Transcripts For CNBC Squawk Box 20160902

Everybody waiting to see what happens. 8 30 a. M. S p futures down by less than a point. The nasdaq up by 1. 5. Yesterday you saw the nasdaq close down by basically it was flat. It was down 0. 9 points or something. It was flat. Dow and nasdaq did manage to eke out gains. Check out what happens overnight in asia. The nikkei looks like it was flat lining as well. Up 3. 5 . Shanghai comp and hang sang both a little bit higher. In europe, youll see thing are relatively positive if evfor th major averaging at least. Dax up slightly. And lets take a look at crude oil. This was the wbig story yesterday. Major pull back for crude oil prices. We have had people who have told us this week that crude was going to come down because of seasonality issues. We did see numbers this week. That has put pressure on wti. Now to the weather. Hermine has downgraded to a Tropical Storm, but not before becoming the first hurricane to make land fall in florida since 2005. The storm brought 80mileperhour winds and rain. The east coast all the way up to new jersey bracing for what is next. Well get a live update from the Weather Channel later in the show. I need to learn how to say hermine. Hermine, its a different name. Shes a famous person now. Big time actress now after starting in that as a little kid. Its not her why didnt they whats a hermine. Ive never heard. Its a different name. Is it a name . Yes. Lady fed president. Loretta,ester, we need a hermine. Hawk or dove. See whether they cause a storm today. We have you here. For that reason. Its a big day. Andrew is out anyway, but we could have had somebody else conceivably. Is that your definition of a welcome basket. Yes, take it. As good as its going to get. Strange strawberry preserves. Can i go on . Good morning, joe. Here are big corporate storying were watching today. Samsung halting galaxy note. Batteries have exploded or caught fire while charging. Found 35 cases. 35 of problems like that with the battery cells. Offer a Global Exchange program for phones that have already been sold. Samsung says about two weeks to prepare replacement. The shares i guess thats today because yesterday they got really crushed. A potential 10 billion deal on the market. Hewlettpackard enterprises reportedly looking for a buyer for software unit. In talks with the buyout firm tomo bravo. According to reuters, hp has already received offers at about 7. 5 billion and those shares this morning not moving much. Up a little bit as you can see yesterday. August turned out to be a good month for bill iek man. This is the flip side. You live by the sword, die by the sword. He has been pushing for change. Seems to be paying off because the shares rose 30 . That was the stock when he was on last week. Was it last week . Yes. Bought of herbalife, but so he mentioned he never thought he would be in a stock down 90 . 90 , its hard to ride that down. Its up a little. Up 30 . And he said hes up for the month. Per strks hing is still track to lose more than 14 . The only thing good about that is he should have to pay you 20 of the 14 . Yes. Definitely have to get back to some of these guys close down the ones theyre never going to get back. They get that 20 . The ones are planning to stick in there and plan to get high water marks. Its six years of under performance for these masters of universe. For me its gratifying because you think, wow, im not nearly as smart as these guys. How do they do it year in and year out. The ones who do have success, its galgorithms. Trading, massi iive baskets. No one being a Value Investor and looking at things. If youre 51 , youre good. Thats all you ever aim for. These guys who have these marquee years a couple years in a row and then drop off the radar, you dont hear. You guys are making the argument for index invests. Which is what we have to do at cnbc so something to be said for our very strong conflict of interest policies. Your work in forecasting the job cast numbers is at best 50 . Im not insulting you, but when you come up with your number sometimes youre 100,000 offer. Thats the margin of error. I pray for being within 50. Thats my hope. It is within 50. What happened last month . Last month i was off. You were off last month. I tell you. The month before you were on. The entire street ufs off. Even with adp you cant come close. Whats your number this time . 177 . I got 142 this month. Below adp. Why . Because the manufacturing number which plays too big a role in my model was lame. Was below 50. I use ism manufacturing employment component which can do a good job. The claims numbers help. The adp number helps. I didnt have the ism services. You have to look at a piece of the journal day. Just the other day, we were arguing about whether the drop in the Participation Rate was just retired people. The idol army. Youre supporting my argument. Back in the last year of the Great Depression in 1940, americans employed between the ages of 2554 was 86. 4 . Now its 84. 4. Down 2 percentage points. Lower than it was at the end of the depression for Participation Rate of men 2554. Its an abysmal number for people in that age. Youre talking about men because women have entered the workforce. Far be it for me to be any type of gender. She makes a good point. Im glad youre here. The demographics have changed drastically. Im glad youre here. Im glad michelle is here. Alison is here. Is that really youre blaming women. No demographics have changed. My wife works now. My daughter works. Ive got everybody working sglg if they didnt work, there would be more jobs for men, joe. You said that, not me. Thats what youre arguing. The world is a better place. We need women Decision Making ability. Men, you know what theyre thinking about most of the time. Football. After that finish thinking about that other stuff every seven seconds. Pro bulls are looking for the job report to put the case back for better second half growth. Putting back on track after the disappointing manufacturing report yesterday. The Manufacturing Index which went into negative contraction nare territory has been seen by some as an aberration and warning of a recession by others. Heres what to watch for today. Nonfarm payrolls. Average Hourly Earnings number. Expect to be up 0. 2 . That would be a tenth lower than the gain last month. Some of the data has been positive. Adp as we talked about has come out. The Economic Data so far pointing to a decedent second half rebound of around 2. 5 to 3 . Together with inflation. Thats at least not falling even though its below the feds 2 target rate. A decedent job number could be enough to give the fed a green light to hike. Some doves could oppose such a move and the rest of the data has to cooperate in september for the fed to hike. September 20 is the actual date. We have a retail sales report, cpi report. Bunch of other data. This is not the only thing going. Its a necessary precondition of the fed is going to hike. My own thing is how does a fed chair who says in august the case is strengthening for a hike, if she gets a good jobs report and good other data that points to a 2 or 3 growth rate in the quarter, how does she not hike in september. I dont see what the excuse would be for not doing that. Lets bat this around the table. Were going be in alison jer regard. Michelle. What do you think with this. The ism number was weak. If youre looking at manufacturing its contractings and thinking about raising rates which would in turn hike the dollar and put pressure on things. Is that enough for them to say maybe we need to hold off another month. Or, again, whats the urgency . I guess in Janet Yellens mind who is probably more cautious than some of the others on the committee, the question probably is is there an urgency to move as you said there are some signs with the ism. Auto sales pulled back a lot of talk. Theres some signs that maybe were kind of losing a bit of momentum and more importantly on the inflation front, we saw on monday with the numbers they like to look at on inflation, were not making further progress. Weve been stuck on the core inflation rate. I think were going to get an Hourly Earnings number today thats going to be lower. I think we also are going to get a relatively benign cpa. Whats the urgency to act if were not quite sure. Except that want the get points on the board and preserve the credibility. Am i right with that. I think those are two really good points. The fed, michelle, is in a hiking mode. Yes. They are in a large normalization. You have to hike rates to be in a hiking mode. Nine months on pause. Honestly all the arguments for raising Interest Rates could have been made and should have been made a year or two years ago. What im kind of questioning now is is the move at point. Youre two years closer perhaps in terms of the economy to me looks less robust now than it did a year ago. Its more vulnerable to the Global Situation itself in the wake of brexit is less clear. But if you missed your opportunity, does that mean dont go for it. Is that the question. Exactly. Have they missed that window. If you only think you have to go because the neutral rate is lower. You think you only need to go once or twice. Is it worth the effort. The market backs up michelle. 23 chance of hike. I agree with michelle. I dont think the number is going to come at 180. The statistics strung. On top of it you had the auto numbers. We are consumer driven economy, i think the fed does wait to the end of the year. Whats the rush. At this point, expectations are low anyway. What about the possible accusation theyre overly influenced by the election . I dont get that sense. Theyve been clear. I think the other thing is data has opinion very inconsistent. They said nine months ago considering hikes and brexit. Weve had all the events happen to make you think we have an economy thats pretty shaky and it wouldnt be that advised. What about the idea the fed i keep reading this too. Theyre not influenced by that, but influenced by the market. If the fed futures are pointsing to only 23 chance they dont want to shock the market. Is that fair or is that not . Steve, you know this too. I think the fed has multiple ways of getting the message out to the market to adjust market expectations. Theyve been job owning a lot. The more frekt frequently they do that and dont follow through the less effective. Its up to the data to meet the job owning in a way. Kernen, why dont you weigh in here. Youre the one clam minoring for the rate hike. Exhausted. Preaching to the choir. Joe and i are in the same camp. Waiting and waiting. Youve given up the ghost. Michelle, im mad it will dollars. Sometimes you have to do things that have negative near term consequences just to do what you have to do. I agree with you on that. I also think clawing back a little bit of ammunition for the future. You havent mentioned this. When i hear a guy like the boston fed president say that he is starting to worry more about the Financial Stability aspects of low rates and if cost of that outweighs the potential benefit, im not sure the market is entirely listening to that. Zerk a voter this year. He is one pounding the table for low eer rates and that doesnt change your mind . Honestly, this fed could very well i dont know if theyll hike in september or december. I just think its at the wrong time. I think the case was much stronger a year or two ago and to me, things look and as a rule, i tend to be pretty optimistic. Im more worried about the economy than at any point. Not that were going necessarily into a recession, but were more vulnerable now. Even though rates are low and hiking once or twice doesnt necessarily hurt, but you know to the extent it may in any way provide another headwind at a time we may be getting vulnerable by the sheer age of expansion and whats going on globally, to me it would be the icing on the cake they end up doing it now. Why should we believe theres something to the age of expansion. Youre absolutely right. This cycle has been so different. A lot of the things we would talk about in terms of being late cycle dont apply. Housing is clearly not late cycle even though were so far in, but we are at a point where its hard to envision employment going to suddenly ratchet up from here. You cant have it both ways. Either you got the its take then long or you have an extra five years. If you believe in that and thats why were still slow or were doing something self inflicted. I think were coming its the husband. His wife. Coming off of a big crisis, a situation where theres a tremendous amount of leverage in society and i dont think its that late. We have more time and the recovery has been so tepid. Its hard to figure out what the imptous would be for the company to suddenly pick up. It doesnt have to pick up from two to three. Even going at two. I could think of a lot of ways to pick up. You get a new president. Fiscal policy would be the easiest. Are you talking about the same thing. When you sail fiscal policy. Corporate tax reform. Tax regulation. Tax reforms, tax cuts. More stimulus that way. Probably more through infrastructure, but in beoth candidates. We need a better policy than right now. Were at zero Interest Rates theres worse things than some infrastructure projects. We need the regulation. Theyre still coming. Hundreds of billions of dollars or added regulations over the last seven or eight years. Absent that sort of change. Thats what im saying. Its hard to think about what companies. Weve hired a lot of workers already t. At least obamacare worked out for your steve. Got to go. Coming up, more joe kernen. Donald trump bringing some new blood to his campaign. Details next. Still ahead, jobs friday. The companys ceo is here to tell us which sectors are hiring and which ones are firing. Squawk box will be right back. [cheg] the hidvce4. Coming up, more joe kernen. Welcome back to squawk box. Donald trump has named david bossy as new campaign manager. Gop nominee telling the Washington Post that bossie is smart, loves politics and knows how to win. August was a big fund raising month for the clinton campaign. Raking in 143 million last month. A 58 jump from july. However, the donations to her campaign remaining flat in both july and august. The campaign raised about 62 medic million indicating the increase was large contributions to the Democratic Party itself. Donald Trumps Campaign has not released august fund raising numbers. And the g20 meeting kicks off on sunday in china. Were getting more inside on some of the topics that will be discussed. President obama is expected to talk to World Leaders about limiting Corporate Tax avoidance strategies and creating a fair global tax system. Lets get to john harwood with an update from the campaign trail. I assume most of that 150 or whatever it was was raised domestically since foreign entities arent allowed to directly. Thats a good assumption, joe. You cant do it. Youve got to go to the foundation. You cant go into the actual coffers for the campaign. I wish they would release the other stuff. Thats what i would like to see. Reporter were in the close of the dog days of summer. Were about to start the last chapter of the campaign. The most important of which in a little over three weeks from now are the debates. Were really going to get to it will point which donald trump is going to see if he can breakthrough, if he can ralt Hillary Clinton, if he can do something to overcome the lead, which has gotten smaller, but still substantial. And as steves intro just indicated. Weve got this amazing contrast in the campaigns. Hillary clinton running a by the book campaign. Collect a lot of cash, advertising battleground state. Donald trump doing a lot less of those things and with a free wheeling band that includes steve bannon and bossie. Did battle with bill and Hillary Clinton for a long time. Its a very unusual. None of us have seen anything like it matchup and were going to find out whether Donald Trumps unorthodox strategy is going to pay off. She does think she has the lead. She does have the lead. I know. Okay. She must have the lead because shes not scheduled to do anything again for another four or five days, john. Reporter thats exactly the point. Hasnt answered any questions from reporters for 270 plus days. Reporter thats one of the weirdness of this cycle. Youve got a Convention Nominee who thinks her opponent. Hof course hes going to say something. Thats a safe strategy. A lot of times too much defense. Reporter im agreeing with you. My point is if they stay out of the way, if they turn the volume down and let donald trump turn the volume up, thats going to benefit them. In this campaign, its been the candidate who talks the most at any given point that the polls dont favor. Reporter right. Youve got this situation where if the elections about her thats bad for her. If its about him, thats bad for him. Donald trump doesnt seem to have the same ability or desire to keep the focus on her. One could make a point. Reporter he attracts attention. One point beyond the right Campaign Strategy and right thing to do is. One of the right things for Hillary Clinton to do is face the press and answer questions. Just like its wrong for. Sure. Agreed. We can talk about Campaign Strategies all we want. We can talk about the right thing to do. The public needs it. From a public point of view. Thats the to face the press. Im with you. Okay. You could say the same thing about candidates. Tax returns. Its not necessarily the right thing to do. It is absolutely the right thing to do. Lets say he takes all the real estate deductions, you know how long youre going to talk about it. Whatever, joe. Its been done by every single candidate. Whatever, i wouldnt do it. If theres no. Youre making argument why hillary wont talk to the press. More than halfway anything. Not on this. Its not about policy. What youre going to do for your country. It is when youre talking about changing the tax policy, tax structure, tax code. Ma healthcare more personal atntcenic, dital invations; fr sfning dices thatan ieret personal da and enabinte providersc platfort to colte wthe thats w o90 ve. Ofhe top5s arturning to cogniza. 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That will set the tone of the day for the markets. Dow down less than 2 points. Same story with the s p 500. The nasdaq down less than 1 point. Well see what happens when we get closer to the 8 30 mark. The hot number will probably be negative. Negative. Negative for the markets. Because theyre going to go. And its were going to see the true perverse logic of the crack addict average trader. Really doesnt want the punch bowl taken away, even at this point. No. You think if its 300, the market goes up. Ultimately. This latest. Knee jerk negative on that. This latest malaise started with the first guy. The composer, john williams, was he the first one. San francisco. Who started with september live again. Him and dudly. Then we started seeing this. The market cant get out of it. Longer term the market is going to like jobs and growth. I know that. Near term these guys are still, we cant take a quarter point hike. Thats another reason to hike. Yes. To get it over with. Begin the weaning process. Cold turkey. I hope some day we dont look back on this and say it was so obvious there was a monetary bubble brewing on market. Negative Interest Rates. Im really interested in this idea that one of the arguments is that simultaneously, the greed trade and the fear trade are overvalued. What do you mean . Everybody is piled into these bonds. 13 trillion of negative Interest Rate bonds. Like theyre scared. And then the idea that the psychotstock market is overvalued. Both at the same time. Both bonds and stocks are overvalued. I dont know. I think theres a lot of people my take is there are more people more afraid than greedy. The stock market is only overvalued if the bond market stops being overvalued. As long as the bond market is overvalid, youre goi overvalued, you have a hope for return. When other things. By the way, thats another reason animating some fed thinking out there of whats going to happen to the pension plans. Thats something ive been hearing. Savers. Youve been cant use that word. Youve been all over. Not caring about them at all. Dumping all over them. Thats not the word you were thinking. You should be honest with people, joe. Taking a dump all over them. Stocks to watch today, verphone cutting Fourth Quarter outlook. Third quarter revenue missed estimates. Lululemon beating analyst estimate. Fell short. Store traffic was challenging in the quarter, but customers are making larger purchases. Cooper companies raising annual guidance following better than expected results. The medical device maker says cfo will retire at the end of october. As we count down to the monthly jobs report, its time to get a breakdown of where the jobs are from one of the nations leading staffing and recruiting firms. Placed over 100,000 professionals. Also a member of ypo. Exclusive cnbc partner. Give me the overall landscape. Is it a good time to be looking for work right now if youre a professional. If you have a job set people want. Its always a supply and demand situation. If youre in data analytics. Things are good. Look what walmart announced. Theyre going to cut 7,000 jobs or move to retail sales. If youre going to battle amazon, you cant do did online with your technology, youre going have to do it on the floor with people walking, customer interaction. How would you describe overall the job market . Weve had three month average job gains of 190,000. Is this a strong job market, lukewarm job market. Weak market . I think its a very steady consistent job market. Its not 2005. You take out the blip which a big blimp in 2009. You take that out, weve gone from 2001 for 15 years of consistent growth and if the Great Recession were that bad, the economy wouldnt be im not saying its great now, but it wouldnt be as good as it is. Unemployment is still 9 percenta. 4 . Weve also had an 8 with bad Participation Rate. Its better than that. All things being equal, its not terrible. What is it like if i want the leave a job and negotiate for a higher salary. If im going used to be go laterally and make a little money. Correct. I dont think thats as strong as it has been. Thats the effects of the global economy. Youre not competing against the guy across the street. Youre competing against the guy across the ocean. Thats your argument against globalization which has played a key roll in the election. It is. If the economy is so bad, how does Hillary Clinton have a record donation. Wealthy people who have jobs. Theyre also giving to Bernie Sanders earlier in the year. 27. But who is giving that money . There are people that have money. There is Consumer Confidence is increasing. There are some signs. Im not saying im putting all my money in the stock market right now if we hadnt had the Housing Market bubble would we be as paranoid as we were now. Shock and learned a little. Maybe we didnt. Does that fear in our immediate Rearview Mirror animate employers today in terms of the risks theyre willing to take in hiring. If in terms of bringing on more people. The number one thing we have to look at from an employer and sure capitalism basis is employing are not a fixed cost. They can be terminated any time. Its not a real estate deal. Im just telling you what reality is. You can cut employees any time you want. Theres pain that goes with it. Hard for the company. Exxon has cut back on hiring because hes been through cycles like this before. Theyre the most profitable industry weve ever seen. How do you explain Capital Expenditures being down. You cant. Youre exactly right. Very high cash levels. A lot of money and profits, but theyre not spending on capital. They will hire people right now. The big thing were going to see is companies that hierm a lot of post college graduates. December 1 we have the overtime exemption increase. We also had the minimum wage being increased. Artificial increases. These are real things. Whats your outlook, tom . Right now im positive. I think things are good. Increase in minimum wage. What people look for and they think, oh, nothing bad happened a month after minimum wage was increased. Its not a month. Its six months, eight months, a year. Great stuff, tom. Whats going on. Going over to this other place. You have energy. Good information. Im sorry for my colleagues and how they insulted you. He we went to bolder. Im okay. Im just glad things are going to suck two years from now when were at 80 . Were only at 70 now. Coming up, ups shipping rates. Plus new details on yesterdays space exexplosion that destroyed facebooks first satellite and a really nice rocket. Thats a reusable rocket. Last one came back and landed. This one landed in about a million pieces. Quick check on european markets right now. Welcome back to squawk box. It will soon cost more to send a package by ups. This is going to start september 19. Hiking by an average of 5 . Similar increase will go into effect for daily ground and air service. That wont start until late december. Ups saying the increase is in line with yearly hikes and move will help pay for system upgrades and expansions. Just in time for the holidays when everybody is shipping everything. Yes, but the keyword there is everybody. If it was just ups, then youd say, well, maybe they shouldnt do that. Guess fedex and across the board. If they do, they do. If they dont, it doesnt stick. Thats the way it is supposed to work. Unlike the epipen where theres one. Right. Update on yesterdays space explosion. We now know elon musk was fueling unmanned rocket when the blast occurred. The company was completing a routine prep to launch tomorrow. No one was hurt, but the blast destroyed facebooks satellite to deliver internet to africa. Zuckerberg put out a statement saying he was deeply disappointed. Trying to expand Internet Access in that continent. Huge setback. What does it take, two years, three years. Youre not going to be able to turn around. Based on the idea they had other technologies theyve been working on, theres no replacement thats coming any time soon. Pretty amazing. We had buzz aldrin on yesterday. Another astronaut on today. Everybody makes it clear that private funding of this is much cheaper. Much easier than government and its going to happen. Its going to be a lucrative business, but expectations were pretty high and this is the beginning stages. You know, when youre talking man and everything else, they dont know what happened here. If you look at the Auto Industry in the infancy, how much is this like that. In terms of fiktss and starts and they dont get down to a production process. It puts us in a tricky position because we have stopped doing this with nasa. Nasa was contracting with space ex. Now putting questions whether theyll be able to get stuff to the International Space station. It can be done. I wouldnt overstate nasa either. They have had their share of misses. The general idea that the private sector should be better and more efficient at this makes a lot of sense. Its also we stopped our projects before the private sector. When it was ready to go. Thats going to be years eas fund things than with the government. Remember, there were reasons why we did this on a government funded basis. There wasnt necessarily a profit motive behind it. Coming up, well talk about it. Astronauts using tools that werent made in america or on earth and space. Manufacturing has big implications for telecom and health care. Detail next plus a live interview with astronaut terry burst. Squawk box coming back from space. Right back. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the ack and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inchthe car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to ol your brakes. Understood, brake bias back 2 icks giving them e agility to have speed precision. Because no one knows like at t. Our special today is the dont you hate that . When they dont tell you how much something costs and you ha to ask . Maybe thats w i alwa make sure to. Bring up the costs associated with your services. I know. Trsparency aboutosts. Welcome back, everybody. A news maker from china this morning interviewing chinese tech of Search Engine baidu. I was able to meet president xi three times over the last year or so. I got the idea that president xi realizes that internet is very, very important. Its also good for chinas Economic Growth. Well have more from the robin li interview later this morning. Also on cnbc. Com if you want to check it out ahead of time. Or next edition of Mission Space takes us to the heart of silicon valli. Aditi joins us now. Reporter we are on the campus here of the Ames Research center in mountain view. Everyone knows that 3d printers arent new, but their use in space is. Just two years ago this company thats based in Silicon Valley made in space launched the first ever 3d printer to the International Space station. It let astronauts print a tool they needed. In doing so, they didnt have to wait for a shuttle to bring one from earth. The process takes just a few hours and makes living, working, and building in space a whole lot cheaper and more efficient. If we want to actually colonize space, if we want to permanently live in orbit, on the moon or on mars, we need to take the ability to manufacture things with us. Just like the settlers when they came out west. They took tools to build industry. Reporter but made in space is thinking bigger with plans to manufacture goods in space and ship them back down to earth. Their newest partners include fiberoptical fiber. Its ten times faster than the fiber made on earth. Which means huge opportunities for communications, health care, and Manufacturing Companies where high speed can mean high margins. Made in space also plans to launch a free floating 3d printer. The printer will be used to build large Scale Structures like a building up in space. And made in space says these technologies arent that far off. First round of fiber in 2017 and the company just signed with nasa to work on the printer over the next couple years. Wow. Aditi, can i have complex questions. Maybe ill wait for our guests but is it the lack of gravity or the potential to do things in a vacuum without any, you know, sort of contamination whatsoever that makes it so appealing to do things up there . Both . Reporter yeah, you know, i mean its probably a little bit. The fiber thing is fascinating because you can build it here but somehow and i think its a science beyond all of us right now, but the fiber made up there is just so much faster and stronger and durable and able to, you know, process it ten times faster. It really is interesting. Thank you, aditi. Our next guest spent time as a commander of the International Space station. Lets bring in terry vertz who just retired from nassau last week. Terry holds the record for taking the most pictures from space than any astronaut. Over 3,000. Hes also featured in the imax film a beautiful planet. Thanks for being with us. I was going to just kid you saying i know a lot of these problems because i saw the martian with matt damon and i saw how he had to deal with these things. That probably even though im kidding there were a lot of things brought up in that movie that youd have to deal with. Is there a way to produce oxygen or you have to bring it with you. You could produce it somehow . Well, on board the space station, we have a pretty complicated recycling system that recycles water and turns it into oxygen. Then it takes the oxygen and Carbon Dioxide we breathe and has a close loop system. It costs 10,000 a pound to launch things into space and water and oxygen are pretty heavy. So it saves quite a bit of money doing that. And i was thinking it would be nice if a 3d printer can make a tomato. But we cant do that yet, can we . Food youve got to always bring, right . Food you have to bring up from earth. We did have an experiment called veggie that was basically a green house and we grew some lettuce in space. The crew after me got to eat some lettuce grown in space which was pretty cool. How did you fertilize it . For the most part we brought our own food. You really have that ask that. Seeing the martian. We ate better than matt damon did on mars. It must be is it true i guess you have to be there . Outs of how incredible it is to be there personally, how close can we get to it with the imax film or with your pictures . Can we get pretty close . So the imax film beautiful planet is just amazing. In my point of view, its the best way to see space without going there. The cool thing about this movie is we used digital cameras from for the first time. Tony meyers has been the producer for a whole series of space imax films and this was her last one. And the ability was to take shots at night. I was able to bring a gopro camera out with me on a spacewalk. Which after i saw the footage and what tony did with it, i thought that was dangerous. I dont know what i was thinking going outside like that. But she did a great job. It kind of brings you to space better than anything ive seen. Youve been up there more than most people and done more space walks than most. I mean, the first couple times, does the pit of your stomach ever just feel like this is no big deal when youre stepping outside . You know, ive had amazing opportunities to fly jet fighters and the chance to fly 42 space shuttle. But when i went out on my first space walk, that was definitely something unique. We went out it was nighttime and going out the hatch is a big operation because youre wearing a big 400 pound space suit, got lots of equipment. I remember going out and seeing the earth. I can imagine. I can definitely fertilize the lettuce after stepping out. Thank you for everything you did and good luck. Hope to see you again. Thank you. When we come back, more on the jobs report countdown. Stick around. Theres a lot places you never want to se 7. 95. [ beep ] but youll be glad to see ihere. Fility where smarter vestors will always be. As obvus when you trade. F oy te fidelitys active trader pro can help you fd smter entry and exit points fidelity whersmarter invest. Hey, jesse. Who are you . Im vern, the orange money retirement rabbifrom voya. Orange mon represents the money you put awayor retirement. Over time, your money could multiply. Heo, all of you. Get organized at voya. Com. They say the worldoes not revolve around you. But today, maybe it can. I am helpi 1800flowers find theerfectift out oftrill. And working with the new York Genome Center to find treatments as personal as dna. And i am helping sesame street make education unique to every child. Working together, we can outthink anything. Global markets pras for the jobs data. Investors will be hanging on for the numbers for clues on the rate hike timing. We preview the data and get you ready for the trading day ahead. Mylan under fire again. Calling for a bofrd shakeup. Theyre major investors and he will join us within the hour. And Hurricane Season kicks into high gear. Hermine making landfall in florida. An update on the storms track and possible costs straight ahead. As the second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box, everybody. This is cnbc, first in business worldwi worldwide. Im becky quick along with joe kernen and Steve Leisman. We are less than 90 minutes away from the number of the month. This is one were watching closely because we know the fed is too. This is the august jobs report. Its going to be released at 8 30. The Unemployment Rate is forecasted to tick down slightly to 4. 8 . And the u. S. Economy is expected to have added 180,000 jobs last month. That compares to the huge number that we got in july, 255,000. But that 180,000, if we see a number like that Steve Leisman tells us at least its much more likely we will see a fed hike on september 20th. Check out the markets. Right now the dow futures down by 5. 5 points. The nasdaq up by just under 2. We have some breaking news this morning from the clinton campaign. John harwood joins us now with more. You talked about in the intro mylan and how its under the gun. Hillary clinton is taking advantage of that fact and coming out with a new plan to indicate how she would try to stop controversies like the price hikes for epipens which we saw blow up in the news last week. Shes announcing that she is going to propose a Consumer Response Team that would monitor price hikes of that kind that would have the capacity to act in several different ways to try to respond to it. One would be to speed the approval of alternative products or try to get competition on the market. The second would be emergency importation of alternative products. And penalties on officials they think are being abusive in their price hikes. Dont know how all this stuff would work, dont know what within this plan would be subject to legal challenge. But yet we havent heard from the Donald Trump Campaign on it. This is Hillary Clinton taking something in the news and indicating that she shares the publics frustration and would do something about it. We dont need a cpfb or something, do we . Do we need another agency . Watch dog to look at this . Well, certainly that will be part of the debate, absolutely. Yeah nop doubt. And kind of the the scary thing is on the republican side theyre not going to want anything like that. Then you say who knows. You know . In terms of the free market. Were not really sure at times necessarily. Its one of those times where the free market and the glories of the free market run up against difficult problems when youre dealing with social issues, with things that affect people in society in ways that arouse a lot of anger. Its when the free markets arent free. Thats right. The way you get patent protection. You get these artificial monopolies because of government getting involved to try to as it always does, trying to do something good. Then theres these unintended consequences. Weve got a mixed economy. And its as you say, free markets arent completely free. And when should they not be completely free. And how should they not be completely free . Thats part of the politics. If they were free, there would be competitors. One would come in and do it for 200. Then next one would get more innovation. And do it for 100. That would be good. Then youve driven it down to the way youre supposed to work. This is a subject you know a lot more about than i do. Why isnt there somebody who competes with mylan and does a because the fda turned down the application. This things been around since 1902, epinephrine. Theyre talking about the way its delivered. Because the pulp fiction way through the chest wasnt the way they wanted to. I still want the fda there protecting our health and seeing whats released, but there are a lot of cases where the fda is moving too slow. And meg tirrell is here. This is what weve talked about a lot. With some more reaction to what Hillary Clinton is proposing. And you can also talk about what happened here. It was a weird confluence of some messed up developments in terms of the epipen that allowed this to happen. Some people referred to it as this perform storm. Not only did was teva the generic competitor rejected by the fda. But then another pulled off the market. We saw this continued monopoly. Interestingly in Hillary Clintons plan today the thing that stuck out to me at least from kind of how the drug industry will respond to this is the idea that there will be this committee deciding which price hikes to focus on. And which companies to fine for unjustified price hikes. She specifies they are for drugs that have been long on the market. Does that mean a daraprim which is what shkreli raised the price on overnight. Or does it mean like biologic drugs that dont have competition and have also seen prices increase. I think the response from the drug industry may be uncertainty and thats never good. And Hillary Clinton certainly has scared drug industry investors quite a bit. I mean, were talking about some form of central planning. Were putting the smartest people we can find in a position of power in washington to decide whats fair and what isnt. Unfortunately its not itd be in a perfect world, you wouldnt do it that way. Unfortunately its not just shkreli that was doing this. Theyre an outlier. But it always has in common that theres not competitors. But that assumes that people are going to be the worst possible actors. Maximizing profits is not characterized by worst. Thats what corporations do. Price gouging is. And theres a fine line between what some of the companies are doing. Okay. Then how do you decide you can only allocate capital and pricing im not arguing for central planning. But but how do you okay. So what profit margin is whats the good one for people . I dont know. But jacking a price up by 600 . Im just saying that you cannot subjectively decide what something should be priced. Because i agree. Intels 60 margins, theyre great but theres a difference. You dont try to determine the difference. You let the capital do i think what . Do you think mylan screwed up with what they did . And then their response to it once they got called out. Capitalism in its purist form, things like this is going to happen unless theres competition. Look, you always try to maximize profit for shareholders. Thats what you try to do. Thats what you do. Right. What does government and society do . Does government maximize life . Isnt that the job of government . Government to make sure needs to make sure that theyre not part of the problem with regulatory mistakes that cause things to happen this way. But how do you do it when a company sets a price on a lifesaving drug . Obviously this is why were talking about it right now. But how does the market im with you on this. Tell me how the market fixes the problem. Fixes it because Heather Bresch is probably going to lose her job and now mylan has this black eye. We had a guy coming on the other day saying he wasnt making a value judgment. It was fred hassan. But thats government coming down. But saying the problem the mistake mylan made was not understanding that this was going to tarnish the company. Not making the mistake of trying to maximize profits. But we have a guest coming up, new York City Comptroller to argue about this. Not from a government perspective but as a shareholder. Its different because it takes five years to develop these things. I get that. Then they have this 12year patent protection. Becky was talking about a balance between letting the free market do its thing and some form of oversight from the government. Let meg weigh in because shes the expert. I think the issue becomes when people cant access the drug, you know, before we become angry, we have this outcry over the high drug price. When you have people who cant get access to the drug, thats where the issue is. I was talking with an analyst yesterday who agreed with joe. He said the system is youre supposed to maximize profits. But if you go too far, you start to destroy shareholder value. Because youve raised the price too much. Thats fine to look at it like that. Thats not the issue. Thats the free market and that would work. The question is what if youre at this point of profit maximization and youve precluded the affordability of the drug to people who have to have it. Thats also a problem. But you could be maximizing profit and not life at the same time. No. I dont see it i dont know what you mean by that. If you get to the point where youve priced it so high that people cant get it, then youre not maximizing profits. Youre not going to be selling either. Right. By definition. But do other industries have this same kind of Price Inflation . No. College education. Medical and pharmaceutical. Well, thats right. But very few have this kind of ethical dilemma around the pricing. Intel could make 60 and people wouldnt be out there screaming. Then you do make it like the fire department. Because theyre not going to be profitable in certain areas. And you do if you decide that it needs to be that way. But no at the same time with the drug industry when you do that. I think some people by the way, im not arguing for central planning. I dont think that works either. What Hillary Clinton just proposed is more central planning. Okay. Meg, thank you. Thanks, guys. Lets talk about the other big story of the day which is the bulls looking for the jobs report. They want to put the case for better second half growth back on track after that really disappointing manufacturing report yesterday. That the Manufacturing Index went into negative territory. Its been seen as an aberration by some economists. Others out there say its the sign of a recession to come. Theyre really worried about it. Estimated to grow by 180,000. Unemployment ticking down 0. 1 . Some of the data thats come out, positive ahead of it. Adp was at 177,000 in jobless claims. Theyve been low. The Economic Data so far has pointed to a decent second half rebound. Call it around 2. 5 to 3 growth. So far a decent jobs number could be number to give the green light to hike. Others dont think so. Some doves on the federal committee, they would oppose such a move strongly. The market seems to agree with those doves. Heres what the futures market looks like this morning. Were at about a 26 chance of a september rate hike. It was up about 0. 3 from yesterday which was a big decline on the ism, guys. All right. Joining us now, vince reinhart. Vince, its good to see you. There are two kinds of people in the world. I dont mean dog and cat people although theyre very different. But there are people who think a rate hike would be the worst thing in the world to do at this point. Then theres other people who say what are you waiting for . This is really important we get started. Or at least continue along what supposedly a hiking is a hiking cycle. I think were supposed to be in a hiking cycle. And im not sure exactly what damage would be associated with a 25 basis point federal funds rate. Especially if you convey that maybe all youll do this year and maybe only a another two next year. I think the u. S. Economy is pretty resilient. Weve had policy for a long time. We are getting the kind of growth we can get in the long run. I think we got to wrap our minds around the notion that potential output growth is only 1. 5 . And that outcome like i think for nonfarm payrolls of 175,000 jobs created is probably twice the pace consistent with keeping the Unemployment Rate unchanged. Why cant we do 3. 5 , vince . Gdp. If we only could, i would be right behind it. Why cant we . Thats a hope. Why cant we . Because you were talking about some of the issues about regulation, about sclerosis in concentration in business. We got a lot of challenges. One thing isnt about legislation. It isnt about regulation. Its about demographics. Population growth is slower. And if population growth is slower, then you cant produce such an increasing rate. For some reason or another, productivity growth is slower too. Were not getting as much output per hour increases in that environment. Were flying the plane slower and closer to the ground. I can think of it both ways. You know, so many times how many times have we heard that when you say its different this time that you know that its probably not or that it may be different around the edges. Am i really at this point in my lifetime and were both young men, vince. There will never come a time where i say, wow, were really back in the were really back in the growth days of the United States again. Remember when it happened after the 70s and we thought it would never happen again. And it did happen again. Not just 3 , but we had much better numbers. Demographically thats impossible . Or just because the structure problems are so intractable for the political environment, itll never happen again . Absolutely not. Let me say two i think thes. In my household, we never say this time a different. But second is economists didnt recognize productivity growth slowed in 1973 until about 1980. Were just not good at understanding the upside lying forces. You cannot rule out there will be technological progress. Productivity growth is slow and it isnt just because were not adding as much capital as were used to, its technology isnt improving as fast which doesnt actually sound right in the world of Driverless Cars and 3d printing and genetic engineering. So part of it might be mismeasurement. But it probably isnt all mismeasurement. For some reason or another, the u. S. Economy is growing more slowly on a sustained basis. In six out of seven g7 economies, the imf has marked down their potential output growth. This may be the most boring part of this conversation thats why youre here today. Thats why we invited you. Go ahead. Steve, were talking economics. And the bar for boring is pretty low. We do the best we can, vince. You do. When guys like eric Start Talking about Financial Stability concerns, am i reading it right that there are doves on the committee that are getting more nervous and that makes the probability for the hike lower than the market believes . Yeah. I dont believe the probability is right. I dont think its as high as you think because they see a very gradual pace of renormalization. And the difference between tightening in september and december is not all that great. Like you do i think theyre going to tighten this year . Theyre a little worried about zero. Theyre worried about Financial Stability. Theyre worried about what they would do the next time if the economy falters and the policy rate is so low. You know, we were at jackson hole and the least convincing part of chair yellens speech was the part where she said, oh, im confident that our conventional unconventional tools are sufficient. That really did seem like a stretch. Weve got to leave it there, vince. Joe, youre supposed to thank him. Thanks, vince. Thank you. Much appreciation, vince. Thank you. I love vince. Coming up, hurricane hermine making landfall early this morning. Its been drown graded to a Tropical Storm. But deadly storm surge could bring serious damage. An update on the storm and potential costs are next. Check out the futures as we go to break here. Id still call that pretty flat. Well be right back. Its scy whn the lights go out. People get anxious and my office gets flooded with calls. So many things go wrong. Its my worst nightmare. Eversecond that power r out, my citys at risk. Emens digital grid manages and reroutes power, so service can be restoredwithi. Priority number one is keeping those lights on. It takes ingenuity to defeat the monsters that live in the dark. Whats that . The number of units well make next month to maximize earnings. Thats a projection. No, its a fact. Bad on hdreds of proprietary and open data sets folded to a realtime, actionable analycs model. Nine. Eight. Three. Five. Two. Yore not gonna round that up . You dont round up facts. Powerful analytics driving decisions for the worlds most valuable brands. Hewlett packard enterpse. Welcome back. Hurricane hermine has been downgraded to a Tropical Storm but not before it caused problems in parts of northern florida. Heavy rain, storm surge causing flooding. Todays forecast calls for more rain and strong winds as the storm moves north. Lets look at some potential costs of the storm and impact on travel heading into unfortunately the labor day weekend. Morgan brennan joins us from savannah, georgia. She was stuck in the weather all day yesterday for our space series. Now you got a twofer on another assignment. Reporter thats right. Im getting a tour of hermines path here. Here in savannah, it may seem like the calm before the storm. Were told its about to get ugly here in the coming moments over the next hour or so as hurricane or i should say Tropical Storm hermine blows through this part of georgia. So weve already seen a lot of rain. Weve already seen some strong winds. Weve already seen thunder and lightning here. Driving up on i95 from florida to georgia, we had some very, very heavy patches of rain and lightning coming in that way. The biggest worry here in coastal georgia is really the flooding. So if you can take a look, weve already seen a lot of rain here in the last couple of days. Weve already got standing pools of water. The expectation is we could see as much as 10 inches of rainfall along the coast. Some areas of the coast in the coming hours. So thats having a big impact on travel here. Weve got a lot of businesses that have already closed. Schools have closed. The marriott behind me telling me some of the employees have already seen an inundation of cancellations. Theyve even got a Conference Group here that is stranded because of flight cancellations. The airport, i will say, is still open. But lot a lots going to change here as hermine sweeps through the area. Guys . Okay, morgan. Thanks very much. Stay safe down there. When we come back, epipen maker mylan getting a dose of tough talk from new york city controller scott stringer. He is calling on the companys board to make changes. And also establish more oversight. By the way, they own over a million shares, new york funds do. Theyre saying this as shareholders not just government officials. Mr. Stringer will be joining us in just a bit to talk about it. Squawk box will be right back. Amazing sleep stays with you all day and all night. Sleep number beds adjust on both sides for your best sleep ever. Donsshe bigst sale of e year. Right nosave 50 on theabor Day Limited Edition bed, plus 36month financing. Hurry,nds moay know better sleep. Only at a sleep nuer. All right, everybody. Lets check on the market ahead of the jobs data. In the meantime, check this out. The futures are basically waiting to see what happens with the jobs report because that could determine what the Federal Reserve decides to do with Interest Rates later this month. September 20th is that fomc meeting. European markets also have been trading a little higher. Not a lot but the ftse is up by 1 . Steve . Lets see. Taking a look at the 10year note. 1. 58. Weve been as high as 1. 60 on a recent run here. And currency, dollar is stronger, yen is stronger. Dollar is stronger against the yen as well. When we return, g20 leaders ready to meet in china this weekend. Well talk Foreign Affairs and trade with bob hormats. Squawk box coming right back. Eningslashclosing night it hit me hats for cats. Everyone said i was crazy. When i went online. I gomy domain, catsthhats. Comrogodadd now these things are feelyin outta here. Got a crazy idea you think yocan turn into a success . We know you can and weve got a main forou. Go you. Godaddy. They played this for you, joe. I know. What is it . Welcome back to squawk box here on cnbc, first in business worldwide. Oh, is that why . Okay. Thats why. I didnt even know. Been playing it because jim carey acts like her and does the most annoying sound in the world. Thats why i was doing it. Now we really did play the most annoying sound in the world for me. We are one hour away from from the number of the month. The august jobs report will be released. You know, im going to rush this and even get to steve which is, you know unusual. That shows you how much you like this music. Every time i talk they play it louder. The unemployment is forecast to tick down to 4. 8 . Expected 180,000 jobs last month versus the big 255,000 we had added in july. Here are the futures at this hour. Thats the most interesting thing about what happened if we do get anything even middling. Because the fed has gone to Great Lengths now to pretend or at least to imply or to say that septembers live and that they will they want to do two, supposedly. Theyd have to do one now. Yeah. I dont know if i believe them. I think they job own when people get too complacent there wont be one. So december seems if anything, that doesnt even seem i thought you were tired of all this. 6 00 i asked you you were done. Im exhausted. Its a new half hour. Here we go. Ten years we have one hike and every time we talk about it. Not quite ten years. We dont want to start without a hike. Weve had one hike in ten years. I think we had one every time you guys digress, theyre going to play this music for the rest of their show. Morning the stories front and center this morning, there are two sets of economics numbers set for release today. At 8 30 eastern along with the jobs report well get the government out with the july trade deficit. Then at 10 00 a. M. Eastern, factory orders as well. Pennsylvania has reinstated an 11. 4 million fine against uber. Rejected the ride sharing argument that the record penalty was unnecessary and excessive. Pennsylvania had accused uber of operating illegally in the state without approval. Uber plans to appeal. And check out crude oil prices. They are a little higher after a couple of rough days for crude oil. Yesterday it was down sharply. This morning its up about 60 cents to 43. 77. Crude down 7. 5 for the week. Thats the biggest weekly drop weve seen since january. Harleydavidson is cutting jobs. Getting rid of 200 positions because its forecasting fewer shipments this year. And just over half of the cuts are at its plant in pennsylvania. Harleys stock up 16 in the current year. August turned out to be a good month for bill ackman. He saw his investment portfolios climb by nearly 6 . They were held by strong gains in valeant pharmaceuticals. Down about 90 . He said he never thought hed be in a stock down by 90 , but the shares last month were up by 30 . Despite the move higher, approaching a loss of 14 for the year. And smith wesson is boosting its full year outlook after the gun maker reported First Quarter revenue rose more than 40 beating estimates. And i think percentage of households with a gun is at an alltime high. I think its 44 , 45 . It shows you a lot of times, you know, the you know, the more you try to do something that you think is positive the more you try to do something will you be quiet so they stop playing that music . Record gun sales. Every time we have a terrorist attack and focus on gun control, more people buy some guns. Starting september 19th, u. P. S. Is hiking shippi inping by 5 . U. P. S. Saying the increase is in line with yearly hikes and will help pay for system upgrades and expansion. But doesnt talk about whats happened to the price of oil and gasoline. Also samsung is halting sales of its new galaxy 7 note smartphone. That coming after reports that some batteries have exploded or caught fire while they were charging. Samsung says it has found 35 cases of problems with the battery cells and the company says it will take about two weeks to prepare replacement devices. Okay. As g20 leaders prepare to gather in china this weekend, lets bring in Robert Hormats former undersecretary for Economic Growth, energy, and the environment. Also we have ambassador Nicolas Burns who served for Political Affairs and is currently professor this is the longest sbree in a long time. Professor at Kennedy School of government. Ambassador burns, thanks for joining us now. Lets talk about this g20 meeting its in schn for the first time. Why does that matter . Well, for the chinese this is just another summit to showcase their power in the world. Second leading economy, second most powerful military actor in the world. The chinese put stock on acceptance of their role. But theyre worried about slow growth at home. Also theyre worried about the fact theyve reached too far, many countries think, in militarizing the islands of the south china sea. The spratly islands. China lost a big court case at the Permanent Court of arbitration this summer where their legal claim was really eviscerated. And so the chinese are looking for they want to manage that issue. But they want this summit to go well on the economic side for economic reasons. And i think president obama would like to work with the chinese to implement the Paris Agreement of last december. Does it matter that president obama goes to china with no Domestic Support for the new trade agreement . I think its a problem. His pivot to asia and i think its the right move strategically to emphasize our strategic relations economic, political, military in asia. I think its one of the signature initiatives of his administration. And the Transpacific Partnership is a big part of that. And now it looks as its going to be very difficult in a lame duck session to get it through congress. It is obviously a problem for the obama administration. He hasnt given up and hell be talking about that, but the other leaders i think have to understand that american politics are going in a different direction right now. Bob, the world certainly seems in retreat. Certainly from the time that we met in the 90s when the world was growing bigger. And now its getting smaller and whats happening in the United States with some of the issues around immigration and trade are not just unique to america. How much does that matter its shrinking . It matters a greet deal. The world was going to continue to expand. Thered be more trade and Global Finance. And trade has shrunk, Global Finance has shrunk. Theres much less support around the world for globalization. Theres more xenophobia. Antiforeign sentiment. And you cant point to Hillary Clinton as the champion of trade. Because shes not. Shes as, you know wants to build walls not quite the same. Youre starting a fight with bob. You didnt say she was. Did you, bob . No. But theres pressure. Thats the point. Theres no support for new trade agreements. If anything, there are people who want to turn back the clock and eliminate the trade agreements weve gotten. This presents a big problem for china. Because china depends heavily on exports. Many of the countries that will be there, france, germany, britain, many of the countries suffer from this nationalistic pressure to cut back on their global presence. And global engagement. Ive had to spend a couple weeks with central bankers and international economists. And what struck me the thought i had after all that is i believe we all have forgotten how central trade agreements and Economic Cooperation are to security. The idea that europe got together and created all these economic agreements so that they didnt fight each other. That one of the things that underpins tpp is security. One of the things that brexit, in fact, undermines the u. S. And europe. Have we forgotten the idea were o one of the reasons was security reasons to keep everybody from killing each other . Well, i think youre right. I think theres a real link between economic trade, Economic Cooperation, Economic Growth and security. We saw it with the rise of the european union. We certainly have seen it in asia over the last 20 to 30 years. Its something weve got to keep going. I think the major culprit here is donald trump. In many ways hes gone after nafta and hasnt told the truth about nafta. And hes created this climate of fear and protectionism. But i want to push back on that. Because i want to we ought to be selfconfident enough to be able to trade and export with some confidence that we can succeed in trade. I really dont think thats right in that yes donald trump has said terrible things about trade and hes demagogued that issue. But you cant do go to say Hillary Clinton is the one out there championing it or the Democratic Party. Bernie sanders did as much or as much against trade as donald trump has done. Theres a big difference. Trump has a very protectionist sort of fear mongering mentality about trade and immigration. Hillary clinton has made a couple of specific points. One, she doesnt like tpp in the current form. She said shes not going to support it now. Shes not going to support it. Theres a big difference between not supporting that and being a person who whips up fear about if youre japan and listening to this, you realize Neither Administration is thats the problem i think nicks put his finger on. And that is and you mentioned it. I went to see with my wife fdr hyde park. The period at that point, the people who led the country at that point understood that if you want Strong Political relationships you need solid economic ties and therefore strengthening economic ties with europe or part of strengthening american security. The point behind tpp is very important. Its not only to strengthen the economic ties but the underpinning of the relationship with asia. And the same in europe. Developing a closer economic trade relationship with europe will strengthen the underpinnings of nato. You need a strong economic relationship to underpin Strong Political and security relationships. If we dont have those, it really deprives us of a key element both in europe and asia. We got to go. Ambassador burns, last word. Anything key coming out of this g20 meeting here . I think the attempt by president obama and xi jingpi jingping i would say i agree with bob hormats. It was Bernie Sanders and donald trump whove really created this climate of fear against trade. Hillary has not been part of that. I agree. Okay. Thanks very much prp you sticking around . You want me to stay, ill stay. Oh, okay. All right, becky. When we come back, new york citys comptroller looking for mylan to provide more oversight. In the meantime, check out the futures. Again theyve been flat. Really flat. As we await the jobs report out in just 45 minutes time. Stick around. Well be right back. Welcome back to squawk box. In other headlines this morning, retailer aeropostale selling with a bankruptcy auction for a little over 243 million. Google has canceled plans to build a smartphone with interchangeable parts. Thats interesting. According to the wall street journal the idea was to allow users to customize their phones to their likings. And yum brands is selling stake in its china operations. Made up of Chinese Investment firm prima vera capital. Verifone is cutting its Fourth Quarter and full year outlook. After the Technology Makers Third Quarter revenue missed estimates. And gap same store sales fell by 3 in august. Dragged down by a 10 decline at banana republic. A fire this week at a Distribution Center is limiting the time of online orders. That stock was down significantly on the news. The new York City Comptrollers office issuing a letter to mylan on behalf of the Pension Funds to express alarm with the companys price hikes for the epipen and the risks these actions pose for the longterm value. That letter goes on to say that mylans, quote, gross mismanagement of its epipen Pricing Strategy exacerbates the strategy. Which has prompted widespread investor concerns and repeated oppositio oppositions. The new york city funds holds over 1 million shares of the company. Its valued at about 45 million. Joining us is scott stringer. Thanks for coming in. Nice to be back. We think of government officials who crack down on things like this doing it from the Public Health perspective. But youre coming at this from the shareholder perspective. Theres no question that a Public Health ramifications to what theyre doing. But equally important is the reputational harm, the legal issues, and the regulatory concerns around the epipen price gouging. And that does impact the share owners like myself, our pension fund has a serious investment in mylan. We always have been concerned about their aggressive ceo compensation. We are calling for an independent board that can right this ship and they should do it now. What specifically measures would you propose . This is about making sure the board gets rid of its nonindependent directors. I dont think they have independent directors. I think its a smoke screen. If this is an independent board, i couldnt imagine what a stacked board looks like. And i think they have to recognize right now that they have theyre facing some serious issues. Legal, reputational, and regulatory. We want to make sure a board has a longterm strategy regarding this company and a longterm strategy regarding the price of epipen. With the netherlands inversion, theres no way to mess with the board. The Shareholder Activism is nonexistent here and those guys are entrenched. Are you really looking at it realistically youre going to do something with the board . We continue to vote our shares in a way that tries to raise awareness and moves the board to do the right thing. Look, if you think about the Health Implications of this, thats also valid to me. Parents dont just go out and buy one epipen. They buy many. Ones in the car, ones in the house, ones in your pocket. At school. Exactly. And they expire every year. So to price gouge Childrens Health is outrageous to me. To protect a takeover from Teva Pharmaceuticals last year moved to the netherlands. Theres this foundation, an independent foundation that is going to protect it. At the time it was done. So even if they voted for the takeover, it wasnt going to happen. Why should the company pay any attention to what youre saying even as a shareholder with a million shares . Because were a shareholder with a million shares. Do you think its going to be effective . I think that when they get called before congressional committees and they explain their recent debacle, i do think there will continue to be an outcry for more independence on this board, more Strategic Thinking about the longterm strategy of this company not because theyre trying to up the compensation package of the ceo and others. Thats something that has to come out. You think the companys tone deaf . I think this company has serious issues based on independence, oversight, and a longterm strategy. This epipen debacle is just the latest in just poor management by the board, lack of independence, they dont ask the tough questions. How do you have an epipen that was, you know, a hundred dollars you pay in 2007 and now its 600 up 500 . This is a lifesaving this is a lifesaving drug for people. Are they making a market mistake by not setting a price that maximizes the profit to the company . Or is this a situation where the government needs to come in and regulate the price of his epipen . I think theyve overplayed their hand. I think this is price gouging. Im going to leave it to others to think about those issues right now. Im concerned about the independence of this board. Firefighters, teachers, the people who i represent on the pension fund are very concerned about the reputation issues surrounding this. This is why weve taken this action to communicate with mylan, to urge them to do a number of things. Your ooir has been focused on the board here. What do you think about the ceo Heather Bresch . I think when we think about the board, we think about the person in charge. And im looking forward to her spending some time with some regulators and perhaps some committees in congress explaining the price gouging of something that is needed by parents and children all over this country. And i quite frankly dont know how she can sleep at night knowing that theres a real risk that people cant get this product that can save lives of children. Has the company doubled down and said it was middle men along the way who was raising prices. Theyre not going to be releasing a generic form of it. Is that enough of a response as far as youre concerned . Its a weak, late response. Look, ill take it. But were not at the end of this. This is only the beginning. And we need to make sure that this company is doing the right things by the people in this country and the world. But also as a share owner of the fourth Largest Pension Fund in the United States, as somebody who is the fiduciary of that fund, we want to voice as we have a right to do our concern as share owners. Thank you so much for coming in today. Thank you. When we come back, he latest on Tropical Storm hermine and whether or not your Holiday Weekend is going to be rained out. And then the number weve all been waiting for. Its the jobs report. That estimate is for 180,000 jobs. Our jobs panel will be joining us at the top of the hour to tell you what they think is going to happen. Squawk box will be right back. Its a pformce machi. Gineering. With this degree of intelligence. Itits a supercomputer. Gineering. With this grade of protection. Its a fortress. And with this standardf luxury. Its aoasis. Introducing the completely redesigned eclass. It everything you need it to be. And me. Mercedesbenz. Ithe best or nothineed it to be. And me. A quick stock to watch this morning. Lululemon. This is a yogawear maker and it did Beat Estimates by 1 cent for its recent quarter. But you can see the stock is down. On the guidance. Did a nice year for the stock but now down. Coming up, becky you want to sing that lyric . The final countdown the jobs report is on. Our expert panel is standing by and ready to go. I asked for human being, i could not get any music. This is not my favorite song. Were going to have predictions and what it means for fed speak. Well have the numbers coming up. Look at the futures as we head to the final countdown. Were now in negative. Its flat all morning. Its a number that could set up the fed for a september rate hike. Our expert panel is standing by with lightning fast analysis. Its jobs friday, september 2nd, 2016. And the final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with becky quick and Steve Leisman. Andrews off today. And the countdown is on. Just 30 minutes now from the august employment report. Polled economists say that nonfarm payrolls increased by 180,000 in august and the Unemployment Rate is expected to tick down 0. 1 to 4. 8 . Theres lots of other stuff. Hours works and Participation Rate and, you know, whether there was any increase the the average workers wage. All that. We have expectations for and so we need a lot of people to talk about it at 8 30. Lets get a check on the futures ahead of this. You can see we are in the red but its basically flat. After a mixed session after a mixed weekend. And actually august was not a great month. Because in midmonth we started thinking the fed might hike again in september after we thought that one 255. But then it came off. And they tried to put it back on. But were only at 35 . 27. Weak ism numbers yesterday. The manufacturing numbers fell below 50 which signals a decline in manufacturing activity. Whats the combined for this year . I have december at 50. 2. So probably not by september. And only 50 50 for december. Yeah. Now, does that do you think people know this may not be a great number because of manufacturing. Therefore because that will move up if this is 200plus, that would be above 35 . You would think so. But there are people who will do it before the election. Regardless of the number. Where did september go . There was a lot of speculation on what the number is. One would think is a slam dunk for the hike. What does it go to . 60 . You would think it would be over 50 at that point. But you argued even if the number comes in below expectations i think look, i dont know how seriously people are taking this Financial Stability thing that was talked about. Then i got stan fisher who told me directly that he thought, you know, september was possible and maybe more than one this year were still possible. I had a sense from people on the board that some people wanted to hike. And they dont know how the opposition is. Some of the people who matter. Some of the people who matter. The democratic nominee proposing a Response Team to monitor drug price hiex. To impose penalties on companies for what they call excessive increases in cost. Yum brands is selling its stake in its china operations. The buyer is a concoursortiumco. They are in the process of being spun off and will begin trading o an separate company on the New York Stock Exchange that begins in november. And samsung is halting sales of the note 7 smartphone. Following reports some batteries have exploded or caught fire while charging. They have found 35 cases with the battery cells. And the company says it will take about two weeks to replace some of those devices. Few stocks on the move this morning. Gap same store sales falling 3 in august. Dragged down by a 10 decline at banana republic. Separately gap says a fire at a Distribution Center in new york is slowing the fulfillment of some online orders. Smith wesson out with revenue rising more than 40 beating estimates. And back to todays top story. The august jobs report. Lets get to our panel. Joining us now austan goolsbee, economics professor at my new favorite university. Ive got always your favorite. No, no. Finally someone took a stand. And i want you to know this is not a safe place for you here. And i might trigger something any minute for you goolsbee. It never has been. It hasnt been. Wait, wait. I want a trigger warning. If youre going to to do it, i79 a trigger warning. Im going to be microaggressing all over you today. What . Yeah. That sounds disgusting. Microaggressing. Also gender fluidity as well . Princeton and other schools also signed on. Austan, you had to draw the line. We have to. Its insane. Look, the reason i always keep coming on the show is the university of chicago taught me its okay to stand up. You can talk to people who dont agree with you. No kidding. God, what is with these little these kids . I dont get it. I mean, if they hear something that goes against the way they think, they go hide and cry . I mean, its nuts. And the professors are and youre not one of them. But joe, i thought youd have more sympathy for that attitude. Joe, joe. Jobs. Oh, yeah, yeah. Yeah, yeah, yeah, yeah, yeah, yeah. Okay. All right. John sylvia, diane swonk, and Peter Navarro. And peter, we just needed you because goolsbee god, whenever he gets a chance, he gets so rare form today, joe. Come on out to uc irvine, my friend. Yeah. He gets so political with a lot of these numbers. And, you know, swonk isnt exactly in the middle either. Good to see you, peter. Ill go back to you diana, whats your number today now that ive referenced you. Probably from a disparaging way, but im looking for 175. Its a little light. Something well over 200,000 would tip the scales. 255,000 would be a slam dunk for the fed. But im still more on the fence about september. But if this number comes out really strong, they talk to steve. Steve, the people who you didnt talk to are as vong as the people you did talk to. The fact we saw stan come out not just once but twice is important. So austan, i cant remember where for awhile you were glum, sullen, merose. Now where are you . Im at 178. I hope the fed doesnt raise, but you know, i think theyve been itching for a long time. They want to. I just think if you look around the world, wow. China is still slowing down. Europe still has a bunch of problems under the hood there. So it makes me nervous. Peter, where you might disagree with austan and well get your number, but for years ive tried to tell austan that maybe some of our slowness, sluggish economy and this terrible you know, the worst repound in postwar is due to its selfinflicted. You look at the rest of the world and might not have caused that, just us. And that were doing better than they are anyway. Do you think we could have done better the past seven years and can do better in the next eight . Well, Donald Trumps going to take us to doubling that growth rate, joe. The way hes going to do it is by ending this structural imbalance globally on trade. Thats been the problem. We dont have currencies that adjust these balances. So everythings slowing down. But todays number is irrelevant to me. Becky quick had it right. Yesterdays number kind of took the drama out of it on ism manufacturing. Both down. Were in recessionary territory on the ism. And dont forget today, the other big number which is far more important to me is the trade deaf stit which will come in at 44 billion or so. So no rate hike in september. I dont want your listeners to leave and go to the hamptons right now, joe, but thats kind of where im seeing this chess board. Peter, yesterday in it was two days ago in mexico, donald trump started talking about something that you and i talked about which is this idea that theres a north American Supply Chain thats out there and really seemed to moderate at least his tune when it came to his concern and his attitude towards the idea that the role that mexico plays in the north American Supply Chain. Has there been a change in the outlook on trade . Not at all. That was a great point that weve talked a lot about. I mean, the problem here and that goes back to see. China for 15 years had it really good with its unfair trade practices but steadily weakened the u. S. And europe. But now both of our economies are too slow to support china in the manner in which it is accustomed to. So if we have a strong hemisphere if we have a strong economic engine here, by definition thats going to be at the cost of china. Which ships stuff to mexico and then they ship it here. So Donald Trumps view is that we need trade deals, the trump trade doctrine is clear. No trade deal unless it increases our gdp, reduces our trade deficit, strengthens the base. Working with mexico is a great way to do that. The problem is that china drains off our vitality and hurts us. So strengthening that relationship, steve, is going to be a way to do that. John, do you want to say anything about the concerns you may or may not have about where trade is going and the importance of some of these trade agreements to the u. S. Economy . The trade agreements are very, very important. I would start out by simply saying our estimates are 176,000 in terms of jobs. I think the construction jobs will be positive. Thats good for house and commercial real estate. When you look at restaurants, leisure, and health thats all good for the american consumer. So i think there is some positive there. Picking up on your point with respect to manufacturing, the numbers were disappointing yesterday. And it does lead us to think that manufacturing will be i think pretty flat overall. One final point overall is theres that with not being in the survey that average Hourly Earnings are a little bit less than trends. Then finally on trade, yeah. To me, steve, is too much of this free trade and not free trade. You know, trade is never free. Its always somewhere in between. Its always a constant period of negotiation. And as you and i know, you know, when we think about josh nash and a beautiful mind, trade is a constant negotiation for the next 50 or 100 years with canada and mexico and china and our Major Trading partners. Its just going to happen and we have to learn to negotiate and change our trade agreements over time with modest adjustments. All right. You wanted to go back to diana, i thought. I did. I just got the courtneys running the show. And i was not nice to her last time because i blew through a break. I wanted to b nice. Hes being respectful. Im being respectful. Unless i can ask diana a question. Courtney, what do you think . You used your time. Concede the time of your balance back. Were going to stick around with your panel. Some news just crossing the wires. Irelands cabinet has agreed to appeal the eus recent ruling. That ruling assessed a 1 14 billion tax big against apple. This is interesting though because the eu wanted ireland to take another 14. 5 billion in taxes that it would collect. Ireland saying no thanks because in the shortterm it may help it in the longterm it will hurt it in terms of being able to attract companies there to hire. Very interesting case. Were going to be watching this closely. And coming up, it is jobs friday so were finding out where the jobs are. Turns out, the secret service is hiring. Our very own kate rogers went through special this is a great story. I heard her talking about it yesterday. But does she have what it takes . The right stuff. Heres a sneak peek. Squawk box will be right back. It is employment friday. Time to find out where the jobs are. Kate rogers joins us live from a secret Service Training center in maryland. Kate, can you tell us where you are or is that secret . Reporter its not a secret, steve. This is part of the Training Facility in beltsville, maryland. With president ial campaigns in full swing, they need a new president ial detail come january. And the fact that 17 of uniform division and special agents are eligible to retire. The secret service is on a mission to hire. Attracting applicants is the easy part. Its getting them through the rigors of the training thats tricky. If youre looking for a high energy, hard charging career, the secret service may be right for you. And theyre aggressively hiring. We need someone who is a selfstarter, selfinitiator, just a high caliber, high quality individual. Reporter only between 10 and 12 of 22,000 applicants the agency received for uniform division and special agents this year will make it past best qualified onto the background check. We do have a very rigorous hiring process that includes a series of interviews, a background investigation, we deploy a polygraph as well as drug screenings. Reporter uniformed officers are usually in washington, d. C. Where is the others are anywhere. Require a lot of travel, requires relocation throughout your career. Reporter she says the agency hires people with diverse academic backgrounds and prior Law Enforcement experience is not necessary. What matters more is willingness to serve. Youre going to have to be flexible and be able to adjust at a moments notice. Reporter so salaries here can be pretty lucrative. 45,000 a year on the low end. Close to 100,000 on the high end. And theyre looking to bring on 1200 new employees through the end of the time. And also people in administrative professional and technical roles. Back over to you. Kate, we heard that you actually tried out for the secret service yourself. Was it incredibly tough and howd you do . Reporter well, becky, i really gave it my all. I dont think i have what it takes. It was incredibly challenging. The job is just so insanely physical. I mean, from shooting to going through control tactics where they put you in the position of a protectee. They pretended i was president obama and protected from a number of devices. You gets toed around and have to be in peak physical condition. Its something to see. Well show you more of that coming up on squawk on the street around 10 30. Did you fire live ammo, kate . Reporter i sure did. I fired a semiautomatic rifle and missed the target every single time except for one shot. You had a semiautomatic pistol there, too. Did you fire that . I just saw you. What was that . Reporter yeah. So that wasnt live ammo. Thats actually a virtual simulator where you have to respond to active Shooter Training drills. So you go into for example, i did one in a Movie Theater where youre responding to an active threat there. So i did hit the target once on that. But i need to work on my shooting a little bit if i want them to hire me. All right. Great. Steve, youre in the market for a virtual stimulater, oh simulator they said. Sorry. Im thinking of something yeah. You were talking about something different. Anyway, coming up the economic number of the morning. By the way, you were asking steve that, not kate. Just for anybody that was not on camera. I was asking Steve Leisman because andrews not here. Its just that chair. Is it almost 9 00 . Are we almost done here . Its almost 8 30 though. Guess what that means. Can we get the number . Its not you. Its the chair. The august jobs report i think its just you. Maybe so. Just minutes a i way. I resemble that. Stay tuned. Youre watching cnbc, first in business worldwide. Better. A. I hel hpitalslspersonalize trs better. A. Using billions of f ta points. I hel hpitalslspersonalize trs better. A. And working with medic to predicthe highs and lowof d. And i am working with orreco to useiomark data to boost the performance athletes. Hello, my name is watson. Rking together, wen outthi. Myygienistaid the most rteeth like an ple. I should thy hello, my name is watson. It coulde great on theutsi not soreatn the inside her advice . Us proh crest ohealthwashat s. Advaed. Itsniquely formated with the ouide colgate total. To ng crest tohpaste and mouthwash makes my who mouth feel amazing. Advance to healthier gums and stronger teerom day one. My checkup was grea crest. Healthy, beautiful smiles for li. Hey, itbeen crazy with school being back so were constany going over our data limit. Oh, well, now all our new plans come with no data overages. Wow, no moreverages . So that means. Go on. Say it. So that means. Weand rek. In ctrol. Inoducing new t plans with dovere charges. Welcome back to squawk box. Im Morgan Brennan live in savannah where Tropical Storm hermine is fast approaching. The biggest concern here perhaps is flooding with as much as ten inches of rain expected along the coast. Now, here in savannah many businesses have already closed down including the port of savannah which is the fourth largest container port. The industry also in focus given that hermine was a category 1 when it made landfall in florida. Its already been downgraded to a Tropical Storm. Many Analysts Expect the effects to be relatively manageable for commercial property insurers. And the flooding coverage is backed by the federal government. Still, companies to keep an eye on in georgia. Homeowners insurance, by direct preem yums written are state farm, allstate, usaa. Also Liberty Mutual and travelers. In florida where hermine became the first landfall hurricane in 11 years, names to keep an eye on there universal holding, tower hill, and state farm. Stay tuned to squawk box. After the break weve got the big august jobs report coming. Coming back after the break. Where, in all of this, is tthe stakes are so high, your finances, yo future. Hodo youolve this . You don you partner with a firm that hadvises vernments and the fortune 500, and, caneliver insight pson to person,on what matts. Morgan staey. And, caneliver insight pson to person,on what matts. Balance transferot to othats my game bank you never heard of, ths my name a thank you. Uh, ne. Wah me makyour Interest Rate. Disappear. For, cretcarom whatever g lets youompare hundreds of cas to find the one thats right for you. Just search, compare, and apply at creditcardsom. A one, a two, a three percent ca back everyone thought wasazy to op. Everyone said its so hard to be a musician, but i cant imine dog anything else. Now that the train makes it easier to get here, the neho iseally changing. Im always hopping othe train, running all over portland. I have to go wherever the woris. Help keep cities moving, so neighborhoodsnd busisses c prosper. I can book 3 or 4 gigs on a good weekend. m booked solid for weeks. It takes ingenuity to make it in the big city. The final countdown welcome back to squawk box, everybody. It is time for the final countdown to the jobs report. Just a couple of minutes away. Lets get some predictions from our jobs panel. Steve is here. He has not given his prediction yet. What are you thinking . 142,000. I did say that. My model is weighed down by the lousy manufacturing report yesterday. Ism does weigh into it. Rick, first time to see you. What number are you thinking . Well, good morning. Good morning. 188,000. I think itll be a middle of the road number, of course. Not because it gives the fed more choices, but probably because theyve been pretty tight lately. I think 188,000 will do it. I also think we want to pay very close attention at some point as our guests have said this morning to the trade deficit as well. Hey, rick, by the way, correct me if im wrong, but you were the closest last month werent you . Yes, i think i was. I think you were. So well Pay Attention to that. Diana, i know you gave your number before but for the new audience yoin joining us, tell us one more time . 165,000. We do have some giveback i think on education in the public sector. And the weakness in manufacturing i think is there along with well see whats going to happen to retail. The real action in retail i think will happen in november. But the retailers are seeing traffic slow. Really a secular trend that they just dont know how to deal with. John, how about you . We are running up on a tight deadline here. 176,000 with gains in health and leisure. Austan goolsbee . 178,000. Manufactures not that big a share of total employment in the u. S. , so the negative numbers i dont think weigh that much. Interesting perspective. Like that too. And finally peter, how about your number . Inline or up its a dead cat. Trade deficit at 44 billion. Folks, again, we are just seconds away from the august jobs report. Lets take a quick look at all of the markets so you can see the Market Reaction post number. Right now the futures are flat. Have been the whole time. Futures down by about ten points. S p futures off by two. The nasdaq is exactly flat at this point. Also take a look at the 10year note. Because this is a pretty important one that well be watching. The 10year right now is yielding 1. 578 . Rick pointed out for the entire month of august with the exception of one day, we were looking at closes of 1. 5 . Yesterday we saw 1. 6 so the questions going to be how does the market weigh in on this . Not only the 10year but also the 2year. What kind of moves we see there. Hampton pearson is standing by at the Labor Department and he has the number. 151,000. August nonfarm payrolls increased by 151,000 jobs. The Unemployment Rate is 4. 9 . Average Hourly Earnings increased by 0. 1 . Less than consensus. We had some significant revisions, but essentially june revised downward from 292,000 to 271,000. But july revised upwards from 255,000 to 275,000. A net loss of a thousand jobs over the last two months from what had been previously reported. Private sector jobs in august up 126,000. Job gains, Food Services 34,000. Social assistance, 22,000. Professional and tech services, 20,000. Job losses. Mining down 4,000. Manufacturing down 14,000. Construction down 6,000. The labor force Participation Rate. 62. 8 . The so called real Unemployment Rate, 9. 7 . Both unchanged from july. The job gains for the last three months have now averaged 232,000 per month even with this 151,000 for the month of august. So all in all, hiring up but at a much slower pace than weve seen over the last few months. Back to you guys. All right, hampton. Thank you very much. Lets get reaction from our panel. Steve, this month you were the closest. Do i get to take a strut . No. No strutting . Well, the thing that worked nicely about my model here was the weakness in the goods producing sector down 24,000. That was a reason to keep a lid on it. By the way, total private sector was kind of lame. Just 126,000 while adp called for 177k making up the difference in july and august was pretty strong government hiring. I dont have information on whether thats state and federal or local. But 25,000 in august. And kind of a mixed bag here. The Service Sector providing all the net jobs here up 150,000. Retail doing well which is interesting to dianes point about the secular issue when it comes to bricks and mortar steers. Thats done well. Actually 15,000. And then finance up 15,000. Temp down 3,000 after being up 12,500. Thats not a good leading indicator sign. But i forgot who it was. Leisure and hospitality, that was up by 29,000. Reaction in the 2year, the dollar weakening. The market is seeing this as a nonfed act there. I asked you for the fed funds. You cant get it realtime. I dont need it. What the dollar does make rick can tell us. What are the fed fund futures . Fed fund futures of course are rallying and rallying means less percentages. Im not going to go into the numbers. Its a mugs game. I do know that if you look at whats going on with the dow, i know steve will say its the reaction. But the reaction gives you a glimpse into the Program Trading world and what the programmers and those that funnel into the algorithms, what they think on a moments notice. Will it reverse . Maybe. But the whole kbad is good, average is good dynamic is here. You saw it yesterday with the uturn and the ism number. We have a parallel shift on the entire curve other than the 30year. If you look to where we were before the number, where we are now, were basically down two, three basis points from those levels. The long bond, the 30year is very close to the same level it was that does make sense. I think when this ordeal is said and done, other than the fact that youre not going to have any mt. Rushmore presence to anybody on the fomc committee, youre going to have a yield curve thats really flat. Options trading going wild here. And what they seem to be doing, of course, is trying to get out of any puts they had and buy some calls. And steve, you know, when i said if its 275, the markets going down. Right. This is the other side of that. People still dont want to theyd rather not have a rate hike. Lets get over to diane. The interesting thing to me was the instasmaller than expec increase. Thats something the fed is watching closely. Even though you had made a good point about the feds threshold for employment gains in a month are not great. But the slowdown in hourly average earnings, thats enough to set people back on the sidelines within the fed as well. I think thats very important. Weve also got a lot of data to go through before the september 21st meeting. Were going to see more cpi data and retail sales and industrial production. Retail sales now going to be light with those auto sales dragging them down as well. Austan, what do you think this means in terms of the fed . I know you didnt want them to raise rates. Does this mean they very likely wont . Yeah. You know, becky, i think it would require a pretty solid case to raise, i think, for them to weigh in before the u. S. President ial election. I think historically theres a lot of anxiety about the fed interfering with the election. So i dont think this is a Strong Enough case for them to charge ahead, you know, six weeks or something before the boat. To add onto that with austan, the last time the fed was raising rates into a president ial election was 2004 thats when they baked in a quarter point far long period of time. Which was a different scenario. I dont think the fed stays on the sidelines just because of the election but there is policy uncertainty with this particular election that i agree with austin, theres a lot of reasons to wait on the sideline. Im somewhat relieved this puts the fed back in december. Mark says done 2016. Start thinking 2017. The markets might end up reversing what happened since they said september was live. And picking up additional gains. I dont understand the logic of i mean, all due respect to diane, the fed has said in no uncertain terms, 100,000 jobs is enough to keep the Unemployment Rate unchanged. I would be shocked in september though. I think this is for this economy and maybe well bring in john here. For this economy, this is what you can expect in terms of the levels of growth and the levels of job growth given the levels of demographics. John, forget what you think the sfed going to do, what do you think the fed ought to be doing here with this number . Again, when we look at the longterm projection with respect to employment over time, i think either september or december is fine. I think they need to do one or the other. At least going forward. Kudos to you, steve. We were over in terms of construction and manufacturing. So the good sector of the economy is having difficulty. And then finally i think its the quirk on the 15th that really explains the average Hourly Earnings number. So im not surprised at the 0. 1 . I would say, yes, the fed should go ahead september or december. I think the gate is wide open. The fomc needs to drive through. Kudu is an animal. I dont know why youre giving that to steve. Just accept the idea that i did something good here. Is it cooties . That would be nice. Can we bring Peter Navarro into this . Peter, your trade deficit number was better than expected. Not too shabby. Less than expected . Its a huge trade deficit. So im not real happy about that. But lets look at the jobs number for a second in this. As my good friend wilbur ross says, not all jobs are created equal. But the two things that should get your eye is manufacturing is down. And construction was down 6,000. Thats the leading indicator. So the obama economy which is the weakest recory since world war ii just got weaker. I said at the top of the hour theres no way the feds going to raise rates pep and its not because of this number. Its because of all the other numbers. Hold up. We just added 151,000 jobs. Its hard to say the economy just got weaker. Actually growth is picking up. The trends is down. No, the growth is picking up in the current quarter. Lets look at the reagan scenario versus the obama scenario. Reagan scenario its not comparable. I dont understand why youre doing that. The reagan recession was terrible engineered by the Federal Reserve wow. This is an interesting interruption. We had 4 growth. The obama recovery is a baseline of about 2 or less. 2 or less for eight years. Without fiscal stimulus. The obama economy has generated millions of jobs less than the reagan recovery did starting from and much more than the bush recovery [ overlapping speakers ] well, weve gone political. Lets stay with the investors here. What the investors are seeing now is a slow recovery which is really not going to encourage the fed to raise rates and were going to have an election which is going to be fought rightly so over Economic Growth and jobs. Because this jobs report is not encouraging the ism manufacturing report is horrible. The Auto Sales Says yes we have troubles ahead. And well see what happens. What people want out there in the heartland is both jobs and wage hikes. And this report is not a recipe for that. Diane . Yeah. I just want to add one thing. I think its really important for the Federal Reserve in terms of how they deal with what were dealing with in this election year. And there is a lot of acknowledgment. The fed looks at absolute gains from the recession to where we are on a relative basis. Were still catching up from 2000 for many households. I think thats where the tension is. And the bottom line is we had the worst recession in the postworld war ii period. Luckily we didnt have a depression. But it was gredepressing. And those still unengaged are clearly feeling left out. And its millions, diane. Austan, what about peters comment about yellen has gone out of her way to reengage those people. I think thats important. I come from detroit, so im in diane, hold on. Lets get to austans comment here. Peter makes a point that were, what . Half the gdp of the reagan expansion and fewer jobs. Yes and no. I mean, the thing is early in this recovery, all of those statements are true. That it was the slowest recovery. But it has kept chugging along. Its been really the tortoise versus the hare. This is now the longest period of private sector job growth ever on record in the u. S. Economy. So its but millions is 4 for six years. Less than 2 gdp. Come on. Wake up, people. How can you make it sound were averaging under 2 per quarter. Thank you, rick. Thats all. In the bush recovery we were already in recession. Thats my point. The thing is continuing. [ overlapping speakers ] john, my friend. I want to give you the last word here. John, how lousy should i feel that we added 150,000 jobs . Because if i think about this politically, im either euphoric or ready to jump off a building here. Ill give you the last word on how people should feel about 151,000 today. I think you have to feel positive about it. The demographics of America Today are not the demographics of the 1980s or the 1990s. Labor force Participation Rates are down for both male and female. And we just see a different america. And 150,000 is actually quite good relative to the longer run demographics of an aging society. All right, folks. Thank you for our panel. We appreciate it. Thanks, guys. And what . What . Youre smirking. What . If you do decide to enter if youre making 40 or 50 sitting at home and you do decide to reenter the workforce, you know you got to get clothes, you got to get child care, you got to buy a car, you got to get gas. So, you know, if you got you know, the safety net has expanded. And im not saying people actually not, joe. A lot of states have cut back. Especially republican states have cut back on unemployment. Coming up and that may have been responsible for the spurt we had in the Participation Rate. Which is what we want. Coming up, more reaction to the august jobs report. Dan suzuki and jim paulsen will join us after the fake. This car is treling ov 200 miles per ho. To win, every millisecond matters. Bo on the track anthousands of miles away. Wi t help of at t, red bull rang can share critical information out evy inbrakes are getting warm. Ly anywhere. Confirmed, danieu need to cool yr brak unrstood, bre bias back 2 clicks. Giving tm the agily to have speed ecisio unbecausno one kws like clat t. Welcome back. What . Yeah. Thats what happens when we come back. Lets look at the futures right now. You figure they went up a little bit. Its not like, you know, 400 points. But it is 40 points and we were down about 10. So and this proves your point. I dont know if it proves it. Its the counterfactual. But people definitely when was that . How long ago was that when they said september is definitely in play . I guess after the last jobs report. After the really solid jobs report. It started and then into august, too, when you were out. And then jackson hole made it more. If you could put up fed. 1, go back a couple weeks if you can, youll see that spike that happened when we talked to stan fisher into the 30 , 40 . Prior to that it was it was up a bit but not a lot. There you go. See, thats too long, guys. That doesnt quite work that way. Im sorry. For people that were there we go. Well done, boys and girls. There you go. For people that thats the criticism theyre doing it again trying to get a tightening move by just talking about it when they really dont have any intention of doing it, it looks like we were fooled again. I think there are credibility issues because there are issues about the framework. We dont understand what it is that causes them to raise rates. Versus not they dont know. And thats what jackson hole was supposed to be. We got into this because the fed was using this jawboning when they were lowering rates trying to get the market prepared. The whole adoption of forward guidance. Youre right. We always said this was going to be more dangerous going up. Despite the stuff youre talking about during the break. Incredibly smart. Despite the idiotic stuff we talked about. You got to hear this. Anyway, lets get more on jobs. Joining us now dan the hipster suzuki. And jim still hip after all these years paulsen. Let me start with dan. I dont even know where to start. I mean, is this a Good Development for the u. S. Economy . Is it a Good Development for stocks . Are we overly concerned about does the fed raise a quarter point here . I think everything you just said. Basically i dont want to read too much into one number. To your point we look at these past august. These are probably numbers that are going to get revised up. The number we just got between zero and 300 if you use the confidence interval. I dont want to make too much of it. But what concerns me is if you look at the leading indicators in the jobs report, theyre actually both pretty negative. Ours missed by 0. 2. Thats equivalent to over 800,000 jobs. The relationship has broken down over the last few years but it is still a leading indicator. Jim, im not even going to ask you a question because i never know where youre going to go with something. I will say jim, jobs, what . Well, i guess im disappointed. Id like to see them normalize policy. I think that would help Investor Confidence as well as private sector confidence overall. But i think the key number that i take away to dans point a little bit here is i think hampton said that the threemonth average job gain is Something Like 220some thousand or Something Like that. I would much rather see the Monetary Policy of this being more effected being more affected by some kind of moving average of where were at than a single monthly number that the vaguerties of that month in and month out. Take a look and step back, 200 plus thousand jobs in a quarter with 3 plus growth, on the gdp now numbers with the trade as you said didnt get much play but thats going to be a contribution to help earnings, momentum down and now up again on the backdrop of materials and energy doing better. I think whether the fed tightens or not, i think the markets will be fine but i think if they do tighten, that would be the better thing to go. I think that the show of normalization would help. One more point from an investment standpoint. Real quickly, yeah. Okay. Weve had almost all our postwar history a negative correlation between yield movements and stock price movements and the fed has always tightened when theres been a negative correlation. But right now, we have a very strong correlation in the last six months between the twoyear movements and stock market. If the fed were to raise rates in september it would be the first time maybe ever that the fed would raise rates when theres a positive correlation between the relationship between yield and stocks, they could raise rates and the stock market should go up. Lets leave it there. Dan, im sorry, were out of time. Thats okay. Dan and jim. Becky . When we come back Construction Contractors warning of a labor shortage as demand for building booms. More details when squawk box comes right back. Thisll w wthoughgeen programmed machines to talk. Ge is an indtrial companythats worldchangi machines. Machines that n talk to each other digilly. Hello . They dont talk to each r liket, ricky. Shhhh, youll ger it. He looks aittle ticked off now. Earlier we told you where the jobs are. Now, to an industry where theres a labor shortage and that is construction. Diana olick joins us with more. We found that out. Maybe thats why there were less than expected number of hirings there. Yeah. Construction jobs down over 13 from a year ago according to todays report. Its not that there arent enough jobs. Its there arent enough workers. A full twothirds of construction firms report theyre having a hard time filling positions for skilled workers according it a survey of nearly 1500 firms by associated general contractors of america. Worker short age are the most severe in the midwest, 77 of contractors are having a hard time filling positions. The south and west arent far behind at 74 and 71 . The northeast thats where the least Residential Construction takes place is faring the best but still more than half of respondents say they cant find enough labor. This as demand for construction grows. Construction employment expanded in 239 out of 358 metro areas that the association tracked between july of last year and this year. According to the Labor Department. The agca says firms are now having to rethink the way they pay workers, that is either paying them more or offering more benefits and or giving them incentives or bonuses, Football Tickets to tradesmen who will work for them, anything to get these jobs filled. Back to you. Thanks very much. Coming up more Market Reaction to the jobs number as we head to break. Quick programming note, dont miss u. S. Labor secretary tom perez on squawk on the street at 9 30 eastern and we will be right back. Is mapping the oceans. Ere we explore. Protecting biodiversity. Everhere we work. Feating. Improving energy efficiency. Developing more clean burn natural gas. My job . My j at exxonmobil . Turning algainto biofuels. Reducing energpoverty in the deling world. Mang cars go furer with less. Infueling the globalconomy and you ght we just made the g. Ergy lives here. Folks coming up this weekend join us for on the money. The chance to speak to country legend and entrepreneur dolly parton. Emphasis on tren. An amazing businesswoman. Her Brand Partnerships and why she actually said no to elvis. That was just a business decision i had to make at that time. Theyre not always easy, making decisions but you got to be responsible for your stuff. Elvis, by the way, wanted to sing one of her songs i will always love you but wanted half of the ownership and she never gives away ownership to her songs. So you got to check it out. Check your local listings to catch on the money in your area. You have to be responsible for your stuff. A check on the markets after the jobs report. The u. S. Equities were stronger, 48 points, about flat when the number came out. The twoyear note was, the yield down a bit. Where is that now . 77. So kind of on that. The dollar was the big pov. Dollar was a big move. We may not have it. A little bit a bit weaker. Dollar index down. Thanks for being here. My pleasure. Everybody have a great Holiday Weekend. Joe, see you tuesday. I will be here tuesday. Tuesday. Time for squawk on the street. Good morning. Welcome to squawk on the street david faber with sara eisen and kelly evans. The august jobs report showing slower than expected payroll growth up 151,000. The Unemployment Rate held steady at 4. 9 . Average Hourly Earnings up 0. 1 . Lets give you a look at the markets as you can see taking it well as the equity market at this point perhaps pushing off the idea of a fed increase as soon as the next meeting. Lets see how european