"squawk box" begins right now. ♪ >> announcer: live from new york, where business never sleeps this is "squawk box. >> good morning, everybody welcome to "squawk box" on cnbc. our guest this morning is steve grasso, a cnbc market analyst. great to see you we are going to put you through the paces today talking about what happened. what is likely to come up today with the wild ride for stocks. the dow down 1,000 points this week check it out we were up 96 on monday,down 343 on tuesday, down 494 on

wednesday. closing the day up by 123 points still on track for major indices to see the third week in a row looking at dow futures s&p 500 down by 10, nasdaq down by 25. what happened? stocks took a dive >> it was more a product of the percentages were going up for powell to have another cut all but factored in. bad news has become good news. good news has become good news if you look at the december percentage cut, it doubled 30 to 60%. october, yes december, yes. sort of. the market took that as a positive we'll see what happens today the jobs report is the all important one that hits in 2.5

hour's time. looking at what happened overnight in asia. the nikkei ended up by about a third a percentage point the hang seng is up just over 1% you are looking at a mixed picture. not much movement for the dax or the ftse a little weakness in italy and spain. looking at treasury yields coming under pressure on this data in terms of the ism manufacturing numbers and the nonmanufacturing ism we got yesterday. this morning, the 10-year-year-olding 1.39%. >> we have a busy morning in

asia overnight we have heard from hong kong chief executive carrie lam invoking powers and banning face masks. that happens tomorrow, just a few hours from now there including one year in jail and a fine just over $3,000 u.s. dollars. we'll get a live report from hong kong a little later this hour we have some corporate news to tell you about the new iphone 11 has only been on sale a few weeks. apple reportedly asking suppliers to make more this is all due to the strong demand for new phones. telling them to increase production that is about 8 million units. launching three new phones last month. if you remember, the 11, 11 pro

and the pro max starting about $50 less than last year's iphone 10 the nikkei reporting that the surge in orders for the cheapest one, which is the 11, the 11 pro models, i'm assuming less so trading higher on this news. the result of this report are also up. you can see it there tech is up close to 2% as you can see others >> how much of this is the lower price point? they raised it so much last time around >> i have to assume it is that if it is really the 11 and not the pro model, that's what we have to talk about i keep seeing the pro model but

it might be the crowd i hang around with. >> that might be the case. >> it is hard to know unless you see the three little cameras that is the bat sign that that's what it is >> a pretty amazing story that apple was at the target of all the tariff issues. the stock is up 40% year to date and seems to be hitting the stride even while they are in that trade war >> tim cook has managed to maneuver that well tim cook has come and made his case directly. >> he did give a little push off. i agree. he's been at the forefront and been the one that went to 1600 pennsylvania avenue and said we need some help >> and here is the reason. right. how much of this is people just wanting to be in stocks like this and running from other areas? >> it is a healthy amount of

that but also everyone was looking for services to really tick up. if you have both kicking in. >> ceo dudly will retire in march after holding that job for a decade dudly steered bp from a near collapse after the spill in the gulf of mexico shares are up. we are counting down to the release of the september job's report at 8:30 a.m. eastern time showing you what to expect and what it will mean for the economy. bringing in chief economist. jim, let's start with you. what happened with the numbers we saw this week, it the rest of the world's slow down catching up with us

>> clearly manufacturing and exports are weaker nonmanufacturing parts of the economy are slowing down as well that is the bigger issue looking at the economy still growth shown above 50. the big drop down from what they were expected. the drop yesterday after the jump the month before, certainly that net has been weakening. if you take the employment parts surveyed together. they ever consistent with close to zero trend. there is a lot of anxiety in the report there is arguably more hard data isn't really a sentiment in there. that is showing no sign of

weakening i'm still looking at the reasonably solid >> when is the bad news, bad news what does the market really want to see i would say ultimately the question is are we going to recession ornot? i think we are teeterring with this concern tempting to say it is near positive territory we are now seeing these levels going into the 01 level and

crisis we are looking at a sign from the service sector the very large service sector saying the economy is clearly slowed we have seen evidence that weakness was bubbling in the surface. that manufacturing confirmed, it is clear that production sector is dissipating and by extension that is slowing and the concern that it will continue to slow to recession. >> to jim's point, those ism numbers are a survey of what they are seeing. consumer confidence, those are all soft measures of what is happening. what is the chicken and egg scenario if the company is concerned and reigning those things in, could that lead to bigger concerns down the road? >> absolutely. what we do see is a very good

predictor of where growth is headed this is in good part to soft data and sentiment businesses, this is also what they are planning to do. they are hesitant in terms of vesting and hiring that will trickle down and effect those numbers we expect it to affect this morning's employment report. we are looking at it to come under at 120,000 that risk is to the down side. this could be a weaker number than we are predicting.

>> they would have to cut to more than zero >> in the press rating, they said, no, we use the fund rate and go back to forward guidance does it happen in the next year or three years who is to say you don't go through another bit of tightening there clearly is a risk of recession. at this point, we are not easing recession ufr asked if you prefer to see three% inflation here. >> let me ask you clearly with record to the odds you think the fed cuts at the

next meeting right now, my call is the next move is december we'll see what apparels number did this morning >> if it is weak enough, yes >> how about you, do you think the fed cuts >> absolutely. the fed is really being backed into a corner now pointing to a slow down in the economy the fed will have to step up and give us another 25 basis points in october and likely another 25 in december. >> thank you both for being with us >> more on "squawk box" this morning. ready for this one we'll debate this. capitalism is dead some may take the other side of that we'll talk all about it. we'll show you the context of that comment from last night's

conference first, the trade war hitting europe where it hurts. one industry is preparing for the worse. willem is live in parma, italy with a difficult assignment. >> they are cheesed off. parmesan makers say they are being held hostage on this tariff from the u.s. we'll have more after this break.

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>> welcome back. the latest threat of tariffs against the eu hitting up to $4.5 billion of italian food products one industry has been hit hard by this. our own willem marx is in parma, italy. years ago, they talked about tvs that would carry smell here, can you carry the scent of where willem is. >> it is a pretty strong scent here in this room. because 5,000 of these enormous

parmesan wheels in this one place where they make parmesan each one of these wheels weighs around 90 pounds retail value in the u.s. about $1,600 once the tariffs kick in, it will be about $1,800 the challenge here -- and it is not just parmesan but gorganzola and others the american consumer will look for a cheaper option what they are looking for now is a, a resolution seems to have

kicked off these guys would be paid about one euro, so a little more than $1 to keep them on the shelves here they don't want to oversupply the market. this is extremely interesting. you have a bunch of milk made. they take the skim milk then they ad fresh milk, stir it together and add the stuff from a cow's stomage. break it up. that falls as they heat them up. they use these huge cheese cloths

they pull up these massive white slabs of occurred this sat here for months the cap ex pretty significant. 50,000 relying on this particular cheese >> willem, andrew said he'd love to have smell a vision you said yes, it's a strong smell. is it overwhelming >> no. there is a store here that sells more cheese. it's the gorganzola that hits hard this smells a little okay.

just touching here, you can feel the oil. it is interesting to see the color change here. >> we have to go here. tell me what is the cow stomach piece? that through me. >> there is a certain sub stan from the cow's stomach the whole point is that they want this to be completely natural. there is a protein from the cow's stomach that curdles the milk >> news you can eat. for breakfast. >> when we come back, we'll talk about tech ceo sounding off. why mark zuckerberg may be feeling the burn we head to the break for the

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salesforce ceo speaking out. >> i really strongly believe that capitalism as we know it is dead that we are going to see a new type of capitalism that is not the milton friedman capitalism but it is just about making money. i don't think you are going to hang out very long you have to be more than that in today's world. you have to be more than that in san francisco or in the tech world. >> i don't know if he's right or wrong. >> the key thing he said was, especially if you are in san francisco. >> the difference is, if you are

not hitting the numbers for your share holder, the key component. >> going to the next step now. there is how much you need to make how much for the share holders >> no, how much does the ceo you have people weighing in saying that much >> should they be billionaires bernie sanders says no >> once you head down that path. i notice billionaires are the first to say they don't want any other billionaires they've already made it, they

want to make it tougher. >> let's jump in to one of those. mark zuckerberg held a surprise question&a >> i understand where he's coming from. i don't know if i have an exact threshold on what amount of money someone should have. on some level, no one deserves to have that much money. >> he compared himself to a robot that needs recharging. he says, i do pretty bad at interer views. >> that didn't look like an ichter view. it looked like a ted talk. >> it was a q and a. >> i think the more he steps out, the better he is. >> we are an interesting moment. i don't know what's going on

i don't know if it is more about the company doing more or the political win. there is a guilt if you've succeeded in anything. billionaires shouldn't make apologies for creating success or creating millions of jobs in all of this. >> joe would laugh if he was here we don't have enough people es spousing the virtue of what capitalism can do. the flip side of that is we haven't nailed how we collect and spend revenue as a government to make sure opportunities are equal. >> i understand, even if we haven't nailed it, it is still better than the alternative around the world the question is can we nail it

democrats and republicans in the past making sure nobody falls below a living wage. we'll go after any success and take it down >> we have to realize that the lower class and others have more than any other country >> a devout republican will come on the show and say he thinks the american dream is struggling too. >> that's correct and a lot of times i think to be politically correct, you have to say that. >> today, it is harder >> do you think the opportunity

is lacking >> it is >> where is it lacking >> education opportunity did you send your kid to a public school with a low passing number >> to get to the next quartile we have not improved we've gone backwards it is still better than any other system >> it is still better. people that want to succeed, succeed. >> in fairness, i think mathmaticly, it is incorrect >> it doesn't matter where you go to school i've been on wall street, i have guys that never even graduated high school that are

millionaires because they work 14, 15, 16 hour days it is not about give aways or making the world equal >> even those that work hard -- >> by the way, this comes down to health care because both democrats and republicans said health care is the biggest issue. they are still worried about health care. >> we should do this on air. >> the hustling piece of this is table stakes i agree with you this is not a paint by numbers operation. i get that >> save that tape. >> when we come back, more on squawk fall out from this conversation and wework we'll tell you how they scrapped ipo is taking a toll on its biggest investor later, we'll bring you reaction. boston fed president on tap.

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>> announcer: you are watching "squawk box. >> it has been a wild ride this week you saw so much concern after the ism manufacturing showed

real weakness. that is what set us up for the nonmanufacturing numbers yesterday that were also weaker than expected. it was much weaker than had been anticipated. big swings yesterday stock market managed to finish with gains after being down by hundreds of points today we get the big number coming up. in the meantime, the dow futures are down by 67 points. the dow by 20 and s&p by 9 numbers are focused on this morning's job's report due out in just under two hours. that would be up slightly from the 130,000 added for the month of august. -week planning to layoff

thousands of workers saying the job cuts will be between 10 to 25% of its company. taking a toll on the biggest investor at softbank air report that some have urged him to delay a second massive fund he has said he wants to raise an additional $100 billion after the first $100 billion so that will be very interesting to what happens in the value that has been considered the exit all of these executives at wework not justwork but other tech companies as well. >> a crazy valuation there

>> it is about how much you can cash out with. i don't think you've seen that before when you look at the unicorns, they want to tap that register at the last leg. we've seen those tech companies that have raised money all the way. i'm glad that bag is not getting handed off to that investor. >> i'll tell you, there are a lot of young employees at this company. by the way, they wouldn't have gone to work at regis in a milli million years. but wework had this halo, now they are thinking that is a mistake. better together. two of the biggest ad companies coming up. talking about changes to the ads you see on line. plus chaos in hong kong.

protesters reacting to the ban on masks we'll take you there live when we return on "squawk box."

>> welcome back to "squawk box." two rivals are joining forces in the digital ad space welcome. his company is merging these are the companies that place ads at the bottom of websites comcast is an investor i should say we see these ads all the time i click through to the slide shows that take me to see some actor and what they are supposed to have looked like 20 years ago or later is what it is you are trying to figure out if they are as good looking as they used to be

>> thanks for clicking we have been working on it about a decade we are driving hopefully growth to journalism. >> question for you, are you profitable >> i am. both are >> you look at digital media space on the publisher side. i'm thinking of vice and vox and buzzfeed, many of which you power or provide advertising to. why not? what's wrong >> we are still a small portion of the advertising space we are not the majority of that

we are still a small portion of that is there is still more work to be done. in general, the cost structure needs to evolve. i think publishers need to make more money for the content they create >> when you look at the big ones in the industry, google and facebook, how were you even able to make profits or build what you've made? >> we are not a consumer facing company. we are very in line with our partners if journalism grows, we grow >> too, it is a huge market. >> the reason you want to combine is you need to get

bigger does that as a result where they won't get as good of a deal. >> they'll get a better deal we'll have more auction and advertisers to consider beyond facebook and google. we'll have more in investment and technology i will go on the record to say publishers will double and triple revenue >> different question for you. hypothetical, the head of the department of justice antitrust division who is looking at facebook, google and amazon. he calls you up as a competitor because this is how the department of justice operates and says, do you feel that you are being put at a disservice in an illegal way by facebook or google are they, as competitors to you

doing something illegal in the marketplace. you tell him what? >> i don't think they are doing something bad to me directly but to people i love when i look at people like facebook who invented the share button it is time they share back and give advertisers more information back >> is that illegal or just tough competition? >> it is a strong word it is a competition. >> it is a disruption. >> but is there something that they are doing that you believe they have monopoly power at a disservice to others meaning in a classic way you might look at the ways people thought microsoft was bundling services

together >> when you look at google or facebook in charge of driving growth, they are in some sort of a luck that they have to play nicely with them i don't know if it is legal or illegal. for companies that generate over hundreds of billions in revenue and in market cap, it would be completely okay to get some of that back. >> would you like us to call him. he watches the show? >> you do you. i'll take the call >> more on breaking news from hong kong. chief executive there carrie lam invoking executive peranows d banning face masks of any time we'll take you there live after this break

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some breaking news this morning from hong kong including chief executive kerry lam

invoking emergency powers. janice, we've seen the crowds. >> reporter: becky, this law goes into effect at midnight tonight. some people are exempt like police, journalists, also people who have religious or medical reasons to wear a mask the protests over this started even before the law was confirmed. the idea has been floated here for weeks by legislators people say that it's draconian and that it could be the first step on a very slippery slope towards harsher measures like restricting the internet or even a curfew now this is the first time in decades that the city's chief executive has invoked emergency powers, however, kerry lam is stressing this is not a stat of emergency, this is what she says is a necessary move in order to shore up the city's reputation by getting the violence under control. violators will face a year in

prison as well as fines and there are laws like this in effect in both the u.s. and in canada, but highly controversial here of course because we're heading into our 18th straight weekend of protests and also because of the timing of it. coming just after kerry lam has returned from national day celebrations in beijing so for protesters they see this as another sign that she's taking her marching orders from china becky. >> janis, more concerning in an era where artificial intelligence lets cameras be put up all over the place and identify people anywhere much more invasive. >> that's been a concern for the protests over the last several weeks and why in the earlier days the hard core protesters are focused on tearing down the cameras. they were using the protests to gain a critical mass of people so they could use some of this facial recognition technology to

then just turn around and round them up for arrest so there are a lot of concerns about what this could lead to given that they have taken this first step down that road. >> janis thank you very much. for more on hong kong and the implications for the trade war with china, let's bring in leland miller. beige book international ceo what do you think of these >> it's death by 1,000 cuts. they don't have to bring in tanks. there won't be a at this tianame here they will keep making tougher rules, enforcing the rules and this is going to dissipate at some point that's the only way this can end other than bloodshed. >> using this as a backdrop for trade talks now. >> well, i think obviously president xi is under a lot of

stress from various issues that are hitting him right now, but so is president trump. if the two sides had their way they would have a deal, a baby deal going into 2019 all the talk right now because of the rumors about forced d listing makes people think there's no longer interest in having a deal or that the president is tightening down that's not what's happening. behind the scenes they're trying to get to a deal. >> but whatever president is on president xi, you talk about the pressure on president trump, i'm imagining that president xi is sitting there, you know, doing this saying to himself, i'm not buying any soy beans i'm not doing anything i'm going to wait out whatever is going on in washington and whatever the outcome of that is going to be, right >> i think that's the growing sentiment. >> what's the incentive for him to do anything >> the incentive to do a tough deal, meaning china would have to do some heavy lifting, is minimal. they would like to buy

agriculture. >> leland, what about all of the companies now we've seen specifically apple that are taking their supply chains somewhere else china likes to win so china doesn't want to wait they could wait out president trump but they can't wait out all of these companies that are now looking at the supply chain saying we've got to get around china for the next event >> right some of this i think they assume is a fait accompli they realize that nobody in the white house, a handful of people, that only sometimes includes the president, wants the december tariffs on. they think this is going to harm the u.s. more than it's going to harm us at this point. they don't want these things on, why are we giving in they'll give a little. they'll do agricultural purchases. yeah, the leverage is -- >> it's rolled on corporations saying should i be in china or not long term? >> right >> it doesn't matter -- >> companies are way too dependent on china for years

now. >> correct >> fell asleep at the wheel. >> that lesson's already there for them and if they're -- >> we're never getting back to that number though china will never be as strong as before these talks once this agreement takes place, to me it's a sell event because china growth has to by its nature, they're giving up something with eventually a trade deal, correct? >> well, look, china growth is slowing. it's going to continue to slow we're on a trajectory no matter what that they're going to slow down the question is whether they're going to head off the challenges which is enormous debt and this challenge to build bridges to nowhere. you're going to have slower growth no matter what. the question iswhether they're able to do that in a smart way or they keep building, building, building. >> leland, thank you great to see you. >> thank you. two big hours ahead on squawk we have bill rudin joining us.

we will talk to the real estate mogul on wework. the broader real estate market and the risks of a recession in the u.s. plus, more on the standoff between disney and amazon that's threatening to remove disney apps from amazon tv. it's an important piece in this streaming war. as we head to a break, the big jobs number this morning coming up in just 90 minutes you do not want to go anywhere st menk box," full coverage in ju aomt. fun fact: 1 in 4 of us millennials have debt we might die with.

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investors on edge. ahead of a jobs report fears of a recession creeping into the market. what you need to noah head of the main event is up next. from "star wars" to streaming wards, the battle over ads. bill ruden with the chance of a wework bankruptcy and the ripple effects in the market the second hour of "squawk box" begins right now live from the beating heart of business. new york this is "squawk box. good morning, everybody. welcome to "squawk box" here on cnbc i'm becky quick along with andrew ross sorkin joe is out today in studio with us this morning is steve grasso. he's the director of institutional sales at stewart

frankel. u.s. equity futures at this hour, yeah, if you think this is something, wait until we see 8:30 right now you're going to see the dow futures down by 84 points this comes after the market staged a big rally after dropping precipitously early in the morning on bad economic numbers. we're going to get the mother of all economic numbers coming up that's what could change things at this hour s&p down by 11.5 nasdaq down 26 the market is on par for losses for the week even before what we saw with the losses this morning. >> want to bring you up to date on some of the headlines making news this hour less than 90 minutes away from the september employment report. here are the numbers to watch. the u.s. economy added 145,000 nonfarm jobs last month. that's the number to beat with the unemployment rate remaining steady at 3.7% watch for both of those numbers and the over and the under. office space provider wework separately reportedly planning to cut thousands of workers to reduce costs this coming shortly after wework

pulled the ipo last week and had its debt rating downgraded the cuts would amount to up to 25% of the company's work force. so a lot of people getting hurt in all of this adam neumann walked away walked away with $700 million but he also has a lot -- he has the loans collateralized against the debt, the homes. we'll see where he lands when this is all over, too. hedge fund darcina capital has seen juul go down 1/3. juul had been worth up to $38 billion late last year talk about marketing being up and down this is one of several hedge funds in juul. everybody else will be forced to market down as well. we should talk about barney's the question of the morning, new life or is there new life. a group of fashion executives

preparing a bid of $220 million to try to take control of the company, be part of the bankruptcy proceeding. seeking to avoid a liquidation this group of buyers is led by san binabraham who founded new york retailer atrium barney's perhaps one of the most iconic retailers in new york city. >> $220 million deal we'll see. >> we'll see. the services sector slowing to a three-year low and now the risk of recession is creeping into the markets again steve liesman is joining us this morning. steve, it's great to see you >> reporter: yeah, becky, good morning. pretty consequential jobs report for the outlook here where there's a lot -- people are looking very closely at this report to see what it tells us about the outlook after the two reports. let's take a quick look at what

the expectations are and talk about what would be worse and what would be better when it comes to signaling a recession we're looking for 140,000 nonfarm payrolls unemployment rate at 3.7 average hourly wages growing at 0.3% there's the adp number we reported yesterday, 135. that's in line with the nonfarm payroll. this would be okay if we were in this zone here, it would be along with the expectations that the job market was cooling back down towards trend, where the economy is slowed as well along with it what are we looking for. first of all, obviously does the jobs numbers soften more than expectations 140 number, get down towards 100. does the work week get shorter it has been trending down over time since the beginning of the year

they've had a pretty good influx into the work year if you've had a weaker jobs market you might have workers leaving the job force. take a look at the ism numbers it's been weakening for about a year september 2018 was probably the peak of the economy. they've been coming down neither, however, while manufacturers in contraction neither is in the zone that signals where it would otherwise be where you'd have a broader recession. signaling a broader recession in the economy. last thing i want to look at is how good an indicator is jobs itself you can see people say it's coincidence. nah. it does soften ahead of time if you look ahead of the last recession several months back it does begin to soften you can't guarantee that means a softness comes we've had some softness that might be the beginning of weakness but it's not down in the zone where that would cause concern. concern is in the fed funds futures market where they have

ratcheted up, 84% probability of a rate cut this month in october and a 52%. they've walked forward another rate cut for december. so that would be another 50 basis points from here if the market has this right. those are among the things, guys, i'll be talking about later this afternoon. >> professor steve liesman, we will see you later with a little more than an hour to go, yeen i don't remember market commentator is at the desk. you want to see more economic data some of the leading economic indicators are mixed some are suggesting that we're in the very late stages of the business cycle. >> you're in the handy capping business so handicap for us.

>> we've talked a lot about this idea of good news and bad news what is the goldie locks number? >> well, i think you've seen the expectations being rolled down even though it was 145 i think the whisper is 120, 125 following the weaker ism numbers. that being said, we know there is a fair amount of noise with the monthly change in payrolls to 110,000 that is a huge range of uncertainty. in addition, this is september we have the school year. before seasonal adjustment we add probably 1.5 million jobs and we lose all of those summer jobs it seems a little silly to worry about the nearest 10 or 20,000 in the payroll number. you want to focus on the three-month average.

we have seen a slower pace of job growth this year bear in mind that we need less than 100,000 jobs per month to absorb the new entrance into the work force these numbers that we're talking about, you know, in terms of expectation aren't especially weak they're not as strong. they're kind of spoiled. we're used to seeing 200,000, 250,000 per month. that's not going to be the case anymore. there may be a little bit of slack but the trend is going to be slowing down over the next 10 years to probably 70,000 per month. that will be the new bogey. >> in terms of the way the market is thinking about this, what i would think of as a good number if you saw this number come in at 180, 200,000 it might be considered high even does the market say fabulous, this is unbelievable good news for the economy? she can take down a recession risk levels or do they say, oh, my goodness, the folks at the fed are going to start scratching their head about what they really want to do. >> i think they're at a moment where good news is going to be a

good news. it's going to be a comfort to the market that the labor market is not sliding more steeply. so i think right now -- in fact, yesterday's news indicated we got this reversal in the market. we got this bounce that started in the morning bond yields hit their lows even after a worse than expected ism services number which shows you that investor and trader psychology had run very far in the direction of more slowdown evidence is coming even when you got it, it wasn't enough to take the markets down. i also think the fact that you had the jobs number meant people wanted to wait and see, even out positions last night and just see if, in fact, we can get a decent number that's a comfort. >> would a lousy jobs number say forget it? >> the market doesn't crave the lousy jobs number to get the fed active right now i think the fed is basically on this path already so i think you want to keep it in the six digits possibly but

below that you might be fine i don't want to make it seem like there's a head long -- >> if you get a lousy number, you get two cuts. >> right the market already thinks you're getting it anyway. the market to your point yesterday when we bounced off the bottom, then the two cuts were back in if you get a lousy number, you get the two cuts to kathy, where were you on recession? you're at 45% now. where were you six months ago? >> we were closer to 35%. >> you were always running a little higher? >> yeah. >> normal state where is it, 10 to 20? is that normal >> it could be 15 to 20% normally you could have any shock that you're not anticipating. some kind of shock, things get pushed up. you want an employment report that's not too hot, not too soft we're actually looking for two rate cuts. we've had september and december in our forecast for a while. anything beyond that, then i

think it starts to get more worrisome for the markets. two is not necessarily bad news. >> who knows, a weak number and then steve talks to eric ro rosengren who didn't want to talk and today he comes out. the slow down to growth that everyone says we should expect, that's kind of what it feels like >> let me add on to your point about steve's interview that's coming up. there's a lot of fed speak powell's speaking. you're going to hear from all kinds of people coming through the place. if the fed is the most important matter, that's what we're watching. >> yeah, powell doesn't have a tremendous track record. >> gotten better. >> 70/30. >> 70/30 >> i would say the trend has been improving the entire way through. >> october is not a great month from now >> i would say the trend's improving. >> yeah. he's been much better the last several times that he spoke. >> sure.

>> okay. we want to thank you for the conversation scott, who's in with us from mobile capitol, thank you very much mike and steve are sticking around. when we come back, apple shares rising this morning on a report of a strong iphone demand we have the reports after the break. then disney and amazon battling over apps. putting disney plus in the cross hairs as it gets ready to launch next month stay tuned, you are watching "squawk x"n bcbo ocn possible every single day. with technology that helps you offer shoppers a better experience. take your company's app. we can add in all sorts of capabilities, which help your customers manage rewards, offers, and payments on the fly. and now, applying for credit can happen in a flash. that way, more people can start shopping with you on the spot, wherever they are. how's that for changing what's possible?

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welcome back to "squawk box," everybody. we're waiting to see what happens with the new report this morning coming out with jobs above that, the jobs are down 84 the s&p is down 11 points and nasdaq down 25 the new iphone 11 has only been on sale for a few weeks apple is reportedly asking suppliers to make even more because of strong demand the nikkei reports surge in orders is mostly for the cheapest phone, iphone 11 and the 11 pro models. apple is trading higher this morning on all of this apple shares up by 1.2%. shares of some of apple's chip suppliers are also up.

ams, dialogue semiall up joining us on the squawk news line, dani ives is this a function of an upgrade cycle. what do you ascribe to what's happening here >> i think part of this is pent up demand out of china i think china's tracking about 20% above expectations from what we see and you have 1/3 of the install base right now that is not upgrading iphone in 38 months or longer i think that's a combination of that, the price cut as well as the features that's really been the key to what we're seeing so far a robust iphone 11 upgrade cycle >> so you think this is all china. what's happening in the u.s. and how much is this a price issue

given that it's guys like the phone that they're going to be upping in terms of the supply is the lower end phone. >> yeah, so right now we think about half of the up side is china. the other half is in the u.s. in terms of what we're seeing an iphone pro and i think that has really been the feature. that three-prong camera is really working in terms of the demand driver. right now they have sort of laid the groundwork for this upgrade cycle to be successful, not just in china but in the u.s., and that's why right now with their back against the wall cook's flexing the muscles. this is something that's defied the street we think tracking over 80 million units per launch period. >> dan, you often and apple talks about this really being a services company or at least the move to services is this really proving the point that maybe it's a harbor company after all? >> i think the meat and bones of apple is ultimately the rock of

gibraltar is iphone, it is the hardware but in terms of the next growth cycle, it is going to be services we believe that's really key why this is a massive upgrade cycle because they need to put a fence around their backyard in china, in the u.s. to further monetize services from a valuation, 400 to 450 billion of the valuation today in our opinion is services that's why this continues to be our favorite large cap name to own despite the u.s. china trade wars. >> dan, thanks for dialing in. when we come back, we're going to talk about amazon and disney they're now clashing over advertising and may keep disney's new streaming product off of amazon's service. we have details on that straight ahead. later, commercial real estate investor bill rudin will join us to talk about we work's impact on the real estate market and much, much more. "squawk box" returns right after this

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now the answer to today's aflac trivia question. the first televised presidential speech occurred on october 5th of what year the answer, 1947 with harry truman disney plus is set to launch in a little more than a month, but it may not be on amazon's fire tv. the two companies are currently at an impasse over terms ft. meade yeah giant to carry amazon's apps. it's set around ad revenue and who gets what. joining us is tom rogers, former tivo ceo he's currently executive chairman of winview and captify. you understand all of these worlds very well it's like two sumo wrestlers

getting in the ring. who has the upper hand. >> this is old fight into the streaming age. when we launched cnbc one of the things you negotiated with cable operators was the economics of them carrying you, of course it was a give away to give them a couple of minutes of advertising. when your viewers cee lo call ads, we take a break here, local restaurants, car services, that's a couple minutes of ad inventory given away to the cable operator part of that negotiation. wasn't worth very much in the beginning of the cable days. today that streaming ad inventory can have some real value and disney, which has hulu which is add supported actually says that it makes up the difference between what it charges for its ad supported service, which is a much lower fee than hulu without ads, it makes more than the difference by selling those ads it's very valuable inventory so this is a negotiation over

the economics of how -- what it's going to be to be carried on these devices. >> is this going to hit everybody? by the way, it will hit close to home i'm thinking nbc universal is about to launch peacock advertising supported service. >> right well, it is going to hit everybody. netflix got through this big and early without having to give up much economics and now everybody else -- >> even before everybody figured out how valuable that could be >> right google has navigated youtube through this without having to give up inventory. >> disney can be the big gorilla. if you don't have offerings like disney plus, if you don't have espn, if you don't have abc on your platform, is that a point where the public says i don't want that platform, i want one that offers natives? >> well, there's leverage on both sides if you're disney and you're going to launch a lot of service with nationwide promotion, not being on 29% of the market share of streaming boxes is a big deal once you're on there and you're fully distributed and people like their disney, it's not like

canceling cable and what you have to go through if you're a cable -- switching to satellite which when the program wars started with cable you had to do getting rid of your fire box and getting another $35 device to get where disney is coming through isn't a big deal so the leverage shifts once you're fully launched. >> is that why disney is offering all kinds of incentives, sending me ads at home for discounted membership signups for a one or two-year commitment >> yes, but that is a question of, again, what device do you have to get it through now remember, this isn't the only guys going after disney and the other services and trying to get into their economics there's an apple tax, when you go to the store to download an app that can be 20 to 30%. >> right. >> there are a lot of takers here for the new service. >> that's the app is not free and if they're trying to use apple pay as the easiest way to pay for it

>> that -- >> so it can be done as a work around netflix doesn't go through that, therefore, they don't pay the fee. i will also remind you, apple tv for a very long time wouldn't allow the amazon prime piece on it. >> right >> i don't know if it was apple wouldn't allow them on or amazon was withholding it from apple hoping people would go onto the fire. >> you had similar by chrome cast owned by google and carriage. >> when you look at disney versus amazon, it seems as though amazon has an easier way at competing in a lot of these arenas because they don't care how much they lose they become a kmod doe advertised business whether it's aws or this segment of their business line. do they have an upper hand against all other players? >> well, amazon has become an enormous player in advertising people don't focus that much on

their business amazon is a $12 billion ad seller just behind -- not just behind, but number three behind google and facebook they're putting a lot of emphasis on the future of this business. >> amazon's biggest point has always been it's done what the customer wanted. if you start withholding services i don't know if that goes counter to what your constant mantra has always been. >> i think amazon has a lot of ways to play the advertising world getting inventory from streaming services is going to be a small part of it. obviously when you're shopping on advertising, their search advertising is going to be far more valuable. they'll be a huge player i don't think we've begun to watch amazon flex the advertising muscle people shopping off of ads is yet to come on television. i think that's the future of tv advertising. >> thank you so much >> nice to see you. when we come back, real estate investor bill rudin will join you to talk about the we

work ripple effect in the commercial real estate market. as we head to break, let's take a look at the u.s. equity futures. dow wndo by 64 points, nasdaq off by 21 and s&p off by 10.

still to come on "squawk box," a lot. we've got a lot coming up. the future of wework in the commercial real estate market. mr. bill rudin will join us. markets on edge ahead of today's very big number. you don't want to go anywhere. we're going to be discussing the risk of recession and then, of course, we get the big job number jobs report will be out at 8:30 a.m. eastern time. everybody will be watching it. number alys,nasis all straight ahead in a moment. ♪

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welcome back, everybody. wework is trying to avoid a cash crunch the post says -- they are in early stages of discussions. one option is a loan of as much as $2 billion. joining us to discuss wework is bill rudin

co-chairman of rudin management. you are somebody who leases space in your buildings to wework you also are a personal investor in wework, correct >> early investor way back in 2013 when i had met adam and understood his vision and we had done a building ourselves back in the '90s and we thought his vision was interesting and we took a building in lower manhattan after sandy where nobody wanted to come back to lower manhattan and rented it to wework where they have also their first new york city welive we morphed into another one in brooklyn, brooklyn navy yard dock 72. i want to make the point that all the noise going on around wework and co-working, it's a very small percentage of the

entire new york city market. the new york city market is over 550 million feet wework has 7 million feet. that's about 1%. the entire co-working sector is about 15 million feet. so it's about 3% so we have to put all of this into context the world is not coming to an end. there are a lot of reports going on a lot of discussions on tv and newspapers that, oh, my god, the real estate commercial market's going to collapse. that is just not going to happen. >> isn't perception versus reality where a lot of the co-working space has acted as a catalyst or a tailwind to a lot of the real estate values where it is a small segment or small notional value of it, it's really monopolized 90% of the conversation. >> it has monopolized the conversation but co-working is here to stay it's an important part of the ecosystem. >> let me ask you about the

model. i accept the idea of co-working broadly as a model the question is whether the underlying weework model is the right one. let's say wework files for bankruptcy or is in a true struggle they come to you, bill, look, we cannot pay our rent. cannot pay our rent. the question i have is do you say to them, good riddance do you say, you know what, we don't want you to leave. we'll lower the rent for you do you say, you know what, actually, we're going to do a direct relationship with the tenant and you can be the service provider offering all of these co-working services? what do you actually tell them that is a fundamental thing about the ultimate model we're talking about. >> first of all, i don't think we're going to get to that point because most of the wework spaces are very well occupied. they're in their 90, 95% range

if something did happen, first of all, we have security we have letters of credit, but i think the discussion would be, okay, why don't we take over the space, hire wework or industrius. >> now we're back into the question of the model. there's two things about co-working one is the concept of co-working, the idea there will be spaces where people come in and work with other people that's a concept the other piece that wework in terms of a model is it was this idea that you were basically going to take long-term leases effectively and then offer effectively short-term leases to the individual or the companies. the question is whether that model is here to stay? >> no question that model is here to stay companies today want flexibility. they are looking for built out space. they don't want to go through the brain damage of leasing

space. as i said before, we just opened up in brooklyn there is companies, one person size to 50 you walk through the space, it looks incredible >> you're doing that yourself. >> no, that's -- wework is in about 1/3 of the space they've done it. we are also -- in some of our own buildings we are doing pre-builts and you're seeing other landlords going into co-working space the tenants want a range of choices. they want long-term leases, they want the flexibility if an advertising agency gets a new account or a law firm gets a new piece of business, they all want that ability to have short-term space and that's what you're seeing in this -- throughout the world. buildings are layering themselves they have amenities like a dock 72, co working space and amenities. it's a change in how people think about work, how the companies are trying to attract

employees to their buildings and all these amenities. our building in brooklyn is fully amenetized food, wellness, conference center, outdoor space. this is what companies are looking for to attract and retain their employees. >> bill, i hear what you're saying about howie work is only 1% of the commercial real estate in new york city that's a fair point. i've had other people saying, well, they were the marginal rise player that was pushing up office rents throughout places as a result, you saw much higher prices what do you say to that argument >> i don't think we've seen -- prices have gone up but there's significant amount of supply that's coming on that's being taken. the whole way people look at new york city real estate used to be mid town downtown. now it's mid town, downtown, mid town south, meat packing, brooklyn, long island city the choices that companies have to look for space are vast the market's responding. everybody's putting capital back

in their buildings, redoing -- a year, two years ago they were moving to the west side. nobody wanted to be there. that's not the case. people are backfilling the space there. they're downtown you saw uber sign a huge lease there's another example. uber's obviously been in the press and their stock dropping they just took 300,000 feet. google, facebook, apple, amazon -- >> doesn't sound like you think we're going into recession to bring it back to a macro. >> honestly, there are a lot of things out of the control of what we're talking about -- >> a big part of it is the investment that companies are making that speaks louder than a lot of the doubt that you're seeing >> the investment in particularly new york, boston, california, austin, texas, that's where the young people want to be and the companies are following them it used to be the other way around, but the reverse is true today. and that'swhy, you know, companies are -- google has over

6.5 million square feet of space, they have thousands of employees. they're continuing to grow you know, disney, you're talking about disney before, they're selling their campus up the block here and moving downtown they are investing in their, you know, plant and equipment, so to speak, to create the environment that's -- there's a war going on between companies to attract talent and so you have to have that right infrastructure to attract talent and wework provides that infrastructure for small companies and medium-sized companies. >> what are your thoughts just as somebody who met adam neumann very early on, watched the risez of this company from nothing what have you thought as it's gone from $47 billion to $10 billion and now talk about saving the company >> first of all, i think the two gentlemen that took over the company are great leaders. i've known art for a long time

i just met sebastien about six months ago i think they're setting a course to move this company in the right direction. they have to do certain things, and i'm sure the finance that you just talked about at the top of the show is contingent upon them, you know, refocusing their energies on their core business. get rid of the ancillary businesses they bought, right size the company so that they can move it forward and so we won't have to get into that discussion of what happens if they don't make it, which i don't think they will. >> are they branching out? >> i wasn't horrified. >> you had on the other day mr. dixon on from regis. he talked about wework he talked about how it was

important that they were in the business i think it made them better. they switched over to create their spaces product which is cooler or hipper we have regis in our buildings it's a different model i think that forced them to rethink how they produce their product and have an alternative to attract younger companies into their department. >> let me ask you a different question when you were watching adam as he developed, if you will, when you saw him driving. when he was buying the plane with the company money, when he's buying the homes, when he's cashing out of the stock, you're thinking what? >> i'm thinking that the company is doing well and he's living a lifestyle that he thinks is appropriate for a ceo of a major company. >> mind you, he is still at the company. >> yes >> so what does that say about all of this? >> well, look, i don't know the

inner workings of what's going on at the company. from all press reports, you know, art and sebastien seem to be in control. my guess is the financing that we talked about at the beginning, you know, is contingent upon those two gentlemen moving the company in a positive direction i don't think they're looking back they're looking forward. >> we're going to continue this conversation with bill in just a moment because obviously we want to get broader takes on it too. we will be back with bill in a second on the economy and markets and where things are plus, as you know, it is jobs friday 8:30 we get the number investors going to be watching that number very, very closely the weak data we've seen will it confirm it will it tell us something else check out the futures and all of it can change in 45 minutes from now. dow down 51 points nasdaq off 15 points s&p 500 off 8 points we are right back with the continuation of this

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41 minutes from the jobs report real estate mogul -- do you like being a mogul. >> i don't think of myself as a mogul. >> i think that's an authentic claim. >> ski mogul. >> you're not one yourself your sense though just in terms of where we are in the economy,

we just had a number of people this week based on some of the numbers say, look, there's a 40% chance of recession, 50% chance, some say more, some say less where is it really >> well, we live in a bubble here in new york city. and obviously brexit and what's going on in europe and hong kong and it seems to be moving forward. it's a record. over 1.2 million jobs here in new york and continues to grow lower interest rates obviously for our business, real estate is very, very helpful we just did a refinancing the other day around a 3% 10-year loan it's pretty incredible so we're capital intense in business low cost of finance is very important. but the companies that are still coming here seem not to be, you know, impacted by what's going

on in brexit again, i'm talking about the faangs the bread and butter of our city are 15 to 20,000 square foot leases and these are, you know, service providers, technology companies, media companies, health care companies. those -- all these segments of the market continue to grow so, you know, obviously if the economy goes into a recession, you know, things could get, you know, pulled back. >> for you, what are the numbers or data that you've looked at -- that you need to look at today or that have been good indicators for you historically within the world of real estate? >> well, when we see more sub lease space come on the market when we see our companies come to us and say, hey, we've got an extra floor. do you have anybody in the building who needs it? those type of -- >> do you feel or see any of that kind of stuff in 2007 no >> after that it really -- >> yeah. these are the -- we started feeling a little, you know, in

2007, deals that we were working on, company would say, we were going to take three floors, now we're only going to take two floors, things like that obviously what happened, you know, 11 years ago, you know, changed the marketplace, but it came becquereltivelily fast. i mean, it -- you know, it wasn't as bad -- what's bad -- historic perspective, you know, 1999 -- sorry,1995 we had 30 million feet of vacant space in lower manhattan out of 100 million. we had 30% vacancy you know, we recovered in the mid 9 os we turned our building around to a tech building, conversion of office to residential, all positive things. it took a while. that's a bad market. i don't think we're -- even in 2008 and nine with the vacancies went up a little bit, not to, you know, panic button mode type of levels. >> bill, let me ask you. you're a real estate guy so obviously you like low interest rates. it means you can refinance your

buildings and get other financing that comes in cheaper, but if you're seeing a pretty good economy, do you believe what the president is calling for, jay pole and company needs to do it even faster or does it matter to you do you think it's not warranted? >> i think the long-term rates, nobody controls that the market controls them they've responded by going down so it doesn't matter what the president says or what the chairman of the fed says they're responding to, you know, turmoils in other parts of the world, safe havens and things like that. obviously, again, we like low interest rates but we also want a strong economy because strong economy means job creation. >> bill, it's hard for me to think about recession when you look at where the interest rates are now and you look at where unemployment is at historic lows, the consumer and everything that you just told us about, but where -- to becky's point, where are you making your

investments now with the interest rates where they are. with the interest rates where they are, where are you biting off investment dollars. >> we invest a significant amount of our capital back in our buildings. we refurbish lobbies bring new technologies in. across the street, times square, the lease is renewed redo the lobby, upgrade the signage. we constantly put money back in our buildings. we remain competitive with the newer products we've got our building in brooklyn with wework as our tenant we have 400,000 feet of space that we have to rent we have a partner, boston properties, and we're very excited because, as i said before, it literally opened. we're getting great response we reinvest. we look at other opportunities within the city and we have some things that we're thinking about. but we're going to move ahead with a couple of projects in new york boutique type office building in mid town and -- but

we always keep our eyes open for opportunities but we don't -- you know, we take a very conservative approach to our investment and have to make sure everything is lined up. >> do you have a view on the implications of, a, just an election year broadly is, you know, most of the research suggests during an election year capital expenditures go down because people are waiting to find out what's going to happen. specifically, in this particular year given the very polarized nature and almost -- very different potential outcomes for where we could land. >> obviously it's a risk and it's something that's out there but, again, you know, we seem to be doing pretty good without all of this noise going on around us and companies still want to be here and gree here and, you know, when we talk to our tenants, they seem to be in a cautiously growth oriented mode. >> do they though? you hear carl icahn and so many

other people deciding they need to leave new york city, the taxes, the salt issue. there are a lot of people, you know them well, they are spending time in florida and they are flying up for 179 days. >> that pattern has been around for a long time and certain people's life cycle, they make a decision they're moving to florida. that always happens. sometimes it's accelerated obviously because of the elimination of salt. people, again, the date at that's there 35 million square feet of office space was leased through the third quarter of this year last year it was 29 million feet almost a 17% increase. that's a huge number we'll rent over 40 million square feet of office space. so what is that? that's raw data. to me that says something's positive going on. the second quarter was a record. over 18 million square feet of space leased and, again, big

companies, small companies, everything in between. that's a key metric in our mind that the -- even with all of this stuff going around the world, there's demand growing in new york and the marketplace, my competitors are investing in their buildings. they're making them smart. they're making them green. they're doing all the things that these companies are looking for so they -- it's a -- to me i think the big issue is a fight for talent you had a segment on before about talent so we have to create the platform so they can bring companies into the city and that's what's happening. >> bill rudin, don't be a stranger come on back nkts i'm happy you're here in new york city as opposed to englewood, new jersey, because that was always fun to come back but right here, my block is -- my building's ten blocks away. i will walk to my office >> then we're going to pull you in more often. >> love to be back. >> thank you

when we return, it's been a wild ride for stocks this week and today a big number is on the way. september jobs report is due out in just over 30 minutes. we'll get the number and the market reaction. a lot riding on this this time around given all the economic numbers we've seen so far. futures indicated weaker "squawk box" will be right back. when i lost my sight, my biggest fear was losing my independence. mmm... good.

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it's jobs friday in america. with market volatility spiking this week, wall street is holding its breath in anticipation of the september employment report. coming up, predictions from our all-star jobs panel. then insight and expert analysis following the number of the morning. the jobs countdown is on as the final hour of "squawk box" begins right now live from the most powerful city in the world, new york. this is "squawk box.

good morning welcome back to "squawk box" here on cnbc i'm becky quick along with andrew ross sorkin he's a cnbc "fast money" trader. steve grasso >> keep going. keep going. >> and he's wonderful and we love him let's check out the futures right now. you're going to see this morning we are looking at the futures a little bit under pressure. things are firmed up everybody is waiting to see what happens with the jobs report the dow futures indicated down by 60 points s&p down by 9. the nasdaq is down by 16 and if you check out treasury yields, we've been watching so closely this week as we've gotten some weaker than expected job numbers. you saw yields come under pressure this morning much of the yield curve is looking a little bit higher that's a relative term two years sitting at 1.39 and 5 year 1.35 and 10 year 1.53

30 year at 2.033 protestors taking to the street in hong kong after the city's leader banned facemasks at demonstrations. we talked about the prospect of this just yesterday. now it is real and it is hear. hong kong executive kerry lam said it is necessary almost all of them have had their faces covered. protesters streamed into the streets in response shouting hong kong resist separately computer and printer maker hp is going to be cutting up to 16% of its work force or up to 9,000 workers. the company said it will accomplish that through employee departures and voluntary early retirement with annual cost savings of about $1 billion by the end of fiscal 2020 oftentimes the reversion of that

you see stock go up. in this particular case the stock is down. office space provider wework reportedly now planning to cut thousands of workers to reduce its own costs. this coming shortly after wework pulled that ipo offering and had its debt rating downgraded business insider reporting the cuts would amount to 25% of the company's work force a lot of real people being impacted by all of this report we should say in the new york post today, adam neumann, co-ops don't want to let him in looking for a $50 million apartment. >> is he looking for another one after all the -- >> he's bought a lot of apartments and i'm sure, by the way, if you're one of the 25% staff laid off and you're reading the article about how he can't get into the co-op, that's what's happening. it is jobs friday. we are now less than 1/2 hour away from the number we're beginning the september

employment report. they're expecting it to be 145,000 jobs the number to beat got to watch that. would be added in nonfarm payrolls last month. joining us ahead of the data, austin ghoulsby. former council of economic advisors chairman. kate moore is here chief equity strategist at blackrock. dave is joining us, a former u.s. congressman great to have everybody here you're right here. don't tell us the number because we're going to play the game in a little bit. >> it's hidden but -- >> given the various pieces of data we've seen this week, which have not all been great -- >> right. >> -- i think that's a -- >> that's a lovely, kind way to say that >> what are you looking for today? >> without giving you the number >> without giving us the number. >> i'm expecting we're going to have relatively healthy job gains in september we're not going to have as much of a hurricane effect as one

might have had in previous years. some of the stuff in gm is not going to have hit this week. while the data we got this week increases the risk of down side, range, consensus that some of us may think. i'm sticking to the fact that the service economy and the labor market is going to be healthy. we still think that the risks of a recession are kind of overblown at this point even with the weaker data we got this week so i don't want to sound too polyana. i'm going to try to stay optimistic about the number we're going to get this morning. >> what does university of chicago think out there, austin? >> look, i hope that's right but i guess, andrew, i've got a little pit in my stomach the market does, too you saw the reactions to some of the news right now the strongest thing we've got going for us is the consumer and the job market and if either of those start to

crack, i think we would be talking about a recession and there's limited power for the fed to respond they've got a short runway the impact of monetary policy doesn't have the same bang for the buck it would have in normal times so i'm a little nervous in that we don't have a hurricane for the job numbers but, you know, some kind of storm is brewing in washington that is probably going to divert our attention. >> joe is saying you're rooting for a recession, austin? >> no, no, i'm absolutely not. 100% the opposite. i hope that we get a good number today, even if we get a good number, i still think the fed is probably going to -- >> let me see your fingers, austin are your fingers crossed behind your back? >> i'm going to cross them double like mr. spoke crossing here >> i'm surprised he hasn't worked the ukraine into his answer >> it's ukraine not the ukraine. >> thank you very, very much do you think we have a recession

coming >> no, i don't i go a little bit deeper and look at something that's hard to measure, and that's the cost of regulations which is a direct impact on employer's decision to hire and those have continued to be held low by the trump administration day in and day out. it doesn't make the headlines, the papers anymore because usually it's a tweet that's on the front pages. i think that and the continued sort of tail effects of the tax cuts a year and a half ago will continue to allow the economy to expand, maybe not at the 3, 3.5% but 2.5 to 3%. i think we'll see job growth in line with the average for this year. >> is there a real overhang from this trade war or not? >> i think it creates uncertainty in the market and then what you're seeing in the manufacturing side is people are adjusting their supply chains and that can work both ways. so far most of the consumer effect has been masked as

companies like walmart and others have absorbed the increased costs of the tariffs. >> austin, i'll let you get political here for a second. we were talking about this in the 6 clo:00 hour does the situation today make it more or less likely that the chinese come to the table? >> i don't think -- look, the chinese are making the same gamble calculation that businesses on its investment which is, i think, let's sit back and see what happens in the election i don't think they're inclined at all inclined to come in and throw a life line to president trump if that's what you're asking. >> no, that's not what i'm asking given all the talk of the impeachment talks and is president xi saying i'm not buying soy beans, i'm getting my popcorn out and just watch this and do nothing >> yeah. yeah that's what i think he's doing think of it this way if you were the chinese and hot and heavy try to negotiate an

agreement, it's not clear that president pence is even going to approve that agreement so i think you will wait. >> very clever you want to weigh in we've got to go to a commercial. >> i want to go to a sentiment thing here it's a big question mark for risk assets. if we have a deterioration not from impeachment and brexit and the trade concerns, but also the slowdown in manufacturing and industrial side. if that really bleeds through to lots of different sectors instead of where it feels like it's isolated right now, then, you know, that's going to be a big question around hiring, investment i think it ends up having this sort of sustaining downward pressure on the economy. right now it's not there but we are at that precipice and i think the more headlines we get, weaker headlines on the data like we had this week plus if things get ugly next week in terms of trade negotiations, you know, i worry that everyone holds off on investing. >> final word. >> i think both the chinese and the trump administration have an incentive to come up with i

think of it as a light agreement. don't accelerate the trade war keep it steady that should have a slight positive effect on that sentiment. >> we have a lot more plus their predictions. the infamous famed predictions coming up in a moment. just after this, the surprisingly simple tax plan from a leading 2020 contender that is getting supporters fired up will there be an appetite for higher taxes, even taxes on the rich, if the economy slows down? pollster frank luntz will join us after the break stay tuned you're watching "squawk box" on cnbc obvious. sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances.

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welcome back to "squawk box. question this morning, is capitalism dead? it's popular in washington and wall street and it's one in silicon valley here's mark bennioff hire's what he said last night. >> i really strongly believe that capitalism as we know it is dead we're going to see a new kind of capitalism and that new kind of capitalism that's going to emerge is not the milton friedman capitalism that it's just about making money. >> right. >> if your orientation is just about making money, i don't think you're going to hang out very long as a ceo or founder of a company. you have to be more than that in today's world. you certainly have to be more than that in san francisco.

>> and that's because -- >> more than that in our tech industry as well. >> some of our viewers are rolling their eyes. >> milton friedman is all about making money. >> depends where you are. >> it's about common sense and economics. >> we'll continue this we want to say it's a hot topic among democratic presidential hopefuls andrew yang talking to john harwo harwood. >> capitalism is not designed to optimize our well-being, it's designed to optimize for capital additions. if technology comes along that can do work cheaper, better than you can, capitalism loves it in the old days we made all of these assumptions that what was good for capital ended up being good for us because if you had a big, successful company, it would hire a lot of workers, treat them well. you would care about what's happening in its home city and now in the 21st century those things aren't true anymore. >> meantime, senator elizabeth warr warren's new rallying cry on the

presidential campaign trail is centered on taxing wealth, not by a lot but by hitting americans hard robert frank has the numbers. >> reporter: they are the two words that could reshape the elections and the economy. >> a two cent tax. >> you've got to pitch in two cents. >> a two cent wealth tax >> two cents two cents. two cents. >> yes that is a two cent tax. >> at rallies and campaign stops around the country, elizabeth warren supporters are raising their fingers and saying two cents. pennies included two warren staffers dressed up aspenys. the rise of the two centers speaks to the populus appeal of the tax but also her skill at turning complicated tax policy and debates over inequality into cashy emotional slogans. the actual plan, of course, is

far more costly calling for a 2% tax on wealth over 50 million. 3% over 1 billion. that would raise over 200 billion a year and taxpayers would have to estimate the current value of everything from cars, real estate, art, private companies. most european companies have already abandoned wealth taxes for lower than expected revenue. larry somers recently said, this is not some little tax, this would be an extremely burdensome tax on wealth. >> figure all of that stuff out. these are market to market situations. >> right. >> how do you prove it how do you hire enough people to audit it it's one thing with real estate -- >> right. >> -- you can watch real estate much more closely. >> a lot of these assets are illiquid but the economists say more than 3/4 of the assets of this group are in stocks and financial assets -- >> that's even worsethough if you're a long-term holder are you supposed to sell it every year for whatever gains are there that moment?

what happens if the gains disappear? >> and to have to sell it to pay the tax could put a lot of pressure on the market and that's one of the big concerns the stock market could have. >> stay here let's continue this conversation on taxes and their role in the 2020 presidential campaign we are joined by frank luntz frank, this sounds easy. it sounds simple it sounds like it's minuscule but it's not when you start thinking of the details and what it means to be putting a 2% tax annually on anybody with assets above that. >> well, it's significant. 55% of americans now believe the corporations should not have unlimited profit and 68% of americans are prepared to tell ceos you can't make more than 20 times what your least paid employee makes our polling has this specific tax at 75% support including a majority, a bare majority of republicans. the attitudes and the core principals and priorities of the american people have shifted over the last three years.

we are no longer -- i agree with what benioff said. we are no longer pro capitalists which is why the language and messaging matters. it's so easy to talk about two cents. they better start talking about economic freedom instead of capitalism they better talk about what it means for main street. i know this is targeted towards wall street, but the american people aren't hearing it they're not responding to it, and they are absolutely responding favorably to what elizabeth warren is saying even if the ideas are extreme. >> i know it's early on. what do you think this means for an election that's over a year away >> i think it's very significant. i think there is a war on success. a war on those who have figured out how to do well and mabreying other people along with it but the public doesn't see it. here's the problem this path to success, which has been made possible by our economic system, if you don't think that you can get on it if you don't think you have the chance to succeed in life, then

you feel angry about those who do and that hostility, that sense of revenge which i do see at democratic rallies, that is pervasive and it is not just on the side of the democrats. >> right. >> i now see independents feeling this way. >> frank, let's talk about the democratic race as it stands right now, i recognize where elizabeth warren stands on these issues to me right now there's almost two democratic parties because biden is -- almost represents a different party to some degree unless you think that's not the case where do you think biden stands relative to elizabeth warren both on the issues and in the polling in terms of who has a better chance of winning what is, not to make it a multi-part question, but throw in what happened with bernie sanders's health this week and what it means. >> let's start with the third question because that's the easiest. bernie sanders votes about 75% of them go to elizabeth warren

so if he should drop out of the race, she will have a nationwide surge that will take her above joe biden. shea's already even or ahead in those two essential early states, iowa and new hampshire second, there is this democratic shift and it is moving in the direction of elizabeth warren every day. she did not represent the mainstream of the democratic party six months ago she does represent the mainstream of the democratic party today and, third, she's a brilliant debater. she knows how to begin her statements, how to use facts, how to challenge donald trump, how to empathize with the average working class voter. she's really good right now and i think she's the odds on favorite to be the democratic nominee. >> frank, why were the polls so wrong back in the last presidential election where you didn't have any polls saying that donald trump was going to win, he was outpolled by about 10% and then -- or thereabouts what has changed about the

polling process and why is it different or better this time around >> so i should not do this because i'm now about to offend a host of this show, but that is actually incorrect the polling had -- had hillary clinton beating donald trump by 3% in the popular vote, the national polling was dead on the problem were these individual states. the national polling was within 0.9% of the final number, well within the margin of error and those states only got it wrong on election day itself the exit polling was wrong but the polling that led up to it was close enough. >> then why didn't we hear that more frequently? because it did seem like a huge surprise to just about everybody when donald trump walked away with that? >> because it was a huge surprise that he stayed in the race it was a huge surprise that he was able to weather the storm. everything that donald trump did would have killed any other candidate until donald trump and

he was successful zsh. >> we're in unchartered territory. what does that tell us >> it tells us to be very careful about projections, and i realize i made one today but i'll stand behind it you can use the video six months, eight months from now to see if i'm correct but it also says that there is an anger and frustration with the electorate that still exists today. it existed three years ago when donald trump got elected and it exists right now and i say to corporate leaders watching today, if you don't listen to what mark said, if you don't find a way to connect to your -- the people you serve, your employees and the communities, and the customers themselves, then you will face a backlash at the polls on election day and you will rule the day that you -- go ahead. >> i've got an election question but just to the specific issue you just mentioned we just rolled tape before benioff talking about how capitalism is over you have a lot of ceos, business

roundtable and others making the argument you're making is this spin, pr, a stop to the position you're talking about? do you think this is real? speak to that. i want to get back to the implications of where we are between biden and trump and what the implications of this impeachment situation. >> so, again, multiple questions. yes, it is real. people yell at me in these focus groups when they will tug my shirt and say, yo you are -- you're not listening. it hasn't been this high since 1992 and they are determined to get even on election day second, joe biden is absolutely a better candidate against donald trump i've been testing it now in speeches i've been giving over the last five or six weeks and in every single circumstance more people say they will vote for biden than they say they will vote for elizabeth warren at this point some democrats don't care they are so fed up with capitalism that is unjust,

unfair and they want a change. so she continues to gain he continues to drop we've got a lot more over the next four or five months. >> we have music playing us out. does this whole impeachment thing play better for trump or biden given the whole situation of how it seems to be splitting people >> how about it plays badly for everyone and it's an awful thing for the country what we are facing. >> i 100% agree with you nice to see you, sir. when we return, the september jobs report is on its way at the bottom of the hour. 8:30 a.m. eastern time we'll talk markets, economy. i le university professor robert s shiller as we wrap up a volatile week on wall street. ♪ lower calories. ♪ higher expectations. the light beer you've been waiting for has arrived. corona premier.

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there are things we would change about work. and there are things we wouldn't. ♪ when work is worth it. work is worth it. work can be closer to home... pay more... make us proud. careerbuilder. work can work. find your work at careerbuilder.com all right. welcome back to "squawk box" here on cnbc we're live from the nasdaq market site in times square. we are 30 seconds away from the september jobs report. this number has become much more important given the economic numbers we've seen this week ism manufacturing and ism nonmanufacturing both weaker

than expected. the manufacturing number showing contraction based on the sentiment that's out there that's been what has been a rip saw in the markets all week long the dow futures. the dow down by 62 points. s&p futures off by 10. nasdaq off by 18 consensus looking for 145,000. 136,000 nonfarm pay rolls increased by 136,000 in september. the unemployment rate fell to 3.5% down from 3.7%. that is the lowest level since 1969 average hourly earnings also fell one cent. statistically flat compared to the month but up 2.9% over the year we did have some revisions for the past two months in the total change july revised higher by 7,000 jobs august revised higher by 38,000. so added up you have a total of 45,000 added jobs. after the revisions job gains have averaged 157,000 over the past three months so year to

date we're at 161,000. compare that to 2018 though and it had 223,000 as the average monthly gains. looking at specific sectors we had health care showing the most gains. 39,000 jobs added there. professional business services also added 34,000 jobs but manufacturing jobs down by 2,000. so a slight dropoff there. a bigger dropoff in retail trade down 11,000 jobs the biggest losses there were in clothing and accessories offset by gains in food and beverages the unemployment hispanic unemployment fell to 3.9%. that's a survey low. black unemployment at 5.5%, also a survey low but unchanged labor force participation rate at 63.2%, also unchanged of course, the favorite, u6 or real unemployment rate at 6.9% back to you guys. >> diana, thank you. we've been watching the futures. you saw them down from 50 to 60 points to up by more than 70

points right now see the other reaction that we've seen around if you want to take a look at what's been happening in the treasury markets, too we'll talk about all of this with reaction from our jobs panel right now. kate, let's start with you we put everybody on spot with saying what that number was. looking for strong numbers. >> it's not a really solid number the number i was going to give was 159. i feel like 136 is a healthy number especially because you saw a good health care number. we expected weakness in manufacturing and retail that's par for the course where we are in the cycle. i feel good about this data especially with what we had this week in terms of ism >> steve, you've had a minute to dig through that what jumps out at you there. >> thanks for the whole minute, bec? >> work fast. >> you have to go back to 1969 for these numbers.

here's the problem and we flagged this back in august. august is very typically revised higher the slowdown we thought we had in august at 130, hey, we're coming down to the place we thought we would be. i like the revisions i think those are good that tells us we're doing a little bit better than we thought we were doing. the question now is are we now down to that zone where we thought we should be which is 136,000 right now. let's just be clear, the private sector, very weak at 114,000 you have to take note of that. 122 the prior month. you're getting a lot i want to double check this. yes, from government i don't have the details in front of me. i am guessing those are census workers. retail has lots of problems. down 11,000, then down 6,000 we have to watch that sector there's a huge transformation you know happening over there. i like the temporary health number i want be to see the work week here weekly hours were up 01. not so great

did not see the wage number, but i'll tell you what happened with the unemployment rate which is a huge decline in the unemployment down 275,000 with 117,000 coming into the work force. so that's a good number. look, there's two scenarios that we're watching for here, scenario number one is a sort of expected slowdown as the crazy 200 plus job gains of last year come back down to normal if we can settle in and call it a 1 poi25 to 150 range, that wo be good. we're worried about the weakness going down below 100,000 i think what kate said at the top of the show was right. i think the idea that we're now in a zone where it looks okay, it's pretty comfortable. not great, not terribly weak, i ka tull a win. >> rick, yields for ponds spiking. walk us through the reaction. >> reporter: well, a couple of things first of all, interest rates ticked up two basis points from where they were but they're still -- let's put it this way,

143 was the previous cycle close for twos we took that out yesterday with a lower one by four basis points we're right back there even though we're up a bit, we're kind of going back to ground how do you make 143 look like a high rate? you start at 138, i guess. if you look at the dollar, it has strengthened up a lit. to me the biggest news without a doubt is that the markets looked at it as good news stocks and treasury yields it's really a bad report and not for the jobs side. wages. this is terrible >> right. >> unchanged month over month. under 3% 2.9 on a year over -- excuse me, month-over-month, year-over-year basis. these aren't good numbers. it's all about the money on the jobs i understand your predictions are better it's around 150,000.

>> people are trying to figure out trade. >> what do you think of this report >> a little bit. this is a mealy peach of a report we're a little under what the forecast was it's okay. like steve said, it's okay but it's not -- it's definitely not great and this dynamic about the census, i think everybody should keep this in mind because as we come to the end of this year, beginning of next year, the census temporary hiring is going to ramp up in the hundreds of thousands. so we're going to start getting jobs numbers that if you're including the public sector in the number, we're going to see big positives but then all through the summer of next year you're going to see huge

negatives, like minus 100, minus 200,000 coming from the government so we've got to keep that in mind >> austan, i'm surprised you don't have the pit in your stomach given what rick said because you're looking at the wage issue, decelerating, not acceleratin accelerating how important is that to you >> i think it's pretty important. now that wages are steady after we've had several months where they were growing, it's not as big of a pit because hopefully this is a blip, but, i mean, i'm telling you, the thing driving this whole thing is that the gdp growth rate is slowing down and a lot of the forecasters are now saying that they expect a one handle for the rest of the year. if we get gdp growth falling down into the ones, the job numbers are going to fall apart and the wage numbers are going to falling apart let's hope we don't go in that negative direction. >> dave, what do you think growth expectations for the next

year. >> i think they're continuing to be strong in the 2 to 2.5% this is very good news the fact of the unemployment rate is at an historic low, that's what most people around the country look at. the job creation rate is averaging at 160 160,000 a month. when you compare that to pretrump, the obama era at 109, that's very good news that you can take to the public and say we're going to continue to grow the economy, create jobs and the wage, it's a slight downward trend in the direction but it's still a positive increase rather than decrease in average wages >> sounds like a goldie locks number to me so everyone picked this apart. you had some weakness. you had some strength. it still gives the fed some room for cover to cut rates i think this is as close to a not too hot, not too cold greeting for the market. we saw the market react to it almost immediately. >> yeah, i totally agree on the

fed here if we had a number that was very, very strong, everyone had to reduce their probabilities for their fed accommodation or mid cycle adjustments, i think that would cause risk/assets to sort of shake. this is right in that sweet spot where it's -- we're still growing but we're not growing so fast and if that can continue on that path. >> difficult to think about a recession as i said before, a 3.5% unemployment rate i know every economist can pick through this austin has a pit in his stomach. this is probably a tailwind for trump, wink, wink, head nod. at this point it's about the economy and for it to go this long extended the cycle really is a testament to how strong this overall economy probably is. >> right it's not ending. >> all right who was trying to jump in? was that steve >> yeah. >> yeah? >> i just want to say talking about i think it was austan talking earlier. the first go round, a lot of the

upward revision has come from government it's one of my pet peeves that government job counters can't count government jobs. it's always a large part of the revision, but you added 12,000 additional -- it's about 1/3 of the upward revision to the august number and all of the upward revisions to the july number whereas the july private sector was actually revised down september was a decline from august when it came. austan is 100% right that you need to watch these government numbers to see how they're increasing the total number but it's the private sector that looks like it has really stepped down and just to sort of square that, we have been waiting to see if, indeed, the decline in capital investment we've seen would end up in a decline in investment and labor, and i have to say it looks like it has. we do have this step down right now. we do have some other reflection of the ceo pessimism in those

surveys and the cfo pessimism that we've been talking about showing up in hiring in the private sector that's worth chronicling there as well as what rick was saying about wages. >> austan, how quickly can the numbers change how quickly would they change if we were seeing a turn in things? >> if you go back and look at previous recessions, they could turn pretty quickly, and if a recession begins, the strongest part of the economy now is that consumer confidence and consumer spending remains strong. that can turn around very rapidly in a space of just a couple of months you can see big drops in consumer confidence. it doesn't mean that it will happen. >> no. >> but that's the -- that's the reason not to just say, hey, well, 135,000 a month is okay and so it's probably going to be fine i mean, if we got in an escalating trade war -- manufacturing's already in a recession and retail is already in a recession and those are two pretty decent

sized chunks of the economy. so we have to count on the other stuff really kind of maintaining itself and the rest of the world, the u.s. is still doing better than all the other advanced countries so it's not primarily about u.s. policy but there are just a lot of dangers out in the world that everybody should keep their eye on. >> do you think the fed should cut rates twice this year? >> i kind of do. you know, i -- as we said on this program, becky, i thought as the fed was raising rates and continuously overconfident for nine straight years, i thought it was kind of a mistake i think that they probably should be looking at rate uts. >> kate, how about you >> i think it's necessary to maintain confidence for the fed to provide continued accommodations, but i think let's see what happens to the data over the next couple of months if we get to like december and isms have rebounded and service sector looks strong, we don't want to use all of our bullets

too soon our expectation is that october is on table. let's see how things go. >> david, if you think our growth is still here, do you think the fed should be cutting? are you worried about what you see? >> i'm worried they move too quickly and too steeply on the other side and cutting it. i think the pressure is there with -- when you look at rates around the world that are negative in europe and the low three-month treasury bill, so i think they will end up cutting i think they need to be cautious and not go too deep to quickly. >> what's the next big thing >> it's the fed trade. china talks. fed coming up. >> minutes next week. >> and then you have earnings starting so we haven't had anything to really dig into fundamentally for this marketplace that's why we've been enamored with everything around it. once we start to see that there's not an earnings recession, fed, china, all of this could be a tailwind and i don't think that we're going to have the same october, november,

december that we had in 2018 that seems to me what everyone's worried about. >> you don't think we're going to drop 20% in the next three -- >> that's good that's a positive. but when you think about it, it's all about positioning in the marketplace. i think the number one gia bun dantly too negative based on what we saw in the last couple of months last year and i don't think they're positive enough for the potential for the market to rip higher now. >> rick, how about you >> you know, when i look at european rates and umt .s. rate, something unique has been happening. as we've been dropping, the drops in the european rates has stalled a bit and to me what reading the tea leaves, i think bank of japan and european central bank are going to have much tougher times adding more stimulus they will but not the amount historically that would have been expected. so if all stimulus is globally fungible, it's going to make added pressures to the federal reserve and when you also add in

that you could look at that spread as almost a growth spread, that we are starting to sneeze as the rest of the world has already caught the flu with regard to their economies, i think this is a new dynamic that the fed is going to have to worry about over the next several quarters >> i want to go back to the earnings this year that's right we're focusing so much on the trade talks that begin next week i think the first reports from companies on third quarter earnings are going to be really important for equity market sentiment. we already know that 2020 numbers are too high revisions are likely to come down, but if we end up getting a solid, you know, bit of guidance from companies as they report, maybe those downward revisions are not as stark we'll have the opposite effect which is a restoration of confidence in some of the corporate sides. >> steve >> hey, becky, i just want to tell you, the market's been sort of -- and i love to hear rick on this market's dialed back a little bit expectations for rate cuts

while everybody on the -- >> a lot >> -- panel was saying we need two this year, the market was saying it doesn't. we came back down like about 75% chance of a rate cut in october. that remains dialed in but we've dropped back to like a 44% chance of one in december and that had been up well above 50%. now this moves sympathetically with what's going on in the two year or ten year of course what's going on in the broader fixed income market. this seems to be good enough to sort of maybe remove some of the panic we've had this week about the recession and the fed needing to do 50 there was some talk about that i don't know, rick probably wants to weigh in. he doesn't like correctly looking through one meeting to another. looking through two opaque windows at the same time and getting less clarity over time it's the best gauge we've got right now, rick. >> no, we're down 3.5 ticks in the back end of this three ticks, actually, in december listen, viewers once again, i

don't play the game of percentages. when you move up in price you look for more fed. when you move down in price you're taking away more of that. to see this very average and when i look at wages i think a below average number if that is sufficient, to me all things being equal, if we don't start to deteriorate on growth more, we don't see the spread to european rates hit more narrow, i think it's one more for the year unless something changes dramatically in this regard, i agree with steve. >> rick? >> yes. >> just one more thing which is i think it is worthy to take a step back and maybe sort of pinch yourself, make sure you're awake and remind ourselves we're having a discussion about two -- one, possibly two rate cuts with the unemployment rate falling to 3.5% i don't know that you would live to see this time and this moment but i didn't think i would it's kind of crazy. >> no, i didn't either then i always look at year six as the real unemployment rate. i don't mean to start a war over

this i still think the dynamics of the last administration, there's a boat load of people that were just evaporated from the work force never to be counted again and that distortion is smaller but it hasn't gone away. >> come back -- >> austin -- >> it's a fantastic story. most of the labor force, you can't compare the unemployment rate today to the unemployment rate 25 years ago, 45 years ago because there have been such changes to the demographics of who counts in the labor force. so -- i agree with steve's sentiment. it's like, whoa -- >> more now than ever before. >> more people in the country than ever before that's why you need to look at a rate, not a number >> i'm going to give you what i believe to be the greatest social program -- welfare program of all time which is running a tight labor market i'll tell you why. because -- >> yes. >> -- it's forced employers to give second chances with

records, people with drug records, all sorts of things there is nothing the government can ever do to bring those folks back into the work force that a tight labor market doesn't do more cheaply and do better >> totally. >> i'm personally willing to risk a lot of up side on inflation for the down side we're getting from the private sector in enacting this incredible welfare program that's bringing people back into the work force. >> steve, while you've been talking our president's been tweeting we'll let austan respond breaking news, unemployment rate at 3.5% drops to a 50-year low he writes in all capitals. he says, wow, america. let's impeach your president in parentheses even though he did nothing wrong exclamation point. rick and austan, you guys can go at it if you like. >> i agree -- >> there's nothing for me to go at it so austan can take over. >> i agree with him. i said the unemployment rate

going down, that's excellent when you get to the question of impeachment, let's save that one for another day. >> all right i want to thank our jobs panel today. great to see everybody austan, david, kate, rick, steve. steve grasso running away. day . in the meantime, data over the past few weeks, robert shiller is with us, yale university professor of economics, founder of the case-shiller index great to see you you just released his 13th book, called "narrative economics:how stories go viral and drive major economic events. here we are, at what may or may not be another economic event. you look at the numbers and before we get into it, what is your reaction? >> well, the unemployment rate seems to me to be the headline it is kind of an important boost there of confidence to see that we are at such a low

unemployment rate. it looks hard to criticize trump's economic success but, of course, the unemployment rate is a fuzzy number depends on a person's willingness to be looking for a job. and i don't know if it is entirely comparable to 50 years ago. we have different thoughts about that now >> we have had a lot of people on the set this morning say this is a goldilocks number it is a bit of a choose your own adventure situation to some degree you also have the wage issue on the other end of it how do you look at -- how do you look at both and square them up, especially against some of the earlier numbers we heard this week >> yeah, well, the flat wage number this report suggests that it is not really such a strong economy. so that -- yeah, it all seems to -- gdp growth is slow

but the unemployment rate is at a record low, almost record low. so you can spin this report any way you want i'm thinking we have to -- >> just throw it out and other numbers, you would prefer to look at this morning >> well, my more unique perspective is to think about predicting there will be a recession eventually, whether in 2020, i don't know but there will be. the question is how severe will it be? and economists are not very good at going out another year. but i think that there are -- this is my book. there are narratives in place that make ourselves a little bit vulnerable not just the narrative that the fed is already at a low interest rate and doesn't have ability to expand, but there are other narratives in the background that i think could come big and powerful notably the narrative about machines replacing jobs. artificial intelligence. that's going so strong, you wonder why it hasn't scared

consumers yet. >> hasn't scared consumers yet, looking at a jobs number as the president tweeted, unemployment at 3.5%. >> you got it. that's exactly it. the unemployment rate goes up in the next recession, which is coming at some point, they will stiff their interpretation to interpreting it to be something that has to do with artificial intelligence you won't be able to say they're wrong either those factors are there. we could have a more serious -- your talk this morning seems to focus on could there be a recession? small recession doesn't bother me as much as a big one. and i think that we have things in place that over the next few years could worsen the recession into a bad one maybe not as bad as the great recession. but the problem is that we have narratives afloat today that are not -- not strong.

kind of long run narratives that are in the background and waiting to affect confidence. >> so when you say there could be a recession, but not something that looks like the recession, the great recession of 2008, what does it look like, what are the things that worry you what are the things that don't worry you that makes it different? >> well, we still have some element of the -- the fears of that remain from the 2008 recession. so this could be like the 37, 38 recession. i hate to bring the depression up but people in that recession, that's a long time ago, the term secular stagnation came up again. because people thought we haven't really felt good about ourselves since the great depression and now we have another

recession ere. so that narrative could come back again i don't mean to be negative, i'm saying for my perspective, i want to think about severity of recessions, and this is not an exact science. but it is something about potential for worries that -- the other thing that may change in the next recession is that we may be less excited or willing to do conspicuous consumption. we have president trump modeling conspicuous consumption. lavish lifestyle as a success strategy and that -- that attitude, i believe -- that argument in my book, that attitude can change. can change abruptly. and it can also add to the severity of a recession. if people don't want to -- >> you would argue it would change the way the consumer spends money interesting. robert, thank you for joining us this morning good luck with the book. >> thank you. >> you bet. down to the new york stock

exchange cramer is there. jim, i can't wait to hear your take on what we saw from the jobs number. what does it mean? >> i think that we are in a situation where the part of the economy that is being hurt, manufacturing can really benefit from a rate cut. a lot of the problems is the dollar is way too strong good to hear that. the next four weeks we have earnings, over and over again, the strong dollar is just a big negative rest of the economy, good. i agree with -- i agree a lot with what liesman said, which is that we have to watch retail at the same time, the jobs are so plentiful in that sector, i'm not as concerned if we get a major bankruptcy it is true that the biggest issue is finding people to go to work, i also like -- why don't we talk like the hispanic job creation, african-american job creation, these are good things. i like the number, but still room to cut. it is the manufacturing sector being hurt by a high rate that is causing the dollar to be too high. >> dollar was up a little bit on the news

looking at the chart now. >> it is too high. >> what do we do, though, when central banks everywhere are kind of looking at negative interest rates how do we compete against that >> i think that some of the -- we need to get -- we raised rates to get a soft landing. now we have to kind of recalibrate because we don't want it to get to be too soft a landing. forget those guys. recognize in a vacuum, the bond market is saying to me, you got to cut short rates a lot of people come on air, i deal with the manufacturing sector, and manufacturing sector is being hurt by the strong dollar it is preeminent we need to deal with mexico and canada i'm afraid the impeachment hearing will derail that. >> what about the ism nonmanufacturing number yesterday. didn't show contraction, but was weaker than expected is that bleeding over? it is a sentiment indicator. >> yeah. costco was on last night, a great -- really critique of the economy. and just kind of said, listen, tariffs are hurting us a little

bit. things are slowing down a little bit. you listen to costco, other than the fact they sold a diamond ring for a couple hundred gs, you recognize there is -- there is worry that it is going to bleed. and that's a great retailer. it is not happening yet though and you don't want it to happen. we can help it by having fed funds rate that is lower and the dollar stops soaring even on pepsico, the dollar is -- >> faber in your shot. tell him nice tie. >> he looks fantastic. >> we can't -- that's a good tease, jim. >> senator warren wants a piece of his wealth. senator warren will come after you for that jacket. >> what are you talking about? i just put my ear in. >> he doesn't know what's going on. >> there are too many billionaires too many billionaires. they should do a show about billionaires called "billionaires". >> i heard of one. >> just over half an hour until the opening bell on wall street. dom chu has a look at the morning's biggest movers, some of which just started moving

last 25 minutes. dom? >> two things, first of all, i know that show "billions," i like everyone's tie on air today. tie envy morning movers starts with snapchat, snap inc those shares are up 3.5%, over 400,000 shares of volume the social media company gets upped to equal weight to underweight from analysts at morgan stanley next up we'll check out shares of general electric, which are lower by over a percent on around 420,000 shares premarket. the industrial giant getting more cautious commentary, reiterating the underrate rating and $5 price target, citing what they think is less growth with greater risk with regard to ge's aviation business. those shares off we'll end on shares of applied materials, which are up over a percent or so on 5,000 shares premarket.

positive mentions by analysts at citigroup. they maintain buy rating, we'll watch those shares for catalyst into earnings season i'll send things back over to you. >> thank you for that, dom have a great weekend join us next week. "squawk on the street" begins right now. ♪ good friday morning. withing to "squawk on the street." i'm carl quintanilla with james cramer, david faber. 136,000, just south of estimates, wages up 209, year on year, down from 32, which kill give folks something to debate today regarding the future health of the labor market road map begins with the latest key read on the economy. jobs, unemployment hits a five decade low