Transcripts For CNBC Squawk On The Street 20151002

Those new worries for the fed on the labor front. September nonfarm payrolls weaker, rising by 142,000 in august. Revised sharply lower to show 136,000 added. The rates stay steady at 5. 1. Average Hourly Earnings come in flat, but we were looking for something in the 0. 2 0. 3 range. Maybe the most biggest disappointment of the year so far. Coupled with the august revision lower. The 2015 average goes to 198,000 jobs created per month. Thats a sharp slowdown. Last year we were averaging 260,000 jobs. Its more than that. If you take the three month average, youre down 267. Which begs the question, whether we like it or not, where are we in the Business Cycle . Regardless of what fed is doing. The whole discussion as to whether rates this low and the fed Balance Sheet this big are able to stimulate the labor market like they think it does. Clearly there are diminishing returns here. The Market Reaction has not been good. Dow futures down 161 points. The treasury note yield slipped below 2 . The first time thats happened since the end of august. Interesting to see that move below. Its been flirting with the 2 level this week. A lot of tumult in the bond market. There the spread is key. Bringing down borrowing costs never hurts for those looking to enter the capital markets. Thats been the case for a long tim time. It is quite interesting, if you look at the news flow from companies, job cuts seem much more common over the last couple weeks. That seems to be the phase were in. On conagra, walmart. Caterpillar and hp. That was about 45,000. Now reports of sprint. It keeps coming. Also the dollar is getting whacked. For more on jobs and this sharp Market Reaction, joining us is david kelly and scott brown. David, your rate hike, which you want so badly is slipping away further into 2016. It is. The reason i want a rate hike is i believe the first few will stimulate Economic Growth and help the market move higher. There one Silver Lining that might move the fed towards tightening, which is the labor force continues to decline. In fact, the number of people unemployed did fall in september. The Unemployment Rate almost hit 5. 0. Went from 5. 11 to 5. 05. You know this fed. You know they wont look at up with Unemployment Rate and decide its time to hike. Nor should we just look at the payroll report. All the bad news is concentrated in this. We have two more employment reports before the december meeting. I still think the labor market is tightening. I firmly believe the economy would do better and the market would do better if the Federal Reserve would remove uncertainty and get going here. This may cause them to hesitate. That seems to be the way they operate. I dont think they should based on this report. Scott, how do you explain the weakness in september and revised lower in august . Well, this was a relatively disappointing report. I dont think it was a complete disaster. If you look at the numbers before seasonal adjustment, obviously you have the start of the school year, the end of the Summer Travel season. Those are enormous forces. We added about 1. 5 million education jobs, which is about the same as we did last year. We lost a lot more of the noneducation jobs than we do. Last year we lost around 800,000. That was the same before the year before. We lost over 900,000 noneducation jobs in september. That likely reflects a strong hiring early in the late spring and summer. A lot of college kids getting summer jobs. Very strong travel season with low gasoline prices. Its natural to see maybe a larger pull back seasonally if you have stronger seasonal hiring. If you look at private sector jobs, its, you know, a slowdown in july august and september. That pace is still roughly in line with population growth. I dont think this is a horrible report. The hourly average earnings numbers bounce back. We know there had been a lackluster trend. Maybe the fed does delay a bit longer. It may not be horrible, but it is lackluster, which comes back to the question i put at the beginning, where are we in the Business Cycle . The assumption had been because we had such tepid growth we could carry on growing with tepid growth because the fed would not raise rates dramatically and this equity market could rise. Does this suggest we may be tip nothing a slowdown and maybe recession over the next 18 months given what the rest of the world is doing . No, the slowdown in the rest of the world is about emerging markets, and its accompanied by a big fall in commodity prices. Thats spurring Consumer Spending. Yes, you have over 18 million Light Vehicle sales, strongest number since 2005. We think the real Consumer Spending will be up 3. 5 in the Third Quarter following 3. 5 in the Second Quarter. So the consumer will save us . Theres a lot of consumer demand. It will never boom. We had 73,000 growth in the labor force over the last year. Thats not enough. This jobs number was disappointin disappointing. It also follows some Consumer Confidence surveys where we had jobs plentiful and eightyear highs. How does that square with this . Thats crazy. This is correct. The Unemployment Rate is low. Its almost 5 . The problem is were not growing the labor supply, so if you dont have enough workers, you cant hire them. Policy has done all it can. Monetary policy has done all it can on the labor market. Its diminishing returns from here. The milk of monetary ease turned sour a long time ago. They should raise rates now to get us back to a normal level. Try to normalize the economy. This expansion has room to run for another year. You dont think todays number adds credence to the negative dot we heard about in the presser . If you understand how Monetary Policy affects the economy from very low rates you will not stimulate the economy through more quantitative easing. It has not worked in japan for 20 years. Thats the argument. Japan is laying the template for everything we do. But if the medicine doesnt work, dont keep doubling the dose. No is it working in europe. For the asset markets or for unemployment. And underlying inflation is turning down. The key issue is confidence and certainty. If the Federal Reserve lays out a path of gradually rising Interest Rates, the u. S. Economy will do better and the job numbers will improve. Scott, you know, when the number disappoints a lot of people point to rerevisions. They say the revisions are catching up with the true picture of the labor market. Eight consecutive downward revisions. Maybe thats the biggest indictment of this data at all. The numbers are reported accurate to 105,000 each month, which is a huge margin of error. So the figures are revised. Theres a benchmark revision that will be coming up in february. We already have an initial estimate of that. Thats not huge. These numbers do bounce around. You can look at the threemonth average. That reduceses a lot of the month to month noise. I dont worry much about the job market. Were seeing a limited pace of job destruction. You get the announcements in the news about companies laying people off. When you add them up, thats trending low. The key over the last year has been the hiring coming from small and medium sized firms. Thats what we need to watch closely. They may be affected by the negative noise youre hearing. The domestic economy is in really good shape. Consumers are feeling better. You had good job growth over the last year. The drop in gasoline prices adds to purchasing power. Yes. The weakness abroad, the stronger dollar will hurt a lot of companies. Its going to have a big hit to u. S. Exports. That may be a drag on gdp growth, lower inventory growth that i be a drag on gdp growth. But the domestic economy is still doing very well. I dont worry much about this employment report. Dow futures down 212 points. Scott, im getting more hate mail than usual and twitter attacks. I know where david kelly would stand on this. He would disagree with me. I think janet yellen is vi vindicated by this number. If they raised rates in september, how would this number have looked . Wouldnt it have looked like a policy mistake . It would have looked bad. Its ironic, i think the fed has tried to communicate things well. The markets dont always hear what the fed has to say. Clearly if the fed is looking down the line, you know, Monetary Policy affects the economy with a lag of about 12 months, 18 months. Theres a lot less slack than there was in the labor market. A year from now there will be less slack. The fed doesnt have to be at neutral, but it ought to be closer than it is now. So, theres no need to hit the brakes. They do have to consider taking the foot off the gas pedal. Pile on, david. I think the notion of monetary stimulus and zero Interest Rates is wrong. The thing is when you raise rates, nobody will stop buying houses if we raise mortgage rates. Thats not a constraint on them. But you will raise Interest Income. A lot of people would spend more Interest Income if they could get it. I think a lot of investors agree with you. Sharp negative reaction to stocks on this number. David kelly and scott brown, thank you both. Thank you. Now that the jobs number is out, this week, we asked you to tweet your predictions. 9 lucky winner will receive a cnbc frame autographed by us. Were combing through the entries to find out who was right and right first. Well announce that winner later in the show. First reaction from the white house on the numbers. Jason fuhrman will join us after the opening bell. Jack lew says the u. S. Will hit its legal debt limit around november 5, in five weeks time in a letter lew says the federal government would likely have less than 30 billion on hand to pay its bills at that point. The secretary says i respectfully urge congress to take action as soon as possible and raise the debt limit. Im sure the treasury secretary is a decent and honest man but there will be a question here as to whether thats political maneuvering. November 5th puts the debt limit deadline just after you reelected the speaker of the house. And whoever it is will have this massive backlash if boehner has not done a deal from his own right wing to not raise the debt limit and put the party, the Opposition Party in turmoil. 30 billion in cash they see on november 5. There are days the government spends double that on a single day. Thin levels of cash. What strikes me, its ban long time since we had a fiscal battle. We had a few years of relative calm. But we have a few deadlines coming up. October 29th, authorization for the spending on the highway trust fund. And this government is only funded until december 11th because of that stop gap measure passed this week. Buckle up. When we come back, we have jason furman on the jobs numbers. Futures were up 109 on the dow, now down almost 200 as we look for some market weakness when the opening bell rings in about 17 minutes. 15 minutes to the opening bell on wall street. The picture does not look pretty. Negative reaction to that weaker than expected jobs report that we got for september. Dow futures down 215. S p down 27. Nasdaq down 59. 142,000 jobs created in the month of september. Economists looking for a number that was above 200,000 and a lot of other weak numbers. The danger here, this is where there may be opportunity, the markets are moving to factor in greater weakness than exists. The jury is out on where we are with china. This is one jobs number, some revisions down, that may pressure the market. If you look at the industry, hotel chains are at 52 week lows, despite the fact that the commentary from executives is that business is sound and it will be for two, three years. The market there is moving ahead of where arguably the fundamentals may be in the market. I would question on whether overall we will be doing that today. We wanted a weaker dollar, we will get it, at least today. A lot of fed speak as well. Williams has spoken about how he saw no acceleration in global risk. And that a lift off was still possible in october. Bullard speaks, then fisher at noon. Thats the clarity well be looking for today in the middle of the session. Well monitor the tone. He has prepared remarks. I wonder if hell take questions or revise them at all. If hes going to reassure people, he has to say theres no rate rise coming. Thats not what fisher does. He tells people that it will be data dependent and one could be on the way. If youre going to be reassuring, dont raise rates and tell people you wont raise rates. That will reassure the market. I think they have a communication problem on their hands. I was in d. C. And the imf talking to world leaders, they dont see anything. They are backing it up saying the data in the u. S. Is not showing it. My question would be whether janet yellen has the correct character in the job because i wonder if you had a more bombastic leader of the fed who could generate more confidence that we might be in a different situation rather than this data dependent consensus view she brings to the table, wearing her heart on the sleeve. If you look back at volcker, it was a much stronger performance. I wonder if that would change where we are. We are where we are and janet yellen has the job. When we come back, the take on the markets from mark cashin. Well look at futures. This is the fourth straight disappointment on nfp and the sixth in seventh months. Heres a look at futures, decidedly negative after a good premarket. Investors were not counting on the miss we got on jobs. 142, well below the 200 expected. Lets bring in art cashin. I doubt you were surprised. Not much. A couple of things. If you look at the trim tabs data, it hinted it would be a lower number. If you looked at the sixmonth moving average over the last year, its been decelerating. People have overestimated what the payrolls will be time and time again. I think ive ive been saying i didnt think the fed will raise rates this year. I still dont think they will. I wonder about the Market Reaction. There are those who believed if they told you it would be this low a number that would state feds hand and we might get a positive reaction because rates are not going up. I think the concern is this ambivalent feeling. Why isnt the fed moving . Is the economy much weaker than we fear . When they saw this, they were like it does look weaker than we fear. If you throw in with it the layoffs announced over the last month and a half, theres a palpable feel that things are slowing down. Art, when she did that huge news conference, when she was talking about weakness t wasnt labor market weakness. Wasnt the basic message were kind of there with the labor markets, im worried about what mark markets will do and what china will do. This is the other half now that they were not talking about. Correct. This is the part they thought was unsettsettled and now its unsettled. The dollar almost 1 lower than the euro and the japanese yen. So this tells you the fed is pushing out when theyll hike Interest Rates. Does it mean this is all well be talking about for the next year again and not paying attention to corporate stories, Economic Data . I think if the data continues on this level, you wont be talking about a fed hike. It wont be a debate. It will be an accomplished fact. Well wait and see. Im interested to see the tone that fisher takes. You know, hes tried to keep this hope alive that we would have it. We could have it. Could it be, just for the sake of argument, that the fed has confused everybody to the extent that were overreacting on the markets to weakness that is not as bad as we think, be it in china or this economy and longer term this is a buying opportunity . They confuse the narrative so much, that now actually is the time to buy. Its not as serious as you might think. Youre saying that transparent fed has been misleading in what theyre doing . We have albertsons pricing. Putting some shares out to be offered. First data. Theres a report out today, china is considering resuming ipos over there. Would you expect a run here before the market truly closes its doors . I think people see the opportunity and try to rush in. It is a fact of human nature, when you see an opening closing, instead of Walking Around it, people run between the two cars coming together. The temptation is to constantly grab an opportunity before you miss it. Well see you later today. Okay. Opening bell and white house economic adviser jason furman on the jobs number after the break. vo rush hour around here starts at 6 30 a. M. On the nose. But for me, it starts with the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. If an electric toothbrush was going to clean better than a manual. He said sure. But dont get just any one. Get one inspired by dentists. With a round brush head. Go pro with oralb. Oralbs rounded brush head cups your teeth to break up plaque, and rotates to sweep it away. And oralb delivers a clinically proven superior clean vs. Sonicare diamond clean. My mouth feels super clean. Oralb. Know youre getting a superior clean. Im never going back to a manual brush. Youre watching cnbcs squawk on the street live from the Financial Capital of the world, the opening bell in just about two minutes or so as we wrap up this week, second trading session of october with negative news as the jobs number is a miss at 142,000. Unemployment is steady at 5. 1. We were not expecting august to be revised down. Its almost always revised higher. We were looking for something resembling earnings, didnt happen. Even the work week, which we have come to take for granted was lower. Amazing. The only thing i would add is the Labor Force Participation rate ticked lower. Icing on the cake there. You mentioned stocks. This is the third down week for the dow and s p 500. Interestingly nasdaq had the worst week of the bunch so far. Well see how it shakes out on friday. Biotech was a focus. Some wondering whether it bottomed earlier in the week when we saw that sharp selloff and then a mini rebound. Yeah. You have such pain in the hedge funds sector, 3 trillion in assets. That number has gone down a bit. The performance numbers ive been seeing for september have been from bad to worse for most of those hedge funds. The dollar may be a bright spot here. In terms of its weakness. And what that will mean for those who are worried about earnings from multinationals. Takes some time. Were going into earnings next week. You will not see it reflected in the earnings reported for the quarter that passed. However to the extent that people are trying to understand what kind of multiple to be on jim cramer would point that out. Inaction from the fed forces other banks to go deeper. It force the ecb into qe. Will be a busy session. As we said earlier, stan fisher will speak at noon. Might address some of the data today. Were watching Hurricane Joaquin, which thankfully seems to be trending to the east. But the carolinas and the outer banks will be seeing record rainfall over the next 72 hours. Theres the opening bell. A look at the s p at the bottom of your screen. At the big board, Performance Food Group company celebrating their ipo. Over at the nasdaq, novacare celebrating its initial public offerin offering. One stock that i will be watching here at the open is dunkin after it had its worst day after going public. Dunkin donuts putting out a disappointing Growth Outlook in terms of sales and profits. A ton of Research Notes on this stock. The sell ooff was said to be overdone, but a lot of analysts are taking down their target. A lot of competition in the breakfast space, from starbucks and taco bell. The guidance over the next five years expected at 2 to 4 , mid to high single digits. That was lower than originally forecast. Both the sales are down and traffic is down. Thats partly because of management, arguably overly aggressive price increases in addition to the canceling of promotional activity as they admitted on the call. And 100 franchises will be closing at speedway gas stations. The upgrade is based on the idea that they should trade at a premium it others in the space. Theyre calling it outperform from beyond perform. Sort of a bullish buy. Yeah. The market down 161 points. Clearly a concern about where were going with nonfarm payrolls. We had a chart made up of the three month moving averages. Thin indicates the concerns in the market. Each time you get the payroll that is lower than the month before you take down the three month average. Thats why i question where we are in the Business Cycle. December we were having a three month average growth and job activity, over 300,000. We have come down to almost half that at 167,000. A lot of that was due to the harsh winter. You see the way gradually that pulls us down. We came out, going through the summer. This dip down now is a major concern, and one reason why we think the fed wont raise rates, but the market still falls. If youre not watching fed funds futures, you might be watching the leaders on the s p which are almost entirely utility related. Investors will look for yield in environment where they clearly expect Interest Rates to stay low. Everything from southern, con ed, duke energy. Nordstrom is getting a move. They have a special dividend of 4. 85 a share and a 1 billion buyback. We are seeing more of these Companies Pay attention to buybacks, in the case of hp raising additional debt. That macco inside with a work force reduction. We already saw the significant reductions hp expects. Theyre about a month away from the official split of that company. The ept prizes side we were referring to when we talk about as many as 30,000 job cuts. We heard from caterpillar dealing with significant increase in commodity prices. Well be watching. Again, the dollar may if this continues, it may have a positive impact on same multinationals. Hp, over 65 of revenues come from overseas. Its been people worry about margin force that company. Can i point out the banks. Bank of america down 3 . Morgan stanley down 3. 5 . A lot of the rally in the banks was based on the idea that Interest Rates would rise and the margin banks would have would be substantially higher. If youre pushing back those rises, you are seriously impacting the profitability of the banks. The journal says q3 earnings are now suspect. Even if we were looking at a rate rise in october and september, the idea of one and done was already done. Where are we in the Business Cycle . Does this indicate that the economy will slow and arguably go into contraction next year . Thats the question. Its not proven by data. What would be interesting is if services started to follow. Services have been strong. Consumer has been strong. Exports are only 12 of our economy. 88 of our economy has been doing relatively well. Well see what we get. Thats not what the Regional Survey data is indicating. On manufacturing. Its disproportionate to the effect we thought we would have from exports. Even china. China would be a marginal affect. Thats not what youre beginning to see. One would counter with autos yesterday, which were 18 million cars. Thats a mind blowing number. Thats also structural because you have an old fleet. People didnt replace their cars i dont care if its because people like yellow cars all of a sudden, they are buying cars. Thats not what generally could boost gdp across the board. I think this is a good taste of the debate now. Certainly the pessimists are getting ammunition today with this jobs report which was unambiguously weak. You know who would help this discussion . Jason furman. Lets get to jason furman. I have a feeling. From the labor department. I dont think hell be pessimistic. Jason, good morning to you. Good morning. Weve been hunting for a Silver Lining in this report. Do you see one . Theres no doubt that the events happening in the rest of the world are affecting the u. S. Economy. Were still adding jobs. Were still on our streak. And the broadest measure of unemployment, u6 went down 0. 3 in september. Its been falling at a much faster pace than the official Unemployment Rate. So i think, you know, broadly were happy to see the Unemployment Rate where it is. But the events in the rest of the world matter for us in the United States. Do you believe the events in the rest of the world are impacting these domestic jobs surveys . Yes, i think they are. We saw the trade numbers for august and our goods exports fell to the rest of the world. Thats what happens when places like china are growing more slowly. That affected our equity markets. That affects the purchasing power of consumers. I dont want to overstate it. Were 140,000 jobs, more than what we need to break even with the Unemployment Rate. The broader measures came down. But, you know, we need to be acting here in the United States to make sure that weakness from abroad doesnt affect us anymore. Jason, weve been eluding to different pockets of the economy are giving different signals and messages, showing different signs of strength. How will you characterize the overall economy, including jobs, including inflation, including the weakness in manufacturing now versus where we were at this time last year . If you look at the last year, weve had very strong domestic momentum. Weve added a lot of jobs in the last year. The Unemployment Rate has come down at a relatively fast pace over the last year. So, you know, i feel good about overall the direction that were going in. I would feel better if i didnt think the sequester was coming back. If i didnt think that, you know if i thought congress would deal with transportation, i would feel better. I would feel better if i thought they would reauthorize xm. Theres a number of unfinished pieces of business that Congress Needs to do that matter to us. People will look at the treasury secretarys announcement that well run out of money on november 5th, in five weeks time, much earlier than expected. They will be suspicious thats party politicking because the speakers election will take place a week before. Clearly whoever is elected as speaker will have huge pressure from within his own party not to let the debt limit pass. Is it party politicking . Absolutely not. The Treasury Department gets new information, that letter reflected new information, that letter was completely consistent with what they said before, which was we would have a bit of time after october 30th, receipts in september were a little lower than expected. And as a result the date is november 5th. Youll see the daily cash statements. Youll get to follow that yourself. Theres no Reason Congress should not act to raise the debt limit to pay for the bills that we as a country have already incurred. Jason, is the economy slowing . We have strong domestic momentum here in the United States. The events in the rest of the world did affect us over the summer in august, in september. But theres no reason, you know, we cant keep pushing forward if we take some of those steps i was talking about like receiving the sequester. In your opinion, does the fed have a path to ease additionally from here . What would that look like . Would the white house be in favor of it . My opinion, the fed will make its own decisions independently of me. That is going out on a limb, jason. Thats fantastic. Jason, you come on every month and talk about infrastructure spending, yet its not going to happen. You know you can keep saying it on that lawn every month with your hair blowing around, but its not going to happen. You know, id love to come out here one month and not have to talk about it. When Congress Keeps extending it two months at a time, three months at a time, this used to be done five years at a time. If Congress Passes a fiveyear bill, i promise i wont come back and repeat myself on the topic. Theres an important argument going on around the world that policymakers have failed people and they left the growth and jobs to the Central Banks who are increasingly distended in the actions they have to take. When we come into economic trouble they will presumably be the first to move again with extraordinary measures that we never experienced before because the politicians dont act, and they dont do what theyre supposed to do on the fiscal side of things. Would you accept some responsibility as a group of people for the position we find ourselves and the position the Financial Markets find themselves in . I certainly think we need to do our part. We put out a budget the beginning of the year. It shows how we could end the sequester do it in a balanced way, and pay for it. Thats not a radical idea. Thats the same idea that paul ryan and patty murray agreed on nearly two years ago. We put on a commonsense idea on that. To mention it again i apologize for this, infrastructure. We put that out. Thats been done over and over again by president s of both parties. The problem is we need congress to act on these ideas. I absolutely agree fiscal policy needs to be doing its part. Jason, its good to see you again. Stay out of the rain. Thanks for joining us. Thank you. Jason furman. Dow is down 215 led by the banks. Goldman and jpmorgan the worst performers. Banks are on the down side. 41 declining to advancing stocks. Almost everything is down 1. 5 . Lets look at the s p 500. So much for bad news is good news. Whatever happened to that idea . Futures dropped 20 points as soon as that report came out. Theyre down now 25 points. Essentially all the damage was done at 8 30 in the futures market. This had a worldwide effect. If you look at germany, even germany dropped more than 1 . Theres germany there. You can see clearly that notable drop. We were solidly in positive territory in europe, there it dropped immediately. The big question now is whats the Trading Community going to do . My feeling is theyll do what theyve been doing the last few weeks, which is nothing. There was a dramatic reduction in exposures by active traders to the stock market in august and a good part of september. They took down their exposures. Thats what led in the last few weeks to the markets drifting lower on what i call moderate volume and no bids in the market. You get normal selling pressure and the market drifts lower because nobody is interested in adding to any exposure. I think this report unfortunately is only going add to the unwillingness of traders to increase their exposures, which is already on the light side. That could mean if you get a sharp move up, it could happen quickly because people are underexposed. Right now theres no reason to throw a lot of money at the stock market. Look at banks. Correctly pointing out, everybody here, that the banks are on the weak side. Particularly regional banks, like regents financial and u. S. Bancorp and keycorp are weak because of the net margin concerns. Financials are leading to the down side but industrials and even health care, which has been a huge concern the last few weeks, are notably down today. Its a bad time to announce big ipos, but thats what happened. Two big ones were announced. Terms for them. First data announced 160 million shares, 18 to 20. The big Electronic Payment Processing company. There was some confusion about when they might go public. My understanding is it will be priced sense october 14th for trading on the 15th. Thats a week and a half from now. Albertsons, also announcing terms, 65 million shares, 23 to 26. These are very rleveraged companies, trying to go public and its a tough time do that the ipo etf down 20 in the month in the quarter ending in september. So its a tough time for ipos. Tough time go into the market. David, right now down 211 points in the dow. Thank you very much. I will hit two stocks that are up. Starting off with sprint. The wall street journal reported on an internal memo indicating cost cutting to come at the telecom provider. Which will potentially include, of course, the loss of jobs. Sprint confirming to us that, in fact, the number, 2 billion to 2. 5 billion of costs looking to be saved. Job cuts likely. They cant say how many. They are early in the process in terms of where the cuts will come from. They are streamlining processes and making the network better. Cost cutting from sprint is important. To put it in some perspective for you, that number itself, 2 billion to 2. 5 billion cost reduction, a company with about 6. 6. 25, if it hits the full number that would represent a third of the companys full operating costs. Why does sprint need do this . The company is losing money while it tries to expand subscrib subscriber roles. It set up a financing vehicle for handsets. The low band auction that takes place in 2016 it will not take part in. Now the cost cutting. The debt maturities alone, buy time. Buy as much time as you can to get back. The cash burn rate is coming down, and will be benefited as a result of this 2. 5 billion in costs that theyll try to take out of the company. Layoffs would seem to be a part of the discussion. 35,000 employees at the company. And then maybe you live to see another day. Live to revisit a tmobile deal. Softbank continues to own 81 . It has not been a winner, though lately the stock has been up sharply. Wanted to come back to another stock thats up. Thats dish. We got the resolution to that argument with the fcc about them paying because they shouldnt have gotten the designated entity discounts. They chose to return the spectrum in question. Pay a penalty price. That spectrum will go back to the fcc. It will be reaction. Dish will pay the difference of whatever the new auction price is we have not gotten anything on the bigger issue, are they in the process of doing a significant deal with their spectrum or to sell some of it or i should say to partner with perhaps a Service Provider or some unknown entity to help capitalize a spectrum co. This is all speculation, but sparked by the fact that they said we need two weeks to figure this out. Charlie ergen had a number of conferences, but nothing. Just the deal itself which is at least a slight positive. All right. Lets get from stocks back to bonds. Rick santelli joins us. Rick . We can debate as to why we ended up here after all these years of what was deemed to be very, very accommodating policy. But the markets are very clear on the response to the lousy data. And if you look at a twoyear, everybody is, lets show it from early july. Its basically july since we closed anywhere near this 54, 55 basis point zone. Its not the winner. The maturity that had the biggest drop relative to yesterdays yield close the fiveyear note yield. Right now as it sits, 1. 22. Down 15 basis points. If you look at a year to date of the fives, its been since february since weve been here. As a matter of fact, since twos are behaving different because theyre so close to fed funds, twos to tens flattened a bit. But the real trade is the steepening thats going on between fives and 30s. The 30s acting a lot like tens. Its at 153, the steepest since july. April 24th on tens, last time we were here, consider this. The dollar index was up about 15 before the number. Now its down 81 to 83. We are down close to 1 cent net change from before the data to after the data. Very significant. And if you look at the way the euro behaved against the dollar and then against the yen, both of those currencies are the weak links. Dow down 234. The russell about seven points from its lows for the year. Were back in a moment. cole alright listen up. We all know that directvs better at this whole tv thing. So, to beat them, were gonna get bigger. Were gonna merge with cableworld. exec 1 cableworld . I cant stand those guys. exec 2 theyre the worst. exec 3 theyre totally incompetent. exec 4 that company stinks and i mean they smell. I used to work there. I had to breathe through my mouth the whole time. cole shh, shh, shh, theyre here. newhart this is gonna be fun, firing everyone. vo get rid of cable and switch to directv. Call 1800directv. Approaching medicare eligibility . 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Unitedhealthcare Insurance Company has over thirty Years Experience and the commitment to roll along with you, keeping you on course. So call now and discover how an aarp Medicare Supplement plan could go long™ for you. These are the only Medicare Supplement insurance plans endorsed by aarp, an Organization Serving the needs of people 50 and over for generations. Plus, nine out of ten plan members surveyed say they would recommend their plan to a friend. Remember, medicare doesnt cover everything. The rest is up to you. Call now, request your free decision guide and start gathering the information you need to help you keep rolling with confidence. Go long™. Dow jones down 235 points. Its financials that are taking it on the chin in the wake of that shock employment report. Wynn resorts is doing well. Quoting a Chinese Government official that they will take measures to boost trade in makow. Were back after this. Weve got trouble in tummy town. Peptocopter when cold cuts give your belly thunder, pink relief is the first responder, so you can be a business boy wonder fix stomach trouble fast with pepto. 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 . Only one dow component in the green. The numbers winners in the s p, seven in the green of the s p 500. Very negative. The dow down 223. Pfizer is the only one in the green. It got an upgrade today from morgan stanley. A sea of red on that disappointing jobs data. Well talk about that and more when we come back. Later this morning, we will talk about the jobs number. We will see if the rate hike may still be seen in december. You pay your Car Insurance premium like clockwork. Month after month. Year after year. Then one night, you hydroplane into a ditch. Yeah. Surprise. Your Insurance Company tells you to pay up again. Why pay for insurance if you have to pay even more for using it . If you have Liberty Mutual deductible fund™, you could pay no deductible at all. Sign up to immediately lower your deductible by 100. And keep lowering it 100 annually, until its gone. Then continue to earn that 100 every year. Theres no limit to how much you can earn and this savings applies to every vehicle on your policy. Call to learn more. Switch to Liberty Mutual and you could save up to 509. Call Liberty Mutual for a free quote today at see Car Insurance in a whole new light. Liberty mutual insurance. Good friday morning. Welcome back to squawk on the street, im carl quintanilla, with sara eisen, simon hobbs. Markets are lower to the tune of about 220 on the dow. Oil is not cooperating, negative. The tenyear below 2. The road map starts with an upset in the september jobs report. Is a december rate hike now off the table . December off the table. Well talk to about that this hour. And Hurricane Joaquin is a dangerous category 4. Many states declaring a state of emergency. And the winners and losers in the online ad space, which tech stocks yield the best returns for online advertisers. First Rick Santelli with factory orders to close out the week. Absolutely. If you were disappointed in jobs, youll be disappointed in the august read on factory orders. We were expecting a down number but we had an extra helping. Down 1. 7 following that downwardly revised 0. 4 original that ended up 0. 2 for last month. Down 1. 7 is the worst factory orders on a month over month basis since december of last year when it was minus 3. 7. This makes the fourth negative factory orders of 2015. And maybe being an august number it was a precursor for what we saw in jobs. No matter how you slice it, many eyes are looking at the weakness in the dollar index and the big drop in yields. The fiveyear note, the biggest drop of all. Back to you. Lets get to courtney reagan, has some news from retail giant walmart. Good morning to you. Walmarts Doug Mcmillan sending a memo to employees at the home office announcing 450 jobs will be cut at walmart headquarters. That is located in bentonville, arkansas. This is more of this costcutting program that we can presume walmart has been undertaking to make sure to get the profitability to a sustainable place for the future. Sara . On a related note, back to the news of the morning. The september jobs report. With more on the disappointing number, lets bring in steve liesman. The question is what drove the weakness and what does the fed do about it. Well look at that in a second, sara. Good question. Its a weak report and it takes off the table the chance for a october rate hike, and that could be pushed into next year. Heres the thing. Nearly every piece of the september payroll report missed expectations and disappointing the market. Nonfarm payrolls, up 142. Looking for 200. August july revisions, downward. Looking for up. Average hourly wages unchanged. The Unemployment Rate did come down for the wrong reasons p 350,000 left the work force. You had a decline in the separate Household Employment report. There was also a decline in the unemployed. Labor force participation going the wrong way. At jeffries they say what i said, there is not anything good here. The data cannot make the fed more comfortable about a possible october liftoff. Itg, they say its not even worth talking about 2015 anymore. Its off the table. You dont need to say anything here. At bank of tokyo, the idea of the u. S. Economy could Power Forward while the rest of the world is stalling out that idea could be put in the garbage bin. This idea of fortress america is being challenged. Heres where the jobs were and where they werent. Retail coming in strong, 24,000. Construction doing well. Big loss in mining. Big loss in manufacturing and wholesale trade down 4,000. You had some hiring in the temporary help. Just a word on fed communication, theres been a lot of complaints. Lets go back and look. The data surprised on the weak side. The markets changed the outlook for fed policy. Its hard to understand whats not working here and what all the complaints are about. Seems like the system is working. If theres a complaint t should be about the forecasting. Those should be corrected at the fed and wall street forecasters and investors and maybe some Senior Correspondents at Business News station. Simon. I disagree entirely. Im not surprised. The job of the fed is to inject confidence into the markets and inject confidence into the economy. The markets are losing confidence. The economy is losing confidence. Did you say its the feds job to inject confidence into the economy . Correct. Where is that Job Description from . The idea that they got this. They are the leaders of the economy and they will do whats necessary in order to boost confidence. Confidence is what were lacking. The federal receiserve could gi some. The Federal Reserve would say theyre supposed to go for maximum employment and stable inflation. Thats what they would say their job. Maybe its a third mandate, steve. You never know. For more on the jobs number and its impact on the markets, lets bring in the chief Market Strategist at oppenheimer and the chief economist at standard poors. Is the economy slowing. Weve seen a downshift in the jobs numbers. Its hard to see anything good in those numbers. I would add to steves assessment, one other area was strong, which was the health sector, probably because everybody got a headache from this bad news. We are seeing a slowdown. Its hard to ignore that. We have the dollar strengthening on manufacturers and exports. Oil prices are weighing on that sector. I would want to say we are seeing other strength in the domestic economy. Yesterday we saw construction numbers coming in rather strong. It was also confirmed by this reading. Last thing is people are writing off a fed hike. I would like to bring in the late, great yogi berra, the game is not over until the game is over. Beth, its inevitable in the environment that people will blame whats happening internationally for weakness in the jobs market. Could it be we have not just reached a stage in the Business Cycle at a time when we see mma at record levels that cos look at the businesses and say i dont have top line growth what do i do now . How do i boost profits moving forward . Lets restructure. Thats the kind of daily news flow that were getting, isnt it . Its hard to say we cant write off the august weak numbe numbe numbers, it got weaker. This comes after 18 months of robust job gains. Could it be were just taking a break . It could be. Maybe we reached full employment. John, is it right to sell in this environment . I think it would be a big mistake. In the last six, six and a half years we have seen many times these mid cycle slowdowns. That mid cycle is wide here based on the Recovery Process in qe. So what we have to see we so have to say dollar cost average here. Know what you own, why you own it and fasten seat belts. It does not mean a plane will crash but theres turbulence well be living with. Separately the reaction has been big and broad to this number. The dollar is getting hit hard now. Eventually isnt that going to be good for u. S. Economies that have been so battered by the strong dollar . Sarah, we think so. When we look at it usually the dollar rises significantly in anticipation of the fed beginning to tighten. Then once the fed gets there, it weakens. Right now its weakening on economic perception, i would say. But we would look at it here and say pretty much about where we should be. If anything, this certainly does vindicate Janet Yellens decision not to raise rates. In fairness, she didnt have the data when she made that decision. It wasnt based on that why she didnt raise rates. She had a lot of Regional Manufacturing data, the effects of the strength of the dollar. Inevitably i want to talk about gold. As the dollar weakens, gold and silver gets stronger. Thats the knee jerk reaction. There will be people who will feel the Federal Reserve is massively behind the curve. Is gold a buy here . I dont think so. Gold is a trade here. You can play it here. I wouldnt get too involved. I would stick with equities and face the cyclical rather than the defensive. Beth, i interrupted you. Forgive me. I want to bring it back to inflation. You talked about the weak economy, thats probably what drove the fed for not raising rates in september, partly so, but they focus on the weakness in the Global Markets and the volatility in the Financial Markets and the impact on already low inflation, that that could have nearterm impact. John, watching these market moves. The tenyear treasury note about to break 1. 90, heading south. You have to revisit your forecast for the equity market . I have to say in terms of time frame we would likely consider it, its on the consideration table. That said, we always remember 2011, a bottom put in about midoctober, and then a rise of over 30 from then to an interim top in april of 2012. John, one final question, has the way weve viewed Monetary Policy fundamentally changed . What happens today means presumably the ecb will double down on qe. Markets are down. What happens today means theres no rate rises possibly this year into the First Quarter. The market is down. Do we view Central Banks fundamentally from an asset market perspective in a different way now . I think we have to consider its all global today. Its tied to digitalization. At the same time you dont want to project too quickly. There are so many positives on a fundamental basis. Thank you both for your analysis. When we come back, Hurricane Joaquin remains extremely dangerous, cat 4. Well get a live report from virginia, among the states declaring a state of emergency. Later, goldmans chief economist, jan hatzius with his take on todays numbers. When youre not confident your companys data is secure, the possibility of a breach can quickly become the only thing you think about. 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. [during sleep trains the triple choice sale. 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When you ask advertisers how they would rank the ad platforms, going the is the number one site on the internet. Number one platform. You find facebook, the incremental interest in buying ads on facebook, despite what is clear ad pricing inflation on facebook, it has not charged. Marketers want to spent 64 there. And they want to spend more and not less. The negative surprise was tri twitter where we are seeing a fall off in advertising. Why the difference between the two . Is it to the degree in which ad load is switching to video . Thats part of it someone specific question had to do with the auto play video ads. This was only introduced by facebook a year ago. Are seeing brand advertisers, think automotive, insurance, financial services, those advertisers are migrating to facebook. We saw strong interest in instagram as kind of an emerging advertising platform. About 72 of marketers said they would be interested in advertising on instagram. Look for that to be a material growth driver for facebook. We asked advertisetors compare the roi on facebook versus Youtube Video ads. Roi was perceived to be higher on facebook than youtube. Across the board the clear winner is facebook. The showdown between facebook and youtube is coming into sharp relief. On twitter, mark, its been such a busy week of news. Still awaiting for some announcement regarding a ceo. There has been a lot written about what people call product improvement. Do you see that moving the needle on roi in the year ahead . Well, most of the product improvement that weve been able to see has been on the user side, not so much on the advertiser side. The perceived roi of twitter advertising is still lower than that of google and facebook. In twitters defense, those are high benchmarks to try to reach. Theres a lot of wood that twitter needs to chop. Im not talking about with users, but with advertisers. The difficult or the real negative data point from this survey was when we asked twitter advertisers nine months ago do you plan to spend more with twitter . 54 said they would. Now its 35 . A real cliff down in edadvertis interest. That can be improved but a lot of work to be done. Twitter up 2 , perhaps a bounce after yesterdays sharp plunge with it down 51 in the last 12 months. How do you tactically trade this . When does it become cheap . You have to wait for the ceo announcement . Im not sure its ever going to be cheap. Whether its less expensive and its an interesting point to look at. Were waiting for a couple of catalysts. Were waiting to see whether this project lightning announcement cure ra announceme announcement curated twitter feeds. Something that makes it easier, more intuitive for people to use that could take three, six months to play out. It would be nice to get some clarification on the ceo decision. However, ill go on record. I think this dual ceo track, the ceo of two companies. Its possible. But, geez, thats a tough bet to make. Its hard to get behind that. You dont rate square but its not ipod and part of your coverage universe. If there was a road show to start, and one of the key guys within that was split with another company, presumably that would sell at a discount. That deal would be discounted because you have a parttime ceo at the center of that business, correct . Simon, i wont comment at all on square. Ill stick with the basic point that twitter itself theres a lot of work that needs to be done to turn the company around. Its hard to see somebody who is not fully engaged with the company, thats not their primary business, its hard to see why that is not a handicap. Doesnt change the investment thesis, but the news that they have a dual ceo, if thats the case, thats not a reason to buy the stock. Probably at the margin is a reason to be more cautious. Yeah. Mark, back to the overall survey, it confirms something that investors already know. Is there anything that you determined that makes you think google or facebook are mispriced because they have been strong and twitter has been weak. Yeah. Good point. I think at the margins, when we do the surveys, its rare we see in any one survey seismic shifts. Its more trends overtime. Facebook reminds me so much of google back in 2005 and 2006 when there were more advertisers, spending more dollars with them. They had so much momentum. Thats where facebook is now. The advantage of facebook is that they are rolling out new green field revenue opportunities. Instagram is a lay up for them in terms of revenue growth. Were sensing that from advertisers. We thought about that from users, but the evidence is stronger that advertisers feel the same way. Facebook has to be a buy. It is. Its one of our top buys. Certainly reflected in the shares. Thank you very much, mark. Mark mahaney from rbc. Flooding expected in parts of the east coast as Hurricane Joaquin makes its way north. Mike sidell is in Virginia Beach today where they are expecting rain. Mike . Good morning. Fortunately joaquin will stay well away from the eastern seaboard, but this is what were dealing with. Not from joaquin, big High Pressure to the north, low pressure to the south, we have this gradient wind. The beaches from jersey shore, maryland, delaware down to Virginia Beach through the carolinas are getting battered again. Last week, we were out here, five days of this. Were on day number two, this will last through sunday and monday because we will get some wave action from joaquin later in the weekend. There goes another wave up. Its chomping away at this beach this is falling into the atlantic. They have about 12, 15 feet. The homeowners are worried theyll lose their whole dune this afternoon. High tide in about an hour. Each high tide through sunday night and into monday is going to be problematic with either minor major or severe beach erosion, coastal flooding, too. The other offshoot is the inland areas could see up to a foot of rain. We have flood watches from here through most of south and north carolina. Some spots could see a foot of rain. Get a load of this. It goes to show you, you dont need a Tropical Storm or a hurricane to get hammered out here on the beach. These winds are only gusting to about 40 miles per hour. That will limit any kind of structure damage up and down the coast. Well be here all weekend, carl, trying to deal with the saltwater covering everything. Back to you. Mike, stay safe out there. Already windy. Tie yourself down. He has a cameraman, too sometimes we forget, theres a guy shooting him also. Yes. One day hell blow out of the shot. A new way of looking at College Rankings based on graduates earnings. Well talk about that in a few. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can take calculated risks. Active management can seek to outperform. Because active Investment Management isnt reactive. Its active. Thats the power of active management. [ thats a good thing, eligible for medicare . But it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement insurance plan, insured by Unitedhealthcare Insurance Company. Like all standardized Medicare Supplement insurance plans, they could save you in outofpocket medical costs. Call today to request a free decision guide. With these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. Join the millions who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. And provided by Unitedhealthcare Insurance Company, which has over 30 years of experience behind it. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. On this jobs friday, were looking at one job with a steady future no matter how the economic winds blow. Mary thompson has more from sweetwater, texas. Some people refer to sweetwater as the wind turbine capital of the United States. Its home of nolan county boosts over 3,300 Wind Turbines including the 161 you see behind me at turkey track wind farm. They generate about 10 of texas electricity. Long reliant on the federal subsidies, the wind industry is viable thanks to the fact that cost of generating electricity from wind has dropped 50 over the last five years. As more turbines go up, so does demand for the technicians to install, repair and maintain them. When our students graduate, i would say about 98 of them are in place. Heath ince runs the Wind Energy Technical school, graduates leave with schools that the industry needs. We start off with them, the basic introduction to wind energy and we talk about hydraulics. Teach them hydraulic schematics, teach them industrial automation. Wind generated electricity accounts for just under 5 of the countrys total now its seen to double by 2020. The bureau of labor statistics sees the market for wind technicians to grow by 24 by 2022. The starting salaries for wind technicians is over 45,000 a year according to the bls. Here in texas, which is the leader in wind energy, because theres greater competition for those workers, starting salaries are in excess of 50,000. Carl, back to. Mary thompson in sweetwater, beautiful live shot. Thanks. When we come back, he sees the fed raising rates in december. Will he change his tune after that jobs number this morning . Jan hatzius is with us after the break. Hello, im sue herera, here is your news update. Authorities are trying to figure out why 26yearold Chris Harper Mercer opened fire at an Oregon Community college yesterday. Killing nine and wounding several others. Members of the town gathered last night for a candlelight vigil. President obama expressed outrage saying the u. S. Has grown numb to mass shootings. 11 people died today when a u. S. Military plane crashed in eastern afghanistan. The air force is investigating the cause but said the crash does not appear to be the result of enemy fire. The l. A. Times reporting local prosecutors are reviewing whether to charge bill cosby in connection with an alleged sexual assault. The case involves an accident from 2008 at the playboy mansion. 15 million tmobile customers are finding out that information has been stolen by hackers. The stolen data includes Social Security numbers and other information. Thats the cnbc news update this hour. Back to you, sara. Sue herera, thank you very much. The dow is down 214 points. Todays job disappointment could it delay the first Interest Rate hike until 16 . Joining us now is jan hatzius. Weve been waiting to hear from you. Do we delay until 2016 or are you sticking with your december call . We think its a close call. We have not made a change, but it was already a close call. We basically said it was narrow path to december. At the moment, when you look at inflation, you look at employment, luke at financial conditions, were off that path. Theres still quite a lot of time between now and december. So, our expectation is that well get back on to the path and certainly what weve heard from fed officials has been reasonably resounding. Its a close call. Everything you pointed to, you mentioned some of that, the Economic Data has turned worse. Inflation data is lower. Financial conditions okay, i guess theres some stabilization in china. This jobs report. What do you think the discussion inside the fed will be about this . The discussion will be to what extent is this new information that were now growing employment closer to 100,000 than 200,000. At the moment my guess would be that theyre still not ready to reach that conclusion. But, you know, its now a genuine discussion. Previously you were running at around 200,000, 225,000. There was an upward revision expected. The downward revision is something that will get them discussing maybe were seeing something more significant. Whether its the revisions or the rolling averages coming in, that would resolve that discussion, as you put it . 100 versus 200 . Whats left to discuss . Two more employment reports before december. So we do get a lot more information. If you look at the economic numbers, theres been some clear weakness outside of employment. Some clear weakness in the manufacturing sector. Very obvious. Other things have generally held up well. You know, auto sales were good. Generally the retail environment seems okay. The conference numbers have not been bad after the initial disappointment in michigan. I think its still certainly a discussion that will be twosided. And i think at the moment they want to wait for more information. I think, jan, you should do a victory lap. You were the first major house to break from the pack and to suggest that we would get a rate rise towards the end of the year. You were the fulcrum of the conversation about the fed delaying into next year. Congratulations on that work that you did, which at the time was controversial for a number of people. The reasoning has changed, though, over time as to why we would delay the rate hikes from where you initially were. Correct . When we made the change thank you, by the way. When we made the change it was on the heels of the june meeting, and it was basically because janet yellen seemed to have changed her mission from september to december that was our interpretation. Listening to the fed closely. At that time it was listening to the fed. Our view has been, i would say for some time, going back further than june, that theres a strong case for delaying into 2016. So, if we had to submit a dot or a path for optimum policy, we would have said 2016. The reason for making that change was communication. At the moment theres a pretty big contrast. You look at what the fed is saying now, now they are sending a strong message for december. The question is whether the new information is going to change that. We will see what fisher says, vice chairman of the fed at noon when he speaks. One more question. Its obvious to say foreign factors, its the dollar, its imports exports. Could it be a cycle, ceo and board mentality, they dont want to invest physically in the business, they would rather buy back their own stock. How do you grow margins . Lets restructure all over again. A lot of these announcements on job losses seem to be in that vain. The concern is maybe that the slowdown started with external drag. The worry is always going to be how much of that spills over into domestic activity, consumption, investment, you know, ceo decisions. The argument that we are seeing spillover effects has gotten stronger. Not yet conclusive. One of our viewers wrote that october is still on the table. October 2017, of which i imagine you think is going too far. That seems extreme, yes. I want to ask jan about credibility. Did the fed have a credibility problem . The fact they come out and say we want to raise rates, yet they can never do it . Even the doves we heard this from Charlie Evans earlier this week say we have a credibility problem because we may raise rates not meeting the inflation target. Some are attributing the market losses to the fact that the credibility factor is up in the air. Theres been a lot of discussion around the communication. You know, i think thats a legitimate discussion. I think that they are responding to new information. I would want to make that point. They are responding to new information about a weaker economy, low inflation than what they had expected. Thats also not great to get it wrong on inflation time and time again. There is a missing element here, the animal spirits and the economy to drive it forward. Nobody is invigorating that. Arguably the fed could inject confidence towards that to say we got this. Im more September Cal on that. By talking more positively that you will generate a large knockdown effect in the economy. Its better to say how it is or how you think it is. And be honest with what youre seeing. I think the cheerleading for policymakers is a highrisk strategy. Yes, maybe youll get a benefit in the shortterm if it turns out youre wrong that undercuts your credible. I would be more worried about that. Sticking to december for now. Well keep an eye on your forecast. Thank you. Jan hatzius. We have our school pride, but which colleges have the biggest bang for their buck . Jim stewart of the new york someti times breaks down schools by expected salaries next. Bounty is two times more absorbent. More sit per roll. So one roll of bounty can last longer than those bargain brands. So you get more life per roll. Bounty. The longlasting quicker picker upper. 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 todays jobs report puts the focus on College Graduates and earnings. Thats the focus of jim stewarts new column. Joining us is New York Times columnist jim stewart himself. What is the takeaway . Is the takeaway we have to go to some college we never heard of to make more than 100,000 a year . Well, theres some surprising results when you look at the earnings data. The new College Score card from the federal government put this back in the spotlight. For the first time were getting a lot of data about what graduates make after they get out of college. That is a legitimate consider when you invest so much money in it. When you look at these rankings, they tend to show you a correlation and not a causation. And Brookings Institution has done a great study which tries to get beneath that to see what value added does a college bring to the table . The results are surprising. There are some, some overlap. Harvard does well. But a lot of lesser known schools that do a much better job of enhancing graduates earnings potential rather than simply having no effect. So the bottom line, i was referring to mcphs university, graduates earn 116,400 on average a year. Not bad. Thats really good. Thats from the College Score card. Thats the Number One School in the country on the College Score card. Where is it . A pharmacy school. Its a Health Sciences school. I had never heard of it. Its not even ranked in the u. S. News survey at all it is narrowly focused. A lot of these schools are. They have a narrow focus on high paying jobs. If thats not your only goal for most people making the most amount of money is not the only goal going to college. I asked brookings to do a specialist that factored out what the major is. If youre an engineering major at m. I. T. You will do well. They came up with a value added list no matter the major. History, art, english. The liberal arts college, they jump up the rankings. Colgate was the anybody one ranked school on that list. That confirms what people have suspected. In the smaller schools with a lot of attention, handson attention from faculty it contributes to future earnings power. Do you think were seeing examples of schools cutting tuition, right . But then cutting all the complicated loopholes they have in place now. Is transparency coming into tuition or not . Slowly but surely. Its a bit like the tax code. The Sticker Price on these schools is essentially meaningless. I tell this to parents and students all the time. Ignore the Sticker Price. Look at what people are paying, what you would be paying. But one interesting thing these studies show is if youre a if you have high s. A. T. Scores and high grades you will do well just as well at a lesser known but reputable Fouryear College than you will at ivy league. So you may want to consider where you get the best deal. Do you think this is sustainable over time in the world in which we live where arguably we should all become programmers . Codemakers . Isnt that where the real money lies . Well, we saw the unemployment numbers. Since the recession theres been a Huge National interest in jobs and employment. Every parent i talk to doesnt want their kids coming home to live with them. They want them to get jobs. Is that going to change . Is the unemployment probably. The pendulums swing. The logic of a lot of these rankings is everybody would be going and majoring in software engineering. Thats an absurd result. We dont want a world like that. We could be a nation of programmers, coders. And nothing else. And have immigrants to do the other work. We need teachers, artists. Obviously at some point if the pendulum went too far, the salaries for these people go down. You can never have enough social media well be fine. The bottom line is forget all the rankings. No one ranking is going to tell you where to go. You have to bore down, look at the right school for you, look at the value added. Look at the programs available to you and pick a school right for you. I was going to ask if you and brooking were going after the u. S. News and world report. Which is still the Gold Standard here is peculiar. It doesnt look at earnings at all. It completely ignores that. They are considering changing that. I think they will face some pressure to bring that into the mix. Next step is looking at the cost versus the earnings. The score card does that to some extent. You can compare costs to earnings. Has ratio is interesting. Jim stewart, thank you very much for joining us. Check that out in the New York Times. Investors in glenncorp not having a good year or good week. Well be live from london with more on that firsthand. Also ahead, did you nail the number . The winner is coming up on cnbc. Before we go to the break, we have cut our losses substantially. Now down 151 on the dow. Here at td ameritrade, they work hard. Wow, that was random. Random . No its all about understanding patterns like the mail guy at 3 12 every day or jerry, getting dumped every third tuesday. This happens every third tuesday. We have Pattern Recognition Technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. For all the confidence you need. Td ameritrade. You got this. An awful week for glencore. The company slammed as they worry about its debt. It lost basically onethird of its value on monday in a single session. Kate kelly is in london with more. Kate, what have you got . Im standing here in front of glencores london office. They have a large arm focussing on energy. Theyve taken a beating, and even this morning theyve been seesawing and up on headlines about a possible sale of a partial sale of one of their units to sovereign wealth funds, but also in the red for periods of today. The deal which i speak is part of their overall Debt Reduction plan. What they would like to see happen is sell a 20 to 30 piece of their agricultural unit ideally to one or more sovereign wealth funds and reportedly we have they have interest, rather, so far from singapore, china, saudi arabia, and a canadian pension fund. It would appear that there are a good number of buyers that are taking a serious look. Thats a deal that could be valued in the low billions of dollars and probably unlikely to get done until the First Quarter of the new year. Other things theyre doing to get the debt down from 30 billion in net debt from the middle half of this year to the end of the year to 24 billion, include a sale of their metal streaming business, which would be a billion, maybe a billion quarter dollar deal, and theyre hoping to announce that as soon as october. They have a directors meeting a week from today, and theyll probably be talking about that more along with their production report, which is coming up. A lot of issues, though, with the stock remain. A lot of concerns about liquidity despite attempts by the company to reassure both Credit Investors and their own employees that theyre in solid shape. They said they dont have to access the public debt markets again until 2017. They dont have a lot of shortterm financing. I think one of the issues, simon and sarah, is that its become a very popular short target. There are a couple of hedge funds. The lance down partners and they are known to be short. Its also a proxy for bearishness on mining in general. Now lets get to Rick Santelli and equities moving down, and the dollar moving down. We could debate who that is good for, who been dpits, and who doesnt. In the end look at this gdp chart. This goes back to 2009. I talked to peter bookfar, friend of cnbc. He gave me an interesting stat. You can see it on this chart after we moved out from the 2009 levels. From the First Quarter of 2010 to the Second Quarter of 20 im sorry. That is not a crisis. Recent activity, yes, janet yellen most likely made the right call, but the conversation shouldnt be about recent activity. It should be about achievement, about rules and rulebased activities. Whether its about taxes or living appropriation bill to appropriation bill, leaving money overseas that could do more here. All of these things are why we dont have achievement. Many believe zero Interest Rate policy is one cog of that, but it is also a negative. Its a negative. Now, can you raise rates . No, maybe its too late, but we need a way to assess shortterm benchmarks like the overnight rate. Listen, you know, when it comes to the dow, the dow, the dow trades up and down. S p, your Airline Tickets arent just just at one place for a long time. I have an idea. Here. Let me borrow that a minute, will you . Oh, here you go. You want these . All right. Theyre doing some construction work down here. Maybe this will be a little more appropriate way to understand whats going on. All right. So we have our hotel rates. I dont see a loss. Okay. Nail those to the wall. Lets see, the dow, the dow does the dow trade . Yes, its an aggregate pricing discovery system. We dont say nail it to the wall. Airline tickets. In Airline Tickets were low a month ago and theyre high today, too bad. It moves. Basically when it comes to fed funds, they want to nail it to the wall, and i say our whole panel this morning said im just not with it. Thats not the way its done. Lets look at achievement, accomplishment, and see if the plan is working. 2. 1 gdp isnt what it should be, but its not crisis mode. The unintended consequences are hard to find. Theres no documentation i know of that any of this is truly making a positive difference in the economy. Why shouldnt capital be allowed to float and have price discovery like anything else . It doesnt make sense. Simon, back to you. Put the hammer down, rick. Put the hammer down. No, no. I will not put the hammer down. Okay. On that note, next on the show, did you nail the number today . Cara swisher will also be coming up on squawk alley in a moment. If theres one thing the human foot has always been good at. Its unleashing great power. The is performance line just got a power boost. Introducing the lexus is 200 turbo and is 300 awd v6. The is line has never been. More powerful. Once driven, theres no going back. Ive got two reasons to take thats why i take meta. Meta is clinically proven to help lower cholesterol. Try meta today. And for a tasty heart healthy snack, try a meta health bar. Suffering from ringing in their ears, theres no such thing as quiet time. But you can quiet the ringing with lipoflavonoid, the numberone doctorrecommended brand. Relieve the ringing with lipoflavonoid. Congratulations go to our nail the number winner. Reece came closest to the 142,000 figure officially that we received. His guess was 143,267. He joins us now on the newsline. Are you naturally a pessimistic man, maurice . No, not really. Pessimistic about this market, though. What led you to your forecast, as i sign the frame here . I wasnt here all week. Im sign it today. You can have all of our signatures. Maurice, how did you get to that very precise number that you picked . 143,267. I looked at the previous numbers on the website. And i guess you can see, of course, that theyre declining. What do you do for a living, just out of interest . Tell us more about yourself. Give us some color on who you are with this win here. Im retired from the army. I sell on ebay. I have an ebay store. What do you sell on ebay . I sell military items like stickers and are you making money in the market at the moment, maurice . Whats your view of where the market is likely to go . Im i just bought a position in silver crest, and i think it will go up. All right, maurice. Congratulations. This signed frame is coming your way. Maurice gilmore. Signed by the whole squawk on the street team. The really good news here is that were cutting our losses. We were down well over 200 points in the wake of unemployment figure, but now were down just 118 on the dow. You never know these days with the markets. Lots of intraday. Twists and turns. With that we hand it over to you, carl, for squawk alley. It is 8 00 a. M. At ham zon headquarters and 11 00 on wall street, and squawk alley is live. Welcome to squawk alley on a friday. Well talk to cara swisher in a moment, but, first, we have to talk about the markets. Starting to regain some ground, ofrs