reits. the reason for this is because the yield curve is deeply inverted. if that begins to steepen, you see the shorter end come down, those are going to print money, and investors are going to get a lot of relief. >> thank you, john. >> thanks, scott. >> that's john mowry. join us on tuesday. good holiday weekend, mel. >> "squawk on the street" is up next. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with leslie picker, mike santoli at post nine of the new york stock exchange. premarket does like the jobs number. 187,000 is above consensus, but june and july get revised lower by 110,000. unemployment spikes to 3.8%, highest in a year and a half. wages are light. ten-year yield drops to about 4.08%. our road map begins with the last jobs print, showing continued strength in the labor market despite rising rates.

nec director lael brainard is going to join us next hour. lulu up against guidance, walmart, a record high, the dollar stores at lows. disney and charter in this heated distribution dispute while barry diller calls netflix the enemy when talking about the strike. let's kick off reaction first, though, to the jobs number. light wages, leslie. average hourly earnings, lightest since june of 2021. better labor force participation, especially among the older crowd, 55 and up. >> the market clearly likes what it sees. a very clear reaction to the print when it came out. that 3.8%, when was the last time we talked about the unemployment rate? we haven't necessarily because it has been historically low for such a long time, and going into the print, economists were expecting it to be 3.5%. huge upside surprise here, and of course, mike, the key narrative this week and in

recent weeks has been, bad news is good news. >> yes. >> and the question, i think, remains, and you can see this from the reaction today, how long that sentiment really carries through into equities? >> we're in that comfortable zone where moderating activity takes the edge off of bond yields, off of fed expectations, doesn't yet really hit the core expectation that the economy had a decent amount of momentum coming into this period. i do think we have to explore where the border is when bad news does not necessarily help the markets, but for now, i think mostly because especially coming into the last week or so, everybody was focused on things look too hot in terms of gdp in the current quarter, ten-year treasury yields, maybe they're going to break out of their range. they didn't, and they're in retreat. the two-year below 4.8% as well. this is bolstering the idea. look, we're landing. it's a question of how soft or hard. the numbers in terms of the last seven months of downward revisions to jobs reinforces the

j.o.l.t.s. message. somewhat moderating wage growth has been a very important piece of that because otherwise you're talking about wages too sticky even as job growth dgoes down. the market has probably correctly said earnings estimates in the last six weeks, when we were last at 4,500 and change on the s&p in this level, earnings estimates were up 3%. ten-year treasury yield, up a bit, not a lot. oil kind of made a run higher. now it's still in the mid-80s. it boils together as we haven't had to really reprice assets in a dramatic way based on the backdrop. so, we're okay for now. i still have i we haven't called off the weight for further lag defects, further weakness, potentially, so just alert to that narrative shift that could be coming. >> "the journal" today echos what boston fed wrote about earlier in the week and that is,

takes five quarters for some of these things to really start hitting corporate balance sheets and maturity walls. you add nfib, jobs hard to fill. conference board, labor differentials. mike mentions jolts. when do we start talking about harder landing? today, b of a says you do want to sell the last rate hike, and he points to signs in retail and housing as signs this might start looking more pernicious soon. >> it's also september now. today's september 1st, cwhich means we're looking at one month until the government runs out of funding. the resumption of student loan interest payments starts today, or interest starts accruing today, the payments don't start until october 1st, but nonetheless, it's going to change the way consumers start thinking about what's going on in their own bank accounts, and you have the excess savings which will really start to completely be drawn down to zero and maybe go negative as soon as this month.

so, all of those factors are the lag effects people have been waiting for. whether or not today's numbers indicate that the economy is strong enough to withstand some of these headwinds is the big question. >> over 150,000 jobs per month is fine if that's where it stays. or even if it moderates down from there. you don't have this massive pool of workers we're drawing from. it is really a question of trying to anticipate the next potential turn or, if we have to absorb some kind of a shock. i don't think government shutdown is enough to be a shock like that, but right now, and again, it's also a matter of, you know, what's my relevant time horizon investment-wise? if i sort of feel as if, look, this is enough of a good backdrop for through the fourth quarter, and that's all i care about for my year because we've already been up 17% year to date in the s&p, september doesn't tend to be as bad when the market is up in this zone. the rest of the year has tended to have followthrough to the upside when you're here. maybe we don't have to worry about that. i agree with hartnett, but

really it's the first cut. i've always been arguing that the stock market is not rallying based on the hope of a rate cut. it's rallied based on, the fed's nearly done. the next move doesn't matter that much. if it went too far, it already did, so let's not worry about what happens next. it's really about if they're forced to cut, it means that the economy has given us something to worry about. >> full pricing of the first cut moves to may from june. >> right. >> so just start to watch that. >> absolutely. for more on the markets, we're joined by ed yardenny. we were talking about the overall sustainability of the bad news is good news dynamic. curious to get your thoughts on that. >> well, i think that's interesting how emotions have shifted here in the market last year and at the beginning of this year. there was widespread concerns about a hard landing, and now,

it seems as though most investors are rooting for a soft landing instead of a no landing at all. and so here we are. we're seeing the soft landing that the market has been looking for and the market's reacting exactly as everyone anticipated it would. it's rallying on the news that things are slowing down, which is good news. it takes the pressure off inflation and reduces the likelihood that the fed is going to be raising interest rates again. >> ed, are you calling mission accomplished here? do you think we're out of the woods for any kind of hard landing, despite some of the headwinds we were just talking about? >> as you know, that's a jinx. i don't want to jinx it. since i don't matter that much, yeah, i think it's mission accomplished. i just don't want to hear anybody at the fed saying mission accomplished because that would be a jinx. i like what powell said. powell said mission is not accomplished. >> ed, you've written a lot about why this is not the '70s. part of your thesis involves the percentage of the labor force that's in a union, which is

obviously come way down, and it won't reinforce that spiral effect of coal's meeting rising emergency prices but b of a has a graph looking at labor on the rise as a percent of u.s. gdp and i wonder if you think that poses any threats to potential wage spirals. >> i don't think so. i think that labor is going to get what it deserves, and historically, that's related to productivity. we have, in fact, seen wages rising faster than prices this year after basically for two years wages rising no faster than prices. we had the stagnant real wages. now, real wages are increasing, and that can only happen sustainably if productivity is making a comeback, which is really my story, and so at the heart of my so-called roaring 2020s thesis that from here on, as miserable as the first few years of the decade has been,

technologically driven productivity is going to make a huge difference to economic growth, real wages, and profitability. >> ed, am i remembering right that you are running with a 4,600 s&p 500 target? you didn't elect to lift it when we got toward that level at the highs. you had a little bit of a shakeout where, you know, within hailing distance of 4,600 again, so do you feel as if it's time to reassess, or does that still feel like a fair value? >> well, rather than change my year-end forecast, i'm starting to talk about 5,400 by the end of next year. so, what i'm communicating is i think it's still a bull market and i really can't call exactly where it's going to be at year-end. 4,600 still feels like the right number, relative to a fairly optimistic outlook for earnings and a valuation multiple that's here almost around forward pe of almost 20 and that's largely because of a mega cap eight.

so, i'm going to leave it at 4,600, but i'm going to at the same time say that whatever happens by year-end, it's still a bull market. >> yeah. and i guess the other question is, as we keep talking about characterizing what kind of landing this might be, we were discussing what we were hoping from the fed. you say you don't want mission accomplished. i always think back to 1995, which is the dream scenario everybody grabs for, and there was a cut. the fed kind of finished up the tightening cycle, got ahead of inflation, didn't have to chase it, but did cut rates, and then it became kind of, you know, the fed was almost out of the picture in terms of the relevant dynamics for the stock market. can we hope for something like that? >> i would love to stop talking about the fed and start just talking about the understlying strength of the economy itself. i think we're basically seeing a normalization of interest rates. if you look at the bond market, before the great financial

crisis, 2003 to 2007, the ten-year tips yield was around 2%, 2.5%, and the inflation premium within that spread between the nominal and the real bond yield was running around 2% to 2.5%, so i think we're back to 4%, 4.5% is kind of where the ten-year should be, and the stock market's saying, that's fine. we can live with that. >> what about the correlation between bonds and stocks at this point? you know, we've seen kind of that oscillate over the course of the year. do you think that will continue as the prospect for a pause and potentially a cut, as soon as may, according to the market, really comes into focus? >> well, you know, when we got above 4.25% a couple weeks ago, that 4.25% on the ten-year was the peak last year, so everybody kind of got spooked that we're going to go to 4.5%, 5% in a heartbeat. but then we came down below

4.25%. i think the fact that we haven't really shot up and that we're back below 4.25%, i think, has helped the market hold its 50 m -day moving average, basically. the bonds are calling the shots for the stock market, and right now, the bonds are saying, clear sailing for now, which is kind of interesting because everybody's fearing that september is a bad month historically, but it's not always a bad month, and it could be a good month. >> yeah. you got the ten-year now back above 4.10%, so significant moves today, ed, thank you. >> thank you. >> got some breaking news on this friday from the ftc a short time ago. amgen will finally be able to move ahead with that $27.8 billion purchase of horizon therapeutics after reaching an agreement with the ftc. agency sued to block the sale back in may over concerns that amgen would use anti-competitive business practices, leveraging key drugs from horizon to

prevent other companies from competing. amgen wouldn't be able to use tactics like bundling medicines together for sale. this was in the cards when we got that pause the other day, leslie. >> this is really big news and a really green light for other companies considering m&a because one of the biggest hindrances has been the regulatory environment. so, if a deal of this size and scale, one that has your bread and butter anti-competitive concerns surrounding it, if they were able to remedy that and move forward with the deal, that, for a lot of people who are kind of sitting on the sidelines wanting to do these bigger deals, could provide a little bit of a -- an opposite case to that. >> maybe i'll stop short of saying a green light, but it definitely does change -- >> a yellow light. >> it just changes that sense that everything's going to be fought, no matter what, if it's vertical, horizontal, and so there's definitely a little bit of a loosening of that story. >> it may still be fought, by the way, but if you want to get the deal done, it's clear that

at least the courts have been increasingly siding with deal-making and then also finding these remedies to actually make it so that the deal will go through. i agree with you. yellow light, maybe not green. green light to start considering it, perhaps. a yellow light to actually sign and move forward. >> you can have a rational kind of cost-benefit of, here's what we might have to go through to get this done. >> next week, we'll check in with david and jim about whether we've reached peak lina khan or peak closing window on new deal announcements. >> yeah. >> it will be an interesting discussion for the fall. when we come back, a tale of three ralliers. lulu getting a lift. walmart, record high. but more pain for dollar general. we'll talk about what's going on in retail. futures, meanwhile, looking to start september off pretty well in the wake of the jobs number. good night! hey corporate types. would you stop calling each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star.

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in every market, every rei region we're in, we're profitable. and early innings of growth. to see every market we're in, the business growing double-digit and consistently and having some of the lowest unaided brand awareness we have in the company, it's single-digit in every market except for australia and the uk, where we have been in the longest, but even there, it's in the teens. so, we have a significant runway of growth in international business, and at 23%, i think we really are just getting started.

>> that was lululemon's ceo calvin mcdonald on last night's earnings call. shares of the retailer rising in the premarket after posting better than expected quarterly results and lifting guidance up about 3% right now. i mean, guys, you look through this, it is just broadly very strong, and this is a category that has tremendous competition, and we've seen, you know, some kind of mixed results this quarter in terms of retail, but geographically, really reaccelerating. the guidance was strong here. accessories, the belt bag, which they have been very prominent in, strong. china, strong. inventory, normalizing here. and i don't know. i mean, there's a lot of dupes on amazon. there's a lot of competition. it's a very crowded space that they operate in, and their price point is among the highest, so they've still managed to garner that consumer attention and consumer wallet in the face of competition and in the face of, you know, in some places, a slowing consumer. >> reinforces the bit of

exceptionalism that lu lu has maintained and i think the market gives credit for. i don't think that's an underexplored story, but they are underpenetrated in huge parts of the world. they still have lots of store growth capacity if they want to -- in terms of physical expansion, and they operate with mostly full price, and the margins are great, and the customer is loyal. i think all that stuff has been true for a long time, still true, long runway. i think it's why it trades at 30 times earnings. in other words, not that that's crazy, but it's certainly a jerps premium to everything else, and i was noting last night too, even a slight premium to nike now, because that was always the story with nike. they pay full price, people come back. they're increasing frequency of how much people own of their goods. it's been interesting. 400 bucks has been a ceiling on this stock for a while. >> td cowen points out, highest margins on the history of the

country. china up, 61. accelerated through the month of august. they view the guidance as fairly conservative. they go to 5.35% on lulu and we sort of contrast it with what's happened with the dollar stores last couple of weeks. loop today cuts dg after the second miss and guide lower to hold, $140. they said no longer a steady eddie. this is really a situation where management's in a penalty box. >> for sure. it points out, too, that lulu isn't that much of a macro tell. it's a slice of the market as certain product areas, and then the dollar stores, so many disadvantages. they're already kind of have this saturation point in terms of the physical network, and obviously, walmart is just operating better for a lot of the stuff that they rely on without a little bit of a pricing tailwind. it's been really hard. >> yeah, so, how much of this, then, is the fact that it really is a tell on the consumer versus just certain retailers taking

share from others? is it that, you know, dollar general, dollar tree, they're all tells that the lower end consumer may be suffering at these levels where interest rates are, or is it just that walmart is taking -- taking their business away? >> in an environment where the pie isn't growing as quickly in terms of nominal total spend, i think that the advantages to scale become more clear, and you know, i'm sure dollar stores have more specific issues they're dealing with. everyone's blaming shrink on some level, but i don't think that's really the story. that becomes a bigger issue when the overall growth is not really, you know, covering up for it. >> yeah. not to shame them, but edward jones upped dollar general on the 23rd of august to buy, and part of their argument was that the core customer, half the time, pays in cash, which they argued insulated you from e-commerce because that's an option you don't have. a lot of the core customer can't afford a membership fee that would give you free shipping, but that call didn't work out.

>> by the way, though, it also has been historically the case that when the economy slows down and becomes tougher, they actually are net relative beneficiary, the dollar stores. hasn't played out yet. we'll see. >> yeah. lot going on in retail last couple of weeks. when we come back, the first white house reaction to this morning's jobs number. we'll talk to lael brainard about the labor market, inflation, and a lot more. futures have held in there as we kick off the month of september. say good-bye to summer. "squawk on the street" is back in a moment. from big cities, to small towns, and on main streets across the us, you'll find pnc bank. helping businesses both large and small, communities and the people who live and work there grow and thrive. we're proud to call these places home too. they're where we put down roots, and where together, we work to help move everyone's financial goals forward.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. >> dell's up sharply in the premarket, set to open at a fresh 52-week high. quarterly beat raises the full-year guidance as they see a.i. as a long-term tailwind. i think the line here, demand, mike, improved faster than anticipated. a lot of high fives going around, especially people who follow the stock. >> without a doubt. and this, you know, just the set up here is super cheap stock that hasn't been priced for growth in a long time, worried about the pc cycle. it's been the slow and steady. you might have placed it in the sort of hp, hpe-type bucket. now the leverage to part of the a.i. trend for a stock that trades under ten times earnings, that's, i think, what has people a little bit excited in the near

term. also, some of the sell-side commentary pointing out that probably the pc cycle has seen its worst as well so that's not necessarily going to be as much of a drag here. >> yeah. $2 billion of a.i. server backlog and an even larger pipeline. morgan stanley has this as a top pick, even above apple here, partly due to that valuation play that you mentioned, but also kind of this stock that wasn't necessarily associated, didn't benefit from the recent run-up in a.i., now all of a sudden getting put into that category because that's real money. >> and we can worry about, later, if this is just a relatively short-term period of excessive demand for a.i. capabilities and it's going to just trail off down the road. you have the cushion here with the runway to the business is still reasonably strong, and it's just cheap. it's a paler version of what did go on with broadcom, up to last month's report, which is slow and steadyish-type stock, pretty cheap, catches a little bit of

the a.i. juice and is traded pretty well higher, although giving some back this morning. >> the morgan stanley call, the top pick target there is $70, which i think is a street high, and they do call it our first gen a.i. winner. congratulations. let's get the opening bell. at the big board, kicking auto off the 2023 college football season, ahead of the aflac game, georgia governor brian kemp, atlanta mayor andre dickens, representatives from louisville aflac. meanwhile, at the nasdaq, financial services xp, bringing the exchange's first ever bell ceremony in latin america. 4,534 here, mike. how much do the bulls need to do to truly have asserted themselves? >> they've done a decent job. you've broke the down trend that started in that late july peak, certainly been above the 50-day

average the not that much more than a percent from the closing high. did get above 4,600 intraday back in late july. i think that the interesting part i mentioned before, we were at, like, 4,520 right here in mid-july. at that point, investor sentiment was getting very overexcited. looked at the weekly retail a.i. investor poll and it was like 51% bulls and 20% bears. everybody thought it was going to continue. now, you're at the same exact level on the s&p 500, and you had more bears than bulls in the latest poll. that's not -- that doesn't mean everything, but it does show you that the pullback did a lot of it job, which is to moderate sentiment, get valuations maybe back, you know, a little more tame. i wouldn't say getting them cheap, but as i said, earnings estimates have continued to go up. credit markets didn't give you a reason to worry. bank stocks, leslie, are flat from that period. so, yeah, they had a little scare. they're not outperforming,

necessarily, but they're not giving you that extra reason to be concerned. >> yeah, remember at the beginning of the month where all we were talking about were those credit downgrades, the risk of regulation. it was a very big news month partner banks. broad-based rally today. all the major s&p sectors are higher, led by energy, materials, and consumer discretionary, so i'm curious kind of what that tells you about the market sentiment surrounding just the overall inflation-sensitive pockets of the market. obviously, energy was the one clear winner in the month of august. but you know, those are some interesting -- >> i think it tells you -- well, energy is definitely started to just act better. it seems as if we've, i don't know, at these relatively acceptable levels in terms of crude. cash flows seem good. seemed underowned going into this period. actually bucking the weakness in china to a fair degree. so, i think that's been just one of these rotation beneficiaries. but as i mentioned, cyclical groups did not really give a lot of ground up toward safe haven defensive areas, and with yields coming down, i do think you still have that rate sensitivity

trade that could work on a limited basis from here. we talk about where the ten-year got to and other treasury maturities. the barclay's aggregate, basically all bonds, 5% has been a threshold. got above it in october. also got above it at the recent highs in yields and that seemed to be a stop and wait and can the market handle this sort of thing. so, we backed off from there as well. so, it's all allowing some of the pressure to lift, if nothing else. >> there have been some second looks on the jobs number this morning. ian shepherdson at pantheon says if you strip out the strikers and strip out yellow, you might have been closer to 240, which he would say is no rollover yet. also with revisions, you've got two months of gains. if this headline number were to stick. >> right. >> yeah, you can kind of rebase it however you like, but in theory, yellow and s.a.g. should have been in the consensus as well, on some level, so -- but i agree with you. it's not as if it's a job market

that's falling apart. it's just sort of loosened up a bit. >> didn't yellow employees get pretty significant severance packages as well? it's not like losing those jobs in the immediate term is going -- >> the severance echo is a big part of the story. >> people focus on downward revisions in the rear view mirror and say, that's what happens when the job market has gotten maxed out. >> remember when we were upward revising for 10, 12 straight months? disney's interesting, mike. just in light of what charter is saying about the a la carte model in general. i guess is espn dark as a result of this dispute? >> i guess so for spectrum, for charter customers. now, familiar type of dispute, may be a little sharper than in the past when you have somebody like charter saying, why should we pay more in affiliate fees because overall viewership is down? but you also have the counterargument, which is, yep, overall linear viewership is

down, but guess what? sports is still the single best collection of concentrated attention we have in media right now at any given moment in time. it's valuable for advertisers. what is going to be interesting, though, is however it settles out, whatever the pricing structure is eventually going to look like, if that has a read through to what espn long-term is going to be able to charge, it has going to change the equation for what they think they need to get in an a la carte type over the top app, because that's always been the question. what do we need to have our core subscribers pay just for espn in streaming or in an app to make up for what we're losing on everybody who has a cable package paying us for espn linear? >> wbasically like a true sum o the parts. >> yeah, exactly. what's our break-even level? that might change your odds for success in getting that to scale. >> i do think it's interesting as we kind of -- i know we're going to talk about this more

next hour, but the whole taylor swift decision to put her concert in movie theaters. historically, she's opted for netflix and streamers, but this time, it's giving the theaters a boost. obviously, this whole idea of people getting together for live events has something to do with it. and i just sat down with sixth street ceo alan waxman this week, who is a big player in investing in sports franchises, and he is extremely bullish just on the advent of live events and all the institutional money going into them as well as the ultimate payoff as a result of things like streaming and creative ways to funnel that content into more consumers, such as what taylor swift is doing. >> we already had jason blum change his own release date in light of what taylor is doing, and we'll talk about what barry diller told kara swisher. >> by the way, weakest stocks in the s&p to start, warner bros. discovery, paramount, fox, and disney. let's back to the jobs

number. more jobs than expected in august, marking some resiliency for the labor market. payroll is up 187. however, unemployment at 3.8% is intersection, the highest sense february of '22. let's bring in lael brainard for the first reaction from the white house. lael, great to have you. happy friday. >> happy friday to you. >> is 3.8% the most important number in this print? >> absolutely not. i think what we see is a picture of a strong labor market. if you look at the number of people coming into the labor market, it's really encouraging. and so, that number is just a reflection of a great jump in participation in the labor force. i think that reflects the good economy and the really terrific jobs that people now have access to. >> how high do you think participation can get, given the curveballs that the pandemic threw at us?

>> well, you know, a lot of people said that we were not going to see workers coming back, but they've come back in record numbers. i mean, you see that in the increase in employment in august. that is president biden's good economy, good jobs, good wages. people are coming back and going to work and the economy is much more resilient, much more balanced. we're seeing that balance in the labor market, and that's why inflation has come down. so, it's a good outlook overall. >> lael, how are you thinking about the role of unions in the current jobs environment? we were talking about the potential adjustments that could be made as a result of the yellow bankruptcy, which stemmed in part due to union negotiations. obviously, the strikes that are also currently ongoing in hollywood and beyond. how do you think about that as a factor in the overall unemployment situation? >> so, there's always special

factors that are taken into account in the flows that you see month to month, so clearly, those items are special factors. but you know, we're also celebrating the successful collective bargaining agreement that was reached between the ilwu and the west coast ports that was ratified with overwhelming support, so generally speaking, again, it's a healthy jobs market with good jobs, and wages are growing faster than inflation, so people are feeling good about their real incomes. >> yeah, lael, in fact, i wanted to get your thoughts on the wage growth. of course, wall street logic had a lot of attention on the pace of wage gains. 4.3% on a 12-month basis. slight moderation in growth from the prior months. what is your current thinking on wage growth, its role in driving overall inflation for consumers? you mentioned we have positive real wage growth, but there's a

lot of folks who say, maybe we're going to have to do more to moderate wage growth if the fed needs to get inflation down to its target. >> you know, i just don't see that. people did say that you weren't going to see inflation coming down absent a really big increase in unemployment, and yet inflation, in the latest report, the three-month, is back down to pre-pandemic levels, and it's really closely tracked that supply chains index. meanwhile, the labor force participation has increased much more than people thought. you're seeing balance in the labor market, and a continued strong economy under the policies that president biden has put in place. >> lael, as you look externally, beyond the united states, there have been some pretty clear issues with china. some of your peers from the white house have been going over there recently. how concerned are you that some of the weakness that we are experiencing or that they're

experiencing in china could have a broader effect here in the u.s.? is there anything that you're working to do to moderate that? >> well, look, i think secretary raimondo had good meetings. secretary yellen before that. it's good to see those channels of communication opening back up. secretary blinken initiated those series of meetings. and that's important, because we really need to be in ongoing contact with our chinese counterparts. that said, china faces some really daunting economic challenges, and of course, that matters for countries in the region. the u.s. is, i think, quite resilient, and again, we've seen the really good increase in people coming into the labor force, the resilient job market here, the greater reductions in inflation here, so i think the u.s. itself is on a really

strong economic course, better growth, lower inflation than any of its peers, but of course, china does have some challenges, and we're watching those. >> lael, i hope i can get you on energy for a moment. we were talking about oil a moment ago, close to $85 today on west texas. we know what retail gasoline has done going into the winter blend. is there a sense that if gasoline really were to start to pressure the consumer going into an election year, that the administration would look to make further moves on the spr or anything else? >> well, it's certainly the case that gas prices, especially on this labor day weekend, matter a lot for american households. we all know that it matters in terms of how much money they have left at the end of the month. and so, we keep a very close eye on that. as you know, the president took very strong actions when prices hit the bump, spiked earlier.

they've come down very substantially, but we're going to keep our eyes on those gas prices, because they do matter so much for american families. >> lael, i have to ask you about the potential for a government shutdown, because we are now in september. there's the potential for the government to essentially run out of money by the end of the month here. there were headlines this morning about a fresh request from the white house to pass a short-term measure to avert a shutdown. how far apart are the two sides at this current juncture? >> let me just say, there is absolutely no grounds for a shutdown. you know, the president engaged in good faith in both the senate and the house passed on a bipartisan basis the fiscal responsibility act, so it would be good to see. we are seeing it on the senate side, the appropriation process working really well. that said, it's extremely important to keep the government funded as the congress works

through their appropriations process, so we will continue to send that message. >> lael brainard, national economic council director, have a great labor day weekend. thank you so much. i think probably the nicest thing that's been said about the jobs number probably came out of breen today. nearly ideal for the fed -- nearly ideal print for a fed looking for prodder macro conditions that are consistent with the further slowing in inflation but also have continued economic growth. basically, that says goldilocks. >> that's where you want it to be. you wouldn't, i don't think, take a lot of issue with the details of this report. this snapshot of the market. it's much more about where it sits along the trend and whether the pendulum can swing too far. right now, there's not a lot of specific evidence to tell you that's true. lael brainard there, of course, emphasizing positive real wage growth. weekly hours also ticked up within the report. that had been one of those concerns. people saying, oh, yeah, hours been cut.

that seems to have firmed up at least in this latest month. >> by the way, it's a truncated session for bonds. jpmorgan said look for a single day rate volatility in light of the jobs number just because there's less time to trade. you do have the vicks close to a 12 handle. >> we got three days of no trading. the s&p is not kwgoing to move until tuesday. >> steve liesman has some comments, i believe, mester about to address a central bank conference. >> yeah, in europe, carl. thanks. loretta mester, one of the more hawkish members, says she sees progress being made in labor markets. in her speech that came out, she said the unemployment rate remains low at 3.8%. job growth has slowed. job openings, she says, are down, but the job market is still strong, and the unemployment remains too low. she says progress continues to be made on inflation, but inflation -- and inflation expectations are reasonably well anchored.

despite that progress, she says, in that old mantra from fed officials, inflation remains too high. she says future policy decisions are going to try to manage the risk between over and undertightening. so, she says here kind of balanced there when it comes to risk. rate hikes have led to a broader tightening of financial conditions. she notes that banks have tightened. credit spreads are higher and mortgage rates are higher as well. rate hikes, she says, are helping to moderate consumer demand and the labor market. sounds like one of those officials who's ready to wait a little bit, september, take a look at all the data coming out, make a decision in movie, not immediately here. >> great chat this morning about fed officials who flip, so to speak, last couple of years, kashkari and daley are good examples. would mester be the most interesting flip? >> he's already moderated her views here, not so certain she needs to hike, ready to -- saying that you have to manage between upside and downside

risk. that's new. that's a less hawkish thing for her to say, because you remember, carl, you have been living through this just like i have. all the risks were to the upside for inflation. mester suggesting that's not true anymore. >> steve liesman, thanks. we'll talk in a little while. busy day on a summer friday. before ism at the top of the hour, we do have manufacturing data out. couple of moments ago. back to rick santelli. hey, rick. >> yes, these are the pmis from s&p. we'll get the pmis from ism shortly. s&p global, manufacturing pmi, final read replaces 47 with 47.9. that does represent officially the fourth number below 50 in a row. 47.9 is only just as strong as it was at 49 in july, and look at that chart of ten-year note yields. zooming around 4.15% now, and the reason i talk about that is we're seeing some steepening of the curve or i should say deinverting of the yield curve. it has a whiff of stagflation,

considering the data. we see two-year note yields down. their down 25 basis points on the week, but the tens close in at 4.24%, have now moved within ten basis points of their close on the week. they're up in yield on the session and it's something to pay attention to. don't touch that tv. "squawk on the street" will return after a short break. power e*trade's easy-to-use tools, like dynamic charting and risk-reward analysis help make trading feel effortless. and its customizable scans with social sentiment help you find and unlock opportunities in the market. e*trade from morgan stanley.

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probably with apple and amazon because -- >> i agree. >> they're in -- you know, netflix is in one business and they are the rulers of the business they're in. the other two, apple and amazon prime, are completely different businesses that have no business model relative to production of movies and television. it's just something they do to support their prime or something they do to support their system in apple. >> that's barry diller sounding off about netflix on kara swisher's podcast urging legacy studios to cut the streaming service out of negotiations with writers and actors. diller says a strike buy yond september would be catastrophic. i don't know if it's a coincidence, but if you chart netflix and disney year to date, they diverged about the time the writers strike began. >> i've been watching that. it's not a coincidence. i don't know that that means you can somehow dial back the clock

and say that -- i mean, they're all pretty much a similar business model by necessity right now, which is streaming is where any growth is going to be and i mean you, obviously, will have different self-interest points but i don't know. it seems like it's very difficult at this point to go it alone without netflix, the biggest really single creator of content in the industry. >> yeah. it's also worth saying they put some big dollars behind some of the content production and there have been countless stories of people who have been able to create shows and movies and documentaries and things that they may not have had the cans to do if it was just linear television, that because of streaming they've had the ability to tell under the radar stories because there is so much money -- >> nostalgia for this business model that was so perfect. people say why did we break it? as if the companies did it by pure choice. they felt they were forced by the markets or business necessity to do it. >> consumers want to stream. >> they do.

>> gallup had a poll asking respondent also they had sympathy for the strikers or studios and thr had a piece, 67% siding with the strikers. >> absolutely. that's -- the studio, i'm surprised it's that low. i would think it would be higher. >> hold something opening gains. dow up 180. 4525 on the s&p as we windp u this week. don't go anywhere. bell ringing ) ( ♪♪ ) ( ♪♪ ) ( sfx: people celebrating ) ( ♪♪ ) ( sfx: people celebrating ) ( sfx: stock exchange bell ringing ) ♪ is it possible to fall in love with your home... ...before you even step inside?

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. good friday morning. welcome to another hour of "squawk on the street." i'm carl quintanilla with leslie picker, live at post nine of the new york stock exchange. david and sara have the morning off. decent open. dow up 200, 4525 as the jobs number comes in heavy, but the street does like the revisions and unemployment up to 3.8, the highest since february of '22. >> bad news is good news so that's the market reaction we're seeing. 30 minutes into the trading session, three movers we are watching, ftc allowing amgen to move forward with the $27.8 billion deal for horizon therapeutics give both stocks a lift. dell shares surging posting a

beat and raising full-year guidance, the stock up more than 20% right now. also getting some of the a.i. tailwinds as well. and watch walgreens. ceo roz brewer stepping down from her role and leaving the board effective immediately. the stock down since she took over as ceo in march of 2021. shares of walgreens down 2.8% on that news. >> near lows there. unbelievably the jobs number not the last print of the week. to rick santelli. >> yes. there's more data and we see rates rising a bit again. construction spending for the month of july comes in stronger than expected up 0.7%. and in the rearview mirror june gets taken up from 0.5% up 0.6%. that's pretty solid. and you know what, that's the seventh positive construction spending month in a row in terms of month over month change, after the end of last year we

had seven of eight negative. ism manufacturing pmi, august numbers, 47.6. better than expected. better than the 46.4 in the rearview mirror. but it does represent the tenth under 50 reading in contraction in a row. prices paid, 48.4. that's a lot more than we were looking for. we were looking for a number closer to 44, and once again that's the fourth negative month in a row under 50, but in this instance, we're happy about it because it's prices but they were higher than expected. on the employment front after having today's employment data, 48.5. that follows 44.4. and that is, once again, not a big run. that is the third run under 50 in a row. finally, let's look at new orders. they are now 12 consecutive months under 50 in contraction mode. that's the record out of these

four releases from ism. 46.8, follows 47.3. you can see rates moving up a bit. most likely it was the construction spending. least a lot more going on than that. 2-year note yields lower on the day, significantly lower on the week and the fact that we have spongy data as of late and rates moving higher on the lodgeng ens something to pay attention to. leslie picker, back to you. >> rick santelli, spongy data, i think that's a good way to characterize some of this volatility we've seen this morning. appreciate it. cleveland fed president loretta mester speaking about jobs and inflation on the back of the latest inflation report. steve liesman here to put night context for us. >> yeah, cleveland fed president loretta mester, one of the more hawkish out there, saying after the jobs report she sees progress being made in the labor market with a slowing in job growth and reduction in job openings, but that labor market remains strong and despite progress on inflation it's too

high. she adds the risk seems to be balancing tightening too much and too little. the data from the morning, 187, but the revisions take the shine off a bigger than expected number. revises bring the three-month average down to 150,000, which is looking kind of normal. unemployment rate by 0.3%. a 0.3 increasing in the labor force participation rape rate. average earnings cooling quite a bit. the higher unemployment rate came from a massive influx into the labor force of new workers pushing up the participation rate to the highest level we've seen since the pandemic. it remains about a half point below the high water mark in february 2020. the key to whether this is the beginning of more persistent or worrisome weakness, whether the new entrants into the work force finds job. sometimes it takes longer than a month. here's where the jobs were, private education and health

services, 102 around this time of year, leisure and hospitality have been pretty strong and goods producing, despite that report rick gave about weak manufacturing, still pretty good on construction and manufacturing. leading indicator, temporary help down 19,000. transportation and warehousing still undergoing a restructuring from all those folks they hired from the pandemic and shop at home wave that hit us. the job numbers suggesting to some in the market the fed could be done. before and after the jobs number 42%, down 36%. easing off on the expectation there could be another cut, only 7% chance for september. the market thinks the fed will digest a couple more inflation reports and payroll data before figuring out if they can hang up their hiking hat, guys? >> it will take some time before we find out whether those new entrants to the market, to the job market, actually do find those jobs. how long does that usually take

to work itself through? obviously, that was a big component into the rising employment rate for the month? >> right. that's great question. during the pandemic and the aftermath, people would come into the work force and it's like they would get a job before they collected the box of stuff from their old job, you know. they would already have another job. in a more normal market where things were a little less tight, people might spend a little time looking for work, a little trouble finding a job. that's a normal market. it could take up to a month or two. you could have an average duration of unemployment around 20 weeks even. it would not be about where it is right now. so we're going to watch that. we had this before where we've had a tick up in the unemployment rate because of new entrants to the workforce, they have found jobs very quickly and also you don't see it in a big rise in continuing claims. >> steve, thanks for that. what a morning. steve liesman. let's discuss what's ahead for the markets, economy and fed as we kick off september trading this morning. joining us at post nine, apollo

chief economist and truist's keith learner joins us as well. great to have you both. we were talking about the 10-year back to 4.16. is it just something weird about the shortened session? why the volatility around the prints today? >> there were numbers, unemployment rate going up, this could be a harder landing, but wage growth did slow down a little bit, which is a softer landing. the market is digesting the broader narrative the fed raising rates, economy slowing, employment slowing throughout the last six, nine months. and the question going forward is that going to continue to go lower and below zero or stick at this level and move sideways with the challenge the rates are still elevated. >> you've been a hard lander? >> absolutely. >> and you remain so? >> this process of slowing things down, think about the broader narrative, the fed has hiked rates a lot that has resulted in things slowing down, employment, capex, slowing down,

gdp slowing down. that process likely to continue because the fed has hiked rates to such high levels we will see the effects of high rates bite on consumers, delinquency rates going up, default rates on high yield. those trends are likely to continue. basically we will have the negative effects of monetary policy beginning to have more negative impact on the economy. >> negative impact on the economy, but potentially a better impact on the markets. keith your take on what you're seeing with regard to this engineered slowdown. what phase of the cycle do you think it's currently in? there's talk about lag effects and so forth. do you think that we've essentially reached a trough at this point or still more to work through in the remainder of the year? >> yeah. great to be with you. you know, we think right now there's this tricky period in the market where things are slowing down from a high level and the question is, you know, is this normalization or is it moving us -- the discussion move

towards a hard landing. we think things will slow down and they're going to continue to slow down as we move later into this year and next year as well, but in the interim, more of a short-term what the market is reacting to it is a goldilocks number. again, you looked at 187,000 on payroll. if you look at it before the pandemic the average job growth in 2019 was about 160,000. unemployment claims are still fine as well, and if you look at it from a market perspective, the markets really, you know, i think focused on earnings. earnings are continuing to rise. right now the forward earning estimates for the market are at a 52 w-week high. i don't think this is a raging bull market. across our asset aloe case we're neutral, stocks, bonds and cash. on a short to intermediate perspective the market is still somewhat positive. >> you had a note titled

"default cycle has started" and predicted the high yield rate could reach 6% by the end of 2023 with rates where they are. how high do you see that default rate sask this in the context o today's job reports which singled out the bankruptcy and job losses as a result of that. do you expect that to meaningfully pick up in a big way? >> important statistic in that regard, there's about 11 million people who work in high yield rated companies, so that means if employment in high yield rated companies is such a high number, that means that every day there are companies that cannot get a new loan, companies who cannot roll away existing loans. all that is implying monetary policy is biting harder on firms, also biting harder on consumers with both delinquency rates on credit cards and auto loans going up. there are people who cannot get a port mortgage. all those things having an impact as long as we keep rates at these levels.

your question is, with the market saying that we're going to keep rates at these levels until the middle of next year, we should continue over the months ahead to see more and more negative consequences of rates biting harder on consumers and biting harder also on hiring. >> not that you would argue for a cut before the middle of next year or would you? >> loretta mester spelled out we have inflation too elevated. it's 4.3. i mean for ten years after 2008 that was running 2 to 3. way too high with wage inflation. the pce data that came out way too high relative to where the fed would like us. the fed and jay powell still says not done, too early to take the champagne bottle out and slow things down more in particular the service sector and a consequence of interest rates biting harder. the fed would say that's the whole idea we want to slow the economy down, expect earnings and to keith's point over the next several quarters see a

slowdown in the earnings and economic data and that's a question whether we will stick at the nice levels of employment growth or not a risk that that slowdown might continue for the coming several months. >> it's interesting because a lot of analysis of the q2 earnings call transcripts corporate sentiment has gotten better and trough earnings a thesis that remains intact. sell side conferences coming up, would you expect the commentary to highlight the worries he's talking about. >> if you look at the atlanta gdp on a shorter term basis that number it's over stated but above 5%. tl even at 3% the economy is still fine. the earnings estimates into the second half are still going to be fine, but i think the greater concern that's being discussed is probably a story that's delayed into again late this year into next year, so that's there, but i think look at the market right now. i mean you have consumer staples making a new relative low,

utilities making a fresh relative low, energy acting better. a lot of this is about time frame. credit spreads relatively tight. we have a window where the market is focused on the short-term that things are okay. at some point we hit the tipping point where things slow down in a meaningful way. we don't think it's over the next month or two or three months and that period the market can do fine but we're not being overly aggressive. that time will come, we think it's later this year early into next year. >> we'll see how long that window lasts as we get closer to the end of the year. guys v a great weekend. great to see you both. >> thanks so much. as we go to break, take a look at the road map for the hour. disney's own channels including abc and espn go dark for charter subscribers because of this contract dispute between the two companies. we'll talk about the fallout ahead. chip stocks under pressure. broadcom shares slide on the latest earnings report and the sector posting its first monthly

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a battle between disney and charter leave espn and abc in the dark. the shares lower today. julia boorstin here with the latest on this dispute. julia? >> now, leslie, this isn't just

another contract dispute with cord cutting accelerating, tv ratings down and disney planning to take espn, the glue that had held the bundle together, direct to consumer, this is a watershed moment for the future of the linear tv business. the stakes are high for both disney and charter. charter warning this morning that this dispute will negatively effect operations and their financials. you see charter and disney shares are both down about 2.5%. now charter says it's willing to drop abc, espn and disney's other channels because disney's offering them direct to consumers, demanding higher licensing fees despite viewership declines. charter proposing a hybrid linear partnership with disney which it says, quote, could transform the industry and help restore our mutual business to growth. charter offering to accept disney's rates in exchange for more flexibility as well as the ability to include disney's ad

supported direct to consumer apps within their package linear products saying it's so customers don't have to pay twice. disney saying as of last night, quote, the rates and terms we're seeing in the renewal are driven by the marketplace. i have not heard more from disney since charter articulated its proposal in a call this morning. rich greenfield writing, quote, every legacy media stock should be down today. if it was a permanent drop of disney it's catastrophic financially for disney. charter will get hurt. there's more pain for disney. meanwhile, rosenblat writing, quote, paid tv future is in the balance, saying an extended fight with charter might accelerate disney's direct to consumer plans and pressure on the paid tv ecosystem overall which is already suffering from the loss of fresh entertainment programming because of hollywood strikes. now with the u.s. open and college football's kickoff this weekend, there's no question that viewers are going to be

frustrated and looking for alternatives the question is whether they then cut their cord or whether charter works with them to help make it through a lot of the sports this weekend and more sports to come. >> julia, such an interesting time on your beat this week. i have two questions for you. i'll let you choose which one. one about diller and comments about separating from netflix and their unique role in the strike. the other is taylor and what it might do to the exhibiters? >> oh. there's so much here, carl. i'm going to start with the diller piece. it's interesting because i remember months ago, i had heard from some sources that some of the media giants wanted to negotiate -- some of the media giants of the more traditional business, not netflix or amazon, wanted to negotiate and break from this amptp alliance of big studios they have, but then i heard that would be really unprecedented, kind of hard for them to pull off, and i've also heard more recently that netflix wants to be part of the

solution, that ted wants to help lead the charge to be seen as a collaborator with the creatives in the industry, so i understand where diller is coming from. his argument makes sense. disney and the other media companies are very different in a lot of ways from netflix and amazon and apple in terms of what their incentives are. we'll see if they can pull this off. it will be complicated from a logistical standpoint and i don't know if these companies are actually that far apart. the traditional versus the more digital media companies are that far apart in terms of what they would like to accomplish here. >> that's interesting. >> everything seems to be on the table at this point. i know a lot of these companies are really anxious to get back to work. >> yeah. >> they don't want to have more months without more new content. >> absolutely. it is suspicious to see netflix bucking the trend in today's price action as well. julia boorstin. still to come today, there's nvidia and then there's everyone

else. broadcom sliding despite the earnings beat. the smh breaking a three-month win streak in august. what is ahead for semis? we'll talk about that. as we go to break watch robinhood as well buying back more than $600 million worth of its own sharesha tt the united states seized from sam bankman-fried. the stock getting a pop here in the early trade. be right back. uh, yea. i have y neighbors' nfl sunday ticket. (josh allen) it's not your best plan. but you know what is? myplan from verizon. switch now and they'll give you nfl sunday ticket from youtubetv, on them. (hero fan) this plan is amazing! (josh allen) another amazing plan, backing away from here very slowly. (fan #1) that was josh allen. (fan #2) mmhm. (vo) football season is here. get nfl sunday ticket from youtubetv on us. a $449 value. plus, get a free samsung galaxy z flip5. only on verizon.

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broadcom shares falling after guidance came in below estimates despite making headway in the a.i. market broadcom hasn't matched the rapid sales gains of nvidia as semi stocks took a breather in august ending the month in the red, breaking a three-month winning streak. here to discuss piper sandler. i have to ask you, broadcom you have a price target about 975 here, so current trading about 10% below where you see this stock in the next 12 months or so. what do you see at this point the catalyst to the upside? >> yeah. so we actually love the stock. let me just start off there. i think what you have to remember is, every other

semiconductor company went to a correction through the lasttwo years. nvidia meant through a massive correction nine months ago, amd went through a correction about nine months ago. broadcom never saw any of that. this is the first time they're seeing a correction, and it's almost like tale of two cities. they have the generative a.i. and the a.i. business, quite literally on fire, it's supposed to grow 50% on a sequential basis in the october quarter and then like everything else. the everything else or the core business is flatish. so if you tell me that i've got a company in a down cycle is going to be flatish, i would say that's a perfect textbook soft landing that was executed. they did extremely well. in terms of catalysts coming up, generative a.i. and a.i. piece will rise for them all the way through 2025 and even beyond and don't forget they have the vm

reveal that's coming up. the deal is about $10 accretive after they do the cost cutting which broadcom is famous for and bring the company up to snuff. we can see up to $10 of accretion from that. those are the two big catalysts we're seeing. >> the stock is trading about 21 times your 2024 estimate. that's a premium to its peer group. is that warranted? >> so the earnings will change quite dramatically, so what's happening here is the deal is not a part of the estimates because it hasn't officially closed. when the deal closes and detail comes out around what accretion will be, you will see estimates rise between $8 and $12 is my guess and the eps will rise by 20 something odd percent, and that will basically bring the multiple back into the range that it's supposed to be at. >> one thing that stood out in the broadcom print, was sort of

the slowdown, i guess softness, relative softness, in telco and enterprise. i just wonder whether or not that is the result of so much emphasis on a.i. at the moment? >> it could be. i think storage has an inventory problem, so you have other companies such as marvel that talked about storage issues, and storage has been under pressure because of excessive inventory for nine months to a year and probably will take another quarter to two quarters to work itself out. a billion a quarter for broadcom. on the telco side it's macro, interest rates this high puts pressure on capex intensive business and telco is a capex intensive business that's under water a little bit and it will slow down in the coming quarter and then stabilize. if you can give me a company which is flat niche a down cycle i'll take that all day long.

if i can couple that with high growth businesses such as generative a.i. i come out that much better. >> of course arm ipo coming down the pike which could, you know, adjust some of the sorting into that category as well. thank you so much. >> thank you. speaking of offerings, journal has a piece up right now about aramco and saudi arabia what they're calling on again-off again plan to list more shares. people familiar say the kingdom is considering selling a stake of as much as 50 billion, the largest offering in the history of capital markets, as the journal says listing to avoid legal risks associated with an international list. a lot of questions within this report. what is the kingdom thinking if this is going to happen. >> because their initial plan when they were going to go public, float $100 billion offering. the first offering they did was about $30 billion if i recall a couple years ago. this would be an additional 50

be t billion. i think currently they have 1.5% of aramco that's floated and available to trade, but $50 billion in stock is a tremendously high amount. i don't know what proportion of the riyadh exchange that would be, but one can imagine it's a significant proportion. >> yeah. absolutely. we'll watch that as we pay close attention to west texas crossing back above 85. still to come, goldman's chief economist jan hatzius on today's job number as payrolls increase by 187,000 in august and what that might mean for the fed going forward. hanging on to gains, equity action at 4525. we're back ia up mutn coleines. e a competitive advantage. ♪ it's raising capital to help companies change the world. ♪ opportunity is making the dream of home ownership a reality. ♪ ...and driving the world forward

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and there's no catch. it's fre. we make money from ads, but they don't follow you aroud join the millions of people taking back their privacy by downloading duckduckgo on all your devices today. welcome back. i'm pipa stevens with your news update. the white house requesting another $4 billion for fema, as the agency

disasters in the country. that brings the total request to $16 billion. the request after vermont dealt with historic flooding, deadly wells fargo swept through maui and after hurricane idalia hit florida. the fda missed a deadline to outline a proposed ban on menthol cigarettes in the u.s. a spokesperson for the agency told cnn the rules which were expected in august, will be completed in the coming months. menthol is the last flavor allowed in cigarettes. and there's a new crater on the moon. nasa shared a new satellite image showing the 10 meter wide crater believed to be left behind by russia's failed luna-25 mission. the spacecraft crashed last month trying to land on the lunar south pole. nasa says the new crater is close to luna's estimated impact point. back to you. >> thank you so much. we are an hour into the trading day.

the dow up 193 points. the s&p and nasdaq up as well. let's get to bob pisani with more on what's moving today. bob? >> you know, another goldilocks report. unemployment ticking up, but not too much. a wage growth subdued. we're getting a broadening out of the market. this is what we need. you want the ad line to move up. four to one advancing to declining stocks. take a look at the sectors. energy on an upswing. this oil we're way up six days on oil. ten-month high on oil. banks are doing a little bit better today. you see how flat consumer discretionary is. tesla on the flat side. most consumer discretionary rough. tech not as strong as the rest of the market. that's a pretty good sign. look at the leadership right now, commodity stocks, freeport, devon, a lot of oil stocks, halliburton and the banks among the leadership group. that is what you want to see if you want to see the overall markets moving up. what's lagging? you got your -- some of the tech

names, nvidia a little bit weaker, tesla a little bit weaker, broadcom a little weaker. disney 81, julia was talking about it. that's a new low. if we close there that's close to a 2014 low. you have to go back years and close like that. so keep an eye on that. the big issue for stocks in september is pretty simple. you got to play the goldilocks game and keep playing it here. essentially threading the goldilocks needle. with goldilocks you can fail on both sides. can't be it too strong, can't be it too weak. multiple points of failure. it's still working. rates creeping higher is the main issue. china weaker and the fed meeting on september 20th. the important thing is, there's little tough seasonality. people ask me about september, it's the worst month of the year traditionally, only up 44% of the time in more than 50 years august is the third worst. august was seasonably weak. people keep messaging it was bad

last year. the last several septembers have been terrible. last three, 2022, 2021, 2020, look at this down 9%, 4% in 2021, down almost 4% in 2020, so yes, it's been awful recently. seasonality is not the primary indicator of anything. you shouldn't base trading on seasonality. what matters is earnings trend and interest rates and those have been friendly for the markets so far in the last few weeks here. we need the market broadening out. this is what happened in august. top 25 up 0.4. the rest of the market down 3.3. that's not a broadening out of the market. you want that to flip around and that would be the key thing. the other thing, look at the vix. back at 13. remember, we started the month practically all the way down here, we're looking at if we close right around here we're at the multiyear lows we saw way

back in june. the market is not terribly worried right now because it sees the market threading that story, the goldilocks story, right down the middle. carl, back to you. >> bob, we'll see. bob pisani, thanks. meantime national economic council director lael brainard joined us in the last hour. take a listen. >> people did say that you weren't going to see inflation coming down absent really big increase in unemployment, and yet inflation in the latest report, the three-month, is back down to prepandemic levels and it's really closely tracked that supply chains index. meanwhile the labor force participation has increased much more than people thought. you're seeing balance in the labor market, and a continued strong economy. >> joining us with his take on the numbers, jan hatzius, head

of global investment research. it's great to have you. happy friday. >> great to be here. >> lot of talk about the number. i'm wondering, can you frame it in the constructive way that the house view has been on the economy? >> i think it's a very constructive report. we had a pretty good increase in non-farm payrolls, stronger than expected, especially if you allow for some of the special factors, the yellow bankruptcy and the hollywood writers strike. if you add that in, you're above 200,000. household employment actually growing above 200,000 as well. the increase in the unemployment rate we saw, which is, you know, pretty sizable, 0.3 is sizable, it was entirely driven by an increase in labor force participation, which is what you want to see, and then the average hourly earnings number did show a downside surprise, 0.2% increase and that is also what the fed wants to he see. this is point, wages are still

growing faster than what's compatible with 2% inflation in the long term. if i look at this, and then also if i bring in the jolts number, the job openings and quits numbers that we got earlier in the week, this is very consistent with a soft landing. >> we've talked all year long about your below consensus recession odds and yet you are looking for cuts in q2, and maybe a cut every quarter after that. >> yeah. i would frame it as grad dual basis points 25 points in q3, q4, driven by inflation coming back down, moving back towards the target. we don't think we'll quite get to 2% in 2024, but, as chair powell has said, they're going to start moving the funds rate very gradually lower before they get to 2% because, you know, at 5 handle they think it's high.

>> how does the fed look at excluding the special items excluding the yellow bankruptcy and writers strike we could be looking at 240,000. do they look at that when they think whether or not the economy is hotter than the headline number might suggest? >> i think they do take out some of the special factors. the staff does a lot of work on these numbers, and that will be very well, you know, very well understood inside the fed. however, they also look at a longer run of indicators, and if you take not just the august number but also july and june, then we're looking at something, you know, a little below 200,000 and consistent with the deceleration in the trend. that's probably still ongoing. i do think it's -- there is deceleration. i'm just saying that latest job growth number was actually pretty firm both on the establishment and the household side. >> yeah.

lael brainard seemed to brush off the concern around wage growth and whether that was contributing to higher flation? do you agree. or do you say that's ticking up and we could see more spiraling upward in terms of, you know, what that mooeans for the overa economy? >> today's news was positive at the margin in the sense that it was weaker wage print. we do need some deceleration, i think, in wage growth, to be consistent with 2% price inflation over the long term. incrementally today's news was positive. i don't think that, you know, wage increases were the primary driver of the inflation surge. that was really much more in balance in the goods market and the supply chain, but we do need to ultimately see wage growth come down on a year on year basis from the 4s to somewhere in the 3s for the fed to be fully comfortable. >> we talked the last couple

weeks through a micro lens on pressure on the consumer on the low end. it's manifested itself in earnings commentary from retailers. i just wonder how you think about delinquencies and the effect of energy prices? you've written about what oil could do to cpi. >> i think the basic view on the consumer is we'll see modest growth, moderate growth in real consumer spending. i don't think there's likely to be a, you know, very strong boom. we have seen a normalization in delinquencies across -- especially towards the lower end, but real disposable household income is likely to still grow pretty strongly in 2024 and that's -- that could only have one indicator of how the consumer is doing, it probably would be real income growth and still pretty encouraged by that. >> what about the draw down in the excess savings, though? you know there are a lot of expectations that could be

pretty imminent and it turn negative which we haven't seen in a few years now. are you concerned that could have a negative effect on some of the spending that we've seen really propel the economy higher? >> i'm not too worried about it. excess savings was an important story in 2022. that was really what helped the consumer get through this period of big declines and real income. and the flip side of that, of course, is that excess savings have been drawn down to a significant degree, but now it's not as necessary. you don't need a lot of excess savings because it's actually real income that is supporting consumer spending, you know, consumer spending growth. probably not as fast as what we've had in 2023 in the first few quarters, but i expect solidly growth -- >> do you have a year on year target on the growth? >> pretty close to current levels actually. we think the increase is

probably largely run its course. i wouldn't be shocked if we saw some further increases in the near term, but i don't expect a big surge from current levels. >> okay. >> 4ish is i think a reasonable place to be. >> have a great weekend. we'll see you soon. >> thank you. >> jan hatzius. still to come taylor swift is taking her eras tour to the big screen giving theater stocks a boost this week. we'll discuss with the ceo of imax after aui bak. qckre

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welcome back to "squawk on the street." movie theater stocks getting a boost with taylor swift's announcement of concert film "eras tour" to theaters. the film will debut on 350 imax screens and other theaters starting october 13th. our next guest says, quote, audiences are back with preferences for premium experiences. imax ceo richard gelfond joins us now.

so what's your overall demand expectation for taylor swift some she's had a tremendous impact on the overall economy, her tour generating an estimated billion dollars for the live concerts. what's your expectation for how much it can generate for the big screen? >> i think quite a lot. it's going to be played around four or five weeks, as you know the demand for the concert was really overwhelming. i think what the swift family is hoping to accomplish is access to lots of people who couldn't either get tickets or couldn't afford tickets, so this provides accessibility. we sold out about 50% of the seats we put on sale yesterday, which is the first day it went on sale. >> 50% of your total seats you sold out. i'm surprised it wasn't 100% given the overall demand for the concert itself. speaking to this idea that live experiences are back and we were talking last hour about how this decision was made to broadcast

in a theater, as opposed to doing so via streaming, how do you think that decision was made and what do you think it says about the overall media picture and landscape right now? >> yeah. i think that's really the headline, leslie, which is that instead of launching an event through streaming, it's being launched directly through the theatrical window and i think it confirms what studios have been saying and most of the streamers, which is a theatrical release enhances the value of later windows like streaming an that's the right way to launch it. you've seen virtually every major blockbuster film launched that way. taylor swift and her team said that's the best way to create long-term value in the property and amc put the deal together. while it's fantastic, i don't think there's going to be a lot of cookie cutters because

there's just one taylor swift and things studios bring to the table like marketing and distribution dates and a whole list global approach when you're taylor swift you don't need that. you just need the name. >> it's true. it's interesting thinking about the concert film and whether it could be replicated. a 24 is doing a stop making sense concert film which i tried to get tickets to one show date and i was blocked out. i wonder if you think exhibiters get more generous on show times if this continues? >> yeah. first of all, carl, we're doing that with a 24, and it launches at the toronto film festival on monday, and imax theater during the festival, and we're also doing a live q&a around the talking heads and i think about 15 theaters to premier it. but, yeah, i do think it

demonstrates for different types of content, how important the theatrical window is. we talked about it before, imax has a live business like i was talking about with the talking heads and there's a disney film called "the creator" where we did did a live event in our theaters in the last couple of days. i do think, at least imax is anxious to find alternative programming. i think one of the silver linings about covid is it taught all of us that you can't just rely on one source of content. you need multiple sources. and i think, you know, live concerts are one of them. >> fascinating. richard, thank you so much. appreciate it. >> thanks, guys. take care. have a good weekend. still to come this morning, the ceo of sentinel one will break down the quarterly numbers and that his company is pursuing a potential sale. reock up in a pretty good tape

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i ing. courtney reagan joins us. >> when i look at this, winners keep winning. lululemon shares up for the sixth straight day, largest weekly gains since june, and at a 52-week high. turning in a stronger than expected quarter, raising guidance and comparable sales for 12.1%. international sales make up just under a quarter of total. lululemon believes there's potential for that to double to half of its total in the future. unlike most retailers' inventory, up 14% to account for the pace of sales and a retailer with store expansion plans, including increasing store sizes and high traffic locations. many retailers experimenting with smaller stores, so the exact opposite plan. several analysts are pointing out that while u.s. sales and international and china-specific sales did grow, it was at a slower pace than the previous quarter. still citi says the quarter, quote, highlight's lulu's

position as market winner. jeffries are sounding a warning for the quarter ahead. saying the brand is as strong as it's going to be while the belt bag tailwind will become a headwind. u.s. consumer is slowing. china growth could be uneven and lulu is not nike and never would be, yet its market cap is a third of nike which makes no sense to us. kind of a contrary view there but i found it interesting, nonetheless. the belt bag is a hit, every mom on the playground, and i have a couple, but how many more do i need? >> and they wear them with their nikes. i have to ask you about competition, you go on amazon they have some arguably pretty good dupes to lulu. i mean, you get just a fraction of the cost. maybe not the same quality, but how is that not having any impact on their margins, at least when you look at the

bigger number? >> it is so amazing when you think about all of the competition in the athletic or athleisure space, specifically. the influencer marketing community to quite literally compare the dupes to buy the amazon version to the lululemon one. the branding still has a certain amount of cache. the margins are really impressive, above 58%. operating margin above 21%. so many retailers would kill for that. >> record high for the company. which we mentioned earlier. my question to you is, if you look at a chart of dg versus walmart for the year, does that mean we need to think of dollar general differently? >> they've had a couple of rough quarters with traffic down, declining for three straight quarters. that's not what walmart is seeing. what i find interesting about this, carl, is you might remember back 2008-2009, walmart was losing share to the dollar

stores because people were using them as fill-up trips, trying to save money when it came to gas and losing out on some grocery business. it seems like that has shifted and there are other fundamentals of dollar general that makes that more of a company-specific story. the lower end consumer is certainly pressured. we're talking about how the student loan payments are going to be resuming here soon. i think just psych licly, ogal another bill to pay. "squawk on the street" is back in a moment.

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ibm. let's create. good friday morning. i'm carl quintanilla with leslie picker. let's get straight to it. august jobs number is 187,000 while unemployment rose to 3.8%. rick santelli and steve liesman with us on what this is and what this week's economic data does for the fed's thinking as we kick off september and debate a hike pause. guys, thanks for doing this. rick, let's start with you. what do you make of the overall kind of at least what we saw in rates with the volatility given all the incoming data we saw this