we'll show you the highlights including whiskey, weed, and a samurai sword. september 7, 2018. "squawk box" begins now. dan loeb reportedly wants to ♪ good morning, everybody. welcome to "squawk box" live from the nasdaq market site in times square i'm becky quick along with joe kernen and andrew ross sorkin. dow futures indicated down by 40 points the dow has been up the last two sessions the s&p 500 and nasdaq both closed down. this morning red arrows there. the s&p 500 indicated down another 5 points the nasdaq looks like it would open down by 19 points if you look at what happened

overnight in asia, you will see the nikkei down by 0.8%. the hang seng was flat the shanghai was up. the nikkei has been down for six days in a row. in europe, red arrows across the board. no massive declines. cac is off by 0.2% the dax in germany down by a third of a percent when you look at treasury yields, once again ten-year still below 2.9% 2.886. >> did you hear this song? the song at the top of the show? >> one toke over the line? >> a thousand dollars -- >> who plays it? >> i think i know this >> then i won't give you a thousand dollars it was from my era you know what it means one toke over the line >> one puff over the line?

>> the same as a puff. the toke is marijuana. and the song was written after they had one too many tokes supposedly they viewed it as a sacrament. >> going from a good high to a bad one? >> playing this for elon that will be one of the stories we'll talk befoabout. >> that's in a moment. we have to do trade war. >> have you seen the video >> let's talk about the trade war, then the elon war, which may emerge after that. president trump telling the "wall street journal" that he will take his trade fight to japan next freeman said he received a phone call from the president in which trump described his good relations with japanese leaders but says that will end as soon as i tell them how much they have to pay. taking it to them there.

third point led by dan loeb looking to replace the entire board, not just one or two, everybody at campbell's soup news of the fight could be announced as soon as today third point has been pushing for a sale of the company. they face a tough hurdle, the descendants of the founder own about 40%. third point has teamed up with one of those descendants, george strawbridge, together the firm and strawbridge own about 8% of campbells shares >> is this because campbell's decided to sell aspects of the company instead of selling outright >> for the past decade you would always hear rumors that campbell's was going to be a target or was going to sell. they were always supposed to be involved and they never were

the question is whether the company has -- i don't want to use the word devolved, but has had the challenges its had as much as it has had, and that has led to dan loeb thinking there's an opportunity whether there is or not, we have to see. the head of comcast, brian roberts, says he is disappointed with the reaction to his decision to walk away from a bidding war for parts of 21st century fox. here's what mr. roberts said to jim cramer on "mad money" last night. >> that's one of my disappointments this year, is that fox and sky, driven by rupert murdoch's decision to sell the company, not our desire to change who we are, why wouldn't we look at it we found it was undervalued. we put in a price, disney offered more and we walked away. people took that and made a narrative that said we didn't love our core business when in fact our core business is having a renaissance.

roberts touched on the company's next steps and where he is looking for new opportunities. now to elon musk watch this exchange as joe roggin lights up a blunt with musk >> so, is that a joint or is that a cigar >> no. >> okay. >> it's marijuana inside of tobacco. >> so it's like part tobacco, part -- >> you never had that? >> i think i tried one once. >> come on, man. you probably can't because of stockholders, right? >> it's legal, right >> how does that work. do people get upset at you because you do certain things?

it's tobacco and marijuana in there. that's all it is >> that's become a giff on twitter. dom chu has been up and has the highlights and potentially the lowlights as well. >> a giff, a meme. i'm kind of looking -- i checked youtube right now to see how many views this thing has. it's one of the most -- the joe roggin show is one of the most popular podcasts in america. right now the video version on youtube has about 467,000 views. like you said, a 2 1/2 hour interview. the weed smoking aspect was just one of the things that got so much attention out of this interview. one that shed a lot of light on elon musk as a person outside of his role as the ceo of tesla and the founder of the boring company and spacex what it did do was give more color and

insight for those out there in light of the last public interview he gave, which is with the "new york times" in the midst of taking tesla possibly private where he made that 420 price tag and a maybe reference to marijuana in that 420 reference. he also spoke about some other things there was one piece of sound that might have gotten some interesting headlines. he did speak about the fact that running a car company in america is probably one of the hardest things to do he likened ford to tesla in one particular way listen to what elon musk had to say there. >> spacex is no walk in the park a car company, it's very difficult to keep a car company alive. it's very difficult. there's only two car companies in the history of american car companies that have not gone bankrupt, that's ford and tesla. >> all right

he went on to say 2018 is not a good time to start a startup car company, an electric car company. he called it stupidity squared there's any number of things you can go think he also talked about things that maybe investors and consumers are not seeing he says there are new developments in the tesla model s, x, and 3s that we have not seen yet so he's laying some easter eggs as well. >> he also talked about this idea of an electric airplane >> yeah. he said so many different things he talked about the boring company, about the fact it's hard to tunnel in los angeles. about the concerns over seismic activity he talked about the electric airplane the idea that we might all be living in a simulation >> he's been talking about that. >> he was not pushed on the take private stuff. >> no. >> or really anything related to tesla in any meaningful way.

>> correct >> i'm not sure if that's something we should expect out of the joe roggin show >> why did elon musk do this if you were an investor who woke up and saw this and you would be thinking what? >> it was on reddit, they were going back with different things i think my understanding was that he was fulfilling his commitment to do that. >> when you tell everybody you're working so hard, i'm sleeping in the factory, i don't have time to do anything, but you're spending 2 1/2 hours smoking weed and drinking whiskey? >> it didn't look like he was hitting that hard. he said i'm thinking about engineering stuff all the time >> he says he is an engineer >> i think it would be cool to think of the electric plane in that you would you need the

strong torque, burst of power but store up the electricity -- it's weird it's kind of interesting the other thing he said, you know i'll refer to you on this, he said when he smokes pot it doesn't affect him now, you know how strong pot is nowadays, right? have you -- >> i don't know. >> you don't know. >> let me tell you, compared to 30 years ago, anybody who says they smoked pot and that it doesn't affect them or they don't notice, maybe he's trying to say his mind is different than the rest of us. i don't believe that that's total crap. >> joe -- >> dom, you might lock yourself in your room and wait for it to be over. >> he talked about that. he said for the record that he's not a regular smoker of weed joe asked him how much weed do you smoke? he replies almost never.

he said i don't notice any effect >> i don't believe that. >> unless he hasn't smoked it in 20 years nlts or >> or he got ripped off and is smoking something else >> if you're an institutional investor, does this video -- is there a point at which you say, you know what? life is too short. i can't do this. >> the board asked him to stop tweeting you would think along with that would go with oversharing. it's interesting i'm fascinated by this there's 450,000 views already on this thing i will sit down and watch the rest of it that i haven't watched. i don't understand why now, given the timing and the questions. >> joe asked him what is interesting is sometimes you engage with people this speaks to the idea that he might be awkward in his interactions with people he responds back what percentage

of that is a good idea musk says good question. probably 10% so when he says one out of every ten interactions he has with people is productive or engaging, that speaks to his persona, his mindset right now >> what did he say with the flame thrower? >> he led with it. >> i'm not a fan >> you have ever used one? you might love it. >> it's not for me >> you never tried it? >> not for me. i think it sends all the wrong signals. i think there's lots of kids who want to get their hands on it. potential danger talk about the risk, he was saying 10% -- 10% of the time it's probably fine i assume there's other times where it's less. >> knives, you don't want to mess with those. >> or samurai swords that was in there. >> or a building above two floors is bad to go in

you could jump at any time >> we have a lot of risk managers who watch the show. >> you have to -- once again, it's not the flame thrower it's the flame thrower of the flame thrower, right >> yes and if you think about sort of who might be interested in buying a flame thrower -- >> all right all right. this is back to our -- any way i think the second amendment protects flame throwers. >> that was not the conversation it's about whether it's a good idea or not. >> dom, thank you. >> you got it. it's jobs friday the august employment report is due out at 8:30 a.m. eastern time joining us now is michelle girard from natwest markets. also jim o'sullivan joins us welcome to both of you michelle, what numbers are you expecting? >> i think we'll see another good report, 200,000 in line

with the year-to-date trend. all of the labor market indicators we've seen over the course of the month of august says this economy remains red hot. >> adp was light yesterday s some people say that's what happens in august. you get lighter readings that will be revised higher >> over the last ten years, 8 out of 10 times the initial print on august has been weaker by 40,000, then you get revised up by about 50,000 we won't discount that you have to take all these numbers month to month with a grain of salt. in july we had a disappointing report, that was due to the one-off factor with the toys "r" us closures. there's always noise in the numbers. we keep the three-month trend at about 200,000. >> we have lasalle coming on you should hang out to watch that he goes it sounded bad there's

no employee loyalty anymore, the reason there's no employee loyalty -- >> it's a worker's market again. >> you need to do more and more to retain employees by giving them the corporate culture he says he don't mean ping-pong tables and kegs. which i think is great >> you like pot, too >> yeah. so strong though and d andrew, am i right >> you're looking at the wrong person >> you mentioned in the lead-up, the shortage of workers and the difficulty they're having finding workers. >> jim what you a, what you areg for. >> i agree the trend is strong, but i think the august numbers tend to be weak. i've got 165,000 for today >> you think that's a lower number because of the august one-off or --

>> yeah. this is the technicalities yesterday you saw another new post 1969 low for jobless claims the ism employment numbers that came out this week were booming. i think it's clear the trend is strong and the trend has been 200,000 or better. i don't see any slowing whatsoever in the trend. i think the august number will probably print on the lower side >> you just lowered expectations now. they have to be 120,000 for people to say this is bad. >> against the back drop of the numbers jim talked about, everyone will be tolerant of an initial print that's low >> if it's 200 -- >> we see ongoing strength in the u.s. economy the august numbers, isms, consumer confidence, there's a resilience there even in the face of increased uncertainty. >> this is all happening before the "new york times" op-ed we'll see how that affects the

policies and the economy and stuff. that's not in these numbers yet. >> jim, if you see a strong number, is there a point where that good news becomes bad news because we worry about what the fed is going to do >> yes i don't think it's just the growth labor market side per se. the inflation side matters as well the average hourly earnings part of this report has become more important for markets than the payrolls number. so far the wage numbers have stayed tame. they've been creeping up a bit that's generally the trend i don't expect today's number to be particularly strong what you are looking for in average hourly numbers >> 2% year over year, the same as last month. these numbers are so hely driftindrift i drifting up.

what would spook the bond market more is a pick up in wages and the inflation numbers. >> people are starting to say it can't get better, there's only one way to go. someone yesterday talked about this is all stimulus it's stimulus when we have huge deficits, rates will go higher any tailwinds from the tax cuts will be thwarted by the higher interest rates >> i hear a lot of concern before living on borrowed term sugar high >> coming home to roost. >> we did a survey of our customers ahead of the payroll report some people put the estimate of a recession for 2020 as high as 40%. you see the markets pricing in the fed cutting rates by 2020. there's the feeling that this can't last because it's a temporary boost. i go back to it's important to think about the type of stimulus

we're seeing this is not the tax cuts to individuals putting money in their pockets. it's benefiting businesses which is leading them to invest and hire it's a more sustainable growth the stimulus, i think, can be sustained longer because it's fundamentally creating -- because we're so used to things. >> michelle, thank you very much >> thanks. coming up, reports now say ceo les moonves could be on his way out with a 1$100 million exi package as a salve to rub on the wounds as we head to break, a look at the biggest premarket pops

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welcome back to "squawk box. reports that les moonves may be on his way out of cbs boosting shares of the tv network he could receive a nine-figure payout if and when he leaves cbs. joining us is the author of "the king of content. so, state of play, where are we? >> there are two sets of settlement talks going on hot and heavy now. one between the board and less mo les moonves and his team, it may come together with a big bow >> to put this in context, one piece of this settlement is related to the alleged sexual

misconduct is that playing into this? one is the future of whatever you think cbs is going to do under national amusement with or without viacom >> it's not just the alleged misconduct that is pushing les moonves towards these exit talks. that's the biggest thing >> but is that a bigger piece than -- by the way, putting -- even if that wasn't on the table, there was a question of who he would end up staying at the company. >> absolutely. he is 68years old, there was a question of whether he would stay or not any way. >> for so long both investors and analysts said that les moonves had the magic gut. you needed him he was the value proposition >> there are two reasons why the stock went up. one is the resolution of this cloud hanging over the company

the other is that as we reported one thing the board is asking for is more autonomy from national amusements. they want to be freer to seat belt company t the company. the independent board members, what they want national amusements do is basically change the trust that would present the company from being sold to a large company. so one of the -- that's one thing that would make it easier to sell. that's what increases the value. >> the skill set of what it takes to run cbs at this point is totally different than when les was in his heyday, isn't it? i remember reading some of the testimonials for example, william peterson. he signed william peterson long before "csi" he was going to use

him in the magic gut he signed him and it became the biggest hit out there. that's not the landscape anymore. you have to be totally different to run cbs you don't just program that stupid main network cbs with serials like "law and order. that doesn't work anymore. >> that's the main business, though cbs unlike other main business companies is the main business >> keeping "survivor" on for 36 years, that's a magic gut? that's a genius? >> it's been successful for them in addition to that, what he's been good at is getting this transmission revenue which is negotiation he's a hard-edge negotiator. that's why he has gotten more money out of it. >> handicap where this is headed >> most likely he is going to leave. >> he leaves, the company remains independent or he leaves and the company gets merged with

viacom >> on the table also is a two-year standstill and that's a long time in this current media environment. >> all of that, the two-year standstill, the idea they'll have more autonomy, how much of that is wrapped up in les moonves himself leaving the company? >> i think none. >> they're separate. >> i think everything i hear from my sources is that they are truly separate one is about a controlling shareholder. this whole me too thing has been embarrassing for les he wants to go >> the other piece is this claw-back provision. if he is paid 1$100 million in cbs stock which has been reported, potentially. the idea is that some of it could be clawed back -- if the investigation -- the independent investigation finds misconduct or is it if there are lawsuits what would trigger that? that's very complicated, too >> that's the independent

investigation, which these investigations could go on a long time. that makes this so hard. so if she find egregious misconduct they can claw back some of that money the board is liable. they have a lot of legal vulnerability to shareholders if they give this guy a bunch of money and he turns out to have done a bunch of bad things >> i'm sure he wants 100 million, but he's been making 50 million a year for ten years at least. >> more than that. >> you said nine figures it is nine figures that's such an unbelievable number that will never impact us unless we start getting paid in yuan or yen, we will never achieve any type of thing like that nine figures six is a hundred nine is a million. eight -- >> hundred million >> that's a hell of a package. >> you can poor mouth yourself, but the rest of us -- >> you're young. you're young if there's inflation

really bad inflation, you might get there. >> thank you very much >> thank you all right. we are remembering a hollywood legend burt reynolds passed away at the age of 82 with his family by his side he's survived by his son reynolds was the top grossing star every year from 1978 to 198 1982 i will remember him in "deliverance." some people liked "smoky and the bandit." and later he kind of made a comeback with "boogie nights" and mark wahlberg. that was amazing do you remember the cosmopolitan cent centerfold >> it was -- >> was it play girl? i think it was cosmo

>> i never actually saw it >> he was it for a long time by fort biggest star in hollywood. >> lonnie anderson, his marriage to her >> sally fields. >> he said if there was one person he really loved, it was sally field. >> exactly >> you heard of him, right >> yes >> all right you're looking at me you never know millennials. >> i'm not a millennial. >> i think in spirit that -- >> no. no >> no. i'm far off. >> can i think of you as a millennial >> i don't even think i'm genratioge generation x >> you're generation triple x in my view. >> i don't know what this means. >> job opportunities in the manufacturing industry, we'll talk to the ceo of staffing firm lasalle network about the search for skilled networks and how tough things are getting as we head to break, a look at

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broadcom's quarterly profit beating forecasts. shares are up 5.1% gamestop shares are lower after earnings missed forecasts on weaker same-store sales the company says it continues to explore alternatives including a possible sale. that stock is off by 3.6%. shares of iag are being hit hard today in london the airline ceo says they notified all affected customers following a data breach of its website and mobile app financial data was stolen from potentially thousands of customers who booked flights online in recent weeks if you look at the broader markets, we are also in the red on the u.s. equity futures at this hour, dow is down by 22 points s&p 500 is off by 3.5.

the nasdaq off by 12. the manufacturing sector is humming along thanks to a boost in the economy and a demand for workers is on the rise kate rogers is in twinsburg, ohio this morning for today's edition of "help wanted. >> the manufacturing sector is humming along, adding 380,000 jobs since president trump took office the manufacturing institute projects there's about 500,000 roles within the industry that still need to be filled, which is why companies like rockwell automation are looking to hire here employees are taking part in what is called modern manufacturing. making things like program logicon trologi logic controllers which are mini computers. they are looking to bring in skilled and unskilled workers and bring them up to speed >> we want to bring in people that we can train. because of our robust training process we can bring people in

with no schools, they get certification and go through various processes in the plant and get more certification >> rockwell is looking to bring in about 140 people in manufacturing roles here in the u.s. they offer things like healthcare on day one. they also offer college tuition reimbursement. overall average pay within the industry is about $80,000 a year like many manufacturers, rockwell recognizes your best future assets are the people you have here in the building. they're investing in them. looking to retrain them. upskill them and keep them in these roles for years. back over to you >> okay. thanks, kate joining us now is mr. gimbel, founder and ceo of staffing firm lasalle. don't know whether you heard us when we were talking about michelle girard when we were talking about the number

this is not something we typically see. talking about employee loyalty we haven't seen this in how long >> decades >> they have to cater to employees not only to get employees but retain employees >> you kid andrew about being a millennium there's that conflict of what millennials want and what employers think they want. there's a disconnect there what millennials want is transparen transparency the biggest difference between a startup and a fortune 500 company is you're sil lowsolod g company. if you leave college and join apple, what impact are you having >> is that the end of big companies? >> no. but don't you think the same conversation existed 50 years

ago about big oil, general motors, ford the difference was they stayed in their lane. they stayed in oil they stayed in automobiles 50 years ago if they said we need go into different industries, they would have dominated the economy. >> to me the distinction is how long they're willing to stay in any one place. the loyalty factor is a real distinction. >> no doubt about it but i believe there are geographic aspects to loyalty. it's less on the coast more in the midwest. >> so there's more loyalty in the midwest? >> i think so. you go to san francisco, l.a., seattle, it's understood and expected that it's okay to leave jobs you grow up in the midwest, you go to college, you come back it's not that way for everything else even on the east coast where you're so financial services oriented, you rise up the traditional ranks to become a partner, a managing director is it is not that way on the

west coast >> you make the post that they have to like the culture companies have to work on culture to retain people >> if all things are equal, if every tech company has farm to table cafeterias, they all have their dogs at work, everyone can dress casually, it's neutral everything is even how do you keep them >> you said ping-pong tables and kegs don't work. you can play beer pong >> you and i both went to colorado, of course it works for us but the issue is if everything is on the fun side, you have to give them different experiences. are you challenging them are you sending people overseas to give them exposure. the issue also is -- andrew, you said people leave jobs at these tech companies if the perks are so great, why do they leave? if you're in the valley, there's a billion start-ups.

you can hop from place to place. if you're in the midwest, you may not have as many things. >> in chicago, you have a lot of startups, but it's not the coast. silicon valley, boston, new york will always be those >> the question is should employers turn themselves into pret se pretzels doing back flips to serve and placate this new culture shift or are they doing too much to placate this new culture? is it about clplacating? >> no, it's a shift. what happens when unemployment goes to 5, 5.5, 6 then it switches the input for employees more than ever is training and development. >> the bottom line is it's an employees market now >> at the moment with the quit rate being so

high, it is. but there will be employees that quit voluntarily and things will shift at some point in time. they'll be left holding the bag. >> make sure you have a seat before the music stops playing >> that's right. there is still a great employer/employee relationship and there's so many companies -- apple and amazon did not get to a $1 trillion valuation but having their really great people leave. >> all right thank you. >> thank you >> you were in sewell? >> i was you were a business major? >> let's skip over that for a while. i was a sociology major. we're both here. >> we are. i know what happened? coming up, fda commissioner scott gottlieb causing a stir in the alternative dairy industry when he says an almond does not lactate. he will join us to talk about how we label milk. i have a million questions about

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all right. welcome back hasbro was hit hard by the liquidation of toys "r" us and it is hoping the movie business will ease that pain. the company launching a film division mattel is going to be looking into developing movies based on its brands including hot wheels, poly pocket and barbie mat tell pl mattel plans to follow the lead of hasbro. and speaking of film, the academy of motion picture, arts and sciences has announced it will not present a best popular film oscar this year that category was announced last month but it got lots of backlash the academy did leave the door open to presenting such an award in the future but that the academy thinks it merits study

>> did you ever hear actors and actresses talk about their craft? you can't do a most popular film but they might need it because their ratings are pathetic coming up -- >> you watch those movies. >> we watch some movies. >> i go back through >> i won't watch the oscars. >> but getting a nomination makes it more likely that people will watch it. >> we know what's involved in getting there. >> nobody wants to see how the sass saj g sausage gets made in any of this >> the money, promotion. the ceo of campari is here we did that. campari and soda in the afternoon. >> we can't smoke a blunt on the air but we c danrink a campari >> we can smoke one. you have one

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♪ have a drink on me ♪ yeah, have a drink on me time now for the squawk ceo call, and we are talking cocktails and liquor sales this

morning. you brought drinks bob consowitz, the ceo of -- you brought drinks. >> this is the spritz, the number one cocktail in italy, one of the fastest growing spirits brands in the world. >> and we can drink this all morning. what's the alcohol content >> it's about 8%, 8.5% mine is around 12%, 13%. looks great, tastes great, it's refreshing. >> the liqueur is 8.5% >> 11% there's a little bit of soda in there, and it makes it lighter. >> orange slice, like a campari and soda, except it's not exactly the same. >> no, no. >> if you want to get it a little bit more potent, you can put some perseco in there too.

>> there is some of that in here too. >> organic growth up about 5.5%. but you're getting hurt on the exchange rate. that's something that's hurting the business >> well, you need to think of it long-term, since we ipo'd the company, we've been delivering 15%. this is the best performance in the spirits industry a came controls the company. >> right. >> so we think long term those little short-term effects doesn't take us from our goal of actually doing some great brand building. >> in terms of this brand, but this has been built, by the way, it feels like, off the back of social media in a way that maybe some of the others have not. >> it looks like an overnight success, but we've been working on it for over 14 years. when we bought it this was a tiny, tiny regional brand northeast of italy, around venice, and we've grown it 14,

four since, very popular all over the world. >> speak to alcohol and social media. it feels like that has been the revolution, if you will, in terms of how people feel about marketing. >> to a certain extent but the model here is actually to run a lot of events and get liquid on lips because people love it and they actually start posting stuff. so they great the content. >> we've heard some stories recently about how millennials aren't drinking spirits the same way that older generations had how do you combat that what do you do >> well, we've got a very broad portfolio, so we're basically in every single category. and to a certain extent, we're also very privileged, brands campari and opolo, these are special brands none of our competitors have them people are drinking this, but drinking better. there are two trends, the classic cocktails, which are

usually heavy from an alcohol standpoint, or the light ones. >> you don't have activities by the next morning, i can tell you, right >> well, if you pace yourself. >> if they're this good and this sweet, i know there's come uppance usually the next day. >> no, you have no issues. >> no? >> no. >> speak to the issue of other business, a lot of consolidation, are there components of the business. >> we expect to generate half our growth m&a i've done 14 deals since i'm ceo in 11 years. our industry is extremely fragmented if you look at it really the hard facts, the top ten companies represent about 15% of global volumes, 20% of value so there's a lot of great brands out there which are still family

owned. >> how do you think about beer >> that's a completely different business but the great thing is that beer is a source of business for this two-thirds of the consumers drinking spritz come from beer one-third come from champagne and sparkling wine. >> thank you so very much. bob conzowitz. >> i saw that in the prompter. they spelled it out phonetically i thought they doubled the beginning because they put that word in. >> that's why people call me bob. when we come back, fda commissioner dr. scott gottlieb causing a stir in the dairy industry when he said an almond doesn't lactate, how we label milk. later today, tax cuts 2.0,

house ways and means chairman kevin brady will be here to talk about the potential for more tax rerm, fo8:15 a.m. eastern time stick around i think that she's a very nice girl... ...you never got the brakes looked at? oh yeah. no. at cognizant, we're helping today's leading manufacturers make things that think and do automatically. imagine that, a world of new digital products and services all working together for you. can i borrow the car when it's back?

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jobs in america, the august employment report in focus for investors today, what you need to watch ahead of the opening bell on wall street. plus eric rosengren joins us for an interview. dr. scott gottlieb calling into question what is really milk. >> milk in a 600 kilogram holstein, that's easy. milk in a one gram almond, that's hard. tiny little utters, tiny. >> his comments about almonds and lactating causing quite a

stir he's going to join us to explain. and elon, the magic dragon. >> tobacco and marijuana, that's all it is. >> his interview on joe rogan's podcast causing quite a buzz this morning the highlights are straight ahead ♪ puff the magic dragon lives b the sea ♪ >> announcer: live from the beating heart of business, new york this is "squawk box. good morning, welcome to "squawk box" on cnbc live in times square we'll show you more elon musk. take a look at equity features this hour. dow is off 24 points nasdaq off 14 points s&p 500 off 3 1/2 points right

now. widely anticipated august employment report, economists looking, the number to beat 192,000 new jobs for the month, unemployment rate falling to 3.8% steve weesman will have more. policimakers need more ammunition, making the comments in a paper to be presented at a conference this weekend. we'll be talking with rosengren live at the bottom of this hour in yet another steve liesman production. one of this morning's big stock winners, cybersecurity software provider palo alto networks, the company beastiting estimates by nine cents. president trump is up early and tweeting about nike. and this is a quick tweet, sort of a drive-by, what was nike thinking what was nike thinking and that's it so far from the

president. i mean, i'd like to think that nike was thinking we want to support efforts for racial equality, and against policemen. i would like to think -- but i don't think that had anything to do with nike's thought process. >> i'll tell you, because i've spent some time talking to people around nike. >> it's about business though, andrew if it's about getting athletes, that's also about business too. >> that's what i was going to say. the amount of good will they created for athletes. >> yes. >> athletes love this. >> right. >> and if you're in the business of -- if you think you're in the business of attracting big-name athletes to be your endorsers, and then you think kids go out and buy sneakers because of those endorsers, that's -- >> you're describing a business strategy to me. >> yeah. >> call it a business strategy. >> yeah, it is. >> as long as we admit what it is. >> oh, no. clearly this is a business marketing decision. >> or a business -- it's okay to talk about business strategies.

>> they think it's a good idea other people obviously will not think it's a good idea. >> hearing that it puts a different perspective on it. why would you wade into the political fray >> not every athlete, but many athletes obviously look at this. >> but andrew, you're willing to try to deduce your business by further dividing a polarizing issue in the united states, it's all about nike's bottom line and it is, which is why it's so cynical for me. >> it can be looked at cynically. but i also think that they think this is a moral issue. >> you mean they've got a cover? >> look, the other piece of this that's always been so interesting is this has been an issue for the nfl because of the audience that is the nfl's audience it's not been an issue, by the way, for the nba in part because of the way adam silver handled it. the audience for the nba is a different audience that sides

much more on the side of the kaepernicks of the world this is getting complicated when all the athletes, nfl athletes start wearing kaepernick's shoes on the nfl field and that becomes their version of a protest without kneeling themselves. >> the nfl's hands are tied. they've got a deal with nike for ten years. >> yes. >> so they can't say they're mad at nike. they almost have to -- >> in a very tough spot. >> right. >> very, very tough spot. meanwhile, we talked about waking and baking this morning a lot of people waking up to this video, tesla ceo elon musk appearing in a podcast with joe rogan overnight. yes, he smoked up, take a look. >> is that a joint or is it a cigar >> no. >> okay. >> it's marijuana inside of tobacco. >> okay. >> so it's like posh tobacco. >> you never had that? >> yeah, i think i tried one once.

>> come on, man. >> you probably can't, because of stockholders, right >> i mean, it's legal, right >> totally legal. >> okay. >> how does it work? do people get upset at you if you do certain things? there's tobacco and marijuana in there. that's all it is. >> that's a video that's going to get replayed and replayed and replayed dom chew joins us now. i've got a million questions starting with how investors will react. and there's the spacex business that does a lot of business with the government. >> so to speak, yes. >> and the military, by the way, there are military rules around smoking, which are different but -- >> doesn't affect private contractors. >> no. but i think this is going to -- this could raise lots of questions, we will see. >> it does and you could argue right now that the premarket action in tesla is probably baking in, if you will, some of what's happening with this particular interview. the shares are up by 1.5% at

this point, 1.25% right now. on the heels of that smoking segment, if you will, part of that joe rogan experience, he talked about whether or not, does he smoke a lot of it? he goes, no, i almost never smoke the weed that's about it, so far, so good he goes on to say that what's interesting when you engage with people, what percentage of that is a good idea and he says 10% of the time is when i think it's good to engage with people. he goes on with a wide ranging interview, things that involved whiskey, weed and a samurai sword. it started off with the boring company, his introduction of flame throwers, and then went on to talk about things like artificial intelligence, see technology develop to where everything becomes simulated reality. also the idea that tesla vehicles coming out in the future will have features that aren't yet anticipated by some of the folks out there right now. and also, social media

it's ironic, perhaps, or at least a little strange in that social media is what got elon musk into hot water in the first place, the idea he tweeted out he wanted to take tesla private and had funding secured for it during the show he spoke about social media and his views of it, specifically with regard to, say, instagram, twitter, that sort of thing. this is what he had to say about how he views people on social media. take a listen to what he said. >> one of the issues with social media that's been pointed out by many people is that i think maybe particularly instagram, people look like they have a much better life than they really do. >> right, by design. >> yeah. people are posting pictures of when they were really happy. they're modifying those pictures to be better looking even if they're not modifying the pictures, they're at least selecting the pictures for the best lighting, the best angle.

so people basically seem -- they're way better looking than they basically really are. >> it gives us perhaps a bit of a glimpse into his thought process, remember, this is the first public seeing interview he's done since that big "new york times" interview in the wake of the tweet about taking tesla private. this there he spoke about the idea that he was perhaps feeling more vulnerable, felt like his health wasn't there, and this is one of those things where he gives us, becky, a have you into what he was thinking again, he talked about a number of different things. we're not even getting into the artificial intelligence conversations they had perhaps even the conversations about the car he had before his tesla p100 model s, which is a p porsche 911. anything happened during this interview, guys. >> a lot of the stuff sounds harmless it's just kind of a conversation

it sounds like he's having when you see him, my gut, when i woke up this morning and saw, oh, my gosh, he's drinking whiskey and smoking pot in the middle of this interview, what does the board think when they've asked him to stay off twitter, what do they think about an interview like this >> this is the conversation of the day with regard to corporate governance circles and board circles. this idea you have a key man, a founder, a ceo, a guy like tesl ceo elon musk who is certainly a brilliant person, but it calls into question for some people whether he has the capacity, a head that's straight enough on. >> we're arguing about it. that's a commentary on how far society, how much it's really changed. 20 years ago it would have been career ending, probably. i just looked up, dom, did you ever see reefer madness? that was along time ago. >> i did not see refer madness. >> on college campuses they used to play it

i mean, it was pushers come to a high school and try to get in there to get the kids hooked on marijuana, and then they all end up committing suicide or addicted to heroin we've come a long way since 1936 this is not going to be -- it's legal in a lot of places it's amazing that it's almost mainstream enough where a guy like musk can do this without -- >> the question is whether if you're an investor, you look at it and you say this is a judgment issue. >> right. >> right. >> what is going on here that's the fundamental question. >> that's a valid question. >> we're back to who you're appealing to again millennials will not have a problem with this. >> you're talking about shareholders and the board. >> there's a lot of millennial shareholders. >> cap re and ron barron. >> we're discussing the question, we're not immediately saying they're all going to flee which is amazing how far -- >> i will even say, look, i hate

it when a ceo is completely coached and told what to say it sounds robotic. >> i told you that -- >> it doesn't sound authentic. i like to hear people who are themselves. >> andrew and i again are on the opposite side. i think they have the -- you know, just the -- to be that sort of self-confident in who you are, where you are, i liked it, you didn't like it. >> if you saw mcmillan from walmart, mary barra or jamie dimon smoking up on tv, i think people would think something's amiss. >> elon musk is different. >> the conversation that i was kind of tilting towards was this idea you guys led in with nike's decision to go with this colin kaepernick ad and make it a business decision. i'm not saying that elon musk in any way shape or form thought about this as a business decision. >> maybe he should have. >> yes, becky. if you look at it in that light, whether or not you are appealing to a certain part of the

audience, or certain customers in the future, maybe elon musk in doing this with the joe rogan experience last night, and opening himself up to a 2 1/2 hour interview, by the way, like we said, whiskey, weed and samurai swords came out is a way to get people to view his company as more open and cool. >> we're not claiming that he, you know, juiced his stock by saying i've got funding already set for a leverage -- you know, to take it private this is -- you know, i'd want people to stop talking about this where were they? it's legal in that state. >> it's in california. >> joe rogan is in california for the podcast. it's legal there and honestly, it looked like he just -- >> i actually wonder if he knew he was on camera he's on a radio podcast. is he really doing that? >> he must know. by the way, that's the one thing about radio that's different than tv. if you ever watch howard stern, the people aren't thinking that there's cameras on him because

they are just -- >> when, if it's legal totally, when does the stigma -- >> maybe, there's no -- >> that's what mine. >> rogan is also a guy who is a proponent of legalization. he's said that in the past maybe it's in surprise. >> we'll be on the same side of the issue one day. >> i don't know when. >> some day. >> maybe we'll share a blunt together and then we'll really -- right. >> no, i don't i'm not going to be there. >> gummies >> acid? no, no, no, nothing. >> nothing. >> compari, and all i had was a sip of that. >> big question of the morning, are non-dairy milk products actually milk. dairy farmers say no, and the fda is now saying they plan to modernize identity standards for dairy products joining us right now is dr. scott gottlieb thank you for being here we're going to ask you about

lactating almonds, before we do, let's ask you about what we were just talking about this, these questions of marijuana, we know this has been changing very quickly, our perception of them in legalization. but as a doctor, somebody who's he head of the fda, what can you tell us about the marijuana that's out there today how should we be thinking about this >> we've evaluated active ingredients in marijuana, and we've approved drugs based on that, approved one drug that's a synthetic derivative of marijuana for various treatments, anti-nausea, treatments for patients with cancer, getting chemotherapy we've approved a drug that's a cbd substance for seizure disorders. there's a pathway for evaluating the active ingredients in marijuana as safe and effective drugs. that pathway is open to companies that do proper research as a physician, the idea of using botanical marijuana as a way to deliver a pharmaceutical

ingredient, we don't tell patients to inhale as a way to deliver a drug it's not efficient i don't tell my patients on hypertension medication to go home, crush it up, roll it in a piece of paper and smoke it as a way to deliver it. the idea of botanical marijuana as a therapeutic alternative that would go through proper regulatory process, it's not out of the question, the door is open if people want to do that kind of research but it's typical not the way you'd want to deliver an active pharmaceutical ingredient. >> recreationally, do you have any concerns about that, or is it stuff overhyped >> i think as a public health official, as a physician, i have concerns around it, sure i have concerns around continued inhalation of a product that has constituents harmful to lungs, especially if you're a repeated user and we know that there are long-term effects from repeated marijuana use, particularly in developing brains. there is research that demonstrates that. so we do have concerns

we have a regulatory process that's been open for business, we have worked closely with manufacturers, at least 20 investigatal new drug applications that are in house, active with people who are trying to investigate components of marijuana for approval, fda-approved products. there is a proper pathway to doing the science to demonstrate these uses that's where i encourage sponsors to make their investments. >> it's impossible to compare it to alcohol too i don't know how many things i'd have to figure out for alcohol, drunk driving, cirrhosis of the liver, alcoholism, which affects domestically, how would you ever come up with a sum total for societal negatives of pot versus alcohol, but i don't think -- do you think, just without looking into it that pot is not as bad, the same, or worse than what alcohol does to society? >> well, i think the use patterns are very different.

and so i think it's hard to make comparisons between alcohol and marijuana. >> it's almost impossible. but i can't -- that's the argument that you're going to hear though. and it's already abundantly available everywhere else, so it guess it should be regulated and taxed. >> recreational use of alcohol, which is a legal substance, versus marijuana, they have different effects on people's behavior, use patterns are different, they do different kinds of harm. i don't think it's appropriate from a clinical standpoint to try to make a comparison. >> that's the knee jerk reaction is to say, well, look at the harmful -- we went through prohibition, you see how that worked out. >> it's one of the arguments you hear. >> then i don't think you shouldn't be taxing cocaine and heroin and legalizing that because it's very available, obviously. so i don't know. this has been -- this argument's 50 years old at least. >> there's a difference between decriminalization and legalization very big difference. >> agree. >> so we could decriminalize the use of certain substances and

the possession of certain substances and not move towards legalization and promotion. >> or criminal justice reform which needs to be done too. >> there's an age issue. if you look at some of the research, and dr. gottlieb, we've talked about this, the idea that kids who smoke marijuana are much more at risk in terms of what it can actually do to the brain. >> the developing brain, that's what he said. >> then the question is, would you ever think about it from an age perspective, meaning it should be legal if you're over a certain age? >> what would the age be >> instead of 18, is it 25 when do you have a developing brain -- or when is the brain developed enough that you wouldn't have the same concerns? >> it depends on the person, i suppose. >> that's for sure. >> once you've gotten out of your teenage years, you're no longer having a developing brain. teenagers and adolescents. but that's not the only reason to be concerned around long-term use of the substance from my standpoint, i sit in a position where we try to create proper science around the use of

active ingredients being used for medicinal purposes or mood alteration there's a lot of drugs approved to affect behavior and press conference as well. >> you were here to show us how to milk an almond, i thought you have a demonstration, and we got off track on this. i don't think you can do it. >> well, little utters you know -- >> it's utterly ridiculous. >> well, look, you know, it's a serious question pla plant-based beverages using the term milk. the second did i have in addition in the dictionary is a substance derived from a nut there's a commercial speech issue here as to whether or not they can call themselves milk. but when you look at the standard of identity, and fda does promulgate what is milk, basically nut butter and what is jelly to make sure food have the

right components to use a certain name they think they're getting a certain nutritional value. the definition of milk is something that's derived from an animal that lactates obviously that doesn't fit the definition of a plant-based beverage right now we have to revisit our standard of identity. the question for us is public health are consumers who are using plant-based milk products by seeing the word milk, are they imputing a certain nutritional value into that beverage they're not deriving and there are some plant-based products that are fortified, and look nutritionally a lot like milk derived from a cow, and there are others that don't. we've seen public health consequences where parents fed children, for example, plant-based products labeled milk and they had nutritional deficiencies. >> not necessarily whether it's plant based or lactated, it's the nutritional content, if it's

fortified it might still qualify as milk? >> that's the question we're going to ask ultimately what's important to us is the public health question of is the nomenclature we're using to describe something conveying information to the consumer that's misleading and causing them to have a indidieta doesn't have the nutritional value they think they're deriving we're revisiting the question of whether or not these plant-based products can call themselves milk. >> that is a legitimate, serious, thoughtful answer to a serious question we've been kind of joking around about it all day and dr. gottlieb, thank you very much for being here with us. we didn't mean to do the bait and switch but we're always glad to have you here you can comment on anything we throw your way and we always appreciate that too. >> thanks a lot. >> thanks for joining us again, dr. scott gottlieb, the commissioner of the fda. jobs and the markets, and eric rosengren, discussing the fed rates, the state of the economy and much, much more. steve liesman will bring us that

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full disclosure, are any of you

guys stoned? >> absolutely not. >> i made sure it was out of my system this morning. >> neither one of you guys wrote that op-ed piece in the "new york times"? all right good, we're starting from scratch what happened to bitcoin hit you with that from the start. you can't foresee stuff like goldman sachs, can you >> no. and it really reminds us that bitcoin is really dependent on sentiment and what they call reflexivity, it's only 50 million cryptowallets globally. >> the real seed that's been planted by this administration has been deregulation. businesses flex their muscle and it's good for stocks the p/e isn't demanding. >> anthony, in terms of the economy, it's like we're back to

like goldilocks with the porridge, you don't want it necessarily too hot, you don't want it cold, you want it just right. are we in danger of getting too hot here, do you think >> i think right now we're not we're going to get 3% growth this year, maybe a little bit more, and next year maybe a little bit slower. those are not numbers that scare me in terms of the risk of inflation. >> the jobs number today, august is typically, we see not quite the same type of activity, just for seasonal reasons you looking for 200,000 today? >> yeah, i think you might get a number a little bit above 200,000. >> above 200 >> remember, august relative to consensus usually comes in weak. but when you look at the four-week average, lowest level in 49 years. we've seen that the number of part-time workers for economic reasons continue to come down and that's mirroring what's happening to the unemployment rate in the next month, maybe even as early as today, you can seeatic

down in the unemployment rate. there's a lot of labor slack out there and i think we're going to continue to enjoy that that's one of the reasons we haven't seen upward -- >> is the fed bothered we're going to have rosengren on today. is there still some question how their path in terms of raising >> right now the federal reserve is on auto pilot, raising interest rates by a quarter percentage point. >> auto pilot. >> back to tesla and elon musk again. >> autonomous. >> yeah, autonomous, exactly anyway, tom, thank you we'll keep it short, anthony, thanks for playing along it's a crazy day we never know what we're going to talk about. >> neither do our guests coming up, the aforementioned newsmaking interview with eric rosengren. who knows what's going to happen really want to be there,

but you can't. at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready, because we're helping leading companies lead with digital.

>> let's get to steve liesman. i thought we should have dead music for you, steve, especially with the elon musk stuff but take it away. >> thank you, joe. i am here with eric rosengren. what do we got there >> i know you right. >> joe, you beat me. >> i did. >> let's talk about this other stuff on the back end. let's do an interview with a leading and important federal reserve official here. eric rosengren, thanks for joining us. >> nice to be here. >> let's set the table where are we we did 4.3% gdp in the second quarter, our indicators suggest a 3 plus percent in the third quarter. >> i'm not changing potential, but i would agree the economy is doing very well. we also expect growth to be around 3%. unemployment rate's already at 3.9% we have the employment report this morning and inflation is right at 2%.

we're exactly where we want the economy to be right now. >> i always go back, and we get to do this at least once a year. i went back and looked at the old interview. we didn't have the tax cuts back then, we have them now, you thought we were at full employment at a higher rate than we are right now while you've upped your forecast to 3% for gdp, have you also upped your outlook for where rates ought to be? that rhymed, sorry. >> we should continue the path of gradually increasing interest rates. when we have an economy that's already where we want it to be there's no reason to be accommodative, and we still have accommodative monetary policy. the only reason we shouldn't move it up more quickly is because we don't have that inflationary pressure at this point and partly it's a prevention to make sure we don't have more serious inflation going forward. >> we have a jobs report coming up at 8:30 tell us how you would look at wage growth that would give you concern about growing inflation?

>> first, one report won't give me concern we average over a much longer period of time and we look at a wide variety of statistics but i would say wages have been going up gradually what hasn't been moving up nearly as quickly is productivity, if wages are going up slowly, and productivity isn't going up, then you have a situation where you start having more inflationary pressure the most recent productivity report was a little bit better. >> good, yeah. >> but if you take it over a longer period of time, productivity is still historically pretty low. >> over a long period of time, we've had wage growth 2.7% year over year. if wage grew with inflation plus productivity in the 3% to 4% range that would not be inflationary would you be concerned on the wage growth, a percentage point higher than it is right now? >> so i would be concerned if i expected that wage growth was going to continue to go up so we have very tight labor markets. if we have growth going at around 3% we're probably going

to have the unemployment rate continuing to go down. that means labor markets are going to continue to get tighter. we're currently in an environment when i meet with business people, the leading question they ask is what are we going to do about getting more workers, how can we take care of the problem of not finding sufficient workers without raising wages substantially? and usually what they tell me is that they've already been doing things that will increase costs but don't increase wages for the entire workforce but they're getting to the point now where they're going to have to actually be increasing wages more substantially. >> it's not my employer talking to you about that. okay, so are you on board, say, for a couple more rate hikes this year? where do you think we need to go people have put that long-run trend or the neutral rate in 2.5% to 3% range. >> i think 2.5% to 3% is right it's a range we don't know precisely where it is i'd be at the upper end of that range. we still have a ways to go

so gradually increasing over the course of this next year makes sense. >> the full answer to this is you'll make up your mind when you need to. if you had to guess now, would you say you need to go restrictive on policy? does policy need to go above the neutral rate >> my guess is, if things work out well for the economy, that's what i expect and hope, we will be in a situation where we need to have a somewhat restrictive monetary policy over time. >> turn to the topic of the conference, why we're here, completely related to this, you're looking at too low for too long you know, some of the favorite topics we talk about back in new york, which is this idea that what are the ramifications, do you see right now excess value in the market, i guess, overvalue in the market, concern about systemic risk coming from market valuations because the fed has kept interest rates so low. >> these are consequences of low rates for a long period of time. many people are doing ten years

after kind of conferences. and looking at the consequences of the financial crisis. there's probably less attention being given to what are the long-run consequences of low rates for a long period of time. and so that's what we decided to focus on and one of the consequences that's reached for yield behavior, you take on more risk than you would have if you had a normalized interest rate environment. >> one manifestation of that are these corporate debt spreads, very tight relative to the risk involved and relative to the risk-free rate is that a concern of yours, that there could be systemic risk coming from the amount of corporate debt out there and how dearly it's priced >> leverage and tight spreads are one thing we would certainly look at. one of the things i'm going to talk about in the opening remarks to the conference is the growth and private equity in hedge funds. if you look at what's actually doing that kind of investment, it tends to be pension funds it tends to be college endowments these aren't organizations that 30 or 40 years ago were taking a lot of risk. as a consequence of very low

interest rates they're taking on more risk and you're seeing much more movement into riskier alternative assets. >> this is big and important do you think the fed ought to do something about this >> in part we're doing it by normalizing interest rates in terms of what we can do directly to impact private equity and hedge funds, we don't have -- >> you don't regulate them >> we don't regulate them in any way. >> last thing i want to ask you about, it's going to be the ten-year anniversary next week, we're going to be talking a lot about it would you do it the same way again, the same response, the same cutting to zero, trillions of qe, a half dozen programs with acronyms none of us can even remember and then staying there for up to, what, almost a decade >> given where we were, i think we took appropriate actions. if i were to roll it back again, one of the things i would do differently is fiscal policy. >> more fiscal policy? >> more fiscal policy and more transfers to state and local

government. >> because they had a huge impact. >> they cut employment in a significant way, exacerbating the recession. >> eric, thanks for joining us today. >> thank you. >> is that boilston street where are you? what street is that out there? >> we're in the boston fed. >> oh, you are in the fed and you put your big cnbc sign up there? they let you do that >> yes, we do. they're very accommodating here at the boston fed. >> thanks for letting them think it's -- >> yeah, what street is that outside? where's the boston fed >> i don't know, eric, where are we what's the cross street here >> congress. >> that's congress street. >> so you're in boston proper, downtown, okay. >> downtown boston, beautiful place. >> yes, you're not in the back bay. >> he needs to get out of new york. >> eric says you need to get out of new york. >> i know the area well, thanks. great city. >> okay. when we come back,

disrupting the education system, one student at a time, education entrepreneur saul kahn joins us after the break to talk about -- futures at this hour, still in the red, not major losses, down by about 26 points after being up two days in a row sp 500 and nasdaq both down is&p is down by 3 1/2. squawk box will be right back.

welcome back to "squawk box," it is back to school season, joining us right now is education entrepreneur saul kahn, the founder and ceo of kahn academy, offers free education resources. thrilled to have him here, you're one of the pioneers in this business and are announcing a new mastery program, i want to talk about the state of online education. what's the mastery program >> well, there's this idea of mastery learning, arguably the oldest way of learning that

before you move on to more advanced concepts you learn the more basic one in the traditional school system, most of us grew up in, that's not the way it works, we get moved at a set pace. if i got an 80% on an exam, even though i don't know 20%, we move on to the next concept, probably something more advanced. teachers every day are teaching seventh grade, but at the test scores half are operating fifth or sixth grade level, the other ones ninth grade level, what do i do mastery learning is the idea that we let every student work on what's appropriate for them we could have talked about this 20 or 30 years ago how does one teacher cater to the individual needs of 30 students. >> outside of a one-room school room. >> or personal tutor. >> we've talked about this before, how do you get the student, this works spectacularly for the student that is insecentivized and

motivated to do it for the student that isn't, how do you motivate them >> there's a young girl in afghanistan who self-educated herself on the khan academy. physics research at m.i.t., unusual motivation in a mainstream classroom, all kids are more engaged in a framework where they're allowed to work on what's appropriate for them we've all sat in classes, most of the time you're lost or bored. teachers know it, they have to teach to the middle. here they're more engaged. >> speak to online education at large. when i first met you we had conversations about how we all thought education was going to move so quickly in this new direction where you'd have one famous teacher teaching students all over the world, universities were going to change, high schools were going to change it hasn't changed as fast. >> in some ways it has and some ways it hasn't how much technology has gotten into classrooms, the first wave was a little bit -- people did

it for technology's sake there's famous cases of tons of i pads being bought and no one uses them, things like that. but now you are seeing mainstream big districts saying we see in our test scores, our kids, there's a spread of four grade levels, we need to do something to remediate that. four or five years ago when i used to talk about personalized learning and mastery learning, it was this avaunt guard thing, they're asking us, we think khan academy is what we should be using. >> how does that work if a teacher is going to use it in the classroom, they put some of the kids on khan academy programs, you do this while i'm teaching this over here, is that homework >> at least one class period a week, and we're seeing that's a good dosage, or minimum dosage, good efficacy studies, a district in philadelphia centennial, if kids do 30 minutes a week of what's appropriate for them individually, they're seeing 30%

more gain than expected. similar studies in brazil and guatemala, all over the world, we're telling teachers in districts, do what you're used to doing, give at least one class period or assign homework for 30 minutes a week where students can work on remediating gaps they need. >> and the teacher identifies that >> the teacher can say, start here, can be informed by test scores when i meet family friends, if you're in seventh grade, start on fifth grade and move ahead. if you know it, you'll accelerate through that stuff. >> it is jobs friday, one of the most interesting statistics i saw when we were preparing for this is starting salary for a teacher today has not actually moved up it's still around $41,000. and that's despite the debate around the power of unions and charter schools and everything else why is that? what has to happen for that to change >> well, you know, the why, and i'm not an expert here, it's the

economics of property taxes and whatever else, and then of the chunk of dollars that go to education, a surprisingly small amount goes to what's actually happening in the classroom and the teacher. >> how much do you have to pay the people working with you? i assume much more than that. >> depending -- well, so we run a school and we run khan academy. so you're saying at the school >> at the school and the academy. i assume people working with you, i could be wrong, starting salary is, i assume, for a teacher much more. >> for sure. a big chunk -- >> a talented person. >> and we're hiring a lot of teachers you know, for a lot of them, it is an economic decision, their passion is obviously in helping students but yeah, i wish that there was a way that we can -- >> why have you remained a nonfor profit all the time you have big name people who are your -- i assume there was

probably an inflection point, a moment where you could have done this in a for profit way if you wanted to? >> back in 2008, 2009 it was a -- i just happened to live in silicon valley a lot of people were like, hey, we'll fund this. and the first conversation seemed interesting, but the second conversation was -- the really valuable stuff we'll charge for that felt a little bit -- some people do that and that's fine but i was getting all these letters from people all over the planet, and it just felt like, hey, you don't want any frictions for people, if they really want to learn it was delusional thought process. imagine a home run in either circumstance the home run is for profit, yeah, amazing things but as a not-for-profit, khan academy could be the next institution, the library system or the smithsonian or the oxfords or harvards of the world, it was a delusion at the time but it's feeling a lot less

delusional now where we're reaching tens of millions of students now, probably hundreds of millions over the next few years. we're getting these fascinating stories of these young people who you would have never discovered all over the world to tap into the potential and teachers are able to meet students where they are. they've always wanted to, but they've never had the tools. >> sal khan, thank you, great to see you. >> great to see you all. when we come back, it's the first friday of september and that can mean only one thing, the number of the month. our panel of experts getting ready for the august jobs report, predictions and reactions to the numbers straight ahead, that number less than 40 minutes away. plus, the buzz of the morning, last night, on joe rogan's podcast, elon musk opened up about tesla, twitter, blunts, whiskeys, much more. yeah, there he is smoking a blunt. "squawk box" will be right back.

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it's time for pops and drops, which we stole from melissa lee. a lot of things like that happen. >> castoffs? >> yeah, when it was brilliant, anyway, chipmaker broadcom reported quarterly profit of $4.98 estimates a share, results were helped by growth and demand for data center-related products on the other way, drops, when you hear that sound, gamestop shares are under pressure this morning. did you whistle, sorkin? >> i did. >> oh, becky, thank you. it confirmed its working with advisers to evaluate some strategic alternatives another one, discount retailer five below, oh, wait, no, five below was above. okay okay five below, but above quarterly profit of 42 cents a share, five

below also reported better than expected comp store sales. that's a big gain, up almost 11%. >> in other corporate news, the head of our parent company comcast ceo brian roberts says he's been disappointed with the reaction to his decision to walk away for a bidding war for 20th century fox. here's what roberts said to jim cramer exclusively on "mad money." >> that's one of my disappointments is that fox and sky, driven by rupert murdoch's decision, not to change who we are, we found it was undervalued, we put in a price, eventually disney offered more and we walked away but people then took that and made a narrative that said we didn't love our core business when, in fact, our core business is having the renaissance. >> stock and reaction actually has been strong. it's been up about 15% off the lows since that news actually happened also roberts touched on the company's next step, where he is looking for new opportunities. if you want to see more of jim's

interview, head to cnbc.com. >> we didn't play the part where he views his core business as "squawk box," and then he was talking about the renaissance with -- >> i see. >> is that not part -- >> i missed that part. when did that air? >> was that not part of -- >> did you have a dream last night? >> i have a dream. we're going to talk about what happened in philadelphia last night, the nfl season kicked off on nbc last night as the super bowl champion eagles hosted the atlanta falcons. it came down to the final play of the game. oh, that's low you're going to stay i'm talking about tennis anyway, trailing 18-12, the falcons went for the touchdown but despite making the catch, julio jones came down out of bounds and the eagles held on to win 18-12. sorkin, i don't know where becky is, what do you got? >> i want to bring you a report, dow jones, verizon's internet

boss tim armstrong in talks to leave the company. he's been on the show multiple times. bring you the headline, it says tim armstrong could depart as soon as next month. >> this has been a huge question because there have been questions with the new ceo at verizon if he still cared about content. we can dish into this more after the break. coming up, whiskey, weed and samurai swords, elon musk and the jobs report back in a moment your muscles look good, but we should be seeing

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jobs in america. ♪ >> breaking economic news, just about 30 minutes away. the numbers and instant market reaction as the final hour of "squawk box" begins right now. ♪ so if i'm going to go at all ♪ go big or go home >> announcer: live from the most powerful city in new york, new york, this is "squawk box." ♪ go big or go home good morning, welcome back to "squawk box." i'm joe kernen, along with becky

quick and andrew ross sorkin coming doup to the august employment report in forecasters, the economy likely added 192,000 jobs last month, the estimate the futures have been down for most of the morning and it hasn't been a great week after a solid week in the previous one. >> oh, last week >> yeah. but this is the worst week i heard earlier since last week of june, which isn't that amazing but that was the last time we had a week that we were down in july and august we're pretty solid. more on jobs in just a minute. first, though, dow jones is reporting that verizon's internet boss tim armstrong is set to leave he came in 2015 when it acquired aol, and there were recent discussions about whether to spin off verizon's -- >> discussions about that, his name popped up, if you remember, over the summer, about whether

he might be a candidate to run wpp after martin sorel left the company. when we had the new ceo of verizon on, we asked about content. he's clearly not a content guy in the same way that some of the others are. >> although when we asked him directly he said that oath is not for sale because that was the way that we were kind of headed down that path. >> yeah. >> so we'll see what happens with that. again, hans vetsberg is the new ceo there. he comes from the 5 g background, people look at that as a new tack for where verizon's headed. breaking news on -- joining us from boston. >> updating financial targets under its new ceo dirk van

deput, the company now says it has planned to grow organic revenue growth of 2% to 3% next year, which is an improvement, a step up in growth. but it's going to do that at the expense of profit growth the company had been growing, adjusted for double dilgits undr the previous ceo that's going to go to midsingle digit earnings per share per growth i did have a chance to sit down with the brand new ceo, his first interview since taking over the company nine months ago, also the chairman of the board. here's what he said about what he's telling investors today. >> i think investors no that the margin focus runaway, and you cannot keep doing that, your top line is not justifying that sort of earnings in crease. we are coming up at an interesting financial algorithm. we're undervalued, which if our

multiple goes up, you get to above 10% tsr, that's still very solid. >> so van de put is pitching to investors today. it's been about cost cuts when it comes to food and consumer staple companies that's been hot. with 3g and kraft heinz. he wants to focus on growth and sales at the expense of cutting, cutting, cutting you may not recognize van de put he came from a private canadian frozen food business they did mostly french fries and saw tremendous growth. he's a belgian veterinarian that had all sorts of stints at packaged food companies, like mars had worked at coca-cola. we talked about the future of these consumer brands.

i'm going to be playing the interview later, but what he sees is the future and how millennials embrace these kind of brands differently. i know you guys are kind of junk food enthusiasts check this out from china, the wasabi flavored oreo, all the rage overseas. >> did you try one i want you to open one and try it on air. that sounds horrible come on, try it. >> i think it sounds great. >> wasabi, that's hot. >> there's also a chicken flavored one. >> i want to see the face when you're trying it. >> as you're doing that, did you ask him the only question we care about on squawk, when he's going to rename the company, that's got to be worth a couple different multiple churns on the stock. >> i didn't ask them that. but, you know, that debate's kind of passed, andrew i think that was a few years ago when they split it off from kraft and people sort of knocked them for the name. i will say that this is a global company. i mean, this company has a ton of emerging markets exposure

their biggest market is europe so while the u.s. is important -- >> and the mondelez name does better in those countries? >> no, i think it's more global. okay, i'm trying to open the cookies for you live on air. so actually i have the buffalo chicken one, which doesn't have actual chicken in it i'll try that one. >> does that have sushi in it. if you had clam, ice cream -- >> or lobster ice cream. >> what's your review here >> this is not my favorite. >> thank you. >> i'll try the wasabi, i think i'm going to like it better. >> i want to see the wasabi. >> let's talk jobs it's going to take time to the get to the wasabi. >> the question is whether elon musk would have liked that after the -- you can any -- >> is sara still there

>> i know. >> i'm dying to see this. >> mark, where's the wasabi one? >> she doesn't know. we're counting down this hour to the august employment rate kate moore is here, aaron klein brookings institution economic studies fellow, tom porcelli, loni chen. research fellow in washington this morning you're right next to me, what do you think is going to happen, kate >> we're going to have a just fine employment report. >> what's the one thing you're looking for? i don't want to do numbers now we'll play that game in a bit. >> those numbers are important we're focused most on wages, from equity perspective we care about how companies are handling slightly higher wage pressures, interested to see where the biggest wage gains are and whether or not the consumer can power the economy. i'm most focused on that. >> here's the other question

we don't want to get too hot this becomes a goldilocks, how much movement you can have, how the fed is going to look at this, and therefore how the equity market will then look at this. >> that's exactly the right construct to think about this, and i think kate nailed it it's not about some jobs number. if it's 150,000 or 250,000 it doesn't change anything for the fed. at this point it's all about sort of where are we from a slack perspective, wage perspective, where the unemployment rate is going, underemployment rate we've shifted. whether the market has shifted to that is a totally different question that's where we need to be. >> has the market shift snd. >> -- shifted? >> no, i think it's still focused on job numbers being on a trading desk and watching this play out every month, the initial reaction is this is what the job print did it was actually good because of this despite what may have been

a weaker headline jobs print. >> they have to think about the trajectory of costs. comps will be much more difficult for earnings next year, which realreawe already k. we need enough buffer for companies to continue to manage other costs of rising wages or pressure for them and we continue to see strong top line and revenue growth so we don't have a year over year earnings number in 2019 that shakes and rattles when it's already a very sketchy and skeptical market. >> what's the chances? >> they're lower than you think. the economy is growing really strong economic expansions don't die of old age. when we hit june next year, it will be ten years, a record level of expansion, starting with the expanse that began in june 2009. we have a ways to run. we'll see a strong number and a hot economy. the statistic i'm looking at is the employment ratio for prime age workers, 25 to 54. that indicates significant slot.

i think that that's the key indicator for how much slack is still in the labor market. >> loni, you're out there in d.c., next week we're going to mark the ten-year anniversary of the financial crisis we were discussing how long this growth has gone on we are, now, coming up on ten years. is there anything out there that looks like an iceberg to you >> no, not really. i mean, trade is the one that everyone talks about obviously, and i think here the question is going to be how earnestly the president will want to get to a deal with china. there the fundamental problem i see that we're asking china to forfeit their business model that's not bad, by the way we do need to pressure them on intellectual property and some other issues the challenge is, you're asking them to surrender their way of doing business so i don't see that happening very easily. the question then becomes if the chinese are unwilling to do that, then where do we go? can we really do a deal with them the signs are positive on mexico

and on europe, but china is really still the big elephant in the room and potentially the iceberg that could sink this whole thing in 2019. >> you know, we're all relatively optimistic. i'm relatively optimistic. is there any cracks you see we should even be focused on? it's almost like every morning most of the people who come on have a very, very positive view. but i also remember we had a lot of people back in 2006 and '7 who had a very positive view. >> it's contrasted, i would say. there's a positive view from some of us market commentators and strategists and economists, we're looking at the data and we feel good. that positive view isn't permeating to the average investor there's a high looeevel of skepticism. >> and fear. >> and fear. >> you think that's healthy, by the way? >> yeah. >> runup in equities that at some level is detached from the fundamentals, either they were wrong a year ago and now we've rebalanced or there's something that explains why there's a nervousness. what goes up, what comes down.

what i think is interesting and what i'm a little bit nervous about is the lack of bank failure, nine months without a bank failure the period in american history where we went the longest without a single bank failing, 2004 to 2007 that wasn't a great period at the time we were all cheering it, everybody was running around saying how well the banks were capitalized, the earnings were great, regulators were on board, and it was a telltale sign of disaster. >> the only thing i would add to this, i'm in general agreement is that as an economist, i'm in the fortunate position of being able to speak with a lot of different investors, even banking accounts, and the one thing that i think is really easy to observe, and you pick up on this all the time, this is probably one of the most hated equity market rallies of all time and from an economist's perspective what i would add to that is i think this is probably one of the most hated economic expansions of all time

it does not get any better than where we are right now it's really hard to find where the imbalances are we're trained to think about be world in imbalanced terms. doesn't mean they can't start to build at some point. if i do a snapshot today, we don't see any. it's really easy to make the call that this expansion goes on for another two to three years, if not more. >> we will continue this we will gplay a game before the big number at 8:30. house republicans, a big plan, you better hurry, ways and means chairman kevin brady will give us a first oklo next. stay tuned, you're watching "squawk box" on cnbc s, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today.

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and you can get 5 lines of talk and text included with your internet. and over here i'm having my birthday party. dj fluffernutter, hit it! ♪ dj fluffernutter simple. easy. awesome. ask how to get $300 back when you sign up for xfinity mobile, and purchase a new samsung phone. visit your local xfinity store today. the house ways and means committee is getting ready to unveil a second round of tax reform next week some of the components on the table include making individual tax cuts that you saw permanent, they expire in 2025. also that cap on state and local taxes known as salt. joining us now, ways and means chairman kevin brady it's going to happen next week, mr. chairman >> yeah, so the news here is going to release the text early

in the week, the ways and means committee will take it up on thursday, we expect to have it ready for a floor vote in september. really going to be locking in making permanent the tax cuts for families in small businesses secondly, really family friendly and business friendly retirement and savings improvements, helping families save more and earlier. in the third part i think the business, you're going to like, the american innovation act, it really is focused on the fact america has fallen out of the rankings as top ten countries best in innovation in the plant and secondly our new startups have never really recovered from the financial crisis this innovation act is really focused on new entrepreneurs and growing them in a big way. >> in tennis, whenever someone breaks someone, congressman, they talk about consolidating the break by not losing their serve. are you sure you don't want to just consolidate your first tax reform plan to make sure that that isn't -- to make sure that

isn't overturned or repealed i think a lot of democrats are running on that, aren't they, in november >> well, they are running on it, it's a huge mistake, because no one wants to go back to the bad old days where the economy was flat, paychecks were flat, and jobs and companies were moving overseas at record pace. i don't know anyone who wants to go back to that. so locking in the permanence we think is fair, and it's pro-growth, creating another million 1and a half new jobs in the long run it's important the american public those tax cuts for example in cincinnati, a tact cut of $2,500, it's really important to them. >> i just wonder, because, you know, it depends where i look, whether it's twitter or other places, i've got people telling me that the tax reform did not work and they look around and actually they're seeing things in this country that are very

challenging or disturbing. so i don't -- i know you try to get the message out a lot, and president trump tries to get the message out a lot. how can the democrats run on the economy in november given where we are right now >> i don't think they can. >> they are, though, how >> i think it's a huge mistake you know, the bottom line is i don't think they're worried about tax cuts for the wealthy, they're worried about tax cuts for every american because, look, if washington doesn't have first claim over your earnings, and washington can't spend it, that's a problem for democrats we've chosen to really make a modest, smart investment in the economy, which is growing in really significant ways. we redesigned the code so our local companies in new york, throughout the country, can compete anywhere in the world. that's making a huge difference. >> congressman, do you have any reaction to the anonymous letter

that came out yesterday, and also some of the comments and revelations that appear to have come out in the bob woodward book >> two thoughts. one, look, i have a lot of rural texas, our newspapers that publish once a week, that have a staff of four or five, even they don't publish anonymous letters to the editor. their standards are high than that everyone, as usual, following these types of stories deserves a permanent tax cut. that's what 2.0 is really about, keeping the growth momentum going. >> no reputable paper would do that and, in fact, no reputable paper has done that. that was a joke, andrew. someone tweeted that to me earlier, that that rule still stands, that no reputable paper would do it. >> i asked this question yesterday, but on the merits of what you've heard, do you feel, given the people you represent, do you have any responsibility to look into it? >> no. >> why not >> look, an anonymous letter,

airing gripes, making yourself out to be a hero, look, that just doesn't fly anywhere. what i do know, my own experience with president trump, especially on tax reform, has been extremely positive. we would not have got that done, changed the trajectory of our economy without his active, involved leadership. that was crucial and it is making a huge difference and so, look, i just disagree with the whole hero complex of whoever penned that. >> chairman brady, can i ask you about how things are going back in your district brian sullivan raised a good question earlier, he follows oil and gas very closely and obviously your district is one that kind of rises and falls on the tides of what's happening in oil how are things going what do you see? >> it's like the rest of the economy, awfully positive. obviously demand matters, having fair and balanced regulations, and lifting the oil export ban, which congress did just a few years ago, has really made a

huge difference as well. but i really think throughout my district, nine counties, part of it's suburban houston, a lot of it in rural texas, last week during our town halls and round tables on the smallest -- in the smallest communities, on the town squares, small businesses are adding workers one, two, three at a time because the economy is getting so much better and they have that certainty going forward. and so if the tax cuts in the economy is working for small town america, it's really working. and not that it's equal across the country. we have a big country. but boy, it is just hard to find an indicator that isn't pretty good these days. >> capuano, is that seeping into texas? does senator cruz have a problem down there outside the austin limits, are you seeing a big progressive movement in texas, real quick answer? >> yeah, so i predict senator cruise will be reelected

is it a race absolutely i think, you know, i think -- yes, it is a race, and i think senator cruise z. rork voted against harvey releaf, and he's not in step with the state. >> thanks. when we return the moment of the morning, the august employment report minutes away, the numbers and instant market reaction in the next hour, don't miss larry kudlow, joining us at 9:30 eastern time stay tuned, back in a moment across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling

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coming up, cue is music, it is the final countdown, the august employment report is almost here. don't miss it. "squawk box" will be right back ♪ the final countdown i think that she's a very nice girl... ...you never got the brakes looked at? oh yeah.

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let's get final predictions. kate, what's your number on this >> going really low at 164 below consensus because of the capture week and because august has traditionally been a low print. >> tom >> bounce back on the back of toys "r" us, 2.25. >> i have 211,000, i think the economy is still growing strong, i think july was a bit of a curve ball, and curve ball is cancelled and we're back on track. >> lahnee? >> 180,000 as we approach full employment, the slack will tighten. >> steve, what's in your model this time around >> 240.

>> 240 okay rick, that leaves it to you, what do you think? >> 212,000, 212. >> he boxed you out, boxed you out. >> if you're playing by price is right rules, that is what happened we're going to continue to watch this futures, do you know down 31 points, it is time for the august jobs report get to ylan maui. 201,000, increased by 201,000 jobs in august the unemployment rate was unchanged at 3.9%. average earnings up 10 cents last month, up 2.9% year over year, the biggest increase since june 2009. now, job growth in june and july, however, were revised downward by 50,000 jobs. 248,000 to 208,000 in june july jobs revised downward 157 to 147

now, after those revisions, the three-month average for job gains is 185,000 jobs per month. in august, job growth was broad based. health care sector was up 33,000 jobs construction up 23,000 jobs. transportation up 20,000 jobs. but several key sectors did contract manufacturing lost 3,000 jobs. the auto sector was down 4,900 jobs and retail shed 5,900 jobs the labor force participation rate ticked down .2 percentage points to 62.7%. and u-six, the broadest measure of unemployment, that inched down to 7.4%, guys, back over to you. >> thanks, ylan. let's bring in our panel and liesman, just because you were listening closely, i mean, those revisions weren't helpful. but the 200 was about exactly in line with what people thought, a little better.

>> yeah, we're back. i mean, look, joe, let's remember what we're talking about here, we're talking about something like 140, 150 million jobs and trying to figure out did it go up by 100 or 200,000 this is a good number. that three-month average at 180 is still a good number anybody who's concerned, really, that we have a weak job market, i think, is wrong. i like the way ylan characterized it as pretty broad based. looking down the line here, negatives in manufacturing which by the way is contradicted by a lot of stuff out there the report showsstrong manufacturing job growth if anything, maybe that's an early sign of possible impact of the trade wars that are out there. but i'd say it's very early days to say that because you had strong numbers in july and june. and then retail is the other negative, along with information. government down 3,000. the rest are pretty strong, construction up 23,000 that's a good number and that participation rate ticking down, i was going to talk about that in the last hour we do not appear to be drawing

people back into the workforce i had a conversation with allen kruger in jackson hole i've been meaning to tell you about, allen, you're wrong, all these people are coming back in. he goes, no, the unemployed were put back to work i take it with a grain of salt, because it's one month in the workforce, we're about even on the participation rate what's happened is the strong employment market, the strong economy has kept maybe more people from leaving but does not appear to have drown a whole lot of people back into the workforce. >> the one number that jumps out, if you're looking at the average hourly earnings, up 0.4% is stronger than expected and the year over year number 2.9%, what does that mean? >> we were talking about this before about how the wages was the most important thing to focus on in this report. this is a little ahead of where expectations were. as i was mentioning before, i think this is really important to focus on as we think about what earnings could look like and margins could look like. >> i should point out the

futures got weaker, dow features down, down 30 now. >> representing the anxiety. >> what the fed will do as a result. >> this is a report that keeps the fed on track i would say the same thing if this was 150,000 there's one thing i do want to point out, particularly with regard to what steve was saying, look, i get it, most people want to look at the headlines you can't look at headline participation rates, you have to look at the prime working age cohort the participation rate has done nothing but rise and, again, it's not like it's an esoteric idea the structural stuff, the cyclical stuff, the prime working age cohort is rising. >> but it's rising with room to go you're at 82, 82 1/2, you're at 83, and 83 up for years going into. >> i could not agree more. >> what i think people need to realize is it's not the unemployment rate that brings people back into the labor

market, but it's wages people decide to return to the labor market because they have a chance to make money, not just a chance to get a job. >> when does reform of certain -- you know, whether it's disability payments that have been sort of i don't know whether i call them abused, but some people have found it more advantageous to stay at home necessarily than go back to work when did that -- when does that change >> when you address child care costs, when you talk about the expectations of a two working, two-income family. >> everybody's blaming it on the baby boomers again but when does -- when does -- when does making it better to work than stay home, when does that start bringing people back in >> it's the right question, the right conversation to be having. here's an answer to that if, again, looking at the prime working age cohort, because this is the right way of looking at it. >> there are people that aren't baby boomers sitting at home too. >> that's right. if you look at not in the labor force, that number has done

nothing but rise, continue to rise, structural idea. look at that number, the not in the labor force for the working age cohort, guess what that's doing, it's falling, and they're falling from not in the labor force back into the labor force employed, literally the transition is usually you go from not in the labor force back to the labor force unemployed. they're going back employed. it does not get better than this people are missing the boat on that. >> santelli, that might have been something you asked, i guess, what are your comments? >> first of all, i'm not sure i agree. i can't tell the voices from the names. about the categories, the demographics and labor force participation rate a lot of skewness to 34 to 5-year-olds that never straightened itself out in a proper way in the credit crisis for all the reasons you inquired about, actually, joe my issue is we could label it structural any way we want what i see, we have less people working, supporting people that

aren't working, retired, unentitlements which they paid into and they deserve, the math doesn't work, the deficit keeps rising, the tax reform keeps paying for itself, but we keep adding onto the spending in light of that. i know whoever that oh, come on, if we made it so we didn't spend a penny, this year more than last year, and all's we did was tax reform i'd bet the deficit would not be increasing very much. >> you could bet unicorns would fly around, it wouldn't happen we have a trillion dollar annual tax cut. >> that's where your money is. >> at some point you are screaming about the deficits, i remember in the tea party rally kicking off, ten years of growth with the fundamentals laid starting in june of 2009 and these trump tax cuts have spiked an already happy economy. >> didn't start in june of '09 noneconomists, we look at pictures and charts.

i see november '16 that the markets changed. i'm not sure about the '09 when you go down you usually bounce in a normal economy unless you're a nondeveloped economy. >> lahnee, we have a brookings guy here, you're at the hoover institute, different view? >> i think obviously the tax reform and the regulatory reform has made a difference. i think to argue otherwise is to deny the truth but, you know, more broadly, the issue here that we're looking at, i think, it's interesting that u-six measure, the broader measure of unemployment, is still elevated compared to what we saw when the job market was comparably healthy back in let's say the mid to late early 2000s. that suggests to me that we still have a number of folks maybe working part-time for economic reasons the question is going to be, as this wage competition increases, and we start to see wages grow, this wage growth number we saw this month was tremendous and really good.

the question is going to be as that begins to expand, is that going to place further pressure on these folks are we going to see that u-six number repla main elevated becae people will not be able to come into full-time work? that's one trend to watch as we go forward there's no question, this is a strong labor market and policy has something to do with it. >> i want to go back to the conversation about how people are changing behaviors as a result of the tax cuts and people in terms of companies that manage or making decisions as well as individuals, and i think one of the biggest disconnects in the market right now is the narrative that tax cuts were going to inspire huge wave of investment spending and capital expenditure, and, you know, the reality that outside of tech that hasn't followed through. if we continue to get wage pressure, and we have, you know, companies trying to balance that out with future uncertainty, the likelihood we see a massive acceleration with the benefits of the tax cut is lower, that doesn't mean they're bad, i would suggest the earlier

expectations were far too optimistic. >> i agree with that. >> where would capital spending be if there was no tax reform? >> i don't think it would be terribly different. >> record level of prochfits before record lows, and it wasn't like companies couldn't spend if they wanted to. >> that's right. >> they made a decision to be more conservative, which frankly as an equity holder hasn't been a bad situation. >> we're returning funds to shareholders and corporate givebacks to shareholders is the logical outcome of the tax cut and the tax policy i think the bigger question is how little policy has been enacted out of washington. after the tax cut, what else has the trump administration in two years of a republican congress done start a bit of a trade war, which is a mild short-term negative, what other signature legislation has there been when i was in the obama administration, the first two years we had a sweeping set of reforms. wls been twhere's been the wash reform >> regulatory reform how can one not -- look, it's one thing to say congress is one

piece of the puzzle. but this administration has done significant amounts of regulatory reform that i think have been hugely impactful, the health care sector, the energy sector, environmental regulation. >> what trading board and stock price are you looking at don't believe your lying eyes, i guess. >> he's on your side, rick, i don't know if you were hearing that. >> i'm on your side, rick. >> that's lahn. >> you don't believe the tax cuts would pay for themselves. >> well, no, look -- >> of course i do. we don't have -- we don't collect too much in taxes. we spend too much, okay, if you want to spend on social programs, great. then make the economy hum which is what we're doing. >> this is a huge spending on defense, rick. it's $100 billion increase annually in defense. >> did i exclude defense when i said stop spending don't give me the party line here i said stop spending i didn't have an exception. >> let's talk about the huge runup in defense spending.

that's where the money's going. >> i don't want to talk about runup in any spending. >> guys -- rick, where were you -- hold on one second, where were you, rick, when we had the pro-growth policies in the first two years of the obama administration i remember obamacare. >> there was no pro-growth. >> i don't remember a spinninin pro-growth policy in eight years. >> first two years, a boot on business that's what there was. just so you know and i wore them just for you today. >> that's a good one i guess if you say it -- >> this is history this the what is last president thought about business oh -- >> two pieces of news that are literally happening almost simultaneously unrelated to each other, but you're seeing it impact tesla stock elon musk smoking pot, that's not the issue. david morton has resigned from

the company. just a month after being hired to work at the company this took place on september 4th, two days ago, in a statement dave morton said since i joined tesla on august 6th, the level of public attention placed on the company as well as the pace within the company have exceeded my expectations as a result this caused me to reconsider my future i want to be clear, i believe strongly in tesla, its mission and its future prospects i have no disagreements with tesla's leadership or its financial reporting, having said that, of course, this will raise additional questions you're looking at that stock down over 5% in the pre-market the company saying that the company's chief financial officer and its corporate controller, of course, will continue to oversee. >> you've got more >> the second piece of news we wanted to bring you is we have now confirmed, sources telling cnbc that, in fact, tim armstrong is in negotiations to leave verizon, the man who

really recreated aol, broad aol to verizon, then bought yahoo, integrated that business. >> the source is cnbc? >> yeah, cnbc. >> not your "new york times" hat, then it would be anonymous. are they anonymous >> oh, oh. >> are they anonymous either way or -- >> we -- we can report -- >> any denials of who it's -- it's not tim armstrong >> these are not denials i am bringing you this news. >> you didn't know that was coming. >> i walked into it perhaps, nonetheless, we should say, tim armstrong did hire a number two from alibaba in april and my understanding is this is part of a transition, tim armstrong's contract is coming up. >> should we be excited for tim armstrong? i bet he's going to have a good job.

he's in demand. >> i'm not worried about tim armstrong at all my understanding that this is a completely amicable situation. and, in fact, something that was planned. >> he may hit the nine figure thing. we may never, yen, maybe. >> again, two pieces of news, again, happening simultaneously. >> i tried to look at your phone as you were walking off the set. i couldn't see it. >> i'm sorry. >> could that be the source? >> it might have said anonymous on it. thank our jobs panel today when we come back, wall street reaction to today's job report we have veteran strategist jim paulsen joining us to talk more about it and don't miss larry kudlow join"sawonhetrt"ing quk t see live at 9:30 eastern time. stay tuned, we'll be right back.

. when we return, strategist jim pallsen, and jim cramer live from the new york stock exchange futures take a look, nasdaq off 47 points, s&p 500 off about 10. and tesla downbo aut 5%. we'll talk about weed and much more in a moment

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get down to the new york stock exchange jim cramer joins us now. that was fun for you yesterday, jim. >> yeah. >> as you said, they took care of business, once again. i thought that was great can i ask you, i didn't see the whole interview with brian roberts. what is -- do we know what is going on with skyy it's too quiet what is going to happen with the date coming up comcast seems to be -- comcast prevail now if nothing else happens? >> my opinion, yes

i didn't get that from brian i think it is, you know, honestly, i would say it's a very high percentage brian is not going to give you that, but the level of confidence that the deal will close, from what i feel, is pretty good. >> okay. good we didn't get to talk sports the entire show. we did a little bit. did you see any of serena, if there was any question about whether she was -- she was like 130% last night. i think it's going to happen in terms of the biggest record ever set. >> i think you're right. i mean, obviously -- >> it's unbelievable. >> and tonight, you know, tonight you see what is going on and tiger shot 62 yesterday. so did mcilroy. >> calloway golf -- whatever he's doing it keeps going that stock is fantastic. i think it's him how is the jobs number today

>> i thought it was perfect. look, 10 cent wage growth. that's good. a little bit more than 27. i like the industries. this time it was personal service. last time it was industrial, manufacturing. we're just having a very balanced -- >> and we can't ignore -- if you're in a state where pot is legal, is it okay for a ceo to take a hit >> i think it was ill advised. >> agreed. >> ill advised we'll leave it there, jim. >> bye >> all right fly, eagles, fly coming up on "squawk on the street," larry kudlow live at 9:30 a.m. eastern. stay tuned we'll be right back with jim paulson. i thought we had pat paulsen from insurance to savings to retirement, it takes someone with experience and knowledge who can help me build a complete plan. brian, my certified financial planner™ professional, is committed to working in my best interest.

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you may need more physical therapy. ugh...am i covered for that? yep. look. grandpa catch! grandpa duck! woah! ha! there you go grandpa. keep doing that. get ready, because we're helping leading companies lead with digital. twitter has dropped double digits in the past week. after similar drops, the trend tends to continue with the stock down another 3.9% a month later. the economy added 201,000 jobs last month. we've been watching the futures, they have extended their losses. as soon as we saw the numbers. joining us now is jim paulson. jim, we heard from jim cramer. he thought it was the perfect number what did you think >> i think we have fantastic fundamentals they are undenial we have the best performance

and more importantly, wall street perspective i think we have the best optimism surrounding it i think the problem is with the markets is that i think that eventually some of these are going to slow a little bit not end but slow because of monetary tightening that has been put in place. >> okay. that's the one thing i would say we saw the futures kind of double down. we're still talking about down 70 we saw it double down as we saw the average hours worked. >> this morning we're down a little bit the wage numbers approach 3. it's not a big problem we're creating 200,000 jobs. let's say the jobs slow down over the next year and go through 3%, now that becomes a bigger problem for the financial markets. i think fundamentals will be okay but they won't be fantastic and we'll continue to have inflation and yield higher putting the fed in a real box. that's going to be a challenge, i think, for the markets i don't see the bear market but

i just see the -- >> this is what we've heard from a lot of people. that things are great. this is as good as it gets. >> let's contrast where it was when it started. we destroyed confidence. because that evaluation is long. so you have low expectations every policy in the world was working to improve today we have almost record high confidence we have high evaluations and policy officials working. >> evaluations come down significantly from where they were in january. >> they are still upper. everyone feels great you have policy officials starting to work against the fundamentals the best time to buy the market when everyone thought it was terrible. >> are you calling for us to fall off a cliff or trudge

along? >> i think the returns and the rest of the bull market, if you want to buy s&p 500 index is like 5 to 6% i think that's what we're. >> a big savings account >> yeah. and the competition with bonds yields higher. cash higher. it becomes more compelling, if you will and it could continue. i agree. i don't see recession right now. but it doesn't mean we haven't used up a lot of capacity in this bull market already. >> bottoms are easier to see tops are impossible. >> yeah. and nasdaq in the last couple of weeks went really i don't know where they were stretched but you never know you might finally be on to something. >> yeah. >> right right. >> jim, it's great to see you. >> thank you for having me.

>> thank you for joining us. >> it was a big show today. >> he came in defending elon musk it's friday. make sure you join us on monday! "squawk on the street" is next ♪ good friday morning. welcome to "squawk on the street" i'm carl quintanilla with jim cramer and david faber. larry kudlow will join us this hour 201,000 jobs added futures down, though, maybe on rate hike jitters as wage growth in august is at a new cycle high europe is weak today ten year above 2.9 and the vix above 15 our road map begins with weed, whis,