Transcripts For CNBC Squawk On The Street 20240713

Key read on manufacturing in the next hour. Plus, streaming wars, apple launching its tv plus platform today. It is the latest volley in the original content battle between media and tech giants. And pinterest plummeting, losing a third of its value since peaking in august. And the Growth Strategy for starbucks, Kevin Johnson will join us first on cnbc this hour. Lets get to the jobs number, october payrolls well above expectations at 128k despite the gm strike. Unemployment goes down goes up to 3. 6. Wage growth 3 from a year ago jim, hard to find things to quibble about this month im going to come back and say youre going to have a the beginning of cracks in manufacturing. There is still two economies the twothirds of the economy that is consumer is doing very well the other third is not doing well and we can i dont know how long we can go with only twothirds i think pretty long. But when you if if they shut down boeing 737 max, youll see very different numbers i just think these numbers dont have that yet. There are some places that are cutting back production. The consumer is strong i dont know why anyone would say the fed is done. The fed will be the fed will cut again if the manufacturing numbers get much worse even with job numbers that are quite strong yes yes. Unemployment rate of 3. 6. Yes youre in the camp that manufacturing is the economy output of finished goods is look at the lines the line by line manufacturing is not all gm. Look, i i am perfectly willing to admit that the u. S. Economy is consumer economy is doing well im trying to find an industrial company, other than honeywell, and maybe united technologies, to say good things so far this quarter. Thats a good assignment. Im thinking back myself. I cant find it were not including things like microsoft, hardwarerelated tech not those, no a company that exports. He had a decent quarter. Yeah. Thats called thats not as bad as feared. Absolutely. Okay. I had not heard that one but ge was nabath, not as bad as feared theyre still making windmills theyre tilting windmills. Yes, they may be. Don quixoteesque. Interesting comments here from james park about how 12 years ago we set an Audacious Company vision to make the world healthier. Right. And google is an ideal partner to advance our mission. Thats good the people have known this was potentially going to happen, the price is still above where the it is a decent premium to the current price, youre going to watch that stock given the 735 in cash move up a good deal. It is about ip, right . Thats what this is about. Intellectual property portfolio. 2 billion and thats up significantly from where the stock was prior to the first reports that google is interested. Why couldnt they close this ahead of them . I think the area of google that people are alphabet people are concerned about is when are we going to see something healthcare when and the answer is i think is this it. This is a competitor directly this company, i would say, was made, some would say obsolete by the apple watch. It is kind of interesting alphabet teams up with what some people think is a not a primary maybe second rate, second tier company, fitbit. I used to have james park on all the time i decided, if you miss your quarter every single time, it begins to be, lets say, there is no draft choice when you tank. We remember when this was a hot stock. Hot 27 yeah. Im not kidding i dont mean to be too negative. But they did not care about what the street thought of them they said were in the Health Care Company of the future there are lots of companies. You get a discount, fitbit and insurance. This is good this is going to be varly never came anywhere near the early highs. Giant short squeeze the whole time this is good james park has been making some money for people congratulations. But i now need we now need to see varly, their healthcare, moon, the other bets, the moon shots. We should point out 2 billion for a company like three days worth of cash flow. Like beatz for apple. It is not a large amount of cash. For the people who follow who watch our shows, fitbit has been a stock i get called on every week. Is that true . It is five they love 5, 6 stocks. Alphabet were to split 1,000 times, they would love alphabet. Still halted. When it isnt, it will show itself. Think there are other bidders . I have no idea. I have not focused on this for one moment thats wow, okay so there you go. There is other things that have been taking up my time. I would have said, jim, im going to do some work and come back no. It has to have another zero. Like a casual friday mind going. My mind is on casual mode. Nobody is going to go up against google really why couldnt you have said that the first time . There youre welcome. It gives a chance with apple in the watch space and apple is a big story today because theyre upping the ante in the streaming wars tv plus now available, launching in over 100 countries and territories. 4. 99 a month featuring a lineup of original shows, movies and documentaries. Netflix the irishman, with its 160 million budget. Man on my block i did everything i could to try to sneak in. I kept walking behind it. Did i make you young . I went to remember they used under first giants stadium, the one when the giants were a good team. The meadowlands, yes. Before they became the bad team it was hoffa karma man on my street, going like this every time, get out of here, please stop it good discussion on squawk with matt blank of showtime that apple, unlike rivals, is not trying to resuscitate a legacy content library. That gives them a chance to try some new things, piece out this morning saying maybe theyre going to put their toe in the water, a sense of what to buy down the road. I asked tim directly about it tim cook, the ceo. Correct and it was i of course blundered right into it, would you like to how would you like to buy, maybe a studio you want to buy. No were not a catalog company, jim. Were not buying a catalog were going to develop our own programming. Going to take a while, as it has for netflix, as it has for amazon, they have done it. And certainly possible for apple to do the same and to the point matt blank was making, theyre not defending a legacy business that is changing dramatically so it is not like disney where they obviously mr. Iger felt we have to go hard into direct to consumer or like warner media. Which is now unveiled hbo max a couple of days ago and is obviously defending against the increase of cord cutting we talk so often about millennials eat spam, they cant afford that, they eat velveeta. John stankey, ceo of warner media, spoke about this on wednesday morning from the back lot at warner bros the price certainly is a key contention, but stankey also did talk about in some ways you can connect it to apple. The connection between the content and other offerings from these companies. Take a listen. As we go forward on this, people arent going to just buy content for content sake theyre going to buy content because it is associated with other products and services. Whether it is amazon who chooses to offer marketplace incentives to have video, or it is at t that chooses to put great value with paid tv or connectivity or Broadband Associated with it. You can say the same about what happen apple is thinking. Theyre not defending a legacy business at the same time, as i pointed out, there is not a lot of there there yet. It is not defending legacy business as the apple thing. If you look at the credit card, it is all about not defending a legacy business. They love green field. And they have a longer term view i like what theyre doing because theyre trying to reinvent theyre not just trying to buy the paramount theyre not trying to buy the paramount studio jack ryan, not doing that by the way, david, one of the great things about stocks, i learned, and this really plays but viacom, they stop at zero. You are just brutal thats why he needs to get in there. It is now venezuela. Not viacom. 16 million bucks for south park. For five years. Not accrues to viacom it is a chimney, you put money in have you seen this stock new lows, multiyear lows. When this deal combines, when this combines cant happen quickly enough for them outperform, low synergy numbers which seem to disturb people, not to mention the low cash flow prognostications that were in the it is not doing that badly. No. Why doesnt it go higher . Will you to that thing you did with discovery you got it from 18 go see malone go see malone and get that stock from 21 to 30. Would you do that for me you did it for discovery do it again. Do it again. Ill put my word out. Im happy to talk to early december, they combine the stock. There are a lot of questions and concerns about that business as you know. Steel mill . No, i know. Whether they can keep the nfl, how much it is going to cost them. I asked tim cook about sports they could own the s. E. C. , they could own you can theyre not going to do it. Theyre not it is interesting because hbo max, they said in their presentation, and stankey made clear in our interview as well, will have will go years out, there will be live so thats news and sports. Thats good meanwhile, frank halota did a nice piece he added the cost of subscribing to apple, disney plus, hulu, netflix, all of those, less than a traditional cable bill. Yes, i have the fios skinny bundle i get a lot of stuff on that. Do you . Yeah, i do. I got a lot of them too. Hulu i dont know i guess my kids like the catalog on hulu, right snl for now. My wife watches hulu. Ill tell you other things she watches. Say again we all watch all this stuff who wants to the question about price is a key one. 71 bucks broadband connection as well, thats 60 bucks there, whatever the number may be because youre no longer taking video with it. It does add up. It is their largest other than the rent, it is the millennials largest thing because they spend so many hours working on it, watching. Needhams laura martin says if netflix doesnt cut prices next year, they lose 10 million subs. Wow real belief theyre going to have to go to some kind of ad supported i cant believe it though. They claim theyre in the goigo going not going to. Peacock, of course, owned by nbc, which will roll out your apple bill just keeps going higher and higher and higher and, remember, they send that to you at 3 20 a. M. Think about the apple care, apple backup, apple credit card, im like apple, apple, apple that adds up thats why there has been some talk about apple offering their bundle when you buy. Which would be really good i pay apple a ton. I pay comcast, fios, the charter thing, altese, i pay them. In the metropolitan area. I pay picasso, i pay altese mine was 1500 last month. 1500 how many wireless. I got a family plan like the like the waltons. Wow i know. Fitbit is open for trade. Again, the 2. 1 billion, 735 theyre not giving us any time in 2020 reflects badly why this is all they can come up with you dont think theyre done. I think that my hope is that when you go over the ark of that call, of the alphabet call, you get to the other bet section and it seems like they just lose a billion every it is this may be the way a lot of people in the healthcare business over there are not that happy. There is two different healthcare units they havent melded them maybe park stays with it how about that thats a good question. Is it i dont know, yeah. How about that . Wouldnt that be something . Maybe he runs it hes a very efficient guy. Humorless, maybe the most humorless person i ever interviewed. Whats the matter . Thats all right. I dont like humorless people no offense to them hope they want elon musk . Hilarious. Have to be a little funny. Parks, never a serious guy. James park 28 million active users. This is when you remember what tim cook says, my legacy will be healthcare the numbers for when you walk to watch companies, their business is down 50 because of apple. So this is alphabets first going up against tim cook. He does say he couldnt be more excited for what lies ahead. His quote, we dont know the answer. Hes never excited about anything by the way, went public at 20 so youre looking at a discount of more than 16 . Suboptimal situation. When we come back, well talk about starbucks today, outperforming the s p so far this year. Up more than 30 ceo Kevin Johnson will tell us how the companys Digital Strategy is sparking sales growth in the u. S. And china after earnings earlier in the week another look at the premarket. Jobs number, 128k, well above the estimates of 90k and revisions were good. Features futures reflecting that. Were back in a minute for farmers here, this is our lifes work. But when a recall happens, perfectly good food goes to waste. Now, weve got away around that. Looks good. Were on target. Blockchain on the ibm cloud helps pinpoint a problem anywhere from farm to shelf. Its used by some of the biggest retailers everywhere. A nice wedge. So more food ends up on your table, is that daddys lettuce . Yeah. And less food goes to waste. By the way, shes the it wasnext mozart. G day. And less food goes to waste. As usual we were behind schedule. But sophies enthusiasm cannot be dampened. Not even by a runaway donut. We powered through it in our toyota prius. Because a stars got to shine, no matter what. Its unbelievable what you can do in the prius. Toyota lets go places. What a morning in the bond pits, jobs number and ism on the way. To rick santelli. It is going to be so fascinating, carl. Obviously thatjobs number even gm just started was really solid. Couple of things we didnt even hit on there was a subtle but very important positive revision year over year earnings last month we thought there were 2. 9, they moved to 3 . Even that onetenth, thats a positive, 95,000 jobs over the last couple of months revised to the upside how did it all turn out . Lets look at some one week charts look at twoyear note yield. On the right side, of course, look at that volatility. Were not regaining all the yield increase from the positive number but most of it and carl is right, the ism is the second punch here well have to see if it is a good one or bad one. One week of tens, up one on the day, down 10 on the week 2s down seven on the week. There is some of your flattening what is interesting, look at 10s to 2s for one week basically were trading a quarter of the range like float. 20, 15, were bouncing back and forth. Virtually, what, two or three on the fed met at its last meeting prior to this. The point is, yesterday and the day before we were flattening with yields moving down, which means prices moving up well call that a bull flattener. Today, it is exact opposite, and were flattening on the bear camp as rates move higher and face value is moving lower but at the end result, the fed most likely didnt expect this number and if ism doesnt go poorly, i would see a steepening as long maturity yield should move higher more aggressively. One week of bunds. The interesting thing about bunds is that we spent some time right around the minus high 30s. What a huge difference from their all time low yield close at minus 71. Some giveback there, but today is the First Official day, of course, of Christine Lagarde and things are going to be changing. Finally, one week of the dollar index, october was unkind to the dollar index it is trying to take a stand here, though the positive numbers are small. Carl, jim, david, back to you. All right, rick, well see you in 40 minutes for ism. We will get cramers mad dash, count down to the opening bell lots to talk about with starbucks Kevin Johnson, first on cnbc interview in a few moments. Futures look good on this friday dont go anywhere. Is the monolithic view of emerging markets obsolete . At pgim, we see alpha in the trends driving specific sectors of outperformance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Every day, our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. All right, fitbit getting bought by google this morning. Jim mentioned the consumer interest in that name. A look at one week chart, 67 gain opening bell is next and our interview with starbucks Kevin Johnson, just minutes away the biggest challenge of. Owning and running a Small Business is finding the right people. In hiring our first recruiter, we decided to post a job on linkedin. They had to have worked. At a recruiter firm and be bilingual. When we saw ana marias profile. She had a ton of experience in hr. The interview went really well. And she seemed like someone who could really sell mckenzie to perspective employees. We found the best person to find the best person for us. Post a job today at linkedin. Com grow on a scale of one to five . One to five . Its more like five million. Theres everything from happy to extremely happy. Theres also angry. Im really angry clive actually, really angry. Thank you. But what if your business could understand what your customers are feeling. And then do something about it. Turn problems into opportunities. Thanks drone. Customers into fanatics change the whole experience. Alright who wants to go again . I do i do i have a really good feeling about this. There are things we would change about work. And there are things we wouldnt. When work is worth it. Work is worth it. Work can be closer to home. Pay more. Make us proud. Careerbuilder. Work can work. Find your work at careerbuilder. Com we got two minutes or so before we get to opening bell. Last trading session of the week, by the way if you like to keep track of the days of the week and this is the last mad dash. What do we got i said the other day that grubhub has been the biggest disaster in the quarter. Well, ariftia networks is going to rival that, anet. Theyre talking directly about a major cause in spending by a cloud titan, jpmorgan says it is facebook the confusion is this is the only company that has seen a major pause in cloud spending. We didnt see it in if you go over and say amd will go up because lisa sue is doing so well they didnt see it. What does arista do make white boxes inside data centers. Thank you what happens here is this call was overvalued in call it was a call where people say i dont see it. Were not seeing a slowdown in spending in other cloud providers. Look, she is the biggest. And she is very good im not trying to minimize theyre a bad company. Their a great company. They have been one of the great, great performers but without a doubt, this Conference Call made people feel that something is very wrong. Could they is it because of it being an early sign, would they in some way see the demand slowing prior to other providers i think she would say that, that, look out for 2020 spending i dont want to put words in her mouth. Shes done such a fabulous job but this was a very jarring call kind of broke down in the middle too and people are, like, saying what the heck . This was a what the heck call. Lets get the opening bell here s p 500 and the cnbc real time exchange, big board, march of dimes, highlighting prematurity infant Awareness Month at the nasdaq, a Technology Company in china you mentioned some of the blowups of the week, wayfair, grubhubs, pinterest we didnt get to in the first half hour. Pinterest theyre very i do not take this wrong they are very sweet company. What i mean is that theyre doing they care a lot about the pinners. They have done a couple of r reorganizations to maybe the site better. It made it hard to figure out how well it is doing they never played the game Todd Morganfeld and Ben Silverman said were not going to do upod, were not going to underpromise and overdeliver, thats not our style it is not. And the analysts i think keep thinking, it is all dont worry, they have something under they have a whole card that is good no, they did what they said they were going to do, continue to work it make the site better the conclusion is theyre out, that theyre done. Other than international, everybody who is a pinner is a pinner. So what Monthly Average users below average revenue per user not great. Was below estimates not below thats whats important. People have to understand, there are two kinds of below there is below estimates and then below what they say theyre very i shouldnt have said sweet theyre very earnest. Youre not explaining why this company is losing a quarter of its market value. Because people expected that you bought it for the growth, not for ebitda positive adjusted you bought it for growth people kind of felt, you know what, they can just put the pedal down we dont really care about how much money they make we want incredible growth and it turned out they were look, a prudent company. Did the number that they said they did but people wanted more than that this is what happens when you make expectations that are realistic and do that as opposed to blowing it away. Another of the ipo class of 2019 that is so far now below its opening price. And some of the price target cuts on wayfair today, from 100 to 65. Wayfair was one of those companies there is an example, they said, listen, were going to grow really fast. But amazon doesnt like them thats exactly right. Amazon doesnt like them. Jim chanos, who famously called for a short on grub, tells the ft today that october is one of his best months ever after p g and grub. Good for him. He does a lot of work. Grub was a company that kept telling you, were an ecosystem. This ecosystem is a term, there are not there are not Many Companies in a real ecosystem. There are a lot of pretender, poser ecosystems grubhub turned out to be a post david, im over here talking. Grub turned out to be a poser ecosystem. Yes yes it was a poser ecosystem and it has promiscuous customers that was a that was im never getting past that one. That call was who made the decision who is writing these press releases the comes department that was a call from hell, the release was from hell, that was bad. But as you can see here, breadth looks really good. Were above 3050, jim. A lot of people talked about that number as being a key reflection of where we are on trade. And earnings look, we had a couple of quarters we had, you know, look, i dont think apple is gigantic facebook is a Gigantic Company facebook Conference Call was so good and it basically said, listen, you know, we are doing much better than you think. Zuckerberg was consumed by the First Amendment and political ads. I know this is going to sound like im a heartless person, im a dollar sign represented by a man, but facebook has to Start Talking about how good its business is. And talk less about whether they should take ads that say that President Trump is really, you know, i dont know i dont want to go there there is just a disconnect between what the company is saying and what the company is doing. The company is doing much better than what it is saying it is mired in the dialogue of, well, should we run these kinds of ads want to hit alibaba, we havent talked about im sorry i was paying attention to you as opposed to when you were talking about grubhub, i was trying to access my alibaba information alibaba was down two. Then up three. Then down four. Call went well this morning and i talked to a couple of people, texted with a couple of people on it, their impression is strong. Strong numbers. Okay. You got 37 Revenue Growth in the core marketplace core commerce revenue up 40 year over year still growing very quickly adjusted ebitda 39 . Total revenue, again, up 40 693 million annual active customers. And so it is responding positively and apparently on the call they did a good job in terms of some dealing with some of the key questions. Thats what we can tell you right now. It continues to move at a very rapid pace, obviously. We followed it, growth of the Chinese Consumer, are they starting to weaken has been a key question this has been a proxy for the trade fight to a certain extent. No signs of weakening among their Customer Base at this point. Estee lauder yesterday. China was a standout, not hong kong, because of the protests. China was very, very strong. A lot of the headlines were wrong about estee lauder, decent quarter, they did raise by about these companies a lot of the companies are selling a lot on tmobile. And tmo. The branded platform. Very important. The consumer in china is strong. The industrial is not. The consumer in the United States is strong the industrial is not. Because the industrial sections are at war with each other. China is more of an industrial, manufacturing led economy, right one would expect the consumer would start to weaken. If they had a labor department, you would see the numbers are worse than us. The pmi did come in 51. 7, best since february of 17. I dont trust that. No one trusts that number. No. True. No one does. I had colombia sports wear on last night they have a big China Business and they have been saying, look, they had to china is bad for them china is down for them there is expensive luxury good very hard read want to bring in kevin in. Oh, my you know what, we should go to Kevin Johnson. Lets do it. Okay. Cold brew, just incredible for the afternoon day, and china, two big Growth Drivers for starbucks, and joining us now, just back from japan, starbucks ceo Kevin Johnson. Great to see you good morning, guys. How are you . We are good and i think that you are doing well i was surprised you happened to report on a day where the market was bad. I thought your stock should have been up 3. Lets talk about we were talking about alibaba, which we know you have a great relationship, kevin. China looks like theyre far more developed digitally than america and you have been a star, you are a Technology Genius from the old days talk about how great china was, because a year ago, china people were dallying. We had a solid quarter. It kacapped off a transformativ year for starbucks china was a big part of that you think about the digital savvy of the Chinese Consumer, you know, they adopt and they embrace technology at a very rapid rate our China Digital partnership with alibaba really unlocked a wide range of new opportunities for us we launched starbucks delivers in china our mobile order for pickup, you know, just those two alone were 10 of our sales mix in china. And we posted a 5 comp with 2 growth in traffic. The Digital Strategy in china is working. 10 million active rewards members, 45 growth in those rewards members. A Strong Performance in china. Now, in the United States, even not that long ago, the investment community, kevin, really felt that you couldnt get United States going, talking about 4 number. Talk about the twoyear comp, what really matters, and how it accelerated and why it accelerated in the United States. Yeah, well, you know, we posted a 6 comp with 3 growth in traffic this quarter. When you look at the twoyear comp, it accelerated to 10 . So, you know, many were skeptical that we posted a strong 4 comp a year ago. But then we posted a 6 on top of that now, the growth and scale agenda were executing against is really all about focusing on the right things and then executing with discipline. In the u. S. , it is all about elevating the Customer Experience in our stores, driving beverage innovation, and expanding Digital Customer relationships. And in all three of those dimensions, we executed with discipline beverage innovation, we now have nitro in all of our stores in the u. S. Our innovation on the cold beverage platform, cold brew, Pumpkin Cream Cold brew, nitro, but also our iced macchiato, cloud macchiato beverage platform, refreshers, shaken teas, so, you know, we have really focused on that beverage innovation that helped us. And we grow an everyday part in the u. S. On the call, you chose to take a bit of time to focus investors on your strategy when it comes to Artificial Intelligence something we talk about a lot here, the growth of ai give people a sense here in terms of how you see it helping your business, potentially eventually i would assume as well, contributing to margin expansion. Yeah, well, you know, clearly we have been focused on the digital flywheel and how that Customer Connection is so important. But over this last year we really spun up our focus on Artificial Intelligence around an initiative that we call deep brew and deep brew started really by using Artificial Intelligence for the personalized offers that we make on our mobile app, but now were using deep brew in a wider range of scenarios for example, deep brew is now doing Artificial Intelligence to really predict how many store partners we ought to have by day part in every one of our stores. By doing that, it is helping us unlock growth because were staffed to meet customer demand. Deep brew is now forecasting inventory replenishment by store. And that is helping partners ensure they have all the items they need to serve customers and they dont have to spend their time doing that inventory and placing those orders so deep brew is actually freeing up partner time, so they can spend more of that time focused on the customer. Basically deep brew is automating the administrative tasks, freeing up our partners to spend more time with customers, and that has led to an all time high in Customer Connections. And when Customer Connection scores are an all time high, thats growing our traffic so deep brew is at the center of helping our partners better serve customers, and it is a key fuel for our growth looking forward. Kevin, it is carl in qsr, breakfast is getting so much attention either adding to the menu at mcdonalds or wendys. I wonder is there pressure internally to expand food, at least in the morning well, you know, for us, were a beverage First Company we differentiate on the fact that our starbucks partners hand craft each and every beverage personally for our customers and then we attach food. We saw good growth so i think the beverage platform is helping, but part of what is helping in the morning day part is the sandwiches, the egg bites and wide range of food items that resonate with our customers. Food plays a role attached to the beverage and were seeing a good growth in the morning day part. In a couple of days, veterans day, i think your company is the one that is maybe the most committed to hiring vets there is a labor shortage in this country could you talk about how you can find enough people to staff starbucks, and what you have done to hire people who have come back from the wars . Well, you know, our focus on veterans and military spouses has been something we have been doing for several years. We set a goal for ourselves to hire 25,000 veterans and military spouses we surpassed that goal three years ahead of schedule. And we now are on a run rate we hire 5,000 veterans and military spouses every year. And they are phenomenal starbucks partners and were very proud to be associated with our veterans and helping support them as they come back from oftentimes multiple tours of duty thats been an important part of it and they are fantastic partners and they make us a better company. I want to talk for a moment about something that marc benioff taught us, business is the greatest platform for change you, i think, your company, uniquely has been an ambassador to the United States what is it like being for the United States. What is it like being an ambassador for the United States to china right now you know, jim, we just surpassed 4100 stores in china we have 55,000 starbucks partners who proudly wear the green apron in china, we have been in china for 20 years now and, you know, for us, it is all been about being in that market, entering that market with respect to the Chinese Culture and doing the right things to, you know, beyond the pursuit of profit, for example, we, you know, we introduced Healthcare Benefit for our partners in china to take care of their aging parents. And thats one of a kind Insurance Program that we put together in partnership in china. The whole foundation of starbucks is built on the fact that we believe that the pursuit of profit is not in conflict with the pursuit of doing good and, you know, in many ways our purpose and our reason for being goes far beyond the pursuit of profit so when were in china, every one of those stores is a part of the community. And we do work to service that community and be a part of that community, take care of our partners and show up in a way that really focuses on doing good in every community that we are a part of. Yeah, kevin, the reason im going down this path is business is under assault in our country. Never seen anything like it in my lifetime. Companies like you are doing things that make me feel that business being under assault is a huge mistake, given the fact that again it is a great platform for change. I happened to be in mexico recently i saw orange aprons and i said, maybe theyre wearing the wrong color. Thats not true, right well, thats not true, yeah, you shared a great photograph of you visiting one of our stores in mexico and it in the month of october we have a great license partner who runs our Starbucks Stores throughout latin america. And alberto and his team do a fantastic thing in the month of october, they have a very special cause they orient to every peso that is spent at starbucks and other brands that they run, they donate money to help feed the hungry and take care of children, take care of their communities. And so they put on an orange apron to help amplify the fact that they are focused on serving their communities and contributing money to those communities and the people in need so were proud to be, you know, to be a part of what we do in mexico, and in every Community Around the world. Kevin, you know, hopping on to jims question about china and being an ambassador for the u. S. In a way, we see pictures in hong kong and we know hong kong is a mess but we see pictures of broken glassat starbuck storefronts how should investors view that well, look, my obviously we monitor that closely. And i just say that my priority is focusing on the safety and security of our partners and, you know, certainly were in 81 markets around the world and we deal with geopolitical issues all the time. But my focus and my priority is focusing on the safety and security of our partners. Kevin, one last question. I know we got to go. Im curious to know what youre seeing about the Delivery Business there was a debacle this week where grubhub was saying this business is maybe isnt a business the fact that their Profit Margins are so thin, is that a win for starbucks . Well, i look at the Delivery Business, china is a very different market than the u. S. In china, we saw 7 of our total sales volume came from delivery. And in the u. S. It is far less than 1 . And part of that, i think, is there is a very different cost structure in china than there is in the u. S and, you know, i think that delivery will evolve in the u. S. , but right now, i think the you know,unless we have a very high ticket, the delivery costs, you know, are prohibit tiff to the consumer so, you know, people are having to invest, either merchants have to accept lower margins or Delivery Companies are going to have to figure out a different Business Model that enables that price to be a lower price to the consumer for us, you know, were pleased with our partnership with uber eats, but it is very early days in the u. S. Where as i see, you know, delivery is much more mature in china and embraced, you know, by the Chinese Consumer much more than it is here in the United States. Kevin, really great to talk to you Kevin Johnson, ceo of starbucks. Good to see you, sir thank you very much. Thanks, guys. When we come back, this morning, Pulitzer Prize winning New York Times columnist jim stewart, his take on the streaming wars at large. Record high for the s p. 3055 and first record high for the nasdaq since july. Dont go anywhere. This is apple card. A new kind of credit card. Created by apple, not a bank. With a better way to track where you spend. A new level of privacy and security. Daily cash you get back every day. And no fees. Not even hidden ones. Oh, and if you happen to be somewhere that doesnt accept apple pay yet, theres this. Nice. By the way, shes the it wasnext mozart. G day. As usual we were behind schedule. But sophies enthusiasm cannot be dampened. Not even by a runaway donut. We powered through it in our toyota prius. Because a stars got to shine, no matter what. Its unbelievable what you can do in the prius. Toyota lets go places. When i lost my sight, my biggest fear was losing my independence. Mmm. Good. So ive spent my life developing technology to help the visually impaired. We are so good. We built a guide that uses ibm watson. To help the blind. It is already working in cities like tokyo. My dream is to help millions more people like me. You got to measure the gains in the thousands of percent just burying the s p over that time period. 251. M w alltime high today and its ticooks birthday. Happy birthday, tim. Were back in a minute. As your life grows, so do your needs. And with bank of america and merrill, the benefits you get can grow, too. As a preferred rewards member, you can enjoy Priority Service and exclusive discounts. So your growing life can be more rewarding, too. What would you like the power to do . Jim, stop trading. Lisa has her same birthday as tim. So happy birlthday, lisa. Qrvo, that is giving us hope for 5g it was a fantastic Conference Call made me feel really terrific about tech people who are down and feeling low read the qrvo Conference Call because, boy, were not left out by 5g were a leader were a leader, david. Got it. I was thinking the simon and garfunkel song when youre down and feeling low, you had me there. Im going to do my game plant tonight and i am excited by qrvo because i know china unveiled its 5g dom chu doing big stuff today and to me, were part of it. So lets jim, well see you tonight. Important show 6 00 p. M. With the s p, 3057 and ism on the way. Dont go anywhere. Orlando isnt just the theme park capital of the world, it also has the highest growth in manufacturing jobs in the us. Its a competition for the talent. Employees need more than just a paycheck. You definitely want to take advantage of all the benefits you can get. 2 3 of employees said that the workplace is an important source for personal savings and protection solutions. The workplace should be a source of financial security. Keeping your people happy is what keeps your people. Thats Financial Wellness. Put your employees on a path to Financial Wellness with prudential. Good friday morning welcome back to squawk on the street im Carl Quintanilla ism. Lets get to santelli. All right here we go and it is going to be maybe the most important number of the day 48. 3 48. 3 well, its better than the 47. 8 in the Rearview Mirror and that of course was the lowest level going back to june of 09. So the comp on this is rather easy we just go back to august when it was 49. 1. But it is an improvement, nonetheless. Lets go through some of the internals, shall we . The Employment Index rose also from 46. 3 to 47. 7. If we look at the prices paid component, prices paid move from 49, seven down, to 45. 5. Finally, new orders. Not quite getting up to 50 49. 1 but a nice jump from 47. 3 we also actually had another number out september Construction Spending and thats always important and thats a whopper of a move actually up half of 1 . Thats rather shocking up half of 1 is the best number going back to april but there is a fly in the ointment. Last months one tenth now turns negative to minus three tenths but i have to say that yields actually havent moved moved a little bit lower so ism is taken as a negative and im sure under 50 isnt building up psychology but it s still is a sequential improvement. Morgan, back to you. Rick, thank you lets go back to Steve Liesman steve, we had better than expected jobs number this morning. Third straight month of contraction but also seems to be a little better. I think thats the way to think about it, morgan spot on, actually. Its still contracting but were not contracting to the downside. Supplier deliveries were faster from slower and backlog was contracting. Thats actually a negative, believe it or not. Just want to see if theres any commentary here about trade. Comments from the panel effect improvement from the final month but remains more cautious than optimistic so its not getting worse and i think the way the market is thinking about this right now looking at how its trading, it expected this number to be a little bit better and it was a little bit better, just not as as much improvement as they expected. But a potential game changer of a jobs report that really makes you rethink just how much the recent slowdown in activity is hurting the jobs market. Here are the numbers nonfarm payrolls 128 but those big August September revisions plus almost 100,000 additional jobs, average hourly wage not really accelerating much the Unemployment Rate ticked up just 3. 6 . Lets look at the jobs in leisure hospitality. Thats a strong number education, we always see that. Health services up 39,000. But government and manufacturing, both down and this is where we put an asterisk on the jobs report. What were going to do is little math here. The actual number was 128, okay . Gm strike. So were going to add that back because thats not happening again. We took off another 17 for the census workers being fired well add that back. The number could have been, and i say could have been, upwards of 190 without those two individual oneoff events. The new strength can be seen in the revisions, what was a threemonth job average of 157 well, now, its 176. Not too shaby. Its still down from last year when it was north of 240,000 but not as much and not careening downward all of this making boston fed president s descent from the recent rate cut look not too bad. Rosengrand saying in his descent fiscal and Monetary Policy are already accommodated with labor markets tight. Real gdp growing around estimates of its potential and a moderation of the risk surrounding trade and brexit, i believe further combination is not needed well, the pause from the fed looks proi look pretty good im just going to update while em aw talking the probability for rate cut going into the meeting, before it was 30 or 25 for december. Now, its below 17 . Another cut isnt being priced in until march or april of next year, carl. All right steve, thanks. A lot of information that investors trying to process right now. Joining us this morning. Chief economist, diane swank christopher harvey, as well. Happy friday, guys good to see you both diane, your piece earlier in the eke we week making case for a fed cause. Does todays data even though we didnt get it wednesday, do you think now is the time . It is certainly the fed could have paused but they didnt so we have it now. I think whats important, too, though the dirt is always in the details. The upward revisions really came from leisure and hospitality most notably, Food Services and Retail Retail had been careening downward all summer really on a downward trend it peaks in 2017 but that actually was revised upward the last couple months along with Food Services the footd food service is also interesting because we know from yelp data, they moved down scale. They moved to lower cost restaurants and to fast food restaurants which could be accounting for some of that hiring what is a little bit surprising in the data, the manufacturing data, we did not lose as much as we thought from gm because we saw gms competitors pick up production and manufacturing outside of the vehicle sector add jobs so i think thats important. On the other side of it, though, those Service Sector workers are seeing deceleration in wage growth theyre not seeing increasing wages out there as rapidly as they had been. And theyre getting less hours worked their hours are being cut back a bit. So as many of these Service Providers have had to pay more for workers, now it seems that theyre willing to cut back on the hours that they have them and not have them pay overtime or, in some cases, cross a threshold into benefits. Right but all of those things, christopher, are better than layoffs, right layoffs are expensive. Layoffs are expensive what were seeing from claims numbers, claims have gone sideways what i think the bigger picture, bigger issue that we have is the fears are really, its not theyre unfounded, they were just too great whether looking at earnings, whether looking at the job picture, whether were looking at the economy thats why the stock markets walking higher. Does that mean record highs are justified then i think record highs are justified. You have low rates you have an accommodated fed you have reasonable valuation. No inflation and people are positioned very risk averse. Diane, lets dig into that a little more because just a couple weeks ago that we were having these discussions about recession fears and now it seems like the discussion has shifted and you can certainly continue to make that argument looking at the reports we got this morning towards a bottoming out of the slowing weve seen in Economic Growth at least here in the u. S. Is that how you see it we are seeing it for now. I actually think the Fourth Quarter will be worse than the Third Quarter in overall right now, its adding up to be worse. There is some slowdown in momentum not a dangerous slow down but a slow down in momentum. Whats critical is what have we taken off the table . We have taken off the table the escalation of tariffs for the moment and as long as that stays in the background, we can handle the tariffs we have. Much on a recession hinges on whether or not we up the ante on a trade war or keep things a little the deescalation that weve seen out there, we can handle the cost of tariffs, the uncertainty compounds. But that alone does not get us into recession unless we up the ante on a trade war with china again and thats really what the recession call hinges on is purely on that part of the trade. Which the fed also cited as one of the abating risks for the moment. Are we going to start seeing macro notes titled soft landing . Or is trade too much is it too much optionalty in trumps approach to trade to write that piece youll probably hear the phrase goldy locks a few times our belief is this economy is not real pretty but its very robust we continue just to rumble along. And again, a lot of what weve been dealing with is just too much fear and now were getting the facts and the facts are okay the other thing youre dealing with, were dealing with uncertainty. Were taking away more uncertainty. Whether its trade and tariff or whether its brexit. How long would it take then for businesses say, we see a runway, well commit to cap x again. Do they have a lay of the land do they believe that we have a detante for the next six to 12 months i think were beginning to see the start of that. Diane, i wonder if were talking enough about the pain in the oil patch emerging here in the u. S. Weve seen rig counts come down. Saying theyre seeing continued slowdown in s shail production i mean, that, as we saw back in 2015, 2016, oil and energy is very closely linked with a broader industrial part of the economy. How much has that been i guess weighing on or clouding the data around things like ism manufacturing . Well, actually, some of the oil data shows up in some of the Service Sectors so it depends on which ones youre looking at but the mining data actually was down in this report. We know that their shail bankruptcies are up. So weve decoupled a little bit where its helping on cost and helping to dampen the blow of higher tariffs and wages so thats good news for the manufacturing sector, bad news for the Mining Sector. The Mining Sector i think is going to be a big drag now, remember the Mining Sector is also a big swing factor on investment in the u. S. That hasnt been whats been the primary drag so far. But it could add to the drag we see until we see the veil lift entirely on the trade picture and until we actually get more than just a detante, we actually get a deal with china, i think its very difficult to do. So, christopher, i mean, with markets at record highs right now and the conversation were having, where should investors be putting their money so what weve been telling investors is you want to barbell your portfolio you want high growth but you also want to add some cyclicality. We upgraded banks in early september. We also like parts of the semispace so you need to balance risk and reward. But if youve ridden Home Builders and healthcare for the past three months, time to ring the register i think you want to ring the register on your bond proxies, your low vol you have some of that in those sectors. But its really more on your bond proxies. Fascinating set of data today. Guys, thanks diane swank and christopher. Thanks. Meantime, Google Parent Company alphabet buying fit bit this morning a deal valued about 2. 1 billion jon fort joins us now with more. Jon, your takeaway from this deal which we had gotten reports could be coming. Yeah, we had an idea this could be coming. Make no mistake, fit bit is going to be part of google, not some floating alphabet component just out there alongside google. The idea is for this to be part of googles devices business under rick osterlo hes quoted in the press release here but lets not fool ourselves about what this is really about this is not about taking on apple in wearables i mean, case in point, you take a look at just the numbers fit bit, in two years, has seen its revenue drop about 25 while apple, in its wearable home and accessories categories over two years, has seen revenue double roughly to about 25 billion. Fit bit is at about 1. 5 billion so theyre not even in the same category what this is really about for google, i think, is suring up the android ecosystem that its got. Look at idcs numbers released earlier this year just at wearables in general apple is number one in wearables. The apple watch is twothirds of the smart watch category behind apple at number two, youve got jami, which is going fast youve got huawei at number three, which is going really fast number four, youve got fit bit, which hasnt been growing that fast but kind of hanging in there. So its part of google fit bit gets a chance to sort of rationalize its cost and trying to do hardware in a kind of challenging tariff environment no question. Gets a chance to really have some marketing humph behind it that would have been really difficult otherwise. It gets to sit alongside some google devices just a couple week ago, we were talking about googles new devices for home wearables that are out. It gets to be part of that portfolio. And google really doesnt want to lose control of android in the era of Artificial Intelligence, home speakers, and wearables. So its taking on challenges not only from huawei and from jami but also from amazon, which is releasing its own wearables. This is googles way of keeping that all together. You know, jon, we were having this conversation on ft. Knox the other day. Weve seen both these companies, even though they have different businesses, theyre both hardware businesses that have fallen hard since their ipos weve seen them trade together largely. Do you think theres any read through to be had here no. I dont. Heres why go pros arent really that wearable and whats arisen in the era of not only wearables with Home Products is things like your ring doorbells and your inhome cameras that are more for keeping track of things going on around the house. Dealing with packages showing up that kind of thing gopro really hasnt played there. Their expansion play was more in the drone category and they backed away from that. So its really unclear how gopro becomes this same sort of smartphone ecosystem play because the market seems to be moving in a different direction. Yep they have one similarity they both were down dramatically from those early days when they wept public, right, jon . True. True both a bargain. Yeah. Jon, thanks. When we come back, right here Mark Zuckerberg fights back. Taking a swipe at politico aaron sorkin and later, were going to speak to goldmans chief enocomist more squawk on the street is coming right back. Corner of your growing business. From finding out whats selling best. To managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Servicenow put our this changes everything. Youre right sir. Everything. No not everything, i mean youre still blatantly sucking up to me gary. Brilliantly observed, sir. Always three steps ahead. Six steps ahead. Sixteen. So many steps. You done . A million steps ahead. Servicenow. Works for you. Back against screen writer Aaron Sorkins criticism of his stance on political ads on the facebook platform by quoting sorkins own words from the movie american president. Saying quote, america isnt easy america is advanced citizenship. Joining us now, Pulitzer Prize winning new york columnist author of deep state, trump, the fbi, and the rule of law jim stuart, how do you come down on this debate about zuckerberg saying its free speech . That even though they may contain vast inaccuracies, its okay versus sorkin who says no you cant. Well, ive been giving this a lot of thought since it first cropped up a couple weeks ago. But now, twitter has come in and just said were not going to run political ads. And theyre both in their own way i think trying to punt this issue. I mean, facebook is saying were not going to police it twitter said were not going to do it at all and it seems theres got to be a middle ground here those are simplistic those are bright line policies at least facebook has the advantage of not giving up a revenue stream but there is i think there is a middle way you know, were all in the fact business and one thing ive discovered about the internet and the minute i write something, it goes online. Boom the crowd sourcing on that is unbelievable if there is an error, i dont care how trivial, somebody nails it within five or ten minutes of it going up there. And if you read the comments online, there are a lot of those Little Things at the bottom where there is a quote unquote like you misspell a name, you get a date wrong. Anybody can correct that facebook could easily correct stuff like that. But that leaves this vast middle, gray area that we all grapple with like, what is a fact and, you know, example just from my book. A lot of people have said, well, how come you didnt have in there that the fbi tapped President Trumps phones when he was a candidate . Well, i do address that. The fbi investigated, the Justice Department investigated. They all said we dont have any evidence of that but when trump came out and said my phones are tapped, that is a fact that is accurate the embedded fact, who knows but barr comes out and says there was spying on the campaign attorney general says theres spying thats news. That is a fact well, was the fbi spying on the Trump Campaign we dont know. And i havent seen any evidence to support that but now we have a whole investigation going on so im completely sympathetic to zuckerberg in the sense that there is a vast area that you have to let the court of Public Opinion weigh in on this and i so im i kind of tilt to the zuckerberg view here. But facebook, obviously one of its great strengths is the ability of advertisers to target very precisely the people they want their messages to reach. Right. So to the extent you can do that with people who are already likeminded or are certainly going to believe certain things even though it may be filled with inaccuracies and outright lies, you dont have a problem with that . Well, look, i think the outright lies can be addressed i think facebook has a mechanism to do that what im saying is lets harness the power of the internet. The same way the internet magnifies the potential for errors, it can magnify the potential to correct those. You mean outside of facebook . Because i think no, no, within facebook. Get their news from facebook. Yes, they do. It is perhaps if not arguably the most powerful platform of distribution of all sorts of things out there, jim. And you dont think it should be regulated . Well, whether it should be regulated is a whole separate question i mean, in general, i feel it would be better to have some policy that applies to all of these platforms. We dont have completely disparate, you know, or shutting down the public debate but, again, once you invite the government in and start saying let the government determine whats a fact and what isnt a fact, that makes me very queazy, as well. So i think thats sort of a separate issue but i do think theres a lot facebook could do without falsehoods and bringing to bear the power of the internet and counter those ads. Send the same people a message that says this is this is this is the actual fact. They could easily do that and they can harness of power. Theyve got, you know, 2. 8 billion users who can weigh in on the truth or falsehood. Just to be clear, you see a world where facebook lets an ad run. It runs. People respond to it and then facebook says, by the way, that ad was a lie that seems like a messy place to go to. Well, you know, exactly how the mechanism of this would work, i dont know but we deal with this, you know, in the media all the time. You put something up ten seconds later, somebody says its wrong and you paste something up there its not that hard i i just feel look, i dont want to see speech suppressed there have always been falsehoods in political campaigns. But i do think the internet gives you the power to to fight falsehoods with more speech and not less speech and people weighing in to be able to correct. Topic two, jim. Topic two. Yes. The war of words between leon cooperman. Of course, the wellknown Hedge Fund Manager got his Family Office now. And elizabeth warren, the president ial candidate in a letter obtained by cnbc, the Hedge Fund Titan writes quote for you to suggest capitalism is a dirty word and that these people as a group are ingrates who didnt earn their riches through strenuous effort and paradigm shifting insights and now dont pull their weight societily indicates you are either grossly uninformed or knowingly warping the facts for political gain thats actually an interesting letter he writes well, leon i will give him that. Yes, he does. I think some of these arguments would be more powerful if they were not being made by billionaires so i will say im not a billionaire and i am opposed to the wealth tax i think it raises all kinds of issues i dont think you actually have to go to the question of whether billionaires deserve to be rich. I mean, thats nobodys going to win that argument partly because, look, there are billionaires i think would agree they deserve to be rich. And then there are those who feel how did they what you know, what lucky tree were they born under like why did they get it so i think its a mistake to kind of go down that particular road but im against the wealth tax and i do feel hes touching on something, what is the essence of capitalism . I mean, its kind of like many things we have to were questioning and again we always took for granted that it is healthy to have a debate about what are the benefits and the, you know, the harms of capitalism how does the system work why do we have the system that we do . And i think implicitly, hes raising some of those questions and thats a healthy debate. Heres what i think is missing from the debate or at least the way its being framed. Rather than it being candidate versus billionaire or, you know, whether capitalism is broken, et cetera, what do the job creators actually have to say right . The people that are having this debate, have you created jobs . Have you ever been in a position, heaven forbid, where youve had to let people go from their jobs like, that seems to me to be the part thats kind of missing from this because thats the key to capitalism in the u. S. , right, its the job creation. Right and you know, they contributed massive amount toward expanding economy. Im not even saying its cooperman necessarily. Im just asking if thats the line, how many jobs do you have to create until youre called a job creator . Look, ive been a longtime critic of hedge funds. Thats not a good place for leon to be in terms of it but he does cite a number of people in his letter, of course, who created an awful lot of jobs whether its the likes of michael dell or bill gates or Mark Zuckerberg. Right and they have their arguments. But again, i think we dont really need to go there. You know, there have been plenty of wealth taxes imposed around the world. And to the best of my knowledge, theyve all been a failure theyve all been rolled back and europe, the experience has g not gone well. We have such an imperfect tax code that you could actually improve and generate a lot more revenue and have a much fairer system, why we need to leap out of that and start layering on this massive wealth tax, i mean i really think its speaking of taxes, final subject here our president , my hometown, queens his entire life built on new york but now hes decamping for florida at some point. Hes leaving us with not being able to to have any sort of ability to deduct that from our taxes. Well, i happen to have given a talk in palm beach not long ago and there was a big dinner of wealthy donors to the Nonprofit Organization where i was speaking and much to my amazement, everybody there were new yorkers. They were transplanted new yorkers and topic a was, oh, were all moving down here because of the tax situation were getting out of you know, the taxes are too high but of course, im thinking to myself many billionaires, millionaires in the crowd and im thinking they cant live wherever they want its like you cant pay the tax . I mean, im living in new york in absolute terms, im not paying nearly as much but probably on a percentage basis, im paying a lot more. Isnt the point of being that rich that you could live anywhere you want . So i i dont get that but i can tell you the same conversation with extraordinarily wealthy people who have even talked about moving to puerto rico a few of them like, why . Again to that very point, where is the value consideration but, you know, what, if youre focused on that, that is making lots of money, its going to be extraordinarily important to you. How much taxes. Right i think its kind of in their dna. Minimizing it. Yeah. Minimize tax and they get thats they derive pleasure out of that. And by the way, trump is already spending a lot of time down there. Hes hes hardly unique in assuming that hes as wealthy as he says he is, he would be planting his flag down there i dont think its a personal slam on no, i mean, leon cooperman also, right . He went down to florida, too the estate tax also plays into it too, by the way, not just salt. The president has had these investigations under way in the state of new york and i dont think theres any love lost there in that specific relationship as well. Yeah. I mean, look, new york is the ultimate blue state. Hes not mr. Popularity here although, one thing i like about new york, its always tolerated, you know, people from all over the place. I mean, he could still come here, he could have his dinners at, you know, whats the restaurant he goes to . With the red tables. 21 club. Exactly i mean, he can still and have a world i think very congenial to him. Meanwhile, what happens to the tax base of new york is a question with all those people leaving. Although, many of them are not making money anymore because they are near retirement right. Jim, thank you. Sure. Jim stewart monday, by the way leon cooperman hes nowhere near retirement i dont think hes ever going to retire actually. Knowing leon as i have for many years, hes going to be in the Halftime Report discussing that letter to senator warren that will be monday at 12 00 p. M. Eastern. All right when we come back, the weakest sector in october. Not a surprise, energy looking to rebound, though, with chevron and exxon out today going divine ways. Well go through those numbers on this busiest week of earnings now coming to a close. Do yous up 219. Times, they jus. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. A new kind of credit card. Created by apple, not a bank. With a better way to track where you spend. A new level of privacy and security. Daily cash you get back every day. And no fees. Not even hidden ones. Oh, and if you happen to be somewhere that doesnt accept apple pay yet, theres this. Nice. For farmers here, this is our lifes work. But when a recall happens, perfectly good food goes to waste. Now, weve got away around that. Looks good. Were on target. Blockchain on the ibm cloud helps pinpoint a problem anywhere from farm to shelf. Its used by some of the biggest retailers everywhere. A nice wedge. So more food ends up on your table, is that daddys lettuce . Yeah. And less food goes to waste. Good morning, everyone im sue herera heres your cnbc news update at this hour. Another new fire in california the latest is burning in Ventura County north of los angeles. The maria fire broke out thursday evening strong winds and dry brush have helped fuel that fire, which has now consumed more than 7,000 acres and has destroyed several buildings. The good thing for us is we still had a lot of equipment in Ventura County because of the easy fire. So what we did was we relocated a lot of that equipment over to this fire and theyre assisting us with this fire right now. Police say four people have been killed and four others wounded in a shooting on halloween night. It happened at a home in orinda, california details are sketchy but Officials Say more information will be released later today and as you may have heard, President Trump has moved his residency from new york citi to palm beach, florida, where he has his maralago resort. Trump tweeting that he will always cherish new york but has been badly treated by city and state political leaders, despite paying millions in taxes you are up to date thats the news update this hour guys, ill send it back downtown to you, morgan. Sue herera, thank you its time now for etf spotlight. Today, we got our eyes on energy today, its the biggest gainer on the s p thats just quite a mixed earnings picture from exxon and chevron. Joining us with more is stuart glikman. For chevron, he has a rating with 133 price target for exxon, haezs a hold rating with a 73 price target. Stuart, thanks for being with us today. Given the fact that we got results from two of the very biggest integrated Oil Companies in the world, your takeaway on those numbers . Yeah. Good morning thanks for having me so i think that, you know, if you look at the numbers, both Companies Beat fairly muted expectations there was a lot of yearoveryear across the board. It wasnt just upstream. It was also down stream and in the case of exxon, it was also chemicals. So, you know, if you just look at the numbers, quarter on quarter, theres a lot of problems with the industry is facing however, that being said, both Companies Look like, you know, theyre certainly investing for growth i like chevrons Growth Potential a little bit better and i im sorry, say again. So, stuart, taking a look, i mean look back at a year ago and oil was in the 70s today, its in the 50s where does it go from here and what does that mean for Energy Stocks overall more broadly . I think the outlook for oil prices is pretty mediocre. I think if you argued for something in the high 50s to low 650s range, that seems reasonable to me because there is an awful lot of supply still out there and Global Demand is being buffetted back and forth depending what the trade discussions are like of the day. I think the biggest thing these companies have going, chevron particularly, is, you know, their exposure is very strong. They have an awful lot of they can harvest a lot of the fruits of the stuff theyve done in australia with wheat stone on the l and g project. And i think, you know, historically, chevron has always been trading at a fairly substantial gap to exxon and i think that gap is getting closed. So looking across the sector more broadly, whether its the producers, the oil and gas producers, whether its the Oil Field Services companies or whether its the refiners right now or integrators like exxon and chevron we just talked about, where do you see value . Where should investors be considering making an investment i think you have to be kind of picky within upstream, i think the names that dont depend on High Oil Prices are probably better bets so a name like eog resources, which i would consider kind of best of breed among the ents i think theyve been focused on premium wells before anyone else was. I think thats a good bet. I like kind of a contrarian play, i like capital oil and gas on the gas side because they have such a low cost leadership position there and then if you look among some of the downstream names, a lot of the downstream operations are going to benefit from the looming change in marine fuel sulfur regulations to hit on january 1st. That that should really do a lot to help to help boost refining margins name like valero or holly frontier especially should do well holly frontier inland refiners or excuse me inland refineries. Okay. All right. Stewart glickman, thanks for joining us today. Thank you. As we hit a break, lets take a look at apple. Another alltime high today the company streaming Service Officially launches today. Stocks up 60 for the year for squawk on the street continues in just a moment dow is up 234. By the way, shes the it wasnext mozart. G day. As usual we were behind schedule. But sophies enthusiasm cannot be dampened. Not even by a runaway donut. We powered through it in our toyota prius. Because a stars got to shine, no matter what. Its unbelievable what you can do in the prius. Toyota lets go places. vo the flock blindly flying south for the winter. They never stray from their predetermined path. But this season, a more thrilling journey is calling. Defy the laws of human nature. At the season of audi sales event. That october jobs number well above expectations. 128 k overcoming the weight of that gm strike markets obviously reacting favorably this morning got new highs on the s p 3060 and the nasdaq for the First Time Since july. Goldman sachs chief economist is here on set to talk about the number, which surprised even you given how we were able to walk past the strike. Yes it was a very strong report. The current month was significantly stronger than expected and there was a large upward so if you look at the jobs numbers now, you really not seeing that much of a slowdown its a little bit surprising because other indicators do show a slowdown over the last year. But the job markets just chugging along for now. One big tick this morning was that rosengren and george were right. The dissenters who said we dont need to cut again. Yeah or you could say the message from powell was right. Which is basically were done here and weve done the adjustment and there are different views on whether the adjustment was necessary rosengren and george obviously think it wasnt. But i think it underscores that the cuts are over. Labor force Participation Rate tick up it looks like having a harder time finding workers. Pool of available labor fell to the lowest level since november 2011 what is that telling us . I think its very consistent what youre seeing in the jobs numbers. Labor demand continues to be strong and i think the longterm trend in Labor Force Participation is really slightly down still because of demographics aging of the population. But against that, youve got this very strong labor demand, which is pulling more people into the workforce, which is obviously a good thing and is a signal that, yeah, job markets very robust. Youve written in the last couple weeks that scarcity, labor scarcity is not a big deal right now in terms of subtracting numbers from nonfarm is that true yeah. So i think there is are some signs of labor scarcity. Nothing nothing major but, you know, to some degree, you are seeing it in the wage numbers. Todays number was obviously weaker but the trend has been towards stronger wage growth but yeah i think workers can can or companies can still find workers where they need them but they do have to pay out more than they have in previous years. One of the big bear theses right now is companies are not laying off workers but theyre doing everything they can do short of that. Give them fewer work hours be less aggressive on wages and benefits and that one people say once the year clears, then well see this new wave of layoffs do you expect that i dont really see that again, the wage numbers are picking up gradually and i dont think you should put too much weight on the sort of month to month numbers. The trend is higher and i think as far as hours are concerned, i also dont see a meaningful downward trend there so clearly, growth has come down somewhat were closer to trend. You know, gdp over the last year has grown 2 thats probably only in the neighborhood of trend. Maybe a little above so, you know, you should see some adjustments in things like hours. But i dont think its anything dramatic. These guys were having a discussion last hour about boeing and the impact the 737 max groundings on the numbers. How much noise do you think that is adding to the manufacturing picture right now . And is there any reason to think thats going to change or subside or have a bigger effect . I think it has weighed on gdp growth to some degree by, you know, a few tenths of a percentage point cumulatively in q2 and q3. Youre not seeing a major effect in the jobs numbers, though. If you look at manufacturing, motor vehicles, it was up, you know, x the gm strike was up about 10,000 so i think its its not a major factor but it has subtracted a little bit from the numbers. Then we got ism pretty decent. I guess you can say. Is that cycle bottoming as well . It looks like it. If you look at the manufacturing indicators, they, you know, clearly weakened the surveys weakened sort of into the spring and summer and you saw that not just in the u. S. But globally. But now, i think were seeing some type of stabilization, even a little bit of improvement in asia chinese numbers have picked up somewhat and i think were starting to see that in the u. S. Data also. Kudlows comments have been said the cuts weve gotten will start to kick in in q4 can we start to expect more aggressive retail Sales Numbers again . Well, weve had very strong retail Sales Numbers up until the last report. So i think the last report is probably a little bit of payback for some of the previous, you know, very, very substantial strain so i wouldnt necessarily expect a big pickup there that said, i think the picture is solid enough so continued Consumer Spending growth in the sort of 2 1 2, 2 3 4 range. Whats the most interesting question to you then now regarding the economy . I think weve put the the the cuts behind us at this point the most interesting question is i think still what is the risk of a downturn . Weve taken the view that the risk of recession into 2020 is still relatively low if you look at market economists and ask their average probability of recession, most recent number is 35 thats the consensus we would be below that we recently rolled out a new model of Recession Risk that put us in the in the sort of low to mid20s and thats not too far from from the sort of unconditional probability. The typical probability that the economy ive seen some others argue the yield curve takes it down to low teens. Could we go that far well, the yield curve is still quite flat and thats been the driver and the earlier version of the yield curve has been the driver of some of these higher Recession Risk estimates. But i think its important to put the yield curve into context because the yield curve is affected by some structural changes in the fixed income markets. In particular, the much more compressed term premium at the long end of the curve, which i think distorts some of these calculations somewhat. Last thing. People are still going to look at liquidity pressures, repo, new york fed are those things even on your radar at this point . Or are they just is it just technical adjustments . Well, i think it is more of a technical issue. Its very important for Market Participants in the money markets. They are very focused on year end and potential tensions as we get to year end. As weve seen, you know, many times in the past. From a broader economic perspective, though, our expectation is is that this will continue to be sort of a nonevent beyond the money markets. We do think that the feds put in place measures that should, you know, keep these pressures contained and prevent a fallout to the broader economy thats good insight from you as always. Thanks for coming in. Thank you. As we head to break, take a look at pinterest. Plummeting on its quarterly results. Down about 22 right now trading just above its ipo price of 19 a share missing on revenues while cost and expenses more than doubled in the quarter full year guidance also below consensus. Oungk as i mentioned tradi arnd its ipo price of 19. We got more squawk on the street when we return you should be mad at airports. Excuse me, where is gate 87 . You should be mad at nonseasoned travelers. And they took my toothpaste away. And you should be mad at people who take unnecessary risks. How dare you, hes my emotional support snake. But youre not mad, because you have e trade, whose tech helps you understand the risk and reward potential on an options trade its a paste. Its not liquid or a gel. And even explore whatif scenarios. Wheres gate 87 . Dont get mad. Get e trade and start trading today. One s p 500 stock had its worth month in nearly two decades and the charts point to more pain ahead. Oore at trading nation cnbc. Com more squawk on the street is coming up. You know, 95,000 in revisions to the upside. Solid jobs report. If you looked in the Rearview Mirror, it wasnt only previous months that gained jobs. We also gained a tenth on year over year average Hourly Earnings now, granted, these numbers arent spectacular but theyre certainly above average. And when you consider what part of the cycle were on, which i always think is kind of a mugs game mugs game, there were four or five years in between the credit crisis and today, i dont think they counted to be honest. I think there were many things going on in the economy. I think we have reinvigorated, go gained more momentum the point is whether you looked at the market yesterday when stocks were down, rates were down, curves flatten today rates are up, the curve was still flattening especially on the numbers you would think three eases and better jobs. Long end should rise to the occasion, and i think it will. One week of tens minus twos, theres been flattening, but stability in flattening, and most likely 15 level inter day solid support, like if you open the chart to july 1st, most likely 20 would be resistant i think we blast through 20 wont happen overnight one other issue is bill issuance, running rather large manufacturing, passive theres no way to put a good face on that other than sequentially it was better we all know manufacturing that issues shouldnt be shocking 12 of 18 that ism reported contracting. Theres a big landscape change in europe. Not saying i think Economic Data looks spectacular, but theres something bubbling up, Christine Lagarde coming in, rates buoyant to the up side 1. 3 billion, the best since march of 2018 in the European Union group. David faber, back to you okay. Thank you, mr. Santelli. Time to send it to jon fortt for a look whats coming up on squawk alley. Jon . David, theres been a lot of action in the payments space we have the ceo of global payments, jeff sloan, coming up to talk m and a and some of the technology pushing in. Thats coming up on squawk alley. With esri location technology, you can see relationships. Connections. Patterns. You can see what others cant. There are things we would change about work. And there are things we wouldnt. When work is worth it. Work is worth it. Work can be closer to home. Pay more. Make us proud. Careerbuilder. Work can work. Find your work at careerbuilder. Com annoepidemic fueled by juul use with their kidfriendly flavors. San francisco voters stopped the sale of flavored ecigarettes. But then juul, backed by big tobacco, wrote prop c to weaken ecigarette protections. The San Francisco chronicle reports prop c is an audacious overreach, threatening to overturn the ban on flavored products approved by voters. Prop c means more kids vaping. Thats a dangerous idea. Vote no on juul. No on big tobacco. No on prop c. Flight attendants taking a stand against boeing and the 737 max airplane phil lebeau has the latest on this story phil reporter this is what boeing is facing with american and a number of airlines as they try to bring it into Service Early next year. Flight attendants union sent a letter to muilenburg after his testimony, saying the 28,000 flight attendants refuse to walk on a plane that may not be safe. They didnt say we will not be on the plane when recertified, they said we want assurances this plane is, in fact, safe these are some of the 737 maxes that are grounded. Remember, about 500 of the planes were in service or had been built, theyre waiting to be recertified as for when theyre expected to fly, american, much like united and southwest, moved it to next Year American has it off the schedule until january 16th boeing still stands by return to service target of the Fourth Quarter. By end of the year, get a signoff from the faa when they greet the planes back into service, boeing is compensating airlines and perhaps some flights ten dants or pilot unions. Put aside 5. 6 billion how much they exactly pay each airline or Union Remains to be seen all right, phil, thanks quite a story as the max saga is far from over. Phil lebeau. When we come back, fitbit shares are surging google is buying them for 2. 1 billion what it means for both companies. Squawk alley starts in three minutes. As a principal i can tell you this. When one student gets left behind, we all get left behind. This is a problem that affects each and every one of us. 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What would you like the power to do . But were also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. From the day youre born we never stop taking care of you. Good morning it is 8 00 a. M. At fitbit headquarters in San Francisco, 11 00 a. M. On wall street, and squawk alley is live good friday morning. Welcome to squawk alley. I am Carly Fiorina with Morgan Brennan and jon fortt at the new york stock exchange. Record highs for the s p and nasdaq earlier in the session, dow on pace to post the best gain in about a month on the heels of a