good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm rebecca quick along with steve liesman and mike santoli we have a lot to get to this morning before the jobs report what the fed will do and if the numbers are not or not hot u.s. futures are flat ahead of this dow futures up 26 points s&p futures up 3 nasdaq up by 3 yesterday was a wild ride in the afternoon. you saw stocks were down in the morning. all of that turned around. you had the s&p and dow closing higher nasdaq coming from the down 2% loss to end marginally lower by .25%. mike, what happened? was this light trading or change in heart

1234r . >> a combination of both s&p down 7% in the week. we are down 1% yesterday actually, aside from being oversold and getting to the levels that should hold and the jobs report today where the market wants to pull into a neutral spot you had reassuring economic numbers. manufacturing was stronger and prices paid cooled off jobless claims were okay net, it did not have a formula there with treasury yields going up it was enough for a reflectx bounce >> the 10-year treasury is yielding 3.265 the 2-year treasury at 3.4%. you are right. not setting new highs. we had seen these earlier in the week steve, the number this morning

is what everybody is waiting for. >> before we do that, mike, it is september 2nd the holiday is monday. is big money in the hamptons and it is light trading and takes a nudge to make a change >> sure. that is always the case. when you have fewer actual humans making decisions in terms of where to buy and sell, you do tend to have it more in the hands of the automated mechanical things. on the other hand, that was true for the market sliding the friday before and true for the fact we were down 7% over the course of the week i don't know if it is directionally relevant, but more in the way of the twitchy market these days. >> sure. whatever the trading, the government is planning for the report due at 8:30 a.m economists are looking for the labor market to cool adding 318,000 jobs down from

528,000 in july. you know it is hard to say. mike, the better economic news helped the market. the word on the street is good news is bad news for the market and equation is simple you end up having more jobs and more job growth and higher wages. this prompts the fed to do more. the idea maybe the market is an tun attune to the idea that better economic growth is better for the stock market i always thought that was true i hate the idea that good news is bad news thing. it is hard to say more people getting jobs is bad for anybody. >> the reliance of the fed coming in and stepping to the rescue it will be hard to wean investors off that the fed is not going to be here

to save you when the portfolio goes down. >> in this case, steve, there was an impression left among some after powell's remarks last friday that they wish to engineer a steeper slowdown. they believe it might be necessary to get inflation under control. as opposed to the fed data depe dependent, they are using this as ammunition. i don't think that is oversimplifying things i agree in general having an economy that can withstand whatever the fed is likely to do because it is stroke stronger is better. >> the other thing to look out for here is the idea that as people get back to work and i've been alone in this idea. i floated this idea with fed folks. i get a luke warm or tepid response one of the problems is lack of labor supply it strikes me putting more

people back to work is not inflat inflationary you saw the 528,000. you look at the industries and we are still with the overall economy was where it was with total employment and then some industries are below 600,000 viewer state and local government jobs. some of those industries are lacking for workers. that means in some cases they get to charge a premium on prices or rise prices without competition. it's a strange time. we keep trying to overlay the '70s or '80s or this inflation or that inflation. we don't have an analogue for coming back from the pandemic. >> i'm with you on that, steve i haven't heard you lay it out before part of the problem is when you can't find workers, you have to

pay more otherwise if you convince people to come back, okay that is some easing on the inflation pressure especially in the wage price spiral. >> we'll talk about this later, becky. there is something of a matrix here which is if we get strong job growth, obviously the market would be spooked by that let's see if we get strong job growth and big rise in participation. i'm not saying that would happen that would offset it we have strong job growth and lower wage growth? this is a nuance to watch and we have to put all of the pieces together to understand what is happening. >> all that is relevant and it is august and a lot of play in those numbers. we'll talk plenty about it starbucks named laxman narasimhan he worked for pepsi and was a

senior partner at mckenzie he will join starbucks in october before taking over as ceo in april howard schultz will remain ceo until then >> this is interesting this is the third time that howard has turned over the reins. he has never gone far away he has built the culture this time he came in under very different circumstances where starbucks in the past had been the one whether come up with the benefits and made baristas a different job. push back this time around union activities at some of the as f stores he came in and make sure to reinvest and figure out how to keep up with the demands of people who sometimes are coming to work and sometimes aren't

just making sure you specialize. laxman is an interesting guy i met him at pepsi when he worked there he was on with us during the pandemic talking about lysol and the demand and they could not get these things through he has been through the consumer goods, not just the stuff recently with lysol, but pepsi and has a good understanding of the coffee dealings they had with pepsi >> the bottle and pre-packaged stuff. >> guys? i want to ask a question what does it say i like to watch this that starbucks did not find a ceo inside 385,000 employees. why couldn't they find somebody inside the company what does it say about the culture? >> they did. it was kevin johnson. >> i always like to see that if they find somebody inside or

growing their own. it didn't seem it was true in this case. >> that is because of the issues with kevin johnson and the board's decision to go in a different direction. it is hard to do when you have someone who has come in and supposed to take over for howard schultz and that did not work out and it fell apart. that was a plan that went awry >> and in what you hear with the fresh set of eyes and schultz talked about the complexity of the menu it is a bigger global brand and company versus ten years ago we'll see about how that unfolds. he has a few months to figure it out before taking over shell ceo preparing to step down this according to reuters which says ben van beurden will leave after a decade there say short list of four candidates to succeed van

beurden. he has and navigated the compan through two industry down turns and move to slash greenhouse conditions shell is not commenting on that report. in the meantime, a movie about last year's gamestop meme stock is in the works. "dumb money" based on the money anti-social network by ben mesrick. features seth rogan and pete davidson and sebastian stan. this is about the bets page who boosted shares of gamestop in a effort to hammer the hedge funds. it has caught our attention here and the question is is this going to catch much attention? steve, look up is this going to catch attention in terms of will the general public be interested in this story. ben is the master of this.

he did it with "the social network" which was facebook at that point >> i guess if the big short could, you know, make trading -- it has a brand and populous message. we'll see. i don't know how you make it dramatic >> i wonder how it ebnds up did people make money? >> somebody did. >> didn't everybody lose their shirt at the end of the day? >> depends of how many of a diamonds hand hodlers you are. coming up, the countdown is on we get you ready for the jobs data after the break later, the government is preparing for a fall covid booster shot campaign. dr. scott gottlieb will join us to talk about that and the new lockdowns in china

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welcome back to "squawk box. adp reported august jobs of 132,000 last month a steep decline from july's 500,000 gain joining us ahead of the jobs data is mark summerlin mark, good morning >> thank you for having me >> let's talk about your predictions here first of all, you don't think this is a recession now, but you think one is coming by the end of the year. how and why do we get there? >> i think the very simple fact is that the fed wants the unemployment rate to go higher that means if today is not the day, some point in the months ahead, we will get a negative employment report. chair powell was very clear in jackson hole that he has both the will and means to get inflation down and to do that he will break the labor market.

i think that is the simplest pay to think about things going forward. >> so, i made note of that apparently he said it before, but he made a point of emphasizing it the idea of some pain for businesses and households. how did you take that to understand how far the fed is willing to let unemployment rise >> it means the first hint came in the june sep where they forecast they rise the unemployment rate by .50%. you see the number to come down to something more sustainable with the 2% inflation target and they have to get the unemployment rate up to 5% to 5.5% i think you will see the estimates drifting higher and higher and we will end up in the middle of next year with an

unemployment rate in the 5s because the fed chosen to do that we can argue whether or not that is the best policy, but we as investors are accepting the fact that is what will happen and the question of what level of short-term rates induces that change >> let me ask one more fed question before i get to the issue of investing in that environment there. you see 75 basis points coming in march -- sorry in september how far do you think the fed goes after that? >> i think the most important thing is once they do the 75 basis point hike, they have the shorte end of the treasury curve inverted powell has the short run neutral rate and the fed funds be above that and the best way to think about the short-term stance and monetary policy is the short end of the treasury curve and whether that inverts

you have about 50 basis points of steepness in it right now it will be restrictive after september and another 50 basis points or 75 is enough to break the economy. i think we top out at 4% it is just we don't know for sure because they will keep going until they get the result they ant >> so, the question is whether or not the market you think has priced in this recession you see coming and what would investors do in this situation is this a get liquid and hang on until the recession is actually priced in? >> i think from a long equity standpoint, that's exactly right. we know the direction of equities the economy will go into recession and the earnings will fall right now, investors are seeing rapid earnings growth with the high nominal gdp economy and

that is going to come down we never know the exact level. the direction will be down conversely, long-term bonds have value. something like 3.25% 10-year treasury is something that is a decent investment. >> so 3.25% real return of 1% you think the inflation rate comes down to 2% that means the fed wins the battle, but at the expense of recession. are there equities to be involved in the equity market or are you saying put all your money in bonds and cash? >> i think you wait until you get closer to 3300 so, i think it -- i'm not an equity stock analyst there may be specific stocks that do better than others i'm not the right person for

that for myself, if you know what is going down, step aside for a little bit >> marc, thanks for joining us this morning interesting outlook. >> thank you very much for having me. coming up, some big pre-market stock movers. including an active wear brand shrugging off inflation. and later, apple is set to reveal the lest atiphone next week we'll tell you what it means for the offering and the stock "squawk box" is coming right back

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shares of lululemon jumping this morning

the brand reported $220 per share. same store shares grew 23% lululemon traffic was strong in store and online despite inflation and the ceo told us not as much discounting. stock up 10% >> that is unbelievable. traffic up 30% in stores and online up 40%. look for weakness. good luck. >> absolutely. the stock had been down 35% from the high clearly investors feel like they are bucking the broader trend. shares of pagerduty higher reversing decline of 7% during yesterday's session. a loss of 4 cents per share wasn't as bad as 8 cents analysts expected. it got hit yesterday thanks to the 33% drop of okta pagerduty erasing losses for

that stock shares of broadcom beat esti estimates. >> you almost created a new company. pager booty. ing interesting line of business >> one of the older businesses out there. >> let your imagination run. when we come back, we take you live to china for the latest on the covid lockdowns and imagining manufacturing centers. this is pretty serious stuff. also reaction from dr. scott gottlieb and his take on how companies should be bringing people back to work right here at home. as we head to break, let's look at yesterday's s&p 500 winners and losers

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good morning welcome back to "squawk box" live from the nasdaq market site in times square. ahead of the jobs report coming out, we are hanging around the flat line. we have been at 25 points. s&p down by 3. the nasdaq down by 30. circling around waiting to hear about the government jobs numbers that come out in two hours time an official from nlrb sdtate the victory at the amazon warehouse should be upheld accusing to support the union drive and organizers of intimidating workers the attorney presiding concluded that amazon, in their words, not met the burden of proving accusations. amazon has until september 16th to reject to the decision before the final ruling from the nlrb

the stock is off .50%. following what we have seen in the broader market in other amazon news, cnbc learned the company took solar panels offline at the facilities last year in the u.s. after a flurry of fires and explosions that is according to internal company documents that indicate that between april of 2020 and june of 2021 amazon experienced critical fire or arc flash events in 6 of the 47 sites with the solar installations. all of last year's operations had to be taken offline so the company could ensure they were maintained properly. a spokesperson told cnbc the incidents were run by partners and amazon contracted a third party audit of the solar systems across the globe in response now to china's effort to combat covid outbreaks

officials in shenzhen extending curbs on activities in public spaces we have eunice yoon with more. hello, eunice. >> reporter: mike, a full lockdown as more covid curbs restrictions expanded on dining and entertainment and public venues work from home orders issued for much of the city factories and offices have not been closed. shenzhen's 18 million residents have reason to be nervous. back in march, they did already go through a lockdown. a week long one. all over 29 cases. the latest number is a reported 87 shenzhen is home to huawei and byd and foxconn. that facility assembles iphones. the plant operations are normal.

chengdu is now in the second day of its lockdown. toyota as well as foxconn and other factories are operating in a closed loop. volvo extended the chengdu facility everyone else not in a closed loop have to make sure they are working from home. especially if it is not essential staff. unless you go out of your home to get a covid test, only one person can leave for up to two hours to shop for groceries. guys >> eunice, if tens of millions of people in the cities are locked down based on a few cases, what is the standard for removing the lockdowns does it have to be zero for a number of days it seems there is not a path out of this protocol if that's the

threshold of 80 cases or something. >> reporter: i mean, it is really hard to know just because it all depends on your local authorities. you know, citywide or down from your compound or something for the most part, the authorities say they want to get as close to zero as possible, but it is difficult to say when the authorities will declare that they've defeated covid. a lot of times what they have been doing is saying they have zero covid, but only outside what they call the community areas. we're expecting that these covid lockdowns will continue and the disruption will continue because the situation has gotten tighter, especially with the political reshuffle expected in october just in about six weeks from now already the clamp down has been

happening around beijing and here in the city and country there is no guarantee that if president xi jinping who is expected to take a third term, does get his third term and stays in power and the zero covid policy changes that is what the people are hoping for certainly business travelers are hoping that zero covid would sei ease up a bit after the political resufl there is no guarantee that would actually happen. >> eunice, thank you very much the cdc signing off on updated covid boosters from pfizer and moderna in an effort to protect against the omicron variant this fall. this happens as companies including goldman sachs announce they are lifting covid protocols in an effort to get employees back into the office full-time joining us is dr. scott gottlieb the former fda commissioner and

cnbc contributor scott, this has been rattling oil markets after eunice yoon's report there's got to be big concerns this is going to be a practice that continues for some time it is just a weird juxtaposition to shutdown over 700 cases a city of 21million people we are talking about back to business here. it is two different realities in te terms of how we dealt with it and how they have. >> look, there is no end in sight for china. we predicted this a couple of years ago that china has a immune naive population and not deploying vaccines they have not had a lot of covid spread they don't have immunity the variants they are dealing with and the world is dealing with is worse than the original strain of the ryevirus. the wuhan strain we have a different experience with it here in terms of not

having as much impact, we have the successful rounds. china has immune population. if a variant gets into the region and they cannot control it, they will lose control quickly. we saw that in hong kong with death rates in hong kong was higher than pre-vaccine london if they get into the immune naive population, it can create havoc. we don't have visibility in the vaccine if they will deploy and be more effective against the variants >> why haven't they used the western developed vaccines is it pride? >> nobody knows for sure they made a deliberate decision to not deploy the biontech pfizer vaccine they licensed it to a chinese manufacturer that got up and running.

the government made a decision not to deploy it they are working on their own mrna vaccine by the time they get that up and running, we will have a new variant. just because b.5 is the viralent in the u.s. -- >> dr. scott gottlieb, we have the jobs number coming out today. i'm interested about this. how much should we expect in people not being able to work on the continuing bases i look at the new york times numbers. it is 90,000 cases if i take 60% of that, which is the work force, i don't know that is accurate, then you get down to 70,000 how many people are out at

ana any one month because of covid and what about long covid? >> i think it is harder to measure long covid and pulling people out of the work force in terms of pulled out of the work force on a daily basis, you look at 80,000 infections happening on a day it will go up in the fall and winter some high proportion of people working age are pulling out of the work force on a daily basis. you figure the average person is registering a positive for five to seven days. that gives you a number. that 80% skews to a higher number with older people or retired or out of the work force. you can break it down from there how many people are out of the work force >> scott, let's talk about the latest vaccines that just got approval the ones that focus on the variants we see here

how effective is it when so many people have gotten these and what are the new variants we need to worry about this fall? what situation are we in >> we don't have visibility on the new variants there are strains spreading in europe none seem to get a foothold right now. it is still early. there's some combination of the mutations we have seen in delta and omicron that people have their eye on the hope is the voaccines are more effective it is based on the b.4 variant we don't have real world data yet. when you look at modelling off people who had the old variants and how protected they are against b.5 and showing it is protective against sub he is

subs subsequent infection the durability is unclear how that lasts that is the question we will be able to demonstrate pretty good protection from infection. it restores the protection again. it hasn't been demonstrated in clinical trials. >> if you recently had it, though, how -- i guess you wait to get another vaccine because you want to use your natural immunity as long as possible there is confusion now if you had it once or twice and you had been vaccinated, do you need another booster? >> i think that is right wait up to three months from prior infection. fda talked about two months. it is prudent to wait prior to infection. waiting to get the vaccine is prudent because you will extend out your period of protection. you will have the natural immunity from the prior

infection. there is evidence the effect of the vaccine will be more robust after infection after that period of time there is recommendation. cdc talked about waiting three months people who had the vaccine and previous booster and the recommendation is waiting two months from the prior booster. that counts 11 million people. so those people probably should wait a couple months before the new booster. >> just in tefrms of getting bac to work. you heard goldman sachs and others saying post labor day we want people becack in the offic. we want a return to normal is that the message you would send >> yeah, i think businesses should start to normalize the workday. we eve we are not in the same situation

as china people who are vulnerable will be vulnerable to the infection the vast majority who had it are less vulnerable. we have a vaccine coming out that tha isis protective agains infection. we are in a different situation and we have to think about how to normalize the workday with businesses who feel that it will be the more productive way to operate. some businesses feel they are getting equal or better productivity with workers from home a lot of businesses are not that t in that position >> dr. scott gottlieb, thank you. >> thanks, a lot. when we come back, a little setback for theranos leader elizabeth holmes. we talk to bill cassidy about policy and inflation and more you can watch or listen to us live anytime on the cnbc app

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elizabeth holmes facing a setback in the bid to get the fraud conviction overturned. the federal judge declining the jury decision against the

theranos ceo the judge will not make the decision until october she faces up to 20 years in prison mike, we were talking about that it seems like a high bar to convince a judge to overturn the jury ruling. >> exactly i guess you try whatever you can by whatever means you have at your disposal. it seems like that is bizarre. coming up, crude prices on the rise this morning. still down for the week. we dig into the energy news from europe straight ahead. reminder, get the best of "squawk box" in our squawk pod on your favorite podcast app and listen anytime we'll be right back. at fidelity, your dedicated advisor will work with you on a comprehensive wealth plan across your full financial picture. a plan with tax-smart investing strategies

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programming note for you this morning you can joanin most powerful investment conference of the year meet with policy makers, lead ares and the world's best investors. i'll be sitting down with paula volent wti has been unable to hold in the mid-90s 88.71. natural gas getting back some gains. new overnight, russia's energy influence over europe may be coming to an end joining us now is energy aspects founder and director of research, maybe pull together a

lot of these tlet threads that t play interesting to see your take on the recent weakness that we've seen is it just about global economic ke concerns, strong dollar or a better-supplied market than we previously thought >> you'd say it is the macro backdrop in particular of course the strong are dollar is adding to it. but i think in tech it's china the lockdowns have really pooked t spooked the market it's around 20% of demand in china. in april it was 60%. it's still a much smaller number the fear of course in the market is that the holockdowns would continue to spread and that would mean chinese oil demand doesn't recover.

china is supposed to be one of the key countries, i would argue, that is going to allow oil to recover next year, especially given our view that europe is going to be in a deep recession, the u.s. is going to be in a mild recession that's been the biggest driver on top of that, some unsubstantiated rumors about an iran deal imminent overnight you've seen headlines suggesting quite the opposite. the u.s. and europe has said that thetext that iran has sen back is quite unconstructive and it has been sent back. >> you know, there are also some reports out there that the g-7 maybe is coming to an agreement on this idea of a russian oil price cap, this mechanism to essentially al how solow some o

hit the market but not enrich russia as much does that seem to be a factor? >> the u.s. has really been pushing the idea of a price cap for a while. but the irony of this is that the g-7 has agreed to phase-out slash ban russian imports anyways from december, barring a few countries that are exempt on the peep ipeline. so this really doesn't have any substance. this is really pointless that's why the market might actually take this as oh, you know, the u.s. is going to continue to push, and it might lead to some easing in shipping sanctions, but that's not going to be the big thing to focus on for year end it's going to be the embargo, which is still going to go ahead in any case. >> we were showing the pull back in europe. is this mainly on reports that

they are ahead of the game, ahead of schedule in terms of natural gas storage or something else happening >> i would say that headline once was a factor and i would argue some of the run up was in very thin market liquidity, not driven by a specific factor. so some profit taking is also taking place right now fundamentally, we remain bullish. even if just about current levels, and that view hasn't changed what soefr >> there's also a related point that there may be enhanced demand for oil simply as a substitution for natural gas over the winter. i keep hearing a lot of bullish inputs here, the idea that we haven't had a hurricane, maybe that's going to come and maybe heating oil demand's going to be more than we're used to out of europe, but yet prices haven't responded. so you chalk that up mostly to

china demand issues? >> no, absolutely, look, they are still strong right now is it as strong as we've been in the summer no, that's because this is the period when refinery goes into maintenance. it is seasonal softness. have we changed the outlook for the end of the year? barring an iran deal we haven't it's an asymmetric response. i think it's very symptomatic of a market where there are probably more outgoes and fewer and fewer what i say humans trading. and last week the statement about the disconnect between the physical and the financial and it is slightly problematic when it comes to price discovery. >> i guess a mirror image of

what we were seeing in the early part of the year, thank you very much >> thank you when we come back this morning, we have the countdown to the august jobs report. it's on, folks just about an hour and a half away we'll get you ready for the big number that's astr straight ahead. "squawk box" will be right back. power e*trade's easy-to-use tools make complex trading less complicated custom scans help you find new trading opportunities while an earnings tool helps you plan your trades and stay on top of the market

good morning futures are trading cautiously ahead of this morning's jobs report, which could heighten fears of aggressive rate hikes by the fed yeah, i think we're already thinking about that stuff. but the dow, s&p and nad sdaq ae all on pace for another consecutive losing week. president biden's export ban tanking the stock of nvidia and amd. and apple's stock seeing a bit of a down turn ahead of next week's biggism iphone reveal

should you be a beuyer ahead of that event we'll discuss. the second hour of "squawk box" begins right now good among, and welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times square. i'm mike santoli with becky quick and steve liesman. u.s. equity futures at this hour just a little bit, right there flat s&p 500 unchanged yesterday. the s&p turned a down 1% morning into about a .3% gain. we've seen this as technically important, plus we have the jobs report this morning. treasuries have been driving the overall. but easing back today. you sighee the two and year note

take a look at crypto. obviously, been back on the defens defenseive as well let's get over to dom chu. he's been taking a look at the big movers in the market this morning. >> the moves of kconsequence ar all tied to the interest rate picture ahead of jobs report, the tech turn around that we saw in certain degrees yesterday with regard to the mega cap tech trade. but it is very much about a wait and see thing. we used to talk about interest rate sensitive stocks. and now they're not just bank and utilities but mega cap tech. ahead of the big jobs report and what might be an interesting move in interest rates, apple

shea shares are just about flat interest rates are going to be a huge focus for sure, affecting some of those valuations we always want to take a look at the banks. ahead of the jobs number and interest rates where they are for the three year citigroup, wells fargo, very much mega cap tech and financials in wait and see mode. but one tech stock in particular is showing some real signs of hive life right now that is broadcom, the chip maker where profits and revenues topped analyst estimates and gave a more upbeat forecast than analysts were expecting, indicating that maybe broadcom could buck some of the down trend we saw with other stocks like amd, intel.

broadcom up 2% in the premarket trade. it does represent one of the bigger moves in the s&p 5 uhp 2% >> i guess something to take note of, given all of the trouble with the tech names yesterday, especially the semis. dom, thank you very much we will check back in with you in just a little bit steve? >> becky, it is job news friday. for markets, here's the expectation in.market. non-farm pay rolrolls up 318 unemployment rate, 3.5%.

that would be unchanged. average hourly earnings expected to be up 0.4%. apologize for the chart there. modest job growth, i think, would be part of the perfect powell payroll that we could get here steady or slightly rising unemployment i don't think powell would be disappointed k key would be growing participation. adp only forecasting a portion or a third of the job growth the consensus is the kind of numbers expected today will further suggest that this is not a recession or that one hasn't begun recently. here are some numbers i crunched overnight. over a typical recession,

unemployment is 2.8% we'd be up 1.5% on the unemployment, instead you can see the unemployment rates have fallen millions of jobs would have been created instead of loss. recession may be coming, but it's hard to say it's one now based on the jobs numbers. not a boom either. it's something else, a refla reflationry recovery >> i like how you're trying to figure the math on what you can count in terms of who's out at any given moment because of covid. also i like a lot of alliteration with the powell's perfect payrolls, well done. >> i was trying to figure this

out and doing some math after talking to gottlieb. you know, in july, we had 1.5 million people out, out sick okay and that is obviously, compared to say, july 2020. it would be july 2019 is a better mark. 860,000. these are numbers in the workforce. so it's kind of like we have a permanent flu, all summer long, all fall long, and maybe this iis what we have to get used to. >> i wonder if one of the nuances is the household survey which might give some kind of clues. some are saying that has been flagging a slightly weaker turn in the labor market relative to the pay rolls report

does that stand up to scrutiny >> it does household has been lower most economists like the establishment survey more, although i won't say that in that case the participation in the household, in the survey has been coming down it came down during the pandemic and by the way, i didn't get a chance to talk much about this adp report it's another reason why adp is going to be interesting. they have 100% participation they just look at the data they have in some cases, that adp data can be better. it's something to watch, mike. these two things play catch up one lags behind, they spurt ahead. if this continues over time, maybe it's a better gauge of what's happening in the jobs market >> yeah, and as always gets mentioned, the august report tends to be one of the more tougher ones to, volatile and revise and all the rest.

we'll get to the under the sur surface themes coming up, president biden signing an executive order redist restricting companies from selling some chepips to china before we head to break, let's get a check of the markets as they hold steady here. s&p down three points, nasdaq giving up about 25 ahead of the jobs report atti 8:30. "squawk box" will be right back.

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the biden administration is imposing restrictions on chip manufacturers, copinkeeping theo selling certain chips to russia and china. bernstein now trimming its price target on nvidia to account for what they see as being a pretty significant loss in sales. joining us now is carlos gutierrez, co-founder and,tive chairman of impath and former ceo of kellogg, and secretary gutierrez, let's talk a little bit about this what prompted the move, the security issues that are there and will this help in. >> well, i think the timing is a

little bit odd the reason for it is the fact that chips are dual use. anything is dual use we've had ball bearings on the export control list for years. so, you know, why did we wait? obviously, the issue is giving china chips when we need the chips, and the imbalance that it's created by where capacity is it's very obvioies have very ob doing it the timing is odd, a few weeks away from the party congress what this does is strengthen xi's hand to be tougher and tougher and tougher. generally, i don't like the government telling business who they can sell to unless it's illegal or a national security issue. but that's our m.o sanctions, sanctions, sanctions, and frankly, i've neff ver seen

them work. i think we need new ideas, a new doctrine >> what would that entail? when you look around the globe right now, the cover story of "the wall street journal" has putin standing over mikael gorbachev, but he's not going to the funeral, because he doesn't want to send a message that glasnost is okay we don't have the relationship we used to have with any of these countries, and i wonder what it means for the future >> it's not good for the future. look, becky, i don't want to blame this on us, but we haven't helped, okay what shoxi jinping is doing is a fundamental shift. this isn't just a president's program and the next one will come in and have a program they feel that private chinese business, foreign businesses, foreign institutions, educational institutions have

taken over society or are taking over society and crowding out the communist party. this is a move to put the communistparty back in control that's happening now in china. we know we have issues with russia my question to the biden administration is why do you keep isolating and pushing and picking these rhetorical fights with china, when what we need is for china to perhaps at least stay neutral but we're just pushing them toward russia. it just boggles my mind, vicky, becky, what are we doing, why are we doing it? i think it's because of domestic politics i think it's because it plays well here but becky, it's terrible foreign policy. and that's where things have come but playing china for domestic policy, i think is so dangerous,

especially now >> let me take the other side of that argument, and that would be that we have tried to work with these regimes for decades and decades. we've tried to take the high road, that would be the bigger players and say even when you push we're not going to respond to any of the problems along the way. china set out their plan and said that they are going to basically rule the world, and that this is the one-china policy and everything else is out there. that they're going to be the economic leaders we can go along with that and help them on the way, or we can kind of pull back. so what's the argument against taking a different tact than we've tried for decades? >> well, i think that the first thing we have to recognize is that china's not going away. we're not going away and we have to co-exist. we have to figure out a way of co-existing instead of just throwing out tactics that continue to make the

relationship more antagonistic there are, there are ways to try to get closer to try to at least pacify, i'm not saying we're going to become best friends we're going to be competitors. we're going to try to hurt each other's businesses but co-existence i don't think, you know, these people who say war is inevitable, i think that's such a dangerous thought. we need to co-exist, becky we need to find a way to co-exist, whether we sell them chips or not, that's fine. we have a lot of things, but we're going to be here a thousand years from here, i hope, and so are they. there is no once and for all stop china it's too late for that >> i take it you are not a fan of nancy pelosi's trip to taiwan >> look, i, i like nancy pelosi. she's actually a neighbor.

but i think it was reckless, and i think it was irresponsible i think it was a tactical move that has huge strategic implications it handed president xi jinping on a sillver platter an excuse o get tough and show muscle on taiwan, which they did on taiwanese waters, taiwanese airspace they didn't even do that in 1995 not only was it a bad move, it just inflamed all of the sentiments that are going on between the two countries, and it gave xi jinping the perfect justification to show muscle before the party congress. >> how does this relate back to business here, just in terms of the chips and the chip shortage that we've been facing right now. obviously, taiwan is pretty important with taiwan semi-conductor being a key component and a key component

supplier >> well, that's the thing. and, you know, we're trying to fix it, and we're trying to at least have some self-reliance on chips. the president's chips act, which i think is a good way to not depend so much on taiwan, especially now, when things are so volatile. but the chips act puts $280 billion in research and development, about $250 billion for semi-conductors. that's nice. china's putting $1.3 trillion into the economy into, into technology. a semi-conductor plant costs about $20 billion to $25 billion to build so these numbers are great, and it's great that we celebrate it, and it's good that we got it passed we've got a lot of work to do. and the last thing we need is a government who keeps knocking business you know the oil companies are bad the and the technology companies are getting too big.

and it's crazy either we want to compete, and the best way to compete is through our private businesses, through the private sector, then let's support them let's stop taxing. let's stop making regulations that make it more difficult to do business. we just have to decide, what do we want? do we want to compete? beat china continue to be the world's greatest economy or continue to bash business that's the part that just doesn't make any sense that juxtaposition >> carlos gutierrez, mr. secretary, thank you for your time this morning. >> thank you, nice to see you, becky. >> you, too. okay, we are counting down to the july jobs report, just a little over an hour away the economy expected to add 18,000 jobs in august dprown frm 528 in july. a reminder, join the most powerful investment event of the

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now thenc answer to today's aflac trivia question. how many days did it take thomas jefferson to write the declaration of independence in the answer 17 days. known as the silent member of congress, jeffserson drafted th declaration at the age of 33 welcome back take a look at lululemon shares, up strongly this among they reported earnings and revenue that beat expectations as shoppers stocked up on workout gear the ceo calvin mcdonald on closing with bell overtime

telling sara eisen that guest traffic remains strong despite inflationary pressures >> we are monitoring our guests' behavior very closely and looking for any signs that would indicate a change in behavior, and as to date, we have not. we grew our men's business 27% we grew our women's business 24% in the quarter our traffic increased 30% in stores over 40% online new guest acquisition was up 24%. transactions with existing guests up 17%. positive comp growth in stores at 18%, online 32%, and across the region so we're not seeing that, and it's driven by full-priced innovation >> a couple of readis here, becomy someone at the higher end, they are able to get their price.

they've train theed their custos to look for the new stuff, come back froequently and pay for t >> he said they're paying full price. it's not just a women's store. people think of it as spandex legging, things along those lines, it's not just a women's store. >> they've expanded into men's, accessories, things like that. it's still only a quarter of nike's size, so the idea to have that kind of brand and the valuation has gone down a little bit but room to grow >> unbelievable pop. we'll gt yet you up to speeo what to expect from apple. where can you get it will there be problems with the supply chain is this we'll

anchainc stay tuned, you're watching "squawk box," and this is cnbc

apple's big product event is next week. the tech giant is expected to unveil a new lineup of iphones, a more affordable ipad and maybe even a new watch joining us, gene munster and joanna stern good morning to you both joanna, i guess the question every time we have one of these events, on a scale of kind of ho-hum to wow, i can't believe what they have in store for us, where would you think this new product set is going to lie? >> i think in the middle i think to be fair, right smack in the middle. this year we're expecting new iphones, of course, four new iphones, which is sort of what they've been doing in the past, sort of giving an array around the price ranges, two new ones in the iphone 14 range the big change there, though, is that they are supposed to get

rid of that mini phone and replace it with a bigger 6.7-inch screen which means you have an i phone normal size and an iphone max size at the lower end pricing, right so you got that big phone, and i expect that to and pretty big seller because people really are buying the big are scger screen and didn't necessarily want to go town up to the pro model. >> is there anything that you feel is going to catlize above and beyond the typical upgrade >> there are the wow features, the smaller things that seem to make a difference to them. the camera, we're hearing about a 48 mega pixel camera, that's a big jump from the previous 12 mega pixel cameras on apple to tell us why those

mega pixels will be better we plan to hear a lot more about confrontational photos why the computers can take better feet others than the actual sensors and hardware. >> we have to be educated on the details or just love the fact that the camera constantly gets better, i think. gene, one of the things i think behind apple's expansion valuation and the way the stock has outperformed has been it's less hit driven than it used to be it's not like every couple years, is it going to fly? is it going to be a good year or not? where does that sit within apple's just normal course of business of upgrades and such? >> it takes a lot of the pressure off the features. i think joanna outlined them precisely. what to expect at the end of the

day, i would put those as typic typical upgrade cycle and what it means for an investor if we look over the last 14 cycles, it's really been two times, especially with the iphone 6 that was the first model where you had to stand up and say something is different here. the theme that it needs to be just a big hit, a wow type of iphone to satisfy growth, i think that that is a little bit misplaced. i think the reality is these products are becoming necessity. we saw it in the june quarter. the iphone sales were up 3%. that's at the end of a cycle, in front of a 50% comp. i think that is testimony to our dependence on these products to answer your question, these are subtle updates i think that they will be enough to continue the story. and there was something that really caught my attention the last 24 hours, really, related to the iphone, i've been bracing

that the i fien iphone is goinga slow down. but when i sigh see the l lululemon numbers, it's encouraging to demand in the next six months. >> from the what's in it for me department, did i read something in your paper about the possibility that there would be satellite connectivity included in one of these iphones? as a fisherman who goes to some remote places a lot of times, i'm real interested in this. >> i thought this was going to be a niche thing but apparently not. yes, there have been reports that over the last number of year, apple has been working on satellite connectivity would you have service, limited service, when you don't have cellular connectivity. report of that coming to the iphone, some model the of the i

phone and the apple watch. there are big expectations that the apple watch pro will come out later this year. a higher helped apple watch that may have extra features, and possibly a satellite feature for those going more off grid. >> so we're not sure it's one of those things that they're talking about it, but it could be coming to a phone i'm not sure how i feel about that on the one hand i was off the grid, on the other hand you don't want to be off the grid. so it's a little bit of a double-edged sword on that >> yeah, and the expectation is that it would be limited connectivity you'd be able to make phone calls, some light e-mails, you're not going to get full data there's some fall back for the phone to actually have service >> you're not going to be able necessarily to send the photo of the fish you just caught >> you won't be able to stream cnbc >> what if i'm in my waders on a stream, and somebody has a fed question from the office

you know, they can call me, and i can say, well, you know that is c that that 75 basis point hike was in 1970. the ipad, where is that business we may get another one and is that, is it just kind of a little bit of a niche thing? or is it something that apple has big plans for? >> mike, before i answer that, i want to weigh in quickly on steve's comment about the satellite phone. i thought initially that this was a greater than 50% chance. i think it's less than 50% call it one in three chance that we see that. this is really important, because that is a substance feature, and i would say that whether it's this year, it was rumored last year. it's going to be in the next two years you're probably going to

see some feature so investors can rest easy on the uptake of the sat phone. we're starting to see growth flatten out. the answer to your question is it's probably a lower single digit grocery stwer and a lowerd ipad would be welcomed >> is there anything out there that you feel apple users or non-apple users crave? setting the satellite capability aside. we're used to it being a new iteration with improvements around the edges but it doesn't seem that our devices seem lacking to us in any particular way >> no, i think you're right, these are necessities. they are, we needthese phones, right? people are looking for these new phones every two to three years,

that upgrade cycle has extended given that the phones are actually better. how much better is that camera getting? you need to see that improvement not over every year, but every two to three years the big question has been in foldable phones. samsung has been putting out foldable phones, other phones have been doing that there's really no big utility in those. the phone lagged behind current smartphones like the iphone. will apple put out a foldable phone, will their screens bend and flip and do all these fun things i think for apple, the question is why why would that need to be there? and is it more of an iphone ipad combination device >> it seems we've gotten to the point where cars, they get bet are a better all the time, but you don't make a leap of one year to the next and remember there used to be lemons

in terms of the stock, it's had a huge streak of performance where do you think that sits? we're not really talking about a rapid top or bottom line grow in the next couple years. >> i think it continues to perform better than most expect in the next six months i think it's a $250 stock over the next couple years, and ultimately, the big driver to that, the first thing that popped in my head, what do investors want, the first thing that popped in my hid was a car, that's what i want, i blew it with the tv prediction it still haunts me, so i'm reluctant to go out and say that they're going to do a car, but that to me is really what gets this to 250 and higher if they do more substance and mass to markets, a car, that's why i'm optimistic beyond just the current core business. >> do you think if they announced -- nobody thinks it's going to happen, but do you think if they announced a car next week the stock would

respond positively as opposed to people feeling it's a little too far afield, too capital? >> i think in a short period investors are going to open their eyes >> the case of smartphones, about a billion dollar market. they get 10% share this is a bigger business than the i phone. cupertino has a growth problem you got go after massive markets to keep that higher. they're thinking about that, and i think that ultimately investors will more than reward share of apple because of the size of the growth this business could be massive >> all right, gene >> i would love to review a car. that's all i know. i'm a little tired of the phone. so give me a car love to review one >> all right, we'll all look ahead to that. see how it goes.

joanna, gene, thanks a lot have a great weekend >> thank you all right, coming up, college budgets face new pressure from china. and bill cassidy will join us to talk labor, the economy. follow "squawk box" pod. makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are.

starbucks has name d a new ceo. he previously worked in pepsico and a senior partner at mckenzie he'll join in october and learn about the company for a few months before taking over as ceo in april founder howard schultz will remain interim ceo until then and the company will unveil new details about its plans at an investor day on september 13th >> pretty cool, though watching through, we knew they were looking steve raised the question earlier about not finding someone internally, going externally for this. but laxman is an interesting

choice, as somebody whowasso familiar at pepsico. somebody who can kind of move and go through this, and i think it's important to know that howard schultz is going to be staying on through at least 2023 at one point so they will give time to kind of let him get to understand the culture of the place and the changes that are under way, which, as you mention theed bef, mike, this is no small task. it's a different company >> they've become ubiquitous that seems to be done in terms of the global expansion. obviously, you're still going to grow, but it's about getting back to the core of the brand is, and the consumer part of it. as students return to campus this fall -- >> not to mention. >> oh, go ahead, steve >> not to mention the labor

issues which are huge. they have some situations at some shops there, and the challenge all over and when i travel around, which i'm doing more and more these days, it seems like there are more and more competitors out there, and it speaks to what mike was talksiing about. >> howard schultz is going to be sticking around for a while. as students return to campus this fall, colleges and universities face a looming budget threat. fewer students coming from china, and that means less money. robert frank joins us with more on that. what kind of schools are getting hit by this, robert? >> well, becky, it's mainly the public universities, because there are more than 300,000 students from china studying in the u.s. right now their tuition and spending estimated at up to $16 billion a year but now that big money stream

may be running out student visas or f1s falling by half this year compared to pre-covid. applications for the 2022 school year down 37%. political and social tensions between the u.s. and china is one reason, but visa problems and fears about china and anti-asian sentiment and gun violence also big tfactors. public universities as we just said taking the biggest financial hit since international students sometimes pay more than twice the tuition of in-state residents. ohio state losing about 1,000 or 25% of its chinese students since the pandemic michigan state losing about 350. like many schools, michigan has launched a new campaign to diversify away from china.

schools no schools now looking to india, vietnam and turkey they may have to raise tuitions even more since they were making so much money from these full tuition rates paid by foreign students >> the idea that it's the state schools, that's pretty interesting. because states pulling up a lot of the budget. rutgers gets 20% of its budget from the state of new jersey it does have more than 20% of the student body coming from new jersey, but what expectations are there for those slots to go to students who live in the state that is getting that is giving a huge amount of funding for that school? >> well, that has always been part of the big debate about international students, particularly those from china,

because they are supposedly taking slots from in-state residents and from u.s. residents, but, you know, so the slots will go, perhaps, more to in-state, more to u.s. students, that's great for the u.s., great for those in-state students, but the question is still that budget hole left because the in-state students are paying less than half what the international students are so yes, the slots will go more local, but who's going to fill the financial hole that's left that's the big question. >> so many questions swirling in higher education right now why tuition has outpaced the rate of inflation for so long. how they're going to deal with some of this with the student debts that have been out there it's a good beat, i'm glad you're digging into this stuff, robert, thank you. >> thanks. coming up, senator bill cassidy joins us to discuss europe's energy crisis and the policy here in the u.s., plus inflation and the jobs market and so much more

the s&p turn add 1% loss into a third after percent gauge. "squawk box" will be right back. e "squawk box" will be right back. . "squawk box" will be right back. "squawk box" will be right back. . "squawk box" will be right back. . "squawk box" will be right back.

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made to do anything so you can do anything. . since monday, the national average for gas dropping by three cents. yesterday's average at $3.81 a gallon in the meantime, california has declared a grid emergency, warning about blackouts potentially coming during high

temperatures expected over the labor day weekend. joining us to talk about the president's energy policy is senator bill cassidy it's always good to have you why don't we start with the drop we've seen in oil prices and gasoline prices recently it's been significant, just like it was pretty significant on the way up, but this is something that the markets are watching and waiting to see what happens. what do you attribute the lower oil prices to? >>ki th i can think of threeaso off the top of my head the rig count has increased. number two, we're through the summer driving season, and a lot of people canceled their vacations because they couldn't afford gas demand destruction if you will and so i think that there's a couple reasons, one's kind of good, one's maybe not so good and then summer driving season's over in general.

>> let me add one to the list. because of china's lockdown. that seems to take the price out of energy commodities as well. what do you think we're in for longer term. where are things setting up, especially as you watch what putin is doing right now in terms of cutting the supply of natural gas to europe. >> yeah, so the interesting thing is i think the american people are under a whipsaw so inflation was really going after them but now the fed is ratcheting up interest rates, and so the economy is going to showdown so although we look at an indicator by itself, and we say that's good news, if you look at it in context, it's just going to be the consumer, the people i represent, being buffeted one way or another we speak about gasoline prices going down, but natural gas prices continue up and natural gas prices mean that people are paying more at the,

at the utility bill if you will, but it also means that all those byproducts, fertilizer for example, coming from natural gas, fertilizer being an input of the grocery stores, you know, you follow that, is going to continue to be a little bit higher so i think if we're just speaking about the person at home balancing their checkbook, they're going to feel it one way or the other for the next few months, six months, maybe even 12 months. >> senator, you serve on the energy committee what would you like to see done for national policy from that perspective? >> there is so much that can be done to streamline permitting of energy projects. renewable and traditional. there was somebody who spoke of a permit that she had applied for, a super major in the gulf of mexico. they were going to drill in four different directions off an existing platform. and she said 12 months after that was granted, she would be sending oil and natural gas to the shore to be processed.

she applied in january and they still have not received their permit now we could align that. i call it the operation warp speed for energy and not just for, not just as we did for the vaccine to bring something that would take three years, to bring it to put it in someone's arms in months, let's do that for resources. by the way, it can also be done for renewables when you sigh see california going to all electric vehicles by 2035, they are nowhere close to that. and california is notoriously delayed in permitting. >> what's the funding that needs to go into that? >> so the funding has been out there, both from the trump administration to the biden administration bipartisan infrastructure bill for example, which i was a part of, there is a lot of money that is out there the issue is, is that some of that, so much of it gets chewed

up in the permitting process so by the way, some of which we're permitting would bring revenue to the federal government think of permitting off the shore of louisiana to allow those four different wells to be drilled. that brings more royalty payments to the united states government i think the money would be there. we would find extra money if required >> senator cassidy, thank you. we will have you back again soon >> thank you all right. coming up, the august jobs report is upon us. just a half hour away. we'll bring you the mbnuers and market reaction right at 8:38:30 stay tuned "squawk box" coming right back

good morning it's the final countdown the august jobs report about 30 minutes away we'll bring you the breaking economic news and instant market reaction a developing story out of china, the tech hub of shenzhen extending covid kucurbs on most companies. starbucks names a new ceo. the final hour of "squawk box" begins right now

good morning welcome back to"squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with mike santoli and steve liesman. u.s. equity future this is morning are in a wait and see pattern right now. we've got some big things happening in less than a half hour's time, but right now dow is waiting, up by 11 points, s&p up by two, the nasdaq down but the jobs number comes out at 8:30 eastern time. in the meantime we've been watching treasury yields, and they're sitting around where they've been at the higher levels over the last couple weeks. the ten-year is yielding 3.2%. again, all of these markets waiting to see what the jobs report will tell us, and then maybe try and figure out what

the fed will do as a result. in corporate news this morning, lululemon posting better than expected quarterly results and posting an upbeat outlook. it continues to see strong sales momentum shares are pretty sharply higher this morning, up by 9.5%, which is big news from a retailer. we're also watching shares of bid bed bath and beyond. setting it up for a possible fourth straight negative session. they announced plans to shore up its finances but the stock this morning down by 5.25%. and broadcom is issuing a stronger than expected current quarter revenue forecast broadcom's ceo says that the company expects strong demand across all of its end markets to continue this quarter and as a result, that stock up by about 2.8% steve? >> hey, becky, educate me on

lululemon, unfortunately, i'm not a customer this is high-end stuff >> it's ex-febpensive. >> people buying clothes to go back to the gym and to the office >> they also have pants for men that are an office ware, a casual office wear the abc stuff, that's what joe wear, drawing more and more men into the brand and that's probably what's helping, too the ceo was talking about when they're looking at men, their numbers are up 27% when they're looking at women, the women's business was up 24%. and by the way, they're not offering discounts onthis stuff. pretty strong demand i think something like 30% traffic increases in the stores. up 40% online. avenue m every metric that they ran through. >> i follow all this stuff, becky to get a beat on the

consumer and the macro side of it, but the lululemon does not sound like a weakening consumer. >> you like to watch, you're not a player >> if you want to put it that way, that's fine mike's been looking at the broader graphics mike santoli >> yes, steve, here's setup for the jobs report, s&p 500 on a week-to-day basis, yesterday's bounce happened really at this level, 3900. just above there many, many folks were hoping and believing that it might hold on the first attempt. last thursday, a week ago thursday, this thing closed around 4200, been going right down since the powell speech last friday. there was some hope that it would get some traction at the 50-day it's about halfway between the june low and the august high we did get the bounce yesterday.

here' here's year-to-date. the late july lows, there was a drop in early june there was a lot of this sort of tactical, somewhat mechanical, m mental accounting factors that come into play when it's about these levels i think the big question out there is, do we need to revisit those lows in june a bit over 3600. i would argue since that time, inflation has gotten better. growth has looked firmer credit spreads are tighter obviously, the fed's more hawkish. we're just holding that uptrend we've gotten since june. it seems like a pretty consequential moment for the jobs report to come in here in a little while take a look at the u.s. dollar index. this captures a lot of what's going on u.s. growth being somewhat stronger than growth in europe, even if we do get a downturn here, it's not expected to be as

bad as it might be over in europe so you see here, this is also part of financial conditions tightening dollar going up is part of the fed's job. it should be also a restraint in theory on inflationary pressures. >> mike, you go back to that stock chart there, it was kind of a stealth rally, right? so it went up a pretty good way. so giving some back is not that, is pretty normal in a situation like that, isn't in >> it is completely normal but we maybe gave back a little more than the strongest rallies would give back. i think that's been a little bit of a concern you know, you have to keep all these numbers in your head for better or worse, i do. but you gain back from june into mid august, exactly two months, more than 50% of all that was lost since january a lot of folks said ah, that's kind of escape philosophy. that should be good. it leaves the market a little bit in between as they say, this could serve as a little bit of a quasi retest

of the lows. they did get maybe stretched to the down side as it was in mid june >> prlus we had a big fed event in the middle of that that accelerated the selloff. certainly toward the end of that powell spoke and whatever was going on right about there coming down and then powell accelerated it do the down side, right? >> 100%. it's really the fed's, the perception that the fed really does want to get the market back on its heels and not have the market rally and anticipate a turn toward a dovish policy. that's been the biggest factor, also this idea of just how much of the tightening that's already in place bit y the fed. are we sort of just waiting for the economic numbers to get worse here have we got tonten to that poin where's inevitable i don't think it is, but that's

where the market is. >> joining us to talk about the continuing global bond rout is sri. we said a hundred times he's going to be hawkish. we said a bunch of times that all the other fed officials had said we're not going to be cutting, we're going to be higher for longer. why weren't people in the equity market listening >> that's a very good question, steve. that was something that i wrote about last saturday as well. markets emerged significantly from the bond market the treasury's hardly budged on friday but the equities crashed. so i think the expectation from the equity holders was that they were going to get the rate decrease in 2023 and powell would speak about it as you know very well, steve, chairman powell has a clear

inclination toward helping the market he has spoke and lot about market stability equity holders essentially thought, we are coming to the end of the height cycle, we are going to cut rates, and that's going to be good for us. let us prepare for it. and that simply did not happen i think even for chairman powell it was even for him a bridge too far to cross for him to say we're going to cut interest rate when is inflation is still at 40-year highs. >> but sri, it does seem like however it happened, a very short speech a very direct speech, the bond market has it now and the equity market has it now. that seems to be the case. at the very least, powell was successful in getting his message across is that what you think now and what does that mean for bold yields >> he has been successful so far

in convincing both bond markets and equity markets that he is going to be tough. but i still maintain, steve, that we are going to see higher and higher ten-year treasury yields i told joe on this program just a couple weeks ago that we were heading to 350, when we were much lower than where we are today. i still think we 350 i may change my forecast to something even higher. the reason is, he has to, powell has to keep hiking until he really sees inflation come down. can he not worry about unemployment he cannot yet worry about the stock market so while he has convinced markets so far, if you have credit even, long-term credit management of 1998, if equity markets crash, as we saw in the second half of december 2018, he's going to want to pivot. so he's convincing until he's no longer convincing, and at that

moment the pivot, i think, is going to come within the next six months >> right so sri, what is your outlook when it comes to a recession i don't think the ten-year goes to 350 if the economy's in a recession. >> i think you're going to have not just a recession, steve, but a stagflation. this is a repeat of the 1970s, you are going to have a recession combined with rapid price increases, whether it comes from energy, or whether it comes from drink or food, there are several contributing factors. it's hard to see where it's coming from. look for instance at the g-7 countries which are going to decide today to put a limit on russian oil price. that, to me, is an absolutely foolish decision if they go through with it, you might expect at some point russia could react by cutting oil supplies to the rest of the world, and can you see oil price shooting up to $150 a barrel

under those circumstances. recession or no recession. remember, that's what happened in 1973 and 1979 oil price shot up even though we were in recession. and that caused inflation to stay high. >> okay, sri, thank you for joining us this morning. >> thank you very much, steve. >> we have a few minutes, under 20 minutes, becky before the jobs report. when we come back, starbucks naming a new ceo we'll talk about the prospects for the coffee chain right after this

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welcome back to "squawk box," everybody. the future this is morning are really flat. it's not often you see a nudge the nasdaq off by 14 a big jobs number coming up in less than 15 minutes, and the market is kind of keyed up, waiting to see what happens. you wonder if the reaction is going to be extreme, especially given light trading at this time of year, a lot of people on vacation people have said recently that it's not inflation even as much as the jobs market that the fed

is going to have to watch when it makes this next decision about what to do next. in the meantime, starbucks announcing the company's next ceo. he's going to be succeeding interim ceo and founder howard schultz next april he'll have some time to spend with schultz before then to get to know the company. andrew's got more on this. this is a company andrew has followed very closely, what do you think of this move >> hey, becky, i spent some time on the phone briefly with howard schultz yesterday ahead of this decision to understand this decision i think it's a unique one. it's an interesting one. and howard explained, really, his view about laxman. they had gone through this relatively extensive search process globally, and clearly found their man in theuk this morning, the stock up about

1.5, 1.6% on the news. recently, ricket, where he announced he was stepping down, dropped. in the world of operators, people have long respected him what he was docking at reckitt and the turn around, what he di there and pepsi. there are really big challenges at starbucks, the union movement that continues at the company. it slowed a bit. that's something i'm not sure he's experienced historically, dealing with customer facing forward folks. that's going to be a different business, but at the same time, he's been dealing with all sorts of supply chain issues, where i v which is very similar

and they're trying to transform the business and when you look at what he did at mckenzie as a consultant and think about the transformation about what starbucks is going to have to become he's been transparent about that the third place is going to have to be different in the future as more people are doing pickup and drive through and the business mix is going to shift. so those are the challenges ahead. it's going to be also be very interesting to see what that transition is like you mentioned at the top that he's not going to technically start or become the ceo if you will until april he's going to spend the next six months traveling the world and visiting stores. the plan is to get behind the counter at many of them with howard schultz, meeting with their partners and hewants to learn and be immersive. for the search committee, it sounds like just his sense of

humbleness of i want to be behind the counter, i need to learn this stuff, was one of the reasons they were attracted to him beyond the professional career that he's already had >> i don't know if you remember. we had laxman on the show during covid because of the situation with lysol and how they were having troubles making all of it coming to, pepsi, too. he is definitely a guy who dives into things. i think it's good that howard schultz will be there for a while to show him the ropes. this is the third time that howard schultz is going to be handing over the reins of the company. you really want to make sure that he understands everything and howard's line of thinking of the and i did see some comments just from mellody hobson, the chair of the company about how howard plays a very special role and has a special place and understands the culture of this company and the evolution, i

think, too >> i think he has been the culture carrier of this company for a very long time obviously, when he departed and original originally stepped down from the board even if you remember when he went to briefly take a run at running for president, he had not just stepped down as ceo of the company but from the board as well he will be remaining on the board and also will remain as advisor to the ceo going forward. so i think that's an important component of all this. i was watching, by the way, this morning, becky, and steve liesman had a smart question about why the company was not finding somebody within. and i think the answer tothat is actually very plain, which is this is a company in transformation it's not that it's going to be the same company and i think that part of what they're looking for is fresh eyes, a different approach and that they recognize, actually that they're going to have to

focus the company in a different way, and so i think that, you know, when people say, you know, could you find somebody within, there's, i'm sure, lots of talented people inside star buck, but when you decide that you want to pivot and that you need to pivot. >> what were you doing up at 6:00 a.m. on vacation? >> that is a good question, and i don't have a good answer i'm actually upset fo with myse for being up at that hour. i would hope to add to the wonderful viewership that we all enjoy on a friday in hate augau late august i was not planning on being awake at that hour as you know, these hours -- >> they're hard to shake >> it's hard to shake. >> it is andrew, thank you, i look

forward to seeing you back here next week and thanks for waking up with us, ha, ha >> thanks. >> steve >> it's the last friday of summer season. where else would you rather be than right here at "squawk box," getting ready for the big august jobs report on the way in about less than ten minutes,om cing up, the august jobs report, stay tuned. "squawk box" coming right back

well, the wait is almost over we've got an all-star panel ready for the jobs report. we're going to be talking market expectations we will get final predictions, and then we will bring you that breaking data and break it all down with this team. tell us what it means, what the fed's going to be thinking about all of it. stay tuned you're watching "squawk box. this is cnbc, and we have less than five minutes to go until the august jobs report futures market's waiting, so is wel suesart.ke 'lbe right back.

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okay, we are just a few minutes away from the government's august employment report our jobs panel today is adp's nila richardson, betsy stephenson at the university of michigan tyler goodspeed. sara mehlich, rick santelli, steve liesman. give me a quick shot on what you think this number's going to be. nila, let's start but.

>> i'm at 290, though i think there's a big range. august is a notorious month for seasonal adjustment and the difficulty in measuring it made worse by the pandemic and education and health over the past few years these trends may make that range pretty wide. >> betsy, let's get a quick number we've only got about a minute to get through everybody. >> over the last ten years, the august number has been 167,000 jobs fewer than the july number. so i think that's where expectations are i think the real truth is that it's not just a measurement phenomenon but we're going to see job growth has slowed but remains strong >> tyler, a number >> i think we're looking at probably 350,000 we just have so many vacancies that it's hard for me to see a slow down much more than that. >> we're at 400,000. watching wages, labor participation and demand is stronger than expected >> rick, quick number?

>> 266,000 266. >> and steve what are you looking for >> i'm on the light side with rick at 250. i think it's going to be a little less than expected. >> again, the expectations, the consensus is 318,000 also unemployment, a earnings up by 0.4%, and rick we're going to send it over to you. >> yes, the numbers are hitting the wire 315,000. 315 is non-farm payroll. and if we look at private pay rolls, there were 308,000. now, let's get into the manufacturing. 22,000 that's much better than the 15,000 expected. and the unemployment rate, think household survey here, jumps up to 3.7%. 3.7% that's the highest since february when we were at 3.8%.

now if you look at average hourly earnings month over month up .3, that's a little bit lighter than expectations. if we go month over month to year-over-year, it's 5.2 sprs. historically a very juicy number, that's for sure. we were expecting 5.3% the high water mark is 5.6% in march. if we look at all the hours worked, the average hourly workweek, 34.5 finally, the labor force participation rate, 62.4 if there's one area that i'm always happy to see the numbers expand on, that would be it, which means it's a post-covid equal high it's the same as it was in march at 62.4, but for those listeners

and viewers out there, pre-covid in february 2020, it was 63.4. the labor force is smailller, en though we have so many job openings. >> the u6 is 7%, that moved from 6.7% and actually, in february 2020, that was at 7% it's one of the rare metrics in the employment report that actually started to come down more than its pre-covid levels post market, what we are seeing is interest rates really haven't moved very much. 324 and tens, 346 in twos, roughly, roughly where they've been lately because they've been moving higher since the symposium speech bit chy the chairman apar and the premarket equities seem

to like this >> let's get to the panel for more reaction on this. and steve, i'm going to start with you the participation rate is something hundr something you had been pointing to this is a good number. >> it's a strong number, remember the normal rate may be 100,000 jobs if you put into work all the people coming into the workforce. obviously, there are people to put to work who have left the workforce, so there's more work to be done so this is an above-trend growth number, and it happened with more people entering the workforce. and that's a good number and wages were lower 0.3% we're looking for 0.4. so maybe some deceleration it's something to think about, something to be a little concerned about but maybe not so much you would think that people would leave their job, spend a littletime in unemployment and

the hot job market, find employment in the coming months. mike santoli asked me earlier this morning about the employment and the household survey the household. that's come a long overall, i think it's a mutual report for the market. doesn't keep them back any people keep coming back in the workforce, that could ease the inflation problem. >> kneenila, let's go to you. this is basically what were you anticipating, any surprises for you in >> well, only good ones. the fact that the labor force participation rate went up is a good thing for the labor market. in fact, the fact that the numbers lined up, i read the unemployment rate uptick is positive because we know the slow down in hiring, some of that was just the lack of supply there was a lot of firm demand

out there, not a lot of workers to meet that demand because the workforce has shrunk the idea that the unemployment rate may have ticked back up means that people may have been lured back into the labor market school's back in session i think that reads well for the labor market, but i caution that we will likely see a more normalization ahead and slower monthly gains heading into the fall >> hey, tyler, when the fed officials who have been talking about more pain to come to the labor markets, is this kind of what they're talking about unemployment going tup to 3.7% or do you think will go higher from here before inflation's under control? >> i think it's going to be higher than 3.7% before inflation is under control i'm not surprised by the strength of this number, because when you look at the fact that we still had 11 million job vacancies, more than 11 million

job vacancies in july when we still have negative real wage growth, that's a big incentive for firms to continue hiring, to fill those unfilled jobs and hoard labor, and when you look that we had a participation rate a full percent below pre-pandemic levels, that was a recipe for a pretty strong jobs number but to your kwequestion, i thin we're going to be look ing at a higher unemployment rate they start reduce hours, and then they start reducing hiring and introduce layoffs. >> that's an interesting point betsy, the average hourly earnings a little lighter than expected 0.3% versus a gain of 0.4% when you look at the consensus. >> yeah, i mean this report is absolutely a goldilocks report

exactly what the fed should want to z the prsee. the problem is when there's a lot of demand and not a lot of supply it grew by 800,000 workers that's great news. that led to both stronger employment growth in this household survey, as steve mentioned, 440,000 more people got jobs in this report. and we saw that uptick in unemployment, because some people who are now willing to look haven't landed on that job. but that's exactly what the fed wants to see is the labor market not being quite so tight, and we're going to see that through lower wage pressure and through more people coming into the labor force. they saw both these things this t in this report. it should give more confidence they can steer us into a soft landing. >> just a quick, becky, just a quick interjection on what betsy was saying the participation, it's interesting. it came from 16 to 24.

and 60 to 64 so older folks and younger folks, which, by the way, were sort of two standout dropouts in the workforce. i wonder if the younger folks is something like the august season jobs the participation rate in the 25-54 was the same sorry, becky, just wanted to get that information out there >> got, this thanks. let's talk about the market's reaction to this because you are seeing futures higher this morning. not much movement at all when you're looking at yields and the treasury market. >> i think the market generally likes it for three reasons, one it's that consensus that it's not too hot, labor's a little cooler but the key thing is what does the fed do with the stat in a few weeks? hike it 50 or 75 that's what the market eventually will be concerned about, which is why this rally

could be short-lived >> what's your broader thought what's the next thing you look for in terms of market reaction? because all of this is investors trying to game what the fed's going to do next >> i think there's a few things we need to watch out for first unemployment tends to reflect when you hit a recession. not surprising to see these stronger employment numbers. worried about the consumer dipping into savings, and earnings we've got margin issues with higher inflation cost, the strength of the dollar, these are all thing we need to worry about going forward. these rallies tend to be fair market rallies because valuations aren't cheap enough especially with the fed and the long path to get inflation down to the 2% to 3% level. we don't see the fed cutting anytime in the near future >> kelly, you kind of agree with that assessment of what the fed's actions might be next? >> yeah, so, it's hard for me to

see the fed giving markets any sort of reprieve come september after this jobs report yes, the labor force participation rate ticked up yes, we may be seeing some evidence of older workers re-enter the labor force that's a really important factor because by my estimates we had 1.5 million americans over the age of 55 exit the labor force in 2020 and 2021, so that's certainly going to be a source of disinflationary pressure, but i don't see much in this report that would signal to the fed that this is a slackening labor market i think they're going to have to continue on the course laid out by chairman powell last friday >> yeah, i mean, we did see a net downward revision by about 100,000 jobs from the prior two months, maybe that make it look like there's a little more softening there. rick, one thing i've been kind of asking myself and others is how much difference really is it if it's 75 or 50 basis point hike in september.

obviously, the literal difference is 25 basis points, but given that they're saying there's room to go at least 1% i'm curious about that in terms of the way the bond market's priced and everything. >> you know, lots of the traders and sources i talk to that are in the bond market and trade fed fund futures and options, they like to look at is a package they like to pick out december, now january actually and look at it from an entire year's worth of tightening, so you're exactly correct whether it's 50 or 75 in september will give us a little volatility potentially, but it really doesn't change the ultimate glide path, and i will point out we're only up a bit on the two-year, 20 basis points on the ten-year the long end has definitely sparked and come alive really since jackson hole, and i think that's an important issue. one thing real quickly i'd like to throw out there

everybody ought to read dr. judy shelton, favorite of "squawk box's" op ed she nails it when the chairman goes and testifies on either side of the aisle, this not being able to address what's going on between monetary and fiscal policy, that veil has to be pierced to see monetary policy, raise rates, create pain, repeat, repeat, repeat, against the background of the federal government, spend, spend, spend, needs to be reconciled before i think investors can get any decent gps, mike, on what's goi going to lay ahead with the economic future. >> the fed funds futures are still indicating they think 75 basis points is coming next. and that is something -- >> absolutely. >> as rick mentioned that could lead to a little volatility. >> so i've got a 75% chance of a 75 basis point hike. the way the market is priced, it's 75, 50, 25 bity the end of

the year do the math yourself there, that's 150 basis points of hiking your peak funds rate trading 391. it was 395 this was for the april 23 contract that's pretty much unchanged plus or minus a couple basis points so it's interesting to think about this as powell being effective. in the following way a number came in and the pricing of the market held through that number and i think that's why powell was short, sharp and shocked to be, to use the name of an old album i used to love, that he was very to the point. there was no guessing what he was talking about, because he wanted to make sure that as numbers came in, the reaction function was set to a fed that was going to raise rates and stay there, at least for a time, while it was, until inflation came down, and i think powell

would see the stability of the outlook for the fed as the success of his speech on friday. >> hmm sara, maybe that is part of the explanation for why we see equities futures higher this morning, not much movement in the treasury side of things. again, what would you be watching for what would you be telling people to do at this point? because people are coming back to work after being on vacation through all of this, if you've been off and have been away, what's the rapid read you need to know at least when it comes to the equities market based on all of this? >> i don't think we get out of this cycle of bear market rallies and declines until demand cracks, or employment cracks, and we're not at any of those points right now from the portfolio fountain of vipoint of view, an area people might not be thinking of in fixed income,

high yield, a place you're getting paid to wait for tightening there's still total returns in the high single digits look outside of your typical 60/40 portfolio into farm land, private real estate. they have escalators built into their contract, so there are ways to invest in a high interest rate environment that is more challenging, and i doesn't think we get out of this environment until we see some of those cracks in either employment or reduction in inflation and we're just not there yet. >> one thing we talking about this morning is adp has a much br broader sense, has the actual numbers for people in terms of their paychecks. what has surprised you most in the economy lately in >> the most impressive thing about the data i've been reviewing with the new report is the pay. the spike in pay that we've seen over the last year, we look at individuals overtime in the data who are in there for a 12-month

period and even for this consistent part of the labor market, we've seen a real ramp up in pay from spring of early 2021 it's now at 7.6% over the last 12 months. that's all pay, all comp, bonuses, tips and compensation what's key about that is it's stabilizing, stabilizing at a hire rate. higher rate. it doesn't mean that wages are going to go down, it means firms are going to have to compensate for higher labor costs that's what i'm going to be looking for, how firms are responding for the buildup of wages over time. >> betsy, earlier you said this was pretty much the kind of report the fed would have ordered or wished to see how much softening of the labor market do you think chair powell wants to actually see before plateauing rates or whatever might happen next? he called the labor market a

week ago clearly out of balance. >> he doesn't need to see people lose jobs to bring inflation down in some cases that does the opposite as businesses start to shutter and fire people we're less equipped to be able to meet demand, so that can cause further inflation. so i don't think we need to see people lose their jobs what we need to see is when firms go out there to hire they don't have to raise wages in order to attract people. that's why i think this report shows some good news for the fed. we had 800,000 people come back into the labor force prime age labor force participation had already returned to pre-covid levels what we need to get is the older workers and younger workers back we are starting to see that happen i think that's going to be reassuring to them and i think the fact that we've not seen wage growth as fast as the markets had predicted is also going to be reassuring. so i don't think we need to see

people lose their jobs, but what we do need to see is employment growth come back to something that is sustainable without driving a wage price spiral, and ultimately, that's going to be job growth of around 100,000, to 150,000 jobs a month >> hey, tyler, that's a pretty good point, especially when you just consider that the problems we've seen with inflation have been supply complain issues, not having enoughthings, not havin enough stuff that we can get also not having enough bodies to go into these jobs if can you get the labor participation back and this was a good step toward it in this report, if can you get that back maybe that does take away so concern about wage inflation >> there was definitely supply side component to it, and the reality that in 2021 we had a massive surge of demand. the month of march 2021 alone we had a more than 10% month over month increase in demand for goods. that's a lot but yes. on impact, that removal of

1.5 million americans from the labor force, americans over the age of 55, that was a structural shock, because you're removing from the labor force 1.5 million americans who conditional on looking for work, being employed, they have a much higher probability of being employed versus unemployed and what we saw in 2021 and early 2022, 25 year olds were not sufficient replacements for those who had left the labor force. when you look at vacancies, quit rates, other measures of labor market tightness, this is still a very tight labor market. and remember most of the u.s. economy is services, and so the tightness of the labor market adds to that inertial pressure and i think the question for the fed is no longer so much, you know, how high do they go, what is the terminal rate, but how long do they have to stay there. >> good point. steve, i see you kind of digging

through all these things what else are you gleaning from the latest things you're catching up on here in. >> i think we want to be a little careful we're watching this and thinking about this employment report from the perspective of the market and the fed it's also another constituency here, an there's also another s constituency here and that's the american public. they're going to see the unemployment rate rising it's a difficult job to explain and understand why this is a goldilocks report. they'll see 50,000 jobs created, that's good. they'll say unemployment rising, that's not a good thing and people will be concerned about that you have consumer sentiment being very low the view in which we live is one where we're looking at the market, we're looking at the the fed, but the public looking at this, there will be some concern about the numbers, becky it could be the beginning of a slackening or softening of the labor market that brings the

unemployment rate up and it will continue to go up. what we're watching for is the extent to which the number of unemployment, i think i wrote that number down, 344,000 gain in the unemployment, if these people go back to work, do they find jobs, or do they end up in the unemployment claims or jobless claims department or do they end up being more permanently or longer term unemployed we have watch that, or think about whether august might have been a turning point i'm happy this is the way it is. i'm just cautious. there are people who say all the things you look at in the jobs reports, all these numbers, the only thing that matters is the unemployment rate and that went up by 0.2% >> we want to thank our panel. thank you for analyzing everything so quickly, guys. appreciate it. steve? >> becky, thanks let's look at this morning's

premarket maneuvers. dom, things might have moved around since 8:30. >> they have to the point of the conversation that the panel just had, there is moderation and caution even in some of the market moves we've seen you mentioned the move higher in futures. that's moderating a bit. then the lack of movement in interest rates i'll put up three charts that are caindicative wti crude, no surprise, over the last couple of weeks here, the move down lower in prices because of fear in the economy if you look at an intraday basis, though, the move higher in crude was right around 8:30 a.m. when the jobs numbers came out. now it's moderating a bit. on the stock side of things, if you look at some of the large mega cap banks and financial institutions, we'll use jpmorgan as indicative, they're sensitive

to interest rates and sensitive to economic data it did rise and moving towards session highs, but fractionally so a little more caution but generally a little more optimistic given the rate picture. one other place to watch is mega cap technology it's been a valuation story, it's about interest rates and what it's going to do to them. if you look at microsoft shares as an indicative part of that technology trade, we've seen a move higher and then a moderation back to where it was pre-jobs-report. overall, banks, financial, even some oil prices showing some temperance with this jobs report, mike >> dom, thanks very much joining us now, former fed vice chairman roger ferguson, a distinguished fellow on the council of foreign relations roger, you've heard us kicking this around, the front page of "the wall street journal" says

investor hopes shrinking for fed to plot a soft landing today's number suggests maybe a soft landing is not out of the question we have moderating payroll growth along with workers coming back into the labor force as well as wage growth softening a little bit >> i would say today's numbers were sort of straight down the middle totally consistent with consensus, as the panel said i wouldn't argue one way or the other as to the possibility of a soft landing or not, because i think the challenge for soft landing is to actually get inflation under control and inflation is still ranging far above 2% these numbers are basically consistent with what had been expected i think the market is still pricing in a reasonably good chance of a 75-basis-point move. overall, as your panel said, it didn't move the markets one way or the other, which i think is right. i wouldn't read a soft landing into these numbers just yet because there's much more work

to be done before we figure out whether the fed gets inflation under control and avoids the bumpy landing people are worried about. >> clearly nothing is going to supersede the inflation numbers themselves in terms of figuring out whether in fact the fed has it under control chair powell said a few months ago that this is not a moment for a particularly nuanced reading of inflation nevertheless the market will try to look ahead and handicap when perhaps a turn is there. a few months ago, the fed had us focused on headline cpi which means gasoline prices and inflation expectations in the consumer surveys which also means gasoline prices. gasoline prices have come down by 20% in a couple of months here we are talking about core services cpi it feels as though the fed wants to keep the market anxious or at least from getting too comfortable with the idea that we can count on this lower glide path for inflation >> i think you're absolutely right. i think the fed was somewhat

frustrated that the market expected tell me to go up to a rate of somewhere below 4%, stay there for a short period of time and come down quickly. fed speakers have been pushing back hard against this quick reversal you heard chair powell saying they may have to stay higher for some time. so i wouldn't say they want to keep the market on edge. i think they're trying to get the market in line to the fact that there's a great deal more work to be done before inflation comes convincingly close to that 2% target and the market should not expect a quick hump and then moving back down i think they're trying to get the market to recognize higher terminal rate, stay there for longer, and come back down much more slowly than perhaps the market had earlier priced in >> and i really i guess, roger, the debate has to be in part about what are going to be the inputs to inflation moderating more quickly in other words, what level of unemployment might have to be required, what's the actual relationship these days between

employment and consumer inflation, because we don't really know, we have these unique factors, coming out of the pandemic back in the early '90s people thought unemployment couldn't go below 6 or 5% without being too inflationary what do you think the fed is thinking about in terms of what has to happen in the job market to help them get their job done? >> i think they're thinking about two or three things, one is the jobs opening number, we still have 11.2 million openings, roughly two openings for every unemployed person. we've had chair powell talk about that number, that relationship, as one he would like to get closer to one to one. i don't know if they'll get there, but that's one thing they're looking at the other thing that hasn't been given much attention is productivity, which has been declining and is negative or has had negative growth. and that is not a good story for inflation. and so i toy people will

continue to watch that obviously the inflation number today we saw a slight moderation in average hourly earnings, i think that's all relevant. there are a range of elements that go into this inflation picture, and we shouldn't get too focused on only one, when there are factors related to inflation that they're looking at >> they've been very emphatic in emphasizing the 2% target, saying that is really the standard here. people in the market will say, look, if it gets in the general vicinity of 2%, even if it's above for a little while, that could mean a policy downshift. do you think that's something that makes sense >> it might make some sense. but the question is how close to 2 does one have to get to call it a victory and i think one of the things the fed is very worried about is

maintaining, you know, confidence and credibility inflation expectations are reasonably well-anchored but at the upper end of something that looks credible from the standpoint of the fed. they have a credibility challenge, insisting it will be close to 2%, they haven't hinted how close to 2% is enough. markets have to wait and see and not get themselves ahead of the fed. the fed is controlling the tempo now, they're finally controlling the message and they don't want to lose that by getting markets sort of out of kilter with their own expectations >> for sure. and so much has changed in just a couple of years when they tried to convince us that they would tolerate above 2% inflation for a little while when they couldn't get it that high roger, thanks very much for your perspective today, appreciate it, and have a good weekend. >> thank you if you are just joining us, a recap on the august government jobs report. 315,000 jobs added, right in line with what had been expected, 318,000.

you're looking at the unemployment rate ticking higher to 3.7% from the 3.5% that had been expected. average hourly wages higher than expected but the participation rate went up, it was 62.4% that adveties the highest rates we've seen in the post-covid era. the stock market is up significantly. i want to thank both steve and mike for being here. join us on tuesday right now it's time for "squawk on the street. good friday morning, welcome. i'm quarrel quintanilla with david faber and leslie picker. jim cramer has the day off 315,000 shows job growth moderating a bit labor force matching the post-covid high, as becky said yields are down ahead of a weekend. futures rallying as the number comes in as expected,