final check on the markets those are the best levels we've seen up 182 on the dow. the s&p indicated up 17. and the nasdaq up 44, lowest unemployment rate in 18 years. enjoy the weekend. >> make sure you join us on monday "squawk on the street" begins now. i had seven doughnuts. >> take a bite one more. >> seven and a half. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber wages and the markets weighing in along with international reaction to the tariffs announced on thursday. a busy morning in europe new government in spain and

italy being received pretty well ten year back home 292 up from the morning's lows strong job gain set to boost stocks at the open unemployment within an 18-year low. we'll talk to larry kudlow this hour trade war tensions, u.s. allies, and major trading partners are striking back against a white house move to slap steel and aluminium tariffs on canada, mexico, and the european union fiat chrysler set to add more than 60,000 drives to waymo. not only did the may jobs number beat forecast, april revised higher unemployment rates dipped to 3.8. the lowest since 2000. wages up 2.7 from a year ago the lowest unemployment going back to data collection in '72

very little wrong with this. >> yeah. we have an amazing economy now we have an amazing job-created economy. and, by the way, the growth is happening, if you're a worker, with not that much wage growth but the fact is that jobs are plentiful. we do not have enough people in this country that's what this number is about, to me, david. >> three-month average 172,000 2017 average 182,000 2016 average 195,000. >> where are we going to find the workers? >> i know. by the way, what is weird another record high and a number of those in the labor force. how do you -- what how does that work >> yeah. disability you talk about disability >> yeah.

>> i have a friend who has a business in wisconsin. 500 people he said we have to go after people who, you know, were in prison. you know, spent their time out the president is pardoning a lot of people. the fact is that, you know, it's great. and i mean that as a positive thing. i mean, who have paid their dues and have been unemployed are getting the jobs it's bountiful and it's nationwide and it's not health care it's mining. mining jobs are amazing. it's manufacturing it's construction and a period where there was bad weather. it's retail. i thought retail was supposed to die out 120,000 now in retail that have been created when i saw the 31,000 for retail this month it's garden no it's 6,000 garden and seasonal. >> it's services that had the gain by far. >> yeah. >> and not health care remember when health care like jamie diamond and warren buffett were talking about how it's

taking too much of the economy well, the economy here is broad based. and i don't know i've never seen in my lifetime anything like this. >> really? >> yeah. i've never seen anything like this. >> this is real. >> early '90s -- >> yeah. this is -- we are in a position now where it's every sector. it's every sector. i mean, that's extraordinary mining yes, we've had periods where it's easy to find the job but do you really ever have -- >> the job growth? >> you have wage growth and inflation low and tremendous job growth it is what the stock market wants. you can have inflationary growth. >> if you have the pool of willing labor shrinking continuously or, you know, available workers, i think, for another 213,000.

how come we're not seeing wage growth even more >> union pacific had its investors day they're paying $10,000 bonus. i call it a bounty the ceo calls it a bonus to find the people and, by the way, when you get ceos offline they say that same thing i said about parolees. we're hiring people some regards is undesirable we think it's the wrong way to look at people look, i find that an extraordinary story. a positive one for our country. >> yeah. you've got college unemployment college-educated in the two. it's amazing so employers have to go beyond the edge of the envelope they have before. >> it's great. look, i mean, i think sometimes you have to say a value judgment good it's a strong economy. look at the joneurozone and eur. how pathetic the eurozone economy is just awful.

we're putting more people to work in this country than china. in china you have a -- you see they manipulate the stock market what a pathetic economy they are. the only way to make money is dump steel through other places and they dump it here. wow. >> you are -- i don't know. >> i'm lying this economy. >> china's economy >> not the people but the prc. the prc can you find some other way other than polluting the world skies and making steel can you put people to work in the eighth darn army that's what you used to be mao used to build up the eighth army and make a lot of bridges we'll talk to larry kudlow in a few moments about all of this the jobs number and how it relates to trade speaking of trade, canada, mexico, of course, the eu responding angrily to the tariffs on steel and aluminium

imports. the eu said it will launch a case to the w.t.o. against the u.s. mexico and canada -- >> they are lost. >> they know where they're targeting. it's not a coincidence. >> u.s. ranging to steel and orange juice and pork. krand began prime minist-- cana minister blasted the decision. >> these tariffs are an affront to the long standing security partnership between canada and the united states and in particular an affront to the thousands of canadians who have fought and died alongside their american brothers in arms. >> today a near term nafta answer is not happening. >> yeah. i thought he was on point there. they've been our best friends ever i just wish they could have worked it out. >> we asked secretary ross yesterday if it was a reflection of lack of progress on nafta

he said it was more of a timing issue. but i guess it's the same thing. if you made more progress, they would have more exceptions you can understand why in five years. five years is nothing. how will you get people to, you know, it's all about making long-term investments and knowing that you have a stable regulatory regime, for example, if you're going to be committing capital. five years is too short. >> it is i think a lot of people are heart broken it turned out like this with canada some of these other countries fell in line. >> how do you square this circle, so to speak. you have trade on the one hand and concerns about the potential for a trade war. we're not there. it's a skirmish, at this point but we're antagonizing our longest allies at the same time, we have a strong economy in the states. >> this is not the issue this is 232, but if they do 232

with autos. >> okay. let's make sure people understand because you can't do this otherwise using the national security provisions under 232. it's a 1962 act that allows you to say aluminium and steel are a national security concern that we have domestic providers and somehow automobiles is why automobiles? >> automobiles is the stretch. >> it is but wilbur ross said the u.s. economy being strong is a national security concern. that's how they get there. >> the u.s. economy is the strongest in the world and the last thing we need to hear right now is that we have to do something with autos i think we have to figure out what to do german companies that build plants, japanese, too. build plants in mexico and take advantage of nafta i think everyone i think the mexicans recognize they have to do something. the 19 to one peso the lack of environmental control laws the free health care the unemployment rate there it's

$4 an hour the workers are being paid $4 or $5 an hour that's a central issue if the president comes in with a tweet that says, you know, the germans are taking advantage of us and doesn't explain it further, ouch. you know, peter navarro explains it in a way that is cogent he's a good speaker. i hope larry kudlow can explain it in a way that makes you feel like it's not the end of the world. i don't feel it's good. >> you know he was profiled once and it was pain to feel see maybe one of the great journalists of our time really kind of lash out at us

she's not ideological. she was cogent more than trudeau about how it was wrong. i don't know i read canada as being ow. >> so the business round table and the chamber of commerce have estimates on what would happen to american jobs if nafta fell apart. 2.6 million, they argue. it sounds like you think we can almost afford it given where we are. >> yes, we do. i think that autos are going to be the issue if we come at it with guns blazing, i think you establish less look steel you need it for national self-defense. if we're going to say that we got to block bmws because of national defense, it does not fly. >> no. we import over 8 million automobiles in this country. that's a big number. by the way, there seems to be some question whether ross is going to china he said yesterday on our interview he was planning to he was in france the journal reporting not long ago, though, that the u.s. theme

is a team that is dealing with china, which includes commerce, treasury, agriculture, and energy and the office of the u.s. trade rep is scheduled to make a recommendation late friday to wilbur ross whether he should plan to beijing if he cancels that trip, that would be bad. >> that ruins the late friday cancellation, you know, a quarter report cancellation. we have a sell what are they thinking >> we're going to watch it and talk to larry. >> larry has to tell us what happened to mnuchin. remember him >> i do. >> on hold and navarro said that was an unfortunate sound byte. >> he just hit navarro in the head and navarro came back with a body blow. >> yeah. kind of like "empire strikes back" navarro strikes back

hey, did i hear the apology? >> i haven't heard it, if there was one. >> no need. >> look at martha stewart. i remember i thought she went to yale but it turned out she went to jail. when we come back president's chief economic advisor larry kudlow we'll talk about the jobs number and trade. looking pretty good on the premarket. it took guts to start my business. but as it grew bigger and bigger, it took a whole lot more. that's why i switched to the spark cash card from capital one. with it, i earn unlimited 2% cash back on everything i buy. everything. and that 2% cash back adds up to thousands of dollars each year... so i can keep growing my business in big leaps!

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getting auto sales for the companies that give them we'll get to phil lebeau >> reporter: we'll start with ford reporting an increase of 0.7% last month in total sales. the expectations was a decline of 1.9%. trucks once again, where the strength is, up 9.4% last month with the f-series being up 11% by the way, these are the kind of numbers you want to see from an automaker fleet sales, which are the less profitable and desirable sales, they dropped 4.6% for ford last month. retail sales were up 3.5%. that's ford. now let's take a look at shares of fiat chrysler this is a strong sales report for the month of may overall sales up 11% the expectations was for an increase of 8.9%

and, guys, listen to this number jeep sales last month up 29% they sold almost 100,000 jobs last month that's a red hot brand italy today said over to the next three to five years, we plan to double jeep's global sales. they are leveraging that brand as much as possible. guys, back to you. >> wow i can remember some four handle on jeep sales but pretty good. wow. >> hot, hot, hot that's with used car inventory getting bloated. >> you center to watch ford. i think ford will get out of unprofitable lines and be only in profitable lines and turn on the jets for profitability i don't know if you saw the fiat waymo yesterday. >> yeah. the order from google. >> yeah. alphabet's waymo unit for 62,000

chrysler pacificas. >> they have the most number of incidents without incidents. >> miles driven. >> right. >> and i just keep coming back to these are just more positives. people should own ford they should own ford just like you have to own gm before the cruz. ford does have a fantastic antonymous driving unit they're doing in pittsburgh as opposed to the valley. >> yeah. >> i like ford i like fiat. >> they're good. >> let's not forget, though, when we move into a world of antonymous vehicles, there are going to be fewer vehicles purchased. a lot fewer. >> yeah. the shared economy. >> because you're not going to have anything like the numbers you have now. >> david, do you this is impacting --

>> it's going to be a subscription-based service. >> i think it was jhonas said long-term half of auto sales cut in half. >> i think when you're on the conference calls like the dollar tr tree the transportation and warehouse part of the economy added 19,000 i think that's because there aren't enough people they have probably triple the amount of demand you know, they don't have enough drivers. i often wonder if people say i don't want to take on drivers because we're not that far from deliverless. it may be hurting freight. >> when we get there, no matter how many years away the changes we're talking about will be so dramatic demographics will change commute times could be less. and suddenly urban centers may not be as desirable as they had been at the same time, maybe urban centers will be desirable because everything will be networked. >> i know i have a buddy in

fantastic business -- >> prices will come down what about oil and gasoline. will that come down dramatically and injuries and trial attorneys and hospitals and garages. >> garages are not doing well. >> no. >> don't get into the garages. >> the l.a. garage business is down. >> lisa comes in. >> i almost bought a car wash and the epa said listen. >> it will be great because thankfully no more drunk driving. ever. >> i'm opening my second place off the river. you'll love it, guys two pizza ovens! >> busy morning on twitter the president, once again, commenting on canada has treated our ag business and farmers poorly for a long period of time highly restrictive on trade. we'll get you that in a little bit. they opened their markets. and jamie diamond making comment about the economy saying it might be in the sixth inning

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is going to beat elon musk to mars made that point. elon musk retweets me and said do it. >> this is a space war between boeing and spacex. >> yes comes out and said tesla is a race against time. very worried about the balance sheet. so elon musk, they're worried about the balance sheet of tesla. he wants to beat boeing to mars. it's a fight, david. it's a fight i don't know when i've seen two companies be just at war with each other to get to mars. >> is there money to be made going to mars? >> this was -- >> i can see how expensive it would be to get to mars. >> it's not cheap. >> but the way i would look at this there was a time in our great country the issue who is going to put the man on the moon first. russia or us david, private sectors king.

public sector doesn't have any money. >> figure out how to get the person back from mars and maybe we'll see. >> have you ever seen richard pryor's first man on the sun >> i must have [ laughter ] >> we got an opening bell coming up, of course. we got the jobs number don't forget, we'll have our interview with larry kudlow on jobs, on trade right after this we'll be back. into retirement...

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general to the white house the night before the friday release. it's released under embargo. strict controls around the security of that number because it's a market-moving number. i asked sara huckabee sanders about the president's tweet this morning at 7:21 when the president knew what the number was. i asked if it was appropriate for the president to be tweeting about the jobs number. it was appropriate because he didn't put the numbers out early. she confirmed, in fact, the president was briefed on this through the normal routine by his economic team last night the president did know at 7:21 this morning when he tweeted that what the jobs number would be and it would be the block buster number we saw this morning. the market took that -- many observers in washington took it as an indicate that the president was saying it's going to be a positive jobs number. >> interesting the press secretary tweeting it was a no-no. advanced info is not to be

shared. >> it's hard i'm trying to think about the scenario you're looking for the unemployment number not to be positive. >> what do we do next if we don't get a tweet. is everybody making assumptions? [ opening bell we officially kick off, guys, the first day of june. >> wow >> as we take stock of what worked this year so far. >> jeez, i've got to tell you yesterday you saw a stock do incredibly well. that stock was facebook. and facebook along with al

alphabet i'm sure people who say, you know, how did this happen? how do we stop what we created they created an american monster and those stocks went from the get go and they never came in. >> interesting bit on facebook today. pugh research center polls teenagers and asks how many still use the core platform facebook 51% versus 71% in 2015 we all know speculated they left the core platform. but twen20 percentage points. >> instagram is big. >> it does. >> it's amazing. people talking about how it can benefit the world cup. i do believe that the confident square and twitter are turning to be amazing investors. i think jeff dorsey should get

his due. >> twitter is one of the best performers. >> twitter and square. square they just closed an acquisition yesterday. >> best s&p tech stocks for the year adobe nvidia is up there. >> cme helps you on board the cloud. adobe a commerce cloud amazing. these are two incredible companies. nvidia is my dog's name and my dog is doing well. it's all cloud those are all cloud placed. >> right i guess netflix is not considered a technology company. >> consumer discretionary. i'll never understand that. >> an amazing number and some people say it's a dell

overhang i say look at that stock. >> yeah. it's complex and dell does have a desire to potentially figure something out. >> yeah. >> in terms of the public markets. because i want to leave it there. in part because of the interest burden is no longer fully tax deductible. >> right. >> and, jim, aisi'll have more some point. >> it was a fabulous quarter i can tell you, they're doing amazingly well amazing. >> we'll watch costco today. talking about rising wages their starting wage is 14. >> it went to 14 i have to tell you, i know people are down on the costco quarter. i'm urging people. you're getting a plus 7% what are they trying to do they're trying to make it so they have an edge against the competition by keeping prices lower than they should be. their stock was down 7 at one point. and that's just, like, mo,

larry, and curly trading that stock. you allude to them as trading costco, is that what you alluded? >> it's funny. i retweeted something. >> what did you mean people trading costco? >> people negotiating trade. >> oh. yeah okay >> yeah. >> you alluded to it earlier i was following up with a creative tweet from one of our viewers. >> we'll have larry. larry is not involved in that, though. >> oh, okay. i was thinking i want to get that on the table. be sure you were going to say it's not. >> not at all. >> larry is a friend of mine for over 25 years. >> mine, too i didn't want an angry tweet i don't want an angry tweet. i thought it was the j.r. smith award for bad taste in tweets. >> there's a lot of j.r. smith memes this morning apparently not watching the clock. he argued differently. >> you have to go back to chris

webber who deserves the j.r. smith award. the fellow wr gracie made 3,000. >> yesterday. >> stan bought 310 shares. western digital. what a killer. nxp he bought 180 shares that have one whoa hitter >> nxp is down again. >>well, no -- >> yeah. >> he kind of had the call. >> right. >> it was before the qualcomm. >> 250 shares of webmd that's by the book. >> yeah. you know, on the ca deal he made $13,000. how about nimble acquired by hp. 445,000. this is a goldman sachs employee that literally traded on stuff he knew. >> how he thought he wouldn't get caught. >> because he had friends'

accounts and, you know, honestly j.r. smith has nothing on this guy. [ laughter ] >> almost every dow component is in the green ge, i think is lagging jpmorgan is in the lead. diamond said economic expansion may be two-thirds of the way through the course trade is negative. the expansion could easily continue and added lowest u.s. tax raids are making foreign competitors nervous about keeping up >> wow, really the tax rate was mentioned by almost all the retailers that reported there was news about italy earlier in the week. >> yeah. that kind of receded they have a government now the ten year yield is down 2.56 or something. >> do you remember what it was the 40% off sale that caused it it lasts only for another week. >> europe did reopen. >> i ordered a flight jacket.

>> wow. >> this is one of the best. >> that's beautiful. >> this is for 180 and i got it in a bogo sale know what bogo is? >> buy one get one. >> i don't believe that. >> a 40% sale, david it rocked it it wasn't the government the government they formed seems like a functioning government. but i know a lot of people sold morgan stanley on that you know, they say sold a lot. caterpillar. >> yeah. italy. >> italy. >> that's how we began the week. they have a piano bar on airbus. >> they're having their own supply chain challenges. trying to keep pace for demand. >> yeah. let's understand there is really that china needs bund more than bund needs china there's a line for planes.

it's too long. >> true. the belief is there's a number of ways we can leverage with china. and china needs our components that are created and produced here in the united states. >> right. >> or by u.s. companies, certainly, that pop late the innards of a lot of technological devices. >> we need private labels. sweaters from the chinese and they need equipment so their technologies work. how badly do we need the sweaters >> most of it lands up in a landfall. >> faber doesn't know what bogo is. >> i don't buy anything. >> you grew up rich. >> i grew up -- >> we grew up bogo cheerios. >> pop tarts were nasty. >> are you kidding i still buy them

they have the individual packs i love them. >> do you have the 92 octane let's get your temperature on deutsche today, jim s&p cuts the rating to bbb plus. european banks have one of their worst weeks, i think, since march. >> the germans have to bail it out. because there's a deutsche bank it makes me feel like there has to be cap infusion still deny that but that's what it means >> back to the jobs number this morning. unemployment hitting a 18-year low. stocks rally this morning. first on cnbc director of the national economic council larry kudlow joins us. good morning. >> good morning. thank you. >> the phrase beats across the board was said after the print i guess you agree. >> yes great number to 23. it was near consensus maybe slight above consensus look, it's a strong economy. i mean, you know, we've had this debate for over a year

one hat or another i've been wearing and what you've got here is continued job growth, low unemployment, participation rates pretty good. wages are still rising gdp real gdp is running pretty much close to 3% we're looking for a strong second quarter prosperity this is a prosperity era, i believe, as you've heard me say it before. i believe we've entered into the longest largest prosperity in a couple of decades. i know it's early in the game. the data is not sufficient yet to make that claim i'm trying to get in front of the curve and give you my view and the view of the administration. >> where is the curve, larry when do the wages get to a point where they get people back in the labor force, right just looking if afor a job agai. >> it depends. the jobs report this morning i think it was 2.7% hourly average

earnings we're inching toward three which is a great number. there's virtually no inflation other measures, by the way, the employment cost index is actually running upwards toward 4% growth. we'll have to see how this works out. look, there's no question. here is sais a key point business is coming alive business investment. what we call cap x this is coming alive it was flattened in 2015 it was flat in 2016. it was up significantly in 2017. here in the spring of 2018 most of these numbers for cap x are showing six, seven, sometimes 8% the ism are roaring. i say that only to say if you're going to invest equipment, technology, buildings, whatever, the demand for labor goes up and their wages go up. i think we're at the beginning of this cycle, carl. i don't think we're anywhere near the end

we're at the beginning this could going on for a bunch more years, in my judgment. >> larry, it's jim i totally agree with you i think this is one of the great bunds i've seen. noninflationary bund we should go to the germans and say, you know, you can't building plants in mexico and getting around the rules to the japanese we're strong they're not. isn't that when you strike and get your point done? >> you know, james, that's a good point you and i, once again, are on the same page. my pleasure. look, first point, we're going to go up to the g7 summit next week the leader summit. i think president trump has a right, you know, in a modest way we've developed an experimental policy here. low tax rates, lower regulations, no punishing business let's reward success take a rip at the ball

that's american capitalism entrepreneurship so the oced published numbers, jimmy, it said the united states economy is growing fastest in the world. i'm seeing mild downturns in europe and asia. they should consider, i say it with modesty, our european friends and others should consider these supply side kinds of policies. to reawaken business and if they do, they will come out of their doldrums and they'll get the kind of capital investment and business investment and that generates the prosperity for jobs and wages. you know, i think it reminds me going back a whole bunch of years when i was here working for ronald reagan, 1983 we went to the g7 meeting. the american economy finally exploded a lot of those guys that mocked reagan the year before said wait a minute tell us again how you did this why do you have an economic miracle. and some ways this is the same

story. we would welcome the europeans to follow our lead and, by the way, president would welcome the europeans to engage us in a serious matter with respect to a lot of unfair trading practices. i know they're our friends and allies we get that. on the other hand, when the president says he wants reciprocity on tariffs and nontariffs, when the president would like some reassurance with respect to the production of steel, when the president would like them to join us with respect to china to try to right all their wrongs, we would like some cooperation and we haven't really had that kind of cooperation yet. and i want to make that point. if they tax american imports, auto imports at 10% and we tax theirs at 2.5% that's wrong they should go to 2.5. we should go to zero

let's lower the barriers it's not just autos. it's a bunch of other industrial products and finished goods. that includes steel. i'm just saying, look, let's talk if you read the statements yesterday we are in conversation this is something of a family disagreement it's a trade discussion. it's not a trade war it's a trade discussion. we can fix this, but we're going to need the help of our friends. okay and our model is working and their model is not. >> one of the things i think that the american people kind of dawning on them i know you know from the years i worked with you. they need us more than we need them i wish you would make that point more i don't think people realize how dependent these so-called strong countries are on our markets. >> modesty prevents me from making exactly that kind of statement. on the other hand, since we're

friends and former partners. i must say your statement is correct. you said it. thank you for very much. you're the more articulate of the two of us. so i'm quite happy i'll put it to you this way, join us. join us. >> larry, it's david back to the numbers themselves this morning, the pool of available workers fell by another 213,000. i think the ratio between job openings and pool of available workers is the lowest it's been in 18 years. is it a good time to be cracking down immigration or is that something that conceivably could end up slowing growth? >> the immigration updated we are looking at ways to bring temporary immigrants with temporary visas legally into the united states in a number of industries i don't want to get ahead of the curve, but your point is well

taken. we're looking at that. we're looking at investors, for example, with the same idea. the generic issues, you know, i back the president on this we've got to fix this broken system it's probably going to require a wall or some kind of border operation. things like sanctuary cities that's got to be changed it's totally unacceptable. but i did think your point in the near term while we wrestle with our friends in congress, i think you're going to see some progress on that very point. having said that, one quick add on i think as wages go up in the booming economy, more people will come out of the woodwork and into the labor markets i believe that's going to happen there's some evidence it's already started to happen. you have to give it a little bit of breathing room. i think there are a lot of americans out there who would love to work if the price is right and the job is right and, you know, doing everything

we can trump has a whole job training program we're going to hear about at lunch today a lot of people really like that kind of thing. so we're doing what we can to attract the labor force, make it a better educated labor force and put it to work. >> finally, larry, sara huckabee sanders tells us the president was appropriate to have the tweet this morning because he didn't give the number the ten year did move a bit. do we see if he tweets every month? >> my response is, carl, by law and custom, the way these things work, just to clear the air, the chairman of the cea, gets the numbers late in the afternoon,

early in the evening he shares those numbers with the director of the national economic council it's my call whether to send them to the president to give him a call or have a meeting with him that's just what i did last evening. okay i track him down on air force one. i wanted him to know the numbers. by law and custom, that's correct. he has a right to know he's the commander in chief. that's all he chose to tweet his tweet basically said like everybody else we await the job numbers. you read into about ten different things the numbers came out about consensus. slightly good news i don't he gave anything away. i think it's according to routine, as i said law and custom by the way, carl, when i was here whatever 35 years ago, exactly the same system. i was in omb those days. the cea sent the numbers to omb

and we decided to alert the president or not it really hasn't changed. >> larry, we know you got to go, but real quick wilbur ross said he was going to china when we had him on there's question today do you know if the plan is for secretary ross to china to negoe on trade >> you know, i don't know where wilbur is. i hope he's on his way to beijing or in beijing. i don't have his schedule. i know he intended to go i haven't heard anything to the contrary but i'm not the guy who holds his schedule if commerce secretary ross, very distinguished commerce secretary, if he goes over there i think some good will come of it, but here, too, listen to the president. believe what the president says. he's quite serious about changing unfair and illegal trading practices and protecting american technology. folks should listen to what he

is saying because he means it. believe it and if he doesn't get it he will take action. i think that's one of the important parts of this entire story. >> larry, we always love seeing you after the jobs number. thanks so much have a good weekend. >> you, too. >> larry kudlow, director of the national economic council. rbc's mark mahaney hear what he has to say about his new note on netflix. dow up nearly every component in the green this morning back in a moment ron! soh really? going on at schwab. thank you clients? well jd power did just rank them highest in investor satisfaction with full service brokerage firms...again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible.

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♪ good friday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber. 223,000 jobs in may. low unemployment wages pretty good. also balancing that with the trade headlines. amazon all-time high let's get to chicago rick santelli has the latest read on ism and construction spending rick >> chronologically construction spending is an april number and that is up 1.8% and i'll tell you what i rarely get excited about construction spending. that's the best number going all the way back to january of 2016 where it was up 1.9% so up 1.8 is stellar number. now let's get to the more contemporary read on may ism that is up 58.7.

another very strong number it's about -- almost a half over what we were looking we were looking for a number slightly above 58. that follows 57.3 and it is the best number going back to -- let's see here -- that's the third best number of the year. high 60.8. that was february. and that's the best going all the way back to 2004 there are some internals the employment, 56.3 and that is not a bad number, down just a tad, especially after knowing what today's employment data is ed lazier coming up, former chair of the economic council of advisers under george w. bush. we want to talk about a variety of things, not the least of which is the drop in the employment numbers

our road map for the hour begins with the jobs report. 223,000 jobs added in the month of may unemployment rate falling to its lowest level in more than 18 years. what it means for the markets. >> canadian prime minister justin trudeau's reaction to the trump administration's tariffs richard hoswill join us on why he thinks the trade policy will be costly for americans. and finally it is day three of walmart's shareholder meeting. we'll go live to arkansas and tell you what to expect from the ceo doug mcmillan's keynote which will be later this hour. >> 223,000 jobs added for the month of may steve liesman back at hq for more on what was a decent report >> yes, it was the best comment on the jobs number as it has for many years coming this morning from our retiring colleague hampton pearson who said right out of the box, quote, the private sector is on fire. let's look at what hampton was talking about. 223 on nonfarm pay rolls

there's the private sector almost all the job growth coming from the private sector. 228,000. average hourly wages up 0.3% unemployment rate ticking down into interesting and almost unprecedented levels here, 3.8%. labor force participation also ticking down we've not had huge growth in the workforce. no holes to poke here. these numbers are phenomenal let's look at where the jobs were 39% in education and health services that's where the jobs always are. retail up 31,000 a sector otherwise left for dead construction also strong many benefitting from good weather. lees youleisure/hospitality. and the strong jobs number offsets and then some the concern earlier this week. take a look at the probabilities for the june rate hike ticking back up to 85% not quite the contract high but

near a certainty the fed is going to focus on the domestic economy the chance of a fourth hike this year would be one in december up from recent lows but still trading about a 30% probability. carl >> a lot to process. the other big development investors are watching are the tariffs. eamon javers joins us. >> the white house now minimizing the significance, suggesting this is not a trade war. larry kudlow, the new national economic council was on cnbc with you in the past hour. he went out of his way to signify there's no problem here between the united states and its allies here's what he said. >> this is something of a family disagreement it's a trade discussion. it's not a trade war it's a trade discussion. we can fix this but we're going to need the help of our friends.

>> kudlow calling the allies our friends saying it's a family disagreement and it's not a trade war. so we'll see where things go from here. wilbur ross said yesterday in announcing these tariffs that he hoped the end outcome was more negotiations with the canadians, mexicans and the eu. we'll see if they're in the mood to do that we had the retaliatory announcements yesterday from all three of those entities and bruised feelings once emotions subside, could they get back to the negotiating table? that's going to be the question for later on today, guys back to you. >> did the president leak the jobs numbers what can you tell us on that front. is that legal? >> i'm not a lawyer but there does not seem to be any law that would prevent the president from announcing the jobs number whenever he wants to announce it tradition and practice is that number comes from the labor department at 8:30 and there's no advance leak of that number by anybody in the government

in fact, the government traditionally doesn't even comment on it for an hour afterwards so as not to get in the way or impede or suggest any political interference at all. those numbers are held like a state secret the president did tweet he was looking forward to the jobs number that suggested to a lot of people it was going to be a good number and it was. i asked sarah sanders if it was appropriate for the president to tweet that she said it was perfectly appropriate because he didn't reveal the number itself and she confirmed, in fact, he was like other presidents alerted to the number last night. larry kudlow just told me and told you guys that he called the president last night when the president was on air force one and gave him the number because he thought it was an important number he knew that the time he tweeted, the president did, that it was going to be a very good number >> you can interpret it ten different ways if you want thanks, eamon javers for a deeper look at trade and may payroll number, let's

check in with diane swan good to see you both diane, let's get your take on the jobs number. how do you balance it with what some are saying is destructive threat to jobs from tariffs? >> that's exactly the issue. the good news is that we have these good numbers and we're starting to see in manufacturing it wasn't as strong as it could have been which we also saw in the ism. things like machinery which means investment is coming back. that's really needed at this stage of the game. that's one of the sectors that could be the most hit by the tariffs and retaliatory actions we're seeing from our closest trading partners and largest trading partner. when larry kudlow calls this a family disagreement, i worry about family feuds and i think hatfields and mccoy. i wonder how these can get out of control and how family feuds. families can be dysfunctional

and feelings can get bruised and things can get out of hand fairly quickly that's one of the things i'm concerned about, not only with the u.s. this is one we've got some cushion and ability to absorb this but it's undermining the very things we'd like to encourage. that's the investment we're seeing when you have uncertainty about trade tariffs and where it's best to produce and compete it makes it hard for larger companies to decide where to put their money most >> david, you've heard that from a number of economists and politicians. we saw tariffs coming from every direction yesterday and yet the market sold off but it wasn't anything dramatic. not as dramatic as the italy political fears earlier in the week is the market underestimating or viewing this whole trade war threat differently >> it's a funny thing. what's going on is we've got, in many ways, excessive stimulus being poured into the economy. we've got -- the unemployment runs to the lowest since

december of 1969 we've got a super tight labor market we can't handle any more stimulus here. in some ways the tariff talk is a negative because it's an uncertainty tax on american business i agree with diane it causes businesses to hesitate to invest. in some ways, that actually is not necessarily a bad thing in this market because otherwise we'd overheat. the negative from trade is helping the economy not overheat right now and that's why the market can take this in stride it really couldn't take much more good news >> how much of that do we need should we van all-out trade war to make sure the fed can take their time >> i don't want to play this game for too long because there will be a day we need a more positive policy on investment and providing certainty, but the tariffs themselves are very small. washington needs to let people know what the rules of the game are and then american business

can invest >> one other thing i want to add to that. we have seen pipeline inflation already pick up. and it's not because of wages, per se, it's more because of input costs. and some of those input costs cited in the beige book that have showed up in the producer price index are areas we've seen tariffs. steel, aluminum, lumber. the construction industry is really feeling the pain here that also showing up in manufacturing. and i worry about how much we're narrowing margins in these sectors finally coming back and not seeing it show up as much as we'd like in wages 2.7% is great. a little up tick in wages. i expected an up tick in wages but that's it. we're still running way cooler than the fed would like to see their target is 3% sustained wage growth. >> diane, how should i look at the fact that we had a record high in the number of those not in the labor force but also what is significantly tightening labor market how does that work >> there's a couple factors going on

one is demographics and people retiring out of the labor force. the other issue is this inability to really bring back a lot of prime age workers and the hurdles to that being much higher than they were the last time we hit this kind of unemployment rate if you round it out to the december -- the april number of 2000 at that time we had people being pulled out of the woodwork march 2000, now hiring, pulse required as one of the help wanted signs they saw. it's clearly not where we are today. today we've got people still not being brought in wages spotty seeing wage gains in certain sectors but not acrossthe board. not aggregate wage gains like then and not this increase in the labor force we're absorbing rapidly. that's a very different kind of unemployment rate. we have to remember it's not just the overall level of the employment rate but the composition that matters >> and i think it's -- >> go ahead. >> i just wanted to paraphrase your whole thesis here it's wacky

so you think that u.s. economy is doing so well that the increased tariffs and increased rising protectionism that we're seeing all over the globe is actually helping the markets because it's leading the u.s. to not overheat and get too good. is that correct? >> in the short run, yes, because if we have just this employment report but not the trade issues, can you imagine what people will be pricing in in terms of fed action the fed is looking at an economy that's growing fast. and unemployment well below where it thinks full employment is so i think we'll be looking at more aggressive actions if it weren't for some of the drag on the economy caused by these questions about tariffs. >> we'll find out if the minutes applaud the rhetoric in any way in the coming weeks. diane, david, good to see you both >> thank you coming up -- a trade war over twitter why counsel of foreign relations

president richard haass has harsh words for the president this morning and we'll also head to fayetteville where walmart has that annual meeting. it is unlike virtually any other. we'll cover that next on "squawk on the street. hi, kids! i'm carl and i'm a broker. do you offer $4.95 online equity trades? great question. see, for a full service brokerage like ours, that's tough to do. schwab does it. next question. do you offer a satisfaction guarantee? a what now? a satisfaction guarantee. like schwab does. man: (scoffing) what are you teaching these kids? ask your broker if they offer award-winning full service and low costs, backed by a satisfaction guarantee. if you don't like their answer, ask again at schwab.

it is day three of walmart's annual shareholder meeting kicks off with the ceo doug mcmillan set to speak on stage shortly.

courtney reagan joins us now with the latest. >> we've got thousands of walmart associates from all over the world all in this arena behind me at the university of arkansas, the bud walton arena today's event is a celebration of everything that walmart has done in the past year as well as a look forward to the future today's celebrity emcee was a surprise as always jamie foxx musical performances from cassidy pope and carly ray jeopson. greg pinner is married to one of sam walton's granddaughters. he took the stage and talked about how risk-taking is back at walmart. he called the retailer a growth company. brett biggs says walmart is disrupting retail and the financial results prove the benefits of that and doug mcmillan will take the stage to give his state of the walmart union address. but one thing that's different this year, a departure from what we've seen in years past, no shareholder business will take

place at this meeting. that was done two days ago, including the election of the board. mcdonald's ceo easterbrook comes on for the first time along with cfo square sarah friar kevin is no longer on the board and neither is james cash for various reasons. of course, the big announcement came with this jet black program coming out of walmart's store number eight that tech incubator started about a year ago the co-founder of rent the runway is running the jetblack program. this is a personal shopping concierge done over text message. so you can text or send a picture of the paper towels that you want or simply say i need a gift for a child's birthday party and the concierge with the help of ai will help get that to you. it's $50 a month for membership. only available in manhattan and brooklyn at least to start for doorman buildings. but so far the pilot program has been very well received and it's been running for 8 to 10 months.

that was just discussed inside shared with the associates here. for now back to you guys we've got to head back inside. doug mcmillan is taking the stage very soon. >> thanks for the update here at post 9 to talk more about walmart, mark cohen, now director of retail studies at columbia business school we often turn to you on retail is walmart a growth company, as they say >> walmart is not a growth company. walmart is improving because they are focusing on their 4800 stores in the u.s. which were declining over ten years because of their poor execution. so much credit to them for getting their mojo back in that regard clean, neets neat, friendly stores, well-stocked shelves is the watch word for a brick and mortar retailer. they have been failing globally for the most part. they are throwing the towel in in the uk. they are out of germany. they're out of korea they're struggling in japan.

>> but they've totally shifted the game plan there selling off the uk grocer, buying flipcart in india >> so flipcart is an interesting $16.7 billion attempt to become relevant in a country they have 21 stores in and do virtually no business they have a lot of free cash flow and they're starting to spend it if that characterizes them as a growth company, then give them credit for that. but from a performance point of view, they have a long way to go before they identify and follow a rational, long-term strategy that will actually give them growth >> you don't think they have a rational long-term strategy? certainly they have the wherewithal to pursue a strategy of like so many other weakened retailers and the willingness on the part of their control shareholder to allow doug mcmillan to do that. >> they have the money and they have the intent, but i don't

think they yet have the strategy they are a store chasing a marketplace. and there's a tremendous disconnect in all of that. amazon is a marketplace. so this announcement of their investment in jet black is puzzling >> why >> this is an attempt to be relevant to a high-end customer who will engage them via text, allegedly as a competitor in amazon prime amazon has 100 million prime members. amazon's prime member should be is open to virtually everyone. certainly in north america who is involved in amazon. and amazon is investing enormously in new technology which is voice activated access. so this is a text-driven technique they've cooked up which is old speak already in my

opinion. >> still pretty targeted n small. it's not like they're going at this with scale yet. >> the trouble walmart has, when you're that large, you obviously have to be cognizant of scale. will a jet black strategy of customized customer access ever scale up to a $500 billion company? i don't think so i think this is as essentially meaningless as macy's investment in -- it certainly doesn't warrant them being characterized as a growth strategy. >> you think it's cosmetic essentially? >> at the moment it's nothing more than a fancy headline >> speaking of a growth company. lululemon's results after the bell the stock moved today. this is a company in retail posting 19% comp store sales beating even super high expectations 28% new guests into lululemon. what are they doing that others

aren't >> they've gotten their mojo back fixated on great product in stores that have great presentation great service. they are playing into a lifestyle that hasn't diminished after a near death experience when they started to play around with fabrics that didn't work for their customer and a founder who started to insult their customer -- >> it's been a while since the shear pants. >> but they're back in the saddle >> great assortments in a great setting by way of presentation either online or brick and mortar never fail. >> really quickly because i'm looking at the former sears canada title below you what do you think retailers are saying about trudeau >> everyone who has a heartbeat in this business has got to be worried about an out and out trade war because in trade wars in the past, there have been no

winners. so here's our most important trading partner that we've had virtually no real issues with other than soft lumber, things of that sort milk setting up for a fight it just makes no sense >> mark cohen, more on that with richard haass in a moment. thanks for joining us on retail. auto numbers continue to come in. let's get toyota with phil lebeau >> toyota last month saw declining sales of 1.3%. a little weaker than the edmunds estimate overall when you look at the numbers from toyota, ford, fiat, chrysler, we're looking at a sales rate, most will expect the number later this afternoon to be in the 16.8, 16.9 million range in terms of a sales pace if it falls below 17 million, that will be the first time in seven months we've not seen the pace of monthly auto sales above

17 million vehicles. back to you. >> thank you very much, phil when we come back, a deeper dive into auto stocks. coming up on monday, an exclusive sit-down with the head of mcdonald's steve east arebrook happens to be on walmart's board as well. from the company's new headquarters in chicago. we'll talk his ten-year mcdonald's, what's coming next for the chain and plastic straws ba's turning into a massive dete dow up 234 back in a minute ♪ there's nothing more important than your health. so if you're on medicare or will be soon, you may want more than parts a and b here's why. medicare only covers about 80% of your part b medical expenses. the rest is up to you. you might want to consider

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it's that time etf spotlight. dom chu looking at how the new tariffs could impact the auto industry >> there's a lot of stuff going on with regard to tariffs and a lot of focus happening here. the driving force behind the auto stocks has been not just the tariff discussion but what's happening with artificial intelligence, autonomous self-driving, that sort of thing. as we saw yesterday, general motors stock and the big move higher a 12, 13% gain and we're extending them so far today, just over the past week, up about 12.5%. a big move there for general motors now to put it in context for gm it will fight a lot of these

secular headwinds if they come to fruition. one of the things we'll watch as well is how it's done since it re-emerged from bankruptcy in the auto bailouts and wh whatnot. a lot of the move higher has been in that range about 25, 26%. this big move higher right here, the biggest since it emerged from those bailouts. one of the other things to watch if you take a play on tariffs aside and autonomous driving, that seemed to drive gm shares as well as ford and fiat chrysler an etf called the global x robotics & artificial. the ticker is botz it's a $2.5 billion, relatively large in size and one that can take advantage of some of these trends one big caveat about this particular fund. one of the biggest holdings, almost around 10%, is shares of nvidia because it does do some stuff in artificial intelligence and also autonomous driving.

this is a 10% weighting in this fund all the way uptowards those record high levels but certainly, as we talk about autonomous driving, cars and everything else, we can look at discretionary funds, all kinds of industrial related funds. when it comes to autonomous driving, some of these etfs like botz could be a way to take a look at those particular views >> botz, thank you when we come back, trade tariffs and tweets richard haass from the council on foreign relations joins us for some reaction. stay with us >> today we find ourselves the target of punitive tariffs on canadian aluminum and steel under pretext of a 232 national security provision let me be clear. these tariffs are totally unacceptable imagine traveling hassle-free with your golf clubs.

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good morning i'm sue herera here's your cnbc news update at this hour. in a tweet this morning, president trump calling for comedian samantha bee to be fired after she made a vulgar comment about his daughter, i vanka on her tbs program it comes days after abc canceled roseanne barr's hit tv show after barr tweeted a racist remark north korean state tv reporting that kim jong-un said the north's will for the denuclearization of the korean peninsula remains unchanged. it said he made the remarks during his meet with russian foreign minister lavrov. a fast-moving lava flow is making its way through parts of hawaii's big island sparking immediate evacuations as it covers major roads and threatens homes. fissures are spewing lava more than 200 feet in the air 14-year-old karthik nemmani of texas is the scripps spelling

bee. he correctly spelled koinovia. he takes home $42,000 in cash and prizes if you're wondering, that word means christian fellowship or communion. congratulations to him that's a lot of pressure that's the news update this hour carl, back downtown to you i never would have made that word >> no, absolutely not. thanks, sue. a market flash from dominic c chu. >> shares of the u.s. traded version of petrobras those shares are down sharply about 7%, 8% the reason why is reuters and bloomberg both reporting that brazil's petrobras says its ceo has resigned no reason yet given. we are reaching out to petrobras to confirm some of these details and get some color on the reason why he has resigned.

this is coming in the wake of a lot of worker strikes or proposed worker strikes for brazil's state-run oil concern also right now to show you, sao paulo shares are suspended probably the only way some can take a view and manage their risk is in these new york-traded shares certainly we're watching this and we'll keep you updated as we know more on our end >> the brazilian real is also getting slammed with the dollar spiking on that. the strikes have also been a problem. thank you, dom president trump issuing a new set of steel and aluminum tariffs targeted at the eu after steve mnuchin signaled a hold on the trade war. joining us for his take, richard haass, author of "a world in disarray." larry kudlow, richard, says that they are our friends, our

allies, referring to the europeans, but they have to make some concessions when it comes to trade can that happen? >> if there is legitimate case that the europeans need to make concessions. there's also legitimate ways to go about it. you don't use national security justification to hammer your allies you don't do it unilaterally we use the institutions we helped create, including the world trade organization what the europeans now have done is they've suspended the talks meant to liberalize u.s./european trade and install or introduce their own sanctions which will penalize american exporters. so no good will come of this >> the fact that we're fighting everyone at the same time, it really gives a whole new meaning to america first europe, canada, mexico japan. china. south korea. they're all angry at us on trade and considering retaliatory tariffs or implementing them >> they all have a -- >> how much more dangerous is that >> they have a point the united states is introducing

tariffs unilaterally outside the established mechanisms in many cases it will hurt us economically it will cost far more jobs than it protects. consumers will pay more. and in the case of allies, this is so inconsistent with what's meant to be the nature of our relationships. to use national security justification, to go after canada, the prime minister justin trudeau was totally justified in blasting the united states saying canadians are fighting alongside americans they are putting their lives at risk, and we're using this unilateral national security provision to penalize them this is the sort of stuff that's truly corrosive. not just economically, but it's corrosive politically, diplomatically and strategically. we will pay a long-term price for this because we're going to end up in a world where we'll not have partners. we'll not have allies. if we treat our allies as enemies, guess what? they're going to distance themselves from us >> i was going to ask.

what is the more likely scenario the trading partners offer some cosmessic solutions, the president walks away from tariffs knowing his base heard him, heard his stance, or that our trading partners get rewarded for fighting against the president and go even deep or this war? >> one possibility is both the partners escalate against us and then we, without waving the white flag, essentially sue for peace. that was a version of what happened with south korea where we had cosmetic changes in the bilateral agreement there and called it success. but this is not an administration that seems to be playing chess. i never know what the moves are two or three moves down the road be it with china, the europeans, with the mexicans or canadians so then we're in the land of speculation here but i'm not sure they could even answer your question >> on the other hand, there appears to be real movement and

progress with north korea for this on again/off again summit on june 12th and a lot of folks say that president trump deserves credit for this i wonder if the fact that we fired this shot at some of our allies on trade complicates that at all >> well, one wonders whether there's a national security process which is looking at some of the countries like china that we need to work with to put pressure on north korea and they're putting things together. but i think it's fair to take your basic point the president does deserve some credit for getting us where we are with north korea the real question is whether we have a summit and more important, what comes of it. we want to avoid two outcomes. we want to avoid a situation where it unravels and then people say we tried diplomacy but it failed. and we want to avoid the pressure of giving away too much simply because we want to avoid a summit failure so i really hope it's well prepared and if need be postponed there's nothing magic about june 12th >> richard, back to the larger issue of trade what would give you some sense

that there is a larger strategic strategy in place i should say to approach this overall issue with all of our different trading partners >> at the risk of fighting your question, i'm hard-pressed to see what the answer would be given this lineup of personnel, given the -- from the get-go, in the inaugural speech, the president embraced protectionism. what it would probably take is some different personnel a different u.s. trade representative a different secretary of commerce probably peter navarro going back to academia and the president essentially saying we're going to reconsider some of our approaches and find some cosmessic way of giving him cover for it essentially he'd have to understand that unilateralism was counterproductive and the way it could come about would have less to do with our trading partners and more from republicans and from the president's own base as they saw through the symbolism of this protectionism,

you are quite possibly going to see republican voters complaining in the run-up to the midterm elections. farmers and others and cop sumers are going to pay an enormous price for this trade policy >> you think that's possible even given the economic progress we're getting today? the ism, the jobs number >> you're right. the economic progress is impressive, but the problem with the protectionism is even if the overall economic progress is good, certain jobs are going to disappear. people, for example, who have to base what it is they produce on imports. people who are deal with automobiles and the like so overall good news will be offset by specific bad news at the rate we're going >> it's sort of a shoot yourself in the foot policy the economy is pretty good richard haass, thank you >> thank you >> president of the council on foreign relations. spain is a big story today lawmakers voting to oust the country's prime minister adding to political turmoil overseas.

it did shake the markets earlier in the week. vi willem marx has the latest >> we saw the sixth year prime minister of the country being ousted in a no confidence vote almost immediately replaced by the head of the socialist party, pedro sanchez. he had said that he will maintain the spending plan that was put in place in terms of the budget and he's a pro-european politician we've seen a positive reaction fr with the yields falling. in spain we've seen the same thing since the dramatic day of trading. we've seen the new italian cabinet being sworn in and also including the man that was responsible for this coalition agreement nearly falling apart on sunday.

he's not going to be the economics minister he's going to be in charge of european affairs giovani pria is not a well-known guy. the two deputy prime ministers and the head of the labor party have both taken on separate portfolios one in charge of immigration he's going to be trying to deport half a million immigrants and then trying to roll out the new universal basic income plan. he's going to be in charge of labor and economic development that could cost tens of billions of euros that would necessitate more borrowing by the italian government something investors are going to watch closely. >> the euro is stronger for the week after that bumpy start. willem marx, thank you for joining us with all the updates in spain and italy former cea chairman ed lazear joining us.

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stocks rallying after a strong job report. one top market watcher says a summer rally is about to heat up find out more, tradingnation.cnbc.com more "squawk on the street" coming up.

time to get to the cme and check in with rick santelli with the santelli exchange. rick >> good morning, and thank you i'd like to welcome my guest, ed lazear it's jobs friday >> hey, rick good to see you again. >> all right very quickly, let's go through the unternals. up 0.3, average internal earnings up 2.7 year over year. 2.6 has been running pretty wild in january we had 2.8 it's still really isn't breakout

material workweek, 34.5 six out of the last seven months have been 34.5 with the exception of one month and that was january at 34.4. and 3.8% i had to go back to december of 1969 to find a lower rate. we've had 3.8 many times, but to find a lower, 1969 233,000 jobs your take, ed. >> okay, well, good summary, rick i think the important point to take from this is that the unemployment rate that we've been looking at for over a year now is not a very good summary of where we are in the labor market if you think back six months or so, we had an unemployment rate that everybody thought was just signaling a labor market drum tight. low 3.2, 3.4%. it's a half a percent below that now. we weren't at the peak then and we're not at the peak now. and the reason for that again is, if you look at the jobs numbers, how many jobs we're

creating, we are still creating jobs at a rate that's about double the rate of population growth that tells you that we're still in a recovery mode again, there are people out there who are not working who are still coming back into the labor force and that tells us that we still have room to grow. that's actually a good thing but it tells us we're not at the peak >> what you're describing really does bug me a bit because, you know, they started out looking at the fed 6.1% maybe is fully packed the point is that error may have really policy implications, story for another day. another way to look at it, 95.9 million aren't counted anymore they aren't in the labor force if you look at the employ rate that's about 1.6 million add that together, 102 million and we're not even looking at part-time people if you look at total civilian labor force it's 161 million that means our total amount of labor force out there is only

37% larger than all those that aren't working that's a huge problem. what do you think? >> well, that's -- i agree i would say the way i always think about it, of course, is in multiply that by the entire population, working age population you're talking about over a million people that could be back at work so again that tells us we have a lot of room. sorry, go ahead, rick. >> reporter: that's key. another way to look at it is we have a big issue with entitlements this president, before he was elected, didn't want to go to

that, at least in his first term. >> right. >> nobody seems to be too worried about it and the debt keeps accumulating these people will be part of the process. they're going to need help they're going to be on entitlements i'm not saying that's wrong. i'm just saying there's a cross there and we need to be cognizant of it. >> there's not just a labcost there's a labor market cost. if you look at cbo's numbers, congressional budget office numbers. >> it's crazy in about seven to ten years, yes. >> we're talking about having to raise taxes by 50%. >> exactly. >> really devastating effects on the economy if we don't get that under control. >> we're almost out of time. i have to ask you the big survey question of the day, trump's tweet this morning was a bit like a kid on christmas eve, saying he can't wait to open his presents in the morning. maybe he knew what he was getting. did you have any thoughts about the tweet this morning, ed >> yeah, i certainly had thoughts about it.

i served a president that was much more cautious in his approach he played it much closer to the vest i certainly like president bush's approach over president trump's. that's a personal view the question is whether this was something that really caused major problems remember, the reason for the rule -- >> quickly. >> the reason you're not allowed to disclose beforehand and i was in charge of those numbers when i was at the white house you want to prevent insider trading. this was a public tweet not a private tweet. this is more like saying we're going to announce the number at 8:30 and at 7:30 say i changed my mind and announce it at 7:30 publicly that's different than something that requires fbi attention. that said, you know, i wish he hadn't done t i would rather we stick to the old rules but -- >> ed, i've got to go here all i know is that in the last administration we were worried about transparency thanks to the media, we don't have similar worries this administration ed lazear, thank you for joining me david be bfar,ack to you.

>> a lot more squawk on the street for you right after this break.

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new developments in this potential massive strike taking place in vegas jane wells is live on the ground there and joins us with the

latest morning, jane. >> reporter: hey, guys we now know that at least 12,000 workers will not be walking off the job after the union reached a tentative agreement with caesar's entertainment earlier this morning they worked past negotiations, past the deadline of midnight. now the pressure is on mgm resorts which still has no deal. there are 38,000 other workers who could walk out of its properties at any time one of the demands by the union, which hasn't gotten a lot of press but suddenly has become important, is protecting a contract in a change of ownership or spinning off the company. >> that says no matter who buys the place, who runs the place, who the administration is, we still have a contract in there and, to me, that's the biggest thing. >> reporter: now tourism has not really recovered in vegas from last october's mass shooting the union that's threatening to walk is the state's largest.

it covers housekeeping, food service, bar keepers, bell hops, the people that make vegas welcoming to tourists. >> a lot of things have happened here the city has never shut down the worst of the worst here at mandalay bay. >> to make it difficult just to get daily things done each day. >> reporter: and talk about timing if there is a walkout, it's happening as the town's brand new hockey team is in the stanley cup championship there will be at least a game five here next week. if there is a strike by then, hockey fans may find they can't get a drink or food anywhere by the way, there are some properties here, not part of these contracts, wynn in las vegas, no strike there cea caesar's and, of course, elvis works strike or no strike, there's always elvis in the house. >> scene stealer there, thank you. jane wells, obviously, in vegas what's coming up on "power"

today? >> upgrade steve milunovich will join us. he compares nike to nokia and what that could do a lot more on the trade side, obviously. >> "squawk alley" starts in a couple of minutes. don't go away.