Transcripts For CNBC Squawk Box 20151002

People and wounded several others at a Community College in oregon. The suspect was shot and killed after being confronted by police. President obama speaking out late yesterday saying that thoughts and prayers are not enough. This is a Political Choice that we make. To allow this to happen every few months in america. We collectively are answerable to those families who lose their loved ones because of our inaction. We will have a live report from oregon in just a bit. Business stories that were watching this morning, credit monitoring from experian disclosing a massive data breach. The information included names, addresses, birth dates, Social Security numbers, drivers license numbers and passport numbers. And in Washington News we have a warning from the treasury secretary. Jack lew says the government will hit its legal debt limit and be unable to borrow more money around november 5th. In a letter to congressional leaders lew is calling on lawmakers to take action to raise the limit. And more Hedge Fund Managers reporting numbers dismal. Bill ackmans fund is down 1. 6 on the year after losing 12 in the last month. He had been in positive territory. The firm hurt as the bio tech name makes up about a 5th of the portfolio. He was one of last years best performing managers. Micron technology is getting a boost after the Electronics Maker posted better than expected revenue. They will be cutting about 5 of the global work force. Expecting to take a charge of about 42 million and sprint reportedly planning to cut jobs and reduce up to 2. 5 billion in costs over the next six months. Thats citing an internal memo. No details on the exact number of job cuts but we had the ceo of that company on our Network Recently and theres no question that they would be cutting something. Nordstrom finalizing the sale of its credit card portfolio to td bank. Theyll issue all nordstrom brand visa and private label Consumer Credit cards. Take a look at super value. The ceo will retire in february. The current cfo will be promoted into the jobs. Take a look at the futures and youll see green arrows. We got the same story yesterday. Big gains in the futures yesterday morning and that all turned around once there was a disappointing manufacturing report that hit the markets yesterday. The dow was down by 211 points. It managed to turn things around and end down by simply 12 points by the end of the day. S p finished in positive territories. The nasdaq was up by about 7 but this morning you see positive sign with the dow futures up by 86 points and the s p up by 9. Lets look at the early trading in europe this morning. Theres green arrows across the board. Gains of 1. 5 or better for many of the major markets. The cac in france is up by 1. 9 . If you check out what happened overnight in asia, the nikkei closed flat. The hang seng was up by 3 points and the corkorean kospi was dow. Oil up but managed to lose the gains throughout the sessions as you saw stocks come off. It settled down by close to 1 . This morning its up. Wti trading at 45. 30. In the bond markets taking a look at the ten year yield at 2 . 2. 053 . Obviously the jobs report we get today will be important to see what the fed does next. In the currency market, dollar is up against the euro and the yen. And gold prices at this point are down by about 8. 1,105 an ounce. In the meantime lets get more on the markets. The economy as we countdown to the widely watched september jobs report. Well get that at 8 30 a. M. Hes the global chief investment strategist at citis private bank. Good morning. Lets do this first, your jobs numbers and how were you playing this coming into this morning and then i want to get into larger issues . Well, 180. Something belocw consensus. And these typically upward revisions, a lot like the august report it comes in light. In a couple of times time well have an idea where the real market is. Were above 200, 210 and we continue to see more, healthy job gains and steady climb in the Unemployment Rate. The market does what. But layer this on top. The news we talked about which is we are going to be dealing with the debt limit earlier than we thought. What does that do . Is that going to be an overhang on the market . Is there an overhang in how you think the market will react to that . Ill less concerned with the debt limit. Im more concerned about todays numbers for the Federal Reserve. The federal has essentially met its mandate for full employment. I want to see what the market does today and the dollar does today. The dollar is weighing on prices here in the u. S. So its all about inflation. Its not as much about the jobs. Absence of collapse in the United States. An absence of collapse in the economy will help restore confidence. The debt ceiling issue will be won but the markets focused on this in critical, critical timing after extraordinary measures have been taken and occasionally they actually make you worry that they will do something really, really stupid on the debt ceiling. But thats late in the year. Conventional wisdom has been if the fed is going to move its going to be december but steve raised the possibility yesterday that they can do whatever they want. They could absolutely go in october and thought it was an increasing possibility because if you got some calm in the markets, why not get it out of the way. Part of the issue is that the fed said virtually anything is on the table. You look back at 2011 and they had time based targets and rigorous things like the Unemployment Rate and inflation and its a wide range of uncertainty in the world. So unfortunately the Federal Reserve can tell us everything about how they will react to domestic Economic Data but they have this issue elsewhere which is completely open. Its not in the mandate. How does anyone know how theyre going to measure it leaves us with this great uncertainty about the fed. Do you think october is possible. Possible. But not likely. Probably unlikely. Given the rest of the world how clear can it be by the end of the month. I dont know if its clearer by december. I think it makes it harder to do an october knowing that you have to deal with the debt limit issue in december. But however makes it much easier. Youre considering all of these issues not part of their mandate. But they do. Its interesting you made a good point that it all feeds back to the u. S. Economy. What i read into last statement and fed speak since then is were worried about what whats going on outside of the u. S. Because its putting upward pressure on the dollar. Thats the one missing piece of the puzzle. Whether its october or december im a little more in the october camp. The fed has an Emergency Press conference system which they have been testing and in december youre looking at very low liquidity so i think its a safer move to go sooner rather than later. The history of the Federal Reserve has not begun a new tightening cycle in the month of december. Maybe we have grown up and its possible to do it then but its very difficult to find them getting all the ingredients that they wanted to that wasnt present in september. Thats the thing that strikes me. Its hard to say that things have improved since you decided not to raise rates. How do you justify that . And you can talk about the Unemployment Rate falling below 5 . What happened when the fed has not tightened. Its usually because theres outside conditions that are important and you found that in those cases over the last couple of decades lots of important financials around the world get weaker and the way they went about this created increased uncertainty. Had they said the dollar moved up and the inflation rate is around zero, i think it would have had a different Market Reaction. I agree. Its where theyre pointing to what there watching because you can understand the inflation argument there. But when you start looking at all of these factors and trying to figure it out, it becomes impossible. Are they waiting to see if shanghai falls . Thats what it feels like. Its much more about rate of change than the level were sitting at. The u. S. Data was accelerating. Particularly the data exposed to international markets. If we just see some stability the fed would be comfortable acting and the other thing is we finally saw the fed not move be bad news for the markets. Yes. I remember a few years ago when bad news was good news. The market would rally because well have cheap money forever more and we din see that. The market wants the fed to hike and the fed saw that. I think they are so deeply conscious of the market and saw that reaction and were disappointed and now they think they really have to go. Thanks guys. When we come back this morning, an awful week for commodity giant glencore. The company slammed as investors worry about whether it can cover its debts. We have a live report next. And later a special squawk conversation on the state of the home and what it will look like 20 years from now. Theyll join us here on set and be joined by top executives. First take a look at this date back in history. Welcome back. Now to the weather and the powerful Hurricane Joaquin. Jen joins us with the forecast of this powerful storm. A couple of interesting things with this forecast. Notably the track of it and where it is going. Lets talk about the bahamas. For the last 24 hours Hurricane Joaquin has been raking the central bahamas. But now its a category 4. The pressure 935 and the movement is interesting because its now made that turn to the northwest. It was either moving west or south and now its finally gotten a northerly component to its movement. So the projected path will take it to the north and the northeast. Off the coast of the u. S. Were going to see the projected path out to see as we get into the time frame over the weekend and next week. Not to say theres not going to be impacts on the u. S. Coast but we focus so much on the senor of circulation and we will see tremendous weakening as joaquin as well. Heres joaquin down here. Look at the u. S. Coast and specifically South Carolina and North Carolina we already had a lot of rain over the past week or so and were about to get more and it is related. You can see the connection and that moisture associated with it were going to see inches if not feet of rainfall. South carolina and North Carolina very concerned about flooding here. The ground is very saturated. Our wettest day on record last week and now were about to add another 3 to 5 inches of rain on top of that and thats concerning and especially South Carolina and North Carolina where we could see a foot of rainfall. Thats one big concern. The other is the fact that its going to be on the coast and winds will be on shore. So well see the coastal erosion concern and coastal flooding as well alock the eastern seaboard of the u. S. Its how the model has been handling this. The european model has been consistent with taking joaquin offshore. The american model has now made that turn keeping it offshore but both models keeping a lot of rainfall here in the eastern seaboard and midatlantic specifically and thats been the biggest concern of the forecast all along and remains the concern into the weekend and early next week. So thats the latest. Ill send it back to you guys. Its going to be rainy. At least its going offshore. Go away. Thank you, jen. Lets check on the markets this morning. Less stormy. What a segway. Remember were getting the jobs report at 8 30 so this could all move around quite a lot. Ahead of the u. S. Jobs number europe is broadly positive as well. Almost 2 . Germany is higher by 1. 5 . Italy 1. 5 and we still show greece out of, i dont know what, nostalgia . Asia is higher, hang seng higher. Shanghai and shenzen are still closed. Wti above 25 barrel. Brent is at 47. 84. The ten year yield ahead of the jobs number 2. 058 . We have been hovering around that number now for a couple of days here and look at the tight range over the last couple of months. As for the dollar, mixed earlier. Still is. Stronger against the euro and the yen. 120 yen for every dollar and gold is lower by 8. 70. 1105 per ounce. Lets head to london now. Kate kelly is there. She is visiting the headquaters of glencore which has been slammed this week. Its a very important story. Kate, you with us. Hey, guys, im standing outside glencores London Office where their focus this week has been on their trading arm after the stock market and bond market with their credit default spreads as well. The key question is whether they have enough financing to stand them in good stead if we head into a further period of low commodity prices. Theyre really scrambling to reassure this market this week after shares hit an all time low on monday of about 67 pence on the london stock exchange. Theyre moving ahead with asset sales. One of which is the sale of their metal streaming business. These are by products from their metal business so they will be selling those to a partner. That could bring in a billion plus dollars. The other asset sale theyre contemplating and hard at work on is a 20 to 30 peculiar stake in their agriculture business. This probably wouldnt happen until the Third Quarter of next year but the prone is it would bring in several different dollars. The end of year goal 24 billion down from 30 billion earlier this year. Now the ceo sought to reassure employees in a memo this week, a couple of key points that they had 14 billion in inused liquidity lines and in his view theyre not going to have to access to Public Markets again until 2017. They recently raised equity. There was also a meeting with creditors here in london earlier this week where some of the key points were raised to try to reassure people. A lot of concern at glencore and noted in the able list community about short pressure on the stock. But for the moment theyre focused on these asset sales as well as on a director meeting to be held october 9th. They may move up their november Production Report and theyre going to discuss the details at that time as to how much detail theyre going to disclose again in an effort to reassure people. Back to you. Kate, fair or unfair to compare this company to Lehman Brothers . I am going to say unfair. I know the comparison has been made many tiles. I think in this case theyre suffering from low commodity spot prices but they do seem to have a lot of access to debt financing. They have 50 billion in letters of credit that backs up their trading business. They have a 15 billion revolver thats not been drawn down despite rumors on monday. Rumors monday that they were unable to roll some shortterm financing and there were also rumors and this has shades of 2008 that some of the executives had personal margin calls and had to sell stock. The company denied these rumors and theres no evidence that theyre true. The short pressure t shortterm financing focus is all very resinate and im not sure that the comparison is fair. But do we know, are they dependent on the overnight funding for the trading arm . Thats super important, right . And whats also the irony here is their structure was supposed to make them stronger. We do real mining and then we have trading. So we have a diversified revenue structure but right now that structure looks to be causing them great weakness in the market. Theyre not dependent on the overnight funding market as far as i know. They dont have overnight financing. They do have a small commercial Paper Program that typically has a duration of 90 days. Its in the low billion dollars of value at this point. As for the hard asset question, thats a great one. They put a lot of energy and stock into this deal a couple of years ago as a source of greater stability. Copper being the biggest problem and if copper goes to 4,000. But for the moment theyre dealing with the same down cycle that others are and its a huge problem. Im not making light of it. But i do think the longterm argument for those metal assets may still hold true. Incredibly important story. Well be watching ripple effects for days if not weeks at this point. Thank you. Another story we have been following, a developing story, a gunman shooting and killing nine people and wounding several others at a Community College in oregon. Jennifer joins us from the scene. It was a long sleepless night for the loss after their students killed in the classroom but also the loss of their sense of security. A familiar scene unfolding. A candle light vigil following a mass shooting on a school campus. The students here in southern oregon, they never expected it to happen to them. We just dropped everything and we ran and when we ran out of the building everybody when every which way. My teacher had come running into the room in a very big panic telling all the students, 20 plus to come into a teachers room in the back and hide and duck down and shut off all the lights and dont make any noise. The 26yearold shooter gunned down but not before killing at least 9 students and seriously injuring several others. We have at least two officers that responded into the building within minutes and exchanged gunfire with the suspect. The assailants father in Southern California says the family is crushed. Obviously its been a devastating day. Devastating for me and my family. President obama says we have become numb to this. This is a Political Choice that we make. To allow this to happen every few months in america. We collectively are answerable to those families that lose their loved ones because of our inaction. In these cases, the president says, thoughts and prayers are not enough. That was jennifer reporting from oregon. When we come back, former fed chairman ben bernanke out with a memoir. We have that story next. Moves the world forward. Invest with those who see the world as unstoppable. Who have the curiosity to look beyond the expected and the conviction to be in it for the long term. Oppenheimerfunds believes thats the right way to invest. In this big, bold, beautiful world. Theres a network that never stops improving. Thats grown faster than any other, covering nearly every american. And these geese. But its not who you think. Squawk its tmobile. Our new extended range lte signal reaches twice as far. And is four times better in buildings. Think you know our lte coverage . Think again see for yourself at tmobile. Com coverage dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is, can your business deliver . Welcome back to squawk. We are in the chairs and the reason that were playing that song is that were wearing pink shoes this morning. We being andrew. You can get a shot right here. This is in honor of breast awareness month. Cancer awareness. Im sure youre already aware. These came to us from the good folks at auto nation. Were going to put them on. Andrew is wearing them apparently for the month. I will say much more comfortable by the way. Then your wing tips. Exactly. There is a promotion and were going to talk about that coming up. Yes. That would explain it first though so you understood why andrew is in pink shoes. But i can wear them every day. I think it would be okay. We do have a couple of other stories that got our interest. The first about ben bernanke. He will be on our program for a full hour 8 00 to 9 00 on monday morning so youre not going to want to miss that but in the meantime this book which was embargoed if you will has been discovered or found by an Associated Press reporter that now went to a store and found the book and has now gone through it. It was just accidentally on the shelf early. Occasionally these things happened. I was sent to get a couple of books. Youd run to find a bookstore and they would put the book out before they were supposed to or you could go up to the manager and say do you have the book and the books have tape all over them and theyll open it and sell the book. Thats apparently what this reporter did. The story talks about Lehman Brothers and his feelings toward what he calls a surreal moment and its how much the world hated the bailouts. And thats been a common theme. But being surprised. Being surprised that fat cats were getting handed checks. And the political backlash and for hill, he tells this story about how he saw a Bumper Sticker that says where is my bailout and that was the molt for him when he realized the distinction, this is the wall street main street distinction in terms of how he was thinking about it. It took him until he saw a Bumper Sticker . He tells that story of a telling moment of how he appreciated what was going on. And yet the whole world screamed afterwards why didnt you bailout Lehman Brothers. It was a difficult position and understanding how Financial Markets work you see why it was so important but i can also completely understand the anger. Were going to be able to talk to him all about that and of course whats going on with the jobs report and what janet yellen may or may not do in october or december. Its going to be a great conversation. Im very excited about it. I am too. I want to know what he thinks about the fact that what she focuses on seems to change constantly. Its a reflection of the idea that it is a much more Global Market at this point and we do have many other factors but i can also again, you can understand the anger when people say wait a second, this is far outside your mandate. To save the world in 2008 but you dont need to keep saving it on a monthly basis. And when we havent seen a rate hike in nine years so youre talking about closing in on a decade of not seeing a rate hike. When do we get back to normalization. I want to talk about another breach. These breaches are happening more and more frequently. The number of people being exposed are increasing all the time. But 15 Million Peoples records were compromised and stolen. These are records that include your Social Security number, your name, your address. Drivers license. Drivers license. Wow. To me theyre saying this was a breach that occurred with experian but honestly at this point you have to wonder why so Many Companies are so freely asking for so much information from their customers when they cannot protect it. Youre not supposed to ask for Social Security numbers but they still do it. And this should be customers starting to rise up and say forget it. Companies should not be taking this information theyre not capable of protecting. For two years well have free credit monitoring and Identity Resolution services set up. Thats not acceptable. You have put these people in a terrible position for the rest of their lives and you never needed to have this information to begin with. If youre a corporation and thinking about collecting this info. Think again. You are wrong and if you lose this information and you give it up to hackers. It is your fall and on you and two years of credit monitoring is not enough. Its unacceptable. Tell me what you really think. Its tmobile and this has happened from company after company after company. Stop asking for this information if you cant protect it. Yeah. Ripple effects from the decline in the oil prices. Do you know theres Petroleum Engineering degrees. 21 departments in the country where you can get one. This will be the first year that they decline the number of students getting the degree in 13 years. There was a Record Number of Petroleum Engineering degrees awarded. They think it will decline by 1 . This can swing. Back in 1983, there were 11,000 Petroleum Engineering degrees awarded. By 1990 that had fallen to 1300. By dad is a geologist and weve been through the boom and bust cycles before and 1983 it was right at that point, right after the edge of it that was the boom right before you fell off the cliff and you couldnt get a job. And these are jobs that are very high paying jobs when there is when theyre available. When theres High Oil Prices and very high prices for the discovery process to try to get people in to do these thicks. My dad restrained his way in Environmental Geology after that. You see so many ripple effects whether its glencore or this. Its just unbelievable. You think youre through the boom and bust cycles. Were not with commodities. You have to live with it and understand that it happens. I focus on latin america. All the countries lived as if this boom was going to last forever. They spent money like crazy. They didnt reform their economies and now theyre up a creek at this point. Lets tell you about some movie business as well. This is about a friend of the show. A number of new films opening including the martian with matt damon. Our colleagues catching up with the actor this week talking about the future of space travel. I mean, this idea of getting some of us off the planet on to some other planet is a really important idea and a necessary one and, you know, were getting to that point where, you know, fewer and fewer people can do more and more damage and before long you hit a point where, you know, somebody who is completely crazy could cause some extinction level event and then its bye bye humanity. Its good to have a crash pad somewhere else. Just a little loft. For more on matt damons thoughts you can go to cnbc. Com. Im headed to see steve jobs this weekend. The movie. The new movie being released in a week but playing at lincoln center. Oh, cool. Im interested in checking that out. Ill give you my review. Is this the second one. No, this is aaron sorkin and that whole team. There you have it. I wonder if the martian is good. Well see. Coming up auto nation boss mike jackson unveils his companys latest sales. Its an interview youll see first on cnbc, next. Its your grandpappys hammer and he would have wanted you to have it. It meant a lot to him. Yes, ge makes powerful machines. But ill be writing the code that will allow those machines to share information with each other. Ill be changing the way the world works. interrupting you cant pick it up, can you . Go ahead. He cant lift the hammer. Its okay though youre going to change the world. Car buyers putting the pedal to the metal. Its best run rate since 2005. Sales figures of 21 year over year bringing the Third Quarter up 7 over the previous year. Chairman and ceo of auto nation mike jackson joins us with more on the pace of auto sales. I dont understand whats happening here. Are we taking a shot of this . We have our studio manager with this pink thing that youre supposed to put on a license plate, drive pink for auto nation. I assume this has to to with Breast Cancer awareness month. Michelle, good morning. Indeed it does. We kicked off our National Campaign of drive pink. And auto nation wants to make a difference in the lives of our associates and our customers and we embraced Beating Cancer and having a race to beat cancer for the last several years raising over 5 million across the country and our latest campaign is Breast Cancer awareness and raising funds for Breast Cancer research senor based out of new york. So were often running on drive pink. We have a photo of joe kernen wearing the pink sneakers that you send over. Whats the promotion . Do you buy them . Its also tied in we send them to you free. If you put them on and post it we make a thousand contribution to Breast Cancer Research Fund in your name. Does this count . Does this count as a picture right here . You know, i got can you see that . I cant see anything . Of course not. I cant see anything. So you have to use descriptive words. Pink shoes on the desk. We have the pink shoes on the desk. Pink shoes on the desk absolutely count. Theres a thousand contribution. You didnt send me a pair but its okay. Im going to do the show like this. Its very comfortable. Should we talk about auto sales now. 21 , whats going on in september . The numbers are looking phenomenal except for vw which well talk about in a second. But why is september looking so good . Well, to be the voice of reason here, not the one that adoesnt like the celebrate great numbers, as you recall when august sales were only up 1 for us i told everybody take a deep breath. Labor day moved into september out of august on a reporting basis and september numbers would be spectacular. I think the prudent thing to do is say what was the Third Quarter . Third quarter was plus 7 . So the entry was on track to break through 17 million vehicles. Probably ending up at plus 5 or 6 . Thats a reasonable explanation. The 18. 3 selling rate is a government number thats totally irrelevant and does not properly adjust for moving the Labor Day Holiday into the month of september. So i think its an inflated number. But the fundamental fact is that its going to be one of the best auto sales year ever. And the runway looks quite good because theres 250 million cars on the roads in america with an average age of 11. 5 that hasnt budged even with the recent Sales Recovery and its going to take years to bring it down and were looking at years of very attractive low Interest Rates. Low gasoline prices and fabulous products from the manufacturers. You saw volkswagen, right . Of course we do. Whats going on with that . Did you have to take stuff off the lot . Have you had customers react negatively . Walk me through the sales experience related to the scandal going on. So we talked about the scandal. I think i was on last week. Its shocking. Its unbelievable that volkswagen has to take major steps to address it. Whats happening on the show room floor. First i told you there would be no spill over or contagion to other volkswagen brands such as aldi and porsche. Thats confirmed. Audi is up 16 . Actually the traffic in the Volkswagen Stores is quite good. Their sales are flat. So they didnt run with pace with industry but thats because all the diesel models for model year 16 are on sale stock. So if 25 of your business is on sale than the sales will be down but the customers are still in the show room. If you go back to the toyota situation, their crisis, i said at the tile, if they take all the right steps theres no permane permanent harm. So volkswagen still needs to take all the right steps. With we need answers for our customers but if they take the right steps they can get through this. Uaw saying forget it. Its not going to do the deal that we were expecting and thats a surprise because thats the union voting against its leadership. What does this mean. Well, youre absolutely right. I think its been 40 years since a union has voted against a deal that its leadership has negotiated and i think that the deal that was done was quite fair and prudent and appropriate for all parties. But this is obviously an antagonistic stance that the Union Membership wants its leadership to take and they dont like the idea that their Union President was close to him. They dont think that the Union Leadership is representing the membership. What happens next. Its unpredictable what happens next. Theyre back at the negotiating table. There may be some adjustments that leads to approval. We just dont know. As i said its been 40 years since this happened. A very fair deal was put on the table. And now its game on and theres several scenarios. They could just park the negotiations with chrysler and move on with ford or gm or try to make an adjustment. Its unpredictable at the moment but i have a high degree of the confidence at the union and chrysler that cooler heads will prevail and theyll find Common Ground to get what is a good agreement to the finish line. Yeah, he can be super tough. Super, super tough in italy. Good to see you, mike, thank you. Great to see everyone this morning. Ceo auto nation and the pink sneakers in studio. Were doing our part to keep them around for a little while. When we come back, ben lerer. His media start up got major backing from a publisher we spoke with this week. Ben is going to join us on set right after this. Im jerry bell the second. And im jerry bell the third. Im like a big bear and hes my little cub. This little guy is nonstop. Hes always hanging out with his friends. Youve got to be prepared to sit at the edge of your seat and be ready to get up. Theres no deep couch sitting. Its definitely not good for my back. This is the part i really dont like right here. doorbell whats that . A package its a swiffer wetjet. It almost feels like its moving itself. This is kind of fun. That comes from my floor . Eww this is deep couch sitting. Deep couch sitting welcome back, everybody. Days after announcing an investment, the the online lifestyle guide is spinning off the commerce site as a stand alone closing line. The ceo and founder, ben, thank you for coming in. Thanks for having me. We have not got to talk to you since the ceo announced this investment. Spilled the beans. What does it mean . What is the investment itself mean, and how does the company go from here as two Different Things . The investment is an opportunity for us to keep growing. A 54 Million Investment to be clear . Yes, it is. That money is partially from axel springer, other investors, and split between the ecommerce business and Media Business. Still a minority investor . Yeah, and axel invested into thrillist in the media side where we continue to invest in more good content. For any Media Business, youre good as the product you deliver, and so for us its going to be more video, more vertical expansion into new interest areas for our guys. Its going to be more local expansion, continuing to invest in Technology Platform and data platform, just full steam ahead on things we have been doing and really excited to have axel involved. We have to remind people not familiar with thrillist. Theres no one not familiar. You dont know our audience. Okay, fine, yeah. The reason you got into this because you wanted to be tell, and informing young men what was going on, what they need to know news wise, what they are interested in food. Yeah. I think we started locally and food focused with the idea of building a media property helping guys figuring out how to spend time and money, starting in food, and expanded slowly, but surely, in other interest areas with the idea to continue to make sure we have the same credibility in other categories that weve been able to build. Youve been selling jack threads on there, right . Almost integrated feeding into the other . Felt natural, right . Telling people what to eat and drink. Absolutely. So theyve always lived side by side to the consumer, so i dont think the idea that were splitting the business is going to be something thats going to disrupt the audience. The experience for the consumer . Not at all. That was important to us, from a business perspective, its focus. We had the business, at times, matr matrixed, and its been hard to balance the different prioritin site . Definitely more difficult to understand. Theres guys who love media and others love commerce, and there are, actually, plenty of people who are cureout about how the two interact, but in my conversations with investors, even those willing and interested in investing in both had a severe bias towards one, and i was worried when times are tough, they would not be Great Investors for the other business. Estimates devaluing what they were interested in because of what they were not interested in. It was not necessarily devaluing, but my belief was one plus one should equal three, and their belief was one plus one equals two. Which business gets the highest multiple, or are you jack dorsey . I think running both is tough. Ive been running both for a long time, really different, and square and twitter are different businesses. Im the ceo of the Media Business and chairman of the commerce business, an mark walker will be ceo of jack threads. Okay. What about the multiple issue . Media companies are showing now, the media multiples are looking nice, and commerce is not out of favor with investors, but its definitely, theres been big blowups, companies, and other ones we have to go, honestly, though, do you feel were in a bubble . The valuations you have to ask. You love bubbles. Yes, yes. I think that right now theres a lot of excitement around digital media, and some of the valuations from a multiple perspective are big. Five years from now, will all the deals, look back and say, crazy times . I think these deals in particular, buzzfeed, buzz box, these are fundamentally important, great businesses, and i think well build at thrillist. They are high now, but not crazy a few years out. Come back soon. Thank you. And save the tape so we can talk about it. Oh, geez. Coming up, the ceos of home dee moe and Toll Brothers for a special hour. And a lot more j nin just a mom. Can a business have a mind . 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 . We are 90 minutes away from data to determine whether the fed raises Interest Rates. What to expect straight ahead. A special conversation on the future of the american home. Well tackle Biggest Issues from affordability to remodelling boom, to efficiency. Covering builders to renovators, and the products that make your home run. The Toll Brothers ceo will be here, and home depots ceo is joining us for the hour. Plus, Hurricane Joaquin a category 4, approaching the east coast with 130 Miles Per Hour winds and driving rain. The latest on the storms path and potential destruction coming up. The second hour of squawk box begins right now. Live from new york where business never sleeps, this is squawk box. Welcome back, everyone. This is cnbc, first in business worldwide. Im becky quick with andrew and Michelle Carusocabrera, and joe is off today. In stocks, 90 minutes from the employment report saying the economy add ee eed 200,000, hol steady at 5. 1 . Look whats happening with the markets. You saw big gains in the morning and futures lost that through the course of the session, but you can see this morning, again, we are looking at some early indications of a big upswing in the market. The dow futures are up by 9 2 points above fair value, and s p indicated close to 10, and nasdaq 29. Among the top business stories this morning, the federal government hits a debt limit sooner than expected. In a letter to lawmakers, treasury secretary jack lew said the government may not be able to pay obligations as soon as november 5th, and credit Monitoring Firm disclosed a data breach. The theft exposed personal data of 15 Million People who applied for service with tmobile including names, addresses, birth dates, Social Security numbers as well, drivers license numbers, passports, huge, huge issue. All right. In other hacking news, a new bug discovered in googles android system. They embed malicious code in song or video that affect the device when played. The bug is known as stage fright 2. 0. Its expected to be addressed in a security update scheduled for monday. Update on the shooting at the Community College in oregon. A 26yearold gunman killed nine and wounded seven others before being shot and killed by the police. Witnesses and Authorities Say the shooter demanded to know religions before he killed them. Law enforcement sources say the gunmans connection to the college is unclear. Heres president obamas reaction in a News Conference yesterday. This is a Political Choice that we make. To allow this every couple months in america. We are responsible to those families who lose their loved ones because of our inaction. Well keep you updated on the investigation as details continue to come in. Changing gears. We are closely watching, of course, the path of the Hurricane Joaquin, category 4 in the caribbean, and heres mike seidel. Reporter the winds and tide running 25 Miles Per Hour, gusts to 40. Out on the beach here, the tide comes back in, and another high tide around noon today here in virginia beach, and the damage is very perceptible. Look at this drop off, this cliff due to beach erosion. This has doubled since yesterday with a couple more high tides combined with five days of this wind we e had last week. In the next couple days, bad news for the beaches. Coastal flood warnings from the jersey shore down to warhead city, the outer bav eer banks, delaware beaches lose sand. Winds gusting 40 Miles Per Hour through saturday night and high tides are the concern. Theres coastal flood warnings up for good measure with tides two to three feet above average. Dont forget the rain south of here in South Carolina, double digit rainfall totals. The hurricane will be offshore, this has nothing to do with the hurricane. It passes by at our latitude off the coast monday afternoon, and after that, things should begin to subside on the ocean and on these baeshs, but, again, what a visual this morning on all this sand being gone, and, you know, natural replenishment brings it back, but not this much. Back to you. Okay, thanks for that. Well keep you updated on the latest forecast throughout the morning, getting to our guest hosts on the future of housing for a moment, but while on the subject, heres an update from the ceo who is here on the hurricane preparations on the east coast. Whats going on . An awful lot of activity is taking place over the last couple days. We moved a lot of product. Its a pretty wide area right now that, you know, with the uncertainty of where this storm was going. Everything from the carolinas up through new england, shipping a lot of product. Tell me i want to know what happens behind the scenes at a place like home depot when you get a weather forecast. Do you have a weather person on staff or someone who says, the moment is comcoming, moving tru from here. How does it work . Connected with a Weather Service that we work with, do stage product. You consistently have storms on going so we learned all the years back from andrew in terms of what product moves when, and we stage the product in the dcs and with our supplier support. Distribution centers. Yes, distribution centers. We begin moving product based on where demand happens. You can warehouse a lot of the product for a long time because it can be used at any point . Correct. None is going lumber can sit. Leek its going out of style. Generators are not perishable. Its a good business. Well continue the conversation about the future of the homes, and with us for the next hour is two titans in the industry. They didnt know they signed up for two hours in Home Construction and Home Improvement. The chairman and ceo of home depot has been with the company for 18 years, taking as ceo last november. Home depot, of course, the largest Home Improvement retailer with 123 stores in the u. S. , mexico, and canada. With us, doug yearley, ceo of Toll Brothers, joined the company in 1990, ceo in 2010, selling 43,000 homes in five years. Good morning to both of you. Talk about what the future of the home will look like. I want to know, ten years out, if you could, how do you think the home is going to be different . Itll be more open. Families today want an open layout. Youll have the formal living room slowly going away, the formal dining room is slowly going away, and back of the home, which is the kitchen, and more inform mall dining area and big family room where everybody lives, opening up to outdoor living, and we do more and more homes, the back of the house is all glass, the wall literally accordians away into the wall of the home, and lots of money, lots of fun put into the backyard, even in the east where we have lots of bugs and maybe this summers shorter, we are doing more of it, maybe you have to put a screen porch in the back to allow the outdoor to come into the indoor, and then, of course, Energy Efficient is a bigger and bigger thing. In ten years, youre going too see houses that are similar because they change very slowly, but they are going to become more open, more informal and more indoor outdoor living. A broader question. You know, we 4had a lot of guess say suburbs are going away, moving into cities and suburban areas are more attached to each other, theres a lot less space. Do you believe that . Well, i think youre seeing some of that right now. Great news for home depot sour founders were smart about how to build out the footprint and well positioned in the urban environment, but you certainly are seeing, you know, younger generations move into, closer into the city with the ameniti s amenities, but i dont know we dont see that has a long term shift. I interviewed your predecessor once, fred blake, saying people in the future would not buy Lighting Fixtures anymore because you can have a wall fill of leads, make whatever lighting you wanted. Far away, but the home of future things they looked at within the possible product lines. You know, led is changing the game, and it can be integrated into a lot of products and services, and as doug mentioned, things around energy for a home Going Forward, you know, roughly average home spends 3100 a year on heating, cooling, and water. So when you think about l. E. D. As part an an Energy Efficient play within the home as well as things like basic things like insulation, you know, you can cut your cost of operation in your home by 35 . Right. Just talking suburbs because i think its important and this is what we do. Yeah . Suburbs are alive and well, on our 44th highrise or mid rise in new york and philadelphia. We have a living line thats on fire, and certainly, more and more people live in cities, but the american dream, when you settle down and your kid hits kindergarten, most people move to the burbs. Millennials are just having kids later . That is right. Delayed purchase. Mid to late 20s, they get married later, families later, and, therefore, moving later, but when they are polled, they all say that, ultimately, most of them want to raise a family in the suburbs. Because kids want a backyard. And the schools. Too much stuff with kids and a two bedroom apartment. No shift in the millennials will never buy homes . No. We see exactly the same thing doug said. The Research Indicates its just a delayed purchase. They absolutely want to buy homes, and, as a matter of fact, buy in the suburbs. Right. How do you feel, by the way, about selling an led lightbulb hat a higher price point one every 1015 years opposed lightbulbs that are replaced six months. Theres a billion light sockets in the u. S. Overall, and, you know, at the end of last year, l. E. D. Penetrated 1 . I think we got a long multiyear run on selling the first l. E. D. Into the sockets. Is there a larger shift, not just lightbulbs, but Energy Efficient products things we used to replace regularly were not going to, and what it means even just for walking in the store. Yes. Two examples, as a matter of fact, right here. So if you think about door locks, so, historically locks are replaced when something breaks or someone does a remodel. With smart door locks like this here with the product that connects to a phone, control the lock through the phone, about 65 of the purchases in this product is simply because of the new innovative technology. I think they are struggling to get a shot of what youre saying here. Sorry. So, obviously, theres a key if you want it, but this is or connects to your smart phone, and you can control it. Its end to end encrypted. So we are showing people this. This is you see this. You can change, i mean, you can basically create allowances for certain people . Correct. Right. Certain family members to open certain doors . Correct. Notifications and timers, saying a construction person is coming to your house today, give them a key or a password, if you will, use if for the day, but at enof the day, it does not work anymore . Correct. Or you can open remotely for them from the phone. I love that. Whats that cost . 240. Really . The risk, i thought about these things, but what if someone hacks into the phone and access to your house . Well, the product is encre encrypted, and think for multiple years, theres been Garage Door Openers you connects in the car, and theres Rolling Technology in terms of a code that happens, so this is the type of technology. I only say that because tmobile talking about president 15 million customers we talked about, they were encrypted, but encryption was broken. Have there been cases . Not aware at this point. You have other gadgets and gizmos, show us. Another thing to do to impact your homes cost of heating and cooling, obviously, is a raise it higher to see it. A smart thermostat like this. Yes. Its a learning thermostat that goes out and actually learns your activity, and then automatically controls your hov ac system to control your energy. Upfront cost is . 250. What could they save on an annual basis . Save 180 a year. What i like more is that in advance an hour before you get home, turn up the heat so im not walking in a cold house. Right. You know, i have to go out of town unexpectedly, do not move the temperature for four days. You do that without walking in the house . Right. Yeah. This product learns activity and adjusts. We have to break for a moment, but i want to go to the cameras. Thats the other thing that will happen, cameras in the house and what it means for privacy and other things. Our special guest stars stick around and well continue the future of the homes with a ceo of company that makes many consumer goods that fill your home. New rubbermaid ceo, michael pope, will be with us in minutes. Talking Energy Efficiency and connected smart home with an executive from reid, maker of heating and coming systems. Look at the back take a look back at the price of homes in 1995. Thats the year squawk box started. New home at that point cost over 100,000, and average rent was less than 600, and 30year Mortgage Rate was 7. 5 . Hard to even remember that. Well be right back. Welcome back, back to the conversation on the home of the future, a company that makes many product goods, the consumer goods that fill the home, from blinds to pots and pans and rubbermaid Storage Containers for everything. Lets welcome michael polk, ceo of rubbermaid, ceo in 2011, before that, holding roles at kraft, and he has 30 brands in the products sold in more than 100 countries. Welcome, michael. Great to see you. Thanks, becky. Talk about innovations, things are constantly changing with you. Sure. But at the same time, products do not look different from what is in my kitchen or what my mom had in hers. Sure. Innovation is the life blood of Companies Like ours, and working with partners, its our responsibility to bring ideas to market to expand consumers in our categories. What we show here today is progression of food storage ideas from basic containers through to clever ways to help mom help her kids bring their Food Products to school to now what were lurching next year, i call in the company an adult lunchbox to the higher end of our food storage offerings which will launch next year, product focused on food preservation. Stuff you keep in the refrigerator and does not go bad as quickly . If you buy strawberries, blueberrie blueberries, leafy lettuce, bring it home, 25 of the product is thrown out. Yeah, we throw away 40 of the food we buy. Amazing amount of waste where people are starving, and in this country we do that, but its true in the developed world more broadly. This preserves fruits 80 longer than if left in original containers. Theres a Membrane Technology we have in the top of the lid thats dishwasher safe, never replace it, moderates the flow of oxygen and c02 in and out of the container, which is what causes vegetables and fruit to spoil. Sounds like a Nano Technology development. Its a technology that we have the exclusive programming, and what it shows you to do is keep produce vegetables longer so you do not throw them out, incredible Value Proposition. Food storage as conceived in basic container mode to produce preservation, just a much higher Value Proposition for consumers so the same basic architecture of the product now, you know, creates way more value than a simple container. Mike, what do you see in terms of the consumer right now . Were trying to feel the economy, trying to understand whats happening in america and beyond. How do you feel the consumer is just in terms of willingness to spend on new items . We talked about this off prior to the show, and recoverys is recovering faster than folks in the middle class and even folks below, and that ask an issue, but weve seen with gasoline prices down theres a more consistent improvement, steady consistent improvement. Directly tied to . Lower prices at gas pumps . Energy and gas, and so, you know, we see some movement here, which is encouraging. The reality is, though, in a company like ours, ideas trump the macros. You cant wait for the tail wind in a category to grow, but bring ideas that captivate consumers interest, and in this tough environment, things most successful for us are ideas like the work were doing on produce preservation to create a tangible, claimable function. Youre in a hundred Different Countries . Right. Emerging markets are walloped. Are you seeing that with sales . I just got back from china yesterday, Interesting Times there. We have a big business in latin america thats growing very nicely. Still . Even in strong double digit growth, some related to transactions, we have a price to maintain margins, but good underlying volume growth, and its about ideas, always is and has been about ideas. Well, poorer countries are interested in produce savers, right, big value added . Its a real Value Proposition. Its an expensive proposition, though. Okay. Well have to figure a design to make it more accessible in the markets. Interesting. The macros are more favorable despite the current woes were in in the emerging markets for Companies Like us because you got with economic developments, social development, people moving from poverty into the middle class, and as it happens, theres a rise of consumerism, which, for our brands, you know, puts them in a strong position for growth. Michael, thank you for coming in today. Sure, great to be here. Okay. Coming up, when we return, conversation on the future of housing will continue, and well tackle Energy Efficiency and connected smart home next with the president and coo of remanufacturing of heating and cooling systems. Were back with that and a lot more in just a moment. Time now for todays aflac trivia question. Who is the only u. S. Athlete to be drafted into four professional leagues . The answer when cnbcs squawk box continues. Aflaaac. Aaaaflaaaac. Someones sandbagging. Id be tired too. He paid my claim in one day when i got hurt. One day . Serious hustle. Serious duck. In just one day, we process, approve and pay. One day pay, only from aflac. Ah they speak louder. We like that. Not just because were doers. Because were changing. Big things. Small things. Spur of the moment things. Changes youll notice. Wherever you are in the world. Sheraton. 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. Go to ziprecruiter. Com and post your job to over one hundred of the webs leading job boards with a single click. Then simply select the best candidates from one easy to review list. And now you can use zip recruiter for free. Go to ziprecruiter. Com. Now the answer to todays aflac trivia question. Who was the only u. S. Athlete to be drafted into four professional leagues . The answer . Dave winfield. Happy birthday, 20 years, squawk box. Happy 20th an verse ri, and i look forward to being with you on your 40th. Happy birthday to you and to this wonderful show. Happy birthday, squawk box, youre only 20. Enjoy the next 80 years. Kid hey dad, who was that man . Dad hes our broker. He helps looks after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at Charles Schwab this bale of hay cannot be controlled. When a wildfire raged through elkhorn ranch, the sudden loss of pasture became a serious problem for a family business. Faced with horses that needed feeding and a texas drought that sent hay prices soaring, the owners had to act fast. Thankfully, mary miller banks with chase for business. And with greater financial clarity and a relationship built for the unexpected, she could control her cash flow, and keep the ranch running. Chase for business. So you can own it. Welcome back here, revenue drop in 33 , if you can believe this, since september, as wealthy gamblers stayed away from the hub, and u. S. Government testing, underestimated how much fuel cars will burn, and suggests that the problem has gotten worse, so theres the vw issue, but this is a broader one. In corporate news, samsung reportedly uses the mobile processors for galaxy smart phones impacting that stock today. A buzz word talking housing for the 21st century, smart homes, whats that means, and heres the coo, and the manufacturing of heating systems, cooling systems, water heaters, pool heaters, and more, 65 of home Energy Consumption happens in their category. Here you are. Thanks for having me. The notion of the future home is Energy Efficient . Interesting being at the front line when the products are not top of mind for most consumers, so we have to create ways to make it compelling, and our Consumer Research really has shown theres two areas of interest. One is energy savings, topic that comes up a lot, and our smart wifi connected water heaters and air conditioners can save a consumer up to 30 annually on their energy bills, and, in fact, the water heater will pay for itself over its lifetime in energy savings. Is it connected to the wifi instrumental to that, or they are better, Energy Efficiency in general . It is. Im speaking specifically about the connected part of it, so a homeowner today, a homeowner needs some level of interaction with it to inform that im leaving the home for a week and i want you to intelligently set back the thermostat, set back my water heater. The futures very different, though. All of that will be done through intelligence, knowing where you are, knowing how much traffic is between you and where you are, and knowing that theres a cold front coming through in an hour or so. I dont have to tell it anymore . Its going to know . Exactly. The hacking question brought up last time. This is wonderful. Its great having the Pervasive Technology to make life easier, but i feel it makes us as a rule near vulnerable too. Theres always that risk. We take privacy and take protecting peoples information with the utmost care and use state of the art technology, whatevers available today, online banking, same encryption for that, but the risk is there. We have to stay ahead of it. Run me through the menial process of the consumer vupdatig their hvac. Do they wait until it breaks down or is there a message if its not old, Energy Efficiency now is better, do the upgrade. Walk me through that. Its a mix. This are people who proactively replease ba replace, you know, theres a sector of the market interested in the cool factor and savings. Air conditioner busts in the heat wave. People dont go without a water heater very long. Because cold showers are awful. They are terrible, yes. So our connected smart water heater has the aid and abbility monitor for water where it is where its not supposed to be. That means end of life or other situation alerts the homeowner similar to an amber alert on the phone, contacts your plumber, its time for a new water heater. Go to the home depot and buy a new one. Rather than waiting for the spots in the ceiling to Say Something bad is happening, this is advanced notice. Yes. What consumer demand do you get for these . Meets your demand or do they need to her more about, get a feel for the comfort of it . Theres growing demand that we see every single day for this innovative smart technology. You know, as chris was saying, the damage from water in a home horrific. 20,000 plus in a home if it happens, and this technology has the ability to detect leaks, notified you, and you can jump on the situation, thats a huge benefit. Who does the monitoring . Is that a service you pay for on top of the actual product itself . Is that built into the price . Who are the companies behind the scenes monitoring the fact that my phone shows that im on this corner right now, and that i am on my way i think im headed home, and the traffic is this, and they are going to take that into account, and add in i mean, theres multiple data bases and things that have to work in concert. Who is behind the scenes doing that technology . Right. Today, its rheem. No subscription fee . No fee. Its part of the product. In the future, as things get more complex, gauging Weather Services, engaging, you know, a gps where you are, those are going to require additional partners to come in, so, really, the futures what we get excited about. Today, its a response to something thats happened. In the future, its prognostics. Its saying, hey, this water heaters going to leak in 30 days, therefore, its time. From your perspective, looking at this, do people want do you find people want this stuff or want Granite Counter tops . This is where were headed. Its fascinating. I think whats going on with many consumers is education is tough. They are concerned about this because technology is changing quickly. Its like phones. Do i buy a phone now when theres a new one coming out in a month, and, because its behind the walls, we find when we sell a home, send buyers to the Design Studio where they can upgrade hundreds of thousands of dollars of Kitchen Cabinets and Granite Counter tops and flooring, some say to us, you know, that high efficiency furnace or water heater you gave us, any chance to get the standard and get the newest, and its a learning process. Many understand it, absolutely moving to hightech houses, but i think, for us, its been slow. Switch gears. When i see the products, i was just in cuba, and, boy, do they use, like boy, i got to tell you, they dont dream of apple in cuba. They dont dream of starbucks. They dream of home depot. You have no idea the obsession. You go to havana, and its like people are living there, have you thought about it at all . Explored it . Its an area were watching carefully. We know at some point in time when the opportunity is right, theres opportunity for the home depot to be there. We need to make sure that, you know, we believe that before we go in there, it needs to benefit the people of cuba, and there needs to be a rule of law. Yeah, and the cuban government, by the way, has not done any deals with any American Companies at this point despite the openings. Your miami stores, i have to believe are the supply chain for havana. When i go to the airport, all the stuff is in there, people do renovations with the help of their lifestyle family. Right. We see exports from south florida to the whole caribbean. As a result. Yeah, yeah, amazing. This could take off like crazy down there, all your stuff. Well be right there with home depot. [ laughter ] all right. Appreciate that. Cool, cant wait. Cool. Thanks, guys. Appreciate it. Good to have you on. Coming up, when we return, movers ahead of opening bell, stocks to watch, and a programming note, squawk box on monday, believe it, former fed chairman, ben bernanke, is joining us for a full hour on monday at 8 00 a. M. Eastern time. Were back in a moment. Welcome back this morning. Futures now ahead of the jobs numbers in just about 15 minutes, and this could change in a big way. Dow could open now at 81 points higher, and nasdaq would open 27 points higher, and s p 500 up over 9 points. Meantime, stocks to watch, dunkin brand upgraded from out perform from under perform from csla after dunkins stock saw the biggest one day drop ever yesterday. The upgrade cited valuation after the big selloff noting that the donut change has plenty of cash and opportunity for growth. There is mondalease, the grocery business in europe could fetch 3 billion in a sale. When people quote how much cash they have, and the other day, i was, like, woah, the market has totally changed, not to focus on dunkin donuts, but you should buy johnson and johnson because they have cash. Thats the market were in, people look at cash to say, okay, how safe is everything . Bringing questions of liquidity into play . Right, right, that discussion we had earlier, you know, the tide changed in sentiment. That stunned me to hear that commentary thrown out. A big decline yesterday, but they jumped to it right away. When we come back this morning, a read on the economy and health of the consumer from the ceos of home depot and Toll Brothers, talking Housing Market, and how things are going. Plus, a programming note for you, cnbc world, a special presentation of a Panel Moderated at the clinton global initiative. Power summit airs starting tomorrow at 9 00 a. M. Eastern. [container door opening] what makes it an suv is what you can get into it. [container door closing] what makes it an nx is what you can get out of it. Introducing the firstever lexus nx turbo and hybrid. Once you go beyond utility, theres no going back. Welcome back, everybody, before we wrap up this conversation for the next 20 years, we want to turn to our ceos and get a pulse check on the health of the American Consumer and economy right now. Youre leaving in minutes, fred, so i want to start with you. What do you see right now . We have all the concerns about whats happening globally and how we import some of those economic woes internally. Have you seen that show up at all here . Look at our performance over the first half of the year, we had a pretty Strong Performance and definitely believe that were gaining a tail wind from the housing environment that helps our business in terms of home value appreciation, and housing turnover. Those are two key drivers of projects within our business, and both of those have been a little bit stronger than how we thought about it as we planned 2015. Where do you think you would be versus where you are . Turnovers arent 5 or so. We thought it would be lower than that. Home value appreciation in the mid 4 to 5 on average, thought it would be a little slower, 23 this year. Still 9 below the peak, by the way, and home values, so, you know, its been its been a good tail wind for our business in terms of generating new projects and help and grow our probusiness. Mark, talk about the home market overall, looking at Interest Rates. We pointed out 20 years ago, Interest Rates were north of 7. 6 , and today its 3. 44 , and do you worry about raising rates . We dont as long as its done intelligently and slowly. The market can handle the 4. 5 . Ill take 4. 5 rate and a better economy any day. The market is good. Were in recovery from 20072011, the worst housing depression ever seen. The country produces 1. 5 million homes a year for decades just to handle demand. From 200711, 500 to 700,000 homes produced, 5 Million People did not buy that normally would buy. Today, were at 1. 2 million, were not back to the 1. 5 million. We have not tapped pent up demand. Its building. Four years in, i would think the Housing Market would be further along. You. What i think it means is theres a longer, slower recovery. The markets are good. With Interest Rates where they are, with the economy improving, you would and with the pent up demand, you know, still building from the horrible years, youd think it was further along, and i think what were getting there, but the good news is i think its going to be longer. If we could focus on new york city just as an example of input costs, when we look at all the housing thats getting built here, its all high end, and its my understanding its because its the only option you have because its so expensive to build, is that a correct estimate of why its the citys so focused on getting low end housing and middle income housing, but it does not seem like its economically profitable at this point. Were going great in new york. Theres chatter that the high end has slowed down. I think thats an inventory issue. Theres just more nor more on the market today that uber rich, the trophy buildings of new york with the 5 million to 50 million units, but we have a few of those, but most of what we do is in the 3 2 million to 3 million range, and those are strong. Construction costs are more in new york when you go high. Its about five times what it costs to build a house in the suburbs, but when you can sell for 2,000 to 3,000 a foot, it works out. Numbers work out. New york is a great market for us and excited about the future here. I have to ask you, we have talked a lot about the changing Consumer Spending habits out there because when we saw gas prices come down, we expected that you would see a lot of the retailers like a macys or anyone selling apparel gets a bump from that, that consumers take and spend the money there. Its not shown up as we had expected. Part is because consumers do other things like spending on eating out. What have you seen in terms of the boost from lower gas prices . Does it pay off when people spend on their home . Becky, weve never been able to draw a correlation between gas prices and sales. Weve tried to make the correlation, but we cant. You have to believe that consumers with more money in their pocket overall, its a good thing for the economy. But theres no measurable gap that says six months after gas prices jumped, we saw it showing up here . No. Why is it so hard to track . Its difficult to make a correlation to, hey, i saved 400 on gas and now spent that on x. Its pretty tough to make that correlation. We have a jobs report coming up in just over half hour, and thats going to tell us a little bit about how americans are fairing when it comes to the job market. I assume thats probably the most important issue in terms of sales for whether people feel good enough to make Major Investments in the home . Yeah, i mean, certainly they need to feel good about their job and income, and then, obviously, if youre going to make an investment in the home, you want to know that your home is appreciating in value. When its not, that becomes an expense. Candidly, in the economic down turn, we lost 13 billion in top line sales. Wow. We got it back and then some, but thats, you know, all the sudden, that counter top is an expense versus investment when they dont feel good about their income or feel good about their home value appreciation. Do you feel any sense just based on the what youre experiencing in the stores . What the jobs picture sliis likn the United States . I mean, i dont know that i can correlate that to how we feel in the stores performances, if you will, but, clearly, you know, were seeing our probusiness recover, so thats larger projects, our big ticket sales have been strong, so i think people are feeling better about the Overall Economic situation in their stability within their jobs, and i think thats a positive. Whats the Biggest Issue youre facing if youre thinking the next 20 years, thinking about how much a corporation changes over that time period. It feels like the rate of change has gotten much faster, management had to get smarter. What are you thinking of . Can you see 20 years down . A lot of change will happen in that period of time. Yeah, 20 years is a long way out, but when you think about change, it is the speed of change, and its the speed of change across multiple things. The life cycle shortened dramatically on product. What used to be 36plus month is now 18 month range, and things are coming faster. Wow. You have to keep up with that. Its the speed of change relating to the competitive environment with the digital world. You know, for us, our customers are engaging in what we call interconnected retail. Many of our product categories start online and finish in store. Is that a testing ground . You see if people like it before you guarantee its shelf space . We do do some testing on that before we dedicate shelf space, but in many cases, customers go online to research the product before they come shop in the store. You know, last year, for example, we grew our business roughly 4. 4 billion, and a billion of that came through digital assets, and 40 of the orders were picked up in the store. Order online and then pick it up. Exactly. Thats a great opportunity to sell more when they come in as well. Does that increase costs, though . Theres a multichannel approach, but there are additional costs to it. So if you think about it, theres tradeoffs. So you might have more costs as it relates to we just opened three new brand new direct fulfillment dcs, for example, thats an add cost, but at the same time, theres an offset in terms of labor if the customers shopping online, so we actually look at it as a blended approach. The customers merging the channels for us in this, what we call interconnected retail, and so were actually looking at it as one total shopping experience. How is the customer experiencing one home depot . Wow. Well, craig, thank you very much for joining us today and being here. Its been a pleasure having you for the hour. We cant thank you enough for being here. Thank you very much for the opportunity. Come on back. Appreciate it. Doug yearley is staying with us and more to talk about as well. Coming up, the september payroll report due in a half hour with big implications for the feds rate hike timing. Time predictions and instant reaction coming up from our panel of experts. U. S. Equity futures up this hour are positive ahead of the number. Oh, they can move around a lot, though. Well be right back. September jobs report is 30 minutes away. A Critical Data point for the markets and the fed. Will the number tip the feds hands to hike rates. What happens to your money, and what impact will it have on the race to the white house . A huge lineup is standing buy to break it down, right away. Storm watch, the entire east coast on alert for Hurricane Joaquin, historic life threatening flooding it on the way as the hurricane churns in the atlantic. We have the path and the latest straight ahead. Crisis in the middle east, russia ramping up in syria, how does the u. S. Respond and what does that mean for the markets . That and so much more as the final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Welcome back here on cnbc, first in business worldwide, im andrew with becky quick and Michelle Carusocabrera in for joe this morning. We are 30 minutes from the jobs report, 90 minutes from the opening bell on wall street. Look what investors think happens, dow opening 90 points higher, and s p opening 10 points higher, and nasdaq 30 points higher. Of course, that could just in a half hour when we get the jobs numbers and people react to it. In europe right now, we have green arrows across the board. Cac up close to 2 , dax up 1. 5 after whats been a roller coaster ride in the last couple weeks. Michelle has other headlines. Heres the stories of today. Polled forecasters say the economy likely added 200,000 jobs last month, and the Unemployment Rate is seen Holding Steady at 1. 35 . More expectations on the round table discussion in a minute here. Credit Monitoring Firm experion disclosed a data breach, expo exposing data of 15 Million People who applied for service with tmobile. In washington, jack lew says the government hits the legal debt limit and unable to borrow money around november 5th, earlier than expected. In a letter to congressional leaders, lew calls on lawmakers to take action to raise the limit. A few stocks on the move this morning. Chip maker pmc serging in premarket trading. Accord to bloomberg, they hired a Financial Adviser to selling the company. The report says pmc hopes to be bought by another chip Company Rather than a private equity firm. Another firm micron beat demand and expects to stabilize in the next few months and improve in the year 016. The september jobs report is ahead, and you are looking at a live shot outside of the Labor Department in washington, d. C. That is compelling. A great live shot. We are 28 minutes and 40 seconds away right now. Hear predictions in a bit, but the state of the economy first, fed policy, and much more. Diane, chief economist at mesarow, and steven ratner, chairman of willard adviser and adviser to president obama, and guest host with us as well, doug yearley, the ceo of Toll Brothers. Diane, its been a while. Catch us up with what you think it happening right now and what were likely to hear this morning. Looking for 2220,000, but do we get revisions for august . The private sector payrolls were weak in august, in part, because they ended the survey a day early in compliance in terms of answering the survey was way down. We do know august is a noisy month so we want to see jobs recoop and watching extremely closely what happens to wages. If wages are not revised down from last month and theres a a pickup this month on a year over year basis, well start to see a much awaited acceleration in wages, average hourly earning, something we are watching closely. Lets go broader, though, theres all these questions about whats happening with the u. S. Economy, people who have come in, experts said, look, all of the numbers are slowing down over the last couple months. Is that the sense you get, were in a slowing momentum economy or Something Else at stake . Well, certainly, the Third Quarter looks like its coming in less than 2 because of absolutely horrific trade data, exports declines for the First Time Since 2009, the recession. Thats showing up in the manufacturing data as well, scene lower oil prices, as good as they are for consumers in terms of creating discretionary income, they are not good for producers, and cash strapped producers see a line of credit expire this fall. Were worried about that. We do think on net that the consumer and domestic demand is enough and now has enough momentum to propel us through the head winds were seeing. That said, head winds are coming from abroad, dampening the forecast not only in the Third Quarter, but Going Forward. Not enough to stop the fed from lifting off in the next several months, but it could certainly slow down the trajectory of what the fed expecting to already be, rate hikes Going Forward. Kevin, what do you think of that . We had a host of opinions here. Some think octobers likely with an Emergency Press conference, and others dont know how to get there based on the last couple months. The fact the economy is getting weaker. Back in the discussion in august, i started pointing to china, developing markets as key sources of weakness, and back then, i said, however bad you think china is, its worse than that. Its worse than however bad you think it is now. With that, theres a strong dollar, pressure on exports, and a lot of anxiety about whether, you know, the imf said there could be defaults in developing countries. You know, thats why the fed did not move. Theres all this international stuff that looks like another financial crisis, and going into that, and lifting rates in the u. S. To make the dollar stronger is something they are very afraid to do, and so its kind of funny, i think, if you look at yelp saying, look, i expect to move this year, but the futures market did not believe her. So is that transparency . If i say im going to do something and you dont believe me, am i transparent . I think not. Depends on well see what the next action is, but, steve, do you think they missed the boat in terms of when they could raise rates . Do i think they missed the boat . Yeah. I dont think so. They did the right thing not raising rates. People think it should have been done six months ago. Some think two years augu s t they are wrong. The economy is obviously weak, no reason to raise rates. Wage inflations muted. Consumer Price Inflation is nonexist end. Theres no case to raise rates in october. Theres almost no case maybe not a case to raise rates, but 0 Interest Rates, is there a case for 0 Interest Rates with unemployment at the levels they are at . Unemployment is low, but we have low Labor Force Participation, we dont know how many come back to the labor force when and if it tightens up. Theres no significant wage increases with two effects. One, the economy grows slowly because you dont have the consumer demand, and, secondly, the whole point of the exercise, i thought, was to create Wage Inflation so the worker gets a pay increase for the first time in many years. People question the effectiveness of the policies at this point, whether they were actually doing anything, and, again, zero Interest Rates suggest that were in an emergency situation. The only policy we have because the other policy that many people would advocate, of course, is using fiscal policy, whether its infrastructure, whether its other forms of stimulus, but thats not going to happen because nothing it happening in washington. This is the only policy we have. Theres an argument to be made the fed allowed nothing to happen in washington by keeping rates where they are, right . No. I have to step in a little bit because the Federal Reserves job is not to discipline washington one way or the other. Their job is to look at the mandates they have, everything from inflation, which they are failing on, the unemployment and employment situation, which we can debate, and i think there is a legitimate debate whether here at full employment or not. I dont agree with the fed. Janet yellen sees it to move slowly on Interest Rates, the idea we could overshoot on unemployment, let it go low eric and raise Living Standards out there like we saw in the 1990s. Thats something that missed in the speech, a lot of people did not Pay Attention to. The heart and humility shown as well, aleving the escape hatch, yeah, raise rates in 2015, i want to get there, but if the world changes, and the forecasts are not great, and all the rigor shown understanding inflation, it can be wrong. That was a a huge escape hatch, and thats what markets are reacting to. The larger picture of the feds job is not to discipline congress, but congress has to do their job, and the fed has a job within the mandate and law, they are doing it. Kevin, we focus on the overnight rate that the long rate does not move, right . When people go to buy a house, the Mortgage Rate is based on what the temperatun year yield doing, and that yield is barely budging. I dont know if they do anything on the short end, that moves, like the lower. You want to be long ten if you below what i say about developing markets. Thats a flight to safety. That was Larry Summers point when he was on. I have to say, though, that we have to move towards policy normalization. People here that agree with that, and if you set prices, like, all the way through the yield curve, like rent control in new york Housing Markets, theres a lot of effects, and so by pushing zero Interest Rate policy out far, and in the press conference, are Interest Rates 0 forever, and i dont expect that, but, you know, it could happen, and i thought that was a very, very interesting moment. I mean, theres japan. Right . The if i were the fed, what i would have done is lifted rates ten basis points, said that were close to full employment. Were missing inflation target low because of the decline in Energy Prices that abated, and we have to return to normal with policy a little bit, and the point is that if you dont, the imbalance, like, all the massive issue of dollar for yield, all that stuff is sign of rent control having negative effects, and marty wrote a piece in the wall street journal, we have to slowly and gradually move, but markets would have celebrated if she said ten basis points, near full employment, Energy Prices are below argument, but thats what do you make of the market dipping last time . The last time when they . When they did not raise. Opted not to. Markets normally cheer this. I understand this. The market was spooked by some of the comments. The market was spooked by the comments of head winds and europe and and concern if they are le t legitima legitimate. And the concern, yes, that theyre legitimate. The market has a ying and yang about the market. They cheer bullish sentiment, but in this case, it was the opposite. I dont disagree with kevin. We have to move to normalization. Thats an odd place to be at the 0 bound for so long. I just simply dont see the case right this minute to do it, and, by the way, the markets as you know, at best thinks its a 50 50 shot for the december at the moment. Youre the person at the table with the best idea for job creation, what it actually means here. What do you think the job markets doing right now just from your perspective as the ceo of Toll Brothers . I think its fair on in our business, you know, labor costs are going up because, you know, building more houses in the last few years, and so many workers left housing, left home building, that in certain markets, its been a crunch, scene we are seeing some wage pressure, but that that is not an indication of the overall economy. We build expensive homes. We focus on the college grad, the up employment rate of the college grad is half the Unemployment Rate of the country, but overall, as i said in the earlier hour, i think the Housing Market is recovering slowly. I think the fed is very sensitive to housing and how important housing is to the overall economy. It was june of 13 when rates were up by over 1 percentage point in three weeks, and that shocked our buyers. Even though a 3. 5 mortgage went to 4. 5, it happened so quickly and for external reasons and not because of an improving economy, and i think the fed is very sensitive to what happened, and i think they are going to be very cautious, but employment is, you know, job growth is very important to our business overall, and, you know, we keep a close eye on it, but were in a very local business. What were doing in Southern California or new york city is different than whats going on in houston. What you said, though, the 3 prepondera to 4 . Did they stop buying . What happened was the Housing Market just recovered, all builders had significant Pricing Power through the spring of 13, so we raised our price, and then on top of that, a rate went up one percentage point very quickly for, again, external reasons. Did not have Pricing Power after that. It was a combination of prices in the spring and movein rate. Marginal buyers fall off. If you are on the edge, the costs went up dramatically to purchase a house. And it was early in the recovery, not a lot of confidence out there, so it took a couple tipping points, to have people, you know, hide. Are we early in the recovery . Feel more on firm footing at this point . Four years in, but slower than expected. Fourth or fifth inning. Thats my question, actually. We have a bunch of economists at aei that study housing, and when janet yellen said housing is an area of concern in the most recent statement, my housing guys were, like, no. I look at the Housing Market right now, and it looks the best seen since 06 or Something Like that, so they view the Housing Market as strength. Who better than you to weigh in on this. Who is right . Most markets are not back to 06 pricing. A few got over the number, but, you know, were recovering slowly. The Housing Market is healthy. Construction activity . How are you seeing it in the fall in. The Housing Market is healthy, but u four years in recovery coming off the housing depression of 0711, i thought it would be better, and given homes are affordable today compare to where they were. Well have a longer recovery. That gets sinto a really important issue. I know immigration is important in the Single Family construction industry, and weve not had workers, but thats interesting is an improvement in the quality of College Educated jobs, picking up, not just quality but quantity, but thats helping out the higher end and First Time Buyers coming back a bit, but we have lost, we have not gotten back manufacturing workers, which were not likely to soon, which were higher wage jobs, and we have not gotten back construction workers. You hire in construction, wage pressures there, but, you know, that interesting duality of it not being broader based. I wonder what extent do you see immigration as a hurdle for the Housing Market Going Forward . Well discuss it after the break. Mark has to leave, doug, thank you for being with us, and we appreciate the time. Well get thoughts off camera for dianes question. Thanks for having me. Thanksing for being here. With the use of wind power expected to double by 2020, they are looking for technicians and how wind could power the next area of job growth, and, later, reaction to the jobs data from Peter Boockvar joining us. Check out the futures ahead of this hour ahead of the jobs numbers. Rld has gotten you far, but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. [during sleep trains the triple choice sale. Big for a limited time, you can choose up to 48 months interestfree financing on a huge selection of tempurpedic models. Or choose to save 300 on beautyrest and posturepedic mattress sets. You can even choose 300 in free gifts with sleep trains most popular Stearns Foster mattresses. The triple choice sale on now at sleep train. Sleep train your ticket to a better nights sleep job growth in december seen continuing steady, but on this jobs friday, one field where jobs growth is forecast to be well above average for the next seven years. Mary thompson is joining us now from sweetwater texas with the latest installment of, where the jobs are. Mary . Good morning, michelle. Were at tricky track wind farm, 300 miles west of dallas. There are 161 turbines on this property, and in nolan county, home to sweetwater, theres over 1300. Now, for the industry that repains and maintains turbines, that means steady business and steady demand for the wind technicians to repair, install, and service these turbines. Its a very Specialized Service we provide, and theres just not many of the folks out there, and so if they are looking, were hiring. Ron widup is the ceo, expa expanding his work force 1020 , four new wind technicians, a number adding each year for the foreseeable future. Hes not alone. The bureau of labor statistics estimates this market is growing 24 from 20122022, off a small baz of 3200 jobs, but 800 new hires will be well paid. Youre coming in as an entry level job, 45,000 a year, and then theres an overtime element, and so you can very quickly get up to 60 80,000 a year, and in a couple years, get up to six figures pretty quickly in this field. Reporter driving the growth, growth in wind generated electricity. The American Wind Energy Association Says amount of wind generated electricity grew 154 from 2008 to 2012. While wind is the fifth largest source of electricity in the u. S. , it accounts for 4. 4 of the total, a number seen increasing in the next couple years because of federal mandates and costs of producing the electricity, cut in half in about the last five years. The Investment Bank estimates this even without the federal subsidies that have sustained the industry for sloong, wind energy is almost as cheap to produce as coal and natural gas generated electricity. Back to you. Mary, thank you. Beautiful shot. Looks like gone with the wind, well speak to you again in a bit. We have a question that diane asked the ceo of toll brother, and doug gave us a response in the commercial break. Diane, we cant do it justice. Just ask again. He agreed to stick around. Thank you, doug, i appreciate it. You mentioned losing construction workers because of the weakness in housing, and i wonder the role of immigration in terms of shortages and how it plays out going bard . Immigrations really an important part of the business. You know, construction jobs, historically, have been, in many cases, filled by immigrants. I walk our communities and its a bit of the United Nations out there in terms of who is working on these communities. Our kids in america today, unfortunately, are just not interested in a lot of these jobs, whether its hanging dry wall or pounding nails or landscaping or whatever it is, so, you know, were very sensitive to the immigration, the issues surrounding the future of this country when it comes to policy, and i think one of the reasons weve had labor shortages in certain parts of the market and the country is because of some uncertainty on immigration policy and some roadblocks out there now. Doug, thank you very much for staying here today, its a pleasure to see you and hope to see you soon. Thanks for having me. Okay. Coming up, final predictions from the panel of experts, and dont miss us monday because we got former fed chairman ben bernanke joining us for an hour in a cnbc exclusive that all starts monday morning at 8 00 a. M. Eastern. Youre not going to. To miss it. Back in a moment with the jobs numbers. They come into this iworld ugly and messy. Ideas are frightening because they threaten what is known. They are the natural born enemy of the way things are. Yes, ideas are scary, and messy and fragile. But under the proper care, they become something beautiful. Welcome back, turning back to the pam of experts for final predictions. Diane, whats your guess . 220,000, 215 private, and 5. 1 on Unemployment Rate. Since you mentioned august last time, whats your number for what happens there . You know, were looking for a net over the next couple months to get 50,000 back in august. Thatll put august back well over the 200,000 mark. Okay. Kevin . Yeah, i think the economy is trajecting down, jobs up, and the two have to connect. Its not good news for gdp, bad for jobs, so im at 185. 185. Doing prices right rules today . No matter the number. Im confused of the cute photo we had of diane. Oh, those are avatars. You gave it away. Talk numbers first. Im going to take the middle, around 200,000. I agree with kevin, the economy is slowing and jobs come with it, but ill do 200,000. Unemployment number . 5. 1. 5. 1, okay. Lets go to rick. Rickster . Reporter 253,000. Oh . Reporter the economy is slowing as well, but i think history provides us with a lot of examples. Job creation in this environment may look optimistic, but it might not necessarily translate into really what counts the most, of course, growth via productivity which are both lacking. 253, me reverting to last months 173. Laughing, rick, because of the avatar. You look powerful in it. Reporter oh, cool, cool. He is powerful. Mr. Liesman . 187 on the private sector via the model in the 10,000 just ballpark guess on government with an interesting number of what John Williams from San Francisco says 200 to 250 is normal for this economy. That makes him happy. We should have the discussion about what is normal. I like that. Thats the Green Lantern . Okay. So you guys, getting out of this, because we got to get to commercial. When we return, the number of the morning, the september jobs report as we head to break. Take a look. U. S. Equity futures, dow looks to open 102 points higher, but that could change in minutes. 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. Here we go, folks, a few seconds away from the september employment report, waiting for the number as well as the fed. Hampton is outside the Labor Department. 142,000. September nonforeign payrolls increased by just 142,000 jobs. The Unemployment Rate is 5 preponderate 1 , average Hourly Earnings flat on percentage basis. They were down by 1 cent in september versus 9 cents in august. Way below the Consensus Forecast for 200,000 job gains. Private sector added 118,000 jobs. Major revisions in july and august. August was revised downward from 173 originally to 136, and july down 223, and decrease of 59,000 jobs. Fewer jobs reported over the last two months than previously reported. September gains, health care, plus 34,000, professional and Business Services up 31,000, and retail trade adding 24,000 jobs. The Labor Force Participation rate dropped to 62. 4 . Lowest since october 77. Mining sector down 10,000. Manufacturing off by 9,000. Wholesale trade down by 4,000. The average workweek actually declined by a tenth of an hour to 34. 5. The socalled real Unemployment Rate is actually at 10 . The only bright spot of any kind, if you will, thats the lowest its been since may of 2008. All in all, disappointing report on total number of jobs added in september. Back to you. Wow, hampton, thank you very much. More from our panel of experts, and, steve, you said theres a chance to raise rates in october. Does this change your mind . It does, not entirely, but its something to consider. Its a pause and concern about something worse going on here. Especially this is the one off numbers of and see revisions in july and august. Thats the underpinning of the logic here, expecting august to be revised higher, and august is a number year after year, lower as first reported, revised higher, and now that its been revised down substantially here, you know, some 40 or so thousand jobs revised down in july, and weakness in the private sector, im looking across here, the mining numbers are significant. Theres a gain in construction. We talked to doug from Toll Brothers there, talking about it is a robust hiring sector right now, but, really, you got to remember the government sector up 24,000. We have to point out the Market Reaction has been swift. Youre looking at many of these charts that have been showing place, but futures were up 100 before the report, and they immediately gave it back, down 76 points below fair value. This is a situation, rick, where the market did not like it, and they, like even less the economy is weaker than we think, correct . I think its all of that, and i think personally the feds toxic at this point. They miss many windows to normalize rates. Markets are confused. I think big hedge funds institutions, banks, small retailers are a little bit upset of the fed passing them. If i was cynical, if joe was here today, i would say how convenient to get a weak number after weak number with weak revisions to a fed, who in my opinion, absolutely does not want to tighten, but knows it needs to. This takes so much of the pressure away. This vicinity kated let me finish, and dispute it all, but in the end, in the end, they missed the opportunity, and now this makes me a lot more nervous about the economy. Were not creating great jobs, but we are creating jobs, more than i would have thought a couple years ago, but it looks like all that is changing. You hear that . Thats the sound of joyous calls being purchased as yields move 11 basis points lower. They move dramatically lower all along the curve, but, really, it was the short end with the swiftest response, and now watch the long end play catchup. I want to point out to those driving now, the ten year yield up by 2 , not much, but now 1. 9 had 4 . That was a big move. If there was a chart, youd see a plummet there. There it is. I have to ask the question of the table here. Does this not vindicate the feds decision not to raise . Totally defends the decision. No, it makes them look like they missed a chance let steve finish. All right. Vindicates the decision not to raise and raises questions whether the fed should race in december. Theres more data between now and then and well see what it looks like, but when you are in an economy thats this soft, where theres, obviously, below trend, below expectation job growth, no increase in wage, i think the fed should wait, as Larry Summers would famously say, until you see the whites of some eyes. You know, it was a few months ago where people raised the possibility now, not raising at all this year, no, this is what fisher said. Well, possible, its not going to happen. Probably not happening. Okay. If its not going to happen, though, should the futures be where they are . Bad news, or no one is taking it as bad news. I know, but if they are not going to raise, does the market think its good news . They are not raising because they are worried about the economy. At the end of the day come on. The gdp numbers are not just below 2, but closer to 1. The jobs report like this, people start to think, geez, this could be a negative quarter. This im going on record as being a guy who not ready to im not ready to write off the economy yet. I want to point out, we sold 18 million cars in a Record Number of good point. In a big number. And 13 million iphones. All the consumption numbers are positive side, theres two big drags in the economy. Theres a big inventory buildup in the second quarter, and its a problem when it comes to exports in manufacturing that the economy has to work through. All that through the trade deficit, a big decline. However, the the domestic demand numbers are in pretty good shape, and i think what were going through is an adjustment here. July, august, and i think what you could be right back at it. My apple watch says that cnbc alerted that fed funds futures are pricing in the first rate hike in march of 2016. Everything you say is, obviously, exactly true, but the only thing i say is that Consumer Spending may seem like its in good shape, consumer incomes are not in good shape. They are not rising, and so i dont know how sustainable these kinds of the car purchase numbers and things like that are, and the economy, i think, is clearly weaker than any of us would like it to be or thought it would be. The case for the fed to raise rates is really at the minimal case. You can overstate that, steve. Move it. Theres 3. 7 in the second quarter, okay, after a weak first quarter. A lot of inventories. Running along in the 2 range, which relative to the rest of the world is not too shabby. Rick needs a shot to talk about this as well. Rick, are you there . Yes. You know, if your wife keeps telling you or your significant other, listen, while youre healthy, buy some insurance. Buy some insurance. By some insurance. Youre not healthy, you die, you have no life insurance, you didnt have any health insurance, thats what the fed is doing to the u. S. Economy. They should have given themselves a cushion. Now, should this collide path continue . Continue to be optimistic with europeanlike numbers that are even drifting lower . What are we going to do . Be in an election year, negative rates. You think the average guy on the street and average retiree is psyched about negative rates in the United States of america . If we have any kind of a collide path misjudgment here and we go in recession, the ability or the lack of movement in 2011 in various points, 13, 14 and a debt limit. Theres no way diane, go ahead. First of all, this illustrates how humbling economics is. Im humbled now, on quick sand, but the numbers are more consistent with the recent gdp numbers weve been looking at below 2 in the Third Quarter. I agree with steve. Theres domestic demand out there. Theres aggregate consumer income, although, wage numbers held up. They were not great year over year, a lump of 2 , thats not what wed like to be seeing, absolutely, but the numbers really do underscore if the fed moved earlier, wed be in worse shape today. Theres no cushion you dont need to nail it to the wall. Thats not how it works. Just thats not how monetary works. It should work different. Thats important. Obviously, its working well, isnt it diane. You can make it work differently something to strive for. Wed love a magic wand to change the way it works, but the transmission microphoechanism, e not there. The issue for the fed is walking this fine line now of how much are they able to get to what they want to get off of zero, but not do it too disruptively in an economy thats still weak, and it really does call into question december, and i think yellen is a good one, yes, steve . Look at the Risk Management frame work. Right. Which is what they are doing. When the fed looks at the world, the biggest risk is inflation, not deflation, but weaker outcomes rather than stronger outcomes. Exactly. Look at that, and this is the reason they paused in september, and its probably a reason they may pause again in october because they are look iing at t numbers, and i dont know that the economy is going to hell in a hand basket, theres reason for waiting. They point out there is risk from waiting, and they dont see risks. Thats the point. Well, and i think the notion that the fed should have raised rates sometime ago so they can lower them now is one of the more bizarre views of Economic Policy ive heard. The feds job is to manage the economy given the fact and circumstances at any point in time, and i think they are doing a darn good job and would be doing well steve so you get to bail out another auto company, big guy. Theyve not done that. Something to look forward to. Kevin, go ahead. They need to move that. Signals it leads to normalization of policy. Give the market a Little Signal they are. Right now, markets can do it. You cannot set prices forever. Why 30 years should be 0. So the dollar is falling sharply in response. Everybody points out you cant set prices forever. Give me an idea where would the market itself set prices in this current environment . Look across the globe, Interest Rates are low. There is quite a good argument and so is growth and so is pricing. You get it . In sweden, Interest Rates are negative. In several other places, they are near 0 by themselves, kevin. The idea that the fed is setting an artificial price thats different from the market would set bankers from around the world agree to disagree with rick. Thats whats going on. Right. And all get a d minus, all of them. You set a lot of prices. They have not promised forever. Bad policy, no pricing pressure. They normalize rates when appropriate i think theres a compelling case its not appropriate at this moment. We keep talking about this. We know when historys written, and, steve, we talked about this as well. When historys written on liftoff, its not the timing of liftoff, but trajectory and thereafter that history is written on. That Risk Management approach is what matters to the fed right now. They dont want to liftoff too soon and go back with nothing whatsoev whatsoever. Its not the timing. We are splitting hairs over october, december, march. At the end of the day, ten years, 20 years down the road, it doesnt matter when they lifted off, but how fast they did it. Diane, interested in what you said, humbled by the numbers rick, hold on, sweetie pie, and you were humbled and on quick sand. Thats a dramatic statement to say here. I mean, the numbers are that bad . Its a body blow when you see things go, not only where the actual number, take one number, you know, one number thats not in the trend, but the numbers went in another direction, especially a month like august, we know they are in positive direction. Three months down the road could be another conversation, but to see the accumulative evidence over the summer with gdp coming in weaker, all evidence there is not giving me reassurance. I agree, steve, theres domestic demand. Auto sales were great, iphone sales were great. Auto sales great in part because incentives were unbelievable good as well. Diane, dont be down on yourself. [ laughter ] our models and everybody models is plus or minus 50k. Thank you, sweetie. 50k, come in under 50,000, its a good day. When it comes to the ability to predict drk the base is 135 million. What happened, plus or minus 100,000, what happened plus or minus 235 million jobs, and did you come in up 100,000, down 100,000, youre within 50. I want to go back to what San Francisco fed president John Williams said, an important issue. We polled on this in the survey months ago, which is, what is the normal run rate of the economy . Lets assume yeah. Assume for a second, arguable point, were at full employment here, thats where well be. I understand what john east talking about. Very good point. Population growth in the country is between 90125,000. This is what youd expect, and i remember, you need to throw this into the pot here, williams said thats Strong Enough for him to go. Steve yes, he did say that. Markets do not agree its full employment. Market would not react like this, or trading like thp. Its great reaction to concerns of the economy. I agree with that. Its not about the fed, but the economy, whats really happening. Thats the point. Its not full employment, and the economy does not believe sorry, the market does not believe were full employment and market does not believe this level of job growth is broerpt. Explaining a 2 yield in the ten year clearly, doesnt it . Right. It also confirms that next month risks we e saw are real. Definite show down anxious about the numbers. Something else to look forward to. This makes for an interesting election, becky. It does. When you most the debate. Kevin and steve sticking around for more. Take a look at what happened to futures. Again, we walked into this, expected a number of 200,000, got 142,000 created, more importantly, downgraded and revised number o ed ed numbers and august reports. A massive turn around in the futures, close up to 100 points before that, now down 140 points, s p swung the same way, down 17 points, and also, check out the ten year, the yield on this falling below 10 . Youll see right now, 1. 942 , euro, picking up a lot of ground on expectation that fed will not raise rate, and thats pressuring the dollar and boosted the euro. More on that in a moment. When we return, peter boockbar is joining us on what he thinks, in the beginning of a bear market, and what investors need to do. Find out why after the break. Futures right now, expected to be in negative territory, deeply. 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The now the dow jones will open lower by 162 points. S p 500 lower by 21 points. We saw the tenyear yield move, rick said 11 basis points. Look at that intraday chart. 1. 95 . The euro went screaming higher. It will cost you 1. 13 now because expectations are, now that the fed wont move maybe at all this year. Fed fund futures pricing in the first rate hike in march. That would lead to dollar weakness. Joining us steve ratner said this number vi vindicates what the fed has done. Agree . I think the opposite. It is a failure. The feds policy, in my opinion, is a road block to a better economy than a facilitator of it. We have been at this for so long with Interest Rates where theyve been in qe and everything else. All i get is 142,000 jobs . Exactly. One of the main goals of Monetary Policy is to pull forward behavior. Almost seven years at zero, all this qe, we pulled forward a tremendous amount of behavior and levered everybody up. Thats what lower Interest Rates does, encourages everybody to borrow and killed savers. Bring up the oneyear chart of the dow jones. That market selloff we saw, was that telling us what was coming . Now we shouldnt be surprised that the big drop is telling us the economy is weakening . Its a combination of that and people are realizing fiscal Monetary Policy is not there to offset anything in the next couple years if this were to decline. Kevin. I agree. I think also now that were moving into not just the debt showdown but the president ial election cycle. Theres a long history that when candidates are far apart, so things that might happen are highly uncertain. If its Bernie Sanders versus donald trump, if theyre elected, its a wildly different policy. Markets hate uncertainty. Two candidates that are close, the uncertainty is not bad. We are looking at a year whoever ends up on the democratic ticket, this is forget about expected policy, just the uncertainty. Im asking the next question. Bernie sanders wanting to spend 20 trillion over ten years is a big negative. His probability of getting elected is low, but mrs. Clinton will have to move towards him to get the nomination. If the economy is crappy, its harder to elect the democratic party. Thats true. So the whole economy goes into suspended animation for the next year and a half . Thats what youre suggesting . Theres spreads going up, priced earnings ratios going down. Do that right now when we have this weak data, we have turmoil coming. In other words, buckle up. Yeah. What do you do in the markets, peter . About half of all stocks are down 20 plus. So were basically in a bear market for half the market. Odds are now high thats the other half over the next 12 months. So, i think investors under that scenario have to play defense. Thanks for coming in. Thanks. Thanks. Up next, more of the stories that have you buzzing outside the jobs report. Once again, tune in to squawk box on monday morning for our exclusive hour with former Federal Reserve chairman ben bernanke. That conversation starts at 8 00 a. M. Eastern time. On cnbc world this morning, you can see a special power summit. This is a set i moderated. John mcfarland lets us in on what makes his job a little tougher than he would like. When i first went to australia, the banks were hated. Now i moved to the uk, the banks are hated. Where are you going next month . I never discovered the love for banks. Thats where at t can help. At at t we monitor our Network Traffic so we can see things others cant. Mitigating risks across your business. Leaving you free to focus on what matters most. The internet of things. What were recommending as your consultants. The new consultants are here. Its not just big data, its bigger data. Were beta testing the new wearable interface. Xerox believes finding the right solution shouldnt be so much work. By engineering a better way for people, process and technology to work together. Work can work better. With xerox. Welcome back. Not the news we were expecting today when you looked at what happened with the jobs report. The markets are going haywire. Dow down by 155 points. By the way, this is after the dow was in positive territory to the tune of 80 points, 90 points before the jobs report. On monday, andrew, a big guest. Ben bernanke, 8 00 a. M. He will be here for an hour. Well talk about the jobs number. How the fed will react to that number and what he thinks. His book is coming out. Perfect timing for a guest like him. Fantastic. Michelle, thanks for everything. A pleasure. Like those shoes. Lift them up. You cant see them. We will see you monday. Right now time for squawk on the street. Good friday morning. Welcome to squawk on the street, im Carl Quintanilla with sara eisen, simon hobbs. Cramer is off. 142,000 is the jobs number for september. A sizable miss. Virtually no silver lining. Negative revisions, earnings flat, even hours worked going south. The futures have reversed big time. The tenyear yield, below two. The market is increasingly betting on no fed rate hike