Skip to main content

tv   Squawk on the Street  CNBC  November 6, 2015 9:00am-11:01am EST

9:00 am
>> yeah. i take the points made. the dollar is a headwind for certain sectors, but the fed won't go that fast. we're not on the precipice of recession. >> maybe these investors need to think about somebody else besides themselves. this is good news. more people are employ the. stop with the sell button on the equities. >> there you go. >> do i see 1.05? >> 1.07. >> join us on monday. "squawk on the street" is next. michelle, get some glasses. good friday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer at the new york stock exchange. david faber is on assignment. 271,000 is the jobs number for october. way above expectations. best month of the year. the pre-market considering what this means for the fed next month and beyond. the dollar index behaving, as you might expect, ten-year up to 2.30. the two-year above 0.9. let's get to our road map.
9:01 am
is mediagetton still upon us. disney posting mixed results. the details of square's ipo are out. and alibaba buying the youtube of china for 3.7 billion. the story of the morning is the strong jobs number, including 268,000 private sector jobs added last month. 5% unemployment is the lowest since '08. average hourly earnings up 0.4. the numbers coming out two days before fed chair yellen indicated a hike in december was a live possibility. earnings year on year, 2.5. the biggest since july of '09. we've been waiting for that number for a long time. >> remember earlier this week i sa switched my posture and said bring the rate hike dollar. the dollar will be stronger than it is, and that will hurt the industrials. the banks will soar. that's a huge part of the s&p. it will be mixed for people who
9:02 am
own stocks. healthcare should go down here. the bank stocks, wow, they could carry the whole thing. does it mean that -- 70% is being priced in for december? if they don't do it -- we keep talking about the window, the window. this is the window. china is strong. bull market in china. europe coming back. the window is open. if we can agree on december, does it mean the front end of this new trajectory is more aggressive? >> no. i still think that they're -- i trust them when they say, listen, we'll be more -- we'll still be data dependent. >> you think like a one and done mentality? >> no one will believe that. these numbers are too strong. but i'm betting one and done. no one will believe it because this trend -- i don't think this will continue. it's unbelievable it will make it so it's an outlyer is what i'm saying. you get one and wait. not one and wait.
9:03 am
one and wait. i don't want to say done. this is a number -- a lot of people are selling everything off this. which is a mistake. it's a mistake because the market was -- we've been seeing -- why did the industrials bottom august 26th besides china? because the economy is stronger and people want to own stocks. doesn't mean the earnings are going up. but the banks -- i can raise numbers on every single bank here right now. you mentioned china. up 10% in three days. second best streak since 2014. almost at 3600. >> the consumer is so high in china, incredible. wage rates have gone up. the consumer is very liquid. i had a big cruise company, royal come on, they say the government is encouraging cruises. they're trying to ship their ships from latin america to
9:04 am
china fast enough to meet the demand of the chinese. one reason why i will speak positively about disney today because of all the talk about shanghai disney, it will be the biggest thing that happened to the company. >> we'll get to disney for sure. a lot to talk about there. in general, your feeling is this -- you've been talking about this -- >> i've been saying we can handle it. a big shift. now you start to see why have the housing stocks been so bad? they'll get hurt. why is healthcare so bad? you don't want to be in healthcare. why have the industrials been so good? nobody is betting they can stay down. they're not recognizing that a lot of industrial weakness has do with oil and gas. you can buy a boeing here. boeing comes down. >> despite what we might see in dollar strength. >> you have to buy those planes in dollars. that's the customer's problem. this is a remarkable confluence.
9:05 am
we all kept saying why are these industrial going up? why? no. it's because the market was right. the market was right. the industrials were right. why is healthcare down? we got this -- this is an amazing moment. tom lee, got to credit him for this. we went from banks being overly regulated, not doing well. now to being done with regulation and doing well. it's a perfect storm for healthcare and it's a blue sky for financials. >> tom lee this morning has a note pointing out that 7 of 10 sectors are above the august highs. healthcare being the primary drag. the rally in his words is not as narrow as some might say. still looking for that year-end meltdown. >> for a while, i felt like tom lee. i do have to reference him? i thought that piece was great. you have to reference the guy. that's great work by him.
9:06 am
makes me feel like those who want to sell on this, you may regret it. do you want to own fpfizer in this environment? no. do you want to own u.s. steel? no. do you want to own 3m? yes. 3m is the kind of company that kicks butt in this environment. this week, we asked to you tweet your predictions for october nonfarm payrolls. in honor of "squawk box's" 20th anniversary, the prize is a "squawk box" 20th anniversary vest. we'll announce the winner later in the show. shortly after the opening bell, labor secretary peres will be with us. a >> do you remember when espn had a contest about who could be a great announcer? whoever nailed the number, sorry. that person is my co-host.
9:07 am
co-host for "mad money." may be my fill-in for "mad money." >> guest anchor. >> disney posting better than expected third quarter numbers. back in august disney's cable warning and losses at espn launched a selloff in stocks. here is what iger said last night. >> the industry did lose some subs last year. is that a reason for panic? absolutely not. people love television. they still love espn and they love live sports. we're in an environment today when there's never been a greater demand for our brands and our content. >> says back then, jim, we were candid, refreshingly so. but no reason to panic. >> you know, we're going to look back and say what the heck was that? 50,000 people determine what was happening with the company? star wars is going to be the biggest movie ever. shanghai disney the biggest
9:08 am
theme park ever. the narrative has shifted. the conference call was about how people are looking at the wrong things. people don't understand the strength. the stock dropped 3 bucks after they reported. foolish, i think. this was a quarter that -- i went over it a couple times. the espn stuff is encouraging. they're saying all the contacts are bought. we streamlined espn. people want to watch it more than ever. rates will be fine. i felt what happened is if you go back, and one of the first questions was about that. do you feel badly about what you said last time? no. this narrative is the one i've wanted from the beginning, talking about iconic figures -- not iconix, but a company with so many drivers and that film is up so much. espn is doing well.
9:09 am
the theme parks are doing well. what he's saying is if you want to focus on this thing, you are going to miss the big picture. you know, i feel like time warner was different. time warner doesn't have as much live program. they have a lot of foreign currency exposure. this was a quarter that explained why disney is a great company. it generates a huge amount of cash. they bought back 3.3 billion, far more than they normally do. i have to tell you, bob iger, has his fingers in a lot of pies, when the stock was at 95, i bet he said 95 for 2 million shares. extraordinary. the basis of how they bought stock is so great. i always ask you guys, did you buy stock? there's no such thing. you buy when you buy it. no, iger knows. he has his money for his shareholders, he's putting his shareholders money to work at the right prices. this man demonstrated that was a one and done bad call. >> there's this disney life. >> my god, the uk. the strategy?
9:10 am
brilliant. >> $15 a month. allows you access to some kid shows and movies. everybody has their finger in that pie to varying degrees. good to see them dip into it. they can do it at the uk, which as he said on the call was kin dread to the united states. i keep going back to studio, 2 billion versus 700 million a couple years ago. the theme parks, personal spending is up 7%. they made it so the customer -- listen together customer this was customer relations management conference call. the whole thing -- look, he is so transparent. he started off by saying we're a little bummed. he got over that existential crisis quickly. >> my favorite stat of the year in studio, film, disney and comcast, our parent, have pocketed 90% of the top ten films box office. >> we were worried about abc one day, suddenly abc had espn.
9:11 am
we were worried about a couple of subs a couple of people. now we're thinking about what were we thinking when we sold it? the stock is up from 95. we got the strong dollar today, which is not good for their earnings. taken off the table is the notion that disney is simply a company that you have to live and die by cable. i also think, by the way, our parent company, comcast, which i own stock in, would tell you -- if you only looked at basic cable, you missed the whole picture. basic cable has not been great for comcast the last 40 points. >> of course. >> after this quarter we won't care about it. the skinny bundle. the skinny bundle. the skinny margarita. skinny vodka. i'm not caring about the skinny -- the skinny margaritas. i make fat margmargaritas.
9:12 am
instead of saying woe is me. they talked about the billions they make and how they buy back stock. i'm looking at this like hans solo thing on it, i'm like get me to the movies like i was opening night for star wars. >> a new japanese trailer for the film that just dropped this morning with some additional footage. any crumb they can get on this film. >> death, taxes and star wars. when we come back, the latest on square's ipo. a lot of news on that. and alibaba striking a deal to buy the youtube of china and hoping for massive business next week on singles day. labor secretary tomas perez on the jobs number today. 271 and 5% unemployment. the lowest since '08. look at the pre-market and more "squawk on the street" is back in just minute. (patrick 1) what's it like to be the boss of you?
9:13 am
(patrick 2) pretty great. (patrick 1) how about a 10% raise? (patrick 2) how about 20? (patrick 1) how about done? (patrick 2) that's the kind of control i like... ...and that's what they give me at national car rental. i can choose any car in the aisle i want- without having to ask anyone. who better to be the boss of you... (patrick 1)than me. i mean, (vo) go national. go like a pro.
9:14 am
9:15 am
awfully strong jobs number this morning at 271. unemployment at 5%. september revised down, august revised up. three-month average at 187. internally the jobs number was strong. jim's thesis is bank also
9:16 am
benefit. question is which bank? >> pretty much everybody. even a zion's bank. a regional bank. suntrust. usb. jpmorg jpmorgan has a pretty good quarter in retrospect. my charitable trust owns wells fargo. wells fargo has been positioned to try to make it so they could make money if the fed didn't raise rates but if it did, look out. this is going from expensive to inexpensive. reason i want to talk about banks is something that happened in the portfolio management. all the wall street firms are underweighted to banks. just underweighted. they never recovered from the idea that the u.s. attorney will go in there and do something badly. i don't think it's one and wait, but people will anticipate that and take the stocks up today. it will take citi to 57, 58.
9:17 am
i think people who want to be in the stocks, they can wait until monday. don't chase. this is a remarkable mistake that hedge funds have made and big portfolios. they're not in these stocks. the stocks have done nothing. >> in large part because the story, at least last quarter, trading remains tough. >> look at goldman. goldman up 20 points from when they reported weak trading. goldman sachs trading to book value. i want to point out you'll see a weird -- a weird bear market and bull market here. huge bull market in the financials, and you'll see that money flow out of healthcare. healthcare is what you did when you thought retail was weak. >> is the healthcare play wrong because it's economically defensive or would be a victim of increasing regulation and -- >> problem is both of those. they have great headline risk. the money is -- wall street is overweighted healthcare. i don't think that's going to
9:18 am
work. the issue is will retail get the benefit of the fact that people are making more money? that wage growth was interesting. this number was what bernanke dreamed of happening. he said keep the rates low, one day we can raise them. it worked. >> you're referring to the beiges here in the number and whether or not consumers have more to spend when they shop? >> where will they spend? last night, plus 35, buying natural organic food on amazon. amazon, i don't even know where amazon will go today, that stock is a juggernaut. where will those additional dollars be spent? they do exist because of natural gas being low, gasoline being low. or are wage rates so hiked at retail, walmart can't make the
9:19 am
money they would like. the whole market is shifting. a huge sea change. should it be this huge based on one number. these numbers change everything. they can change everything in the minds of portfolio managers. whether you think they should or not, they can. portfolio managers will say i will buy jpmorgan at 68 today. i don't care. i don't have any jpmorgan. that's what they'll do. it's going to be remarkable when you see how they were caught -- picked off at first base. picked off. you mentioned healthcare. we have some news. astrazeneca acquiring zs. almost $3 billion deal. >> that is a niche drug. potassium drug. anti-potassium, kidney drug. that ast trazeneca shows you
9:20 am
should be buying. but that group is not where you want to be. pay up for banks. disney will be the tale of the tape. they have some strong dollar exposure. still people were saying, look, i don't know. i'm worried. they have not read -- listened to the quarter. they didn't listen to the interview. they didn't read the conference call. they don't know what they're doing. >> that said, i'm sure would have rather them bought it at 95 than at 113. >> you know, there's only one guy who bought it at 95, his name is bob iger. he bought ever share. he had conviction. everyone else was worried, worried about cord cut, skinny. he said i'll buy. smart buyer. >> yeah. >> as he often is, with a $50 basis? what is the basis on all the stock he bought. my monster numbers. we have to get to them. $58 basis he has. he's not only a great american, a great entertainer, but she also run a hedge fund. >> iger capital management. >> i would quit and just give
9:21 am
him my money. i want to be on his trading desk. short time warner? buy it. no. >> we'll get cramer's mad dash as we count down to the opening bell this morning as we wrap up this crazy trading week. more "squawk on the street" straight ahead. that's 5 extra gigs for the same price. so five more gigs for the same price? yea, allow me to demonstrate. do you like your pretzel? yea. okay, uh, may i? 50% more data for the same price. i like this metaphor. oh, it's even better with funnel cakes. but very sticky. now get 15 gigs for the price of 10. why pause to take a pill when a moment spontaneously turns romantic? and why stop what you're doing to find a bathroom?
9:22 am
with cialis for daily use, you don't have to plan around either. it's the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. why pause the moment? ask your doctor about cialis for daily use. for a free 30-tablet trial go to
9:23 am
♪ >> just about six and a half minutes to the opening bell. let's get cramer's mad dash. people have been cautious on apparel. >> it's been so hard.
9:24 am
a lot of people got caught short. ralph lauren put up a good number. people were trying to cover again. they were buying vf corp and they were thinking about buying men's warehouse until last night when this company lowered the boom. they made an acquisition for joseph a banks. joseph a banks had buy one get three. they're going to phase that out. it was a disastrous acquisition for menswear. disastrous. people were looking for $2.90. it might be $1.75. they have the triple whammy. bought a company way too high. people don't want that quantity of suit. third, it's so warm, carl, i felt like wearing shorts to the show. >> yeah. >> it's almost 70 degrees in new york. talking about it being the warmest winter in four days. >> we don't want those gaberdines, those heavy count wool suits. everybody has the wrong inventory. we hear from macy's next week. i come from a retail background,
9:25 am
i have to tell you, this is a nightmare. this is the worst possible thing that can happen for retail, this november warm snap. >> every year, it's a bit of a crap shoot knowing what people want to buy. do you avoid this sector entirely? >> no buy star wars equipment. literally. one of the 50,000 things wrong with iconix is people are not even buying peanuts. so much shelf space devoted to star wars. star wars may be a gdp mover. insane. >> it's going to color q4. >> i want to buy imax, epr. it doesn't matter. my executive producer, she's like ordering imax tickets for star wars. she already has the seats. she said, listen, i can scalp them. can't scalp. that's illegal. >> messy number. this is not a two for one split this is a counting restatement and it's about what happens -- i
9:26 am
used to have them on. it's about what happens when you -- let's say -- when the s.e.c. gets involved. how about that? that's a nice way of putting it. >> i'll take that. >> opening bell about four minutes away. [announcer] during mattress price wars at sleep train, save up to $400 on beautyrest and posturepedic. get interest-free financing until 2018 on tempur-pedic. plus, helpful advice from the sleep experts. but mattress price wars is ending soon.
9:27 am
9:28 am
9:29 am
. blow out week for stocks, going for six weeks of gains. the longest streak of the year. you're watching cnbc's "squawk on the street," live from the financial capital of the world. opening bell in less than a minute. china has had a nice string of gains. eurozone, factory output wasn't great. being overlooked by this jobs number. >> people will say a combination of weak euro and stronger economy. the money should shift to europe. you have to be careful because the euro might be so weak. autos should do well in europe. again, i always hesitate to tell people to buy europe.
9:30 am
they say it's so great, but i'm down on the stock. that's because thof the currentscy. our dollar will be so strong it will wipe out any gains. >> the nasdaq 100, with that record close. the two-year at a 5 1/2 year high. dollar action today. there's the s&p 500. at the big board, icons from the world of cricket. highlighting a three-game cricket series in new york, houston and los angeles. at the nasdaq, world of children award giving grants to children's programs globally. you said disney would be the tale of the tape today. >> yeah. i think people -- people didn't understand the way that iger approached this, which is to remind people that this is a living, breathing organism. they have a lot of different irons in the fire. whatever analogy you want to use. will you get your chance to buy
9:31 am
it? i don't chase things. i do think that is a place where they crush the number. >> yeah. >> the other guys who crushed the numbers are the growth semiconductors. skyworks solutions. let's see if those can hold. those have been fake-out stocks. >> i see nvidia up almost 10%. >> gaming chips. gaming stocks remain red, red hot. activision is terrific. don't forget gamestop. that's the most powerful tailwind in the country which is gaming. mark zuckerberg said 250 million people game. occulus, that's going to be very big. now, you know, stocks like the facebooks will come in. they don't -- they -- this market likes that yesterday, today it likes banks. keep in mind that facebook is very inexpensive versus the growth. >> marc andreessen according to a filing has sold -- let me make
9:32 am
sure i get the figure right. 620,000 shares in the last week. >> of face backe? >> marc andreessen has sold of facebook. >> he has a great basis. nobody ever got hurt taking some profits. >> i remember when -- there have been or margin calls, typically in the oil patch, aubrey mcclendon had a big margin call. that's usually a tell that the executive was a little too exuberant to have been on margin to begin with. horizon pharma reported a great number. a lot of people say that's a similar roll up to valeant. they raised prices. we have to look at that. horizon pharma had been a hot stock but because of the valiant taint. healthcare very tough to go up here. >> you made a point of talking
9:33 am
banks. regions, zion, state street, every -- the top 25 are almost all banks. >> that group thing. the hedge funds and mutual funds are not there. very underweighted these and overweighted healthcare. the battleground will be oil. eog reported a remarkable quarter, it's not up. they found a billion barrels in their delaware base. nobody cares. that group had its couple of days. the market is fair standard by one area, hates other areas. decided it hates healthcare, biotech and now loves credit card companies and finances. it's a rolling bear market. bull market, bear market. bull market, bear market. the hedge funds didn't like goldman at 177. at 197 they love it. that's a bad recipe for making money. >> you wanted to talk monster. the second biggest gainer. 84 cents, beats by 3.
9:34 am
revenues ahead. >> people have to understand, you have to go over the fine print of monster. they do a great conference call. they're kind of funny. constellation brand is monster. red bull and beer. they're funny conference calls. this is about china. it's about china. moving to china with coca-cola coca-cola -- people have not noticed that stock going higher. coca-cola has teamed up with these guys. i think this is literally the stock that was being hurt by the distribution change over to coca-cola, now everything changed. coca-cola will support them worldwide. just go buy it buy the whole company. >> you have been preaching to that choir for a while. >> i like monster, mutar watches the show, gave me some coca-cola cans that have jim on it. nothing special there. >> not really.
9:35 am
let's get back to the jobs number. the labor department reported 271,000 jobs added in october. the unemployment rate at 5%. joining us for the first reaction from the obama administration is labor secretary, tomas perez. good to have you back. good morning. >> always good to be with you. >> i imagine you'll be happy to talk about this number. our question is to what degree is it an outlyer this time on the upside? >> this is the best month of the year. you look at wage growth, we had the best real wage gross over the last 12 months since 2009, this year, even with those two months that were lower than expected we're still averaging over 200,000 jobs. we're on pace to have the second best year other than last year. so we're -- we're seeing an economy that continues to move in the right direction. now with the two-year budget deal, there's more stability there. we're seeing movement on infrastructure. i'm just hopeful that we'll
9:36 am
continue to make sure that congress doesn't get in the way of further recovery. we have to get a budget in december. that is another potential challenge there. but i'm hopeful we can move through that. what the economy needs what the american people need is a congress that is helping move forward. because these reports are solid. this year has been a solid year, even with those two months. we have to continue to sustain this momentum by getting a long term infrastructure bill, by locking down the budget that we've done, and turning that into real progress for people. >> mr. secretary, jim cramer here. good to talk to you. >> sure. >> there's some heartening news here about the underemployed. these are the people we have all been -- all of us are concerned about. the people, the part-time workers. it seems like this is the beginning of the disaffected maybe being able to get some jobs. >> it's a great point. 1.2 million people who were
9:37 am
unemployed -- working part-time for economic reasons, in other words, they wanted to work full time. 1.2 million more are now getting those extra hours. that's phenomenal. you look at the long-term unemployed, over the last year roughly 800,000 less long-term unemployed. so, you know, these are all bellwethers of an economy moving in the right direction. i still think there's slack in the market. i think we can do even better. that's why we continue to redouble our efforts on issues like infrastructure. issues like raising the minimum wage. things that put money in peoples pockets and then they spend it. that's what we need to continue to do. there are a lot of signs in this report that show us that people are seeing a brighter future. >> the wage component here.
9:38 am
2.5. do you believe that's companies responding to regulations like minimum wage or trying to pay workers more because they're afraid they'll quit? >> i think it's a little of both and then some. you look at the studies about people who are working low-wage jobs, they're sensitive to price changes for good reason. i'm heartened by the number of companies who have been raising wages. i applaud the efforts of walmart in that regard raising wages. i applaud the efforts of various states and localities doing it. the republicans in congress who have been thwarting that, you know, they are way behind the american people on this one. when places like nebraska, alaska, arkansas are doing it, you know this is mainstream stuff. i think you're on to something. i think that employers -- the cost of attrition -- the cost of
9:39 am
training somebody in a new job is significant. that's why the employers i talk to, who have been raising wages voluntarily, they understand it's the right thing to do, the smart thing to do. that high road is the smart road. you look at shake shack, you saw their earnings report. they're going gang busters on wall street. they are a complete high road employer. they understand you can be in the burger flipping business and do well by shareholders, do well by workers, and do really well by your customers. and it's win, win, win. it creates a cycle. >> mr. secretary, you mentioned the idea of infrastructure, spending. do you think there's a halo effect here, that maybe congress will say we got a tailwind. let's put some money to work here, get people hired. you know, there's as been the it doesn't matter what we do, we can't fix it. do you think there could be momentum in washington to say this is our chance to do something for the american
9:40 am
worker from congress? >> i certainly hope so. here's one area i would use by way of example. in 1996, you may recall, there was a government shutdown. newt gingrich thought that would be the key to locking in long-term republican ma jortijo and taking down president clinton. he was wrong. he pivoted to we have to get things done. what do they do in '96? they raise the minimum wage, pass an immigration bill. passed a number of other bills. a welfare reform bill. i don't agree with everything in those bills, but it was progress. the minimum wage put money in peoples pockets. i think there's a recognition that the american people want results. they want to move the ball down the field. that's what the president has been trying to do. our executive actions, because of the congressional inaction, whether it's our overtime proposal, the things we're trying to do to lift peoples wages, i'd like nothing more than to have congress take care
9:41 am
of that work. and i think there's a recognition on the part of speaker ryan and other republicans that, you know, it's time to get things done. so, i do have optimism. i'm an eternal optimist. there's just way too many construction workers that i talk to that need infrastructure reform. we had a good month last month in construction. but we could have a better month and we can turn it into sustained growth once we pass this infrastructure bill. let's get to work. >> finally, you know, all of this report did not do anything for the participation rate. unchanged. 62.4. you are discouraged about that. >> i'm not discouraged by that. if you look at the number of discouraged workers, that didn't go up. the main factor that's explaining our flat labor force
9:42 am
participation is the fact that with the exception of the two of you and myself, the population is aging. >> he included me. >> hey. i'm a nice guy, guys. yeah. absolutely. don't let this bald head fool you. i'm not aging at all. >> i'm with you on that. >> mr. secretary, our thanks to you. thomas perez joining us from the labor department. >> he a good day. can't hammer him. >> dow up about 42 points. let's get to bob pisani. >> just chuckling because of all this excitement, stocks are just flat. there are winners and losers. financials are the big winners, tech modestly a big winner. the loser is utilities. that's no surprise. rising rates are bad for them. healthcare modestly on the down side. the world was divided into two
9:43 am
camps, those who believe the hike was coming in december, those who didn't. those who believed the hike was coming made some big macro bets. generally you are short commodities, short emerging markets, long the dollar and developed markets. when the developed market bets, there were several bets being made. stock sector bets, generally you're short industrials, you're long healthcare, autos and home builders, you're long financials. this was the bet of those who believed the fed was hiking. the problem was those who believed the fed would not hike were somewhat ascendant in october as the data was week. all of these bets, the losers, energy, materials, started covering. they started outperforming. look at october. energy, materials, industrials all outperformed. the longer beth, healthcare and financials underperformed. to the extent that the fed will raise in december camp is clearly winning, some of these
9:44 am
bets should reverse a little bit. you see the banks this morning, particularly the reej flgional on the strong side. super banks, bank of america, citigroup, jpmorgan are up strongly. healthcare, look at the big pharma names. they are slightly to the down side, but not down as much as some other groups in the healthcare sector, and i would expect them to outperform in the future. we already see what's going on in the dollar. the dollar index is at the highest level since april. copper after modestly rallying in october is at the lowest level since 2009. the material sector generally is not doing much and is down today. freeport, newport down, u.s. steel had a terrible report this week, and alcoa fractionally down. energy stocks, not surprising with oil dropping a bit, on a mixed level here, they started
9:45 am
down. eog and chesapeake, but they have gone positive. that's an interesting trade that energy is mixed. there's some precedent for what's happening today in financials. we asked our partners at kenshow what happens on a day when you get a big nonfarm payroll beat, particularly by 94,000 jobs. only happened four times since 2010. on that day, financials were the clear winner. up 1% on average, this is the day of trade. consumer discretionary also up fractionally. s&p up fractionally. other sectors are down. we are having what amounts to a typical day. i guarantee you today we'll get heavier volume some people will have to rearrange the way their portfolio was looking. right now the dow up 22 points. carl, back to you. >> let's get to the bond pits.
9:46 am
big story there, too. let's go to rick santelli in chicago. >> i'm just watching some of the action and the options fit for treasuries. there is a lot of action. both on the call side, more on a bit of liquidation and accumulation on the bund side. so some traders either are putting on or taking off. but one thing i can tell you, ever needs to do their homework more. even this morning's panel, immediately looks at a two-year note in the 90s and said the curve is flattening. maybe it is. but it is not flattening on the two-year aspects of this. let's look at a two-year. let's look at tens minus twos. the premiere spread that most people use to access what they believe is going on in twos. since september 1st, basically flat. at 1.42. here's the winner. if you want to look at what's driving a flattening trade, it's the one issue that's been the richest on the entire curve --
9:47 am
the fives. i did it on the santelli exchange yesterday. look at an intraday of five, it moved from 1.70 -- 1.63 to close to 1.77 as you see on that chart. and if you wanted to partner it up with the other one that's an outlyer on the curve, it is not the tens. it's the 30s! look at intraday of 30s. it's the least jubilant in terms of responding to much of what has been pushing the short end up, whether it's the fed or every now and again we get a surprise better than expected ni nick data point. look at the 5s to 30s, that's flattening. in we look at the intraday of the dollar index, that's moving. a huge move by any measure. up about 1.3 cents at this point. the best level for the dollar index since the 13th of april. about a week out of sync with the mirror image of what the dollar index mostly reflects.
9:48 am
that's the value of the euro. it's comping back to the 22nd of april since it's been down at this level and many have said this is going to be great for the export business in germany. well, it will be, but in the end let's once again not confuse how markets move with how economies move. think vw. back to you. >> rick santelli in chicago. thanks for that. when we come back, more reaction to the jobs number. we will talk to jan hatzius who raised his numbers yesterday. a sign we're heading into the holiday season. they are getting ready to raise the tree at rockefeller center. this holiday season, get ready for mystery. what's in the trunk? nothing.
9:49 am
romance. 18 inch alloys. you remembered. family fun. everybody squeeze in. don't block anyone. and non-stop action. noooooooo! it's the event you don't want to miss. it's the season of audi sales event. get up to a $2,500 bonus for highly qualified lessees on select audi models.
9:50 am
9:51 am
payments, start ups, jack dorsey says square suspected to sell 25 million shares at $11 to
9:52 am
$13 a piece. valued lower than in the private market that will be a topic of conversation today. >> this shows realism among people who are venture capitalists that they got ahead of themselves. i like square. i like electronic payments. i think that starbucks is ahead of them. starbucks were together and there were some changes there. if you like square, you should buy starbucks. starbucks is a technology company that sells coffee. >> you would rather buy starbucks than square? >> yes, i would if howard schultz decided he wanted to white label his payment system, everyone from walmart to disney would want to use it. duthe board blew my mind. magic johnson on there? >> is it like shazam? solomon, hercules, atlas, zeus,
9:53 am
mercury. shazam. >> road show will probably start next weekend. maybe come to market the week before thanksgiving. we'll get stop trading with jim. dow negative by the tune of 30 points. become the only thing you think about. that's where at&t can help. at at&t we monitor our network traffic so we can see things others can't. mitigating risks across your business. leaving you free to focus on what matters most. (patrick 2) pretty to be the boss of you? (patrick 1) how about a 10% raise? (patrick 2) how about 20? (patrick 1) how about done? (patrick 2) that's the kind of control i like... ...and that's what they give me at national car rental. i can choose any car in the aisle i want- without having to ask anyone.
9:54 am
who better to be the boss of you... (patrick 1)than me. i mean, (vo) go national. go like a pro. awe believe active management can protect capital long term. active management can tap global insights. active management can take calculated risks. active management can seek to outperform. because active investment management isn't reactive. it's active. that's the power of active management. is the staying awake part... challeng( gunshot ) your day
9:55 am
sleep train has your ticket to a better night's sleep. because when brands compete, you save during mattress price wars. save up to $400 on beautyrest and posturepedic. get interest-free financing until 2018 on tempur-pedic. plus, helpful advice from the sleep experts. but mattress price wars is ending soon at sleep train. ♪ sleep train ♪ your ticket to a better night's sleep ♪
9:56 am
let's get to jane wells who has breaking news regarding defense. jane. >> carl, as has become the norm now, boeing and lockheed martin are challenging the government's award to northrop grumman for the new air force strike bomber. it is the biggest contract of this decade. the last big contract coming down the pike for a while. worth anywhere from 50 billion to 100 billion. awarded to northrop grumman last month. big win for them. boeing and lockheed martin say they are protesting to the government accountability office claiming -- concluding that the process was fundamentally flawed. that the pentagon did not properly award the contractor's proposals to break the upward spiraling historical curves of defense acquisitions, and that they chose northrop grumman over the industry leaders of boeing and lockheed martin. as you'll recall, a decade ago, northrop grumman also won the danker contact. boeing successfully challenged
9:57 am
that. this is, again, another challenge. we'll see what happens. back to you. >> jane, thank you. >> time for cramer and stop trading. >> you'll see a stock that is up. this company called tabloid data. they do big data cognitive research. they do the dashboard. they tell you how to interpret your own data. this is a company i wanted ibm to buy bad. this is where ibm wants to be. you see why if you go through their quarter, people need help with that big data. that's who you bring in. you bring tableau in, sales force. smart company. deserves to be up this much. >> what's on tonight on "mad." >> this is a guy who figured it out. martin anstice. brilliant acquisition that will transcend the weakness in tech. tech is going down, exempt if
9:58 am
you look at korvo, skyworks. he's in that type of world this is terrific for the companies that are high worth, transcending the strong dollar. i had fun today. am i going get in trouble because i said that? >> got some good stuff done this hour. we'll see you tonight. >> i miss you already. i hope to talk to you this weekend. >> jim cramer, "mad money" tonight. when we come back, goldman's chief economist, jan hatzius. "the year of spieth comes to a close... tour championship winner...and he does indeed take it all."
9:59 am
10:00 am
anything worth pursuing hard work and a plan. at baird, we approach your wealth management strategy the same way to create a financial plan built to last from generation to generation. we'll listen. we'll talk. we'll plan. baird.
10:01 am
♪ good friday morning. welcome back to "squawk on the street," i'm carl quintanilla with sara eisen, simon hobbs. the spike in the dollar has the highest expectations for a rate hike since 2007. with that, the dow is down almost 50 points here. s&p back to 2089. >> our road map, the october jobs number coming in way above expectations. it's the best month of job growth this year. jan hatzius will join us for an exclusive interview. >> cigna out with quarterly
10:02 am
recall t results today. >> and the ceo of hain celestial will tell us about the organic food industry. >> we start with big moves across markets to that blow out jobs report. the u.s. dollar is surging. check out the euro, plummeting back down to 1.07 against the dollar. looking at a 1.3% move. that's a big one. rising odds that the federal reserve will raise interest rates as soon as next month. gold is getting crushed. short-term treasury yields jumping to levels we haven't seen since back in 2010. stocks, as carl mentioned, down. the s&p lower bay half percent. let's bring in diane swann and david kelly. diane, more jobs. more chances that the fed pulls the trigger. this is the kind of report that makes janet yellen's job easier, isn't it?
10:03 am
>> not only easier but lets us breathe easier. i feel like i have been pulled out of quicksand and put on firm footing. what it does, more than making yellen's job easier, it dramatically reduces the chance of a dissent not only among her inner circle but also among charlie evans who is voting at the december meeting. his last vote of the year. he tempered some of his tone today in response to the job report. one thing he was waiting for was an acceleration in wages. we saw that. participation still not what we want, but this gives us a chance to move in the right direction and an affirmation that the economy is strong enough to handle it. >> david, equity investors are not breathing a sigh of relief. we're lower across the board. it's not a sharp selloff or anything like that. why do you think stocks can't be resilient when the economy is growing 271,000 jobs and the unemployment rate falls to 5%? >> i think it eventually will
10:04 am
be. i think the move in the dollar is not particularly helpful after this report. ultimately when the federal reserve does react and move rates higher that will remove uncertainty. i think that's what the market will respond positively to. if the fed was meeting tomorrow, i would say they're almost certain to raise rates, but that meeting is not for five weeks. we have seen they need to have conditions almost perfect. conditions are almost perfect now, but anything can go wrong in the next five weeks. if we get that fed tightening move, that's when equity markets will respond. but there's still well justified doubt about what the fed may do. >> a lot of people are excited about this growth. 0.4% in this number. 2.5% from last year. that's the best number we've seen since the recession. it comes off of two mediocre reports. >> it does. >> how do we note wage growth this time around will continue to move in the right direction. >> we don't.
10:05 am
that's the point david makes. we don't know if it will won't, but not only did we see almost all the improvement in consumer confidence in october came from low wage workers. very low wage workers, which does tell you that those minimum wage increases are seeping in. they're feeling better about it, but we also saw a hiring of low wage workers. also important to this report is professional services, entry level jobs, a lot of solid entry level jobs of new college grads. we know from survey there's that entry level jobs, though the wages are not what they once were, they are beginning to firm. you get the sense there's been a bottoming in a lot of sectors and wages. the clear exception is the oil industry. even on the oil side, mining losses, they were there. we expect them to be there, but they're abating. you get this sense of bottoming. it's not a surge, it's not a continued surge. it moves in fits and starts. we hit a critical tipping point
10:06 am
that is not to say there's not slack in the u.s. economy. i think what you see now is the next phase of yellen's plan and that is to push unemployment even lower to reengage those workers that are not engaged in the labor force that is something she has said she would do. that is something she clearly wants to do going forward. she has seen how that has a huge effect on the economy in the 1990s. i think she wants to see it again. it's part of the healing process. >> everybody will talk december to death. does it mean the front end of this entire rate cycle has to be more aggressive than we thought? >> yes, i think it does. the key point we've been making is feeling that the first few rate hikes will boost demand in the economy if we're right about that, when the federal reserve begins to raise rates in december, not only will it not slow the economy down but the economy may accelerate a bit going into the first half of 2016, which will cause the fed
10:07 am
to fulfill its doths for once. if the fed gets going, it will have to keep going. >> you have been noticeably hawkish throughout this, david. in fairness. you think they should have moved a long time ago. >> yes. >> the stand-out here, the fed got themselves into this dance with the markets where they had to try to second guess what the market would do. whether the market would take a rate rise. if you look back, david, very, very importantly they tidied up their message, put a rate hike on the table on wednesday. the following wednesday janet yellen did the same in front of congress. this is the point. through that week, week and a half, the s&p gained 1.5%. in other words, the markets are effectively off their back as things stand at the moment. they can move. >> exactly. we learned this back in 2013, if the market is having a tantrum, ignore it it does set firm limits. one lesson that the fed learned is that they can't give in to
10:08 am
market volatility. they need to say what monetary policy will be and be consistent. if they are consistent, the market can adjust to the fed instead of the fed adjusting to the market. >> diane, your thoughts on the dollar surging right now. how strong does it have to get before it's a limiting factor to the fed moving. >> it's a limiting factor as far as the u.s. economy. the pace of rate hikes is still tepid next year. the fed will move and pause, in part because of this strong dollar and what it's doing to the manufacturering sector and inflation. we're still in an environment. we finally have gotten where the fed wants to get, has always wanted to get, that's to lift off. the fed does not want to make the mistake every other central bank has and that's fail to stay off the zero once they got off of it. they'll be cautious to raise rates thereafter, because inflation will be slow and tepid to accelerate that lays out a different scenario than the one
10:09 am
david is talking about. the fed will make clear that they're glad we got liftoff, it's affirmation the economy is good, but they're in no mood to snuff growth out. >> thank you very much for weighing in. >> when we come back, cigna getting a boost thanks to higher enroll ms. the ceo will join us next.
10:10 am
10:11 am
10:12 am
♪ >> square outlining term force its ipo setting a price range that cuts its valuation. kayla tauche breaking the news this morning at post nine. highly anticipated. >> highly anticipated but below where the last fund-raising round was. we told you that might be the case earlier this week, to expect the road show and the first trade before thanksgiving. a lot of investors were surprised to see this price range $11 to $13 per share. and if you use the total shares outstanding number, that's a valuation of $4.2 billion for the company. the company expects to raise up
10:13 am
to $403 million including an overallotment that they could exercise. this compares to the last private valuation for the company about a year ago of $6 billion. there is a $150 million equity raise led by singapore sovereign wealth fund there. the company offered convertible shares as far as the series e round. as recently as october, they sold an addition the $30 million of shares in that round and price, the implied price of that, 15.36 a share. so the price range today is even lower than the economy was selling stock to investors just a month ago. certainly there are a lot of questions about the valuation. the company is trying to appear to be a value play. but a lot of questions as to how exactly was this miscalculated. >> my question is two-fold. does this signal the private
10:14 am
valuations are too great and that's why uber may not come to market? it has to deal with that fact, for example? or is it about the fund-raising round where people shell out money but with conditions attached, that they're preferred shareholders or in certain situations they will be first in line for whatever. is it that process is more murky than we credit? >> the second point, you raised, the point that some investors who got into the stocks early, they have components of the deal that make it more favorable to them. about 1.5% of the shares outstanding will be diluted to give some of the later investors more shares so that they break even. that's a small component of this deal. i don't think we can extrapolate what square means to uber t all depends on what your financials look like when you become a public company. we just got square's most recent financials, their losses are accelerating. growth still growing, revenue
10:15 am
growth is slowing. when you see a company like that, it will raise questions, why you are going public now and what does it mean? they had a lot of cash at the end of the quarter. competition is dwindling in the space. there's a lot going for the company but still a lot of questions. >> all right. the market reacting to a blow-out employment figure, 271,000 jobs created in october. healthcare remains a major contributor adding now almost 500 million jobs over the past year. joining us now and a first on cnbc interview is the ceo of cigna, one of the big health insurers reporting this morning. dav david, good to see you. give us an idea what's happening with employment, with healthcare? you're kind of creating as a rough estimate 1 in 5 jobs in this country at the moment as a sector. >> sure, as a employer we
10:16 am
continue to grow, we grow our revenue and customers served around the world. more broadly, the healthcare sector is a growing employment sector. broadening services, health engagement, behavior health, wellness programs and clinical engagement, it's a robust sector that's growing and we are growing because we have more lives to save around the world today. >> that about demographics, an aging population, people no longer being at work or is it about obamacare and the affordable care act changing the landscape? >> if you look at the broader drivers, you have demographics, aging population globally. there's need for more services. a chronic disease challenge globally, need for more services. but also the awareness of lifestyle, behavior and health improvement where people are engaging more on the front end of avoiding health issues. both triaging and improving health for chronic situations, but avoiding health situations by engaging in a prediabetic
10:17 am
state, more active coordination of an expecting mom during pregnancy, et cetera. a lot more consumption of the right services at the right time which is improving health. >> okay. what do you think about the quart quarter? you beat on the earnings per share, but a bit of a revenue miss. where are you on that. >> we're quite pleased with the quarter. it's a continuation of very strong results across our company. our businesses continue to grow. we posted another quarter of revenue growth on a net adjusted basis approaching 9% in double digit eps growth. the revenue missed, all explained through fx. it's another strong quarter which is another strong year where we increased guidance, quarter in, quarter out. driven by strong retention of clients, customers, expansion of relationships with additional services and targeting new business ads. we felt quite good about the quarter again. >> the bigger issue clearly is the $48 billion takeover from anthem of yourselves.
10:18 am
there will be many people who fundamentally distrust the idea that taking 5 big health insurers down to 3 will be in their interest. you are three months into the conversation with the antitrust authorities. wonder if you could give us some color on that in an environment where you are trading $40, $41 below the effective offer from anthem that many in the market think will not go through. >> a couple of important points there. we knew it was long, thorough regulatory process, as it should be for something of this magnitude. two is that both organizations are strong and well-positioned and quite complimentary to each other. that's what most people are surprised to learn, you have two fortune 500 companies positioned differently but when put together will expand choice, improve affordability and expand the ability to partner with physicians on value based reimbursement. that's the dialogue that's unfolding. we're actively engaged in that
10:19 am
dialogue because there's a net improvement in choice, quality and partnership opportunity with physicians that creates a more sustainable program for everybody. >> one of those skeptics of megamergers is hillary clinton. saying in october as we see more consolidation in healthcare among both providers and insurers, she says i'm worried the balance of power is moving too far away from consumers. made that statement at the end of october. are you worried about becoming a political punching bag? you see what's happening to the pharmaceutical companies right now, the outcry over high drug prices. you are worried about the same thing happening because of this deal activity in insurance companies? >> i think it's an important point. secondly, we have to get back to not talking about politics. we have to come back to customers or patients. the opportunity to expand choice, improve health programs, partner with physicians. cigna has the highest percentage of seniors and consumer
10:20 am
relationships already in value based reimbursement programs with physicians, delivering better service, better affordability. that's the conversation we need to have. we're confident as the conversation focuses on what's best for the consumer we can demonstrate this combination expands choice because there will be more individual, more small employer and specialty programs around the country and the ability to work with proven programs with healthcare professionals, physicians and integrated delivery systems to provide better quality and better affordability. that's the conversation we need to have. we're excited to have that dialogue as we are now with the d.o.j. and regulators. >> before we let you go, i see from the notes on the earnings, when the transaction closes, you'll be the president and chief operating officer of the combined group. there was a time when it was said you were holding out to be ceo. why did you step back? what happened there? can you give us some color?
10:21 am
>> oh, you can go back and read the proxy statement. it was a year-long dialogue and a variety of different configurations were discussed. the important part was we were able to get a combination that work force both shareholders, put two great companies together. i'll have the great fortune of running all the operating lines of the organization, $100 billion organization that will be saving millions of lives around the word. that's what is exciting. getting the best out of both companies. we're excited in getting through the regulatory process. my opportunity is to run a great $100 billion plus company saving lives around the world. >> presumably f there have to be divest divestitures, you will be a busy man. >> good to talk with you. when we come back, disney posting better than expected quarterly results. but what about those concerns of cord cutting? more on that after the break. a ?
10:22 am
a subconscious. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?
10:23 am
sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. we heard you got a job as a developer!!!!!
10:24 am
its official, i work for ge!! what? wow... yeah! okay... guys, i'll be writing a new language for machines so planes, trains, even hospitals can work better. oh! sorry, i was trying to put it away... got it on the cake. so you're going to work on a train? not on a train...on "trains"! you're not gonna develop stuff anymore? no i am... do you know what ge is? disney reporting mixed earnings as it continues to push digital offering with consumers
10:25 am
turning to streaming. ceo bob iger is anxious to deliver content in the digital medium. here's what he had to say on cnbc. >> we are continuing to do what we can to make the traditional platforms as successful as possible in this era. we feel good about a number of the steps that we're taking in that regard. we think that there will be more to come. but generally speaking, as we look at the media environment, the opportunities that we have today to distribute our product to reach more people are greater than we have ever seen before. >> joining us now is jason vasanay. there is a strong view from some analysts that they should get on with it go over the top and establish a retail price for what they offer for espn and the rest of the digital cable offering, what do you think? >> disney is unique among the media companies. they're the only one who can put their content online and make more money than they do today.
10:26 am
no other media company can make that claim. the reason disney is unique, it stems from the power of their content. it's the power of espn and the potency of the disney channel. thought the big subsidy within cable is that we're all subsidizing for espn and the amount ofbidding for sporting contracts. >> that is the conventional wisdom. the reason is the cost that -- for sports are so high that people intuitively believe that's the nature of the subsidy. the street has it backwards. we go through in a report called the curtain falls on the web. if you think about it, sports c content is worth more pr minuere than any other content out there. sports is quite unique. that's why the rights are so
10:27 am
high, but the sports fan is getting a subsidy from the nonsports enthusiasm. >> besides sports, disney has star wars coming out in december. is there too much hype. >> that's another interesting thing. i would say 2 billion is in the right zip code. everyone says i want to own disney going up into star wars, after that i want to sell it. here's what the street is missing, the slate for 2016 is the best. it's not just about the december release of star wars but the 2016 theatrical release. if you see a pull back in shares -- >> you're buying. >> doesn't it trade on a 22% premium to the s&p 500 and a 58% premium to its media peers already. >> it deserves it. does it deserve to go higher still. >> i'm saying they'll have to deliver earnings growth. the earnings power of this company is there. the dynamic affecting that high multiple is what the bears focus on, portfolio managers are
10:28 am
terrified of media they're all hiding in disney if things heal in the media ecosystem where portfolio managers feel they can buy another stock safely. that's not the environment we are in now. >> if they were go over the top on espn, would the cable bundle fall apart in this country? a lot of people simply buy cable in order to see live sports. >> that's right. what's interesting is if you look at the economic payoff for each company, some companies it's positive. some companies modestly negative, some enormously negative. once that happens that will cause companies to go over the top and necessitate more cord cutting. that's why portfolio managers are nervous about owning these other companies. >> good to see you. >> absolutely. when we come back, goldman's john hatzius on the numbers
10:29 am
10:30 am
10:31 am
i'm morgan brennan, here's your cnbc news update. vladimir putin agreeing to a recommendation to suspend all flights to egypt. british authorities are making most travelers leave all their
10:32 am
luggage behind when they leave sharm el sheikh. egyptian police are carrying out detailed security checks around the airport. >> in arkansas, a bus ran off the road into a bridge a abuttmt and killing six people. and serena williams says a man picked up her phone and left while she was sitting at a restaurant. after running after him and getting the phone, she said she returned to a standing ovation. >> i was going to say good job he didn't cross you, sara. >> she's getting applauded noor. the chicago fed president, charlie evans, speaking out in an exclusive interview this morning with steve liesman. this on jobs day.
10:33 am
steve jones us from chicago with some of those highlights. >> simon, thanks. the strong job numbers today bakes in a december rate hike it would take a weak number to derail that hike. so if they do one in december, when is the next up with and the one after that? chicago fed president charlie evans is a prominent dove, and in a recent cnbc interview he said he could stomach that increase in december but wants the fed to make it clear there will be no sharp rate increases from there. >> i agree with chair yellen when she said there's a lot of focus on the first move, but need to focus on the entire path. so i think we need to have communications that indicate the path will be gradual. >> it's important. most economists don't see the current job growth number of 271 as a new trend.
10:34 am
more they see it as catching up from two weak months that we had. they look to the three-month average of 187 an say that's more like the actual trend. here are the numbers. payroll number blowing out the consensus at 271. but not a whole lot in the way of prior revisions, up 12,000 in september and august. the average hourly wage a strong number. but economists want to see that repeated before they feel like that's a new trend. unemployment rate falling to 5%. labor force participation study. and where are those jobs? healthcare up 57%. retail, maybe some early hiring. maybe a sign of confidence in the christmas selling season, up 44%. construction, indicating the strong housing sector, mining down, and manufacturing unchanged. those are two of the challenged parts of the economy. not everyone agrees the paths will be gradual. some see a steeper path. the rate markets are underestimating fed funds rate
10:35 am
hikes in 2016. for evans, the hikes are december dependent on jobs than inflation. doves like evans will fight against a sharper rise in rates. simon? >> steve, thank you very much. joining thus morning, jan hatzius, chief economist from goldman sachs. nice to have you back. >> nice to be here. >> you call it a pristine report. how should we be thinking about this, 271? >> when we look across the different parts of the report, payrolls, household survey, earning earnings, it shows the labor market is improving at a good pace. there are ups and downs from one month to the next. the trend is not 271,000, but it does suggest that labor market is still in good shape. does it suggest that the trend is changing at all? or is this simply, as he said, making up for the last two
10:36 am
months? >> it makes us less worried that the trend shifted to the down side. there were significant upward revisions in the private sector in the prior two months. is that also helps that case. i think the trend is slowing a little bit. but less than what it looked like after the last report. >> how about wages? is that trend changing? i would think that we're probably getting somewhat stronger wage increases. that case is still somewhat tentative. luke at the employment cost index. that came out a couple weeks ago. that was not looking particularly firm. so, i think we're probably moving somewhat higher, but not clear. >> as the odds of a rate hike go up in december, sharply up to around 70% in the bond market, do the odds of the european central bank adding more qe in december go down? >> i mean -- >> can that really happen at the same time. >> i think it's unclear. we do still think they probably will extend the qe program beyond what has been indicated,
10:37 am
the september 2016 kind of date. so, we still do think they'll keep going. yeah. at the margin this will make it less urgent to do more than that. >> you have been saying december for a long time. it's all -- at this moment, it's coming your way. what does it mean for early '16 or mid '16. >> the question is not so much about the december rate hike that seems likely, but what's the path beyond that? what's the signal going to be from the federal reserve at the december meeting? what happens to the plot? it looked in the last dot plot as if the fed leadership had slowed the pace of hikes to 75 basis points in 2016. there's a question if that might have gone back up. it's still going to be gradual by historical standards. >> is it too soon to talk about march for a second hike? >> would be my expectation. it's too soon to be confident on that.
10:38 am
i don't think it's too soon to talk about it. one of the issues is that while it's likely to be gradual, the bond market has been pricing in an extremely gradual path. whether it's going to be quite as gradual as that is a different question. >> jan, many people wanted a rate hike because they think it's an important signal to ceos to say this economy is sound. stop returning 80% of your economy to shareholders, invest in the economy. we can all grow together. how much room do we have? how much runway do we have? could that be true or are we tinkering at the end of a cycle? >> i've been a skeptic on that argument, the idea that a rate hike sends a strong message that actually ends up being expansionary from a growth perspective. i think tighter monetary policy will ultimately slow down growth. so the justification has to be that you think the economy is
10:39 am
ready for tighter positions. >> if coes are not able to buy cheaper in the market, they are able to buy back dividends. >> they would also be less inclined to borrow to finance capital expenditures, and consumers would be less inclined to borrow for house purchases. on net, it's still a negative. >> i want to ask you one more question about the markets. you're not a market guy, but the central bank was trying to second guess to how the markets would react to what they were doing. are we past that? >> they will always care about financial conditions. financial conditions are the way monetary policy is transmitted to the economy. sometimes the situation will look a little more fragile. other times it will look less tr fragile. the extent of the focus will shift, but not dramatically.
10:40 am
>> for those who complain about the participation rate. the labor secretary talked about discouraged workers lightening up a bit. will that ever change? >> i think we're gradually unwinding broad labor markets beyond the unemployment rate but there is probably still some broad labor market slack in the participation rate. a lot is structural but still some slack left. >> jan, nice to see you. jan hatzius. >> the call has been there since june for december. still ahead, cakara swisher gives us her take on square's ipo. and can you explain why you recommend synthetic over cedar?
10:41 am
10:42 am
"super food?" is that a real thing?
10:43 am
it's a great school, but is it the right one for her? is this really any better than the one you got last year? if we consolidate suppliers, what's the savings there? so should we go with the 467 horsepower? ...or is a 423 enough? good question. you ask a lot of good questions... i think we should move you into our new fund. sure... ok. but are you asking enough about how your wealth is managed? wealth management at charles schwab. "the year of spieth comes to a close... tour championship winner...and he does indeed take it all."
10:44 am
♪ >> welcome back to "squawk on the street" on this friday. look at shares of zs pharmaceuticals up by 41% after astrazeneca said it will buy the u.s. biotech company for $2.7 billion, around $90 per share in cash. the deal is expected to straighten astrazeneca's portfolio numbers. >> big day for us all, 271,000 jobs created in october. let's get over to chicago and the santelli exchange. >> thanks, simon. nobody was more wrong than i was. actually the whole panel this morning was wrong. i was 101,000 off. but let's look at some statistics on today's headline
10:45 am
n n nonfarm. thus far for the year of 2015, the average is 206,000. last year it was 259,000. last year we had -- yes, four numbers that were higher than today's 271,000 which is the highest of this year. one of those four numbers was over 400,000. i would like to welcome my special guest, tim kane. what did you think of today's numbers. >> i felt affirmed. i have been saying if you look at the insurance claims, they are lower than they have been. the doves out there have been wrong. the labor market is tightening in the short-term. >> i read your letter. explain to the audience why you call this a red alert condition. >> go back a year ago when
10:46 am
unemployment rates were closer to 6%. the idea that we would be at 5%, and eventually going to 4.something, that means we are at a red alert. >> participation rate is at the lowest several since 1977. does that play in your calculus? >> it does. it's a mixed message. the economy in the short-term is tight but there are structural problems, monetary policy can't fix and shouldn't try to fix. we're missing 9.8 million people at my last count because of that labor force participation rate. these are people who left the labor force. monetary policy can't fix it. it's something that's serious. mixed message. >> now, demographics, many explain away labor force participation as demographic issues. you go back to the tables on the fed website. what do you find when you try to
10:47 am
kick the tires on the demographic involvement in the low labor force rate? >> yeah. there's the story that labor force participation rate has dropped by 3.5% because the work force is getting older. look at teens. the teen labor force participation rate is down. prime age males down. older workers, their labor force participation rate is up. it's not a demographic story. there are incentives doing this over the long-term. it's a long-term story, that's different from demographics. >> finally, under 10% on u6. am i off base? your final comment in thinking that's the real unemployment rate, now that is good news because that number is under 10. >> is good news. i think you're right to focus on the discouragement in the american work force. it's not because of monetary policy, it's because of too much regulation, it's hard on
10:48 am
entrepreneurs, that's where the congress and the next president need to focus their energy, change the rules to make it easier for america's entrepreneurs. >> tim kane, thank you. sara, back to you. >> thank you, rick. >> the dow turning positive thanks to goldman sachs, jpmorgan. >> it's been a rough few months for hain celestial. the ceo will join us when "squawk on the street" comes right back.
10:49 am
awe believe active management can protect capital long term. active management can tap global insights. active management can seek to outperform. that's the power of active management.
10:50 am
10:51 am
good it with the first quarter results last night. the company missed on the top line, but a bright spot is its natural foods business. joining us now in an exclusive interview hank, founder and chairman and ceo. good to see you. >> you are having a bit of a soft patch when it comes to u.s. sales growth, at least falling short of expectations. why? >> so, you know, when we say we had a bit of a soft patch, our personal care business did well. our greek yogurt business, tea business, our snack business, our protein business. you know, the consumers today are shopping more the perimeter
10:52 am
of the store than the center of the store. you know what, i said on my call last night, i had never seen the natural organic food industry in such demand. >> the consumer -- >> do you lower prices? >> some is priced, but what we'll never do spectrum, we will never, you know, reduce our quality. we're not going to come back. we can't expect -- there's spectrum and crisco, and we're going to put each other on the same playing field. consumers want more and more healthy eating than they ever had in their life. >> whole foods we mentioned is struggling, though, despite that trend. is it still 25% of your u.s. business? >>. >> they are going to wal-mart, target, kroger.
10:53 am
>> wal-mart is not doing great either. can you recover if wal-mart and whole foods do not recover? >> first of all, the great thing about hain, we are in so many diversified categories. we are sell over a billion dollars plus outside the u.s. today. >> wal-mart m com. we are aware that consumer wants us to be and are selling our baby products. erst best and elia's. >> isn't it the point that it's no longer a novelty. as the sector grows, you are going to attract more players. it's no good any longer to just say we're wholesome and hope that you attract a premium for that. it's going to get dirty out there. it's going to get mass volume and how do you deliver still fresh? >> number one is this here. been doing this for 20 years. we are one of the few companies that can say this here.
10:54 am
99.9% of our products are gmo free. mill enwrals today look at ingredients, look at sustainability and look at the product that it's made from. >> i'm asking about more feel getting into the space. >> the category is getting bigger and bigger. oscar myer hot dogs versus a hot dog made -- you saw what the world health organization came out and said. eating products with meat that have nitrates can cause cancer. where is the consumer moving? hain can't change the way the world eats by itself. other companies have to go out there and change their ingredients and clean up what they're doing. >> you mentioned the warning on meats. protein has been a good side of your business. >> we today, our protein
10:55 am
business is close to a half a billion dollar business for, you and what's happened is consumers are staying at home farm to table eating a lot more protein than meat. with that, you know, big opportunity for us. >> irwin, thank you. >> thank you. >> coming in, talking about the quarter. >> thank you. >> irwin simon, the ceo and chairman of hain. >> coming up on the program -- or on squawk alley, rather, alibaba buying the youtube of china. more on that when john and the team takes the stage. that's after the short break. stay with us.
10:56 am
10:57 am
10:58 am
. >> we want to say congratulations to our nail the number winner. tony grande of melbourne, new jersey. guessed early this morning that non-farm payroll at 282. 282,000. that was the closest guess. >> crazy. >> that is an optimist, mr. tony. he doesn't join us, about the we want to recognize him. we're sending the best that we
10:59 am
find. >> 271, of course. 271,000. way above expectations. >> the dollar rising to levels and the -- also, treasury yields are rising as well. treasury. geeldz go higher. short-term yields, the two-year yield, back to levels we haven't seen since 2010. we've got some breaking news now out of washington. let's go to eamon javers with that. >> the white house has announced that at 11:45 this morning the president, vice president, and secretary of state will make a statement in the roosevelt room over at the white house. the white house not saying what that statement is going to be about, but dow jones is reporting now citing sources that the president and the administration will reject the keystone xl pipeline according to sources talking to dow jones.
11:00 am
>> the game here is all about seeing if they could extend this path to the obama administration and maybe get a more sympathetic administration in after the 2016 elections. the obama administration signalling early this week that it would not pause. it would, in fact, move ahead with that decision making process. now the president and the administration ready to reject the keystone pipeline. that is sourced dow jones ace sources, and we have not been able to independently -- >> thank you for that. >> s&p back. keystone the headline right now, but following the jobs number


info Stream Only

Uploaded by TV Archive on