all right. welcome back to "squawk box. you can see right now things have settled down a bit. dow down about 40 points after being down 170 or more earlier in the session that came after the jobs report was weaker than expected but so were average hourly earnings have a great weekend right now it's time for "squawk on the street. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber coming in 30 minutes, larry kudlow on jobs, china, trade, huawei and more. speaking of the jobs number, 155,000, just weak enough to ease some fed rate hike worries. futures erased a nearly 200-point decline.

more drama at opec as we are still waiting for a firm declaration on a production cut. november jobs growth coming in slower than expected, payroll up by 155,000 jobless rate at 3.7, wage growth remaining 3.1 year-on-year data comes out one day after that volatile session for stocks dow fell more than 780 points before rebounding to close with a modest decline we can talk about the reversal yesterday, but these numbers are interesting. month on month wages revised down >> yeah. this is what -- if you go back and you look at what the fed's trajectory was versus what the data showed, janet yellen would right now -- she wouldn't have put out we will do december. she might have had the option to say we've done a lot, let's wait it wouldn't cause the havoc. now we have to choice. these numbers indicate that

there is downshifting in key parts of the commission, and we haven't even seen the collapse of the oil, the permian is a strong area, a huge amount of information designed to get oil and gas out to export. that's the area of economic growth that's about to hit that will hit hard big decline in january retail hiring, not nearly as good as you would have thought given what executives were saying a month ago >> is it really going to be in the permian a big decline? >> yeah. >> why wouldn't it be what it is, not an increase, but why do you think if we maintain 50 or above it will be a decline >> there's some marginal producers that don't have the money. like a chesapeake. chesapeake is big, but they have to cut back. they won't make enough money these guys are not getting 50. they're getting 35

canada is getting 10 you get 35, your costs are 40, you go to the board and say i want to keep my budget look at schlumberger they were bullish. they thought the numbers are not coming through think about all the manufacturing that goes into getting pipe we use american pipe now i'm saying this is why the fed was prudent to leak to the "wall street journal" that it's one and wait they're not trying to walk things back, but not embarrass themselves they don't want to admit they didn't see, because it's not what you want to do. to analogize, i cut a fella named derek henry, tennessee titan running back he got 50 points last night in fantasy. i'm willing to admit they'rendl of people who are their

mouthpieces, they will never come back and say we have to cut back oi retail not that good healthcare was the leader. >> the goods-producing element got attention. weakest print since march. >> that's what i didn't want a lot of that, i feel what will happen is that, you know, we'll have a negative cpi. i believe that you're not going to see -- look, is it true that of the 604,000 people that get out of prison that we'll hire them is that bad? they did their time. all the guys i talk to say what's the salvation for trucking people come out of the military and people who come out of prison i feel like these phillips curve people, they act like people are unemployable so many companies are reaping the benefits now of big data

the big data shows you exchange a worker who makes 35 for a worker who makes 15, 16. >> so through that lens that drop yesterday was a successful was that the much maligned f.a.n.g. came back then you got -- you were mresed wi blessed with a call from broadcom, hock tan, who said this data area is strong people were saying because of amd's weakness and nvidia's weakness that it wasn't strong that was a false read. i felt good about what hock tan was saying he has a good, broad perspective. in the morning, you still come in, what happens you have the price target cut for apple. a month ago the price target was

raised it's china's slowdown. it's a devastating piece china's smartphone market. she's talking about wearables and services offsetting. i love the wearables and services business, but i see people all over not wearing watches. >> like myself >> where is it >> the battery ran out >> don't you want your ekg >> it used to cost me $2,000 for an ekg, now i just get it. >> that's great. >> let me present you with a different view jamie dimon yesterday, listening to him with becky. very positive. i can go through some of the details. >> versus how he has been when >> he's typically been positive. but i have spoken to him when he's less so within the positive realm, he's

either more positive or less there were some reports this morning this say it's a two-track thing. the huawei, it's not unimportant, but the negotiations will continue the chinese seem poised to actually make concessions when it comes to ip >> wouldn't that be something if they did that? you have that. >> okay. >> you still have a jobs number averaging 204,000. >> now you're doing the average. how about this month >> 173,000 over the last three months >> when you're at 3.7, that means people are unemployed. where does it say we can't have an economy at 3? where? it doesn't, but there was a belief -- >> i'm calling those models into question >> i don't close my ears when you talk i hear you you've been saying it. >> i would think you want to get

some productivity -- >> right i thought -- look, i did not know the average hourly wages would rise by 6 cents. maybe that's something that jerome powell and the rich people in the fed should be worried about. right? the rich people? they have a sixth sense about six cents. >> this is not lennon talking. this used to be the way the country used to be >> and the enormous deficits and what will happen in the bond market dimon did talk about the bond market in a bubble did you look at the bubble anywhere, it being government bonds -- >> did you see the numbers revised down for most banks? >> united states has 1 trillion of bonds

>> there's appetite. where are the usual super fed hawks? where is that terrific person from cleveland who said the first week of october that the economy was white hot? where is she she coming out today maybe friday at 2:00, when the market is down and she comes out. not up like bullard. i'm being cynical because this was the kind of thing that i was embarrassed that they felt they did not see and do the homework to know this was occurring. they're not talking to the right people they're talking to the 27-year-olds who work at their companies. it's a company, and it's not a company performing well. so you're taking a discount to

dimon, muilenburg, mcmillon. >> do bankers ever say there's a do downshift? >> ceos are not paid to be negative >> i was with a ceo last night at a restaurant. he asked are you going to do another restaurant i said my credit line has doubled. why would i do that? it costs me twice what i did for my first restaurant. you think i'm alone? >> i don't >> the business roundtable is releasing the results of its ceo economic outlook survey. dominic chu has that >> the business roundtable says ceo confidence fell in this past quarter to 104.4 from a prior reading of 109.3 this is the third straight quarter that ceo confidence

declined to add balance to this, the reading still remains at historically high levels this is the eighth consecutive quarter that the index exceeded its historical average ceos cited dips in plans for hiring they also tempered down expectations for plans for a capital investment and expectations for sales growth did decrease interesting note about this, in the past, in four of the past six quarters when ceos were asked what they think the biggest cost pressure, it will be for them, they cited in the past regulatory risks. >> in this quarter they said that the top cost pressure they cited was labor costs, followed by material cores, possibly reflecting a tighter u.s. labor market and higher costs. ceo confidence does dip, it's still high, but some interesting notes from ceos on how they feel about tariffs and the tight

labor market >> all right >> that's a good read of that. i think there was a lot of pre-buying going on. a lot of companies feared the tariffs. i had olley's bargain store on he said so many retailers brought in stuff, so many manufacturers brought in stuff because they feared tariffs would go to 25 now they have to offload it. i think these numbers are inflated by fear of 10 to 25 >> are you surprised at how short-lived euphoria from your tax rate going to 21, repatriation, your expensing -- >> from the corporate level. >> yeah. >> look. when i talk to the hard-liners, my friends are hard liners on china. you get the immpression they wee

saying we gave you the large packs breata break. now it's time to be patriotic. they're like, no, now we got the tax break, we want to make more money. this is the mary barra case. >> it is it is. i think these executives are alsolooking at tax returns those of us now filling them out see a huge deduction is not there. >> depending on where you live >> if you live in high-tax areas. >> i don't live in tennessee >> i would point out ceo confidence is important. certainly it becomes important in m&a and dealmaking, but their predictions in this survey are always wrong almost always. >> how about if jerome powell was coming out again today and saying, listen, i want to reiterate what i said two months ago, we have to do one this year, three next year. we may have to overshoot

that was october now it's december. what happens if he were to come out and say that today >> that's why people are saying their shift to going with the press conference at every meeting is the most brilliant move they've done. >> it is, but they also have brilliant people like mr. kaplan paging mr. kaplan. i'm paging mr. aplan, he got i dead right >> we will get university of michigan consumer confidence in about 40 minutes we'll talk to larry kudlow about the jobs number, huawei and trade. >> and sara has her teieinrvw with muhtar kent coming up

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the ibm cloud. i am a techie dad.n. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. let's get to the bond pits rick santelli is at the cme in chicago. >> you know, in my opinion rates are stabilizing, but people watching this will say how can they be stabilizing? two-years are down one on the day, down four on the week 30-years down one on the day, down 14 on the week. i'll tell you why they're stabilizing. a two-day of tens.

see that drop yesterday to the 2.82 level that's technically significant as you open the chart up to august 1st, the last bottom on the left is 2.81 before everything takes off it was the last bottom before we established the double top just shy of 3.25. we have bounced nicely we want to pay attention to not revisiting the low 2.80. there is pressure. you node to go eed to go to theg chart to understand the issues that are difficult for our economy much less our rate structure and various currency issues look at bund yields, hovering in the mid 20s. they have not seen this level since june of 2017 on a closing basis. on the dollar index, it took a hit after today's jobs report. we could argue this were some

good aspects to it the two-day dollar index, you can see how it responded if you open the chart up to early august, yes, we lost the 97 handle, but for our purposes it's trading quite well considering the volatility in the other markets which is leading some buyers into the indoi index. >> cronos is soaring in the premarket as altria agrees to acquire a 45% stake in the company. earlier this week, cronos said they were in talk with altria. they could acquire up to 55. >> sort of like the deal constellation had. cronos doesn't have the scale or technique of canopy.

>> technique >> you want to divide it into medical and wrerecreational the medical won't be merchanting with the chinese >> not giving that up. >> the chinese know their way around opiates >> fentanyl. altria's growth has really come down heavily constellation did it because they recognize it will be a giant growth market. maybe disruptive up to 5$500 billion. so altria is right i've been looking for altria to do something, anything that would show a sign of life, a pulse, nothing >> constellation, altria, other big buyers in the wings? >> molson will be. i think you will see every major

liquor company, big rum companies i think will be involved a lot of foreign -- many foreign countries have similar rules to canada only two years -- only five years ago only two countries had it legal, now there's about 20 this will be a continuing trend. i'm surprised they went so low quality, trafficly >> interesting when we come back, cramer's mad dash as we count down to the opening bell one more look at premarket that jobs number, 155, below the 198 estimate it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail.

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six minutes before we start trading at the nyc a tumultuous week punctuated by a day of no trade at all >> that ruined a lot of the algo guys >> yes, they were not set up for an unprogrammed day off. broadcom an important part of the themes this morning, perhaps. >> yes giant semiconductor company that has been in every area of semiconductors >> also moved into other places. >> a lot of these companies have big yields this now yields 4.6% why? he did a 51% increase in the dividend why? because he is saying, point

blank, hock tan, looking deeper, the fourth quarter results reflect strong year-on-year growth for our networking and commuting offload businesses, traditional enterprises strong, networking strong what does this mean this is an opposite read from that worry in the slowdown of the data center. he's not seeing it slowdown in enterprise cloud spending, not seeing it this could be a savior from a lot of companies, everything from amazon web services, mofticroso to companies we may have forgotten. you might think about qualcomm >> we'll keep an eye on this >> hock tan, congratulations >> opening bell a few minutes away larry kudlow joining us sqwkn e ily on "ua oth street."

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financial capital of the world opening bell in 90 seconds busy friday. it's not just about the jobs number today at 155,000. it looks like we may have a tentative deal out of opec >> y i saes, i saw that >> 1.2 million barrels a day a little less than expected. >> we're at an interesting level. for the consumer, it's not bad i always felt the $50 level is decent enough for growth in our country. we're the bigger producer in the world, but it's something that the fed finally took notice of raw costs going down this will ripple through the entire system. natural gas not down, natural gas up four. we're a giant natural gas producer i think the oil and gas has to be watched because it's a

positive the fed needs tos to come out say maybe a short-term positive, but it's a positive. >> opening bell here at the s&p at the cnbc realtime exchange. at big board, aegon, the dutch insurer doing the honors at the nasdaq, moderna, doing their ipo. >> cliff mason explained this as another wave to go after certificate be kinds of genes. ionis is one i've been following that have done this. they invented a lot of things but also gave away a lot of rights to things i think it's interesting this came to public in this market.

there's ban litteen a little pe allerai algeon the one who will tell the most is amgen >> amgen >> amgen they have the great migraine drug fabulous -- a fabulous pipeline. amgen is unable to tell its story. >> and that's because they choose to be uniquely unable to do that or they're inarticulate? >> damned if i know. >> they just can't tell it but you'll help them >> i am. i have a business plan. chevron and exxon helping the dow owut

intel a laggard. china at the center of this. >> she's terrific, she's trying to make the case that the service revenues will help, they deserve a higher multiple. i remember when she raised, they didn't see this. everybody makes mistakes, including the fed. i look at her timeframe. morgan stanley, previous price target, 2.53 she had gone from 2.26 to 2.53 >> to her defense, several suppliers have warned since that call in november >> yes >> china's real weakness you hope it is apparently style the way people buy, and not a boycot boycott. >> we don't know

>> we don't. we don't >> there hasn't been a widespread call for a boycott of apple products >> no. >> let's not forget the amount of people they employ in the country. >> we should ask larry >> sure. ask larry. >> let's get to larry kudlow joining us this morning. labor department says job growth did slow in november, $155,000 jobs added for the month unemployment steady at 3.7 larry g to have you. >> good morning, carl. >> the three-month average goes to 1.70. weakest consumer goods print since march. adp says job growth has peaked has it >> i don't know if it's peaked we're running 200,000, 206,000 a month. for the entire year through november that's pretty good last month was 250 this month 155 i was impressed with the manufacturing number, which was about 27,000

this has been a blue collar recovery the best blue collar job performance since the 1980s. i think it's a decent number >> month on month, average hourly earnings were revised down un. market will like that news you can blame them >> i don't know. i like higher wages. i like working people getting higher wages i even like broadcasters getting higher wages 3.1% average hourly earnings year on year times hours worked probably running atne near 5% a an income proxy for main street workers, that's good 3.1% you have 3.7% unemployment, carl, as you know. that number you could almost tweak it to 3.6% it was very close on the

rounding error i think it's a solid number. >> larry, it's jim, how are you been >> good, how are you, jimmy? >> okay. i think when i read this number, i think the president made a good case to say, listen, let's let it play out. let's have all these people be employed do you think it's right that an elected official, the president, makes those statements they turned out to be right. >> guy is a good forecaster. i don't have any problem with it i think a lot of things are coming home. i'm reading all these fed officials are now saying that the inflation rate is actually coming down a bit. the economy is growing supply side tax cuts and deregulation is working. there's capital deepening, which is great for productivity and real wages sounds to me like the fed's spokespeople are signaling maybe one more rate hike in december,

later this month maybe no more for quite some time again, the president, as i said a million times, he has a lot of experience as a businessman and investor, so he knows his stuff. >> let me ask you, you were down in argentina i find it disturbing you taught me the notion of red china rising red china rising is not necessarily a blessing for our national interest. when i see the canadians willing to comply and arrest a cfo, that means it's serious business. the canadians don't do our bidding. should we be more concerned about the national interests we have at stake or more concerned about the profits of businesses? >> look, on the huawei story, we've warned them for quite some time, violating the iranian sanctions.

i don't know every detail, but as i understand it we did ask the canadian government to do this they have been very cooperative. we appreciate that very much and, look, we have the sanctions on iran, it runs against our policy why shouldn't we enforce that? i don't know that that necessarily spills over into the trade talks to be honest with you. at the home i rather doubt it. we can get to the trade talks in a moment in terms of the profits of these companies, national security always takes precedence. this is a clear example. >> larry, let's get to the trade talks. i guess, "a," why don't you think it may not spill over into the trade talks, that being the arrest of the huawei executive >> i think it's a separate track, number one. again, i said we warned them this kind of goes to a lot of technical issues, or shall i say technology related issues. we would like china's

cooperation. can't break the law. if you break the american law, you break canadian law, you pay the consequences of that that was the case with other companies and will continued to be the case. these are issues of national security the bigger picture here is extremely promising. that's the point i want to make. i tend to be on the optimistic side of this story i was there. i heard the chemistry. i saw the chemistry between president trump and president xi perhaps as important or more so the documents back and forth, the cables back and forth. we've been working on them for several weeks. it looks to me like we will accomplish quite a bit before i run away with optimism, i want to tell you trust but verify i was on the phone with ambassador lighthizer a few moments ago. he reiterated to me all this has to be monitored, all of this has to be clearly enforced, promises

made have to be promises kept. i don't want to go too far i would say given the china announcements of the last couple days, i believe those are wednesday and thursday that talked about immediate movement certainly in the commodities area, energy, agriculture, industry and the car tariffs, which i think will come down rapidly, and then their willingness to discuss the main issues the most important family jewel issues for the usa, i.p. theft, force the technology transfers, cyberhacking, cybertheft those are the key, key issues. they have a willingness to talk, that was in the cables and notes we have. we'll see. it all has to be verified. you know, call me optimistic >> so, how would you characterize the chances that success will be reached in the next 90 days

>> i think there will be a lot of success in the next 90. i can't say everything it's hard to forecast, david the president has indicated if there's good solid movement and some good action he might be willing to extend the 90 days. we'll have to see on that. that's up to him and his discussions with president xi. we'll get a lot done i'll tell you a quick antidote about this story bob light houhizer and steve mni and i had a couple meetings with their top economics guy. we saw them friday, we saw them saturday before the dinner one of the things so interesting to me is the statement to us that things could change and that china wanted them to change "immediately." that's a word i had never heard

from china they never say yes to anything so far in our bargaining this year i asked what does immediately mean he said basically immediately means immediately. that's a good sign if you look carefully at the china commerce department's public statements on wednesday and thursday, you also see that word immediately not only in terms of opening up markets, lowering tariffs for various commodities and so forth, but also in discussions on key technology related issues. so i can't make a promise here, i'm part of the group that's discussing this. we will wait and see whether it's satisfactory to the president and so forth again, i like the word immediately. i think president trump himself is rather optimistic right now >> larry, on huawei, "washington post" has a piece about executives and whether or not they may reconsider any trips to

china that they have what would you tell them >> american executives >> american executives, yeah >> if i were they i wouldn't stop business or disrupt business just on the basis of huawei if i were they, i would try to help us with all the chinese officials regarding these trade talks. trade openings, tariff reduction, non-tariff barriers of course the technology issues. they should join us. i don't necessarily think they have to disrupt business the center of this discussion, this is an important point i saw this at the g20 plenary sessions we heard it from a lot of top american businesspeople. i was at the brt yesterday speaking on these subjects the center of gravity here has really shifted there's no longer a debate about

whether or not china needs major reforms. there's no longer a debate about the i.p. theft issues. there's no longer a debate about the forced technology transfers or the cyberinterference to american commercial operations there's unity that these problems have to be resolved i saw the same thing at the g20. country after country, we're talking about the need for major reforms of the wto, for example, major changes in china's behavior i think that had an impact on president xi as i watched him at our dinner, it went three hours or something, he and trump going back and forth i think president xi was much more accommodative than anything i've seen or heard up until then i think it's spilling over all i'm saying on this, carl, the rest of the world -- i call it a trade coalition of the willing. the rest of the world is now

essentially agreeing with the united states. there's no disagreement here i think china feels that heat, and that's why i think among other reasons they will be more cooperative and accommodative. i hope so. again, to echo am babassador lighthizer, trust but verify we have to see the timetables met, enforcement procedures met, et cetera. >> larry, you introduced me to peter navarro a brilliant man. i think he knows more about the way china acts and thinks than anyone i ever talked to. he talks about the 2025 domination plan. isn't it time for the chinese to take that back vice president has been remarkable at the apec conference talking about the issue of belt and road and about the notion of chinese forced tagemony don't you think it's time to go

back -- to go back to what they said they would do when they joined the world trade organization in 2001 and renounce some of these what i regard as being war-like comments against our great nation >> i don't like war-like comments i agree. peter navarro is an old friend, valued member of our trade team, so forth jimmy, i would -- look, i would be very happy, very pleased, i think our group would, i think president trump would, to see china make these crucial changes in the trading area, and in the wshgsz t wto. for example, china is no longer an undeveloped country can we agree on that that most favored nations which gives them tariff powers, they don't need that. that's got to be stopped that's got to be part of wto reform which almost every other major country in the world supports china has itself in passing

talked about wto reform. we will learn more as time goes on to see if their attitude is changing i hope it does >> larry, finally to transition to an issue that i think we'll be discussing a lot in the new year, the growing budget deficit, how it may impact your legislative priorities in the administration, isn't it time to admit that the tax cuts are not going to pay for themselves? >> no, i think quite the opposite you and i disagreed about this for two, three years, maybe going back longer than that. i think the tax cuts are working. i think nominal gdp is much higher than people expected. even the cdo acknowledged as much there's a shared gdp because of faster economic growth you know, we're in a good spot here, if you ask me. i hear all this pessimism coming

off wall street. okay, i understand corrections and whatnot. look, we're getting tremendous increases in growth. we're running 3% year-on-year. nobody thought that would be possible we're there. i think for all of president trump's quarters, except the very first quarter when he just came into office, i think the growth rate has been 3.1% at an annual rate for something like seven quarters >> you really think the budget deficit will start falling next year you really do? revenues don't seem to be pointing to that cboe doesn't point towards that. even if we maintain 3% >> yes i think you'll see bigger increases in revenues. the president has already talked about a very tough budget. 5% reduction across the board for non-defense accounts that's a very tough budget the combination of spending limits and economic growth will

do the trick the deficit as share of gdp will come down a lot in the next few years. i don't want to predict exactly, that's the view. as i was saying before, the supply side tax cuts and the rollback of regulations and opening of energy and so forth, we're producing very significant growth with virtually no inflation. inflation is coming in under the fed's target that may be cause for their reassessment i think it's a good position to be in. i do think that we have to spend good time trying to hold back budget spending. i agree with that part >> larry, we didn't get to the yield curve or the trade defi t deficit. next time you're in town stop by the set. >> love to talk yield curve. love to do it, carl. jimmy, david >> good to see you, larry. >> we're getting news from the president this morning as he makes his way to kansas city about new nominations for a.g.

and u.n. ambassador. >> he was my first choice from day one. respected by -- >> making a speech on law enforcement. very important subject i want to confirm that bill barr, one of the most respected jurists in the country, highly respected lawyer, former attorney general under the bush administration, a terrific man, a terrific person, a brilliant man. i did not know him until recently when i went through the process of looking at people he was my first choice from day one. respected by republicans respected by democrats he will be nominated for the united states attorney general hopefully that process will go very quickly i think it will go very quickly. i've seen very good things about him even over the last day or so

when people thought it might be bill barr. so bill barr will be nominated for the united states attorney general position i think he will serve with great distinction. i also want to inform you that mike pompeo and others over at the state department, heather nauert will be nominated, she's going to work with nikki haley to replace nickie at the united nations. she'll be ambassador to the united nations she's very talented, very smart, very quick and i think she's going to be respected by all so heather nauert will be nominated for the ambassador to the united nations. those are two very big ones, i have another one for tomorrow that i'll be announcing at the army/navy game i can give you a little hint it will have to do with the joint chiefs of staff and

succession and i look forward to telling you and i'll see you late later. >> that's the president on his way to kansas city today by the way, bill barr has been ag before under george h.w. bush from '91 to '93. it's been written a big defender of presidential powers worked harding the justification for the panama invasion and so forth. >> look, you know, this is a name brand it's a name brand from a late president that we know is very, i'd say, removed from the way justice wor justice works. it was an independent justice department under president bush. >> h.w. you're talking about. >> yes it was independent that's what a lot of people want they want justice to be this stand-alone pillar of what's great in our country and

that's -- he was -- i wish that that could happen again. >> that's going to be where the tension is given what we've seen with the president's tweets about the mueller probe. >> the tweets were disturbing. it was disturbing to talk about enron and the role of the good career prosecutor. so barr is i think not going to tolerate the kind of things that the president does on twitter. >> other reports suggest we might see other staff changes in the coming days. we'll find out and we are expecting filings out of mueller's office potentially today. >> tell david i'm not taking any of the trade jobs he thinks i'm about to take. >> you're just focused on the fed. >> yes i don't have time to do the fed. i don't have time to work with peter navarro right now. >> we have a transition plan to the fed. we'll be back. >> s&p has reclaimed 2700 and 25k on the dough we're up 75 points.

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time for jim and stop trading. >> wow, jeffreys goes from hold to buy on tesla.

they have balance sheet detox under way. i didn't know -- i guess it's a 28-day plan. talking about musk's erratic behavior makes us wonder if he might be considering reducing his direct involvement in tesla. they think that's great. talking about reduction of -- and increasing the margin here this is a nightmare for the bears. it really is. >> only auto maker up for the year crazy. >> this analyst has a particular set of skills that's a nightmare for people who are short tesla. >> what's on "mad money." >> we have doe mow, major doe mow, a cloud enterprise go to market expand company. then we have danny meyer talking about gold belly which allowed me to get a jim's cheese steak for breakfast at 7:15. is that not golden >> i don't know what gold belly is. >> you can order stuff -- maybe you go to kansas city, you get ribs coming from st. louis and

you can get a lot of food -- >> it gets sent to you. >> chicago pizza. >> yeah, look, i'm going to use it because i think it's -- my wife doesn't watch the show so i'm going to shock her with some things she likes you, she likes andrew and she likes you. she loved the sweater you wore at the party she said why don't you look like him? >> jim, see you tonight. "mad money," 6:00 p.m. when we come back, ko coca-cola's chairman muhtar kent dow is up 86 so they say that ai will put the future in the palm of our hands. that's great. but right now you've got your hands full with your global supply chain. okay, france wants 50,000 front fenders by friday. that's why you work with watson. i analyzed thousands of contracts and detected a discrepancy. it works with procurement systems you already use

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welcome back to "squawk on the street." rick santelli with breaking news we're expecting university of michigan december preliminary read, it just hit the wires at 97.5 that's better than expectations and it actually equals our november final read. if we look at the future inflation notions that are part of this release, well, what we end up with is -- i'm sorry, current conditions, 115.2, expectations 86.1. now let's look at our october financial read on wholesale inventories. they were up 0.8%, close to

expectation expectatio expectations and on wholesale trade sales it was down 0.2% we lost a tenth last month from up 0.2 to only up 0.1. carl, back to you. >> rick, thank you very much rick santelli. good morning, welcome back to "squawk on the street," i'm carl quintinilla with mike santoli and david faber at the new york stock exchange. sara eisen will join us in a moment with the an exclusive, the outgoing chairman of coke, muhtar kent. stick around for that. in the meantime, as we start this friday morning, a big show ahead starting with the november jobs number. payrollsup by 155,000 versus expectations of 198,000. unemployment holds steady. markets responding today as the major averages swing between gains and losses and the anxiety of the trade truce weighing on investors. the president trying to temper those fears tweeting oil prices up as reports indicate opec may have reached a deal to cutout put.

we'll take you live to the meeting in reason is in a few moments. david kelly is here and diane swonk, chief economist with grant thornton talking about the numbers we got what did you think of that and the wage number and the revisions? >> well, you know, stocks evolve, the job market isn't this is what we were expecting the unemployment rate, you take it out to an extra tenth, it hit a new 49-year low. labor market is tightening what's going on here is 2the economy is shifting from third gear to second gear. people are getting nervous about it but that's what's going on. >> we can't not mention the call you had this week that you expect the fed to begin cutting by the end of '19. >> after they raise rates. i have a december rate hike and two next year but david is

right, we are shifting down in growth, we know the fourth quarter will be weaker and we're moving into a year that will be weaker that isn't too weak to start with but at the end of the year we have more head winds and we could change that we could get more tail winds if we get some change in the trade situation and the tariff situation but right now we're starting to see the corrosive effects of trade creep into the numbers and we're seeing the issues going on in the auto sector, vehicle production was down a bit that will be down even more as we go into the year because of the allocation of cars versus trucks and the need to get rid of a lot of car production instead of stuff production in the u.s. >> diane, if you think the fed goes up in rates initially and then by the end of next year it will be lowering them so we're spending no time at neutral. is that what you're saying we quickly realized we've gone too far? >> it's not necessarily that we've gone too far but the economy has fragilities to it and fault lines. there's some breaks in the

foundation and we're not patching them up right now so the cracks are getting larger rather than smaller. they could be patched up with a change in policy but right now policy has not changed actions speak louder than words and what we've seen is although the administration is trying to move forward and trade agreements, they have not backed off on any tariffs they've levied so far even though they've come to tentative agreements with our trading partners so that's the thing that we're the most concerned about and the spillover effects of that, weakness in china, what that means on knockoff effects it's not the direct effects of the tariff bus it's all the contagion effects and collateral damage of a weaker china.s but contagion effects and collateral damage of a weaker china it's the second largest economy in the world >> david, isn't this the kind of number you want? >> it is and it's very important that everybody keeps their nerve here, including the federal reserve. the federal reserve should raise rates in december, they should raise in march and june. i hope they stay at neutral.

because the problem is the moment the federal reserve panics, everybody will panic and so while i get it that the economy will be -- will grow more slowly next year, it wouldn't be anything -- any problem with having a slightly lower federal funds rate by the end of next year i think the fed should move to neutral, stay there and let this expansion coast for as long as it can >> you've been -- thinking back a couple years ago, you were -- you wish they had gotten an earlier start. >> absolutely. the problem is that the federal reserve is like a knight with one sword and two dragons and the inflation dragon isn't a problem but the asset price dragon is. asset prices across the whole economy have been moving up for years and you let that get out of hand, it bursts and it's an ugly scene so the federal reserve needs to get to neutral in order to holds a asset prices going up to quickly. >> that's straight out of the op-ed piece the other day, diane. >> i wanted to add the one issue the fed is watching closely is

corporate debt and corporate debt has gone up quite a bit and by the end of the year i expect the fed will do the december rate hike. that's a doubling of interest rates in a year, they're low but that interest expense is going up and i think that's where the fed is looking for some of these tipping points that might not be what they once thought would be at a neutral rate so some things in the economy we've extended and pretended in many aspects of the corporate sector and when we should have been restructuring earlier in the cycle, a lot will be pushed out to when rate hikes are higher and that's one of the concerns the fed has and it's certainly one of the concerns i have that going forward. >> david, i guess the way the corporate sector in general also reorients itself is interesting here you're starting to secure more about balance sheet repair, we're going to be careful about how much we do in buybacks and how much more debt do you see anything that's more of a pronounced shift in that direction? should that draw more from next year's growth? >> not too much.

i mean, when i look at the -- if i look at the behavior of the corporate sector, it's on a reasonable track this economy has been a tortoise a long time. a sugar high in 2018 but now it's reverting to its tortoise like character i would much rather the fed were tightening into a 3% economy than a 2% economy. better late than never a lot of bad behavior is encouraged by a zero real rate and they need to move that to positive. >> david, what about the bond market you may not want to disagree with jamie dimon who said if there's a bubble anywhere, it would be government bonds, we're too suppressed for the better part of eight years, we have to sell $1.8 trillion to bonds, $1.2 trillion to finance the deficit and another 600 coming off the balance sheet. does that pressure prices? >> yields will go up the big thing that pushes up yields at the long end is the short end so we could be at 350 by the middle of the year.

beyond that, there's a huge global demand for fixed income also which helps hold these rates in check and the one other thing that i think is very important is we're not seeing enough wage inflation to cause a general inflation. i think a year from now we're still going to be looking at a 2% personal consumption year over year without any breakout to the upside on inflation i don't see 4%, 5% yields on ten-year treasuries. >> diane, jamie dimon says i honestly believe the ten-year should be at 4% already. do you agree >> i used to work for jamie, too. i don't know that it should be at 4% already but there's no question that the fed's quantitative easing program pulled out a lotz of that high end. it put a ceiling on the long-term rates and we are now looking at that. it will be interesting to see how the fed maneuvers a slowing economy and its balance sheet. that's one of the questions they're starting to look at along with how do they deal with short term interest rates get flexibility in general but this auto pilot on the balance sheet may have to be revisited as we get to the end of the year.

and although i agree with david, there has been a strong demand from foreigners for u.s. treasury bonds, the largest buyers of u.s. treasury bonds are the federal reserve and social security. the social security trust fund is shrinking and on the other side, the fed's balance sheet is shrinking. you need to fill up that gap and you're adding a lot to it. at the same time china has rotated out and japan picked up the slack, i don't see china being the big buyer of u.s. treasury bonds they once were because they have too much debt already and they can't do it >> we're going to have to be on our toes all year next year for sure david, diane, good weekend thanks, guys, see you soon. >> thank you. >> trade tensions between the u.s. and china continue to pressure the market, though things seem to have cooled down a bit over the last 24 hours the president tweeting china talks are going very well. yesterday becky quick sat down with industry leaders at the business round table to talk about the china conflict and tariffs. >> i'm encouraged by the

dialogue we've heard and i think both president trump and president xi are motivated to find a solution. >> it's a minor issue for both companies but a big issue for so some they may hold off on something because they need to know where to build the plant. >> i hear from many different parties very positive discussions about there is a way forward here to work through this 90-day period with china so i'm cautiously glad to hear what i heard about those things. >> a lot of people, myself included say we see clouds on the horizon and those clouds are derivatives of trade discussions. >> it secretes uncertainty as it relates to pricing causing us to think about where we want to source goods from we buy more merchandise made in the u.s. a by far than anywhere else but china is second on that list so we worry about next spring, next summer, next fall what customers have to pay if tariffs escalate. >> let's bring if brian gardner,

director of washington research. he just published his 2019 outlook. brian, we just heard from the leaders of the largest corporations, global corporations many of them as well and we seem to have at least got an sense that there's more positive outlook in terms of where this goes. what do you think? >> i think it's the biggest policy concern going into 2019 it's something we highlighted a year ago and i don't think a lot has changed between then and now so i -- you know, i understand some ofthe optimistic view tha some of the business leaders are trying to put out but i don't share it i think we're in for a rough patch of headlines coming out of washington, not just on the china front but here in north america, too there's a lot of uncertainty about the future of the newly reached usmca that is supposed to race replace nafta and how

that is going to proceed in a new congress so i think there are risks on the trade front. >> we can talk about the new nafta in a minute. give me your sense as to why you're not more optimistic on the prospect of a resolution in some fashion of the tensions between china and the u.s. >> i think -- one i think it's strategy i think china is playing a longer game while the u.s. because of u.s. political and electoral factors is playing a shorter term game so i don't know that it's as much in china's interest to reach an agreement as the u.s. wanting to get to an agreement and the president is in a tough spot bauds because he's going to want to trumpet something going into 2020 trade and immigration were his biggest platforms. i'm not convinced china will give him what he wants. >> brian, we had larry kudlow

on he said he doesn't think that the waugh way news bleeds into trade talks but you look at chinese state media, they call the arrest a despicable rogue's approach how can those two thicks remain separate >> i don't see how you can separate them. i think they are linked for better or for worse so, yeah the arrest is going to bleed into the trade talks. if you look at it from the chinese perspective, this is a major development for them in my view so i think they will link the two. i think from the chinese perspective they are linked. >> do you think they retaliate in similar fashions somehow. it sounds ridiculous we've been asking people if they should be nervous traveling to china and kudlow said no but should they be >> china has to think carefully about this

they want foreign investment, they want foreign customers. obviously they have been heavily criticized for intellectual property theft for several decades now and so to add on to that problem of arresting foreign nationals and foreign businessmen would put them in a tougher spot i think my own personal view is that the administration would be better served by getting some of our allies on board in our nations with china it's been too bilateral one on one. i think a multilateral approach would be better and i think it would insulate the west and european countries as they deal with china, give them a little more leverage going into the talks. >> brian, the usmca, i know pelosi met with lighthizer and there certainly seems to be -- and i think you believe this as well -- some question as to whether it will be approved. a, do you believe it will be and if not is there a chance he will repeal -- that is trump --

nafta, which would lead us into a no-man's-land? >> let me take those in reverse order, david, i think there is a big question in washington of whether the president has the authority to unilaterally withdraw the united states from nafta. i believe he does. if he doesn't get his way on usmca, i think he has boxed himself into a corner. i don't know what the exit strategy is if he doesn't get usmca approved what do you do with nafta? you've threatened to get out can he kick the can down the road and buy himself time? possibly but he's in a difficult position at this point, i am actually fairly bearish on the outlook for the usmca. i think the democrats in the house are going to have a difficult time governing as republicans did when they came in in 2011 there's a split in the

democratic party among centrists. a lot of them have been elected coming out of the midterm elections. those seats were won by more centrist-type democrats that can run and win in those districts versus the hard left of the party. can pelosi keep her team together, get enough votes to get a trade deal through the house? add on the partisan issues with geographic parochial concerns about what it means to a particular business or industry in a representative's district or state, i think people are underestimated how you have to it is to get a trade deal across the goal line. >> quickly as we watch the broader markets turn negative. there's something positive if you're long stocks for a third year of a presidential term, isn't there? >> absolutely. when you look back across history, the third year of a four-year presidential term is by far the best performing year in the cycle so i think that and

the prospect of divided government has proven to be a positive for the markets over time so, yeah, i've painted a fairly negative picture on some things but david and carl, i think fiscal and regulatory policy in a good place for the markets. especially for financials. history is in a good place trade is the one area where i'm most concerned. >> all right well, you share that concern with lots of others. brian, thank you brian gardner, kbw director of washington research. when we come back, oil prices holding on to gains up about two bucks as opec reached a deal to cutout put we'll take you live to the meeting in vienna for the latest plus, muhtar kent will sit with sara eisen exclusively. we e'll get more analysis, jan hatzius is with us 'vqukly lost our gains dow down 141

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this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. energy moving higher as opec and russia agree to cut oil output by 1.2 million barrels a day. a little on the high side. the xle etf, the energy sector etf, down 9% for the year. brian sullivan is live from the opec meeting in vienna with the latest good morning, brian. >> good morning. in fact, we've had reports out

there. sources say that kind of stuff as we've been talking about and most major publications calling out, sources say they've reached a deal a few minutes ago the iranian oil minister left the opec meeting earlier. remember, opec hasn't made any official announcement yet. these are -- he was leaving, we had a camera there and the iranian oil minister making the first on-the-record comments confirming the deal to cnbc. watch this. >> cnbc will speak to our global audience can you confirm the 1.2 million barrel a day cut overall >> yes yes. this is 800 but another 400. i am sure they will reach agreement. i'm going to the airport. >> reporter: is iran a part of the cuts >> no, iran is exempted. >> these are the first

on-the-record comments from a named delegate a lot of sources say this, sources say that iranian delegate maybe stealing opec's thunder either way, 800 from opec, 400 from non-opec which is really russia but the intrigue isn't over just because there's some number out there doesn't make this okay for the oil markets and here's why. we don't know what the 1.2 million is coming off of they base it off of a specific month so if it's october or november levels, that could mean a different overall number also, what are the cuts and where are they coming from is 800 from saudi arabia only? is it 500 from the saudis, 300 from the uae nigeria looking for an exemption. libya looking for an exemption iran got an exemption. the market wants to see what countries will cut by how much and there is some chatter that maybe those numbers will not be laid out in the state. they want to know who is going to cut what, otherwise that statement could lose juice,

guys, so the intrigue not over yet in vienna, austria, and the headquarters of opec. >> brian, yes. we'll consider that 4% to 5% bump in crude oil prices to be tentative and contingent we'll be back to you soon. brian sullivan, appreciate it. november jobs numbers missing estimates, coming in by 155,000 with unemployment at 3.7% imf manager christine lagarde telling sara eisen she doesn't see a recession coming and worries about global growth are overdone >> i think the markets are saying that, you know, there is volatility there is clouds relating to tra trade, tightening of the monetary policy, emerging markets that are volatile and there is a question mark about growth prospects going forward my sense is that on the latter point it's a little overdone 3.7% growth forecast for next

year is not bad. >> with us now, the oppenheimer cio at post 9. krishna, it seems like that's everyone's base case, we'll have a moderate slowdown, nothing to be alarmed about the jobs number fits in with that ism as well. what, then, has been so bothering the markets, do you think? we used up good news on the way to a flat s&p year but looking ahead what is holding it back? >> two things -- u.s. rates and trade policy the fed probably goes up two times in 2019 but it's clear at some point they have to stop on the trade front, though, it's far more uncertain but what do you need the u.s. economy to get down to the trend growth rate of 2%. that increases the pressure on

the fed to stop and that increases the pressure on the trump administration to come to some on collusion and we get to that in the first half of next year. >> when you say it's not about the economy, it's about the economy if doing more than one or two fed rake rate hikes brie end of the cycle. >> well, if people are worried about us facing a recession i don't think that happens in the next three or four years it's more about fed tightening policy than the economy and i think we get through the sugar high and by early part of next year we are back to slightly above the trend growth rate of 2%. >> people say we have to get to a conclusion with trade and china. it's unclear what that would be to make both the market happy and this white house happy. >> it's a man-made situation, a man-made disaster, if you will but from a long-term perspective

it's a geopolitical issue. we have had that situation in the past we can have a good outcome from a trade standpoint even if we duel on a constant basis with china. that will go on forever but that doesn't mean we are talking about tariff all the time. >> does it mean tariffs come off or that we live with a new level of low-lying tariffs >> we live with a new level of threats of tariff all the time rather than tariffs going away all together. >> and you think at some point ceos just say okay, this is the game we're playing, we have to go about our business. >> let's be clear. we have had tariffs all our lives. it's not a new phenomenon. tariffs in and of themselves don't undo the market. what it does is basically a threat of it not stopping and going all in once that probability gets priced out, we'll be okay. >> this number doesn't change

the fed's opinion of anything, does it? >> no, its doesn't again, i think there's enough momentum in the economy for a doctrinaire fed that's worried about inflation that hasn't manifested itself. i think that in december they probably grow one or two times in 2019 as well. >> but you don't see the inflationary pressures that perhaps they're concerned about? >> there is none i think they're stuck with this phillips curve thing that has kind of bothered them all along but there's no real pressure. >> we had a miss on the wage growth at 3.1% today xx.2% 3.1 panic it had markets in february. >> well, we got nervous about 2.9.ked the markets in february. >> well, we got nervous about 2.9. >> if the underlying trend is that it was strengthening, that number would bother you but if the underlying trend is towards slowing down, it's probably a good thing you want some wage growth, income growth. without that the economy is going to slow down even more.

>> how long do you think we live in this 2640 dto 2800 world? have we had enough tests to satisfy you? >> we have had enough tests to satisfy me that the likelihood we have a meaningful down lag in the markets, in my mind, i've resolved that. that's not happening. >> really? despite death crosses today and blah blah blah >> at the end of the day, what it will be driven by is the trend in the economy and the two risks that i talked about trade and rates getting resolved and they're on the verge of getting resolve over the next three or six months >> people have had a lot of chances to sell this market at 2700 to see if it's been enough. krishna, thanks a lot. when we come back, saraexclg coke chairman muhtar kent. we'll get his take as he gets ready to hand the full reins of

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saraize season with us at post 9 after talking to muhtar kent what an interview. >> i'm a little hoarse but excited to bring you this conversation movement tar ke conversation muhtar kent announced he'll be stepping down as chairman of coca-cola after being with the company for 41 years, including a decade as ceo. i talked to muhtar a few minutes ago in a cnbc exclusive. he always has a good big picture view and relations where coke does business, steering the beverage giant through the financial crisis i asked him how he characterizes the current environment. here's what he said. >> volatility, volatility, volatility and more unnoknown.

i think just running a global business is getting tougher and harder and more complicated. not just the environment but also the sociopolitical dynamics around the world are making it hard harder with constant volatility with bigger increases both on the high end and the bottom end of that volatility and so that's the world that we live in and it will be here to stay i don't think it's something that is cyclical and will pass. >> the markets certainly have been turbulent lately. concerns about global growth are they justified in your view. i think the market runs ahead of itself and pulls back but there's a lot of political

uncertainty in the world. >> he talked specifically about brexit, about the trade wars, i asked him how he thinks the u.s./china trade fight is going to shape up and we'll bring you his full views and interview later on the closing bell. including the transformation of coca-cola. the speed is fast right now under the new ceo james quincy, soon to be chairman. so interesting to hear kent's thoughts about how the company has evolved since he stepped down as ceo. catch it on "the closing bell" and we will be speaking with the incoming chairman of coca-cola on tuesday full coverage from atlanta james quincy, ceo and chairman of coca-cola on how he is putting his stamp on this more than 130-year-old company which is outperforming the stock market since he took over. >> all right, lots of tea between now and closing zblel

tea a. >> tea and honey not coke. >> let's send it over to kelly evans with a news update. >> sara, you are a trouper here's what's happening at this hour. president trump announcing he will nominate william barr, former president george h.w. bush's attorney general, to serve in the same role he also says he'll nominate state department spokeswoman heather nauert to be the next u.s. ambassador to the united nations. multiple media outlets including nbc news reporting white house chief of staff john kelly is expected to be out of a job in the days ahead. among the leading candidates to replace him is vice president mike pence's chief of staff name ayers. former fbi director james comey arriving for his private testimony before the house judiciary committee after he initially filed a legal challenge to force a public hearing. and two days after being named host of the 2019 academy awards, comedian kevin hart has stepped down this follow an outcry over past homophobic tweets. hart later tweeted an apology to the lgbtq community.

and that is our cnbc news update for this hour. back to you guys. >> thanks, kelly when we come back, goldman sachs chief economist jan hatzius will weigh on today's job and, of course, the state of the economy. "squawk on the street" will be right back alpha seems more elusive today. is it because so many go after it the same way, chasing after short-term returns? instead if getting caught up with the crowd, the investment managers at pgim take a long term view. uncovering opportunities for alpha across public and private markets, while anticipating unforeseen risk, has powered our rise to a top ten global asset manager. partner with pgim. the global investment management businesses of prudential financial, inc.

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show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. welcome back do "squawk on the street." we are all over the market this is morning there's been volatile trading on wall street. we bounced between fairly large gains toward the open and losses november jobs report was weaker than expected. the unemployment rate held steady at what is nearly a 50-year low. oil is up as opec reaches a deal we have full team coverage and analysis for you this morning. starting with the jobs report national economic director larry kudlow joined us saying he believes the jobsnumber points to a blue-collar recovery. take a listen. >> i don't know if it's peaked i mean, we're running, what, 0

200,000, 206,000 a month through november that's pretty good last month was 250, this month was 155. i was impressed with the manufacturing number which was, what, about 27,000 this has been a blue-collar recovery the best blue-collar job performance since the mid-1980s and also the best blue-collar wage performance so i don't know. i think it's a decent number with us now, goldman sack's chief economist jan hatzius. is it a good number? >> it's above friend growth but it's somewhat softer

we are at a 3% unemployment rate and probably beyond the level that's sustainable in the long term so i don't think there's anything to get worried about in this report but it's definitely below expectations. >> we had you on a month ago and you said you're very comfortable with our above-consensus call for a hike in december and four next year. less comfortable today >> very comfortable with december less comfortable with four hikes next year. basically because financial conditions have tightened substantially. i think the data have been a little weaker. i don't think that's been a major shift. you look at the ism reports this week, for example, they were very good. this one was softer but financial conditions matter for monetary policy and if you get the markets do more of the tightening for you, then the fed needs to do a little less. >> and just what we've seen right now, if this is a passing

storm, financial conditions ease up again going into next year, then we're back where you thought we were? >> that's right. so the thing about markets, of course, is they move very quickly and they can move a lot and they can also move back but that's exactly right if markets go back to where they were in terms of not -- helping growth, boosting economic activity then of course the down side risks go away. >> so when you say this morning that you see meaningful down side risk to your baseline forecasts or quarterly hikes, what is meaningful down side risk >> it means there's a good chance that there will be a pause at some point in 2019 and we haven't had a pause but i think that, you know, markets are, of course, pricing in a lot less tightening for next year. basically one-hike price relative to that, i would say that's too low and, you know, i

feel pretty strongly that it's too low if i look at the whole kind of range of possible outcomes but the risks to going every quarter are on the down side. >> you mentioned the ism numbers are strong we have seen this uptick in weekly unemployment claims there's sensitivity to looking at signs of peaked activity. anything scrutinize there? >> well, i think the kmu is slowing. i think it's gone from very strong growth to merely strong growth so if you're focused on kind of the second derivative of growth as markets often are, of course you look at that and you say, yeah, the second derivative is negative. but the pace of growth relative to potential is very important and there's still clearly above-friend growth and even if this payroll number, if you took

that 155 at face value, didn't average it with anything else, that would be above trend. >> you've done good work looking at the impact of tariffs and placing odds on these 90 days that we have to work with. jamie dimon yesterday said 6040. we get something substan nshl 90 days do you have your own >> i think there's a lot of uncertainty. my best guest would be that you probably do get some additional tariffs. but it's unclear what was agreed exactly -- as you saw, the accounts of the meeting and of the dinner were different so i think it's pretty uncertain. i think that if you're looking at the atmospherics of the meeting it was better than we thought coming in our view is a

chance of a justice statement that we will continue to talk but -- >> did huawei change that? >> i think it just adds to the uncertainty around the whole issue. obviously there are a number of aspects to the u.s./china relation sh relationship trade is one and security issues are another and technology issues that may have security implications are sort of something else so i do think it adds to the complexity. >> where do you think unemployment bottoms next year if it bottoms, how low does it get? >> we have it going to 3% by early 2020 so basically declines at roughly the sort of pace that we've seen over the past year. down half a percentage point so we've got -- over the next year to year and a half we have a further decline of half a percentage point.

>> and what would be -- what would move your forecast from meaningfully potentially changing to changing >> well, i think more tightening and financial conditions or weaker data relative to all baseline which already has gradual deceleration in there. for me the main question really is at what point does the economy get to a trend growth base and what point does the unemployment rate stop falling if the unemployment rate stops falling on a multi-month kind of perspective looking not just at the household survey but also other indicators, i think it would be appropriate to take a pause and the probability of that happening, well, i don't think it's -- i don't think we're close to that. i think the probability of that happening has increased because financial conditions are probably going to be a bit more of a drag on growth than i thought two months ago. >> some of your contemporaries are looking at the drop in oil

and arguing that it presents upside risk to consumer spending is it too transitory to count on >> no, i think that's correct. i think it is positive for the consumer and i think the consumer outlook is still quite good it is a negative on the business side so the u.s. is more hedged than it used to be with respect to oil price changes but on that it's a small positive to growth and it's a negative to inflation, mainly headline inflation but maybe also core inflation so i think the monetary policy implications are mixed. but it is true it helps the consumer. >> appreciate it, jan hatzius. >> watching the markets sell off, down 205. s&p down 20. we're all over that. back in a moment

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welcome back to "squawk on the street." got a deal in "squawk on the street." buying a stake in cronos aditi roy has more >> good morning. shares of altria are up. the news came up before the open they're investing $1.8 billion for 45% stake in the cronos group. the price per share is more than 41% premium over the company's ten day volume weighted average price. cronos saying the deal accelerates the pace of expansion across the globe and will help increase product

offerings, improve distribution capabilities, navigate regulatory issues. the move comes as big tobacco faced increasing challenges in the u.s. from declining smoking rates to heightened regulatory pressure to competition from e cigarette companies like jewel shares down more than 20% year to date. cnbc reported that altria has been in talks with jule. talks could be completed as soon as later this month. in a note just released, we believe an investment of this magnitude provides overall legitimacy to the industry as a whole and should represent a positive catalyst for the sector with the news likely to drive valuations higher. talking about the cannabis sector, of course. the second major deal in that space after constellation brand $4 billion investment into canopy growth earlier this year. shares of other companies are all up this morning.

back to you. >> it is interesting all of this activity is happening in the absence of any real push for national legalization in the country. it is all about big companies looking to lay bets on the next area of growth >> yeah. there's been a lot of speculation since constellation and frankly before constellation as far as who will be the next partner in the cannabis space and what other big company and there's speculation. some others are cpg companies and pharmaceuticals. more activity could be in the works in the future. >> we'll watch for it. thank you very much. appreciate it. let's send it to jon fortt with what's coming up on "squawk alley. hey, jon. >> hey, mike it has been a volatile week for stocks, tekin particular as we close out the week in the first half of trade. how does it set us up for next week, when it comes to trade quk ledig into that and more on "sawaly.

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welcome back stocks are trading lower on the heels of the jobs number meanwhile, a lot of activity with sectors overall some green, but energy prices surging as iran's energy minister says opec and allies reached agreement to cut production by 1.2 million barrels a day. that jump is giving a boost to the s&p 500 energy sector, up more than 1.5% some of the stocks with the biggest moves, eog, and others around that 3 to 5% rage all of those remain 20% or more off recent highs, some traders refer to bear market territory remember, keep in mind as we talk about this, there are outperformers, underperformers within energy. oil services, underperformer, exploration of production, relatively speaking, outperformance you talk about the sector

breakdown, it is a trading dynamic to watch back downtown to you at the new york stock exchange. >> thank you very much "squawk alley" is next all over the market volatility, dow down 215 and china u.s. trade truce stephen roach is with us don't go away. i think we should do that meeting tomorrow.

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