open flat and the nasdaq up by just over three points ten year yielding 2.971% not far off from what we saw before the jobs report. hope you have a wonderful weekend. brian, thank you for being here. right now it's time for squawk on the strooelt. -- "squawk on the street" good friday morning. welcome to "squawk on the street." dow futures had about 60 point lead but lost it as the july number for jobs coming in light. 157,000. break down the numbers as we also watch reports of new tariffs from the chinese on u.s. goods. europe is hanging on the gains 10 year yield eases back to 2.97 the road map begins with a summer hiring slow down.

data points to a continued expansion what that could mean for interest rates. >> mum is the word cbs delivering a quarterly beat with les moonves stays silent on sexual misconduct allegations. and the trillion dollar apple. tim cook calling it a significant milestone. the question remains, who is next straight to the july jobs number 157,000 is lower than expected unemployment rate fell hitting 3.9. the near the lowest level in nearly 50 years. rising tensions on the trade war. china saying it's preparing to retaliate with tariffs on about $60 billion worth of u.s. goods. the tariffs ranging from 5 to 25% on everything from wine to agricultural, semis, chemical products and the revisions, by the way, may of '24 and june of '35 more than get to what you were

expecting for july. >> if you smooth it out in the first half of the year, we averaged 224,000 jobs per month. that's even better than 2017 it's impressive at this stage of the economic recovery. tenth year into an expansion to see that kind of jobs growth as far as the break down for the month of july, pretty healthy. saw 37,000 jobs created in manufacturing. construction was strong. services was lower but leisure and hospitality added a healthy 40,000 jobs. it doesn't alter the picture of a better economic recovery, a better labor market. 3.9% unemployment rate tells you the story. as far as the market concern going into the report, david, it would be a too hot wage number we didn't get that 2.7% year or yooefr doesn't really move the needle in terms behalf we've been seeing in wage growth it's not healthy enough. it's not a 3% number we want to see in terms of wage gain but as

far as fed policy and the market. >> not going to move the needle. i didn't see the ten year momentarily. are we falling below 3%? >> yeah. >> when you look at the overall average in 2017 it was 182,000 for the last six months averaging 221,000. it's pretty good you know, you go back 195,0 195,000 '16. 250,000 jobs a month in 2014 which we know is a strong year we talked about gdp from that year, as well. overall strength. >> sfrent. doesn't change the direction of the markets. what is more interesting, maybe, and we talk about it every day is the lack of concern about a trade war. i mean, the fact that this is not just noise, you know, how many strategists come on and say it's noise no it's tariffs being announced and probably see the impact and the jobs report because still early and, you know, companies are dealing with the shortage of

workers anyway but it's interesting that the market just brushing it off. yesterday we closed positive. >> i completely agree. it's part of the conversation i have with at least a few people i was able to reach this morning being a summer friday. but people who are market participants say it's surprising to them. more tariffs no impact. nobody cares. >> they care in china, i will say. typically people care at some point. it's how the market seems to react to these things. >> i've heard two big excuses. one, even if they go into a fact they're going to be short term they'll get reverse before the midterms and before a major economic impact. and the other is just so far what we've seen in the small component of the u.s. economy. >> very small. meantime shanghai takes on the chin down 17% for the year shanghai lost the number two spot in terms of global stock

markets. back to japan. so they're feeling the pain. they reserve the right to introduce what they're calling new counter measures against the u.s. so, yeah, it's definitely a two-story day between trade and the jobs number. on jobs, manufacturing up 37 is the most since december. very interesting retail was relatively flat and as kayla pointed out, largely affected bit the liquidation of toys "r" us. some 32,000 jobs in the sales of hobby and goods and toys it's amazing one company could move the number. >> right it shows you have to smooth out the numbers and look at a whole and retail has been better this year than at the end of last year the manufacturing in construction numbers were particularly surprising in a good way because that's been a big contributor in the last few months so some economists were saying it would be a pay back in the sectors and they continue to hire

we've seen confidence levels very high from those industries. probably on some of the trump policies, which are intended to help our goods producing sectors. i think what will be interesting as we move to the midterm election is how the economy factors into that whole e indication route sers running an article saying that fund managers from fed rated, openen heimer are repositioning their portfolios and going forward cash ahead of the november 6th election in the idea that the democrats may gain power in at least one of the houses for congress. they don't think it will be good for the markets because potential roll backs of deregulation. >> right 97 days to the midterms. a special election in ohio next week could continue to set the tone david, cbs. >> yeah. more stories to follow there not much yesterday it was business, as usual, in fact, for les moonves. you see this morning the shares are down 1%. it was a strong quarter, though.

no doubt about it. mr. moonves lead the call, before jumping on, they made it clear mr. moonves would not be addressing his sexual misconduct allegations against him. >> in light of pending litigation and on the advice of counsel the call will be limited to the quarterly results of the company. >> and the analysts followed that to a "t." eight questions asked and none about allegations. or what is going on in terms of the lawsuit against controlling shareholder national amusement. i know you were on-air during the call. >> by the way. >> everybody was on pins and needles. >> yeah. >> and, you know, i think that, in some ways, encaps lates whul is going on business as usual.

it's not business as usual will it return to business as usual? perhaps. but there is still quite a few people, you know, anybody who is expert in this area has watched this kind of thing before they, to a person, tell me they simply don't understand how he can survive here one way or the other, they don't see how he can keep his job. i'm reflecting the opinion of so many people within the industry. with people who are expert on these kinds of crisis. it goes on and on. that said, i don't know what mr. moonves' intentions were earnings were strong the stock is down. revenue up 6%. eps up 8%. they're taking big game, as they have been and showing success in terms of their all access product and direct to consumer efforts saying they're going to

8 million subs for all access and show time ott product by 2019 moving that a full year ahead of the original target. and targeting 60 million subscribers for those two products by 2022 important metrics for them so, you know, these are things that moonves has done that typically people would be saying are excellent in terms of the financial health of the company. they're looking forward to a new nfl contract a few years from now. there's questions about their ability to compete or how much they have to pay and what that would do to profitability. so many questions when it comes to whshari redstone will do she's keeping it quiet. >> yeah. the guidance on the upfront is pretty strong. very high expectations for what sports bet willing bring some of the commentary bernstein said cbs gave a quarterly earn

that would have made cronkite proud. their argument if you lose moonves, a board that is left has fewer arguments against. >> yeah. i thought that was interesting i think it wraps up for a lot of investors just so many things unknowable here. whether it's the future of mr. moonves, i've said, so many people seem to think is not going to be long and then, as well, the continued dispute with the controlling shareholder and the desire on the part of the shareholder, still, to put the two companies together or move to replace the board. at some point, should that come up by the way, we should mention, though, the investigation ongoing they hired two well-known law firms so that investigation has begun. the question is how long it's going take to sort of come to any conclusions about mr. moonves' behavior. i guess there's a scenario you

can argue many of the charges or false or not seriously enough to rise to a level this board feels like he needs to leave and therefore would business as usual. most people find that hard to imagine. >> we were on site yesterday with larry he felt an independent board member should have gotten on the call and said here is an update on the investigation. you know, it's ongoing it's business as usual just to give investors a clue that the board is on top of it. >> yeah. >> i think there's some governance questions why did the board make the decision they did? what are they doing? how supportive are they of moonves at this point? where is the stated succession plan >> i agree with everything you said and what larry said i think there are a lot of questions. this is why you get to this. we're not getting those

answered they're key to the future of the company. >> the stock is trading at nine times earnings. >> journal has a big specie citing academics whether or not they withheld material information. we'll watch cbs all day. apple the first company to hit a trillion dollars in a memo to employees tim cook writes apple passed a significant milestone. we have much to be proud of, it's not the most important measure of our success financial returns are simply the result of apple's innovation putting our products and customers first and staying true to our values. interesting they chose to address it but a lot of discussion the times has a great interactive graphic of how many companies you need to cobble together in market cap i think it's harley, ralph lauren, macy's together are 3%. >> oh, wow. >> it gives you a sense of the incredible size. >> and a kind of statement you would expect from cook

at least acknowledging it. nonetheless, noting it as a number. >> in terms of his second place amazon market cap just below $900 billion google or alphabet $850 billion. it gives you a sense how the economy has changed from the exxonmobil and ge days that used to be the biggest companies. >> without a doubt i remember it well microsoft was among the biggest back then when it was exxon, microsoft, ge. sisco had a brief period where it was near the top. >> yes and the few that have done it overseas and lost it. >> yeah. >> badly. >> not lasted very long. >> apple had a lead for a long time mean tile, when we come back, the former chairman of the

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july jobs number coming in a bit below expectations market aiming for a flat open here joining us now to discuss the numbers and the impact is chief economist at grant thornton. i characterized it as maybe a headline miss but a healthy snapshot of the labor economy. do you agree >> exactly i think you accurately clocked the miss from toys "r" us in the loss in nearly 32,000 retail jobs i think the more important issue with this, i think, strong job numbers coming back professional hires nice strong manufacturing numbers. we're not getting the wage

gains. we're seeing many firms are taking what a pier paying job and splitting it into four lower skilled jobs which is holding down overall wage gains and seeing a restructuring in retail they're going to online. that warehousing distribution are jobs in many retail floor job the. they're removing the number of managi managerial it's not giving us the wage jump we would like to see. >> we don't have to worry about inflation getting too hot? >> well, that's right. i mean, americans today, you know, anyone can get a job no one can get a raise it's remarkable in july. average hourly earnings up that's per quarter in which u.s. companies saw a 27% ingagain in

operating earnings it's not good for workers but the companies are holding down wages. it's good for stocks and bonds. >> it's been a puzzle, diane why the wage number isn't rising some economists blame productivity overall, ceos are confident. we see it in the survey data we hear from interviews we have on cnbc. we see it in the economic report why aren't they paying their workers more why are they spending it on buy backs and dividends and cap x investing in the business and not into employees >> not even as much in cap x as we like. jason furman, who you have later, does good work with this. the bottom line is workers lost the negotiating powers they have it shows in the distribution of wages. there's a change in the structure of the job market that we're seeing now

lower wage jobs that is not helping as well. so i think we have a lot of factors coming together. we're going to see more inflation from the tariffs in the third quarter. many companies said they're going to pass along these increases in prices they're having to pay in their components of steel and aluminium. everything from cars, washing machine prices are going up, boating prices and iphones smartphones going up in price. all the increases will show higher inflation. >> yeah, david, we're talking about the rolling averages of headline numbers 224 over three months. even year to date is outpacing the last two years for the full

year is that indicative of a ramp up in job creation or not >> a little bit. it's bound to happen because you have the ramp up in job growth but companies are scraping the bottom of the barrel we saw the unemployment rate for high student drop outs failed by a record low if you move the economy to about 3% growth it hits. so we're going to see a struggle to find workers, particularly over the next year. >> thank you for weighing in when we come back, take a look at shares a take two up 13% premarket. on pace to be the best day for the shares in about three years. we'll talk about what is moving in some of the games that might drive growth in the second half of the year. futures trying to recover from a

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♪ each day, brings new possibilities. that's why you need a partner dedicated to helping your company reach its goals. u.s. bank -- the power of possible. so you're watching squawk on the street jobs friday, as you now by now the number 157,000 we were looking for 190,000 but upward revisions to may and june by 24 and 35,000 would, obviously, get you past the target that we were looking for for july wages, though, as sara said, is the number that most people are

interested in. it's about what we were expecting. >> on pace with the sluggish wage growth that is not keeping up with inflation and the economy. we should being a number around 3% we're not. on the plus side, for investors, that's a signal we don't have a big inflation problem and the federal reserve shouldn't alter the pace of interest rate hikes. two more expected this year. not a huge market reaction in the bond currency or stock market. >> but the same conversation for years now it's interesting to hear diane talk about seemingly structure impediments to get paid more money. >> they don't have the marketing power. >> yeah. i wonder what else is there, too. >> yeah. in the meantime, not as many impediments to raise higher prices at the grocery store or any kind of store, really. that's why we're looking at real wages trending below the flat line that's troubling. >> right people are going to have to deal

with higher consumer prices. it's not just tariffs. i mean, i got a lot of heat every time we talk about rising prices on commnsumers. there have been trucker strikes in places like brazil. but the tariffs are also having an impact. kraft heinz ceo was talking about that they have to adjust pricing because they have input costs with steel and aluminium, like a lot of other food makers coca-cola is going to be raising prices a number of these consumer companies are raising prices for whatever reason. that's a bit of a problem. >> the biggest real earnings slump for july since 2012. that's going to be a bigger and bigger story

[ cheers and applause >> let's get to the opening bell on this friday take a look at s&p on the left side of your screen. [ opening bell looking for the strongest day in about three and a half years four price target highs and we'll talk to strauss later on today not just demand for the games but also currency head winds, which is as much an issue for them as a lot of other companies. >> you know e sports is a big driver for that company. i know cramer, david, has been all over the e sports phenomena. that's what the companies are talking about. >> you prepared last week for an

interview we never got to. [ cheers and applause >> this is a growing business. i still come back to just time spent viewing and what it means for all people who are watching and playing these games because you have only so much time as reed hastings said, what are we competing against when he's asleep in when you watch games like this or the one we talked about as a global phenomena over the last six months. you wonder how much it's taking away from more typical viewing of our video or television, as we describe it. >> you can talk about it with strauss. this case their focus for fis dahl year 2019. >> yeah. keep an eye on faang

apple is the worse dow component. keep your eye on facebook up a little bit more than a buck. interestingly tom lee has a note out this morning just looking at the fundamentals of faang and how they tripled what the s&p has done argues all of faang benefitted from the advent of the internet. they got on the train at various points in time his new theory is it's going to be about millennial's faang. given the power that millennial's will have over american consumers spending. >> right i think jim did a deep dive on "mad money." i think he was one of the fathers of the name of faang what distinguishes them is the monopoly power they don't have a lot of peers and competitors. each one of these individual names. and so he says stick with it versus a win resort, for instance, which is getting fresh. these are companies that deal with a lot of competition. >> right and the times has piece today, guys looking at whether or not

the rise of super star companies, right, has been 3/4 of american industries been consolidated since 1980. whether or not you're left with the few big giants and that keeps workers from m migrating different jobs. >> right it speaks to what diane was talking about on the low wages which is where is a big source of job growth? the warehouses you know, this is is a completely different retail environment. completely different online environment. and that's where the jobs are. there's a debate that is much alive, i think, which is within the market technology is still the leader it's something changing. did the earnings last week mark some sort of turning period from growth stocks into value stocks. you know, the wage nuchl ever number today i think looked at if you saw hot wage number talking to stefanie link last night she was saying you could see the real shift into value

stocks you know, that would be a turning point in the cycle but with a golding locks type of number. >> hope springs eternal for that move and it seems to come for a week and then and very quickly and faang, once again, reasserts its dominance. >> best performing group of july was industrials. >> right and the banks had a decent, i believe, a decent week the banks benefit from that. sara, i'm going to get to a name i know you want to talk about which is kraft heinz reporting earnings sales rose 7.4% year over year organic sales down in the u.s. organic sales now 1.9% it doesn't sound great but it was better than anticipated kraft heinz saying positive things on the call in terms of its now in a position to drive

sustainable top line growth by year end and into 2019 so the stock is up the stock is up. their plans on mergers and acquisitions that we talked a great deal about certainly since the failed attempt to require unilever sometime back now. their inability to be hostile in any way has narrowed their footprint in terms of what they can look at. campbell's soup is referenced today at the new york post as a potential target. >> we went there. >> you know it's up 3% i don't know i don't know if the post story is correct i will tell you in speaks to people who are advising campbell, as it moves through this strategic options you know, they're what hopeful everything will be on the table.

there are a lot of numbers of the stock who have come down but on their call, sara, kraft heinz said, you know, we've developed a lot of knowledge after the heinz deal that allows us to be more confident. what assets can be turned around we know how to integrate faster with better understanding. the framework hasn't changed we like businesses that can travel key synergies we talked about this you talk to bankers and talk about campbell and kraft heinz, well, they crush a lot of tomatoes together is what somebody was saying. there's a lot of money that can be saved by crushing those. >> campbell's soup is not international. campbell's soup has brands

i think it's fair to say. >> sure and integrating some massive acquisitions. >> yep. >> the previous ceo implemented. they have a story about how kraft heinz passed on pinnacle foods. just did not see it as a good strategic fit or a good value. remember conagra bought pinnacle foods. but it's another example of a company of brands that are in the center of the industry and that's not where you want to be in the grocery these days just as far as the macro issues we were talking about on the kraft call prizing did rise by 1.3 percentage points in kraft you hear the ceo talking about the fact that cost inflation on many fronts has been holding back the bottom line on top of these weaker sales trends and the packaged food companies are dealing with, they're dealing with inflation and cost pressures and inputs. do they have the pricing power

to raise on consumers now which is something they have to do. >> right that has been reflected in kraft heinz performance. it's down 29% for the year. >> yeah. so, you know, it's a nice move up and moving higher as we talk about it now. >> a lot of commentary out of the number yesterday either about tariffs or price increases on the pack of tariffs and company's inability to pass along those price increases to the consumers. that will be one to watch. it's an interesting week for ipos sonos priced below the range at 15 versus a look at 17 and 19 was the range. they open at 33% on day one. and today adding another almost 5% to that a lot of discussion from the ceo yesterday on "squawkbox" saying, guys, market doesn't understand the story very well. but that's two pretty good days. >> hardware company, right >> yeah.

>> it's been a good year for ipos i know a lot of focus this morning. i think they have the pellton ceo on "squawkbox." >> right in the series f. >> yeah. >> positioning is not just a bike company or a machine company but media company. because they do their own programming, as well. >> argument is you don't need to buy the treadmill if you have a treadmill. you can watch their streaming content on your 60 inch television or your ipad. so trying to leverage the installed base of treadmills that people have. >> one other point i want to mention, it looks like a big loser is shake shack reporting earnings last night. the comp store sales is a big metric 1.1% in line with estimates. the stock has run up so much we were talking to nick of webbush he said he needed to see a 2% number because expectations were so high. that's set to be down almost 6%. >> dish. take a look at it.

it's had a terrible year, of course, the shares of dish almost up 10% this morning actually more than that. there are concerns about how much leverage they have. the move to take to building out the wireless business. they did have some subscriber losses but they were not as bad as people had anticipated they were declines, though, still. and, well, it's a case of perhaps the news not being as bad as we had feared. >> all the expectations gains on earnings let's head to the bond pits to check in with rick santelli at the cme group in chicago rick >> good morning. you know, if you look at the day, right now two years are unchanged. 10 year notes are down two year notes are down 1. ten year yields are up two you can see on the week and the day, there's not a lot going on except for the fact that we're basically at the top of ranges looking at one week of two year.

look at one week of ten year maybe the most interesting aspect of those is they had a very small amount of volatility around the employment data and indeed they drifted a bit on the long end after an initial uptick in yields but really not too much. yes the report was a little headline light when you take into account revisions and three and six month averages and what is going on with regard to manufacturing jobs, it's not a bad report. it certainly could have been better if we look at the dollar, it's been a great week. i like the 24 hour chart you see they've doubled touched. that's 95. traders really have that as a major pivot. not only for the day but for the week and maybe for the big trend, as well, you'll see on the next chart this chart starts in july of 2017 we are very close, very close to breaking out and testing those areas. believe me, if we start to trade much above 95.5 or so you'll see traders jumping all over that

move for more upside on the dollar finally, i can't show it enough. this is the dollar versus yaun we can debate why. we can debate how much is intentional. but right now the yaun is at the lowest level of the greenback since may of 2017. sara, back to you. >> rick santelli, thank you. bob is on the floor with what is moving this morning. bob? >> good morning, everybody happy friday jobs report was a little bit weaker than expected but i don't think it changes the narrative at all particularly for the fed and the probability of a rate hike in september or december. remember, there was upward revisions in may and june. we have a three-month average. that's pretty amazing for late cycle here i want to put up what is going on in china. even though the s&p is up this week and we have been short of shrugging off the trade concerns, the chinese aren't they've been having a tough time of it recently the shenzen, which is largely owned by retail investors main

land china retail investors is down lu8% this week remember the s&p is up 0.3% for the week china is clearly more concerned. a lot of people think may be the ones who blink first who knows. take a look at the sectors kind of mixed. the semis opened on the week side i saw micron a little bit weak but consumer stapes, industrials on either side of positive or negative so where are we? a lot of headlines this week a lot of news going on we summarized where we're at the main point about the whole tariff thing, selling on the trade fears hasn't been profitable this is a story for months now but we saw it again this week. i would note the vix is sitting near the low for the year. it broke below 13 a day or so ago. the market is not showing any tremendous fear. tech sentiment, i don't care,

it's bullish i don't hear anybody talk about getting out. we talked about small moves into value from growth. and we did see some momentum in the old value names. in the transports, in the banks and particularly pharmaceutical. for the most part, those have been fairly modest one we note is pharma it's been terrific pfizer had a great report. johnson & johnson spin-off this was the last 30 trading days what i would note on tech. look at the break down a little more carefully it's a fairly narrow rally in tech it's the only thing i caution people about apple is up 8% and intel is up 4% if you look at microsoft, advanced visa.

bakkt platform you'll can pay for starbucks using bitcoin. i think it's a fairly significant move we'll talk about it. when we come back, jason furman is with us. we'll get his take on the jobs number today, the economy, and new role examining digital competition. another look at the major averages here. bocehas gotten a 39 point un to start things off. don't go away. (birds tweeting) this is not a cloud. this is a car protected from storms by an insurance company that knows the weather down to the square block. this is a diamond tracked on a blockchain - protected against fraud, theft and trafficking. this is a financial transaction secure from hacks and threats others can't see. this is a patient's medical history made secure - while still available to their doctor at their fingertips.

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get back to today's jobs number 157,000 below expectations unemployment is down to 3.9. with us this morning is jason furman good morning happy friday good to see you. >> happy friday to you. >> let's talk wages, first you point out on twitter that it's a wage puzzle and one that i don't have the answer to you reference employment cost index, which is a little bit hotter with why the number today? what is going on >> we've seen average hourly

earnings grow by 2.7% in the last year. i think for the most part, there's an easy explanation. which is we have low productivity growth in the economy, and when you have low productivity growth, you'll have low wage growth. i think this is what a pretty hot labor market looks like in a world of low productivity growth i'm puzzled why in the last year or two you haven't seen a pick up in the wage number. it's possible just it's a bit mismeasured and look at them you see some faster wage growth. >> if it's not a measuring problem, what are the other potential answers? we talked to diane about structure changes in the way retail has changed and the job has changed if you work in retail is there something else? >> people are trying to understand is there something different about the way the economy is behaving today or the normal way one hypothesis is a lot of slack in the economy i don't see that another hypothesis is a lot of

inequality in the economy. you're seeing faster wage growth at the bottom than at the top. so i don't see that either what i think we're not innovating at the pace that we did, you know, 15 or 20 or 25 years ago. and when you're . you've seen a pickup in 2018 the pace of job growth is faster than it was in '16 and '17 the gdp growth is faster that's not a disaster. i don't think it's particularly mysterious we have had spending increases this year.

so you're going to get some short-term boosts out of that. how much further we have to go i would be shocked if we have more than a year of this pace of job growth and gdp growth because i think we'll run up against capacity constraints and we're still not seeing much of that >> what's going to bring it? i can make an argument ai, robotics, these are all things that are being introduced at a more rapid pace, including the coming of 5g, is that going to bring a significant uptick in innovation >> a lot of people are worried about the robots taking our jobs i think we should be worried about not having enough robots if we had more innovation, that would balance and be good for wages. i'm hopeful we get it, but i think we need an awful lot of it

to continue to push our economy forward, so i don't know what the abc nswer is yet. >> so you think we're going to be stuck with this wage growth for quite some time? it's not just today, it's been years since we have been asking this question. >> if you would ask for my best gues guess, that would be my best guess. we can raise the minimum wage, and there's other things we could do to increase wage growth, but it will be hard to get much faster. >> explain your role in taking on digital competition what's going on? >> the sort of the x chapter in the uk, asked me to lead an

expert panel to make recommendations to them about how to promote competition in the double digit at the economy. we'll be reporting back next year, trying to help consumers get more choice and invnovation in that important sector >> is this something that some might argue about google >> it's a whole different set of issues, and we'll come to our conclusions, i don't know what those conclusions are right now. >> thanks, jason markets's up 46, s&p's up 42 at this hour "squawk on the street" continues in a moment.

big show still ahead on this ld s friday, we'll check in with gom goldman's chief economist. "squawk on the street" is back in a moment.

good friday morning, welcome back to "squawk on the street. we're at post nine at the new york stock exchange. the s&p is down on a busy

friday >> the economy adding 157,000 jobs during the month of july. apple crossing a trillion dollar valuation yesterday >> and finally, sticking to the numbers, cbs leslie moonves does not address the sexual allegations against him in the company's earnings call. >> the nonmanufacturing service company. this is a definite miss in the service sector sequentials follows 59.1 remember, there's only been three numbers with a 60 handle and going all the way back to when this series existed we have deteriorated a little bit. on a weekly perspective, they're down close to unchanged.

meantime the jobs number up 157 as you know by now, below consensus, but positive revisions in may and june. let's check in with steve liesman in morning on both of those numbers. steve, i know the miss on the headline ism prices paid is definitely a beat. >> the manufacturing survey earlier this week did show some trade impact, but not decemberly this jobs report it's a stronger than expected weakly jobs number look at those powerful may/june revisions, it brings the average up to 24,000, that is a big number, and 10,000 more than it was going into the number. average hourly wage is up .2%.

several factors that may have biassed the number lower here that people are talking about. lay ya layoffs at toys "r" us folks, get the survey in before you go on vacation and a big decline in the education number much of the swing between june and july appears to be due to seasonal adjustment problems around the end of the academic year, so you may want to bring down june a little bit, july a little bit manufacturing, that is a very strong number, we keep going along strong there, temporary help, that sometimes tells us where things are going, up 28,000, construction is strong, and there's the complaint they can't find construction workers. economists caution, this month could be the start of a somewhat weaker trend

most folks see little reason for the fed to alter price hikes this year. >> when if at all should we look for impact from the trade tensions and the tariffs in terms of the company hiring? >> i think that's going to take a while to show up if they do show up. this round of tariffs don't affect the economy that much, but the next round you may see business confidence falling off. i haven't looked at the service sector reporting to see if that's in there as well. there's some concern that it may show up in the service sector. again, we're talking about 27% of gdp is the percent of trade, imports and exports together and not all of that is affected. we have seen that in some of the confidence reports so far. >> yeah, i mean, do you think

that's wise, steve, ultimately, investors have brushed off concerns and headlines about trade, and not just noise this week, actual tariff threats like we got from china this morning, like we got from the u.s. yesterday? >> i think that's right, sarah, i think that's the ultimate gdp effe affect so far is small, and i have said many times, how much it matters of -- if you're going back down to trend to 2% and you take off a half a point, that's a much bigger deal i also think that investors are not going to react until they figure out what the profit impact is. and companies have been enormously profitable. they're booking the gains from the tax cuts right now so it's a little bit hard for it to show up in the profit numbers and that's ultimately what's going to move the stock market when people are saying profits

were down x because of trade and a lack of demand at the consumer level. >> the automakers wasn't pretty. >> no, it wasn't and apparently it was mentioned a lot of the earnings report but you can make the argument that the earnings have been stellar and the muted response has been stellar so there's a lot to think about. keeping our eye on apple this morning, with the company hitting that $1 trillion valuation yesterday for the first time joining us to talk about apple's rise, former chief marketing officer of cloud based marketing advanced nice to have you here. whenever we get these milestones, it's an opportunity to reflect and look back maybe you could take us back to your days as ceo, the rise of

the pc >> in 1982, when i first drove up to the apple building in cou cupertino, and the building was very secret. with the development of the first m arkmac. steve jobs was the only person in the world thinking that the world of computing power for nontechnical people to be able to do really easy to do things on creative type applications. so the '80s was all about graphics, ease of use, and there

was almost a nine-year lapse for the power of computers to go beyond graphics because it wasn't until we got to the 1990s that we actually had the world wide web on the scale where we had to do memorized computer components so we have the power of making the macintosh, in the late 1990s, to come up with the ipod. and then eventually it coast stecoast - cost steve's latest vision that we went from 2g networks and 33g networks with the advancement of the camera on the smart phone. we're going to get some of these

events again in the next five to seven years when computers get incredibly powerful with augmented really and artificial intelligence >> we at this desk talk a lot about the pace of innovation of the hardware i wonder which you think is going to be more potent over the next three to five years was services a significant topic of discussion in your time there? i know it's a long time ago. >> well, services really weren't. remember, when i was there, carl, there was no world wide web, it did not exist. there were no cell phones even at that point in time. no digital cell phones, so no we didn't think services, nobody was doing services models, it was all about selling preapplied

software we have to say that tim cook has done a brilliant job being able to adapt to a slowing growth for smart phones, including the iphone and being a i believe to manage the profitability of the cash flow, at the same time, he's showing real growth and innovation with the services so hats off to tim and what he's accomplished >> when you look at the services app, what's coming up in the first? is it 5g, 3g enabled the actual iphone to do all the things it can do today >> i think it's all of those things, what makes apple different than other high-tech companies, i think tim cook has done something that really is the next step that's beyond what steve jobs did steve jobs created a loyalty with users that is unparalleled

in the world what tim cook has done, he's built a loyalty with shareholders a shareholders and he's done it with the high prices that apple charges for its products, which he's earned with its apple reputation, with his product reputation and he's build a brilliant business model, he's buying back stocks, about $100 billion of stocks this year, he's has a huge reservoir of additional capital, he gives out dividends. so he doesn't have to be on the bleeding edge of innovation. remember, he's valued as a growth stock so he's positioned the company well, so he doesn't have to make a bet on does apple go out and buy tesla and things like that he can just watch the scale and

see what's going to be important and adapt to them. >> it looks like there's th this ---microsoft, google parent, alphabet and microsoft do you have a guess who's going to get there first >> i think apple has about 10 times more cash than amazon. i think jeff bezos is the most creative ceo in the world right now. but he's valued as a growth stock, not a value stock the way apple is, so you're betting on jeff's brilliant to continue to open upnew lines of business in the case of microsoft, there's been an amazing turn

around, and the new ceo has come in and completely redeveloped microsoft. google is in a very strong position so you've got some great companies out there. my guess is the next one to go over a trillion dollars is amaz amazon >> john scully, former ceo of apple. when we come back, cbs reported that strong quarter, but all of that overshadowed by moonves not addressing the sexual allegations against him luist talk to "new york times" comnjim stewart. we're back in a moment honey, this gig-speed internet is ridiculously fast.

i know, right. we are seriously keeping up with the joneses. i know, right. we are seriously keeping with the anderson's. we are finally keeping up with the ford's. keeping up with the garcia's.

keeping up with the harvey's. keeping up with the wahh-the-wahh the romeros. carters. patels. the allens. wah... wolanske's. right, them. no one is going to have internet like this. no one is going to have internet like this. gig to more homes than anyone. not just the joneses'. over here. xfinity. the largest gig-speed network. despite the misconduct allegations facing les moonves, it was business as usual in yesterday's earnings call. les did take the lead on that call and did not address the allegations. joining us now, "new york times" columnist jim stewart. jim, a lot of people brought it up to me, in particular, one of your key contentions being, how could this board move against

the controlling shareholder if they knew this was coming. >> i'm kind of dumbfounded by that and we keep learning more information even since my column came out and now we're hearing that there was this complaint to the los angeles district attorney and at least some members of the board were told about that at some point as a board member, even if you say, well, none of this was proven, but the "new york times" was working on a story, the journal, but at some point you have to say, there's so much smoke here, we should at least be cautious by not doing any rash you don't launch a war with when your general is about to walk off the battlefield. and then finally, there's the issue of he knows, i mean, again, this is what's so

preposterous about the earnings conference yesterday, because he knows what happened. so at some point, you have to sit him down as a director and apparently some directors did and said what happened and what did he answer was he candid? that's got to be a huge part of the investigation. but his interests are clearly separate from the company and the shareholders yes, as far as i can tell, the ceo is still speaking on his behalf, representing him, as far as i know, he doesn't have his own set of lawyers, but he needs to distance himself from the company and the shareholders which is why every other company in this situation has put that person on a leave of absence >> i have talked with many inside the company, insioutside

company, that don't believe he's going to have to leave the company eventually and it's a surprise that a leave wasn't immediately instituted upon the beginning of the investigation. even though they have two law firms. >> those lawyers will do a thorough job you do have the dispute on the board, but i notice one of the representatives is overseeing that but i do agree with you, i don't see how moonves really survives this in the end, because by his own admission in the new yorker, something happened he did apologize for some kind of behavior. and then as i said, there's this issue of, has he been candid with the board about all of this and the indications to me is maybe he hasn't. and that's another serious issue.

>> let's talk about the board, because these people are not -- there's some pretty high profile members. former defense secretary, what do you think they're thinking, do you think it's a loyalty to les moonves or is something else going on >> i'm utterly baffled, because you're right, i'm still a professor at harvard law school. as are some of the governance on that board >> a lot of people won't to her and wonder what was she thinking, what was going on there? >> when you're new, you factor united states in yourself into other decisions that are being made here i think they were just buying time here, but why didn't they have a contingencies plan. they had at least a week when the new yorker was fact checking

with them. they could have at leasted a a law firm lined up. they didn't have a law firm on monday i'm utterly dumbfounded that they seem to be caught by surprise by something that was brewing for months and months and months >> one thing that's interesting is analysts failure to ask about this during the call. >> my first reaction was, this is why you need reporters. >> i totally agree. >> analysts just don't ask the tough questions. wouldn't you think just out of curiosity, maybe not asking what he did necessarily this is highly material information that is more important than the future for investors right now than what they're doing with over the top subscriptions. >> and this is despite what we're -- we're at pretty good

numbers for cbs. let's talk about delaware, as of now at least, it seems as if they're still planning on going to fight in delaware even as you say some of this board may actually be questioned on what seemed to be their loyalty to mr. moonves above the company. how do you see this playing out? >> this is all going to be appearing in the court case, i'm hearing that in the document production for this case are lots and lots of emails being discussed among certain board members, august of this is going to come out. what moonves did a decade ago is not particularly relevant to the somewhat more arcain issue of who has the rights, what are the rights of a controlling shareholder. but in practical terms it's going to have earning to do with it because the whole underlying basis of this suit is the division between moonves and

sherry redstone and if moonves has a cloud over him and he's out of the company, really the dispute doesn't exist anymore. >> i wonder if we're going to see the first company to fight the me too allegations i mean there's something going on here between the cbs story and what happens with this, there's bad behavior everywhere, this surely isn't going to be the last >> i think you're right. at some point we all know this pendulum is going to go too far, and somebody's going to get caught up that shouldn't be, but if somebody's going to go to the mat with this, they've got to have very good people on their side forget that while the los angeles district attorney didn't follow upping on the case, that was only because the statute of

limitations had run. and in the court of public opinion, there is no statute of limitations. >> are we not agreeing on some period of time where it is truly irreleva irrelevant >> what i'm saying in the court of public opinion there's no statute of limitation, so it's hard put a time on it. b >> and we have made the point, jim, in very few of these cases, this has not been isolated behavior it's typically more reflective in a pattern that we found out over a period of time. but it's as good a bet as any. >> as these investigations continue, there may be additional lawsuits appearing against him individually but this is all going to get

hashed out all of this is going to be coming out in lurid detail at some point, from what i read in the article, it's not -- technically whether it amounts to assault or something. still, it's a horrible story i feel bad about it, because les moonves is much loved by many people, and has done a great job at cbs things aren't always black and white. not every accused sexual predator is a harvey winestein >> thank you always appreciate you weighing in jim stewart. coming up, an $18,000 raise, that's what lowe's could have given workers if they didn't buy back their stock stocks are higher, dow's up almost 50 patients, s&p is

up .2% more "ua othstetwhsqwkn e re" en we come right back

taking a look at apple hitting a trillion dollars >> it's really driving the biggest and most influential stocks in the market and over the course of the past year to date period, technology has brought a broader leadership role outside of the megacaps that we have talked about. if you take a look at the s&ps that track the tech sector also the investco, ticker ryt, so far year to date, performance has been pretty much in line up over 13% over the last month, we have seen a little bit of outperformance by a little bit more than 2% there

that's thanks in large part to better than and at least average performance from the apples of the world, the alphabets and microsofts and so on and so forth. so you can see in that chart, big moves. a couple of other interesting moves that will be key to watch, smh, as well as the first trust cloud computing etf, that ticker skyy, to see if anything relative or strength wise to develop with these stock wise. as we talk about, the tech sector, the key industries could be those cloud computing stocks. good morning, everyone here's what's happening at this hour, secretary of state mike pompeo meeting with his chinese counterpart wang li for sideline

takes before the meeting in singapore. he thanked the asean's support >> we appreciate asean's ongoing effort to promote stability firefighters fought the mendocino fire the fire has grown to more than 10,000 acres and that fire is only 39% contained. some areas saw up to five inches of rain in a three-hour span, resulting in flooded roadways, unfortunately, more heavy rain is expected. you are up to date, that's the news update this hour. >> sue, thank you very much.

as we head to break, take a look at shares at semantech after cutting it's guidance, it's announcing it's cutting 8% of its workforce dow is up 76 points, it is jobs day, that means goldman sachs chief economist jan hatzius will be here after the break when we come right back.

about an hour introtrao tra and things have improved since the open the dow is up 80 points, the s&p

up .25%, nasdaq is up .14. nasdaq set for a fifth weekly gain let's get back to the july jobs number, the u.s. added 150,000 jobs this week closing in on its lowest level in 15 years. goldman's chief economist is here you think the report indicates a faster underlying rate of growth >> i think the averages have picked up both the 3 month and the 6 month are under 120 k and if you add that factor with toys are -- the drop in the employ rate wasn't due to weaker labor

force participation. >> and july is historically weak, as i understand? >> well, yeah, although they do seasonally adjust these things and so i would tend to take this as face value in terms of the seasonal adjustment. >> interesting and moving to wages. your take on that? >> no real news on that. it was a little bit stronger than we thought. we expected a bit more than a negative calendar effect so if you're looking for the timing of the month, maybe it's a little bit stronger, but nothing major in terms of the wage numbers overall, what we're looking at here, is a very strong jobs market, very rapid employment growth, stabilize the jobs rate which was in the low 100s. >> 10-year yield went back below

1% this week and it sitting there. if you ask people about that, you get 100 different answers. how does it relate to the u.s. economy? >> it has moved higher over the last couple of years as the economy has strengthened that said, i think you look at the long-term, you know, the term premium at the long end of the curve is still very depressed. central banks around the world are still buying, the bank of japan, still running a very easy monetary policy. ecb hasn't stopped the monetary policy yet i think all that has something to do with the very flat curve at the long end. but we have seen increases that are pretty sizable relative to where we were back in 2016 >> barring any warning signs for inflation so the fed should ignore that? >> you should look directly at

the break evens, between nominals and -- the fed has to be forward looking and has to look at what the inflation message is, but also what the jobs market message is and if you're still the fed looking at the nasdaq--so they still are going once a quarter in 2018 and 2019, we expect four hikes this year, four hikes next year and then you get into the 3s >> we talked this morning about real earnings power withering in the wake of inflation. does that have higher spending down the road or would you expect them to keep pace with inflation? >> headline inflation, as well

as core inflation due to oil prices, if that doesn't continue at that same pace over time, i think it will be close to 2% maybe the high 2s, or the lower 3s i think you will see some real wage growth, even though the backward looking numbers are solid. that's contingent on the energy prices not increasing at the same pace as the past year or so it's the rate of change that matters and that's a oneoff in that sense, so i think this whole discussion about, zero or negative real wage growth, it's true as a matter of fact, but it is a little backwards looking >> tariffs on $60 billion of chinese products as what point do you say, jan,

this is going to be a problem for the economy? >> i thinkthere is some evidence in some sectors it's already an issue if you look at the ism surveys both this morning's and the manufacturing survey, there is a bit more talk about concerns about tariffs. and if you have continued escalation, i think there will be some negative growth effects around the world i think they're probably going to be bigger in places that have large trade surpluses than in countries with trade deficits. because surplus countries are relying a lot more on exports. >> no, i don't really think so, because while you can -- you can want a scenario where things get significantly worse, i think the baseline is the impact from a macro perspective is going to be relatively muted there's something in the numbers, but we don't think it

undercuts a strong growth environment. i think the market has this broadly right. >> really quickly on the isms this week, slightly weaker than expected a concern for you or no? >> today's number was a decent sized decline. and we're probably peaking in terms of the growth numbers, i don't think we're going to be seeing a lot more 4% quarters. you know, the economy is doing well, and we're growing well above trend which i think is less than 2%, but maybe not at that sort of pace going forward. >> when we come back, take two shares way up on a strong earnings report, really the best day for these shares in a few years after the installment of the grand theft auto units

we'll talk to strauss zelnick in the next hour. dow is up 80 points. le. people who rely on us every day to deliver their dreams they're handing us more than mail they're handing us their business and while we make more e-commerce deliveries to homes than anyone else in the country, we never forget... that your business is our business the united states postal service. priority: you ♪

i'm going to talking about the ism today, we had an addition of 30,000 manufacturing jobs remember, even though that is true, we didn't see a terrific

ism number earlier in the week, but it was only basically at a 3 or 4-month low and it was still at lofty levels, which brings me to today's read on nonmanufacturing you have to go back to august of last year to find a lower dm number manufacturing is coming back to some extent. so how bad was today's ism nonmanufacturing pretty darn bad. i only got to see the headline on the flash this morning. and of course as you dig through it, there's every aspect that's important. if you look at business production numbers were down, new production as carl pointed out, were down backlogs were down

you don't want to see -- what's really interesting considering tariffs is the topic du jour, how does all that work in? one number doesn't change anything, but we really want to pay attention to close trends, because they've been going on a terror for the last six or seven months this series goes back to 1996. so we really have dpe tieterior bit. interest rates weren't that dramatically affected. they have drifted off a bit. quickly i want to go to this chart. this is s&p index versus 10-year note yields for the last 10 years. right in 2012, things change and to some extent we are.

but the problem is the divergence, obviously we could call that the fed spread and the interesting thing about spreads is that either they narrow or they widen most likely this is going to narrow >> all right, rick, thank you. let's get over to morgan brennan now for a look at what's coming up next on "squawk alley." >> it's a huge show on this friday morning, i don't know if you have heard, apple hit a trillion dollars this week and jeff bezos, becoming the world's new tech style icon? we got all thaand mt souch more coming up in just a few minutes on squawk alley.

is this at&t innovations? yeah, wow..this must be for one of our new unlimited wireless plans. it comes with a ton of entertainment options. great, can you sign for this? yeah. hey, uh.. what's in that one? that's a shark. new and only with at&t, you can get unlimited data, 30+ channels of live tv, and your choice of things like hbo or amazon music. more for your thing. that's our thing. visit att dot com.

chevron, starbucks, qualcomm and apple, am hitting $1 trillion, part of that thanks to the initiation of buybacks at

that company part of the phenomenon of research that could be quote starving the economy that's according to our next guest, andy lowery from "the atlantic." buybacks starving the world. do you really think the popularity of buybacks is hurting the academy. can you explain? >> yeah. it's a pretty complicated phenomenon you hide corporations hiding 7 trillion dollars in buybacks, they're currently spending hundreds of approximate billions of dollars a year on buybacks and that might be down streaming corporate investment and gdp and wages. this is a relatively new thing, subject of a lot of research and debate nevertheless, obviously, the movement from providing things like dividends to buybacks seems to be having a broader economic effect both in terms of wealth

and other important numbers. >> i would imagine they are more tax officiate and other reasons why the company elects to do that i guess it gets back to the fiduciary responsibilities to their shareholders >> yeah. this is great for shareholders, obviously. these companies are very very profitable they're sitting on huge piles of cash this is a tax officiate thing to do from the corporate side it makes a lot of sense you would go ahead and do this. these were effectively barred until the 1982 sec rule change again, there is some evidence coming out of financial economics right now it might be better for the economy much more broadly to distribute this money in terms of dividends and encourage companies to reinvest it more. why they're not doing that is a complicated thing. do they not see enough space for investment are there tax and regulatory

changes that might be made i think you're right from the corporate perspective why you would do this is obvious. this has been great for shareholders of any number of firms. >> we made the point here many times, of course, it can have the impact reducing the share account, therefore increasing earnings per share by which some ceos are measured in terms of a metric for their compensation. that said, annie, it's not clear to me and i'm curious if you have evidence were there not significant buybacks the money would not go to increasing wages for employees or cap x given those decisions are made in the world depending which these companies operate how they want to allocate capital to stay competitive. >> absolutely. you run into a frustrating chicken and egg here companies are very profitable, in part because labor costs are relatively low if you had a legal and regulatory environment in which the labor costs are higher

perhaps you would have less incentive. you look at the work of some economists, they would say this phenomenon is sxigs existing at same time you see this and the buybacks have been so big and decades concern this are distortive, and you're seeing a lot of research and growing concern. obviously, democrats are considering legislation, they're not in power right now, considering legislation in the process for the future that employees are the ones getting shafted here >> interesting you talk about you can spend your money on a buyback or build plant. that takes time with architect and people and takes time, not in a buyback you would think in this

deregulatory period we're in that would shift back. do you think the trade discussion or something else is clouding what should be a natural migration. >> absolutely. we now have evidence and have had evidence a long time starting before donald trump's tax law passed, companies were planning to use the cash they were going to save from the tax bill actually on buybacks opposed to investment. the economy is obviously running pretty hot right now companies are investing, unemployment pretty low, but you have dark clouds on the horizon. given the tax environment. there is this encouragement to do that. we now know the trump administration is contemplating another change to change capital guidance and taxation rates and probably encourage some of this. i think that that -- you know, the numbers cited in my story were actually before the tax law

passed but since we've seen that we've seen roughly 60% of the savings from the tax cut on the corporate side going straight into buybacks. >> a lot of this gets to this larger question sara raised, what is the true responsibility of a corporation it's a worthwhile debate there was a time perhaps many years ago many people thought corporation had as much responsibility to its workers as it did to its owners that may have shifted over time and perhaps will shift back. that seems to be where all of this is centered in terms of a debate, isn't it >> yeah. absolutely we could sit here and talk about a week on short termism and long termism on wall street to encourage companies in the long term, a major source of concern. going back to changes democrats are talking about, asking for representation on corporate boards, that kind of thing,

along with changes to perhaps again encourage dividends opposed to share buybacks folks are talking about. buybacks is a short term way to make shareholders happy but not be better for the company long term. >> annie, i have a feeling we will hear more about this going into the next presidential election annie lowerey from the atlantic. >> the first crew of astronauts going into space later on in the "closing bell" we will have our o cwnrew of astronauts join us for the future of space travel and how viable it is. the dow is up 57 points. eligible for medicare? that's a good thing, but it doesn't cover everything.

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good morning, it's 8 atm a.m. at apple headquarters in cupertino and 8:00 a.m. at our headquarters and "squawk alley" is live. ♪ ♪