the gathering with military leaders at the white house might represent the calm before the storm. asked what storm he's talking about, the president said you'll find out so, not clear exactly what the president was referencing there. but this comes after a week in which the president sort of rebuked his own secretary of state, saying that he was wasting his time trying to negotiate with north korea there could be something that

the president is contemplating there. but there's so many flash points around the world, it's difficult to say what the president was referring about. he could be talking about iran, syria, even venezuela where they talked about the option of military force not clear at all we'll try to pin the white house down more on what the president was talking about last night that sets the stage today. >> we saw some insight into his thinking when he said -- heard him say, yeah, make them think i'm crazy. i can do anything at any time with this korean -- i think it's similar to that if it was directed at north korea, it's like -- you know this got back to them immediately. they're like what does this mean >> the north koreans are unsettled about president trump. >> that's what i mean. >> they've been doing research, trying to figure out how to understand him psychologically i don't think the white house minds that they like the idea that the

north koreaens are rattles, uncertain, there could be some conniving going on here, good cop/bad cop strategy in terms of dealing with kim jong-un it was one of those things where reporters left the room scratching their head. >> right >> the other thing i would say, this president likes the idea of suspense with his presidency he likes to do what we call in tv as a tease. throw an idea out there, you'll see what's coming. it's coming next he's always hinting that he has knowledge that the reporters don't have everybody has to stay tuned. there's sort of a reality tv element of the way the president conducts the presidency. gets people to talk about it like we're doing now there's a method here to what's going on >> you almost said method to the madness. >> almost did. >> did not say that. definitely a method to to what

the president is doing he's conducting the presidency in a way where he is getting a lot of attention all the time. dominating the news cycle, that's part of the way he wants to do this in the white house. >> we'll see it's friday. we'll see. we have some guy -- we have robert kaplan coming on, a sitting fed president after the jobs report. >> immediately after >> immediately after >> i will watch both of those. you got me hooked. this could be the calm before the jobs report storm. we have nelson peltz on october 10th is the storm, right? >> this is the last business day. monday is a holiday for banks, columbus day >> is it >> it is markets are open banks are closed schools are closed some schools are closed. >> do they call it that anymore? >> i do. >> i don't want to get -- i don't want to trigger anyone

andrew is back, we'll start talking about columbus you think that's smart thank you. they're guarding that beautiful -- up at -- >> you just lost your mic. >> columbus circle >> i think it's called something else now it was changed to some other name >> columbus circle to me >> you are stepping out, my man. you are -- >> i've lived in the city a long time it's columbus circle >> you are unusually timid >> i know. >> the september jobs report is due out in a couple of hours many expecting the recent hurricanes to show up in the hiring data. joining us now is seth carpenter, u.s. chief economist at ubs, and chris rupkey from mufg welcome. chris, what's your prediction? >> i put zero. >> zero? >> nothing no jobs. it's a one-month thing it's a bit of a tease. >> yeah. >> after hurricane katrina, it

was 2005, that's a long time ago, it actually fell 35,000 i don't think it's about jobs today. it's more any signs of inflation in the report. >> that's what you're watching closely. seth, how about you? >> totally agree a big drag, but we wrote down 125,000 this is one time -- i often get the question, if you could only look at one economic indicator what would it be usually the jobs report, but this months doesn't matter we have a drag of about 55,000 from the hurricanes. there's so many assumptions that they have to rely on we won't know real information until a couple weeks we'll get the state level data if you see a huge drag from texas, that's part of what's going on with the hurricane. if everything looks evenly distributed, you can do more terntation >> interpretation. >> let's talk about something much more interesting, the next

fed chair. nomura is out this morning handicapping saying they think it will be kevin warsh, a 40% chance that it's warsh, 20% chance for powell, 20% chance for janet yellen, and 10% chance for gary cohn what what do you think? >> it's hard to put probabilities on that. >> they had nothing over 50% >> 10% other nobody over 50%. >> nobody as a favorite? that's tuned >> 40% >> that means it's more likely he's not going to be than he is going to be. >> okay. but this is not a tiger woods field scenario >> that's a 60% chance of something else >> they're putting leading odds on kevin warsh >> give me a 51% >> what's interesting, they give janet yellen as much of a chain as powell. >> i'm convinced he will want somebody dovish. >> that's yellen or powell not warsh.

>> that's why i was surprised to see that's their take and there'salysts who have different versions of this. >> let me ask you why you think janet yellen is a dovish central banker it's the common theme but a different version is look where the inflation rate is now. the fed is on a hiking path. inflation is -- >> she continued emergency policies eight years into a recovery from the event. it took her two years before she decided to -- >> wouldn't the dovishness mean she's doing it because inflation is not a big deal? this fed is hiking when inflation is low >> she changed her tune in the last six months. >> i think they should do jobs is low inflation bad i don't think we understand -- with the way tech makes everything cheaper and amazon makes everything cheaper and walmart -- i don't even believe

the nominal numbers. >> it should just be about jobs. wlofrnlgts do >> what do you think, the next fed claire. >> chair >> we have a populist president so warsh >> coming up, we will talk ads did you see the president's cup? the founder of wheels up, when you put your stuff in a luggage thing in newark airport, you stare at a wheels up ad. the company has news about a big round of funding details next it's what this country is made of. but right now, our bond is fraying. how do we get back to "us"?

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so all you pay for is data. see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit, or go to xfinitymobile.com. wheels up raising over 200 million of capital joining us to tell us more is kenny dicter of wheels up. last time you were involved with try doing this with blue hchip investors, it's always in a company that's not public yet that was started three, four years ago? >> four. >> has it been four years? >> right here. >> yes, sir. who are the blue chip type -- people recognize these names who gave you the 200 million >> led by current investors and really unbelievable supporters, t. rowe price and fidelity, also

tony florence who did the jet.com deal he's in there as well. we added a few additional institutions kkr -- >> did the -- >> did the debt. 2$200 million of new capital, growth capital a lot of things to do with it. western europe, digital, other initiatives to accelerate the growth but a billion dollars -- what do you mean digital booking stuff online >>whatyeah what you want do is make it easier for people to interface with us. how do we automate and make it more simple? wheels up will use some of this growth capital to accelerate digital programming. >> at this point, you fly the mainstay the king air, a turboprop for flights. if they want to go from teterboro to nantucket >> 80% of flights in north america and 85% of flights in western europe are less than two

hours in length. >> if tom price had a wheels up card t wouldn't have been a million dollars. >> everybody in trump's cabinet should have wheels up. the administration should have wheels up. >> it wouldn't even show up. but it's still expensive >> look at ge, they announced they're closing their flight department >> getting rid of company cars for senior executives. >> should be wheeled up at uber. >> when you read a story like that, do you go straight to them >> of course >> what's happening? >> i think it's a big trend. you don't want to be flying a gulf stream to dc. we saw what happened with the car companies. ultimately the king air is the vehicle, if you have to get from a, b, to c in a day, everybody company should have wheels up. >> i assume your business is tied to the cycle and tied to the markets. >> it's a little counter intuitive. there's going to be a massive trade down if the markets come off, the king air will be the new gulf stream 5 so we're the last stop before

you go to laguardia, o'hare, kennedy. >> you're the home tdepot in a housing downturn >> there's no way executives to use the commercial system to hit two, three cities in a day >> what percent of your business is an individual business, what percentage is corporate? >> i would say 65% of our flying is individual. but there's some corporate in that individual that's entrepreneurs. >> that are expensing back to the business in. >> 35% of the flying is corporate. i think we would like to get to 50/50, get that count up i think until you get scale, which is where we are now, that's when the corporate flight departments and risk managers can say they're big enough to handle my lift >> how many citation xls do you have >> we took our 80th airplane last week, 65 kings, 15 xls, and the 10, which i know -- >> do you have any 10s

>> the 10s are on a ramp painted. i could see a program the end of 2018, 15 10s. >> that's the one i ask for. they fly high, fast. >> being a private company with these public investors, the other great thing we have on our team is our partners jeffries and richard handler and ubs -- >> how do you get serena tom brady? >> they're ambassadors but also investors. we're talking about hard money they invest alongside the institutions >> are you adding electric jets to your -- becky is worried about the electric -- she's willing to drive a car with a windmill -- >> i know scott ernst and scott donnelly, if an electric jet is

viable, they will be there at the electric jet table we'll be with them >> seems crazy >> i think that's ten years, 15 years away that's not 3 to 5. >> another 15 for me >> they'll have the best electric jet if there is one >> we have to run. if we have the same conversation four years from now, will wheels up be a publicly traded company? sold what's the ambition? >> 12 to 18 months from now, we would like to take it to the public markets if we take it there, i'll sit here there's $1 billion of enterprise value. where i do see it four years from now 4 billion, $5 billion company i terms of market cap and size that's what i come to work every day to do. >> what revenue do you have to hit to get to a 5 to $10 billion market cap >> probably in the 2 billion to $3 billion of revenue. ten times the size we are today.

>> ten times >> ten times the addressable market for how wheels up is going after this business, 1.5 million, 2 million people and companies, all we have to do is have 25,000, 30,000 members, you have the $2 billion of revenue we can get there >> all right kenny, thanks. >> thank you >> love a success story like that. >> when we return, jay timmons head of the national association of manufacturers is leading a delegation to the white house to talk tax reform. he'll join us first here on cnbc right now, take a quick look at yesterday's s&p 500 winners and losers

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♪ welcome back you're watching "squawk box," live from the nasdaq market site in times square. time for the squawk planner. the september jobs report is the number one thing that's out at 8:30 a.m. eastern. non-farm payrolls forecast to rise by 80,000 due to the impact of hurricanes harvey and irma. the unemployment rate is expected to hold steady at 4.4%. in addition to the jobs report, look for august wholesale trade at 10:00 a.m. eastern.

and consumer credit at 3:00 p.m. we'll hear from several fed officials today plus steve liesman has an exclusive interview with dallas fed president rob kaplan futures at this hour are similar to many mornings recently, the past two, three months up a little bit but mixed. up 8 or 9 on the dow jones, 10 on the nasdaq. the s&p is down less than a point. the international monetary fund is likely to upgrade its outlook for global growth when it releases its forecast next week saraizen sat down with christine lagarde ahead of that release and asked how long she is expecting economic growth to last >> let's hope it lasts as long as possible what we're certain of is that it's really taking roots. and it's not just a little short-lived cyclical moment. we are seeing it coming from

about 75% of gdp in other words, it's not one country leading the charge, it's not only the emerging market economies that used to be the case it's europe, it's the united states, it's japan, and it's china, of course and india plus a few other countries >> the full interview is coming up today on "squawk on the street." manufacturers across the country are opening their doors to show local communities what they do and to dispel myths about the industry a delegation will visit the white house to talk about the key issue of tax reform. joining us is jay timmons, president and ceo of the national association of manufacturers. good morning to you. >> good morning. >> you're headed to the white house. what are you planning to say >> i've got a little detour to roanoke with optical cable, a manufacturer down there. former governor george allen will be there, kellyanne conway will be there. this is one of 3,000 events

across the country today to celebrate manufacturing in america. and we're planning to have about 600,000 students and teachers and community leaders coming in to our facilities across the country to see what modern mavrerrimavr er manufacturing is is all about. then we'll head to the white house. >> as you take notes about what to say when you arrive at 1600 pennsylvania avenue, you will tell them what the president spoke to the n.a.m. board of directors last week he gave a great outline and speech on the need for come p comprehensive tax reform to benefit all americans. we've seen the plan from the big six, we're encouraged that for the first time in 30 years we have the opportunity to get comprehensive tax reform across the line that's good for business we just did a survey of manufacturers, two-thirds of those that we surveyed say if this tax reform becomes reality,

they will invest in new plants, new equipment and hire new workers. that's great news for the american economy and the american people. >> you were out earlier. do you remember the numbers? for ten years we had a net loss in this country of 200,000 a year of manufacturing jobs this year there's a net addition of 25,000. before tax reform. are you familiar with those numbers? is that true we lost a couple million >> after the recession we lost about 2 million jobs >> 2 million manufacturing jobs. >> we got about half of those back >> was there a net addition for the first time in i don't know how long do you remember what it was? 25,000 or 30,000 jobs or something? >> i'm not sure what the year's actual number is compared to other years. since the end of the recession, we had about a million --

increase in a million jobs we think today's report will show a slight bump we know about 3.5 million jobs will be created between now and 2025 2 million of those will go untilled because we don't have folks in the right skills, which is why we have manufacturing going across the country to show students what possibility there's are for their careers. >> it wasn't just deregulation, it was mostly -- energy -- >> energy was huge in that no question. our new technologies and energy development has added to the manufacturing economy, manufacturing jobs the regulatory environment that has improved for manufacturers over the course of the last fi mon few months, the prospect of tax reform those are good news items. what was the percentage -- you mentioned it earlier, who said they would create new jobs as a function of the tax reform plan?

>> about 60% >> 60% do we have real numbers in terms of -- not a pledge, but an estimation of the jobs created i ask because i interviewed mark cuban earlier this week, he said in this day and age you could go around and get pledges or just algorithmically should be able to figure out at 20% how many jobs should be created at 25%, how many jobs are created. >> i don't have that algorithm i would love to see that the bottom line is what we get back from members. these are members large and small, manufacturers all across the country. they want to hire more folks they'll use these tax cuts to do that, and invest in new plants and equipment. >> when you think about those manufacturing jobs, the big question is what kind of jobs those are. are those assembly jobs? advanced manufacturing jobs in the digital space? how do you break them down

>> it's really all of the above. you have a need obviously -- we have 350,000 jobs open in manufacturing today. as i said, that number will go up to about 2 million by 2025. those are traditional manufacturing jobs, mannists, welders, but also a tremendous need for -- for skill sets and new technologies we talk about robotics we talk about artificial intelligence these are new technologies that are being infused into the manufacturing processes that require a different skill level. that's why we need to work more closely and are working more closely with community colleges and other institutions of higher education as well as primary and secondary education institutions of education to provide those skill sets >> that's the other reason andrew's ears should have been burning. was that yesterday or the day before he said for every robot it takes a job, you know how many humans

are there? >> somebody thhas to build them and maintain them. >> until the robots maintain the robots >> manufacturers great america it's a great day across the country. we look forward to welcoming people into our facilities everywhere mfgday.org >> thank you >> thanks. we still have a huge wllinep nelson peltz will join us to talk about his bid for a seat on the procter & gamble board at 8:30 a.m., we get the september jobs report. stay tune for final predictions and instant analysis after that, reaction from the dallas fed president, robert kaplan he will join us live from austin, texas. you're watching "squawk box" here on cnbc

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the super bowl of the beer industry is taking place in denver now the great american beer

festival you lobbied for this, didn't you, landon? you have all the beer buzz that's the -- you drew the long -- i guess you drew the short -- the long straw. >> i drew the long stick on this one. i don't get out often, when i do, it's good. boats, booze this is the super bowl of the beer industry. the great american beer festival where brewers like blue moon are excited to get the taps going. we're expecting more than 60,000 people to attend the event it kicked off last night beer-goers lined up around the block to get in and get a taste of the more than 3500 different beers. you wouldn't have ideas by the look of this scene, but the beer category is struggling overall beer sales were flat for 2016 they have been on the decline so far this year. >> in general, i think the

category as a whole is, you know, under siege in some ways from wine and spirits. wine and spirits a s ars are cu into beer's share of total alcoholic beverage nobody is really loyal to any specific type of alcohol it's wine or beer. i think that's had an impact over the last 15, 20 years over beer's overall market share. >> so, with wine and spirits killing beer buzzes, brewers are having to adapted and get info investigative. >> the consumer wants more flavor and variety than ever before companies are responding there's more options there's brands that change constantly by the season the other thing is clearly beer lovers want that experience. they want to connect with brands ways to engage with beer lovers rather than just offering them a product. give them experience >> while the trends have been positive, don't count beer out yet. we're seeing signs of hope in q3

we saw signs of growth year over year there's more than 800 brew here's pouring their brew and 5700 breweries nationwide investing in businesses and betting on beer's turnaround back over to you would not believe the things we saw last night unbelievable fest vabival >> national beer drinking bay this week, which would coincide. love beer. 12 ounces -- the first six go down smoothly. that's the thing -- >> they only let you pour an ounce at a time. >> really. that's a good idea >> with the altitude -- >> yes yes. >> with the altitude and the lack of food, things go downhill fast >> really? that sounds great. how long does this last? will you be there until monday >> so -- if i'm not at work on monday, you'll know why. it is all weekend.

it ends on sunday. it's a big competition it's a big thing for these brewers to get that stamp of approval if they win the competition. i'll be reporting all day. i'll find you the best beer possible >> is some beer that's like not 6% there's beer that can be 20, 22% alcohol. you have seen any of that out there? >> i tried one that was 28% last night from boston beer i only tried a sip i was working. let me tell you, it is strong. it is very strong. that's what you are seeing the brewers do they have to adapt, adding flavor or more alcohol >> i have a story about that that did not end well with me. i wasn't informed. it was like, oh, i can drink -- i drank it unbelievable then i woke up four days later landon, thank you. good job have a great day >> thanks. coming up, hollywood scandal, we'll talk about the sexual harassment claims against one ochtdf the industry's most

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>> decades of previous sexual harassment allegations against movie producer harvey weinstein. brett lange is senior media editor at "variety." we're happy to have him here to talk about this and the implications for the weinstein company. i know the board is expected to meet, i believe, today to try to sort things out. >> i think he is toast i don't see any way he recovers from this. this report is so well done, so well researched. you have people on the record. i don't see a way forward for harvey weinstein, and if we have learned nothing from bill o'reilly and bill cosby and many of these other scandals -- >> the third bill. >> the dam is going to break wide open. >> even though it's his own company? >> it's his own company. he doesn't have a majority stake in the company he and his brother control about 43%. >> he basically said it's -- he

basically said i did horrible things and made life miserable for a lot of people, but i'm sued for $40 million, $50 million because of details >> i thought that statement he gave was one of the most unhinged public statements i have ever seen you know, it was absolutely so bizarre to say i take some responsibility for this, and then go after the nra. it was totally -- >> that was -- yeah. but i'm going to devote my life to -- >> what happens to the rest of the company? let's say he either takes a leave or a permanent leave what are the implications? there are two sides to the business there's always been harvey's side of the business and his brother's side of the business >> the company wasn't really doing that well before this happened i mean, they tried to move into television they claimed it was worth about $900 million they were trying to sort of sell that indy film has changed dramatically i think a big question is if you are talent, if you are an agent, do you want your clients working for him? >> that's the question the real question is he has succeeded in large part because

he was able to buy oftentimes indy films people wanted to bring him the films because he was so good at the awards circuit, getting publicity for these things there was a lot of goodwill in hollywood for harvey weinstein himself despite what we're lingering rumors like this for years. >> let's just be honest, and let's call it an open secret people knew about this i don't think it's just the weinstein company and it's just the creative community i think disney has a lot they owned miramax if they owned this report, it looks like disney paid to cover this stuff up. >> it seems like they certainly knew some of it based on the commentary coming out of -- >> i would be shocked if top executives at disney did not know this. >> hadn't heard this >> is that where you think this story moves? >> i this i it moves to disney >> does it move -- >> even though he has been gone from disney for so long? >> it's probably outside of the statute of limitations, but disney is probably going to have to do an internal investigation to look if whether or not they were complicity in creating a

work please culture. >> was it an open secret with harvey weinstein or an open secret in hollywood that the couch interview is -- i mean, is it just pervasive? do we all -- should we all just with a wink and a nod say this has been going on forever in hollywood? >> one hopes that this sort of boy's culture and this era of the casting couch is over. i don't think it is. i think there are going to be more people who come forward with stories with people like harvey weinstein >> i think he set a new standard >> he was an egregious example if the allegations -- they are still allegations -- are to be believed >> do you think this gets to bob eiger? >> he was at the company at the time i'm not sure he was in direct charge of it michael eisner was ceo at the time you have to think whose money was used here to cover this up you know, to pay off these wo n who knew about it? i think there are some troubling questions. disney has been totally silent about this, and i think they owe

people an explanation. >> it is a large conversation and a larger story thanks for coming in >> thank you for having me we have a huge line-up still ahead. nellon peltz will join us to talk about his bid for a seat on procter & gamble's board that's coming up at 7:30 eastern time then at 8:30 a.m.we'll be getting the september jobs report you can stay tuned for final predictions and instant analysis then right after the jobs report, we'll be getting reaction from dallas fed president robert kaplan. he will join us live from austin, texas. "squawk box" will be rhtacig bk. [vo] quickbooks introduces rodney.

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stocks continuing to march higher as we await the jobs report your trading day setup is coming

up a hurricane hit like harvey and irma will be the focus of that september pay roles number. we will talk expectations ahead. and trian's nelson peltz is here to discuss his proxy battle with proctor and gamble. the markets and more as a second hour of "squawk box" begins right exactly now after we run this little music thing. ♪ ♪ it's friday, i'm in love ♪ monday, you could fall apart >> live from the beating heart of business, new york city this is "squawk box. ♪ >> welcome back to "squawk box" right here on cnbc we're live at the nasdaq market site in it times square. i'm andrew ross sorkin along with joe kernan and becky quick. it is a big morning as we count down to many news-making events. nelson peltz will discuss the p & g proxy battle fa fight really heating up, and

it is quite close at this point in terms of where the vote stands later in the show the september jobs report will be out. we'll have the numbers and market reaction after the jobs report dallas fed president rob kaplan is going to join us with steve liesman. first right here on cnbc it is a big morning on "squawk." we have to make sure it's locked right here meantime, check out the futures this morning ahead of those jobs numbers. of course, all this could change in just a little bit, but the dow right now would open about 15 points higher nasdaq up about ten points, and the s&p 500 looking to open off. we'll just call it -- i like it call it -- just marginally off a couple of headlines making news this hour shares of retailer costco under pressure the retailer did beat street forecasts both the top and bottom lines, but profit margins shrank there was a concern about price wars among grocers that was after amazon's purchase of whole foods earlier this year that stock down close to 3%. automaker nissan recalling every single new car it sold in japan over the last three years. it's a big move.

it comes after the company discovered that the final vehicle inspections performed for the sales were not done by authorized technicians 1.2 million vehicle are involved in that recall also -- after its initial public offering priced above the expected range. switch, which numbers amazon and ebay among its major customers, raised about $531 million with the ipo priced at $17 a share and the expected rate of $14 to $16, it gives it a total market cap of roughly $4.2 billion. >> u.s. stocks are on pace for one of their best gains in history relative to their maximum pullback only 2013 and 1995 -- there's my 1995 i love 1995. those three straight years of 35% plus gains if those are the only years that rival 2017's risk versus -- or return versus risk pay-off, all years of a patient fed, which

was combined with d.c. gridlock. the question now, will this remain a good news is good news setup, or are we nearing a good as it gets moment? mike san toll santolli is here u about the no pain, no gain setup. it's been in the face of resist yan resistance the entire way. >> there's all kinds of reasons to doubt it. you were talking why early, joe, every day it seems like the plarkt is quiet. it doesn't really have a lot of drama attached to it in an orderly way, it just marches higher, and that's been interesting. i quantify how much up side we've gotten 14% year-to-date the s&p 500 without dividends. we've only had a maximum pullback of 3% that's almost five times as much reward as down side risk that puts it on par with those great years. normally if you are 2-1, youar doing really well. what does that mean from now what happens in these markets? well, for one thing 2013, 1995, of course, were not market peaks. this is not typically the way the market acts when it's

getting ready to have a major top. usually gets emotional and jumpy and more volatile. i do think you're starting to hear a lot more talk now about are we on the verge of a meltdown whatever you might define that as a more energetic surge as people try to get in, and you have a hot economy combined with very, very easy financial conditions around the world i think that the fed expectations are probably going to be one of these things that gets into play you've gone from 35% of a december rate hike odds to 88% the market is just fine with it. at what point, though, does that become to seem like perhaps under a new fed chairman, you know, it a change in the game? for right now it zebts seem like the market -- it's shot in the short-term, but this market has shrugged that off this year. >> starting to look like when greenspan said it was a rationale uexuberance >> please. that was late 1996 >> we had another three years with just crazy -- >> although, as you recall, it did get -- 1995 was just straight up.

the rest of those years they were very rewarding, but there was a lot of chop and a lot of drama. i mean, you had a high velocity market, which we don't have right now. >> what you just said was when does the good news get too good? when rates are still basically zero, i mean, i understand we can get, like, 4%, 5% by choking off this time. it used to be double digits is what you needed to do. >> i think the too good means ism above 60, which he we had this week. unemployment very low. the fed feeling like, wait a second, we got -- we have to actually move faster that's what too good would be. >> do we not realize how much the internet changed things in terms of inflation and was so beneficial is maybe we just -- think what -- how that changed, though >> i think -- >> it's actually part of the productivity numbers because it may not have helped corporate productivity, but it has helped my productivity mass iivelmassi.

i think about how much time i save ordering groceries on-line. >> the inflation question, jeff degraph says, look, we look like we might have a melt-up here he says that the fed is essentially using inflation like touching the outside of a microwave to figure out how hot it is inside right? it's just not the right way to figure out exactly how things are going. >> you can't stand too close to the microwave, though, because it will fry you. >> yeah. and don't put any tin foil in there. >> or a cat. >> that really went the wrong way. >> noted >> don't even joke about that. people are going to get the wrong idea mike, stay right here. we're going to continue this conversation ahead of the jobs report gabriela santos. joshua fineman gabriela, let's kick off with what mike was just talking about wlsh how does this feel to you >> it feels like there's a good justification for the rise in the market, and actually for the low volatility as well if we think about all the shops that were thrown at u.s. earnings and the global economy over the last few years, we had

plunging commodity prices. we had very unbe stable currencies we had fears of a chinese hard landing. those fears have stabilized and dissipated it does make sense to us to have such good risk asset performance and such low volatility. if we look over the next few years, right, certainly we acknowledge the market has come a long way in the u.s. we don't think it's going to come collapsing down right? a bear market only comes with a big recession. we are starting to think that opportunity is more and more really overseas. especially when we think about europe and emerging markets. >> josh, a big part of this will be what the fed does because interest rates are kind of the determining factor for all of this whether valuations are stretched or not what will happen >> i think the fed is going to continue what they've been doing, which is sort of easing their foot off the accelerator, but not stepping on the brake. i mean, they see the economy as proceeding more or less the way they would like it to. moving back twarz full employment inflation story is still low there's still not a great sense of urgency on their minds -- in their minds to really have to

move quickly and aggressively, so i think it's a little low and slow trajectory. >> would you change your mind if, let's see, we've got october, november, december, january. in four months if we are now looking at a new fed chair, who is either kevin warsh or john taylor or someone who will throw out the playbook as it's been in the past >> we get new leadership at the fed, it could be somewhat different. we'll be looking carefully as to who that is going to be. you know, i suspect, though, the changes will be more incremental. i mean, i think that we're likely to get somebody who is not going to want to throw out the playbook entirely. >> you think who is the most likely candidate >> it's tough. you mentioned a couple of people i'm not sure about taylor. i think jay powell is a possibility. he would be probably the most continuity type of person. >> yellen would be the most continuity -- >> you cannot rule her out emmo i mean, look, the president probably wants to choose his own person, but, you know, yellen has a lot to recommend her not the least of which i think she's done a really good job >> gabriela, there's another thought as we look just at these

last few months of the market. war enbuffett was here the other day and said, look, he is not doing anything with billions of dollars of potential sales of securities that he would be making, but he is not because he wants to wait and see what happens with the tax bill. he never waits for things like that he is anticipating probably hundreds of billions of dollars of other people doing the same thing. how much of a cushion does that provide to market right now? >> it could, and to be honest, this is something we're watching very, very closely are all the developments over the next few months in ermz it of corporate tax policy, and not just only because of that, but also how we're thinking about how much fiscal stimulus are we going to be injecting in the economy in the first half of 2018 >> i just wonder if there will be a bunch of sales come january if there is a lower capital gains that people have been holding off thinking, okay, i finally can do this, and we'll kind of see things shake out a little >> short-term move potentially, but it could be -- >> perhaps perhaps. we'll have to see, right i think there's still a lot of appetite for u.s. equities regardless, and so it would be a short-term move, but when we think about the fed, i think something we're missing is in terms of the potential up side

that a little bit of fiscal stimulus could provide next year and that could actually set up the fed regardless if it it's yellen or powell, whoever is at the helm at the fed, a slightly more hawkish policy. if indeed you do get stimulus in the economy, you get that 3% growth for a few more quarters >> that arguably could be your too good moment, right where you have a hot economy you're throwing more stimulus at it the fed has to -- >> no more goldilocks. >> arguably. >> folks, thank you all for being here today >> i love that. >> what's that >> good old warren sitting on all those billions because he might be able to sell them at a much lower tax rate. very good advice do what warren does. not what he says coming up -- >> he said that too. >> coming up, yeah, you -- but he loves higher taxes on the rich do what he does. follow what he does. not what he says the recent national anthem controversy in the nfl hitting ticket prices on the secondary

market going to break down the numbers and talk about what you may or may not see this weekend around the league then trian partner nelson peltz joins us this will be fun we're going to get in the weeds, andrew, with -- >> we're getting into the details. >> into the weeds. all right. you're watching "squawbo t to the weed. we're not going to do that into the weeds you're watching "squawk box. or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more.

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. welcome back while many have blamed the national anthem controversy as lower nfl viewership eric ge mr gemmy has more on tht >> after the last two weeks of controversy, we've seen a 2% decline in ticket prices going into week five compared to week five last year data from ticket iq showed ticket prices had seen 20% to 40% increased in the first three weeks of the season, but after the president's comments and nfl player reactions, week four saw only a 5% increase, and now we're seeing an outright decline. that's a bad direction we reached out to vivid seat, stub hub, seat geek, and ticketmaster, but none of them would share specific numbers the nfl would only tell us that ticket sales are trending similar to last year obviously, more factors affect ticket prices than just the anthem protests. game matchups, weather, and big-time teams going worse this year, like the giants, are just

some of those items. meanwhile, more bad p.r. cam newton, the former heisman and mvp winner, made dispairabling comments wednesday to a female reporter yesterday yogurt company dannon dropped him saying it's not okay to belittle anyone based on gender late last night cam put out an apology on twitter he has several deals for now with gatorade and beats by dre as some of them. forbes said he was the second highest paid nfl player last year soft tv ratings, the protests, and now this, it's not been the best couple of weeks for the nfl. >> did you hear it said loyal fans, 30%, say they're watching less >> yes >> seton hall. that's who did it. 30% are watching less. 51% say it's due to the kneeling >> it's interesting. only 1% of them said it was from the concussion i thought that would have been a much closer ratio, but it's not. >> no. all of last year when if you

watched espn, nobody tied any of the weakness, and then you talk to fans, and they talk about kaepernick no one tied any of the beginning of the weakness until it came to a head with trump's comments, but now suddenly people are saying this may be having an affect it was having an affect last year >> it reminds me of the whole thing with trump and clinton going into the election where people wanted to discount the affect of, well, this isn't really going to happen, and then when it came to results day, you saw what happened. i think in a way you're seeing that same demographic who may not get picked up in a lot of data normally speaking is now looking at it happen with ticket sales. >> i see the ratings on the nationwide -- the local markets, do we know whether there's any year-over-year drop-off in local markets for teams? can we measure them? >> the way they do those games is that regional coverage on cbs and fox. >> so it is included in the numbers. >> some of those time slots have actually been up

the cbs regional, the fox regional, and the single game where, they average all those out when they say, oh, it's down 4% or down 8%. some of those slots are up, but some of that's matchup dependent too. >> do we take anything from the notion that there were 200 participants in not standing, and now there's six or something. >> the owners, there was a story saying how the owners did not want to go up against the white house. they thought that was bad for business >> they thought about that too late they went up -- bob craft immediately said he was deeply disappointed and then i think some of the calls started coming in to their offices and, you know, then they got less inclined to go up against the white house. they were ready to go with the union and their players. >> it's tricky employee management how do you keep the white house happy and keep your players happy and the fans happy >> how many players you got? you got millions of fans that are going to vote with their feet, right? those are your true

constituents not your players >> you need the players to play. you need the talent to perform >> those guys can play all they want if if no one is in the stands and no one is watching at emho, they'll be playing for themselves >> that's true too >> or they'll make $2 million instead of $4 million. >> where are those big paychecks coming from? they're coming from -- >> they're coming from us. >> and goodgoodell, i don't understand if you have a big flag koofrg the entire field and then you have a fly-over, i mean, you either wrap yourself in patriotism or you don't. >> the problem becomes free speech, and you also have fans who are in the seats who you are alienating by the entire situation being politicized. they've been hoping to go back down and be able to play -- >> i can go out after i get off today and go demonstrate somewhere, but i'm not necessarily allowed to demonstrate my personal cause with nbc they're not going to say, my god, joe -- if i ever really let it hang out, you'll be -- i don't know during your job, i don't know whether you have the right to. >> the situation got

politicized. we talked about dan gilbert about it the owners would like to see this just be pushed under the rug and go away. we want everyone to be here. we don't want to take sides because you're going to alienate somebody >> you have to -- adam silver did exactly the right thing. >> right by the way, he also had the benefit of hindsight >> he had the benefit of hindsight. >> watching it fall afarther on another league >> it was live in motion for him, and he is finding alternative outlets. there will be alternative outlets for a lot of these basketball players to try to express their views. they're making those available to them. by the way, that may have its own ramifications. all of this, whether it's the physical taking of the knee or whether it's just being outspoken on some of the political issues, it's going to get complicated. it is. >> we're learning that everything is politics right now. it's the time you live in. >> you never hear somebody say i'm glad i got involved mixing business and politics. that turned out really well for me >> right >> direct tv is giving out refunds. that was a big-time thing. they say you are so offended, you can get your whole season

money back >> wow eric, thank you. >> you got it. >> when we come back, trian partners ceo nelson peltz will join us to talk about his proxy battle with proctor & gamble later, after the jobs report, a first on cnbc interview with the dallas fed president robert kaplan check out the futures. as we await that jobs number, still mixed picture. dow and nasdaq both indicated higher s&p futures down, but by less than half a point. "squawk box" will be right back. >> time now for today's aflac trivia question. what was the median annual take home pay in the u.s. in 1990 the answer when bc "cnsquawk box" continues don't you mean dad kind of ruined our hawaii fund? i thud go to the thothpital. there goes the airfair. i don't think health insurance will cover all... of that. buth my fathe! without that cash from - aflac! - we might have to choose between hawaii or your face.

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♪ watch this don't get mad (bell mnemonic) get e*trade and get invested >> now the answer. what was the median annual take home pay in the u.s. in 1990 the answer, about $14,500. >> welcome back to "squawk box." we are watching shares of two casino operators this morning. there are reports that they are talking about a possible deal. here's the news. wall street journal reporting that pen national gaming has been in discussions with rival pinnacle entertainment the talks have been on again off again and haven't resulted in a

deal pen national set to still be interested in buying pinnacle. >> netflix is raising prices for the first time since 2015. the cost will remain at just $p.99 a month, but if you want to stream in hi-def or two devices at the same time, the price is rising from $9.99 to $10 .99 a month. a little better than the last price hikes that caught people off guard and were quite a bit higher also, the cost of the higher end 4k streaming plan is rising $2 to $13.99 a month. >> ge has eliminated -- >> we talked about this briefly

before corporate cars for senior executives at the company. looking to shave more than $2 billion in costs by the end of 2018, and execs were informed by e-mail that their leases would only be good through the end of next year. the move follows the elimination of ge's private jet fleet in september. >> we can ask nelson peltz about that >> we can ask nelson peltz about that as well >> costco is reporting better than expected results. the stock is falling this morning. company beat on both the top and bottom lines e-commerce sales rose 1.3% gross margins slid in the fourth quarter, and those were two metrics that analysts were watching closely after amazon's acquisition of whole foods the stock now down almost 3% coming up, trian founder and ceo nelson peltz on his bid to join the board of p & g he is here early he is here early he is ready to go. he is ready to go. he needled me about how early we

come on, and don't people know what ben franklin said >> early to bed, early to rise >> you don't need to watch that late night stuff except for fallon. he will join us after the break to discuss what he wants to see changed at the consumer giant. as we head to break, look at u.s. equities futures. "squawbo wl rhtack x"ilbeig bk. can we at least analyze can we push the offer online? legacy technology can handcuff any company. but "yes" is here. the new app will go live monday? yeah. with hewlett-packard enterprise, we're transforming the way we work.

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♪ >> good morning, everybody welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories front and center this morning, the september employment report is just about an hour away, but it is not expected to be an indicator of any long-term trends that's because the numbers will be heavily impacted by hurricanes harvey and irma the consensus forecast, though, did call for 80,000 new non-farm jobs last month with the unemployment rate holding steady at 44% speaking of storms, another one is tletd inning mexico and the southeastern united states tropical storm nate is on a path

towards mexico's caribbean resorts and the u.s. gulf coast. the national hurricane center is predicting that it will hit the gulf coast on sunday as a category one hurricane and japan is seeing its second best stretch of economic growth since world war ii preliminary measures by the government show that august growth came in at the best level since march of 2014. that would make 57 straight months of growth that's something that hasn't happened since between 1965 and 1970 >> the largest corporate proxy fight in history is taking place right now between proctor & gamble and nelson peltz coming a week ahead next week it comes to a head, rather, next week with a very central shareholder vote trian partners has taken a $3.5 billion stake in p & g and is seeking a board seat trian partners and founding partner, nelson peltz. thank you for coming in. >> joe >> we're, like, 72 hours before you're going to find out -- a little longer than that. >> a little longer than that i made a lot of phone calls

yesterday. >> right what are you hearing >> on all sides it seems like this is going to come down to the wire i mean, truly close. i will tell you even people who i would imagine will be on the other side of this feel that you have actually won to some degree just given how close things are. that that wasn't even expected when this began. where do you think it is >> i'm not allowed to speculate. those are s.e.c. rules, but i will agree that it probably will be close the closest one -- i only have close ones you know heinze was close dupont was really close. it was 46% we lost the battle >> right >> won the war hopefully that will be a big lesson for p & g as we go forward here >> let me ask you a question obviously, hopefully, you will hope imagine that you will win -- >> yes >> if you were to lose, would you sell your stock? >> i get asked that question, and what i -- i don't like the

question because i don't want people to feel, oh, i can vote either way, and he is going to be there there is a great story that goes along with that answer, and i refer to it briefly. at dupont we lost we had 46% of the vote the stock the night before the annual meeting was 75, it went down to 48 two quarters later, ellen coleman took early retirement because we said at the annual meeting that we congratulated them on the victory, but if they didn't change their ways the next quarter and the next quarter, it would be misses. that's what happened they changed ceos. we had an opportunity to spend time with the board, which heretoforewe have not done at p & g. we were very much part of the dow dupont merger. you read the proxy statement those meetings were held at my house. they all worked out perfectly,

and now that $48 stock is valued at about $110 given all the in's and out's and so forth it's a happy story it was a rough ride. 75, 48, 110. i hope we don't have to go through that same kind of rise >> you might hang? >> that's the implication. >> and you might even do it again. >> well, i said that at the dupont meeting i said, you know, if you didn't change your ways, they would see me again the following year. >> i think the gloves came off on one side, and i was praise

worthy of david taylor as a person i thought he was a gentleman i think he was an honorable gentleman. i felt i could work with david i still feel like i can work with david you know, we've had all kinds of these issues at heinze we won a proxy fight, but it was very tough proxy fight bill johnson, who was chairman and ceo prior to, during, and after that proxy fight, is now an advisory partner at trian, and he was our point on the pepsi board. people do mend fences. >> nelson, you said that. >> prior to david becoming ceo

in november of 2015, the stock had dropped 31% versus the peers. david was running almost 50% of the company at that time he became ceo, and the stock has gone up 24%. he has captured 2% of the 31% lost somewhere in that 24% trian showed up, and i think we might get a point or two credit in that stock the stock today is where it was four years ago. >> should he be the ceo? >> with me absolutely >> trian always has a policy that when we get into a company, our goal is to work with the ceo. our goal is not to get rid of the ceo. ellen coleman would probably be ceo today at dupont had she given me a seat on that board. >> when did p & g lose their way

in your view i mean, do you think laughley was great, did all the right things >> that's a great question p & g was one of america's really great companies forever people are buying from their pc's and cell phones there are wonderful digital brands that have come out, and the -- i got six of them at home, so the millennials are a weird lot. they're loveable, but they're weird. okay what happens is that they don't

trust big brands anymore they want what's called my brand. they want a brand that they can have an emotional attachment to. a brand that's got a value proposition for the environment, for their body, outside, inside, on their hair. whatever it is that's what they want. when p & g -- what they've done is it sold 120 of these small brands, and these brants were bought, every one of them was bought, for the future of p & g. now they've doubled down on global brands. that's not the way the world is going. it really isn't.

you would i a brand like method soap, it's in my house i never heard of it. my kids said you got to use method soap. i'm sure everybody around has got method soap. method soap, let's pretend those 200 million in sales, i don't know what they do. let's say sales go up 15%. that's great that's $30 million you divide that $30 million by six sales organizations. that's five million a piece. that's around compared to pampers and tide it doesn't get the attention because the structure says that selling organization reports to corporate. it doesn't report to the brand manager or the head of the global business unit >> what was your answer? when did they lose their way did laughley, did the next guy that became the va guy >> i think they lost sight of

what happened. >> he was like the prodigal son because they couldn't figure out anybody else did that work? were they still on track then or not? >>. >> this is a dutch company and swiss company that's broken the mold they've gone outside and brought in ceos from outside there's a corporate -- there's a human resource problem here at this company they don't bring in the best athlete. they bring in who is available next stop on the latter of corporate success there. what happens is you don't get the best and the brightest they bring laughley back because mcdonald -- i never met the man, but everybody said he was terrible i can't defend him or have an opinion on it, and he has been blamed for everything, including global warming

mcdonald doesn't do the job. >> i would say i think global warming caused him to become ceo. >> you might think -- >> well, you have to explain that >> when there's -- >> the white house thought it was causing isis >> let me ask you about this this is what david taylor says about you. he said that nelson peltz would look to change the soul of the company, he said -- he is talking about you -- that corporate r & d is a hobby it it is not a hobby it's fundamental to our brands and the processes that make our brands what would happen if nelson peltz wins this? >> first of all, i think p & g has lost its soul, and its soul was growing market share, more and more and more over the world, and today for ten years they've been losing market share. when you are in the consumer business, you cannot be losing market share that is fundamental. when you lose market share and you cut to advertising in the last quarter to make the numbers look -- that's a cardinal sin.

you just -- i mean, you don't have to be a marketing genius to know if you are losing market share, don't eliminate advertising. i have said no one has to come off. i will nonl nature the board to come right back on >> their counter is why can't you give them ideas, and be partners with them without being on the board >> that's not their answer anymore. >> that was their answer that they -- >> becky, they're not looking for my ideas first, i had no ideas, which was -- which the bar you had to jump over to get on the board. then my idea became a bad idea, and then they said they're not -- they are already doing

it they're already doing a bad idea they're not doing my idea. i've given them a great idea i've given them the structure, which holds people accountable >> i'm curious about the interpersonal relationship and how that works you've actually had difficult proxy contests on a board and then had to actually win the group over >> i have never been more than 2 out of 12. i've been 1 out of 12. once you get on a board, you will find groups on that board that are not all solidly in one camp they have to look that way today. they all know that fundamentally

they're there to represent the shareholders, not management, not history, not any of those things when i get on a board, i appeal to that, says and all i ask them to do is let's have a real serious discussion about what i'm suggesting if you don't like it, let's hire a consulting firm. one of the top ones. we can look at our structure i want that consulting firm to report to the board, not to management, but to report to the board and really -- i know -- look, we have dealt with matrix organizations throughout my career they don't work. they just don't work it means complexity. that's the synonym for matrix. it means sales growth is slower. it means margins are lower that's what matrix does. >> nelson peltz will be with us.

>> fascinating about the consulting group i don't have a great impression of consulting groups in general. >> i'm going to tell you why you are right. is this water okay to drink? >> it's okay >> joe is mad at me. >> we had a tester check it out earlier. i mean, i watch the ceos that come from consulting groups, and they make mcdonald look like, you know, jack welch >> let me tell you what happens -- >> well, let's -- we'll continue -- >> mckenzie, seriously mckenzie still to come on -- still to come on "squawk box," the september jobs report. our jobs panel will preview today's data and what it tells you and what it means for the markets. numbers straight ahead "squawk box" will be right back with nelson peltz. at fidelity, trades are now just $4.95.

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those boots could make a unicorn cry. yeah! tears of joy. (groan) settle up with your friends on october 17th with the bank of america mobile banking app. >> welcome back. we want to continue our conversation on the biggest proxy fight. ceo and founding partner, nelson peltz. i wanted to ask you this, given this proxy contest, if you win this thing, does it -- do you think it truly means that every company in america is up for are grabs? i mean, there has always been a sense and there were certain companies that were off limits given their size

>> what happens with those lbo's, besides the leverage? clearly that juice returns we're not suggesting leverage. you know what really happened at those companies? on the board and management there was an ownership mentality. that's not what's happening today, and the big companies, heretofore have been unassailable by private equity or anybody maybe i'm a pioneer, and maybe i -- maybe i'm tilting at windmil windmills. even though we lost the dupont proxy fight, i think it was

obviously very good for dupont and dupont shareholders, and i think that today p & g will never be the same company it was two months, three months ago it will not be the same. now, if i get on the board, the speed of that change will increase if i don't get on the board, that change will continue to happen, but it just won't happen as fast. look, i said i wanted to get on the board with one seat. they said no you know what they said three days ago they said they're now changing three irectors i said you don't have to change any directors. i'm willing to come on the board. everybody stays. but, no, i can't come on the board, but now they've got three new directors to come on the board. they're refreshing the board there's not one seat pg guy or woman on that board. not one. if you look at some of the

charts we sent you, the tsr of those directors starting at 17 years of ten year until miss chang who came on a few months ago, except her, the tsr versus the pier -- every one of them is negative every one of the directors i mean, think about that i get stuff done i'm pretty good on my iphone i think my real experience is

the cpg, and there is nobody on the board today with cpg >> nelson, just a philosophical question tricks you know, they went -- they changed. they're selling kale flavored trix or something. the coloring is all natural and everything they finally said no one is eating this crap anymore they're to go back to the way that trix used to be with red dye and sugar. are you sure that p & g needs to embrace every new aged trend they've been around for how many years? sticking with what they know, stick -- they got to go to method soap because the millennials are buying $100 million worth of this crap i don't know what it is. andrew, what is method owe soap? >> it's a brand of soap. >> it's just a brand of soap >> what is it? non-gmo or gluten free soap?

>>. >> do you know how to satisfy millennials? do you have the answer >> i got six of them at home i have two -- >> if you look at a pepsi, who just came out with earnings this week, they have suffered with the traditional beverages and they've been bringing out all these new things that are designed to appeal to the millennials that are very different, but they're now admitting that they're going to have to shift some of the resources back to the old brands stuff so that it doesn't die a slow death it sounds like all of these companies are facing a crisis no matter which way you try to address it >> sometimes you make the story up for what happens. i don't want to get into pepsi i was there once i've got to put a very talented guy on the board, bill johnson i will talk about millennials. no one has the formula, and no, no, you do not jump on every fantasy that comes by.

you do understand trends okay you do understand that these millennials are rejecting global brands does that mean you stop selling tide and pampers absolutely not you have to sell them other things otherwise, you will continue to lose market share. >> it's a pretty delicate balance, right >> it's a pretty delicate balance. >> it is a balance in order to accommodate a small brand, you have to have the structure that accommodates that brand. >> where do you think we are in

the economic cycle where will you get the jobs numbers at 8:30, and where we are where the stock market is right now? that has to figure into some of your thinking, i would imagine >> it does look, i think that the economy is much stronger than anyone would have anticipated before the election >> i know. i'm with you >> and i think it is i like the fact that the dollar is weakening >> in the last eight years in terms of the government's response to business was not friendly am i overstating that? >> hostile >> it was a proxy fight. >> right >> that makes a lot of sense when you are trying to create jobs let's impact the corporation makes a lot of sense >> but what we have today is we have the dollar weakening, the economy getting stronger i don't understand why they want to have three interest rate increases this year. we owe a lot of money. why do we want to pay more

interest why do we want to make the dollar stronger? i think things are just fine the way they are >> you look at corporate earnings right now you think comps come next year are going to be okay >> multiples are very high okay and multiples are high in my opinion because of interest rates. i mean, that -- when you have a stock that's paying 3%, 4% dividend and where you could put your money today, that's amazing. if you are going to continue to raise interest rates, you might sour the market. or at least those stocks >> right >> so it seems like a reasonable place. valuations are high, but reasonable given the circumstances. >> right >> what percent of your portfolio is in activist positions versus sort of broader calls either on the -- >> 100%. >> 100%. >> 1 00% we have eight positions. >> and that's it >> that's it and we're on board of five or six others >> the reason i ask is a number of other people who are so-called activists have their

activist portion of their portfolio, and then they have another portion of their portfolio. >> i know what i know. i don't know what i don't know i don't know how to pick the market i do know how to make companies better i spent the vast majority of my career not staring at a bloomberg screen and not picking stocks, but building businesses. as you know, i ran and built a fortune 100 company in the 1980s. then we sold it to the benefit of share owners. i turned around snapple. i have some experience in doing these things i love the consumer space. i only became a fund about 12 years ago. >> final question. this is the biggest proxy contest you've ever pursued thus far and the biggest in history now. do you have an elephant with a target on its back that comes after this one >> we're looking at a lot of

opportunities, clearly i can't tell you that we've session t settled on one right now, but we are looking. these companies are amading company. thee generate gobs of cash they generate gobs of unnecessary expenses as well >> i know we've got to go. next week when are you free to come on "squawk box. >> next week let me tell you something. >> i've got a calendar open right here i'm booking you now. >> i will come on in the next month. i promise. en nelson peltz, thank you for spding the half hour with us >> i enjoyed it. "squawk box" will be right back.

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breaking news this hour. the september jobs report. the numbers, the analysis, and the instant market reaction straight ahead cnbc exclusive dallas fed president robert kaplan speaks out on the economy, rate hikes, and the trump agenda just minutes after the payroll's release. >> plus, is the block chain the next big job creator

we'll tell you why businesses are doubling down on the digital ledger as the final hour of "squawk box" begins right now. >> live from the most powerful city in the world, new york, this is ""squawk box." ♪ >> we got pitch. jason fuhrman is here. larry kudlow is here welcome back to barbara. he is the best guy >> i already talked about you this morning larry says i love you. with all -- >> then you say these horrible things >> moderate raltly horrible, but personally the guy is first rate >> he knows nothing, but he is really nice. >> it's skrg a communist perspective on the show that could be useful. >> exactly anyway, thank you for being here appreciate it. larry, we're going to need you today, my friend this is "squawk box" on cnbc

live from the nasdaq market site in times square. a lot happens when the cameras aren't rolling it's the same kind of thing. >> only war. >> unhinged. i'm joe kernan along with becky quick and andrew ross sorkin we're less than 30 minutes away from the september jobs report, and an exclusive interview with dallas fed president robert kaplan that should be good, right right after the -- >> it will be great. >> right after the jobs report it will be good. here's what economists expect. nonfarm payrolls are expected to rise by only 80,000 due to the impact of hurricane shar have i, hurricanes harvey and irma >> is it doesn't have any meaning. no meaning whatsoever. >> the broader meaning >> labor markets are pretty darn

hot as the economy is getting better i think it's minus 50. i don't mean to misquote him >> i thought he was i was going to be the bearer at 65 we're not going to learn anything about the economy from this release this morning. >> we are marching towards that number, but as we get closer to that countdown to the jobs report, let's take a look at what's been happening with the markets this morning you are going to see that the futures have been mixed for much of this morning. this comes after some big rallies that we've seen and steady gains all the way along in fact, you're now looking at the longest string of record closes since 1997. s&p futures are indicated down by just about 1.5 points dow futures created up by 9.5. the nasdaq indicated up by just over four points if you check out the ten-year note, the yield right now sitting just at 2.366% among today's top stories, we are watching shares of costco. the warehouse retailer, beating on both the top and the bottom lines, but the stock is being pressured by a drop in profit margins. sparking some concerns about an

escalating grocery price war facebook reportedly cut references to russia from a public report about manipulation of its platform around the presidential election. facebook, as you know in recent weeks, has provided information about the russia-backed accounts to congressional investigators >> it's jobs friday. joining us now barbara rhinehart, head of asset allocation, jason fuhrman, har vrd kennedy school professor and really a productive in ermz it of editorial op eds you have written. i see them all the time now.

>> we'll have a conference, and then they put at a new york financial -- they do it blatantly. they're shameless. they own other entities. >> big source of information >> yeah, page six. >> page six. >> exactly right >> no one wants to admit it. >> a former cea chair and contributor larry kudlow, and jason is so smart that i just let larry handle this. anyway, we already heard it's a battle of the -- we already heard you think, say, 65 you say you have an actual number >> i got to come around zero to 25 >> zero to 25.

>> i got to have a range >> yeah. >> k on. i'll take 50 to 75 >> you'll say 50 to 75 >> how much is it? 100,000 error factor per month, isn't that -- >> yeah. >> the range -- >> we got, you know, i predict the jobs numbers are close to 140 million. >> larry wrote a tax plan, he

tells me, soar at least -- >> steve mnuchin >> he says you can't do above two. >> i disagree on this. at least modestly. >> kevin often comes on the show or did and he did a couple of things yesterday. number one, he absolutely spanked the tax policy center for their terrible assumptions, which he called inaccurate, false, based on fictions it's really become a left wing operation, the tax policy center actually, at the conference yesterday which they co-sponsored, they didn't only disagree with kevin, but -- i give kevin a lot of moxie and a lot of credit. perhaps more to the point, he makes the case citing numbers of peer reviewed studied that lower

tax rates does, in fact, promote growth, and in particular -- in particular, lower corporate tax rates spur investment and productivity and wages for middle income people his estimate is that 70% of the benefits of the business tax cut go to the wage earners, and you may have seen this morning glen hubbard, a former bush cea chairman, he estimates 60%, and i say this because, a, i believe this i have been touting kevin's work for many years b, i'm glad there's some academic evidence to support it. c, this is where the republicans should be. okay instead of being mow-mowed, like these are rich, bad people and not understanding the incentives the gop response should be not

to punish successful rich people, but to understand that lowering business tax rates for large and small companies bringing the foreign cash home and allowing for expensing for new investment the biggest winners of that are middle income, working folks wage earners they are not rich people you do not disagree in principle? >> i do not disagree with everything that larry just said. the basic idea that the corporate taxes partly paid by workers is absolutely correct. the buvlg administration assumed that wasn't the case, and -- to reflect the fact that that tax is partly paid by workers.

that higher growth rate will translate into higher wages. when i look at this plan, though, number one, it's i abig increase in the deficit. that big increase in the deficit will hurt our economy. the lower tax rates might help our economy. the net of those two, it might be good up front, but over time it's going to be bad i base that on a lot of research, a lot of peer reviewed research, including a guy named kent smetters at the penn wharton budget model he worked in the administration. this is not like some swamp partisan left wing hack. >> he was a political appointee. he worked as a career guy. >> this is somebody who published, you know, reading -- second, the magnitudes you have, larry, i think somebody once put there's nothing wrong with supply side economics that couldn't be solved by dividing by ten >> even though it worked in the past with reagan and john f. kennedy. >> goldman sachs did a great

research review this past week they went through -- they looked only at studies that were published in top peer reviewed journals they didn't think of anyone else they found relatively modest benefits from tax cuts they found the tax cuts could maybe offset 20% of their costs with the extra growth. i think it might even be as high as 30% of their cost that means instead of adding 1.5 trillion to the deficit, it will add $1 trillion to the deficit i don't think that's good for our economy right now. >> all right so we do agree in many principles we disagree on the magnitudes. fair enough. >> a factor of ten >> i understand the factor of ten. thank you. >> are you closer to larry or -- >> let me just finish this off, though one of the problems with the tax policy center, which has moved way to the left of you in recent years, but, but, but, but, look, they don't acknowledge even the growth impact, which is in the literature, it is almost mainstream economics

>> there's a $1.5 trillion tax cut, of which $500 billion is going to come from a current policy baseline. much of the rest of it will come in this plan from better growth, and there will be some offsets there's no question they're going to be reforms. i'm just saying, i don't think this is out of control i think we'll see how it works okay i get that i think it worked in kennedy and reagan we'll see. i think -- all i'm saying is it's logical, and the tax policy center did us all a great disservice, but i'm glad kevin hasset and today glen hubbard, and i have written extensively about this

>> where do you land >> we land in the -- when we think about this from the perspective, we're putting capital at risk for retirement we think about it through the lens of the business cycle does full employment and, you know, long expansion at this point, does any of this policy hasten the business cycle, make the fed act more aggressively at the margin you would have to think it does. you're at such low levels of unemployment naru may indeed be further lower than what the fed expects, but we do think that a big stimulus probably hastens the cycle and probably shortens it >> quick question. >> the supply side cuts. they're not demand side cuts we're going to boost productivity >> yes, but you are already down at low levels of unemployment, and the issue that you have got is that wage growth will likely start to accelerate. acceleration -- it's not necessari necessarily. >> i love people with higher wages. especially me, but all my friends. >> we all do, but higher wages are also likely to start to infringe on corporate profitability. at some point it may be one to

two years from now, but this stimulus package would have been fantastic, say, three years ago. >> when you bring all that money home from overseas, you are going to have a huge chunk of corporate profitability for years to come. >> we got to sneak in a quick break. >> sorry >> we'll continue this conversation in a minute we're going to try to make some monies ourselves up next, when we -- we are are going to try to explain the block chain technology one thing that you should know is where the jobs are next month, and they relate to the block chain. later, steve liesman will sit down with dallas fed president kaplan, and it's an exclusive interview. you don't want to miss it after thseemr bse ptbejo report. stay tuned you're watching "squawk box" right here on cnbc

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technology alone, and now many much them are looking at qualified workers to help implement it >> block chain is one of the most exciting things that has happened since the beginning of the internet craze >> blockchain is a record of transactions, a transparent and tamper proof digital ledger that allows users to share information quickly, freely, and without fear that it could be altered without user's detecting it >> it makes the data that be used in our processes permanent. it absolutely increases the level of confidence in that data >> big companies like ibm and wal-mart are working together to use blockchain to address food safety challenges among other things and the government is adopting the technology as well last year the state of delaware launched the delaware block chain initiative to allow for more efficient governance and structure for some 300,000 companies incorporated in the state. >> we want to create the most innovative environment for our corporations to do business. a sandbox, if you will, and have

those organizations feel comfortable in that sandbox trying out new technology, anything that's going to increase efficiencies, and help them manage costs in the current environment that we live in. >> prior experience in coding and computer science isn't necessary, but it is helpful this is a new technology, of course, so not many people have a ton of experience working in block chain. that's why companies like ibm, where we are today, are willing to train the right candidates, especially those who have adjacent skills to things like i.t. development, says financial services, consulting and so much more back to you. >> kate, thank you for that. we also want to tell you one of the biggest proxy fights in corporate history heating up between activist investor nelson peltz and proctor & gamble here's what he told us in it the last hour. just got a response in a moment. take a listen. >> this proxy fight is probably the dumbest thing i have ever been involved in it really is >> because

>> because in my opinion they're spending over $100 million think about that $100 million all the sales and effort to keep me off the board i will nominate the man to come right back on. >> and this morning proctor & gamble has responded to the commence made during that interview. heersz a statement from p & g. >> this is a statement they made -- this was -- >> it was made in a letter >> it was a letter they did before nelson peltz was on >> he writes the following "what matters in this proxy contest is that p & g is on the right track with the right management team, the right board, and the right plan that is working the company is in the middle of a successful transformation that is producing positive results. nearly everything about the company is changing, and it is well-positioned for future market share growth, margin growth, and leading returns to investors. krl shareholder vote taking place next week. we should get that result -- >> they go on to say that they call peltz a respected investor.

this is what mcnearney said. the case for adding mr. peltz missing two factors. the timing is late and the substance is lacking >> if nelson peltz talked for 30 minutes on a morning show and you wanted to respond to that, it's seriously -- i would have at least jingled around -- looking at it more seriously that's like disrespectful to -- peltz comes on and talks for a half hour about -- what do we get? they take a segment out of a letter they already -- we all of a sudden -- >> called crisis mlgt wlsh. >> that was before he was on the show that was some generic defense of the fact from before he was on they couldn't address one thing that he said live for 30 minutes here they got to send out boilerplate that they sent out earlier does that make you mad that they don't take it seriously?

>> maybe peltz was on for -- >> i think he is one of the smartest people. isn't he just basically saying, look, you got a good company here you got a lot of products, but your rate of return on capital is lousy, and you are deploying your capital >> he actually wants to change the way that the company is structured the company is saying we're already in the middle of a transformation >> i am no expert on this stock or anything else, but i think peltz is right some of these companies are like big government okay big government bureaucracies i call these guys big -- they're corpocrats >> i didn't get to this on the tax part we'll have to go in one second which is this. what do you think of the pass-through rate at 25% the reason i ask is because a number of the reports, including, by the way, on both sides, think it is a gift to the very wealthy meaning that most small businesses, if that's what you're trying to spur, are people who are making under

$100,000 to begin with they're already paying 25% that the people who would be the beneficiaries of this are the people that are closer to 39.6 or would be at 35% >> there's about 25 million small business that might be affected by this, okay they're not all rich people, trust me now, the point you are making, a wall street point, or whatever i don't want to laebl it heaven forbid some rich successful person or business should do well i think -- i happen to like rich people i wish the non-rich would get rich i wish we would reward success, not punish it. to directly answer your question, which is really accounting, they're going to make sure that this new rate will apply strictly to business income and an ongoing company. not personal income. they have the tax accountants to do that. oy.'s what they're aiming for >> we'll learn more. i'm not oblivious to your point, okay

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>> you can see ahead of that the futures are narrowing towards the flat line. dow futures now up at only 3.5 points nasdaq up by two and a half points s&p futures a little wider, and it looks like the two-year note is yielding 2.368% hampton pearson is standing by hampton, take it away. >> minus 33,000. september nonfarm payrolls declined by 33% jobs the unemployment rate is 4.2%. average hourly earnings .5%. that's the highest since july of 2017 2.9% year-over-year. yes, hurricanes harvey and irma did reduce the nonfarm payroll estimate, but did not affect the unemployment rate. private sector jobs lost in the month of september minus 40,000. we also had downward revisions for july and august. a net decline of 51,000 over the

two months from what it previously had been reported back again to the hurricane effects. the sector that basically took the biggest hurricane related hit. food services and drinking places, employment there dropping by 105,000 jobs in september. also, those hurricanes basically, especially the second one, happened to hit during the period that the surveys are actually taken by the bls in putting its numbers together this statement from the commissioner's statement september 1.5 million workers had a job, but were not at work for the entire reference period due to bad weather the highest level the bls says in more than 20 years. health care up 23,000. transportation, wear housing, plus 22,000. the u-6, the so-called real unemployment rate, 8.3%. the lowest since june of 2007. that 4.2% unemployment rate is

the lowest since february of 2001 the number of unemployed persons also dropped by 331,000 during the month of september no data on puerto rico and virgin islands they are not part of this survey they're part of a separate survey the last time we had a negative jobs number, september of 2010 back to you. >> hampton, thank you very much. right now, folks, we're going to get reaction from our panel. also, rick santelli is joining us this morning. >> the it en-year treasury is reacting to the 4.2% unemployment rate and very importantly average hourly earnings that means the fed is going in december of this year. >> what do you see down there, rick >> i tell you what, the minute the number basically was out, we popped a couple of basis points. pretty much everyone on the curve. we're getting very close to 240 on tens. why is that important? we settled last year at 244. we're getting very close the dollar index popped nicely

we're now over 150 how much selling activity have you seen in there? minimal, but the selling activity pushes the price down, which raises the percentages of what is perceived to be fed tightening >> what's the year-over-year change in average hourly earnings >> big deal. it is a really big deal. >> so, okay, i like this more people working. >> yes >> and more people prospering. more people picking up wage gains which have been lagging for 15 years under democrats and republicans. it's a good thing, may i say it is a good thing it is not necessarily an inflation thing at all >> it's a good thing it's something, though, that

pushes the fed as we were all just -- >> the fed has to respond to two things inflation and labor markets. they're going to respond to the labor markets. >> why why? >> yellen said her own models -- she said this in the speech last week i don't mean to be coming at you all the time >> don't worry i love you anyway. >> i'm pushing back only because yellen herself said that for the last 20 years the labor market inflation model has completely broken down. the only thing i disagree with, jason, is i don't think it's true for 20 years. i think it's true for 40 years >> the fed wants to go in december because it's going to be the last time that yellen potentially is going to be in the seat the other issue that you got is they are trying to also see that you are running out of workers in the u.s you cannot go down -- >> no, we're not we're not. >> you are -- >> i agree with barbara on the

prediction of the fed. i don't know if that's what they ought to be doing. >> there you go. >> is this translating into price inflation where half a point below the fed's target on prices, we've been below it for in seven years now there's a little bit of room for error here more in one direction than the other. the 2.9% wage growth that we've had over the last year, we should have been there a while ago. wage growth has been drifting up a little bit we have a bit more productivity. we could justify that level of wage growth at this part of the cycle, and the productivity is key. we're not going to know that right now. it's key to see how it plays out. >> better tax return >> then, number three, there has been more space in our labor market than i expected you look at the participation rate this month was up .2. the employment population ratio was way down there are more workers out there ready to come back in than i would have said two years ago, and i think that's going to -- i think that's the reason i would love to just see how far we can play that out before with we go up >> jason fuhrman could easily have served as an important

person in the economics wing of a republican administration. listen to what he is saying. automatic idea that wall street has because the fed has, because their models are broke higher wages are bad, or inflationary no no they're not. okay i'll give you a quarter point in december all right. but, but, but, but it's something called normalization that's all it is it's a mechanical thing. >> is normalization getting back to 5%? are we still -- >> normalization is not. >> the neutral fed funds rate is nohigher than 3% we can go and argue that i'm just saying this mindset that higher wages is somehow bad because it's inflationary or labor markets are too tight -- look, if -- >> if it were 2.5% right now, i would be worried it's not >> you are going to let him say you could be a republican? you aren't going to say anything back to him? >> he is so --

>> i don't think that -- >> i don't want to be. >> i don't think just because larry calls himself a small business he should get a lower pass-through rate. >> i think the issue -- it's not a matter of what the fed ought to do. you have to respond to what the markets are going to have, that they're going to interpret this, and bond rates are going higher. >> the underlying economy, and the other thing is the market. >> and investments >> right which has been taking stock prices higher because -- >> the underlying economy -- >> because of the -- which has been growing at a lousy 2% for years under republicans and democrats needs a boost. we are so far behind by some estimates we are $3 trillion lower gdp than we ought to be if we kept post-war trends growing, which are over 3% i'm just saying, look, the reason i like warsh for the fed is he wants to come in and change the fed's models and change the idea that wall street obsesses over that somehow if middle income working folks have better wages, that's bad

it's not bad it's great this is wisconsin. this is ohio this is all the states, pennsylvania, that trump talked. he was the only guy on to this i'm in favor of higher wages, and i think there's a reservoir of unemployed going on >> we have to leave it here. we have a fed official who is waiting. larry, barbara >> thank you >> thank you >> steve liesman joins us now with a very special guest. steve. >> how do you process the data >> i'll take more time to look we knew that the september number was going to be affected by harvey and to some extent irma and it has been

i noted of the measures i look at, i look at participation rate and i also look at a thing called u-6, which is the unemploy unemployed, plus discouraged workers and people working part-time for economic reasons that went down from -- the prerecession low was 8-1 i take note of that. i think a lot of these job losses, our judgment will be temporary. >> look at the the coming down and saying we're close to that prerecession average are labor markets getting tight? >> i think labor markets are tightening, yes. i'm not saying there isn't still some more slack, but my judgment, i think labor markets are tight. >> and there was a big pop on wages. the year-over-year is 2.9% that's the wage growth that you guys in some of your model fears leads to inflation growth. >> i think the structured economy is different than it was

five and ten and 15 years ago. there is tightening labor markets. there should be some building wage pressure. theability of companies, though, to pass on wage increases in the prices, i think, is much more challenged couples have far less pricing power today because of technology enabled disruption, primarily i think the trend is very different so the cyclical versus the structural forces are playing against one another. >> do you see a break between the wage -- the ability of wages for inflation? >> yeah. >> right now i'm looking here. i don't see much change in the probability for the december rate hike being 75%. we got a lot of guys out there that are making bets or ine investments based on where that probability is is this a wrong probability? is that too high in your estimation >> i can only comment on what i have been saying, and as you know, i have been saying i think we ought to be patient i'm open-minded about december, but i'm not there yet.

>> it's having a muting affect i think on prices, and so i think we can afford to be patient. i plan to take a little more time between now and december before i make a judgment, but i think we have the ability at the fed, in my judgment, to be patient about removing because i think of some of the structural shifts in the economy. >> this idea of structural shifts, does it change your estimate or your sense of where the fed needs to go ultimately the terminal rate idea the median fed forecaster fomc member, is it 2.75%. it's come down where do you stand >> i'm a little lower.

population is aging. work force growth is slowing i think it's creating a head wind and so i think we're accommodative right now. we're not as accommodative as people may think today it's much lower because of prospects for future growth are much more sluggish unless we make changes to address those issues >> the median -- let's talk about that in just a second. the median forecaster sees three rate hikes enradio ut to that terminal rate next year. where do you stand >> probably a little more muted than that. we'll have to see. it will be my other judgment that we can afford to be patient.

are you in the camp that sees the underlying growth rate around 2%, and where are we right now relative to that underlying growth rate >> i guess the short answer is approximately yes. here's my concern. the demographic issues that i have been talking so much about, aging population, slowing work force growth, are going to get worse over the next ten years. the participation rate over the last ten years has come down for about 66% to around 63%. our own judgment at the dallas fed, it's going to decline further, okay? just to keep it flat will be a good accomplishment. why? because people are aging out of the work force, and so i think that aging trend is slowing work force growth is creating a headwind not just the united states, by the way, but in most developed

economies. >> can the tax cut or the tax reform package that the administration has put out and congress as well changed that underlying growth number >> i've mentioned a number of things i think we ought to do, and i'll come back to taxes at the end. one, i think we need more work force growth we're here -- we're here at a skills training conference, and this is the big reason at the dallas fed we work on skills training and convening groups like this. there's a skills gap in this country. there's literally hundreds of thousands of people that we can get back into the work force with skills training i do think we need -- we need to relook at a sensible immigration reform >> i think we're $3 trillion under spent. on taxes, i think tax reform underlying the word reform, if it's done thoughtfully, could

help sustainable growth. if it's just a tax cut, financed by increasing the deficit my concern is you get a short-term bump then you go back down to trend growth, except you are more highly leveraged i would be leary of us doing that where. >> there are two kinds of people being talked about to head the fed under president trump. those who would change the fed and the way it operates, and those who would continue the fed. does the fed need deep and vast reforms? >> i've been at the fed now for two years. i would say on the positive i think the fed works very, very effectively. having said that, i have never been in an organization in my career that didn't need to keep reviewing how it worked, better governance, better practices i think -- i think as you and i talked before, i know the candidates, and i've got good relationships with several of them mentioned i think any good leader is going to look at how to make the fed

better, and the fed should be open to that i think as an outsider coming in, i think the fed from a monetary policy point of view has been a very effective body, and i think it's been effectively led. it's not saying it can't be better i think it can i think we'll continue to improve whoever the leader is. >> don't miss another. imf managing director christine lagua lagarde. "squawk box" is coming right back draws youthful populations to mobile banking and e-commerce. trade and travel surge between emerging markets. everyday our 1,100 investment professionals around the world search out opportunities for alpha. partner with pgim,

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welcome back to "squawk box. the u.s. lost 33,000 jobs in september after hurricanes harvey and irma hit texas and other southeastern states. of course, in september the other thing that happened beyond that, obviously, it happened in texas, florida, and beyond we've also had the first decline, we should mention, in nearly seven years the unemployment rate falling to 4.2% and 4.4%. that's the lowest level sense february of 2001 want to show you the futures right now. see how the market is reacting to that. dow is off now about 6.5%. the nasdaq looking to open down about 12%. the s&p 500 looking to open off about four above i call the percent -- i shouldn't have said that by four. then the ten-year hitting the highest level since july 11th.

the dollar index highest level since july 27th where. >> that explains -- the ten-year and the dollar explain what's going on >> you would think, wow, we lost jobs that's bad for the stock market. wait a minute. it was because of the hurricane. that's not bad if wagesup, then the fed will move, and that's why the market, you know, the market still doesn't want the fed to tighten. >> nope. nope keep inhaling the helium >> yeah. i guess that's one metaphor. that's right >> smoke in the -- >> when we come back, jim cramer will join us live from the new york stock exchange. we'll get his take on the jobs report and h iisowt going to play out in the markets today. back in a moment

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get down to the new york stock exchange jim cramer joins us now. interesting action, the dollar end and the ten year based on that number that we just saw i guess that was from the overall rate and from the wage gains. 2.9 year over year >> exactly it is funny, you have a number that everybody says doesn't matter, it is like people are trading, like it completely matters. i do think that we see why we had a bank rally that has been endless. take a look at some of the bank stocks they're going up, precisely

because what we see in the ten year i think it is legit rally. i do think -- i got to tell you, i'm reading all the articles, listen, this has to be bad or irrational exuberance and come back and say, look, stocks aren't moving, bank stocks are doing it this time it is not so bad. >> the melt up notion, it has been -- it has been up but quiet, hasn't it maybe that -- if anybody comes with the conclusion, rates are zero, and unemployment 4.2, and earnings are great, if you ever really just look that instead of looking and looking for, you know, something wrong, to find something wrong, look at the goldilocks scenario, these are pretty good times overall. >> there are times that you and i have seen that are good times. but they were a long time ago. we don't remember it always remember good times are going to lead to bad times almost like our moms are saying, listen, you're having too good a

time, whenever time that happens, somebody gets hurt. we can take that wrap and say, it is a decent environment and we get a couple of down days, maybe get people come in who haven't had a chance to come in yet. >> depends on your time frame too. you go back to, you know, you go back to the lows of '08 and got this great compound return in stocks, but go back to 1999, it is like 4% per year so are we really that expensive right now? i think if we're going to a million, like buffett says, in our lifetime, jim, hopefully, if we're going to a million, we got to get going we got to get cranking on the dow. >> the leadership group, the banks, these things are -- they trade with incredibly low multiples. if that's the leadership group, i don't mind it. i think that there is some areas, i don't trust the rails up here. you listen to nelson this morning, that whole group is very challenged. i don't understand some of the moves and some of the industrials, the dollar keeps getting stronger but in the end, it is like,

okay, we have a decent market. it has been up too many days in a row. i'll give it that. and it is a little overbought. i'm not panicking, like i see a lot of people saying, listen, you got to sell, everybody is happy. >> are the eagles playing this weekend? >> the cardinals and, you know, fletcher cox is out and wendell is out, but i think -- we have to watch the left sides again douglas because he's a rookie, but -- >> home or away? >> home game 1:00 game. then dallas has home field advantage against green bay. i can't stand them >> you like romo >> yeah, i text romo back and forth. yeah, he's a great guy i like him he's doing a fabulous job. >> beautiful jim, thanks. 'lseyoin cplof minutes. "squawk box" will be right back. . they don't invest in alternatives or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investing

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us. it's what this country is made of. but right now, our bond is fraying.

how do we get back to "us"? the y fills the gaps. and bridges our divides. donate to your local y today. because where there's a y, there's an us. welcome back to "squawk box. some are calling a bull on the wall street firm behind the fearless girls stat at the stock exchange there is part of an audit, investigators said the company discriminated against more than 300 female and 15 black senior level employees since 2010 those employees will be getting

back pay with interest from the settlement fund. >> johnny carson used to work monday through friday -- or monday through thursday and take off friday he didn't, you know, not work monday through thursday and then work on friday what is your plan. >> happen to be working. what is your plan? >> i'll see you next week. >> thanks for the warning. >> get out. >> make sure you join us on monday "squawk on the street" begins right now. ♪ good friday morning. welcome to "squawk on the street." i'm scott wapner with jim cramer live from the new york stock exchange cart quintanilla is off today. a drop in payrolls, down 33,000 in the wake of hurricanes irma and harvey let's look at how futures are shaking out on this friday morning, record-setting week