the mac. and if that wasn't enough, it's jobs friday we'll get you ready for the october employment report and the potential reaction in the markets. it's friday november 2, 2018 "squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. as joe said, it's been a strong week for the markets the best week we've seen since early march. the dow is indicated up by 175 points the last three days without these gains this morning, the dow has added more than 900

points a big back swing upwards after the losses and volatility a couple weeks before. the s&p is indicated up by fin last three days which hasn't happened in quite awhile right now the nasdaq is indicated up by 6 points let's look at treasury yields. you will see the treasuries now, the ten-year is yielding 3.165%. if you check out what's happening in europe, at this hour you can see we are looking at gains across the board. biggest gainer of the major averages is the dax in germany, up by 1.1% italy is up by 1%. stocks are higher in spain, too. wti yesterday closing down another 2.5% to a seven-month

low. another 16 cents lower this morning. 63.52. >> you got that from santoli >> yeah. >> we have a cnbc contributor joining us today, andrew ross sorkin >> thank you welcome back >> good to see you you're leaving at 7:00 >> congratulations big day yesterday. >> we had a big conference yesterday. >> you did a lot of stuff a lot of pictures of you just looking like a -- you looked like you were running the woel thing to me. >> he was. it was his conference. >> the pictures were impressive. big names. i saw a whiskey sour with a picture of you >> there was a cocktail afterwards where they had machines -- they can make anybody's face >> i saw yours >> how does that work?

i don' >> i'm not sure. they were doing it with coffee in the morning check out the rally overnight in asia i would argue that's propping up some of those stocks you saw in europe the nikkei rising 2.5% the hang seng rising by 2.4% the hang seng composite up by 2.7% following a bloomberg report that the president asked his staff to draw a possible trade deal with china. president trump tweeting just had a long and very good conversation with president xi jinping of china we talked about many subjects with a heavy emphases on trade that propelling markets further. we'll show you video of peter thiel on china a lot of people talking about china yesterday. >> i would say the midterms are coming this is a great thing to do before, but is it real in the past it was real with the

nafta 2. >> we need a new name for this thing. >> nafta 2.0 you know what we're talking about there. >> is this a head fake or not a head fake? >> we're deciding in any normal world it would be a head fake, but in this world it's probably real, that maybe something is happening. >> larry kudlow called it a thawing in relations >> a thawing maybe we were never going to 500 billion. they never went into effect. and in your view, i'll be cynical, maybe the president wouldn't get that much in your view, but we would still claim a huge victory maybe that's what will happen her here >> what does the market say about that >> the markets would be thrilled by that.

>> this is the el-erian 80% thing. >> can president trump claim a win that the markets think is a base >> so the worst case scenario doesn't happen if we stay where we were, the worst case happens i liked the tweet. i was glad it happened after apple, i was thinking i would come in to a -- >> me, too >> an ugly session >> i thought that would be ruling the roost today it's not we're looking at positive territory. we will start with our panel this morning the reports of the trade progress with china, we have michelle girard from natwest markets and seth carpenter from ubs. let's talk this over the reality of this or what do you think the reality is do you think this is a head fake or for real? >> i was interested in what you were saying about the base it's not clear to me this would be an election play.

it's not clear which way the base wants trump to be it's surprising a lot of the base is welcomed, despite the volatility it's triggered in equities, the tough talk on trade. >> these are areas of the country that feel like they got the wrong end of the deal for a long time on this. >> so my suspicion is there may be some thawing there are talks going on, which is something that at least holds out hope i've been hopeful all along that the worst case would be avoided. i think this president is willing to go there in order to get progress done. the only thing i would say is what i fear to some extent is it's not going to end -- it's not just about trade with china. this will be sort of an ongoing conflict or -- >> it's a new turn in the relationships. we will be bumping into each other on all kinds of fronts seth, what are your thoughts >> i agree there's uncertainty this seems like it has to be a

step in the positive direction for resolving the trade dispute. i also think it's interesting there were negotiations going on before, back in the summer, then when the first round of tariffs went in, those negotiations stopped. i think it remains to be seen how serious these overtures are and whether or not there are concessions that will lead trump to say that's fine, the investigation that we did that said chinese intellectual proliprolicies are hurting us, unwinding those, or keeping the escalation >> my understanding has always been, from the sources i have in china, this has been about the midterms for them, which is to say they want to see how he does to figure out what keend ind of leverage they have

the idea that this will end in the next week, i imagine the real answer won't come for several weeks if not longer. >> china will wait to see if he's weakened? >> that's one of the ideas here behind how they were thinking about it. >> it does seem impossible to get any resolution before the election so it may be playing out that way in terms of timing and, yeah, the domestic politics on both sides of the pacific means a lot for the negotiating position of the principles >> the only thing i would say it's not clear to me how the outcome of the midterms influences the president if he doesn't do well, he may get tougher in his rhetoric with china. one thing it's not clear about is whether or not that strategy, if that's what china is doing, would do that. >> i don't know if china feels that going in and trying to hurt the red state voter -- the red state voter, even the soybean

farmers have not abandoned him >> the farmers sound -- >> they're patient supposedly china was targeting the tariffs to hurt his biggest supporters, which are still big supporters >> could be something where it is days, and china decided we think we know where the elections will land. in the past couple of days nothing has changed. >> let's talk about the pain at this point how severe that pain is in china and what kind of pain we're feeling here what impact have these tariffs had in it's been more of an impact there >> it's hard to see too much in the data so far showing up maybe you can look in a few places manufacturing had been doing well for a long time then the august and september reports for manufacturing employment clearly show a deceleration relative to where

we were before whether that's specifically tariffs or not is open to debate you're starting to see actual change in spending patterns. there's no evidence yet that there's a big macro effect >> the president likes stock markets that go up, too. >> right the last couple of weeks -- >> he's been nervous >> and you mentioned why put on tariffs if powell is tightenitighten ining and with him he says we're up 7 trillion, if somebody says we're down 2 trillion, he's like i don't like to be down 2 trillion, i like to win. >> do you think it's that tactical for him or is there a belief that in the long run -- >> i do think that >> i think both could be true,

to having a long-term view and short-term goals >> we're also not going to change hundreds of years -- they do things a certain way. i don't think we can change every type of way they view the economy, are we? >> my guess is no. broadening the discussion out from trade, what i'm worried about when we talk about signs of slowing, it may not be about trade. you talk to individuals looking at the outcome of the midterm elections, the signal that may send in terms of a growing concern that a lot of the positive developments on taxes, deregulation, they may not be sustained if the president and the republicans begin to sort of lose -- if they don't do well in the midterms, if that's a signal for what will come in 2020 i think there's some growing concern that the political landscape which has been very positive for business and for

the economy may start to shift in the coming year or two. that may lead to an uncertainty in businesses that were not there. >> tariffs may have been a big part of it. >> do you think that's about what couldcome politically by 2020 or where the economy could turn based on analyst and others >> it's more looking at the midterms if the republicans lose the house. there will be new committee chairs if they were to lose the senate and you're talking about elizabeth warren, there's a concern among businesses that the very business-friendly tone that has been emanating will start to shift >> we'll get an answer next week >> exactly i think there's a caution there that along with trade -- absolutely there's the concern about trade. but even a broader caution that

businesses may be starting to feel that maybe behind also some of the tempering in activity, again we're watching business investment closely, business confidence, they're off their highs a bit. i don't know if that's feeding in >> seth, how about a jobs prediction >> we have a headline number of 184. we think manufacturing will be the number to watch. if you don't see new jobs created in manufacturing, a third month of slowing, that will be a cautionary tale. i think the market will be happy with a broad range people are feeling in general upbeat the last gdp print was solid the ism print that came out yesterday was below expectations but still above 50 so people will be looking fo anything remotely approaching 200 as consistent with something as good. >> i'm at 225. the underlying fundamentals for the labor market continue to be

incredibly strong. my models based on some numbers we've seen are above 250 we had hurricane noise and other things going on, i think we'll see a stronger number. we may see upward revisions to september. that tends to be the trend >> or the fed, is it the average hourly wage number that matters the most >> i don't think that will be dispositive. you have several months with noise from the hurricanes. the fed is always taking more of a moving average of all these different things >> what's positive wage gains or muted wage gains exactly. they' they're expecting more. >> i want more >> wages are bad if you get that productivity story, we don't have to over

overreact and think of it as a bad thing. >> thank you for coming in today. >> thank you the other big story of the morning we've been following, apple announcing quarterly earnings among the highlights, they plan to continue to boost prices to offset slowing sales and the company will no longer be breaking out individual sales numbers for the iphone, ipad and mac. the stock down sharply but off the lows from last night ed lee is here from the "new york times", cnbc contributor, just published a piece on cbs. let's talk about apple and this idea of no longer disclosing the sales numbers. do you do that when the numbers are not good >> or when you expect the numbers to not be as good as people have predicted. >> is that what this is about or is this philosophical? >> the answer that tim cook gave on the call was philosophical. he gave a bizarre analogy when you're at the checkout counter,

they're not asking for how many items you have i think the market is reacting to the fact that we won't get that same visibility anymore apple is telling us stop looking at iphone sales. look at the number we're a services company that's the most important line item. >> that may be the ambition, to become a services company. >> they will hilt 50 billion in services sales in the next few years. the icloud, apps, advertising, apple music, that's the more stable line of business in terms of it doesn't do this every quarter. here's the philosophical piece of this. as a journalist and investor you want the transparency piece of it at the same time we all talk about how we want these companies to be investing on a longer term basis, not to be focused on the quarterly number, the sales number

are those two ideas in conflict? >> i know it's the idea of the short-termism that we're just managing for the quarter the expectation. instead of reporting once a year or twice a year, i think they should report every month. i think the more information we have more frequently, you can think longer term about how the business will go >> this is the antithesis of what jamie dimon and others said with you, becky. >> the business roundtable, dimon and buffett never said they want fewer reports. they said people should stop issuing guidance, because when y you don't hit those numbers. they don't think you should report every month but there's no way to decide what will happen three months from now >> but the more frequent reports

you have, people can do their own guidance >> so figure it out yourself >> let's talk about the stock and where it's headed as a result it was headed down from a margin situation, long-term, do you think this is a blip along a highway that continues to line up >> i think it will be a blip people will have to readjust expectations and go off numbers now that apple will get. we are just going to get channel checks from third parties, rely on third party numbers for iphone sales that will determine where the stock goes i think it's weird it's weird they're not giving that number. >> now we can watch whether apple is a trillion dollar company coming from a 1$1.1 trillion company even if there's a 5% selloff today, it's at 1 trillion.

>> just under 1 trillion, i think. >> no, it isn't. >> it's down 5% on one -- >> is this a discount for transparency or a discount because there's something material going on with this company? i think it's a discount on transparency >> i think it's a discount on transparency this is what we've been trading on, iphone sales [ overlappi >> what about china? >> if tariffs come into play, that will hurt apple >> so many guests have come on saying apple should be considered a proxy for china is that fair >> proxy because not only do they sell there but manufacturing comes out of there.

yeah i think that's fair. >> it would still be on the margin how much it gets hurt if anyone will get hurt, you can see them getting hurt coming and going. >> because they sell so much because it's a huge -- >> it's not just a sales thing he's also the face of american business in china. >> they have such huge inroads there. >> if there is thawing in relations, maybe they will benefit the most >> for apple and all the tech issues, you know, intellectual property theft, it's not just about moving products back and forth, it's what you're stealing from me in terms of technology >> after that report yesterday with apple i would immediately say wow, apple is in trouble i feel bad >> because you're a smart long-term thinker, joe >> thanks. >> let's punch up the cbs stock. you have a piece that you just published. >> published it an hour ago.

>> the news is >> the outgoing chairman, interim chairman, richard parsons, he had a conversation with the ceo of hbo saying what do you think about coming over to cbs and running the show to replace les moonves. and richard turned him down, he said i'm happy where i am. which makes sense. he has the job he wants. for cbs he has to program for an older audience, has to deal with advertisers, work with shari redstone. >> so he's not worried about the -- he probably feels like he's getting what he needs from them >> for now also, you know -- it's not a bad thing for him. >> what is a commentary on the future of cbs or the future of at&t/time warner?

>> it's a future on the comment of cbs, how difficult it will be to find a successor. >> does that mean the current interim chair -- >> joe i ianella, he is the current one. investors like him because they know he understands the business and what they're looking for from him it will be determined more on where the board goes in terms of their strategic plan for sbs cb altogether do we merge with viacom? >> let's look at apple shares. the current trillion dollar cut off price for apple is 207.04. that will be recalculated once we find how many more shares they buy back.

what was the worst down 14.50 or something? >> yeah. >> ed lee, cnbc cribber, thanco, thanks >> sure. business leaders are watching closely to see if the u.s. and china can actually strike a deal on trade we'll see what peter thiel said we'll see what peter thiel said and gm's marry bardes are just . or where you trade, you'll only pay $4.95. fidelity. open an account today.

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we welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning some big stocks to tell you about. starbucks latest results beating forecasts. the chain posting the best sales growth in the u.s. in more than a year the company benefited from higher prices as customers drank more cold brew and specialty drinks a rebound in china was also a big driver in the quarter. the stock up 8.6%. the ceo will be on "squawk on the street" today at 9:00 a.m. eastern. shares of kraft heinz are under pressure earnings missing forecasts rising commodity costs and pricing promotions overshadowed higher than expected sales that stock is off by 7.5%.

shake shack's earnings beat forecasts but same-store sales fell shy of estimates. the chain is raising its revenue outlook for the year, but that was also lower than expected it's down 3.3% u.s. equity futures this morning, it's all about trade with china, potentially a deal on the way also waiting for the jobs report dow futures up right now 212 points over the last three trading days the dow pulled together more than 900 points of gains we're on friday for the best month for the major averages since march, with the s&p up 18 points the nasdaq indicated up 14 >> talking about china, one of the big topics at yesterday's deal book kconference was about the trade war with china we heard about the impact of tariffs on the economy and their businesses >> i think we'll be more honest in the conversation about china.

and i think when we have an incredibly unbalanced trade regime >> it's a good place for us to do business. the chinese government is eager to see new products approved >> not only do we have a significant business over there, last year we sold 4 million vehicles, we're number two in china. not only would it hurt from a sales perspective but we also have a strong joint partner there that we do work with from a development perspective. >> if the path remains the same in the next few weeks we'll have a full-fledged trade war >> what does that look like? >> the 200 billion in tariffs that the president opposed china is a strong and proud nation i think they'll stand firm i think privately they will negotiate. i don't believe it has worked for them at the moment >> we have more from the deal book conference throughout the morning. check it out on cnbc.com as

well i would say real quick, you know, larry fink was very dour about a potential fratrade war. peter thiel sounded like he would almost prefer one. >> because of intellectual property rights? >> because of what he thinks is a potential reset for the way this country operates in the world. it was almost more philosophical than it was an economic argument he doesn't believe the tariffs are a tax on american people believes that there's so many imbalances that are created as a result of just the way that trade operates today it was very interesting to talk to him about this. we can't use any of the words to describe anyone anymore. whether you're more america first versus more the world first. i'm afraid to use those words. it's clear larry fink is very -- he has business dealings all around the

world. he would like everything around the world -- peter thiel is different. >> you also heard a string of other guys >> you can't use the word globalist or nationalist anymore. >> we know larry, when he comes in i think it was funny he was so dour that was before the tweet. >> he was first up in the morning, so yes. >> i would have said the same thing yesterday morning at that time >> i know. >> how about canada? friday it was like -- remember with the nafta 2.0 on friday, eh, it will be a bilateral deal by sunday they're hugging. it's bizarre the way things can happen >> yeah. >> it's posturing. the thing with trump -- we heard someone say earlier, he's not going to go the entire way with the tariffs, but he's capable of it so he does make you think he will at this point shouldn't we be

thinking he's bluffing but you don't want to do that because at any moment he might >> it's a new way of doing busine business, that's for sure. >> we need some new words. i'm so worried about dog whistle. >> we'll get you a sin list. >> the dog whistles from the left, right? my body language is everything okay >> there's dog whistles everywhere >> are you sure? i read some, i'm not sure. >> maybe we need to attune our -- >> my dog whistle is high. i'm sensitive now. >> i did one of the training sessions yesterday, the mandatory training sessions that we're supposed to do -- >> dog whistles everywhere >> you know one of the things in the video, would it be a good idea to take a meme of millennials on instagram and tag co-workers on it

the answer is no wh >> what do you mean? >> you can't mock millennials. >> yeah. sorry. >> tesla's ceo elon musk -- no, i love millennials they're out there. >> i know. they're watching and they're pretty funny >> i did that after the show yesterday. >> holy smoke. can i say i like generation z? >> you can >> sure. >> that is positive. elon musk making headlines this morning, telling recode's cara swisher that he in his words probably wouldn't take money from the saudis following what happened with jamal khashoggi. he went on to call khashoggi's death bad. elon musk tweeted earlier this year that he was taking tesla private. he said the saudi arabian sovereign wealth fund had offered to help him take the

company private. i don't know that's weird the way those two stories emerged. >> he thought they had committed, and i could have said they haven't committed because they don't commit until they sent the check now the money may not be welcomed >> you can't accept it given what happened. when we come back, we expect quarterly numbers from alibaba that's expected in the next half hour we'll bring you those. later, the results from exxonmobil and chevron as we head to break, a look at yesterday's s&p 500 winners and losers each day our planet awakens with signs of opportunity.

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♪ welcome back to "squawk box. time for the "squawk" planner. we'll get earnings from alibaba in a few moments and two big oil reports, exxonmobil and chevron will issue their quarterly report cards. we will hear from alibaba's vice chair, joe tsai, he will speak on "squawk on the street" at 9:00 a.m on the economic data front, october jobs reports at 8:30 a.m. eastern time.

they expect an increase of 188,000 non-farm payrolls, and the unemployment rate to hold steady at 3.7% wages set to increase by 2.1%. let's look at equity futures at this hour. we are in the green on the back of the tweet from the president that picked up the markets for asia and europe. dow opening up about 210 points higher nasdaq up about 11 the s&p 500 up about 17. the jobs market usually moves this around. let's get a read on hiring in october from staffing firm lasalle network. tom gimbel joins us now. i want to believe you, tom i want to believe you know these things initially i thought you know how the president comes on, speaks in hyperboles about we have

never seen -- in the history of the world we hahave never seen n economy like this, this strong some data indicates it's really good when i seed what you're saying here, you don't totally disagree with him >> he is who he is when it comes to the job market, companies hiring, it's never been like this >> it's a change in your view, which is interesting ten years ago people that were unemployed just wanted a job today they're looking at a career path and they're actually gauging which job they want to tak take >> what exists today is a level of transparency mostly due to social media everybody knows what everybody else is doing. >> that makes companies pay more and delineate a career path for people people can ask for that. >> the loyalty factor has

inverted employees have less loyalty to their company than they used to. >> so it's a buyer's market. >> right now it is whether it's 3 years, 5 years, 18 months, it will shift it always does >> it sounds too good to be true >> the interesting thing is six, seven, eight years ago it was software developers that could pick and choose, leave a job after a year and get more money. now everybody thinks they can do that in any job. the skill sets are not that unique it will catch up >> how do you know all this? >> this is what i do >> so you're sure of this. >> i'm sure of this. >> this is what is out there >> did you read the article in the "journal" yesterday about first and second-year bankers and the increase in salaries, and what carlyle and other private equity -- $300,000 that wasn't happening before now they'll go after seniors in

college. >> it's marketing, sales >> but the margin in private equity, the margin in soft wear can support those salaries traditional businesses can't right now while everybody is making money, people can start paying when it gets flatter, the margins won't be there then the layoffs come in then you see the ripple. right now it's a market that employees can go around and get more money >> my point with wall street was going to be after the financial crisis kids no longer wanted to go to school so they could get straight to wall street and go into these areas is that still a factor of has that eased >> i think it depends geographically it used to be -- i'm 46. it used to be when i got out of college, you ivy leagued to get into wall street then it became private equity, then a michigan or a wisconsin, that was good. stanford became the new harvard.

there's been an evolution from the education of where these kids can go and how much they can make i think there's a huge volume of college graduates who wall street and private equity. >> the idea that they'll go into private equity and miss the weigh station of an investment bank for a couple years, is that the function of a tight market or is that the function of a cultural sort of shift in terms of how private equity is even think being trying to hire people and the kinds of talent that are now going to the valley or go into other industries completely >> it's a desire for talent on the private equity part. no doubt we hear it all the time. a lot of money is on the sidelines. they're looking. they need to move fast where will you get the talent? it's with younger folks. number one, even at 300,000, they're cheaper than trying to getquity market.

>> so you don't care about today's number >> it's irrelevant >> how do we screw this up >> you guys say it all the time, markets are cyclical it will happen on its own what we have now that we never had before is a true global economy. so you're not competing against the guy in your building or your cul de sac for a job, you're competing with the guy across the world. >> so you have to train and match up the skills with the work force >> we have to get people to realize you need to work just as hard in a bad economy as you do in a good economy. >> you see this tweet? this guy likes the new contributor on the set i think the guy's name is anthony. >> we should get anthony on. >> did you read it >> i didn't. >> i like this new cnbc contributor. >> who is this tweeter >> maybe becky quick knows the

guy. i think i've seen him on other channels welcome, new guy >> thank you >> it's andrew >> only been here seven years. >> he likes you a ot >> he's being a smart alec >> he is >> thanks for coming in. >> thanks for having me. when we return, the new guy here, we'll talk to the ceo of teladoc. the stock soaring to an all-time high, but it's under pressure this morning the ceo will tell us why >> the wait is almost over we'll get the october jobs report at 8:30 a.m. eastern. we'll find out how much wages have improved for american workers. what is this >> pay day >> $187! >> that big report is straight ahead. we'll bring you predictions and instant analysis "squawk box" will be right back. ♪

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. welcome back to "squawk box. google employees around the world walked off the job yesterday because of the company's handling of sexual harassment sundar pitchai spoke to me yesterday and expressed support for the employees and said the company had not lived up to expectations >> moments like this show we didn't always get it right so we are committed to doing better we're listening to employees that's partly why today's important. and, you know, i think there are concrete steps coming out in terms of what we can do better so for me, i want to acknowledge the women who step up and do this it shows extraordinary courage we want to figure out how to support them better. it's a process i'm committed to doing better. >> i have to tell you, guys, i know a lot of people inside google are upset and walking out because of it, it's such a unique culture because think about a company where people -- you have a ceo who almost

encourages people to walk out. >> to speak up, yeah there's >> there's a sense of transparency about this. >> not only the report, but the response to the report was weird where they said we fired so many people because of sexual whatever rasmen harassment i thought the point was you didn't deal with a key essential employee the way you dealt with others >> i think that was the initial concern. once they announced there were 48 hours, then there were questions about those, and whether there was a deeper systemic cultural issue. it's so interesting that they have sort of taken -- most companies don't sort of go at it this way we'll see what the real impact is on google long-term in terms of talent. >> it's a different culture than most places. >> the whole silicon valley is a different culture. we think of it as progressive.

they try to do -- >> with microsoft, amazon, apple, you don't get the same thing. >> they're in seattle, though. when we come back, healthcare on demand we'll talkceo of teledoc stock trading lower this morning. but it has been up higher 80% this year. also check the futures hitting session highs right now. dow up another 215 on the open if we were to open here. we'll be right back. at&t provides edge-to-edge intelligence, covering virtually every part of your finance business. and so if someone tries to breach your firewall in london & you start to panic... don't. because your cto says we've got allies on the outside... ...& security algorithms on the inside... ...& that way you can focus on expanding into eastern europe... ...& that makes the branch managers happy & yes, that's the branch managers happy. at&t provides edge-to-edge intelligence. it can do so much for your business, the list goes on and on.

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welcome back, everybody. teledoc connects patients to doctors via web app or phone call within minutes. the company reported a loss of 34 cents a share on revenue of $111 million for the quarter those numbers beat expectations from the street. the stock now up 85% year to date it's down this morning by over 6% joining us now is jason gorvek, he is the ceo of teledoc thank you for being here today >> thanks for having me. >> a couple things in your release. i noticed third quarter revenue was up by 62% even though your membership was only up by 18%. what levers did you pull to get more numbers

>> ur revenue per member is increasing, obviously. we put up significant increases in our per member per month revenue and our visit volumes increase significantly those two are the big levers that drive growth in revenue that's faster than growth in membership >> you have 22.6 million members and you have a lot of big customers. people like fortune 500 employees. something like 40% of the fortune 500 use it for employees. you also have 35% of the major health insurers in the united states feeding you customers but we have seen the stock down over the last month like everybody else on wall street. where there are concerns about kind of show me the money now and obviously just market discontent at this point what do you think is happening over the last month? has the business changed is there anything different about the business >> no. we had a great quarter across all of our segments i think as we demonstrated yesterday in our announcement honestly, i stay focused on the long-term opportunity here to

transform how people access health care. >> why do you think the stock is down this morning? >> you know, i don't know. i think there's a lot of noise in the market right now -- >> the market overall is up this morning. and you guys are down 6% on an up take. what did the street not like here >> i think all of our numbers were very strong we raised our guidance a month ago on our analyst day -- >> what do you think investors' biggest concern is with your company? >> i think the question is around adoption. whether people are going to use it more. we put up 220 basis point improvement over last year same period i think that really demonstrates the fact that consumers are adopting virtual care as a front door into the health care system >> we appreciate you coming in today. we'll have you back soon to talk about the other trends >> excellent thanks so much >> thank you coming up, the countdown to the jobs report is on.

we will get october payroll and wage data at:3 90 a.m. eastern up next, predictions from anthony chan and jim paulsen we'll be back. and last year, i earned $36,000 in cash back. which i used to offer health insurance to my employees. what's in your wallet? in 1948... [sfx: bottle sounds on conveyor] one bottle at a time. today, we produce nearly 20 million cases a year. chubb has helped us grow for the past 30 years...

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happening now. global stocks jump on a possible trade deal with china. jobs in america. the employment report 90 minutes away and it could be a game changer. plus the news maker of the hour the former jpmorgan activist now turned manager who is making a big bet on deutsch bae bank the last hour of "squawk box" begins right now ♪ live in the beating heart of business, new york, this is "squawk box.

>> good morning and welcome back to "squawk box" here on cnbc i'm andrew ross sorkin along with becky quick and joe kernen. take a look at u.s. equity futures at this hour we are in the green up triple digits on the dow. dow up about 236 points. s&p 500 up close to 20 points. nasdaq looking to open about 16.5, we'll call it 17 points higher right now we'll explain why all of this looks to be the case we are watching three big stories this morning one is trade a new report says president trump asked his staff to draft a possible deal with china that's helping futures this morning. two, it is jobs friday the government's latest read on labor will be out at 8:30 a.m. and three, there is apple. the stock slumping this morning. that slide in apple shares coming after outgoing shipments in the current quarter fell

below estimates. apple beat on the top and bottom lines for the recent quarter they also said they would no longer issue shipment data we've got more on apple in a few minutes. that stock down by 5% right now. starbucks reporting quarterly profit of up 2 cents a share than expected. and we are awaiting numbers from alibaba. that stock is up ahead of the news analysts think the revenue jumped 57% from a year ago it's up by 1.7%. all right. the hour is 8:30 to watch for. the october employment report. less than 90 minutes away. steve liesman joins us now with a preview of what to expect. the last one had -- it was hurt by hurricanes. wasn't it 135 or something

do we get it back this time? >> yeah. but then we got another one. >> another hurricane. >> i don't think we've had back-to-back -- go right to the headline board there it's 188 so not seeing a lot of concern there. and i think that's because of the idea that what you lost in florence -- i'm sorry. what you -- i can't -- florence was first and then michael, right? florence was in september. >> yeah. >> hit the carolinas >> "f"before "m. >> that's a brilliant way to do it and it's an important part nor the market there are a lot of big developments that are likely to influence the jobs market. short-term, long-term, and seasonal here are the aforementioned numbers. perhaps a hurricane-hurt september number unchanged at 3.7% for the unemployment rate.

hourly average wages 0.2%. and adp a little hotter than consensus. less affected by hurricanes. so here's a bunch of things that are out there. that hurricane michael and hurricane florence you're going to go up on rebound from michael and down, perhaps, on florence. we just don't know how much these storms affect hiring you will have -- we look at leisure and hospitality as a clue there you have holiday hiring. so there's expected holiday hiring and thequestion is how much above the seasonals >> -- evidence looking at what companies are hoping to hire specific numbers >> right big numbers. then you have this issue of worker shortages i can see a weak number here because employers can't find the workers. finally we're watching wages here's what goldman sachs says we expect rebounding employment in north and south carolina following hurricane florence to more than offset the drag from

mu hurricane michael. we're trying to get people a yned a of what it will show. and that's for the first time since the spring of '09. the fed has one more report after this one before the december meeting this report not decisive only weakness that i think can clearly be related to the hurricanes would not raise effects. if they can look at this report and say there's a sign here against, by the way, a lot of the other data that the economy is weakening. that would keep them from their appointed rounds in december i don't think you can get it from this report. >> now, we have an election. you think the labor department will play ball with trump the way it used to play ball with obama and give the good numbers before the -- >> so we used to play a game with my son when he was -- you'd

hit against -- you'd throw it up an easy ball for them to hit i'm not swinging the bat >> oh. so you're not going to take my bait i was joking i was referencing some of -- >> i figured you were making a joke >> all right let's just -- i withdraw that. >> well done, steve. >> i'm learning, becky it's only, like, 16 years and i can't keep my mouth -- you know. >> joining us now jim paulsen and anthony chan anthony, you're a little more bullish than the 188 you think we get a snap back from what maybe was affected in the last report from hurricanes. 195 is your number >> yeah. i think about 195. still get a little bit of a positive jump. with regard to what the fed is watching,there's a a good chance of staying unchanged. the headline number doesn't concern as much and i'll tell you why. because what we've seen in the last several years, you're

drawing in people not in the labor force. and then on top of that, we are not seeing as many wage pressures because you're seeing that component part-time for economic reasons has a percent of the labor force it's all the way down to 3%. that's one of the steepest declines we've seen in any given expansion. and that's one of the reasons why we're not seeing as many wage pressures out there >> is there anything in this expansion now? i mean, the age is long. but is there anything that you can look at the underlying strength of it that makes you worry that we're long in the tooth. or can this keep going >> there's a lot of things i look at. the thing that makes me most worry is when you look at non-financial debt as a percentage of gdp. that's a flashing a yellow sign that suggests by 2020 we can move into some sort of a recession. >> by 2020 >> yes >> so not -- so an actual two-quarter print of negative

gdp? >> remember, that's the technical definition >> what do you mean? >> -- allow a lot of broader things personal income and general economy. but you're right the rule of thumb is the two consecutive quarters >> but that is possible in. >> it is possible, yes >> paulsen i don't know, man. you're in a bad mood i can't believe you -- someone would even -- >> he's smiling. >> yeah. but you should see what he's saying here. >> he's very negative. >> don't get out of equities completely yet. just tilt away from u.s. stocks and diversify broadly. and going to emerging markets which i've been hearing about for years and years and anybody that took that advice wishes they hadn't. and you also think, finally, your commodity call is finally going to come -- finally come true a little bit early on that one >> well, joe we've diversified -- we've been in commodities earlier this year and also more hedge fund

approach you know, some cash. as i said, moved away from the united states a little bit here. emerging markets here have done very well in the last two months even though the markets have collapsed, they've been matching that performance they haven't underperformed. >> no. but they've come off the lows, off the underperformance for the last couple years. >> that's right. yep. >> would be great if you only said this two months ago, but that's really not the case >> well, we've been a little concerned all year and this has been a tough year in the markets. there's no doubt about it. and the problem all year has been really i would say overheat pressures. it's been fed tightening, higher yields, and despite the fact we've had remarkable fundamentals on main street and great profits. the market hasn't been able to get a gain >> does that mean you -- >> go ahead. >> would you -- i don't want to

say you root for bad jobs numbers today, but is there any part of you or any part of you that would actually root for bad numbers because that would then maybe turn into some kind of goldilocks moment to turn the fed the opposite way or hold them off longer? >> well, i think if you get bad numbers on the employment report, it's certainly going to be welcome news to investors because they're going to anticipate -- >> can i answer that question quickly? we've done a lot of surveys on this the market wants more jobs much more than they want the fed not to hike. over a short-term period, that may not be true. over the longer term, the stock market likes growth and it likes jobs a single report, it may want weakness but not over the longer term >> hey, paulsen -- >> steve steve? i think the market, if you're a bull right now, i don't know what you're rooting for. i mean, if we get wage numbers

that print this morning on hot report, that's not necessarily good on the other hand, if we find out manufacturing jobs are dropping as an effect of trade wars or whatever and bringing up the specter of recession sooner than 2020, that's not good i think the path to goldilocks here is really tough right now that's kind of what i'm worried about. i don't even know -- what do you root for this morning? >> the giants to win a second game >> i saw this in your notes, paulsen. with the election, a split house if one goes one way, one goes the other won't make a difference but you say it'll be a big dea if the dems get both the senate and the house. a big deal how i imagine in your world that the market would just soar is that what you're saying there? or you're saying the market could have a problem because i -- what are you saying what do you mean a big deal if the democrats take both?

bad for the markets or good for the markets? >> i think it'd be bad for the markets, joe >> why >> i think the markets have -- >> that's contrary to your thinking in all -- you mean the republicans have been good for the market, paulsen? >> i think they have, joe. i mean, i think the markets have responded to the -- >> really? >> -- particularly lower regulation >> all right good for you >> there's no doubt of that. >> i just wanted to hear that from you that's the only reason i brough it up, honest to god just to hear you say that. being from minnesota, you know, huebert humphrey is looking down on you and walter mondale. >> you really put me in the tough place with the comrades, joe. >> that's all i'm talking about. i wanted to hear you say that and now you're going to have to go out and put your collar up. anyway -- you could be next time, anthony.

>> the reality is markets don't like change. >> okay. there you go you can tie it to that, jim. it's not actually one or the other. >> there we go >> used to change in a hurry in the evening of the election. >> certainly did thanks to chase's anthony chan and jim paulsen, my buddy from the leuthold group alibaba just coming out. earnings did beat estimates. although revenue falling out the figures on the screen right now are in the chinese currency, of course, rather than u.s. dollars. so do take account for that. among the metrics the street follows, saw an increase of 125 million active annual consumers. that compares to a year earlier. by the way, a total now of 601 million core commerce revenue up 66%. and by the way, we will be hearing from alibaba vice chair

joe tsai he will be at 9:00 a.m. on "squawk on the street. when we come back, apple shares down on the company's outlook. we'll bring you a bear/bull debate after this. then at 7:30 eastern time, douglas braunstein he's now making a big bet on deutsche bank and he'll join us to explain why later, the october jobs report don't miss this market-moving data at 8:30 eastern time. we'll talk much more about it today. stay tuned you are watching "squawk box" here on cnbc place, the xfinity xfi gateway.

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which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. apple shares dropping this morning on the company's outlook. our next guests have differing takes. tech analyst at maxim group. and director from webbush. >> before we find out how many shares they bought back during the quarter. >> i thought i said it was a

second derivative of rate growing. but it's still solid and you think the way they decided to not give unit projections anymore is -- indicates they're worried about they're going to somehow use subterfuge to not tell you what they're selling. >> so the number one thing, the story is hinged upon iphone installed base growth. how are you going to get services growth which is where you get the multiple currently if that install base is low single digits to declining, how can you support a 15 or 17 multiple but if you don't have the iphone installed base, then how do you know >> nobody can put numbers to it and you have to take their word for it >> yeah. over the next two years you'll

have a growing suite of services you'll have a delta between services and iphone installed base for a couple years. at some point in time, the number of new services you can roll in and thus get effectively higher -- >> but there's not a country in the world that wouldn't like to have apple's problems. this em boldens you that your long-term thesis is you're positive >> there's no doubt it was a hew dee ni -- houdini-like act but if you can get china's growth 16% you look at what i think implies of december guidance, what we're seeing in terms of china growth which is the xr. ultimately we think 220 million unit ifs for the year and it's really asps. part of the frustration of cupertino and we've talked about it is asps are beating the

street by 5%, 10%. they wanted to kind of put that into an overall sort of revenue number, get the street more on the sort -- >> but you think it's a fair thing to do? this goes to is this just a philosophical view about how they want to re-make your thought process around the stock. sor th or is this a signal something is coming >> so in our opinion, it's more of the sort -- >> basically you believe tim cook when he says it straight up >> look, i believe that this is part of the vision for the coming year. it's how they want investors to view apple in the totality along with services. the way they did it was a gut punch. to come out of left field in the conference call, that's the knee jerk reaction in the stock and transparency -- >> what's a better way to tell people you're not giving them as much information

>> you come out saying starting in fiscal '20, we're not going to give unit growth. this is why. we talked about it, it's that you want to give the approach. to come out of left field -- >> you think it's a band-aid situation? >> at the most crucial period that you have all these launches and going back to sort of the negative thesis, this emboldens that thesis. >> overall revenue grew 20% year over year. that was enabled by 28% asp growth so what was units? it was actually probably a flattish year declining. >> we've been talking about china all morning. i'm just curious given where we are in maybe a trade war or not depending on the morning how you think about that in relation to apple? >> potential trade war >> yeah.

>> you know, the only potential positive outcome is it's the status quo and their opportunity to continue to grow there is maintained but there's obviously significant risk that they have that -- >> is that in your equation at all? >> you look at that supply chain in china we're seeing no issues in demand in terms of china, unless it continues to get ramped up, it's not a negative >> all right, guys thanks coming up when we return, elon musk in his own words s arn sla ceo speaking out o hiye of costly tweets. we'll talk about it. stay tuned

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hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies advance diagnostics and prevent blindness in patients with diabetes. everything looks good. you have beautiful eyes. ♪ . kwelcome back to "squawk. elon musk speaking out on a new recode podcast he said this has been the worst year of his career he calls it insanely painful he talks about the tweets and

the fights which came late at night. >> i look at it as a way to learn things, stay in touch with what's happening it feels like the inflow of consciousness of society it's weird i sometimes use twitter to express myself and that's a weird thing to do, i suppose >> not so much it isn't sometimes it's very funny. other times it's not so funny. >> some people use their hair to express themselves i use twitter. >> musk said he probably wouldn't take money from the saudis following the killing of journalist jamal khashoggi back in august. he tweeted he was considering taking tesla private he later said that the saudi arabian government had offered to help him take the company private. he also took issue with "the wall street journal" report recently that suggested that the fbi was investigating and

closing in on the company. >> he called those reporters horrible people and said it was completely fabricated. >> when he was talking about twitter, he was saying it in the presence tense i use twitter for -- not i used to use twitter for -- until the s.e.c. banned me >> the complicated part is he was banned from twitter on material issues. >> right >> anyway, it's interesting. coming up, we've got this morning's biggest earnings movers stay tuned i got like eight seconds. >> no, you don't go we'll be right back. >> you're watching "squawk box" on cnbc. we've been helping you prepare and invest for retirement since day one. why would we leave now? because i'm retired now. so? we're voya. we stay with you to and through retirement... with solutions to help provide income throughout. so you'll still be here to help me make smart choices? well, with your finances that is. we had nothing to do with that, uh, tie. or the suit. or the shirt. voya. helping you to and through retirement.

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♪ good morning welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square among the stories front and center at this hour, we are now an hour away from jobs reports numbers that we'll be hearing those numbers. economists expecting 188,000 new non-farm jobs and unemployment rate of 3.7% that would be the same as september. we'll also get september trade deficit figures. also cable channels hbo and

cinemax have gone dark on dish network. this dispute has an extra layer of controversy u.p.s. saying it's going to stop picking up heavy shipments starting next wednesday. they're trying to get ahead of a work stoppage. union workers are in the process of voting on a tentative contract all right. let's get to the biggest earnings movers. stocks moving based on results dom chu joins us from the cnbc newsroom with those. hi, dom. >> good morning. happy friday, joe, andrew, and becky. take a look at the earnings movers so far. new ones this morning, we'll take a look at shares of alibaba which are almost up about 4% in the extended trade so far. this after the chinese e-commerce that largely beat analyst expectations revenues came in below some analyst estimates. mixed result there, however, a

lot of the trade tensions have put an end to these stocks if you look on a more year to date basis, still in a down trend along with many of its other chinese internet commerce brethren another one new to watch is newell brands. all of those brands, those shares up about 6% in the premarket trade as well. this after that company said that earnings came in better than expected. sales were slightly worse, but it did up its full year guidance if you take a look at newell shares over the course of that year to date, that's been on a near term down trend and of course we're watching those two big ones yesterday and that is, of course, apple and starbucks seeing decent sized moves one way or the other. along with earnings and sales. and apple of course moving lower because of that earnings and sales beat but the fourth quarter forecast may be shy of expectation.

we'll certainly be watching that just to sum it up so far, we're still counting the ones this morning. through yesterday, however, the earnings growth rate of everything else comes to fruition, that's revenue growth if everything comes to fruition will be around 8% as well. a fairly healthy quarter we'll see if those analysts can stick with those or whether they keep selling the news. back over to you >> dom, thank you. dom chu. let's stick with the earnings theme western union, fell short of what the street was expecting. ji joining us is the ceo. thanks for being here today. >> thank you. >> can you explain what happened with the revenue coming in

light? >> revenue is not in big change. digital business has grown very well we are now in 50 countries with our digital business sending money to 200 countries we pretty much cover the world we're expanding that one our digital growth is very strong our retail money transfer growth has been strong. in some countries we've been slower like in the middle east but we have the strong growth also in europe our u.s. domestic business has been slower than we thought. and generally i would say that very stable, solid quarter and we are very excited about the future >> all right let's talk about a couple of the places where you saw slower growth than you anticipated. u.s. domestic. what caused that, do you think >> u.s. domestic definitely there has been some competitive environment. nothing changed like last quarter. we have certain customers, they like to pick up cash immediately. nobody can beat that you can send money from your

mobile and we pay out in cash immediately. but there are also competitors like zell and venmo who have been capturing market share there. and that has been definitely u.s. dominated it's only a small part of our business it's 7% of our revenue we are more focused on our cross border, global cross border network. that has been growing very well. >> let's talk a little bit about your new announcement. if you're facing competition from guys like zell, you guys have a new announcement with amazon that will take advantage of people who want to be able to show up and pay for their purchases in cash and be able to hand that over and get something off amazon was this to make sure they're meeting needs? >> we have been over years building a cross border platform which is unique. we are moving transactions in

132 currencies globally. and we do about 32 transactions every second we have a network of about 550,000 locations. we are reaching out to about 4 billion accounts globally. this is a unique platform. today we serve our customers with that platform and companies like amazon engaged us, would like to use our platform to serve their customers in a better way to give access to the, you know, millions of customers who don't have access today to buy online and pay. in the future they will have the capability to buy globally and pay locally. >> i know there are a lot of things you can't talk about in this partnership like when and where it's going to be released just in terms of whether you've tested it and how successful it's been in different places, but what can you tell us about this what kind of opportunity does partners with amazon mean for you? is that a much bigger market opening? >> it is. it is for us very exciting,

actually, becky. because now suddenly we are opening our platform to new customer segment other organization like amazon and this is very exciting for us today we are serving with our branded transactions in the future we will be able to serve huge organization like amazon or amazon will engage us or other organization will engage our platform and using our platform to serve their customers. >> hey, just because you are transferring money around the world, i wanted to get your take on cryptocurrency and in particular bitcoin given that people talk about that as a global currency that could eventually upend or disrupt, frankly, your kind of business, i imagine. well, currencies are effective when you use them. has to be ordinary currency. when you pick up the money, you

want to pay something with that. today currencies like bitcoin are not used by like 7 billion people and currencies are mostly by central banks. is it issued in chile? is it issued in europe is it issued in vietnam? what we do is actually western union has been creating the first cryptocurrency what we do, we take the local currency, translate it to the ten-digit number, and this settles all the way to the other local currency we do that 32 times every second so we hold the funds, we translate them, and it's kind of a currency conversion engine we created over the years that has been very, very effective. and customers can immediately pick up the money and, you know, shop or whatever use case is that has been very, very effective.

>> great hikmet, thank you for your time today. it's always a pleasure talking to you >> thank you, becky, having me here. >> we appreciate it. the ceo of western union coming up, doug braunstein joins us in studio he's now an activist hedge fund manager. he'll tell us why he's now betting big on deutsche bank when "squawk box" comes right back (clock ticking) (bell ringing) it's time. time for a new kind of cloud. the ibm cloud. the cloud that proactively protects your business from threats, instead of just reacting to them. that lets you modernize and move more of your apps without re-writing. that unlocks insights from all your data and puts it to work with ai. get a faster, more secure journey to the cloud. the ibm cloud. the cloud for smarter business. ♪ ♪

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welcome back to "squawk. deutsche bank stock has been cut in half this year. they failed the federal reserve stress test back in june, so why is the former cfo of jpmorgan and current founder of an activist fund taking a stake in the bank doug braunstein is here. leslie picker is also with us. doug, very happy to have you this has made a lot of news in germany. the headline is brave u.s. investor takes a bet on deutsche bank explain the -- it could be courageous, we'll see --

decision to do this. >> thanks for having me. congratulations yesterday, leslie i spent the last year working with a very broad network of financial services professionals. obviously i have a long history in the industry working on whether or not investing in deutsche bank made sense and quite frankly, for eight or nine months of that year, i couldn't get there >> because the stock was too high still >> partially value but actually more importantly the strategic direction in the leadership at the top of the firm and with the change in management and the direction that kri chchristian and the tee now setting, i think it is the most compelling risk/we ward re financial services today >> how much of that is because it is potentially oversold because the bar is lower than it

used to be >> part of the argument is the starting point today that the company trades at a third of its tangible book value. so most european banks trade at about one times tangible book, slightly below u.s. banks. trade at about 1.4 times tangible books you start from the perspective that this is cheap on any measure. >> right >> you have to ask yourself the question why right? and the first question you ask for financial services firm is, is book really book? and what's happened over the last seven years and this is really what john did during his period of time is they took 32 billion euros of charges, 15 in litigation, 17 writing off bad assets they raised almost 30 billion euro of new equity and when i announced my investment yesterday, the entire market value for deutsche bank was 18 billion euro.

you start from the proposition is the balance sheet good? and the answer is after seven years of pain, you've got a highly liquid, well-capitalized i would argue conservatively marked balance sheet. >> let me ask this does this company have to remain independent? this is from your former boss jamie dimon. he was asked just yesterday whether jpmorgan would ever want to buy deutsche bank this is what he had to say he said it would not make any sense. if you only buy a company just to consolidate it, it's almost impossible to do without killing the patient. i don't know if that is a commentary so much on deutsche bank in terms of your own investment, but is this a company you think will ultimately get bought out by somebody else? >> the real story for deutsche bank is the second part which is this is the most compelling self-help story in financial services, right? so you start off with a very clean balance sheet, but the company's not earning any money.

right? and so what's been important in our investment thesis is the new ceo has articulated a compelling plan to return this bank to sustainable profitability. so the value opportunity for investors today is all about self-help. ultimately, andrew, is there further consolidation of financial services almost certainly is there further consolidation in europe and germany specifically probably right? but there is so much value creation that is available to the company and its shareholders just by fixing their businesses. that's the most important thing. >> just to hear -- i'm kind of reading through the lines on what you're saying there it sounds like you're saying it could get bought and it's a good thing. but even if it doesn't, it doesn't matter because the bank's going to be fine on its own?

>> yeah. that's probably more subtle than i want to be i think the most important thing this management team can focus on today is fixing the balance sheet. over time if they play a part in the consolidation, they should play it off their front foot, not their back and there's so much value -- >> meaning being an acquirer, not an acquiree? >> for the near term and i'm really talking the next three to five years, there's so much opportunity. and let me give you one example of that. right? 65% of the company's revenues are in traditional commercial banking operations right? steady, low capital intensity, sticky businesses. not sexy they don't make the front page of "the new york times" or "the wall street journal. but they are very attractive businesses and one of the things that christian has said as the new ceo is we're going to focus our

capital, our emphasis on the pcb and the global transaction bank. that's exciting from a shareholder standpoint >> now doug, when you made this investment, how do you look at the downside here? because a lot of people look at the return on equity for deutsche bank well below peers well below your alma mater jpmorgan as we kind of get into this -- what a lot of people say is later in the cycle, do you think deutsche bank can withstand a recession at this point? with the balance sheet it has right now? or do you look at kind of a moral hazard situation where it's the crown jewel of deutsche bank and the government would step in if there were something bad to happen to that bank >> yeah, so leslie, i actually think that today's price we've incurred all the downside, right? trading -- they're literally trading below their tangible book value that they traded during the financial crisis. which is why i think the relative risk/reward is good

>> why do you think others have indicated that this is dead mon money? >> if you've been a shareholder since 2010, there are literally bodies left by the side of the road right? it has been a very difficult road to travel on. people are exhausted they've heard a lot of promises and a lot of unkept promises so it's hard to get excited. i'm a fresh new look and after a year of work, i think we've bottomed and the most important thing i could argue today that's different than the past, right there's actually three quick things one is that balance sheet is now clean, repaired, well capitalized. our starting point is better this is the first time you have a management team that's articulating a clear vision of

how to make this bank profitable >> and you don't think the culture is broken behind that? >> no. quite the opposite one of the things that's interesting when what you hear people inside say is christian in the first three months in his job made more decisions than the previous ceo in three years' time so i think this company was thirsty for leadership, thirsty for execution. i think they picked the right guy for this job at this time. >> just to put a fine point on it we talk about activists and people think this is a quick buck thing how long are you into this for >> first of all, you know it i don't use the phrase activist for myself i'm an engaged shareholder

>> i'm not saying they say that about you. >> in fairness, my former boss, you know, he proactively looked out to the shareholder base and listened to what they had to say and he's done pretty well by the shareholders so i think there's a pretty good model there. having said that, you know, i worked actually with a company where we raised money. greg has been a fantastic partner. part of the principle behind this was changing a business and moving it forward whether it's big or small takes time. and we've raised long-term capital. and we're in this for the long run. and quite frankly, we think the opportunity for those that are, you know, going to join us in the long run, there are few -- >> that was my question. you manage to double your money by the way it's a low base, when

do you get out >> we get out when we think we have done the job we've told our investors we would do. which is turn this bank around and we move our capital to some other opportunity. that should -- i'm hoping it's sooner, but we have a long time to get there >> when does the new management team's vision actually trickle down to earnings because obviously, you know, we've seen deutsche bank continue to lose market share in equities and other areas to their u.s. peers. we see a huge revolving door from the top bank bankers at the firm when do these plans start to work it's been six months since they've been in the job. >> this is part of the benefit of having been a senior executive myself it takes time. and the problem with this market -- and you've had lots of folks talk about it -- is it's a next day, next week, next

quarter market but turning a business takes time i will tell you you're already starting to see results in the pcb. right? so for the first nine months of this year, the pcb has actually had a 6% return on tangible common equity. what's interesting about that business just as an example of where the opportunity is is they bought post bank in 2010 and they merged post bank with deuts deutsche in 2018 so it took them a long time to get there, but christian and the management team, they actually have a plan in place to generate it's been approved by the labor unions almost a billion euros in synergy over time. you're just seeing that happen >> doug braunstein, we wish you luck if you succeed, deutsche bank succeeds pitch is good for everybody. we appreciate it good luck. when we come back, jobs in america. we're going to get ready for today's big report

"squawk box" back after a quick break. dow futures up 333 points. the nasdaq up by 27. we'll be right back. place, the xfinity xfi gateway.

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the countdown is on. we're just a half hour away from the all-important jobs number. the anticipation, the data, the reaction, and the analysis are all straight ahead as wall street gets set for jobs friday right here on "squawk box. live from the most powerful city in the world, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in sometitimes square i'm joe kernen along with becky quick and andrew ross sorkin the dow is up. after a couple real solid sessions wednesday and thursday, this would be -- what happened on tuesday

i thought -- would this be the fourth or the third? >> this would be the fourth. because we've seen three days of ups from the market. >> the first day was the biggest. then the second one on wednesday kind of petered out. >> but thursday came in strong built through the day. >> and now today is up 315 it's a pretty bigweek. got to be closing -- this would be over a thousand points for the week, i think, on the dow anyway as you can see there, the nasdaq's up even though apple is one of the big losers today. >> the dow's going to get help from exxonmobil today. dow component out with its third quarter results just moments ago. a moment ago not moments. profit of $1.46 a share reported that's well above what the street was looking for the street was looking for $1.23. also making other comments about what they're seeing in terms of capex. $6.59 billion. and you can break out a few other numbers that they look at

through this too obviously the street cares about up stream, downstream. net of $681 million. international upstream net $3.6 billion. u.s. downstream net of $161 million. upstream net $660 million. better than expected numbers as we saw oil prices high throughout that quarter. oil's been coming down significantly in the last few weeks or so. you can see the dow component is up by 2.9% on this news this morning. that will be further helping the dow. although the dow was up by 332 points before we saw this. let's get you caught up on other stories investors will be talking about this morning too we are 30 minutes away from the key number of the morning. october jobs that data is due at the bottom of the hour. analysts expect that the economy added 188,000 jobs last month. they think the unemployment rate will hold at 3.7%. apple beating street expectations for its fourth

quarter revenue and profit the iphone maker earning $2.91 a share compared to the street expectation of $2.78 but as you can see, apple shares under pressure because of weaker than expected iphone shipmen numbers and light current quarter guidance and the news they're not going to release sales and alibaba out with quarterly rernings a short time ago. earnings per share came in above consensus even though the revenue fell below estimates to a total of $601 million core commerce revenue up by 56%. clout exce that stock is up by 5.9% we have big trade news this morning. the u.s. and china making progress towards a trade deal. eamon javers is in washington

with the latest this morning >> reporter: good morning. a lot paying attention to that report which suggested the president had told people around him to begin drafting the terms of a deal in terms of trade with china. but people should be cautious with that report it is out there, but i've talked to a senior administration official this morning who says there's no truth to it senior administration official telling me there's still a long way to go in the negotiations between the united states and china on that. and that mirrors what you've heard administration officials saying publicly throughout the week this week on wednesday i had the opportunity to interview larry kudlow the national economic counsel director at the white house. larry kudlow told me the negotiations with the chinese haven't been particularly intense recently as you would expect if we were on the verge of a deal. >> we haven't had intense talks lately, but there's always communication. so who knows maybe -- i'm not forecasting i'm just saying it is possible

some good, positive things could come out of president trump/president xi talks it's possible. >> reporter: so on wednesday, larry kudlow putting it in very conditional terms saying there could be a deal here, but he wasn't promising anything. in the time frame for that, he was looking at the g20 at the end of november in argentina when we do expect president trump and president xi jingping to meet face-to-face to talk about a number of these issues kudlow telling me on wednesday, though, the official agenda for that meeting is not even set yet. the expectation had been for awhile that the chinese would wait until after the midterm elections next week before they began to seriously talk about any deal because they wanted to take the measure of president trump in terms of his political standing. one of the big challenges in all of this is chinese intellectual property theft it's a difficult issue to

negotiate because theft by its nature is something you do in secret and you don't admit to. how do you prove a negative and prove that the chinese have stopped stealing american intellectual property? one way the department of justice has been doing that over the past week or so is really cracking down on a number of these instances of corporate espionage. on tuesday chinese intelligence individuals were accused of stealing aerospace secrets on thursday a chinese state-owned company was indicted there's been a crackdown in place, but how do you translate that to deal terms to guarantee the chinese won't continue to do that in the future that's the big question. a big challenge here as they continue to negotiate in washington >> real quick, just in the timing issue because you talked about the midterm elections. the idea china was waiting to see what the outcome would be. perhaps there's incentive for the president to try to get a deal going before the midterms

how see the timing >> reporter: you mean could get a deal before the midterms >> is that even on the table >> reporter: everything's possible in this world, right? as we've seen. and we saw with the u.s./mexico/china deal things looked dire before the deal came together everyone throws up their hands, walks away from the table, sometimes for dramatic effect and then you do get to a deal. but even that one took weeks and weeks after we thought we were ultimately in the zone where there could be a deal. so in this case, you know, i think that people should be cautious with this report this morning. i'm told that it's not true and i'm told that the two sides are a long way from a deal. >> the report is not true that there's a workup for a national trade pact >> reporter: that the president is asking people to actually draft terms of a deal that we're somehow close to a deal. the senior administration officials suggesting we're not close to a deal and there's a long way to go between the two sides. that's this morning in reaction to that report

>> you know what is true, eamon? >> reporter: don't jump the gun, joe. it's not weekend until you tweet it out the end of the day. some of us have to work all day though >> which is the possibility of a weekend tweet later. >> reporter: just over the horizon. >> eamon, thank you. important clarifications we'll talk to you soon we are less than a half an hour away from the october jobs report we're going to talk about that, talk about trade, and ask our panel what they are expecting. joining us now is aei economic policy study trukter michael strange, aaron klein, richard bernstein, and howard ward let's talk about the last thing eamon said just to clarify and -- >> the weekend >> no. not that the last point he was making about this report he's hearing is not true. the idea the president directed

them to get a strategy for what you could see on a trade deal. how important is that and how important is this overarching idea that larry kudlow said we could be watching a thaw >> i think from my opinion, i think -- i describe this whole thing as shooting yourself in the economic foot. you've got a strong economy, healthy economy. then you do something like tariffs. and every time the market worries about volatility notice there are not going to be tariffs, trade wars, and things like that. the market bounces back. that's the fundamentals. so i think what's happening here is perhaps maybe politically, i don't know, you're getting the realization of a little bit of shooting yourself in the economic foot. that's the way i would look at this. >> what you just described is a different scenario than we used to see when we first started hearing about these things, the market kept ignoring all of these things every time you heard an idea it might be for real we were getting into a trade war, the market sold off.

you describe the opposite. maybe it's been factored in at this point and it's upside from here >> correct i think maybe it's a bit temporary because tuesday is election day we'll see what happens on wednesday. but i think the important message in all of this is if you don't impose tariffs, if you don't have a trade war, the u.s. economy, global economy is going to be fine that's the message for the market, i think. >> howard, do you agree with that >> i do. but i don't think it's a coincidence the president made the phone call yesterday a few days before the midterm elections. in my opinion with all due respect to the president, he's talking up the stock market before the midterm election. there have been no discussions taking place between china and the u.s. there will be no deal next month. i challenge the white house to bring us a deal which we will then celebrate it's not going to happen >> so you would not be optimistic in terms of looking a at the market -- what is your overall call on the market right

now? we've got the jobs report coming out. you've got the fed >> you take advantage of the decline we've had which is material for a lot of great companies that are down 15%, 20%. the overall market down 10%. so i like stocks but i don't like stocks on the basis that we're going to have a trade deal next month because i don't think that's going to happen >> but you seem to think it's not material to what's happening now or it's been priced in >> it absolutely is material to what's happening now -- >> but you think it's priced into the market? >> there are bargains to be had in the stock market regardless of -- >> irrespective of china >> exactly but i wouldn't buy any china deal play. i wouldn't like the idea of adding the stocks on the basis that the tariff war is going to be over next month it's not going to be over. i think it's going to get worse before it gets better. >> and very quickly i want to get to our economists. but from a market perspective, from each of the two of you, what's a good number, what's a bad number is good news good news or is higher average hourly

earnings something that would concern people because it would mean the fed is closer >> i think the big number here is not necessarily the jobs number, but exactly what you said, becky. the wage numbers and what's happening with wages. you know, it's been our contention at our firm for some time we are in the very early stages i want to emphasize very early wages of a price spiral. >> that's a scary phrase >> it is a scary phrase, but there's plenty of opportunities out there because of that. because most investors are not in what i would call pro-inflation assets everybody is still positioned for disinflation if you're willing to step out, there are good opportunities >> i don't want to speak for steve liesman but he was here in the 7:00 hour and he said investors ultimately want better -- as long as there's growth and better numbers across the board, investors will see past this as a short -- if in fact the numbers come in hot, the market may not like it in the short-term but long-term they would have to >> i agree look, you want a healthy economy. that's what these numbers are

going to show underneath it, i think. you want that to continue. i think there's a subtle shift going on, though, to some extent towards -- because of the tight labor market, there's a shift going on >> real quickly you think we're headed towards wage price inflation spiral >> that's only a matter of time, i think. but there is some hope that that can be contained because the global economy is cooling. so there is -- we're going to get 3% wage growth we're practically right there now. the question is do we go to 4% which has been a precursor to problems in the past that's still a ways out. >> michael, let's talk about this jobs report we're going to get in 15 minutes' time. in that number, you'll be digging through what there's going to be noise from hurricanes there's going to be noise from seasonal hiring that's taking place. what should we look to as real indicators of what's happening in the economy >> that's right. we'll look at what the performance has been over the past six months. there was noise from hurricanes last month and this month.

what i'm saying is a strong underlying trend, the fundamentals of the markets look like they're quite strong and improving. i think what's going on with wages is the most important indicator right now. >> okay. how about you, aaron >> well, i think i'm going to be looking at three things. first, wages that's really what we're after that's key underlying thing. the second thing i'm going to be looking at is employment we're getting close to the peak we had before the last recession. i think that's a good indicator of what's happening more broadly in the labor market. and the third point is the u-6 indicator. which is the broader view of the unemployment which gives a better feeling for those that are part-time for economic reasons or more marginally attached for the labor market. it's also near lows, but i want to see where that's moving

>> one other thing i'll add to that we heard from a few economists earlier this morning is watch the manufacturing jobs level too. because we've now seen two months of flat to down numbers for manufacturing. that's a concerning issue that'll show us about what's happening in the real economy too. folks, we will be back with more from our jobs panel in a bit coming up when we return, exxonmobil's earnings are out. we'll get instant analysis and reaction stay tuned you're watching "squawk" here on cnbc hey, what are you guys doing here? we're voya. we stay with you to and through retirement. so you'll still be here to help me make smart choices? well, with your finances that is. we had nothing to do with that tie. voya. helping you to and through retirement.

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leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. welcome back to "squawk box. a look at the futures right now. they're up 214 which a positive. but they were up about 350 earlier after the exxon report which was good >> they were up 320 right before >> there's eamon's report right there. it was right at about 8:05 when eamon said that the bloomberg report that the president had ordered his staff to draw up the outline of a trade agreement with china, he spoke to a senior administration official who told him that was false and then we've gone from up 350

to about up 212. and howard ward was jumping all over the possibility of this happening. he wasn't positive either. >> this is an administration where there are two camps on this >> you heard larry too >> larry said a thaw from his side of things >> larry said it's possible after the meeting down in south america that something might happen that's not until the end of november >> that was larry on wednesday on thursday larry said this could be a thaw. but you have to remember that there are two camps in this administration navarro and other who is would like to see them and wilbur ross who would like to see them keep running with this so it's hard to -- >> isn't larry a free trader >> yeah, he is completely he's in the camp that wants to see this get resolved. >> larry wants to see a deal navarro a z a differe-- has a dt approach to this >> we're asking china for major concessions to the way they conduct business this isn't going to happen overnight. this is a long slot.

>> we referenced that because the dow component is up a couple of points. let's see where it is based on the results. better than expected earnings. quite a bit better up 2 percentage points joining us, raymond james senior vice president and equity research analyst pavel, i'm not sure why, but you expected a big miss on earnings. i don't know whether you were including charges or what. but they earned $1.46. you were at $1.07 or something, weren't you? why was that off by so much? >> yeah. so we always focus on controllables. exxon has all kinds of moving parts. income tax was a big one this quarter. a lot of the earnings upside was simply from lower than expected income tax so not a very high-quality beat. the metric that i would encourage everybody to focus on is production.

this was the ninth quarter out of the past ten with production down year over year. the rate of decline has slowed this time it was down 2.5%. >> so that is -- for you that's the whole ball of wax there is whether they're replacing reserves or how much they're producing. the natural gas was up, but what was down >> well, so actually liquids were off just by a hair. and natural gas was down exxon while everybody thinks of it as an oil company, close to half of its production is actually net gas a lot of that is in the u.s. and as i think most people know, u.s. natural gas prices have been very depressed. exxon has practically stopped investing in that part of their

business this is what they bought from xto. not the best decision on their part so that is in steady decline the other source of big declines is european gas where you got wind and solar essentially killing gas prices there for many years now so that's a source of major decline. but, you know, i will say one of the nice metrics here was u.s. liquid so some of this is now permian bas basin. so that's silver lining. >> all right so you think at 80 -- 82 or so you think that's over valued here you have a long-term negative view on the prospect for the stock? or you like the dividend or what >> the dividend yield is high and it's certainly safe. on the other hand, here's what i would say.

for people bullish on the commodity story, this is not the best way to play that by far >> all right pavel, thanks. >> simply not enough operating leverage to oil. >> all right $340 billion company, though, but pavel, thank you okay coming up, the big number. we are just minutes away now from the most important number of the morning coming up at the bottom of the hour we'll be there in just a moment. stay tuned

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( ♪ ) and your free wi-fi will start shortly. enjoy your flight mr. jones. world's best inflight entertainment. fly emirates. fly better. we are just minutes away from the government jobs report. let's get final predictions. we're almost out of time be fast with this. >> 165 i'm worried about noise from the

hurricanes and service sector weakness >> aaron klein >> 161 but what i'm looking at are wages which i hope will pop. >> howard ward, how about you? >> 210. >> all right way to do it fast too. steve liesman? >> 214 no ability to correct for hurricanes in my model but 214. >> richard bernstein >> 190. >> and rick santelli >> 230 >> ooh >> bold. >> playing price is right out there. >> we only have about 30 seconds before we have to get to the number, but the selloff we saw in futures, was that directly linked to what eamon was telling us if that report from bloomberg was not correct, that the president did not say to go ahead and work up a trade deal, a trade pact, is that what took steam out of this? >> oh, i think it definitely had part to do with it but i think the equity markets

would have had that same move anyway that was lot of pent up buying >> okay, rick. thank you. we're going to get back to everyone in a moment we have the futures for the nasdaq actually indicated negative at this point the dow up by about 210 points and we will send it over to ylan mui with the number. >> 250,000 jobs. payrolls rose by 250,000 jobs in october. the unemployment rate, unchanged at 3.7%. average hourly earnings, those were up 5 cents last month to $27.30 over the year, they're up 3.1% that is the biggest jump in wages since april 2009 as for revisions, september was revised downward by 16,000 jobs from 134 to 118. august's number was revised upward by 16,000 jobs.

270 to 286. so those cancel each other out we're seeing 218,000 jobs. no sector lost jobs last month we saw particularly strong growth, however, in health care which added 36,000 jobs. manufacturing added 32,000 jobs. particularly in durable goods. leisure and hospitality, that rebounded by 42,000 jobs after a weak september because of hurricane florence the labor department said that hurricane michael had no discernible effect on last month's data the labor force participation rate, that ticked up 0.2 percentage points to 26.9. guys, back over to you >> all right ylan mui, thank you so much. market is reacting positively at least for the equity markets

the dow futures are right where we started things. up by 201 points that's about where we were just beforehand and that's because the number, the top line was better than expected at 250,000 versus what the street had been anticipating 3.7% unemployment right in line with expectations. wages, a little hotter than expected i guess you take the good news and weigh it all out with the hotter the number wage growth and here's where we wind up right now. let's get reaction from our panel. rick, i want to start with you because you were closest to the number 230,000, you said. the number game in at 250. >> you know, i'm optimistic. i thought there would be some comeback from last month's rather dismal134 which now is more dismal at 118 i look at this and i see so many things that are important. 62.9 on the labor force participation rate that really makes me feel good we upped that by a couple of tenths 3.1 hourly averagely earnings on a year over year basis that's something to contend

with and i know i've had a lot of smart people on as guests this week like lacey hunt saying the metrics seem to be bottling up, see seems to be contained. maybe these numbers will take time to push through in measurements that the fed and investors pay close attention to but these are important issues and i know that wages, the most expensive aspect on any balance sheet of any company is obviously the people that isn't always a stock market plus but i think that from a general perspective, i think this is a really, really good report and the market's going to have to contend with the notion that sooner or later, these wages are going to spill into other areas that the market's going to be more discriminating on with regard to future investing strategies >> but you're right. yea for workers now to see that long-awaited wage growth steve, you were looking through the numbers and commented on manufacturing. >> you had mentioned it, guests

mentioned it earlier it's pretty strong 32 i do want to take issue with this contention by the labor department that there's no discernible weather impact in here and i see, for example, leisure and hospitality was zero in the month of september it was 42 in october retail was minus 32. that came back to be plus 2. i like to take these two months together and get an average of 180. i think we got a little bounceback this month. i can't be sure. the other thing i want to remark, one of my bob by horses here, is the inability to count government employment. and i've watched this over the years. almost all the september revision came from revising down government >> that's not just federal though that's local too, right? >> government can't count government i think that's one thing they should be able to do >> how long does it take for markets to like jobs

you said the end result is the markets always end up liking a lot of jobs. not right away maybe. >> sometimes right away. >> not today >> they like it today, don't they >> it's 182 now. that's a lot 250 is a lot >> it takes longer for the market to get to that number and say, okay -- >> there's a nightmare scenario here, if i might that scenario is the idea you have all of this stimulus into a full employment economy that leads the unemployment rate to drive down and puts the fed in this position of -- i mean, we had guys yesterday talking about 3% unemployment rate what do you do if you're a policy maker >> the fed can make a mistake by jumping the gun on looking at the number of three. but not whether inflation is a problem. >> i don't think they'll do that, but i think they'll assume there's an inflation -- >> heavily orchestrated one soft landing, really? >> you can say that. but they've also orchestrated two of the --

>> i think the u.s. economy orchestrated that. >> hold on >> the fed can get out of the way. not screw it up. >> they jumped in front of the train and held it from going off the rails. >> with that administration, you mean you're right for that eight years they did need too stay at zero >> i'm making a comment on the fed being clearly responsible for some of where we are today >> i'm just saying that usually if you screw it up, it's because you go up too much before you really are -- i mean, they bring in the -- they overshoot, right? >> let's clarify in the 2000-2007 period, they raised every meeting by a quarter point and were criticized for being what? too slow >> i know. >> and they're being criticized now for being too fast >> just keep in mind, except for volcker, the fed has always been

a lagging indicator. they don't actually set policy the way everybody believes they react to the economy. >> although they've also been the thing that has killed a lot of markets brought on bear markets. >> yeah. they go too far. agreed they go too far in every single cycle. the reason they go too far is they're following lagging indicators like inflation. and the front end of the economy is already slowing down. and that's the end of a cycle. >> so they're data dependent but you say the data stinks -- >> no, they are data dependent but what does that mean? it means you're a lagging indicator. >> that's just it. if you're following information that is outdated, how strong can you be >> exactly >> so in 2005, '06, and '07 caused it because they raised too much >> no. >> that's what you said. >> -- the two longest expansions >> i was just asking you to be consistent, joe. >> we know what orchestrates it's the american --

>> it's cable television >> american exceptionalism >> oh, my. >> the problem the fed has, and the reason the fed typically overdoes it is there's an 18-month lag between changes in monetary policy and its full impact on the economy. as richard said, they're reacting to today's news they should be thinking about they've got 18 months of tightening in the pipeline so they eventually will go too far. but they may not hit the market and the economy for another year or two >> you think it's a dynamic economy in the way -- >> i think if you didn't have one, two, three, and four i'm not sure where things would land >> you think it's the fed? >> i think that the -- >> the fed needs -- the fed's mandate is price stability and jobs >> it doesn't have to be either/or. you have a central bank that guides the economy back towards what are perceived to be neutral

rates. you have a dynamic economy that dynamic economy created a massive meltdown in '07 and '08. >> can i get -- >> and that might have been assisted by the fed. >> can i get back to rick for just a moment? rick, let's talk about the reaction we're seeing in the markets. we'll stick with equities. dow futures up now by 180 points we had been up by 340 this morning until eamon javers came on and said the report that the president had ordered that his staff to come up with some sort of a trade pact we could work out with china was not true. we saw the futures come down to up about 210 then we got the numbers from the jobs report. better than expected jobs, but also hotter than expected wage growth and that has taken us down to about 175. what do you think of these issues that are overhanging the market what's the reaction there that you're hearing on the floor? >> listen. my litmus test is always the same if there's news and we never know how tightly we can tag it

to the movement. i always assumed it didn't exist. are there anomalies that jump out at me that wouldn't have existed? to some extent yes but i think today's dripping away and the very notion, i think the china news yesterday actually is more of a dollar related event. the dollar really got whacked yesterday. and i think if you've watched the accumulation of the dollar against the chinese yuan and tried to calibrate that with tariffs, that all seems to make sense. if you're a dollar bull, the last thing you want is a shaking of hands between xi and trump. that's going to hurt your position for awhile. all that being said, interest rates have firmed. they're not much higher than they were before the data. but they've firmed remember, they have been firming. we are right now one basis point away from four-year cycle highs on 30-year bonds we're six basis points away on 10-year notes. so that complex is firm. the equities, they're going to

have to deal with 3.1% listen i understand the logic of higher rates actually being good if it's for the right reasons, but nobody really knows if it's for the right reasons. i think at the end of the day after the volatility we've seen going in front of a weekend, stock investors are going to be a little bit nervous about rising wages >> you think we could have a 50-year boom if we just did qe-infinity? i don't know why we don't do that >> we kind of are. >> joe, you and i are about the same age if we didn't care about everybody else in the world, sure, let's do that. it'll take you maybe farther than people think. but in the end there is going to be a reckoning and everybody could whine about the fed and whine about jay powell, but whether he's gone too far too fast at least he's going in the right direction the rest of the world will suffer setbacks that the u.s. won't because we're discovering religion if there was a recession next month, what is japan -- what are japan and europe going to do to contend with it? go further into negative

territory with rates oh, yes. the banking system the transmission to the economy would just love that wouldn't it i think everything is fine considering that central banks have put us in orbit and they don't have a computer for re-entry i think things are looking pretty good. >> all right aaron -- is that aaron or michael? >> it's aaron. i want to make two points on the fed. the first is i am concerned that they're overshooting but the fed did something very important this week that's going to have a big impact which is it loosened bank capital rules. which is going to potentially accelerate and put fuel into the economy. so everybody thinks of the fed as having this one monetary policy level but their bank capital and capital regulatory situation also has a big impact here so the fed is tapping the breaks on monetary policy joe and rick, i sometimes agree with you on points about the fed here this generation is acting like it doesn't care about the future with the huge trump deficits

which will cause a day of reckoning. >> all right michael, i'll give you -- >> we've had a lot of experience with deficits since 2008 look at '09, '10, '11, and '12 >> yeah. those were good ones what did we get for it >> wasted money. wasted un. >> we've got a huge difference, joe. a huge difference to a series of government spending when the economy is falling -- >> he's got that. >> and then when it's growing in potential. >> three quick points. one liesman might not like deficits are a problem trump tax cuts added to them the real driver of deficits is entitlement spending on middle class seniors. got to get that taken care of. the trump deficits pale in comparison to that threat to the economy. two, the fed is right to be increasing rates. they should think of the pace. i'm skittish about a rate increase in december all the good news we see today suggests that we might want to let the economy run a little hotter for a little longer

but certainly rates should be higher nine months from now, a year from now than today and three, if you look at the six-month average of job gains and compare that to the average over the last five years, what you see is that we are still in the middle of this cycle we haven't entered the late cycle. and that's a remarkable thing. >> all right, guys we're going to wrap this up. thank you, all and just remember, folks, for anybody who missed it, 250,000 was the jobs report. the street had been looking for 188,000 jobs unemployment came in as expected at 3.7%. but it was the hourly average earnings up 3.1% for the year. we've also been watching the futures come down even before that as our very own eamon javers joined us to say that the report that trump has ordered his administration to come up with a trade plan for china is not true

eamon's going to join us later to talk about all those issues but you're still talking about the dow futures indicated up 185 points after the dow gaining more than 900 points over the last three sessions. >> you know, the bloomberg report notwithstanding, you did have the trump tweet and the china markets, i don't know whether they were up on the bloomberg. >> i think they were up. >> both. >> but also on the trump tweets. >> both. >> you're hearing the trump tweet was worse than 200 >> we will talk about all that and more peter crouse is going to join us he's here to tell us about how he's managing the recent market volatility and why mutual fund managers should only get paid if they make money for you. he's got a new firm. stay tuned you do that, you should meet our newest team member, tecky. i'm tecky. i can do it all. go ahead, ask it a question. tecky, can you offer low costs and award-winning wealth management with a satisfaction guarantee, like schwab? sorry. tecky can't do that. schwabbb!

calling schwab. we don't have a satisfaction guarantee, but we do have tecky! i'm tecky. i ca... are you getting low costs and award-winning wealth management? if not, talk to schwab.

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to talk about the markets and a new approach to investing. i want to get your reaction both to these numbers and the way you think investors are thinking about all of this news whether it be the china piece, the jobs piece, all of that and how maybe the fed is thinking about all of it >> look, i think your panelists were all talking about the right issues the market is clearly more volatile the market is going to be more volatile until there is some trend that develops. i think the next trend since we're late in the cycle and earnings are at peak or perhaps past peak is going to be a more volatile probably downward move in the market. you know, there are people that are saying buy in the dips there are people saying don't buy in the dips. you have this volatility that's going on >> what is peter kraus saying? >> peter kraus would say we are late in the cycle. the fiscal stimulus that was odd coming late in the cycle has

extended theeconomic growth. the recession is likely to be a little longer and deeper than would otherwise be and i think this is a difficult market to, you know, put cash into >> here's the question you are starting a new firm in the midst of that. >> we are. >> and you are telling investors to do what when they hand you cash, do you say i'm going to sit on this for six months >> our investors are quite cautious right now our two activities we currently have are credit fund and emerging market fund both of the managers are actually careful about risk. they both think this is an opportunity coming and so they're keeping their powder dry to take advantage of that >> and to the extent they're looking for opportunities now or putting any money to work, where they would that be doing that? >> well, volatilities increased, so that caused both credit and risk assets to be more volatile in terms of price. so there are disconnects going on there are opportunities to buy

there's just not many of them. >> can you give an example of one that might be worthwhile >> you know, i think -- not specifically i don't like talking about specific positions that we're in but i do think in the credit markets, you've seen spreads, you know, move out a little bit. that'sbit. that created an interest of opportunity and high yield and investment grade and over credit the emerging market world, we have seen some changes in government of brazil kind of interesting of what's going on there and maybe there is an opportunity. certainly more volatility. we have to see how china have this trade dispute and there were some comments is our government ready to sit down and do a deal with china and is there more discussion >> what's the house view on that >> it is too premature to say we are ready to do a deal with china. we need more time to get to some

specific answers with china and i don't think we are there yet >> eamon says a good time would be after the meeting late this month after the g-20 >> to get a deal with china will take more effort in time than sort of wave your hands and make it done. the president will have to decide what he really cares about and i am not sure it is settle yet >> i want to talk about the new fund and a philosophy in terms of pricing for investors, in terms of the fees that investors pay. you have a view that may be, dare i say provacative to your peers. >> oh, it is definitely provacative. i came to the view over long over team that financial matters in the industry where you manage money.

the incentives are you get paid where you perform. the only way is to gather more as se assets >> right >> if i am going to give you my money and trust you, i am happy to pay you when you perform but i rather not pay you when you don't perform. >> right >> when you think about that, why does that exist? it does not exist because look it is better to get paid whether or not you perform, there is no doubt about that i don't think that's a fair deal and i think investors voted with their feet they move out of management and hedge fund because they're not happy. >> what do you think the right fee structure? >> some base fee of what you would pay for, unbundling of the value that's exposed to the market and paying people to perform when they perform and they'll focus on performing and they'll not focus on gathering

assets the more assets you have, the more challenging it is >> do you believe it is impediment >> started this firm, how big do you want it to be there for? >> each of the manager controls the capacity you will take money. you can pay less so each manager is going to control their capacity if we have ten managers and each manager have 3 to $5 billion >> do you want to make the in incentive a higher fee >> two and 20 model is a very challenging model. it is a little crazy to pay people based on beta that means the market went up 10 and you have 25 data you get 100 bases points for

doing nothing because 20% times 5 is 1%. we are charging 30% only on the excess return. if the market goes up 10 and our managers go up 10, they don't get pay anything >> i like the strategy thank you for being with us this morning. >> great to be here. >> good luck with the new firm >> let's get to jim cramer down at the new york stock exchange can the market finally really embrace a really hot job market with wage gains or is it still going to come back to bite us in the rear because we worry about the fed. wow, 250 is great. >> no, i don't think you can say that yet i think it is still scary. >> i just think there is got to be some data that comes out that just says this is more of an out

li lyre than you think. it is the most important report that we have the futures should be down obviously apple's largest stock is down very badly i would not pay up >> you think the market would still prefer a 150 print or a 130 doctrine >> absolutely. >> i think it is a shame i think things have changed in the country, we are using old data of how we view things i think you can have full employment of what we hope for one day. the pockets of the country are way too hot. i get that i am a believable. it is about time that workers made more money. that's what the job cuts are about. the tax cuts are working these people, why should they not make 3% more

why should the rich people make all the money. it is disturbing the futures are going to be down and markets are going to be down i recognize the power of apple bringing down the market it is a shame. these numbers are not what the market wants >> jim, you said all the facts are in >> people are panicking. wall street community hates it when you change any metrics. think they it is about hiding what's going on. they did not give tim cook any benefit benef benefit of the doubt they'll buy any share. you can make more money than sell them back no, we are buying back stocks. >> yeah. if you want to sell to apple, fine i don't want to sell into a company buy back

procter & gamble, does it tell you how many razors they sell? they're trying to get away from the traditional hardware/software of guys who make up these numbers. i like what they did i understand people hate change. what can i say >> we'll see you in a few minutes. eamon javers, your report took 120 points from the dow. why don't you clarify. you know a lot more of what's happening on this. give us your take. >> let's recap, we had this report this morning that there was the possibility of i think the market took it as there was a anthropologipossibility of trh china. and that gave the market of a

sense that we are much closer to a china trade deal especially when we had a tweet from the president saying things are moving along nicely. a senior official tells me it is not true that we are close to a deal with the chinese and there is a long way to go still in those negotiations that would square with what officials have been saying publicly throughout the week would also square with expectations in the washington circle that the chinese would not have any incentive to do a deal in terms of the election. the expectations if anything that's going to happen, it is going to happen around the g-20 meeting between xi jinping and trump at the end of this month that'll put us several weeks away >> the tweet was a feel good i spoke to president xi, we like

each other he's a beautiful man >> yeah, the market took that tweet to heart yesterday >> all the president said that things are going nicely. >> it could be the president says -- the markets take away on that is something that's close that's where it is a whole lot of uncertainty we are not near a clear deal thinking of getting something after the g-20 is optimistic >> the reporters who put that report out this morning are solid, they have really good sources. >> is it possible of a split inside the white house and there is a group of people who think they're working on something like this but maybe are not. >> it is possible. now i am going to leave the realm of reporting and get into the realm of speculation it is possible that there are people in the white house who

wants this news out there and the president himself want s to get a deal he wants something he got with mexico and canada which the administration views it as a big win. the practical reality is there is a long way to go in this negotiations right now intellectual property theft for the chinese is difficult >> you can't confirm and the weekend is coming. thank you, ammoneamon, we got t. make sure you join us on monday. it is "squawk on the street. ♪ good friday morning, welcome to "squawk on the street," i am carl quintanilla with david faber and jim cramer, we'll talk