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 looks like we'll open lower

across the board europe is mostly lower, the ftse 100 getting a boost, modest. big boost in rates that's a story as well, the ten year note yield, look there, 2s and 10s on the move this morning, ten year at 238 look at crude oil as well. just below $50 a barrel, $49.65. road map starts with the hurricane effect the labor department reporting that 53,000 jobs were lost last month, first contraction in seven years. does that mean a pause for wall street's record run? stock futures are pointing to a lower open slightly this morning, the s&p 500 coming off its longest record streak since '97. watching netflix sharpen its fangs, the streaming giant up 5% yesterday alone. and seeing some key upgrades today. the september employment report also shows privatesector payrolls down 40,000 the unemployment rate did fall to 4.2%, the lowest since

february of 2001 average hourly earnings now up 2.9% from one year ago jim, we mentioned all of the classes of stuff that is moving, rates are up, the dollar is up, and the stocks are lower. >> look, i think that everyone is feeling a bit of ennui of greatness. the same thing every day, a thesis that things are better than we thought, that we're optimistic, and the answer to that is there will come a time where we'll just say we have paid up enough for what we now know which is that wage better, the fed has to hike. we're watching jpmorgan. the stock had an amazing run. >> the market. >> an amazing run. the amazing run made it so that jpmorgan is the market leader in the nonf.a.n.g. department and if that can continue to go high near earnings, you got a market that is more than just

mastercard and visa on the financial side, financials being really huge, yesterday was a kind of a -- a mystifying day. we had a rally in the banks that was so big we see today why interest rates have shot up so to speak but i tell you, scott, you're here now, a team, it is very patriots-like, they win, they're going to win, it is a w for the market every day a w and we're going to get tripped up by something else i just don't know what is going to trip us up. i know as long as the financials lead the rally, we're fine. >> the patriots haven't looked like the patriots. >> and this rally -- look, we're not use ed to being led by bank of america we have to go back, i'm really going back 1991-'92, the fed kept rates low in order to rebuild the balance sheets, and you had a remarkable bank route and it was really -- we all -- we were either not old

enough or forgotten what a real rally looks like. >> isn't it likely to stay that way. harker told liesman, pencil in, i'm going sharpie. forget the pencil, sharpie for december wages are up dollar is up, rates are moving up. >> i don't want the dollar to keep going up. the narrative was so terrific. we didn't have to hear about, you know what, the strong dollar, constant currency. we're in this moment, we're the only thing that happened was costco and yum china and yum china was okay i just look at it and see certain tech stocks involved, other than f.a.n.g this is the week we saw pricing maybe peaking and flash peaking, very interesting >> downgrade yesterday >> no, this is important it is important that tech not be led by f.a.n.g it is important that tech be led by components. it is important that banks be led by jpmorgan and not chubb and not mastercard the reason i say this, there are signs of cracking in the nasdaq

and they're being massed by f.a.n.g., which is all off because of the netflix price increase. >> the journal says no end in sight to the rally there are few obstacles ahead. >> we have the earnings coming and if they -- people -- the etf-ization of the market made it so we think the earnings won't matter then we get the earnings costco will be a major focus for us today probably the longest i ever read, 26 pages, it is a very disturbing call. it says, okay, listen, amazon is coming for you guys and we don't even care what you say what i'm saying is that the idea that we're in the going to care about earnings when costco is down 7 bucks, we're going to keep -- the earnings are going to be that good. >> amazon is coming for everybody. not the industrials that ripped the boeings and the cats and other names.

>> boeing was responsible for almost 40% of the gains. >> selling airplanes online. >> i saw honeywell is making $3 billion acquisition water filtration, get a wave of it from aerospace it is not as good as it looked yesterday. because it was a rally, if you look at the time and sales, netflix announces 9.9% increase, suddenly facebook, amazon and alphabet start going up. there was nothing positive about those stocks i don't like when stocks go up on nothing i don't like it. >> let me get your comments. i talked to a smart and well known investor yesterday, who is now wondering, i think like many are, maybe you are too, how much of a projected tax reform or cut is now in the market every increment that the market goes up, isn't more of that now getting into the market? >> the only one that -- no look, the only stock, let's use

dow stocks, the only stock in the dow that is reacting to tax implications is cisco, which had a not great quarter and now above where it was in the quarter, because it has $70 billion largely overseas, repatriation i disagree with the analysis that it is a tax code. i think it is a belief that as this morning, when sarah was talking, worldwide exchange, it is lagarde lagarde is saying the strength is in india, in the united states, in europe, the strength is in china. the chinese strength alone is measured by copper, it is extraordinary. so it is worldwide growth that is driving the stocks. >> you don't think taxes are in the market at all? >> no. i don't think we're going to get anything. >> but yesterday the market is up 40 some odd points, the house passes the budget resolution and the market goes up 100. >> they don't have -- they have no gain. if you're buying it for that, you'll be disappointed because the white house does not agree with congress about how to get to where they have to go and there is a lot of different stuff thrown away and i'm

telling you that it hasn't helped you to focus on washington, the only thing that really happened yesterday in washington was this guy quarles got in, ruehl is out but i just think that the lagarde interview , sarah's work, it is about worldwide expansion. it is not about what is happening in this country. and i'm not saying it is the calm before the storm. >> coming up in a little bit, you'll hear more of that interview >> look, she is a stalwart in terms of observing the situation and her comments resonate far more to me than whether we're going to do what rate taxes. by the way, when you get together with people, you know that it is a big tax increase for -- for new jersey, for new york, if they get -- >> fourth bracket. >> fourth bracket and state and local, my taxes go to 55%, which is a lot that means i work until like tomorrow for the government.

>> you already do work a lot >> i like to work. i like to work i like to play i don't know if anyone saw me with jon hamm last night often confused with jon hamm people, like, people say, yeah, which one is jon hamm. okay, i know he's the best looking guy in the world. i'm not going to hold a candle to him. >> did you tweet a picture of it >> of course he helped brooklyn park. >> we talked about the f.a.n.g.s. let's go netflix. >> f.a.n.g.s were insane yesterday. >> it was raising subscription prices in the u.s. on a couple of plans you have multiple notes out this morning, price target increases. >> i know, i know, i know. >> stifle says with the price increases, netflix is the best value of the consumer internet look against hulu, what they're charging, hbo now. the pricing power, they stril it and it is still a value. >> i was thinking about bob ire.

this gives him the ability to charge $9.99 for 40,000 programs he's going to offer games and offer mostly, you know, from really from -- only you and i care about everything is an umbrella for everything netflix raises prices, so therefore we can make it so everyone is going to pay $9.99 that group itself, the cbs group, disney, not good, jeffrey cuts numbers disney, saying 127 will go 111. that would be substantially below the street be aware i'm telling you, there is problems >> what does it matter if f.a.n.g. leads as long as the midcaps and small caps and all the other areas of the market are pulling their weight too. >> something good has to happen to move us what happened in facebook yesterday, facebook was so up? >> here is the journal here is the journal today. netflix breaking away from the f.a.n.g. pack. >> that's just great what is that, like, secretariat

breaking away -- >> it is up 56% year to date, netflix. >> netflix, who has -- >> fifth of the market cap of the other f.a.n.g.s. >> netflix has pricing power, amazon has pricing power, what do they have in common they are 100% artificial intelligence they know exactly what you want before you know it spotify, by the way, i like that song even more -- pearl jam came out with a new album yesterday i'm surprised spotify in my head did not play that song because they know i like procedubrother daughter. >> we have the picture we have the tweet? >> of me and -- >> yeah. we're looking for the hamm thing. >> we are? >> you mentioned it. >> netflix is a small cap -- >> there it is there it is. >> come on, i have game. >> you're the grand poobah you call for it, we show it. >> look, jon hamm happens to be a great guy.

the only time i ever see him is at a charity thing he helped us tremendously. >> jon hamm market >> it is a jon hamm market you know, most of the celebrities i talk to, and i do, they all hate this market. they all say it is about to crash, about to crash, about to crash. >> people who have been -- you said it yesterday, that throw in the towel, a throw in the towel market. >> i can't take it anymore why do i want to recommend microsoft? well, because it won't come down that's not good either i am seeing things -- everybody loves this market, i'm seeing things i do not like it when facebook is up big because netflix is up. what is that about how does that work >> there are many reasons why facebook should have been down instead of up? >> that's my point facebook yesterday -- >> i have no -- >> what? i have no idea what he said. >> i think it was jon hamm in my ear, saying it is don draper

right in my ear. how did he get in my ifb >> are we going to a tease what are we doing? oh, you know what i want to touch on >> we're live tv we better touch on it. >> it is breaking news that's why we roll with the punches around here. so herbal life announced they were doing this -- let's look at -- maybe look at it premarket. they announced the result s of it, this just came out 60 to 68, looking to buy back 600 million. >> tell me what happened already. >> stop talking, i will. 6.7 million shares, 457 million. under subscribed, which is interesting. >> what is the implication >> the implication of doing the self-tender in the first place was making it more expensive for him to borrow. and continue to short the stock. when they're not disappointed about at all the stock getting a modest bump.

they had the cvr, the contingent value writing include ed in all of this. you knew uh-they had talks to go private. if you're afraid to tender your shares, into the self-tender, and miss out on the payday on the back end, they say, don't worry about it, we put the cvr in >> how much flow -- not enough flow, it is about squeezing -- >> they can do this again too, by the way. >> it is important, it is a theme you and i have there is nelson peltz on this morning. bill ackman, guys against -- he hasn't really talked much about herbal life lately he mentioned chipotle the other day. these are all -- these are all active hedge fund situations, i wonder where procter & gamble would be if nelson woreren't involved piper upgraded someone has to sell. takes two to tango

we need some deals and it just can't be t-mobile, sprint. >> what does this tell you about what the market thinks p&g wise will happen next week? >> nelson peltz is going to win and shake it up and one board member, whatever jim i spoke to yesterday, he's talking about the idea, it is not necessarily the time, we have our own transformation going. but these big cap companies are so -- they have to come up with something very quickly because if rates go higher, we don't want any of them >> peltz was on squawk making his continuing to make his case. >> what did you think? >> alwayscompelling. i know i understand the other side. david taylor has been doing things the small brand philosophy that -- small brand philosophy for unilever is the one i like he's done a remarkable job i oftentimes wonder why a procter & gamble doesn't just

say let's go do what paul pullman does as opposed to what nelson does. nelson makes a compelling case procter is doing better imdon't know if i want to be in that group. rising costs, dollar starts going back up, rates oriented. >> other than for the yield, right? >> what protection >> you're talking about clorox yesterday. >> they have the best organic growth, 4% growth. the best organic growth of the entire group is constellation brands, that's the stock that has real upside. >> knock out to of the park. >> unbelievable quarter. a lot of it is because tastes have changed one thing he said, people used to drink one drink they would drink scotch. or they would only drink vodka now they drink beer, they drink wine, and they drink spirits and he was the only guy who saw that coming. so i think a lot of what rob -- >> talk to me. >> 55% of the people do that these companies have lost touch to some degree with what younger

people want. and that they should go to rob sands, on the constellation call,s it the ultimate silver lining playbook about what people want. >> the same playbook of what peltz was talking about this morning, losing touch with what millennials and younger people want >> and costco, which we go to, a moment in the costco call where gallante said, yes, millennials are not signing up for the card as much as other people. and they talked about the age -- average age of a costco customer, wow. it was some call >> i now know where we're going next i got my you know what together. coming up, more on today's movers also ahead. imf managing director christine lagarde in an exclusive interview we'll get her take on the global economy. tax reform and the united states and much more. and taking another look at futures, looks like we'll have a lower open after that jobs report, a loss of 33,000 jobs, unemployment rate ticks down to 4.2%

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s&p on the eight day winning streak going to have to do work on this friday at least off the open, that jobs

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♪ she's a little runaway daddy's girl all the things she couldn't say she's a little runaway ♪ all right, 6 1/2 minutes before the bell rings. time for cramer's mad dash we're talking costco

into a little -- >> very big run, you can't really see as much from this, but costco, this is when you started hearing, this is amazon going and buying whole foods now, costco is a great company reported best numbers. by the way, the conference call was without a doubt shakespearean in nature. you got this hero, which is costco, putting up unbelievable numbers in every single aisle including high single digits in clothing and no one is listening. all they care about is your customer -- not signing up like they used to be. do millennials still go there? the average age of 52. now finally near the end, he goes, i want to address the elephant in the room, amazon are you kidding me all they did was talk about the elephant in the room it is just like this was, if i were costco, i would say this is the last call. >> a tragedy, is that --

>> yes, not a comedy it is a tragedy. >> the margins are the issue, right? >> every bit of -- the only reason why the markets weren't that great, they sold a lot of gasoline they don't have the buy -- they don't have the order online, go pick up thing that walmart featured this morning. costco is the greatest place to shop, but millennials aren't crazy about shopping. >> this is because of the margins, right >> it is also -- no, that's what i'm saying it is the zeitgeist. people do not want to pay 25 times earnings for a company that is up against amazon. >> just up against amazon is enough to take -- >> can't pay 25 time earnings. morgan stanley downgrades more reits today and doesn't mention amazon amazon is this hidden undercurrent an undertow. there is a red flag in the ocean. it is amazon you can't go in the ocean. >> stay out of the water. >> stay out of the water amazon is jaws

oh, my, it is jaws >> think we need a bigger boat opening bell just minutes away we're back after this.

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ring in less than two minutes. you said it was a jpmorgan market. >> yes, don't think they're happy i put that much pressure on them. oh >> so they -- >> that's very helpful extremely helpful. >> they're playing the music for the opening bell here, but they need to get a deejay. >> this is the nfl starting the game? i'm old school can i just say, let me go about why i think that i'm a little more -- a little less constructive than most people. the last part of this rally has been on an absence of news

all we're really hoping for is a fed rate hike and maybe a tax cut. i think that if i had something substantive to buy, like if i -- well, that's just great. they're fired up you actually should read that stuff. >> no one will hear me if i read it anyway. you're watching the opening bells. and the s&p 500 at the cnbc real time exchange here at the big board. celebrating, just a little bit, its ipo, data center operator switch. >> good company. very fast growing. i really like it i had all the data center companies on the reits they're very good. this is not a reit has the inside. >> the ceo's name is rob roy >> got to like that. got to like that. >> congratulations to them at --

>> i think people don't understand that not all ipos are bad. >> national geographic encounter, ocean odyssey is there at the nasdaq. it is an immersive entertainment experience in times square. >> i want to talk about shopify. everybody and his brother has defended the stock over and over and over again another big defense from baird and the stock goes down. what that is more indicative of, there say lot of people who don't know what they own of stocks that have moved up greatly. is shopify, small, medium size business online exchange the reason i mention this, if you get negative piece on something that has been flying, a lot of people who own it are saying not unlike 1999, what is shopify? listen, people at home, if you own a stock and you don't know what the company does, and it

has been terrific, this is as good a time as any to take some off the table. >> perfect segue to another monster winner, where goldman takes it off a notch that's albalbemarle. >> that is a great segue. >> talked about this my friend seth is in this stock. it has that critical mass around this name. it has ripped, okay. lithium. >> now, here's what's important, lithium is for -- in the piece, we'll talk about -- lithium, in the piece, they say it is going to remain tight to 2020. therefore you got some time to get out. here is the problem with al albemar albemarle. if you go to the website, if you go to the website, this is a chemical company they decided -- it is a lithium company. they need some lithium they're so bullish about lithium. what i'm saying is they reinvented the company of which only part of it is lithium

but i watched the stock go up and it is bitcoin of the chemical group now, i love lithium. i do believe, look, when volvo does this and gm, the rerating of gm -- >> invidia of the chemical group. >> there is a brick wall at invidia, 1le. 180, you cannot crack through that wall. people don't know what invidia does either and they're in invidia. this morning, we're getting reports out of nintendo that the -- not the switch that rang the bell, but actual switch, the game, 20 million, the most popular game in history. if you smash open the switch, which is idiotic to do because it is great, you'll see invidia's chips. t do the people who own the stock in invidia know that no, they think it is my dog, he renamed my dog invidia. >> you're culpable in that.

>> i wanted people to realize it is facetious, it is about knowing what you own, and i'm saying that a lot of people don't know what invidia is it might as well be my dog, okay that's what i'm saying it is a metaphor for not knowing what you own and i don't think a lot of people know what they own. do they know that invidia's chips are about autonomous driving? a lot of people bid up intel we didn't like mobile i when they did it. then we liked it, we like autonomous cars, because gm -- i'm telling you there are too many narratives of positivity, something i learned from the spice girls. >> cautious time perhaps >> i've been -- every day i start the show with, like, here's what i'm worried about. nobody seems to be as worried as i am i'm worried. i'm worried. you're worried about the eagles playing the cardinals. that's foolish. >> i told you that was a w. >> i haven't seen too many people buying facebook because

netflix is up. come on. come on, man. >> netflix is down 1% today. >> was up huge yesterday on the same, raising prices look, i want something new i want something new and the costco call jarred me. because it -- it jarred me, costco is doing so well, but all anybody cared about was the idea that amazon bought whole foods, whole foods is near costco, the millennials aren't signing up for cars the way they used to, sell costco. there is not -- you're going to take the remobilization, the mobile down, the price earning mobile down to costco. >> here is the problem how can you find something new when transports and industrials and midcaps and small caps and chips and all of these other stocks have been going up now in unison >> i know. look, we're -- >> where is the new? >> worldwide -- >> here is a good example. right now. it is semiconductors at 114. let's think about that

there is a $110 on the table bid from qualcomm and nxp at 114 i know l.a. partners who does high quality work is saying that qualcomm won't get it for 110 and looking at it on relative valuation. now the coueva is here and micron, shouldn't qualcomm have to pay more? this is na greater fool stuff. i don't like it. i want actual earnings buff. that i'll pay for it maybe a caterpillar earnings bump i want higher earnings i don't want just, wow, i'm more optimistic. >> the bar for earnings season is about as high as the high you want for -- >> thank you and what i'm saying is that next week at this time, we're going to be talking about jpmorgan's earnings and wells fargo and they better be darn great.

pnc, these stocks, the pressure on jamie dimon, not that he feels it, he doesn't feel anything, but i didn't mean that negative, i meant, like, he doesn't react to the stock every day, he's a business person. >> unflappable. >> he's unflappable. that was really good but i'm saying the pressure on that -- we're going to get earnings if the earnings aren't higher forecast, we're going to say, you know what, what we were doing last week when we paid up for all the stocks i'm not a bear i like reasons to buy stocks higher i would like to pay higher for a stock price, because something good happened, not because someone else got in ahead of me and i'm taking them out. >> what about the fact that the fed is maybe more likely than not to go in december, rates, two year, ten year, moving up today on expectations of -- >> i want a healthy economy, but -- >> you're getting that maybe the banks can should continue to go up. >> i'm saying i would like to

have actual fundamental evidence that things are better from the company point of view not taxes. not -- not paul ryan he must like the camera. >> don't want to miss three field goals and still have the stock go up. >> i'm seeing levitation i'm seeing levitation. yesterday's upgrade of microsoft -- >> just called him out i alluded to it. you called him out i set you up for that. >> castle rock, where i had -- dow dupont i like here they're going to split the company up no one is talking about it. >> they're talking about maybe pursuing more deals. >> like who? kellogg made an acquisition, new ceo. this is a really good example. kraft heinz went after unilever. bad quarter. look at the sequence

bad quarter, thursday. then friday went after unilever and kraft heinz up to 96, 97 look where it is now down 20 points why? we found out that warren buffett is a large share should holder, wi will not do a hostile bid. this group is pathetic and if you go over the costco call, you keep hearing, they want fresh and organic and those companies are pantry companies giving you a rap which says can we please wait to see something real last night we saw something real was costco and the stock was down keep it real, man. >> yeah. pisani is keeping it real on the floor with more on what is moving bob? >> the important thing is we're watching for switch to open here let me talk about the market right now. i think clearly we're being

moved by the jobs report, so we got the dollar up, yields up, stocks a little lower. let me show you the sectors. i think the important thing is with the yields up, materials and industrials great all week, you see a little flat here energy is down once oil hit $50, we started moving down quickly. some technical things going on there. banks, new highs, look at the big guys up there, bank of america, morgan stanley, jpmorgan, citigroup, all up there at new highs right now let's review why at new highs. more than one reason we have been doing this all week the tax cuts and value of what is going on there, the stronger economic numbers, we had the september isn and the services numbers were fantastic the reflation trade that moved on global economic expansion rotation we have been seeing, the small compacap small caps h up whole market lifted in last week everything is up

i'm not just talking about small caps are up. look what is up here new highs on the small caps, midcaps and big caps growth is at a new high. high beta at a new high. low volatility at a new high the whole market has lifted here the question is how long is this going to go on for we know the risks, talking about the big three risks. north korea, more hawkish fed, and failure of tax performers. the market is not afraid of any of these issues. maybe they should be but they're not right now. the technicals here, we are way, way overbought i used relative strength, a technical indicator, look how the market is doing. momentum, you're over 70, it is overbought over 90, way overbought. you can stay overbought, we know that it is -- very rare territory to see the s&p industrials at 95 out of 100 russell in the 90s these are indexes, not individual stocks. it is amazing, and the -- the market will tell you that historically this should

moderate jim's point, about looking more cautiously is very good advice at this point here meantime, we're waiting for switch to come big data center, number two, tech ipo of the year, we had 31.3 million, that's above the range. price talk 14 to 16. we're waiting. we have early indications, 19 to 21 is what it was a moment ago let me see if we can get another indication, 19 to 21, where the indications remain for that. data centers have been hot all year the important thing is that it is all about cloud computing it is all about big data, about the internet of things it is about wireless data and streaming revenue, most of these as jim referenced have been reits in the past, this one is not. maybe various reasons for that the ceo, mr. rob roy, quite a character, he's over here, declined requests for interview s but i'll chat with him. here's what's important.

they have been stingy, they have been triing to get prices down all year, and it worked. look at ipo renaissance etf. it is a historic high. 31% on the upside this year. that's because the people who buy this stuff, the investors have been very stingy trying to get people to push prices down and because of that, they succeeded, the after market trading in the ipos has been much better. the people who buy this stuff have really been doing well this year so you can say, well, there is not a lot of big ipos, disappointing, and you're right about that the people who buy into the market in this business, the ipos have been doing well so far. on one level, it has been successful year for ipo investors so far right now, the dow is down 21 points back to you. >> bob, thank you so much. >> very good what bob said i think the market is fine i just want people to know, look, it has been overbought it is the most -- i use the

oscillator we got to go it is finally five just beware. a little overbought. didn't mean to interrupt. >> no worries. to chicago now to the bond pits. rick santelli, they're selling bonds today. rates are on the move higher, rick >> they absolutely are it hasn't been that long, everybody was debating when we would dip under 2%, intraday low yields of 2.2. look where we are. what a fascinating time. two year note back to october of '08, end of the month, around thanksgiving is the last time we had yields this high, but, remember, that runs all the way up to 157. so that's going to be our comp for a while, even though the couple of base points over 150, we talk ed about it yesterday, your dollar option pit was really starting to cruise. in lu ieu of trying to get to t data point today many traders didn't trust or

think that the outcome was going to be all that relevant. but they're still prepared once that number was out of the way, things really started to move and parts of that number like wages that were pretty impressive look at one week of ten year, very important we have popped above the range we had seven days, three or four basis point closing yield range. that all may change now. look at year to date tens. wow. how many times have we talked about the fact that we closed at 244, we made our high at 263, then two more stabs. one below 240, one above it. that 238, we're taking that out as we speak. we're comping to about july 17th, with regard to the ten year and this is significant. excuse me, for the ten year, comping to may, but what is significant here is that you really want to remember all the closes 119 for two year, 193 for five,

244 for 10s. 307 for 30s. these numbers are coming back. look at bund, bund yields pop, can't get over the 50 to 52 basis point area that's very significant. dollar index, yes, it is up. it isn't up aggressively but on the one week chart, it is now over 94. if you open the chart up to about july, with respect to the dollar index, you can see why that area is important we have taken out what was an important top. does it mean we're going back to 102.20 maybe not. and a lot has to do with once we get our energy over this week and what the markets are doing behind us, maybe more eyes will start focusing on how the euro will behave based on the october 26, meaning the notion of what mario draghi may or may not do with his quantitative easing back to you. >> thank you very much rick santelli. big reason for a dow component and its shareholders to celebrate today. we'll fill you in when "squawk

on the street" continues right after this throughout my career, i've been fortunate enough to travel to many interesting places. i've always wanted to create those experiences for others. with my advisor's help along the way, it's finally my turn to be the host. when you have the right financial advisor, life can be brilliant. ameriprise

♪ i guess you're just what i needed ♪ ♪ i guess you're just what i needed ♪ still waiting for switch to open it is a strategy that has given mcdonald's shareholders big reason to smile. two years ago today, the dow component launched all day breakfast nationwide part of ceo steve easterbrook's plan to turn around years of lagging sales at the fast food giant. since that launch, shares dropped 56%. here is steve easterbrook on "squawk on the street" talking about menu innovation earlier this year. >> we don't want the cycle to end. the part of the challenge you have leading companies like this is to make sure for the future, the line is strong enough you don't end up getting into a cyclical thing we had a great period of time from 2003 to 2010, 2011, but the

pipeline dried up a bit. i have a responsibility to our business, our shareholders to make sure we keep innovating, challenging ourselves and making sure the ideas don't dry up. >> that's undoubtedly the jump start that got mcdonald's moving again. now they moved so far past that, they have so much momentum. >> there is a research out that this will be a disappointing quarter, in domestic, and another one that came out that said, the numbers are really good steve easterbrook has kept innovating i feel to some degree he's been pigeon holed in the role of the all day breakfast, there is much innovation, there is a menu. most importantly he got the buy-in of the franchisees and they put more people on staff, and the staff -- the places are cleaner, there is just a -- i asked him what is the secret, he goes, it is mojo it is funny he use s that term, he's not american, but that's

when you go to an nfl game, and people say, why is such and such team doing so well they got the mojo. it is a very ethereal thing happening at mcdonald's, hard to pin down why it is doing so much better other than the fact that when you have an organization this big, and everybody is involved, and very excited, the people who run the stores, you do get momentum, offer tremendous value, and i -- i'm deeply committed, there last sunday, always tell steve when i'm there, last sunday, i had a big night out saturday you have a big night out saturday, you need an egg mcmuffin. >> you do. >> cheeseburgers late at night. >> crystalburgers, a bucket of crystalburgers if you're watching, send me a bucket, you'll make my year. you've had crystal burgers right? >> i have not. crystal burgers? i don't know what those are. white castle. >> kind of. >> crystal burgers

the greatest -- >> up next, it is stock trading, stop eating with jim "squawk on the street" will be right back

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time for cramer and stop

trading. >> one stock seems to transcend, no matter when they have disappointment, disappointment in tests, drugs. it is bristol-myers. they're taking the price target up from 62 to 72, saying, listen, for all the things you heard, it is still doing incredibly well. bristol-myers is back. and this is amazing. had that against merck on a lot of different trials, did not do as well. but when you have a market that is this bullish, no one is going to leave behind bristol-myers. and, yes, the people on twitter are just -- crystal burgers. >> i knew the crystal burger thing would come back to haunt me. >> i'm seeing things like cintas, uniform company, goes ever every time we get an employment number. it is the employment number stock. >> what do you have on mad

tonight? >> i have a company that is on fire, that will be put out of business by air bnb, the stock was at 53, i said, come on, come on, you're not going to be wiped out, it is time shares, those are sold, stocks doubled it doubled who do you have on >> we're going to talk about the albemarle downgrade. >> who do you have >> josh brown. >> josh is -- must follow. i follow josh brown, i follow adam shefter. >> there you go. coming up, have a great weekend. >> yes i am the guard. >> coming up, i mf manamf manag director christine lagarde ♪ feel that? that's the beat of global markets,

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and energy to fuel its growth. real estate such as e-commerce warehouses. and private debt to finance transportation and infrastructure. building blocks of strategies to pursue consistent returns over time from over $120 billion dollars in real assets. partner with pgim. the global investment management businesses of prudential. . welcome back to "squawk on the street." august final readinventories on the inventories, up .9% i could say it follows 1%, but 1% is the midnumber. the final number of .9 replaces it, so it really follows .6. .9 is one of the best month over

month inventory numbers just like the number we threw away, 1% was, since november, when it was up 1.1 on the sales side, which may be more important, this is a big number, up 1.7 1.7. we're expecting a goose egg. inventory builds add the gdp sales make it real sarah, back to you. >> all right, rick santelli, thank you. good friday morning. welcome back to "squawk on the street." i'm sara eisen with scott wapner and mike santoli carl has the day off and david is on assignment let's check on markets for you dow is sort of unchanged, fractionally lower here. record highs for the last six straight sessions, we have seen stocks coming off the biggest winning streak since back in the '90s wti crude watching that too, down 2.5%. >> road map today begins with 33,000 that's the number of job losses in september, hurricanes harvey

and irma took a toll on the u.s. economy. we're going to discuss what it means for the markets and the fed next >> plus, our exclusive interview with imf managing director christine lagarde, what she told us about growth in the u.s., the global economy, tax reform and more. >> and the countdown is on and nelson peltz's proxy battle. support from one of the world's largest pension funds. all the details straight ahead. let's start with that big myth the u.s. economy losing 33,000 jobs in the month of september, versus an expected increase of about 80,000 our steve liesman joins us now after digging through the report, steven, a chance to speak with robert kaplan with his initial reaction what do you make of it all how much can we blame on the hurricanes >> i think a lot i think this was a big miss as you said, but this is hurricane weakness when i read the commentary out there, a lot of economists are finding strength in the weakness and i'll go through the numbers

and show you where they find that strength. take a look. we were looking for 80,000 plus on the jobs. we got minus 33,000. revision down 38,000, not too much over the two-month period there. hourly wages, up by half a point. the unemployment rate down more than expected. that could be a little affected by the hurricane participation rate, people coming back into the workforce, that one ticking up to 63.1% when you look at where the job losses were, that's where you see the actual hurricane effect. first, look at service providers, they were down by 49,000 this number does 100 to 200,000 in a good -- on a regular month. leisure hospitality, i don't know if that's all disney and universal, retail trade, we saw that affected in the adp number. and even though education and health services, that number usually does double, 27,000, construction has been running higher, up only 8,000 this

month. let me give you two more numbers, i haven't given you enough, write these down, 1.5 million people did not go to work due to the weather. that's the most since 1996 2.9 million worked part time due to the weather i asked all this about -- to robert kaplan, in an exclusive interview, and he is a little bit more circumspect than the rest of the fomc members, many of them on this issue of december rate hike here's why >> i think we ought to be patient. i'm open minded about december, i'm not there yet. i think we can afford to be patient and so i plan to take a little more time between new 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 accommodation because i think some of the structural shifts in the economy. >> those structural shifts, he says wages rising, he sees tighter labor markets, but believes because of technology that companies cannot pass those price increases along.

so he's maybe more dovish when it comes to the inflation outlook, therefore more dovish when it comes to the rate hike outlook. back to you guys. >> i don't know if he'll be surprised to learn, steve, that right after the report, the december odds of a rate hike shot up to 98% so that's where the market is right now. looking at the -- >> i think that's right. that, sara -- that's endemic of them seeing strength in this saying believing the fed will look right through these numbers and keep on its course to hiking rates in december. >> that appears to bethe take, steve liesman, thank you another look at stocks at this hour taking a slight hit after the jobs report. down for the first time in eight days the story here is they are holding near recent highs. the nasdaq flipping between the positive and the negative. dow and s&p still on pace for the fourth straight weekly gain. we're joined by ian shepard son. and david kelly. welcome to you both.

your take on the jobs report, how much we should look beneath that headline miss and some signs of strength, wages and the unemployment rate. >> the unemployment rate is a number that really got my attention. the bls said the survey wasn't disrupted by the hurricanes. they said the response rate was in line with normal. even in the areas that were affected by the storm. so to get the unemployment rate dipping by .2, down to 4.2%, that's quite startling in terp tems of payroll numbers, they have hurricane written all over them. i want to see there what happens next month, in november, when we'll see some sort of normalcy returning. but that unemployment rate which janet yellen told us over and over again is her favorite indicator of the level market, how tight it is, and how much inflation pressure could be building up in it, to get that down to 4.2 and the trend still falling, we're looking at a three handle before that and that will scare a lot of people at the fed. >> put that sort of through

investment lens right here it seems like their take away, storms or not this is like a full employment type report. markets now raising their expectations for december. what does it mean for risk assets here that have been on such a roll? >> i think you got to think about that which kind of risk assets the big team coming out of this, we have seen interest rates rise off the back of it, the probability of a fed rate hike in december has gone up. i think we will get full rate hikes between now and the end of next year. that means interest rates are going up in general. look in the equity market, the cyclical sectors things like financials, discretionary, take advantage of that strength i think any weakness in this report is a complete head fake the economy is seeing a pickup in growth now, approaching the 3% level i don't know if it can sustain it for long. i think we'll see 3% growth for a while here and that i think will push rates higher and people should invest with an eye to that. >> ian, is there anything that keeps the fed from going in

december >> it is hard to see now i think yellen has the bit between her teeth. there is a couple of standout who will be unhappy of the idea of hiking again. they're going to go and i this i they're going to reiterate when they make that move in december they intend to go three times next year. they might end up going more than that next year, i think we could be looking at a wave growth accelerating quite dramatically i think it is not quite a done deal anything could happen. it is pretty close i think the market is right today to be pricing in a much stronger likelihood of that december hike. and as a result, you know, risk assets are now vulnerable. i agree with david, the rate environment is rising, the cyclical sector, an opportunity to take profits. not have more risk and the real collection could be coming pretty soon

>> now open for trading. see some high fives there. bob pisani has been in the scrum all morning waiting for this moment we'll get to bob in a moment. >> look at the initial pop there. 33%. >> hot area to be in they have now opened that stock is trading up 35%. bob, i was saying, you've been waiting for this moment in in the scrum. >> the important thing here is a terrific demand overall. let's review here. price target was 14 to 16. priced it at 17, just opened at $21.70 you've been doing this with me for a while. they want to push the ipos lower than the midpoint and most of the time they have succeeded demand was so high here, why was the demand high? data centers, you're dealing with the confluence of cloud computing and big data, the internet of things, wireless

data, streaming revenue, all that comes together, they got to go through something and it goes through these data centers here which this company is representative important thing here, got all sorts of other interesting things going on, mr. rob roy is over there, the chairman, unfortunately declined to talk to us, made numerous requests, interesting man. he's going to control 68% of the stock in this company, so it is another one of those tech -- the people who are buying it right now you can see that demand, $24 now, and 20 cents. 14 to 16 talk, prices at 17, opens $21.70 and now just over $24. back to you. >> bob, thanks so much bob covering the switch ipo. back to david kelly and ian shepardson we're not getting ahead of ourselves at all on this

inflation read nowhere to be found, we get a month of wage gains and now all of a sudden saying, oh, inflation, inflation, inflation. >> you know, the wage gain i don't think is significant it happened because a lot of people dropped off the -- because of the -- it raised the average. what janet yellen cares about is the future she tells us about the long lags if you're expecting it to keep falling, bear in mind it is not 4.2%, you can't afford to have it fall without having interest rates in the position now to start restraining that decline that could take a year or so she's thinking, where will we be next summer? could be at 3.5. we have to get rates to a level that will prevent it going lower. we can't -- based on the history, we can't sustain an unemployment rate that low it is not better today, doesn't mean inflation won't be there tomorrow and we got to get ahead of the game. >> final question on the

markets, the cheering continues here, as scott mentioned, a hot space, it is not a bad market to go public in right now you have to go back to 1997, to see a stretch like this. 6 straight record highs in a row. you can't deny the fact that this has been stunning action. what do you see as the catalyst? this new round of economic data, like services and manufacturing out this week, showing strength, is it a global thing, is it tax reform, trump reflation trade. >> i think the prospects of tax reform are proving that means a tax cut in corporate taxes, also there is people don't want to get out of the market because there might be lower capital gains tax rates next year, that's keeping money in the markets, and then there is a little bit of euphoria, rates this low, you get out of the market what are you getting into

we have a good earnings season here i think things are positive on the market short-term, but people need to look at valuations, longer term, things are getting pricey here. we need to be more selective. >> we heard that warning before, though >> eventually it will be important. >> timing will be tricky thank you. david kelly and ian shepardson >> releasing a report on deregulation and its impact on markets. kayla tashi has details from the white house. >> treasury suggests some changes they say will encourage more companies to go public. this is the second of four they want to streamline regulations under the administration's project kiss,

this is the second of four reports that treasury is producing at the behest of a february executive order at the white house where they said the treasury needed to weigh in on the entire financial regulatory landscape and treasury this report says these are the changes needed for equity markets. they want to cut disclosures, they want to broaden the net for who is actually defined as a credited investor. they want to increase who is able to participate in private markets and they also want to raise the limit of what companies are allowed to raise in the crowd funding market. treasuries suggests these changes for trading and liquidity. they say that capital changes should be made for securitizations, derivatives and swaps markets. they suggest leveling the playing field so that regulations on capital and the u.s. and overseas are the same this report mainly deals with the purview of the securities and exchange commission and the commodities and futures trading

commission treasury officials said they studied whether to merge those two regulators and decided against it, but did say that some of the overlap between the two agencies did need to be eliminated most of this report dealt with either revisiting old rules or potentially rewriting new rules, which would make this process be very long in the making. treasury officials said that there was consensus among all five regulators that the volcker rule needed to be tailored, but any official changes to that would be a long way off. the next report out of treasury is expected to concern the insurance and asset management industry and treasury officials say it could be out as soon as next week. but certainly the banking and financial services industry is going to be diving into this one today. back to you. >> absolutely. and banks are the biggest winners now on the s&p 500 off the higher yields. thank you. when we come back, what may be the world's largest ipo ever. saudi aramco announcing the

public debut is still on track for 2018 a former top executive of that company is here to talk about the ipo. oil prices, opec and more. plus, an exclusive interview with imf managing director christine lagarde, what she d ha to say about the global economy, how to get to 3% economic growth in this country and tax reform >> and it should be project neutral. it should not increase the deficit. it should not drive to yet more debt into the future because that's an issue that the u.s. has to deal with it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management. i can't wait for her to have that college experience that i had. the classes, the friends, the independence. and since we planned for it, that student debt is the one experience, i'm glad she'll miss

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christine lagarde laying out her policy agenda ina speech ahead of the imf annual meeting next

week talked about the fuel for this market, global growth, and for the first time in years the fact that we're seeing a coordinated expansion, emerging markets and the u.s. and europe. that's been one major reason for the march to record highs in the stock market i asked her about the unusual phenomenon, synchronized worldwide growth pickup and how long it can last take a listen. >> well, let's hope it lasts as long as possible what we're certain of is that it is really taking roots and it is not just a little -- little short lived cyclical moment. we are seeing it coming from about 75% of gdp in other words, not one company leading the charge, not only the emerging market economy that used to be the case. it is europe, it is the united states, it is japan, and it is china, of course and india. >> you hinted that you're going to upgrade the global economic forecast, what are you seeing that makes you so optimistic

down the road? >> the sources of growth are comforting us in the direction much more investment than we have seen before it used to be very much driven by consumption, consumption, consumption. we're seeing an investment in many corners we are optimistic that good reforms in some countries will also push that momentum forward. >> we are talking about it in this country, when it comes to tax reform is that something that is desperately needed now in the u.s. >> we have said regularly, very strongly in the last of the u.s. economy that tax reform is a must tax reform in the u.s. is imperative it has to be simpler it has to be at lower corporate rates. it has to eliminate all the exemptions and the exonerations and the various exceptions that

make the system so complicated and it has to focus on improving the situation of the middle class and be conducive to more labor. those are the parameters with which we believe the tax reform is needed. and it should be project neutral, it should not increase the deficit. it should not drive to yet more debt into the future because that's an issue that the u.s. has to -- >> i'm trying to figure out if you're liking what you're seeing out of the republicans and the administration as far as what they presented so far. their principles on tax reform >> it is too embryonic for the moment it is not gone through the legislative process through which it has to go and which both you and i know will add complexity, will be subject to lobbying forces and all the rest of it. so we reserve judgment until such time when that is taking place. >> do you buy this idea that the administration is supposing that

it will pay for itself in terms of economic growth that the tax cuts will generate enough growth to make it budget neutral? >> ideally it would be good. we don't have enough details and we don't know for instance the pressure, we don't know the -- where the 12% rates or the x percent rate of the top will apply it is impossible to model what the outcome will be of the reform but ideally he should pay for itself, as quickly as possible, so it does not add to the deficit. that's critically important. >> 3% economic growth has been elusive in the country it has been the expansion, we haven't quite gotten there what does it take to get to 3% >> you know, it has been the longest expansion since the 1850s. which is just amazing. and that's really the very good side of what we are seeing at the moment should it go, can it go higher we certainly all hope so and if it is, you know, a result

of a good balance, solid tax reform of the kind that i was talking about, plus a good infrastructure reform that would actually drive investment in sectors that actually need it, combined with an immigration reform that will bring work forth and skilled workforce to the u.s. economy, that should be conducive to more growth and you add to that the appropriate degree of deregulation so that the red tape and the bureaucracy do not hamper growth those are good principles. >> so it sounds like you're a fan of trumpanomics. >> i'm not a fan of anybody or any initial proposal we want to see the details we need to see the numbers >> you have been an advocate for janet yellen and the monetary policy should she be reappointed fed chair next year? >> not for me to vote. not for me to support. all i can say is she has been a

very great force for stability, for good communication of monetary policy shce has operatd under difficult circumstances with great wisdom. ability to convince and communicate. i've seen her in action in many instances, including with emerging market authorities, with colleagues in the central bank communities she commands respect in that group and way beyond >> it is amazing to watch this market run higher, record after record high. do you see areas of excess or exuberance >> what i think we are concerned about is the -- the amount of debt around the world. so i'm not focusing my comments on the u.s. markets. i'm generally concerned about the volume of debt and the amount of debt whether it is sovereign debt,

corporate debt or household debt it has gone up significantly since the crisis and that's an area where we need to pay attention. >> is there a particular market? a lot of people are raising the alarms on china. >> i think china, the policies, i heard the alarms ringing and taking steps and measures to rein in credit and certainly the people's bank of china is taking the right measures and i think it is at the highest levels. >> imf managing director christine lagarde saved her comments on bitcoin and the new political and regulatory push. my main takeaway, usually they downgrade global growth. every time this is the most optimistic i've heard her in years and she is hinting that the growth numbers will come up next week, when they meet. >> rightfully so you do have to synchronize

global recovery that you guys spoke about. it is represented in the stock markets, the msci world index. don't have to look far to see the fruits of what is taking place around the globe yes, the dow, the s&p and nasdaq are representations of that. so are other places. >> for the imf, which is fixated on global imbalances to the point where it was a buzz phrase forever, it is about the balance sources of growth is what she kept emphasizing, which i think you can take it two ways, a mission accomplished moment, where everyone thinks it is great from here on out or not. >> the big worry, i heard from her, and we asked this, it is about global debt. debt levels rising since the financial crisis that was what people need to be aware of supports a lot of the measures we have seen from republicans on tax reform, lower corporate rates, a benefit for the middle class, simplification. says it must be budget control critically important. >> see about that. >> yeah. when we come back, saudi arabia and russia reaffirming its pledge to cut oil supply

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good morning, everyone i'm sue herera the international campaign to abolish nuclear weapons celebrating their nobel peace prize win at their headquarters in geneva. the group also known as ican describes itself as a coalition of grassroots nongovernment groups in more than 100 nations. >> the tireless efforts of many millions of campaigners and concerned citizens worldwide who ever since the dawn of the atomic age have loudly protested nuclear weapons. insisting they serve no legitimate purpose and must forever be banished from the face of our earth. rohingya muslims fleeing violence in myanmar swimming ais cross a border river in an attempt to enter bangladesh. it is the largest refugee crisis to hit asia in decades supplies of food and water

were hand delivered by police to puerto rico sound of guama it has been declared as one of the 50 areas in most need of supplies the aid is being coordinated by the u.s. department of defense and fema in puerto rico. you're up to date. back downtown. mike, back to you. >> sue, thank you very much, sue herera. full steam ahead it seems for what could be the biggest ipo ever saudi arabia's energy minister saying that saudi aramco is on track to go public in the second half of 2018 joining us now is sadad al husseini of upstream operations, founder and owner of husseini energy company at this stage, it has been so long in planning already and we have perhaps another year before this ipo is there anything the global oil price or anything else that you

think could side track this offer and make it a successful one at this point? >> good morning. i don't think there will be anything to side track you have to remember aramco is not just a company it is an industry. it is huge it is global it has got everything from oil, gas, refining, shipping, ware housing, maintenance, so it has got to be done right there is a very professional team working on the ipo, and they're working to fight schedule, i think everything is going ahead as the minister said >> there has been a lot of commentary surrounding the lead up to this deal that the saudi arabia really would like to do whatever is possible to restrict supply and keep global prices high enough to sort of pave the way for this deal. just how important is that how is that effort looking in terms of trying to have supply discipline now that we have saudis talking to russia and having the russians cooperate

with opec to some degree >> yeah, i think this is a very strategic milestone in the industry because it is not just about saudi arabia, it is all of opec, opec is 31.5 million barrels of oil, plus another 6 or 7 million barrels of ngo. russia is 10.5 or 11 million so if all of them can work together, that's about 45, 55 million barrels, they could bring stability to the markets and stability to everybody is looking for, not the volatility, the highs and lows that we have seen historically. so this is a very good strategic development. i think the vision is shared between russia and its cooperating countries, kazakhstan and others, and opec. so this is a very important step forward. i think we'll see benefits across the whole industry. >> sir, we just had an exclusive interview with madam lagarde of the imf, she talked about

raising a global growth forecast if that is the case, what is taking place around the world in terms of the recovery, where does that put oil prices in the next 12 months >> yeah, in fact, we have seen demand picking up already this year there was a huge increase in demand, between the last quarter of 2016 and the second quarter of 2017, almost 2 million barrels increase in demand and as we look at 218, the demand is going up to about 99.5 million barrels. so that's quite a significant increase it will prop prices, i don't think we're going to see a rollback to the $40 level, say, for brent. it is 57 already today it is going to stay above 55, hopefully maybe even to 60 and 2018 but much beyond that, i suspect

we'll see shale oil come back in, i think we'll see some capacity kicked into the market again. so probably somewhere just around 60 or just below 60 >> and you're talking there about the brent crude price, i assume, sir. i wonder, any company going public wants to present to investors the idea that they are in a long-term growth industry will that be a challenge for aramco given the fact that there is all this talk that the world is moving in an accelerated way away from petroleum. >> you know, there is a lot of talk about that. it is all very long-term and in the near term in the short-term, and i'm talk ing industry short-term, not financial markets, that's 2018, 19, 20, there is hardly anything that can displace oil. beyond that, yes, there are electrical vehicles, and there is solar power, wind power, nuclear power. but, you know, the world is

consuming over 240 million barrels of oil equivalent, 240 million barrels of oil equivalent per day of energy that's a lot of energy and to try to displace one form with another, even in the next 20 years, is extremely difficult. infrastructure isn't there the technology isn't there the global markets won't be able to absorb it so i think the outlook for oil is very sturdy for quite a long time maybe even beyond the 30, 40 years forward. > >> sir, your late sister was a pioneer in many i wways, first saudi woman to work for saudi aramco what would she think today about the lifting of the driving ban in the kingdom >> this is a very exciting, very productive change in the policy. it shows that the government is committed to growth.

let's face it, saudi women are very, very highly trained, very highly qualified my two daughters are professionals and they have jobs, my wife is a professional. and i think the whole community in saudi arabia, the whole male and female community, is very excited by this very brave move by the government to finally put the women on the front line of the workforce. >> yeah, very profound advance there. glad to have your thought s on that thank you for your time this morning. >> thank you and when we come back, goldman sachs chief u.s. economy chief global economist jan hatzius weighs in onhe t job report with the dow down 30 points yields on the dollar still rising "squawk on the street" will be right back

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opportunities if you can find an answer that separates fact from near fact. thomson reuters provides you the intelligence, technology, and human expertise you need to find those trusted answers. the answer company. thomson reuters. 33,000, that's the number of jobs the u.s. economy lost in

september. the numbers were worse than expected due to the damage from hurricanes harvey and irma joining us now is goldman sachs chief economist jan hatzius. the market by virtue of the way rates are reacting and the dollar is reacting today, says december is sharp, no longer thinking about it, going to happen is this the right decision and the right read >> it is quite likely. the december meeting is still two months away, things could still happen we have an 80% subjective probability, you get a hike, we nudge that up after today's numbers which when you cut through a lot of the distortion, looks solid. >> the wages, is that the most significant part of this report? >> i think the most significant part is the upward revision to wages in july and august but the cumulative .3%, and then you got to find the increase in september, that's a little more open to doubt, there was calendar effects on that, could have had some distortions there,

but at least, you know, on the surface, that looks strong too put those things together, you're at 2.9% year on year growth rate and average hourly earnings and that's pretty solid. that's very important. you know, the rest is more debatable, i think. >> going through the internals, big decline in jobs, restaurants, down 105,000 last month. those were adders in the past. so clearly a hurricane impact. how long does that last? does it snap back next month >> i think it is a little too early to tell because we don't know exactly, you know, how localized it was, and we, you know, haven't had the survey yet, so, you know, survey week is next week for the october most of it should come back. you should expect the headline number which you're supposed to ignore, like i think we should ignore this report on the payroll side of the -- for

underlying strength of the economy. >> is the story going to shift anytime soon to worker shortage and to essentially real tightness in the labor market, broadly, and what does that mean for the fed in terms of the pace of normalization >> i think, yes. short answer i do think that we're out of labor resources, in the sense that we no longer have slack in the economy, i think and the -- we're seeing that in the broad range of things, we're seeing not just the employment rate, but also surveys of shortages, households, job openings, splits and now we're seeing somewhat more in the wage number so wages have been accelerating until the end of last year, this year has been generally on the weaker side. that's starting to change. and that is one more reason for the fed to basically stay on the kind of very gradual, once per quarter tightening phase that they sit on since the end of

last year. our baseline forecast, 2018, is a rate hike a quarter. four hikes in 2018, now risks to that on the downside maybe three hikes. that is a lot more than what markets are -- >> 2.5% of the fed funds give or take by the end of next year >> maybe a little less but just a little bit. >> are you as optimistic about where the economy is as others appear to be sara had this exclusive interview with christine lagarde, the imf, talking about raising growth forecast. you have to pinch yourself just to remember when last time the imf raised their growth forecast. >> i am generally optimistic i think a lot of the really good news on the growth side has come outside the united states, and when the imf talked about growth, usually talk about -- >> they are. a lot of the incremental positives have come outside the u.s. the u.s. is looking solid. >> with that pickup in global

growth comes a pickup in monetary policy tightening, globally the uk, talking about higher interest rates, the germans have beenpushing draghi to do that for a while. the markets are okay with it now. does that become spooky in 2018, if we're talking about all the growth now, start talking about policy. >> i think it is still a gradual normalization, even in the place of that nrmallizing. i think the u.s. is there, the canadians are there, the uk, you know, will be there to some degree but all of those moves are fairly subdued, i think. beyond 2018, you could get into a period where in the u.s., for example, you might be beyond -- demanded would need to be more aggressive that's a risk, though i think it is a fairly gradual transition there are some places where actually monetary policy is

still looking at a lot of the economy, your area, you know, still has a high unemployment rate, even though it is coming down quickly, wage growth is still very subdued, inflation subdued. they are, i would say, the expert is going to be quite drawn out and careful. >> nice to see you as always jan, chief economist >> coming up, it is the final push in the proxy battle between nelson peltz and procter & gamble they get ready for the shareholder vote on tuesday. "squawk on the street" will be right back

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back to the cme group in chicago. rick santelli has the santelli

exchange on the jobs friday. >> thank you yeah, i'll tell you what if you're a technician, if you are a passion about markets and trying to study them and improve the outcome in your favor with regard to trading and strategy, the last couple of weeks have been just amazing with regard to technicals let's go to the white board. i love the white board ten year note yields starting in october, there is so many things we have done in previous santelli exchanges that all come together now we talked about how the big gap move was and that midpoint was 2% fast-forward, below yield, pretty much, around 2% hey, now, let's look at the high for the year, we understand that all of that was made prior to the double bottom and low yields from 12 and 16 that we had, 138-ish. here is the lay of the land. settlement is 244, big level, we have talked about it

made the high, we came back, we failed to get above settlement on 510, 243, came back, failed again at 239 the fact of the matter is if we start taking out this july yield of 239, the odds are like a magnet, this 2.44, and the fact it failed is somewhere between 2.63 and 2.44 is where the market is going to go and we talked many times, there's a rhythm to treasuries over the last four or five years, maybe an artificial rhythm, but always seems you get the real meat of the down trade coming at the end of the year. timing is perfect. i love tearing these things off. ten-year bund yields not nearly as exciting a chart and it's well above its settlement, 20 basis points, but here's the neat thing about bunds. this is so managed, it should join a union seriously. 48 basis points, 48 basis points

last one, 48 basis points. this is a key level. now, if we start to take this out, i'm not sure it's going to fly or not, but the timing of this and the context of october 26th and what mario draghi may or may not say is really important. i don't have time to go to the euro dollar and the dollar, but we talked about these one-month cycles and the euro dollar, the currency, euro versus dollar and the dollar index really need to watch those, because as good as the dollar may look today or weak as the euro may look today, i think the real moves are going to be on hold till that meeting scott, back to you >> all right, rick, thank you so much now let's send it over to john fortt with a look at what's coming up on "squawk alley" in a matter of minutes. john >> netflix has been on a terror, starting to outstake other bank stocks question is, what's got to go right for that to continue we'll check in with an early "ua aey, and that's coming up onsqwkll". college and

college and you start trading. >>yeah, 5 years already. 5 years, hmm. you ever call your broker for help? >>once, when volatility spiked... and? >>by the time they got me an answer, it was too late. td ameritrade's elite service team can handle your toughest questions right away- with volatility, it's all about your risk distribution. good to know. >>thanks, mike. we got your back kate. >>does he do that all the time? oh yeah, sometimes he pops out of the couch. help from real traders. only with td ameritrade.

it is a proxy battle for the ages pushing for a scene on the board, biggest ever proxy fight in terms of a market cap

company. last night peltz saying it felt the additionof peltz to its board to the p & g board is best for the consumer products giant. speaking on "squawk box" earlier this morning, peltz commented on how he sees the vote going >> i would agree that it probably is going to be close. the closest one -- i only have close ones, you know, heinz was close. dupont was really close. it was 46% we lost the battle won the war. and hopefully that will be a big lesson for p&g as wego forward here >> the company's annual meeting in voting for the election of directors takes place on tuesday of next week we'll be there, of course, in cincinnati speaking exclusively with david taylor, the ceo of proctor and gamble, the company for its part this morning putting out a statement from lead director jim

mcnerney saying everything about the company is changing and well positioned for future growth, leaving return to investors, urging them to vote against peltz. pelts putting out a statement highlighting support he's gotten >> iss, louis, yakman, mcallister, and he's really making the push. this sort of last-minute push as to why his campaign should be the winning one to an incredibly large retail-owned audience. >> he did also make the case that either way it could be good for p&g, because they've been catalyzed, maybe they are going to operate with a little more haste in terms of changing things and analogy to dupont, who did not win. >> wonder how close it is, what p&g would do about that and what vote of confidence or nonconfidence it would signify and we should mention that trion is an investor, as well. so, we'll watch that vote on

tuesday. >> when we come back, more on these markets and the economy, former imf enostcomi ken rogoff is with us next on "squawk alley"

welcome back to "squawk on the street," i'm dominic chu discretionary stocks leaned higher for the s&p 500 general motors giving that sector the biggest boost so far today. also check out yum brands, best buy, under armour, as well that does it for this hour of "squawk on the street. let's send it down to "squawk alley. back over to you >> thanks, dom good morning, it is 8:00 a.m. at netflix headquarters in los gatos, california, 11:00 a.m. on wall street, and "squawk alley" is live. ♪