Transcripts For CNBC Squawk On The Street 20161104

Morning. It is the kind of flashback wall street does not want to see. A lower finish by the s p today would mark its first ninesession losing streak since december of 1980. Were coming off eight straight negative days for the First Time Since 2008. And then that jobs number of course showing lower than expected payrolls. But, jim, the wages suggest that unless more people come back into this labor force, its getting tight. Less slack. Thats certainly a way to look at it. I think that the fed has plenty of ammo here. They can say, listen, weve got job growth. Weve got people make a little extra money. I know theres another whole scheme of thought which is hold on let it run. But in an environment where they think these are emergency rates, these are not emergency job numbers. These are job numbers that you get when things are fine. Now, i know that theres an undercurrent in the election which says that one party is saying, listen, not only things not fine but millions of people are losing their jobs. And another person saying, hey, listen, jobs arent paying as much. If youre the fed, you get this, say we have plenty of cover. Plenty of cover to raise. Even though every day we sit here talk about shortfalls, how bad retails doing, restaurant, dining, well talk sto starbucks later today. Were going to hear things are subd subdued. We also talk about amazon and activision last night and your thesis people may not be spending outside their home but certainly things to do inside. I had one of my favorite guests last night from take 2. I dont know if you saw the full page ad from mafia 3. It looked like a movie strauss was the president of Twentieth Century fox. He says these things are better than movies, theyre staying home, still ordering pizza and drinking beer, beer numbers are great. Its a theory so powerful overrunning everything from whole foods to the mall to starbucks. Right. But its got to be a positive that year over year weve got a 2. 8 increase in wages. And overall that i would think a good thing. Yes. Even though it doesnt seem to be showing up to your point in retail sales. No, im saying that the if you want to raise rates on things that come out on fridays at the beginning of a month, you just got to. Its very good. If you want to say, well wait a second, i just looked at the numbers from macys, i looked at fords numbers, thats different. I think if you want to say, listen, i dont see europe turning, thats different. But we have no International Crisis right now to speak of, brexit, hey, we got to go to the parliament. We dont have anything other than election, which is going to be over by the time the next meeting hopefully be resolved. We assume. Right. I thought this number is, listen, its a foregone conclusion and thats one of the reasons why even during this horrendous period banks have held up well. We mentioned the eightday losing streak. Well see what happens today. Vix is up eight straight. And i think coincident of those two has never happened where you got eight straight losses and eight straight gains on the vix. Ive got to tell you this is a very the averages have mass carnage the likes of which i havent seen in a long time. The health care carnage, i havent seen it since the banks in 200. I mean, we had a couple of banks we had some companies yesterday, some pharmaceutical benefit company, these very small diplomat lci. Yep. These companies are losing 40 of their value and 25 i dont know whos selling these things. This followed last week with mckesson. Dont forget teva. And generics yesterday. Not to mention just broadly speaking pharma. Right. Health care has been eviscerated. If you own health care, you need health care. If you own health care, you need health care. Yes. Thats a true statement. It has been its got to be overdone, isnt it, jim . No. No . No, it does not have to be overdone. Why not . In 1992 when bill clinton stood september 25 in front of merck, said he felt that the Health Care Crisis were out of control, you had 18 months of drug stock underperformance and drug stocks going down for months before that. So i dont think theres any natural buyers of these stocks. Thats part of the problem. What you need is takeovers. Takeovers. On the broad market citi today im sure youve seen this, the tail risks of a Trump Victory or a democratic sweep could result in a Market Correction in the 5 range similar to brexit after which the Investment Community reassesses the environment. 5 . Ill take that. Thatd be dynamite. 5 . 5 . Thats a blink of an eye. I may be able to take a couple days off. Weve done three in eight days. 5 is super. I mean, weve had that 10, 15, 20 in the drug zone. 5 . Thats actually equivalent of up. I think anybody would take that. Chances of a democratic sweep are extremely low. Yeah, kind of like if the cubs were to win the world series thats how low it is. Yeah, its true. Weve been mentioning these losing streaks the longest since 1980. People say 108 years, thats the standard. If it hasnt been 108 years, its not impressive. I mean, if you get up and watch wilf and sara every day, they talk about brexit forever like brexit was yesterday. Brexit stands for everything you heard like dewey defeats truman. All i can say is that people this down eight days and the vix, those are signs of people trying to price in a Trump Victory. Not just a rate hike but a Trump Victory. Theyre frantically trying to do it. Each day they flail. Oh, Trump Victory, we should buy Lockheed Martin, then Lockheed Martin gets rolled back on the f35. Oh, we should go buy the company the bank stocks, but then wells fargo happened. Someone the other day said, cramer, you got what you deserved, you like john stumpf. He was the best banker in the country. I didnt like james park, but theres no this is a bad market. So if were only going to be down 5 in this bad market, ill take it. Right. But that is not a uniform opinion. There are plenty of people i speak to that will be down 10, 15. Or others say its going to be like brexit week, go down early quickly and then by the end of the week be fine, if trump wins. Brexit is bullish. Im saying brexit, which was this big shock, we come down that friday was really bad. Remember, look, im more concerned about the august period of last year when my new friend james bull ard was saying, you know, he was sanguine. Which then became key to my whole lexicon. I use sanguine so much i had to drop sanguine. I was using it at home. I was going to rename my rescue dog sanguine and bub was going to be suboptimal. But i kept the names the way they were. Remember celgene at like 83 or something . I dont want to woosh down. I hope these guys are ready. I hope everybodys ready. For what . When you wake up that morning and you either get a sweep one way since we dont know or we get a Trump Presidency and people are saying now what happens. Theres not a chance theres going to be a sweep. Just get rid of that one. The chance the democrats take the house is virtually impossible. Its either trump wins or hillary wins the senate obviously is a much more likely or at least certainly more likely that you worry that it could become a democratic but the browns play dallas this weekend. Browns could win. Yeah. Theres a spread. Theres a spread on that game. Theres a spread. See, were money line here. Im just saying you dont want to own stocks going into is this election . No, no, im saying a higher cash position. Well thats whats been going on the last eight days. Im being descriptive. Im not presenting a newfound narrative. Down eight days is people building a higher cash position. Thats what theyre doing. Because theyre saying, hey, this is too crazy. James comey now people like comey, comey . Fbi . Household word. Thats for sure. Comey changed everything, whether he wanted to change it or not, and i hate talking politics. I know jim comey from when he was a u. S. Attorney. I mean, are you allowed to say hes a fine man . Or does that put you right in the cross hairs of millions of people right now . But comey changed everything. And if people dont think comey changed everything, theyre just gravely mistaken. Because before that we were talking about some conversation on a bus and locker room talk that the nfl doesnt allow. Its true. Its been comey. Ever since comey im sitting here thinking, wow. Hard to believe its been one week, a week ago today. It was that a rerun on saturday night live . It was. Theyre live again this weekend. Okay, because i heard a Conspiracy Theory about even that. Im telling you right now the craziest to carls point which he did throw in there even after the election there could be a lot of oh, its not over. That could also be very eight to eight, scotus, four to four, well see what do we do to cheer ourselves up . I dont know. Were going to talk later this hour with labor secretary thomas perez about the jobs number. In the meantime speaking of politics, clinton and trump pulling out all the stops heading into the final weekend, three days, 14 hours away. Lets get to john harwood with the latest. Good morning, john. Carl, this is the point where both candidates race around the country trying to either lock down states that theyre ahead, or breakthrough in some cases. The onus is on donald trump. Take a look at this abc the Washington Post tracking poll out this morning. This is a poll thats been fluctuating from big clinton lead to poll now theres a hint of late momentum for Hillary Clinton in this poll. 4744, shes up by three. That jibes with the consensus of strategists in both parties that this is about a threepoint race right now. Take a look at the electoral map, which is going to end up deciding it. Hillary clinton has got an advantage in more than the 270 electoral votes that she needs to win the presidency. So donald trump has got to scramble. Today hes going to be in New Hampshire and in ohio, both of those are states he really needs to try to build up from that 206 electoral votes that mitt romney had four years ago and breakthrough. Hillary clintons going to be giving an economic speech in pennsylvania. Tomorrow she goes to florida. Shes going to have a concert, get out the vote concert with katy perry. So both of these candidates for the next three days going to be in a lot of places on the map, mostly the same places, although drumdss going to be out west and try to go into colorado, a state Hillary Clintons built the lead, and see if he can breakthrough there. Hes got a lot of opportunities that are decent but not great. And what he has to hope, guys, is that at the very end the wind gets at his back. Its not at this moment. John, thank you for that. Our john harwood. Obviously the next few days going to be key. Wow, thats a statement. I see bloombergs running a piece of mexico planning contingencies for a trump win. Do they have to tap the imf, do they have to intervene on the peso . All sorts of people having to make all sorts of plans. Dont overdo it there, mexico. Geez. Mexicos mexico needs an opec agreement more than it needs anything else. It needs trade with the United States too. Oh, no, absolutely. If you get rid of nafta, that would be a game changer for mexico. It would just send them over the edge. That whole country is based on nafta and oil. Theres really not much else there. Cocacola and kimberly clark. Thats not a slide on mexico. Im saying they got carlos slim. They made the right move. They made the right move. They welcomed all of american industry and they succeeded beyond all reasonable doubt. Its been fabulous for them. Our special coverage begins tuesday night 7 00 p. M. Eastern time. When we come back, an exclusive interview with teslas elon musk from the baron Investment Conference. Technology playing a role in starbucks earnings. Well talk with president and Ceo Kevin Johnson later this hour. Look at the premarket pretty tight range as the market deals with both the jobs number and pending election. More squawk on the street from post nine in a minute. E new gla . They are. Do i look smarter . Yeah, a little. Youre making money now, are you investing . Well, ive been doing some research. Let me introduce you to our broker. How much does he charge . I dont know. Okay. Uh, do you get your fees back if youre not happy . dad laughs wow, youre laughing. Thats not the way the world works. Well, the worlds changing. Are you asking enough questions about the way your wealth is managed . Wealth management, at charles schwab. It is jobs friday. Lets get back to Rick Santelli at the bond pits of chicago. Good morning, rick. Good morning, carl. Listen, without a doubt the surprise today was wages. It was big. And were going to talk to a lot of people to get their opinion, like ed, perez, but this is the issue, but whats also the issue is how all Global Markets are one. This is super significant. They didnt have Employment Data today, but look at our intradays of twos and tens. They liked the number. They all popped. But we did uturns and it wasnt just here. We made the high yield in bunds, back down, gilts, dollar index, same thing, all the markets are moving to the same issue. And being political season with all the things going on theres a natural tendency for everybody to try to find election and political correlations. But down here most of the traders i talk to think that as fun as that may be the next chart sums it all up. This is oil versus the s p since october 1st. And we can clearly see that theres a huge correlation right now, whether its historic or correct it doesnt matter. And the fact that we may have a record for down days in a row in the s ps is weighing on the fixed income guys. We all know that there are times when equities get spongey that Interest Rates give up some ground. So the weekly close whether its on the north or south side of 180 for 10s may be the critical issue today. Carl, back to you. Rick, thank you very much. Talk to you in a little bit. Rick santelli. As we said earlier starbucks had full year results global comps up in q4 helped in part by mobile order and pay. Also hiking their Quarterly Dividend 25 . Stay tuned for live interview with coo and president Kevin Johnson later this hour. This is one kind of something for everyone. Also something for no one. Meaning that if youre a growth stock investor, youre kind of looking at a nike situation saying why am i paying 24 times earnings for a company that did not have a surprise. And if youre an Income Investor you say theyre raising the dividend, a lot of cash, some good things here, its not going to go down much because its already down a lot. But that pleases no one in the sense that i cant think my travel trust owns a position in it and we dont want to buy more, ill talk more about that with kj, but the problem is youre not getting what im used to with starbucks rk which is raising numbers starbucks. Youre not getting the big upside surprise in same store sales. So you end up saying to yourself, okay, this is a stock of a company thats slowing. Now, its slowing in environment where everyone else is slowing even more. So is that enough to get people excited . Or do you just say, you know what, the heck with that im going to go buy a company thats doing incredibly well thats got great things going for it, even if there arent that many of those. So this is within its category its the best, but its no longer the best within the pan plea of the s p 500 and it was for a long time. Just thinking recent 52week lows, starbucks, nike, under armour, kroger, right . These were the companies that weve retreated to time and again when we felt that the economy was uncertain. And theyre not delivering now. In a world where facebook, which delivers a spectacular number, gets taken down because they say there could be meaningful decline in the rate of ads and because it would be substantial investment. I would still prefer that to a starbucks. I would prefer an alphabet, google, to a starbucks. There was a time when i would think said my travel trust own it, basically since the travel trust began a decade ago and im trying to reassess on the fly. And say is this what you want. Do it for me on the fly based on a p e i think around 27 times this year. 24 times next year. And 24 times next year. Which next years almost here. Right. Is that appropriate for this kind of top line growth, and bottom line . Because it is growing. No. Its not appropriate . No. Its not. And thats really the issue. It needs to be pepsico, which is doing very well my now gold standard, thats 22. So its hard thats still a lot of years worth of earnings investors are paying for these companies, 22 years, 24 years. I am scrambling to figure out as many other people on the fly what should be paid for this because this is a brave new world where we dont know what to pay for a company that had fantastic growth, that has good you dont know. Talking quietly always makes me nervous. Because we have k. J. Up, i happen to respect the Management Team so much here. And theyre doing so much in the face of what i regard as being secular, not cyclical but secular headwinds that were going to talk about. Well get cramers mad dash in a moment. Well countdown to the opening bell, final one of the week. Later on at the baron conference in midtown well talk to teslas elon musk. Take another look at the premarket as we continue here on squawk on the street. Dont go away. Hey dad. Hey sweetie, how was your first week . Long. Itll get better. Im at the edward jones office, like sue suggested. Thanks for doing this, dad. So i thought it might be time to talk about a financial strategy. laughing you mean pay him back . Knowing your future is about more than just you. So lets Start Talking about your longterm goals. Multiplied by 13,000 Financial Advisors. Its a big deal. And its how edward jones makes sense of investing. Remember here at ally, nothing stops us from doing right by our customers. Whos with me . Im in. Im in. Im in. Im in. One, two, wait, wait. Wait wheres tina . Doing the hand thing . Yep we are all in for our customers. Ally. Do it right. We are all in for our customers. Will your business be ready when growth presents itself . American express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. Find out how American Express cards and services can help prepare you for growth at open. Com. That got me going, i dont know about you, as we head to mad dash here six minutes before we get the opening bell on what has been a tough week if you are owning stocks broadly speaking. Yes. Well, you know what, david, after a typical week like this what i like to do is kick back. Im going to go serve at bar san miguel. I will be the concierge, the bu will not be serving cuervo, not kas nova. Cuervo is down, but thats a combination of they make key components for cell phones. This sentence destroyed the company. Gross margin for the quarter was passing 43 , within the quarter we experienced lower than expected manufacturing yields during a steep product ramp to a large customer. Large customer means, typically means apple. So they came with a lot more demand, increase yields and they were incapable of doing that . The first readthrough was when you first saw the headlines means apple, didnt know about the deal, apple must not have ordered a lot. Skyworks, which also reported said their Major Customer ordered a lot. So the takeaway here is that qorvo had a rush job they had to make and couldnt make all they had to do, so its not bad for apple. Skyworks is saying things that its good for apple because of demand. All i can tell you is that all that does is keep apple from falling less hard than a lot of other stocks. Why isnt that not that bad for these guys . Its a high class problem. They couldnt meet demand. People are saying, listen, were tired of that. You didnt have a good quarter last time. Were tired of you guys not getting it right. Were tired of you guys just not figuring out what to do. Why arent you like broadcom, why arent you buying somebody . All right. We got the opening bell for this friday coming up right after this. I need a cuervo. Me too. Lepes foods is a locally owned here in santa rosa. As a small business, were always looking to save money, and pg e was able to help us. I help the Small Businesses save money and energy. It feels great. We looked at their lighting, their refrigeration system, and with just those two small measures, they were able to save a good amount of money. I was shocked. I couldnt believe that i could save 1,500 a month. With the savings that we get from pg e, were able to pass it on to our customers. Its pretty awesome. Learn how your business can save at pge. Com businessenergycheckup. Together, were building a better california. Hthis bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade youre watching cnbc squawk on the street live from the Financial Capital of the world. The s p trying to avoid its longest losing streak in 36 years. We did get a jobs number. Unemployment rate the lowest in about 40 years. And wages rising at the fastest since the crisis. Were watching election poll numbers. Were watching earnings, everything from gopro to activision to fireye to cbs as we head into the final weekend before the election. Down here at the big board ringing the bell abm industries, a Facility Management provider celebrating its 45th listing anniversa anniversary. At the nasdaq, smart sand, a producer of Northern White Sand celebrating its ipo today. We see oil not far from 44 today. Its interesting if youre growth oil like eog resources, you got some real pump today. Thats because they gave you a longterm plan. People are reading the readthrough from qorvo and theyre selling apple. Theyre saying. No ones going to give apple a break here. I want to understand that. Again, you said they had increase in demand at the last minute. Right. The yield wasnt there. No ones going to believe it. Why is that a bad thing . Apples not going to get a break any more than any other company. Theyre going to say come on. Demand is demand, even if it came in late, its still there. Unless youre going to get a takeover bid or rumor of takeover bid, alexion because of a conference may have been canceled, youre stuck in a very difficult moment where you cannot seem to get any momentum. Like at kraft heinz, they beat on the bottom line. Top line wasnt so hot. Wasnt horrible. Doesnt matter. Thats a pariah. Wow, look at that. The question for kraft heinz really is when do they do the next deal. I know. That resonates amongst the crowd trying to figure that out. Continue to do deals to grow. You have to grow to grow. But its not organic growth. Theres no organic growth there. No, but it hasnt been about that. Its about doing the next deal, capturing a lot of cost synergy or cost savings and maybe some revenue synergies. But more just cost savings. And what will that deal be . No, youre right. Do they try and take a shot at mondelez . Were all kind of caught here right now. Youre going to be talking to elon musk. Teslas one of the great growth stories of all time. Its doing a deal with a company that may not be great solarcity where first solar reported one horrendous number and pushed back everything. Now hes going to say we have nothing to do with first solar. Im saying i could give you a negative thesis on almost every Single Company right now. I could spin things negatively. Starbucks had the greatest quarter, most profitable quarter, raised dividend. Thats unbelievably good. And i can say, wait a second, they did not do the 5 in the u. S. , they did 4. I think even the executives at these Great Companies who are unbelievable, do not understand how the stock market is diverging from their work right now. The stock market is saying we got an election coming up. And holy cow will there be a federal reserve. On the one hand is there going to be a rate increase, and on the other hand is there going to be one . Theres some people here think im going to be appointed to the federal reserve. Yes, right here. I am looking forward to that. I expect you to answer the phone when i call, all right . Its going to be moved to new york. Ill be fine. Just drop in. You can spin a negative thesis on any company. I can spin a negative thesis on gopro which was wider than expected loss. Oh, yeah. Revenue down 40. They warn on the quarter, they warn on the year. Shipments down 36 . Well, you know what happened this quarter that i think may have hurt them . Im sorry, im being facetious, did you know they had a fight with amazon . They had a fight with amazon. Gopro stopped selling hero 5 on amazon. They said, listen, youre discounting us too much. Lets think, whos had a fight with amazon that thats really paid off . Hey, got a battle with amazon the other day, youre a retailer, you did that unbelievable special on amazon. Amazon has enormous power. Battle amazon, what is that like . Is that like the Cleveland Browns playing, you know, dallas . No. No. It is like a division 3 team playing dallas. Okay . Its a division 3 team gopro. No. It may be maybe thats cool, those high schools in cleveland, in ohio, that play, you know, that are unbelievably good. Or it may be don bosco. Don bosco is very good, they would lose to dallas i think. When you put together with fitbit, idcs report on apple watch, on wearables. These are Niche Products that turned out to be commodities. Thats what they turned out to be. Why is that a surprise . Because the Companies Presented themselves as broad products. Gopro, how could you not know that . The whole media, i mean, they had a strategy to make themselves a media business, remember that . I told you when i got on gopro when i was in hawaii. Yeah. And i said i just saw a pig on a surfboard wearing gopro and they said have you seen the goat on the surfboard . That was it. Boom. The goat on the surfboard wearing the gopro, could there be what was left . I mean, i ask you. They jumped a shark on the surfboard. Lets get back to the jobs number this morning. That all important last final number before the election. The Labor Department reports 161,000 jobs were added in october. Unemployment ticks down a bit to 4. 9. Joining us first on cnbc with reaction from the Obama Administration is u. S. Labor secretary tom perez. Tom, good to have you back. Mr. Secretary, welcome. Good to be with you. The declining usix, declining wages, is this what full employment is supposed to look like . Were not at full employment yet but were making progress. Seven years ago our Unemployment Rate was 10 , now its 4. 9 . You look at the quality of jobs that are being created, you know, roughly twothirds of the jobs last month are in middle class or above sectors. And this continues a good trend. And as you correctly point out, you know, perhaps most importantly, were seeing evidence of real wage growth. Sustained real wage growth, 2. 8 over the last year. Thats the best weve seen since the recovery began. And, you know, workers have been looking for a meaningful raise for quite some time. They deserve that raise. And were seeing this sustained evidence that theyre getting it. Not only in these numbers, but you look at the census data, last years 5 or 5. 1 growth for the avrerage family was the largest on record. So were starting to see it. Weve got to keep moving. I still think we have slack in this economy. We can do even better. If thats all true, why is the Participation Rate not popping more . Well, again, you know, the Participation Rate is a little higher than it was a year ago. And dont forget were swimming into demographic headwinds, although i mixed that metaphor. And so, you know, when you have a labor force Participation Rate thats a little higher than it was a year ago, and youve got all these people retiring, what that means is actually youre doing pretty well. Im very encouraged by the fact that the number of discouraged workers is at its lowest level since when basically the president first took office. And that tells me that folks have confidence that they can get back into the workforce. And that low end level of discouraged workers helps explain why the usix Unemployment Rate, which is the most broad indicator of unemployment has actually gone down to its lowest levels since 2009. So these are all data points pointing us in the direction of an economy that continues to move in the right direction. Undeniably more work to do. People i think we can do even better on lowering the Unemployment Rate. When you invest in infrastructure, you create good jobs. When you raise the minimum wage, you put more money in peoples pockets. And as you know, consumptions roughly twothirds of gdp. And so, you know, you pass Immigration Reform and youre putting money in peoples pockets and growing the economy. We know what needs to be done. We just need to muster the political will to do it. All right. Mr. Secretary, jim cramer here, good to see you, sir. Good to see you, jim. Couple areas that are bright spots. Health cares always been a bright spot during your administration. Yep. I see the professional Business Services, ive been worried about that, thats pure white collar financial activities, these were decimated during the great recession. What kind of jobs are being create there had . I see computer business, Computer Systems. These are jobs, high professional jobs that have not come back that are finally coming back. Where are those jobs being created . Just kind of give our viewers an example of whats coming back here. Yeah, weve had we had a good month we had a better month last month than this month, but professional Business Services continue to be one of the primary engines of growth. I think its the second highest sector after education and health over the past year or two. And you see those in consulta s consultants. You see those in financial analysts. You see those in the i. T. Sector within business and professional services. And, again, you know, we look at the data on the average hourly rates of these jobs. These are really solid jobs. And to those who are saying, you know, this is a low wage recovery, youre just not looking at the data. This is, i think, a really solid context. And your point about health care, you know, since the aca passed weve seen 15. 5 million jobs created in the economy. So those job killer predictions certainly fell flat. Let me ask you about the job gain in Computer Systems design and related services. Theres always been a sense that were not producing enough people who can take those jobs. Has something changed culturally in society . Are we kind of recognize that maybe even from ground up weve got to start producing people who can understand it and its starting to payoff . That would be a feel good story, sir. Jim, thats a great question. Weve invested a tremendous amount of time. Weve got 5. 4 million job openings right now in the United States. And roughly 10 are in the i. T. Sector. And a substantial percentage of those 540,000 jobs dont require a college degree. So weve been investing a lot of our workforce resources in building that i. T. Pipeline. And were working with young people. When my iphone goes on the fritz, i dont call apple, i go to my 14yearold. So what were trying to do, jim, is take that fluency that young people have with gadgets and translate that into a middle class career path. Were using the apprenticeship model working with high schools, working with coding camps. I was up in one in delaware recently, and these were people ranging in age from 19 to 50 who were getting to these coding camps. And literally everybodys leaving a job leaving the camp on the friday and starting their job on a monday. And theyre literally doubling their salary. And thats the opportunity out there. And i think theres a wide ranging nonpartisan recognition that this is a tremendous, tremendous growth opportunity. So your question is spoton. And were seeing very sustained evidence that cities and businesses and educators they all recognize that we have a tremendous need and a tremendous opportunity. And we want to make sure its available to everyone in every zip code. Mr. Secretary, appreciate your time as always. Good to see you. Thanks so much. Good to speak with you. Thank you. Lets get to bob pisani on the floor see whats moving this morning. Hello, carl. Tgif, everybody. Down eight days in a row. But declines have been very modest. Look at sectors, friday, last day of the week, mixed market here. Tech was doing pretty well comparatively this week in financials, but lagging a little bit. Industrials up a little bit. Health cares just been a horrible performer. Finally, a little green there. Take a look at the major indices for the week. The s p down 1. 8 . And the russell again underperforming the major the big cap index. This is a source of some concern on the street. Take a look where we are from historic highs. This decline this week while its been noticeable, were only less than 5 from the s p 500. Nobodys raising any eyebrows about that. But the russell 2000 now down more than 10 from historic highs. Hit historic high back in june. That is getting a lot of discussion. And this is only partially due to election jitters. A lot of this is the fed and concerns about higher rates here. So take a look at sectors in q3 here, telecom and reits down almost 10 . And those are rising Interest Rate concerns. Health care, well, that is not. Thats clearly concerns about the election. While there may be concerns about trump winning this week, Hillary Clinton is having big concerns or there are big concerns about Hillary Clinton winning particularly in health care. Look at pjp, this is the pharmaceutical basket thats out there. Its down about 13 . For the quarter overall. Thats a straight down line. Look at biotech stocks, xbi that is equal weighted biotech stocks. Were down 20 , straight down. This is all concerns about regulation. Now weve got reports of the department of justice possibly doing a generic drug investigation. We got stocks like mylan have already been done moving to the downside as well. You can see whats going on there. Finally, just want to note here, we do have an ipo here again underperforming here. Smart sand, hydraulic fracturing company, 10. 6 million shares 11. Again, another ipo well below the price talk. Carl, back to you. When we come back, starbucks president and c. O. O. Kevin johnson after the companys earnings beat. And then later on, elon musk, an exclusive from the baron Investment Conference watching the market dow opens 16. Were back in a couple minutes. When you travel, you want your needs to be understood no matter where you go. You want an experience that feels highly personalized. With watson on the ibm cloud, travel Companies Like wayblazer can apply cognitive analytics to social data to understand what a destination is really like. And who exactly, it will appeal to. Today watson is helping businesses create experiences that revolve around you. Because thats what the ibm cloud is built for. That revolve around you. Prge a manufacturer. 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Call now to request your free decision guide and find the aarp Medicare Supplement plan that works for you. Like all Medicare Supplement plans, youll be able to stay with the doctor or specialist you trust, or look for someone new as long as they accept medicare patients. But unlike other plans, these are the only ones of their kind endorsed by aarp. Rates are competitive. So call today. And learn more about choosing the doctors youd like to see. Go long. Starbucks reporting Fourth Quarter earnings after the bell yesterday beating analyst expectations. Joining us now in a cnbc exclusive is starbucks president and c. O. O. Kevin johnson. K. J. , good to see you, sir. Good morning, jim. All right, kevin, ive got to tell you i have kind of a split personality on this. As someones travel trust owned starbucks forever, numbers were fantastic. Much better than anybody else is doing in the industry. Absolutely. Theres no doubt about it that you guys are performing at a higher level than every company in the restaurant business, every company in the hospitality business. At the same time, it did not do meet necessarily expectations you had in terms of Comparable Store sales in the u. S. , not that long ago. And in the Conference Call you talk about the idea that maybe were in a new era where you just dont have as much traffic on the street, not at starbucks but people going out as much. How does starbucks triumph over a secular trend thats even called the amazon trend in your own Conference Call . Well, jim, as you pointed out, we had a fantastic quarter. We grew top line revenue 16 . We grew operating income 27 . And our same store comparables in the americas were 6 . Certainly in the u. S. We post or they were 5 . We posted a 4 in the u. S. But we saw acceleration from q3. You know, certainly all retailers are facing some challenging operating conditions today. Certainly the election is creating a lot of noise in the market. Thats requiring retailers, us included, to work harder to break through. Certainly the shift in traffic patterns from malls and theres evidence by the back to School Season that was very weak. I think thats created challenges for all retailers. So certainly continuing to create and invest in starbucks is whats helping us deliver the kind of results you saw in the last quarter. Kevin, what about a little bit of a change of narrative . I spent a lot of time with david novak and greg creed and they are saying at a certain point china is so dominant and has such great growth that we have to recognize china has the growth. In this Conference Call i felt you began to pivot. And the pivot is, okay, look, the rest of the world is okay. Our growth is china. Thats what you should be looking at. Should we be assessing starbucks as a much more of a chinese growth story with good stability around the world . Well, i think weve been clear. We believe one day our business in china will be larger than our business in the United States. And we have been committed to china for 17 years. We now have over 2,400 stores in china with the commitment to get to 5,000 stores by the year 2021. So certainly china is a big part of our growth agenda. And we feel good about the progress weve made there. Weve got wonderful stores, Beautiful Stores in china. Great partners in those stores serving customers. And we continue to see great progress. In fact, this last quarter we posted a 6 same store comparable in china. And were very bullish on china. Kevin, you mentioned the election causing a lot of noise. Weve asked a lot this season why are ceos choose to make their voice known about the election. Do you think theres any chance consumers are associating the brand or at least howard with a Certain Party and some of those consumers are visiting less out of protest . You know, i dont think so, carl. I think certainly, you know, this has been a very divisive election season. Theres been a lot of discussion around the election on television, in print and customers discussing it. But at the end of the day i think people come to starbucks for a bit of a retreat from all of that noise and a place to come to have a joyful experience, enjoy a beverage with family and friends and just connect with people. So i dont think thats a factor. Okay. Kevin, lets talk about the idea, the concept of the same store sales. At the end of your Conference Call howard does address the question about whether that is still necessarily the correct metric this quarter to analyze. How do we figure out what starbucks Going Forward is by metric . Do we judge it by the fact that roast roastery could be blown out to be a major leg of business . Do we judge the fact maybe japan will come back and europe will be coming back and look at this as a temporary low . Do we say give us the election season, give us another month and youll see something different, or do we talk about technology . Again, i struggle with the narrative of the bestrun Hospitality Company in the world. I need metrics, sir. I wish i didnt. I wish i werent stuck with the four walls and spread sheet. Ive said this to howard many times but i am because im a creature of this business. I want to know more. I want to know how to analyze. Yeah, well, certainly we have a lot of metrics, jim, that really drive the investment thesis behind starbucks. Certainly the number of new stores we open and how those stars perform is one of the metrics. This last year we opened over 2,000 stores globally. And those stores are performing at higher auvs than any prior generation in the history. Second, certainly same store comparables. And i think the point that howard was making yesterday is dont get caught up in a shortterm view of samestore comparables. I mean, if you look at the u. S. Samestore comparables in fiscal year 16, we posted 6 growth in samestore comparables. So this last quarter was four for the u. S. , five for the americas. And i think this combination of new store growth, long term same store comparables and well go through ebbs and flows on that, and certainly the strength of the brand. If you look at starbucks brand in our Channel Development segment, weve gained market share and roasting Ground Coffee down the aisle. We gain market share in kcups. We are the number one premium coffee brand on kcups and down the aisle. Our readytodrink Beverage Business with frappuccinos. Certainly the metrics looking at how our new stores are performing, how quickly were expanding new stores, how are we growing in our existing stores and we continue to deliver on that for years. And how were strengthening the brand through our cpg relationships and down the aisle. Those are all really good metrics to look at to give you an indication of the strength and the health of the starbucks brand. Thank you so much, Kevin Johnson, president of starbucks, on a quarter that was the best in the group in a challenged time. Thank you, sir. Thank you. Still to come this morning, an exclusive with elon musk from the baron Investment Conference. Meantime were watching the dow down 17 points. Dont go away. This is my retirement. Retiring retired tires. And i never get tired of it. Are you entirely prepared to retire . Plan your never tiring retiring retired tires retirement with e trade. Im in vests and as a vested investor in vests i invest with e trade, where investors can investigate and invest in vests. Or not in vests. Sign up at etrade. Com and get up to six hundred dollars. Is that they contour to tempurpyour body. Esses. You just have to lay back in my tempurpedic, and it just kind of forms to my body. It comes up to you, like hey, there you are. 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Especially in my business. With slow internet from the phone company, you cant keep up. Youre stuck, watching spinning wheels and progress bars until someone else scoops your story. Switch to comcast business. With highspeed internet up to 10 gigabits per second. You wouldnt pick a slow race car. Then why settle for slow internet . Comcast business. Built for speed. Built for business. Jim, theres never enough time in this hour. Whats on mad tonight . Fastest growing tech company in the land, twilio all the back stuff for everything you see airbnb, netflix, by the way twilio is why your uber works. Cover of forbes last couple weeks. Smart, smart guy jeff lawson. And logitech, by the way, people still use these people still use mice, you know . We kill mice at our house. We use traps. Like the rest of the world. Someones got to make them. Exactly. Jim, see you tonight. Great weekend. It was great. Wish i could bring more. This is a tough week. I think you did plenty. Well see you tonight and monday. When we come back, Evan Mcmullin who could become the First Independent president ial candidate to win electoral votes since 1968, and then of course elon musk later this morning from the baron conference. Dont go away. These goofy glasses. Yeah. Well, we gotta hand it to fedex. Theyve helped make our ecommerce so easy, and now were getting all kinds of new customers. I know. Can you believe were getting orders from canada, ireland. This ones going to new zealand. New zealand . Psst. Ah, false alarm. Hey you guys are gonna scare away the deer idiots. Providing Global Access for small business. Fedex. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Good friday morning. Im Carl Quintanilla with sara eisen and david faber at the new york stock exchange. Wage component within that trying to avoid nine straight down days for the First Time Since 1980. Were watching earnings as well. And then oil below 44 this morning. Our road map does begin with the market slump. The s p coming off an eighth straight day losing streak for the First Time Since 08. Jobs and wage growth in focus this morning. Did the numbers seal a deal for a december hike . And just four days left until election day. The candidates targeting batt battlegrounds as the polls tighten. Weve got the latest numbers, analysis and well speak to Third Party Candidate Evan Mcmullin. Plus well head to the baron conference in new york city where well talk exclusively to Tesla Ceo Elon musk about the company, spacex, solarcity, a. I. And a lot more. First up, 161,000 jobs added last month. That gives a threemonth average of about 176,000. Meantime, the markets are poised for a nineday losing streak which hasnt happened for 36 years. All of that just four days away from the elections. Lets bring in david kelly, chief global strategist at j. P. Morgan funds and vincent rinehart. Gentlemen, good morning to you. Happy friday to you both. David, are we at full employment . Yeah, we are. In fact, you know, this is a very good employment report. But to me the most remarkable statistic in this is the number of people who are short term unemployed. People unemployed less than five weeks. Thats lower than its been 98 of the time in the last 50 years. We are basically out of easily employable workers. Weve got some longterm unemployed who are finding it hard to match up with the jobs available. But in terms of shortterm Unemployed People who are easily employable in this economy, were basically running on e. Were at full employment. Vincent, do you agree . Is it full steam ahead on december . This was a solid employment report no question about it. I think theres evidence of labor hoarding on the part of firms. You dont see many quits many layoffs. And the fact theyve got to pay workers more to keep them on the job tells you the market is pretty high. I think for the fomcs standpoint in september when they put the december fed meeting in the crosshairs, basically meant we had to have job gains averaging about 150,000 for the three months leading up to that meeting. Well, weve got two of them, and with the revisions in hand, as long as employment gains for the month of november have three digits to the left of the comma, then the fed will tighten. I dont dispute the fed thing, but david, on the full employment factor, how come the share of americans in the labor force right now is only 62. 8 . Which is still near a fourdecade low. The percentage of americans that are either working or looking for work. That doesnt sound like full employment. No, because this is the most misused and abused statistic in the entire economics system. The reason the Labor Participation force rate is so low is because the baby boom is retiring by the millions. What we measure labor force by the percentage of the population over age 16 that is either working or looking for job. The problem is that so many of those people are over 65 now and are simply retired. And thats whats going on. If you look at discouraged workers, people have actually given up looking for a job even though they looked in the last 12 months that numbers less than 500,000 people. And its the lowest its been since 2008. The numbers say that were at full employment. We are at full employment. Vincent, do you agree with that . Even with Industries Like mining, construction, manufacturing, trade, retail trade, transportation, warehousing, information, leisure and hospitality all barely or not adding jobs at all last month . I would first say that the list of misused Economic Statistics is pretty darn long. And civilian the employment population ratio is one of them. But id put it a little further down on the list. It is true that the broadest measure of the Unemployment Rate usix tick down 0. 2. But i think what youre pointing out is the composition of the job gains isnt very attractive. Were Getting Service employment but not manufacturing employment. Were getting the lower paid wages rather than the higher paying Wage Industries hiring. True average Hourly Earnings went up, but it went up because of paying the lower wage people a little bit more. So thats bad for income distribution. Its bad for Income Growth generally. And it puts pressure on the political system. David, what happens if labor force doesnt bounce here . Does that suggest theres a lot less slack than people think . Yes. The labor force is not really going to bounce over the next few years. What we could do about it we could do Immigration Reform which would bring more qualified workers into the United States, but if we assume thats dead on arriv arrival, if were not going to bring more qualified workers in, then we are gradually going to overheat. I think, you know, after the election, after the gloom and the uncertainty of the election goes away, when the fog clears weve got rising earnings, rising gdp, good employment gains, weve got wages beginning to pick up here. I think were looking more at a little bit of overheating in 2017 because we really are running out of the capacity to grow and growing faster than our longterm capacity. Gentlemen, quite a number, a lot to chew on today and will be for several weeks. David, vincent, have a good weekend. Thanks. Thank you. As we said, four days until election day. Our john harwood joins us this morning taking a look at some of the latest poll numbers. Good morning, john. Good morning, carl. Latest poll numbers from the Washington Post and abc news, which is conducted a tracking poll that has a good track record over time shows that Hillary Clinton inching back toward a three percentage point lead, 4744 in that track. Earlier in the week shed been down. This jibes with the assessment of strategists in both parties that this is looking like about a threepoint popular vote race right. Now, the popular vote is less predictive this year than it has been in the past because Hillary Clinton is doing so much better in states that arent in the balance, states like california and texas, where texas shes running closer to donald trump than past democrats have. And in california shes winning by more. But take a look at the electoral vote map. Shes still barely over the 270 votes she needs to win the white house when you look at states that are either solidly or leaning her way. Donald trumps got a lot of opportunities but not all of them great opportunities. So both of these candidates are crisscrossing the country. Hillary clinton is penning a lot of emphasis on pennsylvania. She goes there today, she goes to florida tomorrow with katy perry. Donald trump is today in New Hampshire and ohio. And hes going to be crisscrossing the country over the weekend looking for breakthroughs somewhere in places like wisconsin, michigan, colorado, nevada. Tough map for donald trump, not impossible though. John, well be checking in with you throughout the day too, thanks so much. A quick programming note, well go to the baron conference in a few minutes here. Billionaire investor ron baron will join us on squawk alley, and well talk exclusively with teslas elon musk. Thats coming up 11 00 a. M. Eastern time. When we return here, the Third Party Candidate who could deal a huge blow to Donald Trumps fight for electoral votes. Does independent president ial candidate Evan Mcmullin have a shot in utah . Hell be joining us next live. Plus, wages in the u. S. Seeing their biggest year on year gain in seven years. Former labor secretary e lan chao joins us to talk jobs, the election and the sales scandal rocking wells fargo where shes actually a member on that board. Huge show ahead. Stay with us with the dow down about nine points. Remember this guy . Hes the drug company big shot who raised the price of a lifesaving pill by five thousand percent. Said he wished hed raised it more. Prop sixtyone targets drug company pricegouging to save lives. The drug price relief act will save californians nearly a billion dollars a year. Join the California Nurses Association and aarp and vote yes on sixtyone. The drug giants wont like it. And hell hate it. While the polls have tightened, donald trump continues to face an uphill electoral climb. One state youve got to be watching this year, is utah, which hasnt voted nonrepublican for president since 1964. Yet polling does suggest independent Evan Mcmullin remains an outside contender. So much so that donald trump has attacked him calling him a puppet and someone hes never heard of. Heres mike pence at a utah rally last week. The truth of the matter is theres only two names on that ballot that have a chance to be president of the United States of america. And a vote for any candidate other than donald trump, bottom line is a vote to make Hillary Clinton the 45th president of the United States. Its a hard truth. So its time to come home. Its time for republicans to come home. Joining us now from Salt Lake City is the independent president ial candidate and utah native Evan Mcmullin. Good to see you again, evan. Good to be with you. So the latest monmoth poll shows you slipped to third place a full 13 points behind donald trump. Are you worried about those gains slipping away . Well, that poll has been an outlier since the beginning of this process. It had me a couple weeks ago at 20 when other polls had me at 29 or 30 . But even by the standards im up by 4 since they last run the poll. So its an outlier. But i do think whats happening is as we get closer to election day and learn more about Hillary Clintons corruption, people here in utah are nervous about Hillary Clinton becoming the next president. They dont like donald trump either. And so its very volatile. And thats why you saw my climbing in the polls very quickly, and you see a lot of movement, a lot of fluctuation. Weve got to keep fighting until november 8th and thats what were doing carrying our message across the country or across the state, especially now in these final days. But were the only campaign that has a ground game in utah. Weve got a lot of momentum. And we know other polls are coming out that will show a much closer race. That may be true but rasmussen has trump at 31 in utah and you at 21, i wonder if the mike pence message of republicans coming home at a time when he is gaining more National Support is resonating. Well, i do think as i said people are nervous about Hillary Clinton. Every time they see a new scandal about her corruption. So i do think something is happening there. But i think this race is far from settled. Again, other polls will come out soon showing a much closer race. But in mike pence argument the republicans should come home, you know, i think that may have resonated for some, but a lot of people i think it pushes them farther away. I mean, the reality is that people want to come home. You know, i was with the Republican Party for a long time too. But the truth is that donald trump doesnt represent our values, he doesnt represent conservative and timeless american principles. Hesse veerly lacking in character. Hes going to be up on child rape charges in december. I mean, this is not somebody who people want to stand with here. So the race is still very volatile. Were going to fight to the end. Weve got a lot of momentum. Again, were the only people, the only race in this campaign in utah with a ground game. Just review your strategy for those that dont know. Youve always been harnessing these utah votes, especially among the mormon community. I think youve been saying that your goal is to get a tie, and neither candidate to get to the 270 electoral votes. But then it would go to congress, and it would look likely that if the republicans are in control that would hand it to donald trump. I dont think thats the case. I mean, our constitution provides for this system in the case that neither major Party Candidate for example or the no candidate is popular enough to win a majority of the electoral college. Thats what this process is designed for exactly this situation where you have two major Party Candidates who are so unpopular. If we get that far, i believe the race will reset. Im the only true conservative in this race. I share the policy positions and goals of the House Republicans, most of them. And so i believe that they will side with me, a lot of them, a lot of states will end upsiding with me in that scenario. I also believe the democrats wo wont have the votes to elect Hillary Clinton will look and say do we want Evan Mcmullin or donald trump. A pick i think would be very good for this country. Not a sure thing, but its worth the fight. Youre only on the ballot in what, 11 states, and only look competitive in one. Well, were a threemonth president ial campaign. And, you know, id hoped somebody like mitt romney would step up and do this months and months ago when they didnt do it and when he and others didnt do, i decided that i needed to go ahead and do it. So weve got some constraints on our campaign. Were very transparent about them. But we knew we had a chance if the race was close to get in and win a state or two. We dont need to compete in every state across the country. Thats not our strategy. Our strategy is to compete very strongly in a small number and elsewhere in the country. But in terms of winning on november 8th, a small number so that if the race is close we can block both Hillary Clinton and donald trump and take this thing to the house. Its very difficult. Yeah. But given just the unfitness of both of these candidates, theyre both so awful, it would be so terrible for our country. Its worth a shot. Well, you clearly made an impression and gained some traction so much so that you drew the ire of donald trump. We mentioned he called you a puppet, said hed never heard of you. I know you shot back pretty hard on twitter. Whats been the response since then . Hes got a lot of angry fans supporting him. Yeah, well look, hes never heard of me because ive spent my life serving the country in the shadows as a cia officer, not seeking the limelight. In fact, avoiding the limelight. Hes been seeking the limelight and avoiding service. So thats why weve never crossed paths before. But he knows who i am. I know he knows who i am. And the reality is that were fighting for the fundamental principles that have made this Country Special and namely all men and women are created equal and for the cause of liberty. Thats creating a lot of anger among the White Supremacist Movement and White Nationalist movement supporting trump. Theyre threatening me, theyre threatening my family. Theyve even called for a genocide of people of my faith. Im a member of the church of the jesus christ of latter day saints, but this is what were up against. We are fighting because we know this is the type of america we know Donald Trumps movement is creating. We shouldnt stapd for this and shouldnt have a corrupt president like Hillary Clinton either. Shes selfserving and believes shes unaccountable to the american people, wants to grow the size of government at the expense of our individual liberty. We have to stand against these things and the character flaws of both of these two major Party Candidates. I think a lot of people agree with you, evan. So what does your strategy look like . Its friday before the election, over the next four days. Were making our case, were differentiating ourselves between mainly right now donald trump. Because its going to be donald trump or me who wins the state of utah. Thats the reality. Hillary clinton has a ceiling here. She cant get it done. Everybody knows that. She knows that. Thats fine. So were differentiating ourselves between donald trump who is a Big Government liberal and me the true conservative in this race. Were all over the state making the case, getting to know people. And we hope that will carry the day. We will be watching utah. Thank you, Evan Mcmullin, independent candidate for president. And, david, if he does win, it would be the first time that an independent candidate has won a state actual electoral votes since 1968. Right. 68. Who was it, do you know . I dont know. Got to find out. Well find out. Were going back to the history books on a lot of issues. Actually was probably George Wallace. All right, well find that out and make sure im right. And when we return, remember this . And they showed he didnt pay any federal income tax. That makes me smart. We discuss how this oneliner may be creating a rare moment of unity on capitol hill. Much more ahead. Stay with us. Donald trump says hes been smart by using existing laws to avoid paying federal income taxes for years, if not decades. But our next guest says the gop nominees public tax admissions have created a real opportunity for bipartisan and comprehensive tax reform. Something of course that we have not seen in 30 years. Joining us here at post nine, Pulitzer Prize winning columnist, jim stewart. Its become my theme this Election Year. Maybe im being naive and, you know, seeing a Silver Lining here, but i did talk to the democrat of oregon who may head the Senate Finance committee or may be the ranking minority winner or kevin brady who heads ways and means, theyve both said theres so much outrage out there over trump not paying any taxes that the wind is really at the back of people who want to finally reform the tax code in a way thats fair. You go down that road and you hope that would be the case, i think many people would hope it would. I hope so. And so many deductions, so many things, and yet you seem to get caught in this ma ras that makes it impossible because you have to not just do individual, you have to do corporate. And theres competing well, its all just crying out for reform. But i think the key is when they start getting down into the weeds, thats when the battles break out and they all fall apart. I was really struck by talking to both sides is if you look at the big picture architecture, both sides are quite close. They want to simplify the tax code. Both the democrats and republicans have proposed reducing the three brackets. They want to simplify capital gains. They disagree exactly what rate to tax but the philosophy is the same and want to cut the Corporate Income tax. Those are like the big issues. So if they can agree on that, can they somehow decide lets just push the details and agree well work those out somehow . I mean, its really tragic to me that they have not been able to do anything to now. I love youre talking about taxes when were talking about fbi scandals on one side and treatment of women. No, its good, but the problem is the way these two candidates are painting their tax proposals are polar opposites. The simple narrative is hillary wants to raise taxes on the rich and donald trump wants to cut taxes on the rich and corporations. So how can you possibly find a Common Ground there no matter whos president . Well, heres something interesting. Neither president ial candidate has really put forward a coherent reform plan. I mean, trumps plan if you call it a plan, even republicans say this is ridiculous. I mean, it doesnt even attempt to reach any kind of balance in the federal budget. It has crazy ideas in it like you get to immediately deduct expenses but also going to deduct interest expenses. Hillary clinton has a bevy of specific proposals mostly aimed at increasing taxes on the wealthy, but theyre not a structural reform. To me, again im seeing the Glass Half Full here, theres room for compromise. They both kind of left it to their congressional parties. And the House Republicans have put forward this, you know, way forward. You can see it on the internet. Its very coherent, very clear. You can disagree with specific rates on it. The philosophy though is very clear. And as i said, its not that different from what senator wyden came up in the past. Ive had conversations with people close to the clinton camp for months and months now whove indicated at least and those who are on wall street who support her believe Corporate Tax reform will be one of the first agenda items if shes elected. Yeah, well, ive talked to the clinton camp too, and mrs. Clinton herself if elected says she wants to somehow unify things. People say thats hopeless. But let me tell you one area where i think you could actually make a big step forward towards unifying this country is in the tax area. I mean, weve got almost uniform agreement that this thing is a mess. And its not fair. Its not, you know, maximizing growth and revenue. And its ripe for improvement. Except theres a lot of lobbyists and a lot of money at stake. Its just hard to imagine a process that doesnt end up with things going awry. Well, i agree. Sorry. Look, we havent had it since 1986. Right. It did happen. It could maybe happen again. I mean, i realize that was a different era. It wasnt as polarized. It clearly is going to take some willingness when the rhetoric of the election cools off for people to say, well, maybe we actually should Work Together for the better of the american people. The apple case, the fact that the european governments are going after u. S. Corporate taxes adds some urgency and unification to this issue. Right. And even if they cant do everything at once, at least break a piece of this off and say like on Corporate Taxes something has to be done here and we can do it. Im hungry for congress to do something that benefits the American Economy and american people. And i think everybody is. It would be a real confidence builder. Jim, thank you. Jim stewart. You were right. Five states, George Wallace 1968, nixon still won. M coing up, we speak with former deputy of labor secretary elaine chao, well get her take on the elections, jobs and much more. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Im Courtney Reagan and heres your cnbc news update at this hour. Heavy fighting erupting in the eastern neighborhood of mosul as Iraqi Special forces launched an assault deeper into the urban areas of the city. Columns of Armored Vehicles wound through open desert to attack isis militants from a second entry point. British Prime Minister theresa may sought to reassure european leaders that her time table for britain to leave the eu remains intact. British newspaper headlines were dominated by reaction to the ruling. Well, taco bell says it plans to grow to 9,000 locations in the u. S. By the end of 2022. This opening the door for 100,000 new jobs. Currently the company and its franchisees employ some 210,000 people. And harvard is suspending its Mens Soccer Team for the final two games of the season over sexual comments made about members of the woMens Soccer Team. Harvard has been investigating the team since an article in the schools paper detailed the practice of sexually explicit scouting reports of freshmen women soccer players. Thats your cnbc news update for this hour. Back to you. Courtney reagan, thank you. The last jobs report before election day, nonfarm payrolls increasing last month by 161,000. The Unemployment Rate fell to 4. 9 . But the real story here is wage growth. Steve liesman joins us with more on that. Steve. Yeah, sara, this was a highly anticipated report that could have had strong implications for the president ial election, but looks like it has little. Heres the numbers. It came in right in this kind of purgatory world of not too hot, not too strong, 161 was just below the expectation of 173. What you lost you got in the revisions of august number up 44,000. Unemployment rate ticking down 4. 9 . Theres what sara was talking about. Strong hourly wage increase, Labor Force Participation ticking down to 62. 8. Heres where the jobs were. They were in construction up 11,000. They were not in manufacturing, which was down 9,000. Finance did well, Leisure Hospitality up 10,000 and government has been doing a little better these days up by 19,000. Most economists say the jobs report was solid and the best measure it may have had little impact on the election, donald trump didnt tweet about it from what we can tell, not yet so far. Rates markets also taking the number in stride. A 61 chance of a fed rate hike probability. Thats according to to reuters, which tends to run a little bit lower than the cme followed by others. The fed sees job growth just needs 100,000 as enough to keep the Unemployment Rate in check. So this is enough for the fed to hike in september. Atlanta fed president Dennis Lockhart earlier this morning calling the report, quote, satisfactory. Heres the debate, folks, whether the economys long run Unemployment Rate can go lower drawing in more people who have dropped out of the workforce. The doves on the Committee Want to give the economy, quote unquote, more room to run, sara. Steve, thank you very much. On that now lets get to the cme group, Rick Santelli with the santelli exchange. Looks like yields have come off their highs for the day, rick. Yeah, yields have been bouncing around some uturns after the data and we have ed lezere to break it all down with us. Thank you for joining us. Thank you, rick. Pleasure to be with you. I disagree with Steve Liesman for a little bit. To me the surrogates, one of the surrogates for Hillary Clinton is going to directly zero in on this report, its going to be used in a positive way because as he pointed out up 0. 4 month over up on wages, up 2. 8 year over year, strongest since june of 2009. I tell you thats going to be the theme. But heres my question to you, weve had guests say this and my emails are going crazy. In the end were adding lots more Service Sector jobs that pay less than better jobs like manufacturing. So when you have a lot of jobs that arent as good adding a little bit to wages, it is going to push the wage component. Is that fair . It is fair. And i think what your emails and commentators are telling you is that if we look at the economy, it basically looks like weve peaked out and weve peaked out at a low level. And thats why theyre not feeling it in their pocketbook. So heres basically the problem. If we dissect it and look at the numbers, its not actually quite inconsistent with what steve was saying. I think you guys are actually closer than you think on this. Whats going on, look at the employment rate. I always look at that, and i know its kind of a boring thing to look at, but its to me the bottom line in terms of the most important number. Its just been stuck. Its stuck at the high 59 range. It should be in the 6 1 range. So what people are telling you in their emails is, gee, you know, labor markets okay but we still dont feel its giving us the kind of buying power that we should have. The other thing you see in the wage growth while i do think that its a good thing that were seeing that positive wage growth right now. Oh, definitely. Absolutely. But it also indicates that were peaking because what you tend to see is wage growth occurs when youre at the final stages of a recovery. It doesnt occur early in the recovery. So when you see wage growth taking off, it probably means were pretty much at the top. And what people are complaining about of course is that the top just doesnt look very good. Then the final point is that the job numbers, even though theyre decent, the job number increases have fallen. And theyve fallen relative to where they were over the past year. So all of those things kind of look like, yeah, you know, were kind of getting things are fine, things are not terrible, but theyre not great. And thats i think what the complaints that youre hearing are all about. Well, ill tell you what, you must be clairvoyant because im going to read another email. And i get this almost every time. And i think its important. And its about what you were pointing, employment to population Labor Force Participation, yes, its not at the worst levels. But heres an email, when fewer people are earning wages, but the same number of people are eating, wearing clothes, wanting to pay for entertainment, go to restaurants, it means your economys becoming poorer, not richer. Is that valid . Yeah. Yeah, it is valid. And actually what i would go back to is a number that we chatted about a little bit last month. And that is, you know, when you look at the census figures and look at Median Income and how things are doing there, you know, it looked like we had a pretty good year in 2015 and people say, gee, i just dont feel it, it wasnt really showing up in wage growth even with current numbers wage growth is just, you know, a little bit above inflation. Its not like this is gang busters real wage growth. And everybodys saying whats going on . And primarily whats going on is we have more people working, thats a good thing, its better to have more people working than fewer people working. Yes. But the point is that were working harder and were not making a whole lot more. And i think thats exactly what your last contributor is saying. All right. I want to get to an optimistic topic. Okay. Yesterday, quickly, productivity improved a bit. Yeah. We need more improvement to get to where we were. Quickly comment on productivity. Okay. Productivity is key because wages dont grow in the long run unless you have productivity growth. Thats a fact. Thats well demonstrated. So the fact that productivity went up and went up considerably in the last quarter is a good thing, unfortunately year over year it was completely flat. So what we need to see is more sustained productivity growth. To my mind the only way to get that going is to see higher investment to create a climate where businesses want to get Capital Expenditures growing again. Without that were not going to see productivity growth, without productivity growth were not going to see wage growth. Ed, thank you. Its always interesting when you start to dig into some of these issues, predicated on big data points like employment. Thanks for taking the time. David faber, back to you. All right, thank you very much, mr. Santelli. Coming up, an exclusive interview with the ceo of saudi aramco. And its the final push in the race to the white house. Only four days to go 6789 fo. Former labor secretary elaine chao joining us and carls interview with teslas ceo elon musk live from the baron Investment Conference at 11 00 a. M. Eastern. The greatest population shift in Human History is happening before our eyes. Sixty to seventy Million People are moving to cities every year. At pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. Partner with pgim the Global Investment management businesses of prudential. If youre looking for value in the stock market, and who isnt, do you need to look outside the u. S. Borders . One strategist says yes. Hell explain why at tradingnation. Cnbc. Com. More squawk on the street coming up. For the holidays. Before his mom earned 1 cash back everywhere, every time. [ dinosaur growls ] and his dad earned 2 back at Grocery Stores and wholesale clubs. Yeah even before they earned 3 back on gas. Dannys parents used their bankamericard cash rewards credit card to give him the best day ever. Thats the joy of rewarding connections. Learn more at bankofamerica. Com getcashback. It is the final sprint for Hillary Clinton and donald trump. Just four days to shore up final support in what is proving to be a very close race. Investors are certainly paying attention. Joining us now from washington, former clinton gore Senior Advisor morris reed. And here at post nine former bush and reagan advisor ed rogers. Gentlemen used to Work Together. Youre on opposite sides of this debate. So, ed, the jobs report today. Did it provide anything to talk about, or are we just going to continue to hear character attacks on both sides throughout the weekend . I think character attacks are in order. I think the jobs data today didnt give anybody a lift, more of the same, more of an anemic figure you can read a couple different ways coming out of the Obama Administration, certainly nothing to give hillary a lift going into the last few days. I dont know, morris, cant she hone in on the fact that wages are growing the most weve seen since 2009 . And weve seen steady job growth averaging just under 200,000 jobs per month over the last year. Its strong growth. Its not the best, but its certainly not as bad as its been. I think what youre going to hear from Hillary Clinton is its time to get people to the polls. She needs to focus on turnout. Everything else doesnt matter. If she doesnt identify her potential voters and get them to the polls, it doesnt really matter what the jobs numbers are. People need to turn out for her in order for her to win. I mentioned the final weekend, ed. New york times has a good look at how fridays prove to be surprising moments in this season. Very much so. The fbi revelations, like the letter last friday. And its on friday, a lot can happen. The access Hollywood Tape came out on a friday. Are we in for a surprise . Well, that would be fitting with how its gone so far. And lets face it theres a lot of people out there holding some cards they havent shown yet starting with director comey at the fbi. Theres been revelations and leaks over the last few days. Some of the emails on weiners laptop are coming out to not be duplicates or turning out to be they are fresh content as far as hillary is concerned. So, yeah, we theres a possibility, theres a lot swarming around that could surprise us later in the day and add an extra element of surprise to the election itself. Well, morris, back to the employment numbers. I mean, 4. 9 Unemployment Rate as sara referenced, 2. 8 year over year growth in wages, with those kind of numbers you would think a democratic president coming off eight years of nktic administration would be in a great position, and yet her message doesnt seem to resonate that well. Well, first, id like to blame the fbi on ed. I like to blame all these things on ed all the time. Yeah, go ahead. No, but do you think the democrats are really crediting the fbi with this move . Theyre desperate. Theyre lashing out at whoever they can. Sorry, morris, go ahead. Yeah. This has been an unusual campaign, the focus on substance and issues havent really broken through on either sides. So you see what you have to do is focus on things that are going to move the needle. Going hard on the fbi director does work right now for hillary. Focusing on substantive issues dont work. She needs to focus on whats going to move her voters to the polls. And thats what shes doing. In the last week this race has pivot from being an unflattering referendum on donald trump to being mostly an unflattering referendum on Hillary Clinton. The question is whether or not hillary got up a big enough head of steam and trumps just got too much baggage to catch her. Are we going to see you again before election day . On election day. Okay. Give me prediction then, does he have enough momentum . I dont think so. If you had to call it today, i think shes got the edge. Hey, a lot could happen. Ed, youre a smart guy as always. Thats why i love you. Thanks, morris. When are you coming back to work for me . What happened . I told you youd be back begging for a job. That was four years ago. With hillary in ill get more money i think this is a twopoint race, ed. If you look ive always been one that said it was very, very close. I think this is going to come down to be a gore v. Bush type of election and really going to turn into a turnout and funny enough it may be florida again. Well know early, if hillarys winning wisconsin, if shes winning virginia and north carolina, its going to be over early. Well, as you know, its very difficult for donald to do this, right . Hes got to run all five and flip a state, which is almost virtually impossible. Im not going to count him out just yet. Gentlemen, we have to leave it there. Very Friendly Exchange on both sides. All right. Lets get to our hadley gamble. She spoke exclusively to the ceo of saudi aramco and joins us now from london. Hadley. Hey there, so were on the sidelines of this oil and gasz climate initiative. This is basically ten Major Oil Producers all coming together and trying to get on the same page to invest 1 billion into finding ways to promote climate change, initiatives and renewable energy. Big question is of course a billion dollars just a drop in the pan. I asked some of these ceos are we going to see an increase in that kind of investment if oil prices go back up. I spoke exclusively to the ceo of saudi aramco whats your price outlook for 2017. Take a listen. I think it will start gradually going up in the first half of 2017. We see a gap between demand and supply closing. It will be closing in the first half of 2017. The inventory levels start to go down and were expecting more to happen Going Forward. So there was the ceo of saudi aramco basically sounding very positive about Oil Prices Going back up by 2017. Of course that would leave many us to believe he thinks theres going to be some movement from opec producers as they meet later this month. Of course the big question for saudi arabia, this is a country of course that relies very heavily on oil prices to promote stability and to basically keep the state running, so the big question of course Going Forward is, you know, what are we going to see in terms of an ipo of saudi aramco coming down the line in 2017 and whether or not the oil prices are going back up to stay. Guys. Hadley, thank you very much for the comments from saudi aramc. Much more ahead on squawk on the street with former secretary labor elaine chao. Ah, beth. So the elevator is stuck again. With directv and at t you can stream your favorite shows without using your data. That makes you more powerful than being stuck in an elevator with a guy with overactive sweat glands. Sorry, rode my bike today. Cool. Hey its your tv, take it with you. Watch all your live directv channels, on at t, datafree. Guyhey nicole, happening here . This is my new alert system for whenever anything happens in the market. Kids a natural. But thinkorswim already lets you create custom alerts for all the things that are important to you. Shhh. Alerts on anything at all . Not only that, you can act on that opportunity with just one tap right from the alert. Wow, i guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at Td Ameritrade. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats 10 times faster than slow internet from the phone company. Say hello to internet speeds up to 150 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. About 14,000 fewer jobs than economists were expecting. The Unemployment Rate ticking down slightly, now 4. 9 . It was the final jobs report before tuesdays president ial election. Were joined now by secretary elaine chao, former u. S. Labor secretary under george w. Bush and a distinguished fem low at the hudson institute. Always nice to have you, secretary. Thanks for being with us. Thank you. If you were on the white house lawn instead of secretary perez as you were many times for us and it was 4. 9 , up 161 with i think an average around 176,000, what would you be saying . Yeah. If i were in his place, i would be saying one thing, but im in my place so i have to say what i feel is reality. If people are looking for drama in this report, theres not much drama. On the other hand, theres not much difference when what was expected except that as you mentioned the net new jobs created was below expectations and the level of job creation continues to be weaker than expected. I think whats interesting to note is the labor Participation Rate. That ticked down a little bit to about 62. 8 from 62. 7 last month. We thought that we were on a good flied path for labor Participation Rate for it to go up, but unfortunately it has not gone up. Ten years ago, the labor Participation Rate was about 67 , 68 . So with a population, working population of about 157 million americans, those differentials in terms of the labor Participation Rate means that a lot of discouraged workers are still out of the workforce. And thats of concern. The second issue is the gdp growth. We are still not seeing the robust vibrant job creation rate that we would hope after a steep decline after nearly eight years. Generally, the recovery is much faster and it is much more robust. So i would say that the gdp Growth Numbers are disappointing, even though the Third Quarter advanced estimate was about 2. 9 . Times have shown, the past has shown, generally the Third Quarter estimate before an Election Year is generally positive, and what happens afterwards is that 58 of the advanced estimates are revised downward by about half a percentage point in the next six months. So well have another estimate of the gdp by november 29th and then lets see what happens. Yeah. Secretary, i wanted to ask you about trade policy, very much resonating with a lot of voters. Donald trump has tough talk on trade. Do you agree with his positions . Do you agree with potentially imposing tariffs on china . And dupg investors should be nervous about it . Well, both candidates are antitrade. Both mrs. Clinton and also secretary clinton and mr. Trump have come out against trade. I think there are a lot of frustrations and anger about the loss of jobs. My personal take is that its technology, actually, thats creating so much of the disconnect and that the rapid pace of technology is creating a great deal of anxiety on the part of our population who are dealing with such fast, rapid changes. And i think technology and rapid acceleration of the rate of technological change is creating a great deal of anxiety. So we have a very important legislation, billed as potentially up for consideration. Thats tpp. And its questionable as to whether it would be brought up during the lameduck session, number one, and number two, whether it would make any progress if, indeed, both sides, both candidates, secretary clinton and mr. Trump, are against it. It sounds like you dont agree with his position on trade. I think trade overall, fair and free trade, creates more jobs within the United States that are related to exports and imports. And im for anything that creates new jobs. What are your expectations, then, in terms of an economy under mr. Trump . I think generally speaking republicans tend to be for less taxes, less regulations. We are one of the most highly tax ld nations in the world. I think were the United States has a second highest tax rate. Obviously in terms of regulations, one of the suppositions for why the Economic Growth has not occurred is because of the avalanche of regulations thats been coming out of the executive branch of this for the last eight years. And obviously there have been major regulations, because 66 of the net you nu jobs created come from Small Businesses. They have a certain budget. They could only use part of it for hiring new people or complying with new regulations. So there is a dampening effect on job creation with overly intrusive and burdensome regulations. 30 seconds left, madam secretary. Do you support donald trump for presidency . I have said that i have endorsed him, and what we want now is for the nation to come together and more job creation to cur so more americans can have jobs to take care of their families. Real quickly, big business, youre on the board of wells fargo, no shortage of drama involving that huge bank. Yes. Do you feel like you have the situation there under control and do you have confidence in your new ceo . Can you gif us any insight into your thoughts as a board member . Theres a new ceo, tim sloan. He has worked at the bank in other areas, and he has implemented new leadership in the part of the bank that has caused these problems, and the board has confidence that he will lead wells fargo in a good direction in the future. All right. Secretary chao, we appreciate your willingness to at least engage briefly on that and of course all your other comments as well. Secretary elaine chao joining us. That does it for us on. Squawk on the street. Billionaire investor ron baron and Tesla Ceo Elon musk, hes made his way to midtown. Hell be live from the baron Investment Conference up next. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Yoyeah, i do. E . You guys are working on some pretty big stuff over there, right . Like a new language for crazybig, worldchanging machines. Well, not me specifically. I work on the industrial side. So i build the worldchanging machines. I get it. You cant talk because its super highlevel. No, i actually do build the machines. Blink if what youre doing involves encrypted data transfer. Wait, what . Wowwww. Wow . What wow . There is no wow. Good morning. It is a. M. At goproheadquarters in san mateo, california, 11 00 a. M. On wall street. Squawk alley is live