Those new worries for the fed on the labor front. September nonfarm payrolls weaker, rising by 142,000 in august. Revised sharply lower to show 136,000 added. The rates stay steady at 5. 1. Average Hourly Earnings come in flat, but we were looking for something in the 0. 2 0. 3 range. Maybe the most biggest disappointment of the year so far. Coupled with the august revision lower. The 2015 average goes to 198,000 jobs created per month. Thats a sharp slowdown. Last year we were averaging 260,000 jobs. Its more than that. If you take the three month average, youre down 267. Which begs the question, whether we like it or not, where are we in the Business Cycle . Regardless of what fed is doing. The whole discussion as to whether rates this low and the fed Balance Sheet this big are able to stimulate the labor market like they think it does. Clearly there are diminishing returns here. The Market Reaction has not been good. Dow futures down 161 points. The treasury note yield slipped below 2 . The first time thats happened since the end of august. Interesting to see that move below. Its been flirting with the 2 level this week. A lot of tumult in the bond market. There the spread is key. Bringing down borrowing costs never hurts for those looking to enter the capital markets. Thats been the case for a long tim time. It is quite interesting, if you look at the news flow from companies, job cuts seem much more common over the last couple weeks. That seems to be the phase were in. On conagra, walmart. Caterpillar and hp. That was about 45,000. Now reports of sprint. It keeps coming. Also the dollar is getting whacked. For more on jobs and this sharp Market Reaction, joining us is david kelly and scott brown. David, your rate hike, which you want so badly is slipping away further into 2016. It is. The reason i want a rate hike is i believe the first few will stimulate Economic Growth and help the market move higher. There one Silver Lining that might move the fed towards tightening, which is the labor force continues to decline. In fact, the number of people unemployed did fall in september. The Unemployment Rate almost hit 5. 0. Went from 5. 11 to 5. 05. You know this fed. You know they wont look at up with Unemployment Rate and decide its time to hike. Nor should we just look at the payroll report. All the bad news is concentrated in this. We have two more employment reports before the december meeting. I still think the labor market is tightening. I firmly believe the economy would do better and the market would do better if the Federal Reserve would remove uncertainty and get going here. This may cause them to hesitate. That seems to be the way they operate. I dont think they should based on this report. Scott, how do you explain the weakness in september and revised lower in august . Well, this was a relatively disappointing report. I dont think it was a complete disaster. If you look at the numbers before seasonal adjustment, obviously you have the start of the school year, the end of the Summer Travel season. Those are enormous forces. We added about 1. 5 million education jobs, which is about the same as we did last year. We lost a lot more of the noneducation jobs than we do. Last year we lost around 800,000. That was the same before the year before. We lost over 900,000 noneducation jobs in september. That likely reflects a strong hiring early in the late spring and summer. A lot of college kids getting summer jobs. Very strong travel season with low gasoline prices. Its natural to see maybe a larger pull back seasonally if you have stronger seasonal hiring. If you look at private sector jobs, its, you know, a slowdown in july august and september. That pace is still roughly in line with population growth. I dont think this is a horrible report. The hourly average earnings numbers bounce back. We know there had been a lackluster trend. Maybe the fed does delay a bit longer. It may not be horrible, but it is lackluster, which comes back to the question i put at the beginning, where are we in the Business Cycle . The assumption had been because we had such tepid growth we could carry on growing with tepid growth because the fed would not raise rates dramatically and this equity market could rise. Does this suggest we may be tip nothing a slowdown and maybe recession over the next 18 months given what the rest of the world is doing . No, the slowdown in the rest of the world is about emerging markets, and its accompanied by a big fall in commodity prices. Thats spurring Consumer Spending. Yes, you have over 18 million Light Vehicle sales, strongest number since 2005. We think the real Consumer Spending will be up 3. 5 in the Third Quarter following 3. 5 in the Second Quarter. So the consumer will save us . Theres a lot of consumer demand. It will never boom. We had 73,000 growth in the labor force over the last year. Thats not enough. This jobs number was disappointin disappointing. It also follows some Consumer Confidence surveys where we had jobs plentiful and eightyear highs. How does that square with this . Thats crazy. This is correct. The Unemployment Rate is low. Its almost 5 . The problem is were not growing the labor supply, so if you dont have enough workers, you cant hire them. Policy has done all it can. Monetary policy has done all it can on the labor market. Its diminishing returns from here. The milk of monetary ease turned sour a long time ago. They should raise rates now to get us back to a normal level. Try to normalize the economy. This expansion has room to run for another year. You dont think todays number adds credence to the negative dot we heard about in the presser . If you understand how Monetary Policy affects the economy from very low rates you will not stimulate the economy through more quantitative easing. It has not worked in japan for 20 years. Thats the argument. Japan is laying the template for everything we do. But if the medicine doesnt work, dont keep doubling the dose. No is it working in europe. For the asset markets or for unemployment. And underlying inflation is turning down. The key issue is confidence and certainty. If the Federal Reserve lays out a path of gradually rising Interest Rates, the u. S. Economy will do better and the job numbers will improve. Scott, you know, when the number disappoints a lot of people point to rerevisions. They say the revisions are catching up with the true picture of the labor market. Eight consecutive downward revisions. Maybe thats the biggest indictment of this data at all. The numbers are reported accurate to 105,000 each month, which is a huge margin of error. So the figures are revised. Theres a benchmark revision that will be coming up in february. We already have an initial estimate of that. Thats not huge. These numbers do bounce around. You can look at the threemonth average. That reduceses a lot of the month to month noise. I dont worry much about the job market. Were seeing a limited pace of job destruction. You get the announcements in the news about companies laying people off. When you add them up, thats trending low. The key over the last year has been the hiring coming from small and medium sized firms. Thats what we need to watch closely. They may be affected by the negative noise youre hearing. The domestic economy is in really good shape. Consumers are feeling better. You had good job growth over the last year. The drop in gasoline prices adds to purchasing power. Yes. The weakness abroad, the stronger dollar will hurt a lot of companies. Its going to have a big hit to u. S. Exports. That may be a drag on gdp growth, lower inventory growth that i be a drag on gdp growth. But the domestic economy is still doing very well. I dont worry much about this employment report. Dow futures down 212 points. Scott, im getting more hate mail than usual and twitter attacks. I know where david kelly would stand on this. He would disagree with me. I think janet yellen is vi vindicated by this number. If they raised rates in september, how would this number have looked . Wouldnt it have looked like a policy mistake . It would have looked bad. Its ironic, i think the fed has tried to communicate things well. The markets dont always hear what the fed has to say. Clearly if the fed is looking down the line, you know, Monetary Policy affects the economy with a lag of about 12 months, 18 months. Theres a lot less slack than there was in the labor market. A year from now there will be less slack. The fed doesnt have to be at neutral, but it ought to be closer than it is now. So, theres no need to hit the brakes. They do have to consider taking the foot off the gas pedal. Pile on, david. I think the notion of monetary stimulus and zero Interest Rates is wrong. The thing is when you raise rates, nobody will stop buying houses if we raise mortgage rates. Thats not a constraint on them. But you will raise Interest Income. A lot of people would spend more Interest Income if they could get it. I think a lot of investors agree with you. Sharp negative reaction to stocks on this number. David kelly and scott brown, thank you both. Thank you. Now that the jobs number is out, this week, we asked you to tweet your predictions. 9 lucky winner will receive a cnbc frame autographed by us. Were combing through the entries to find out who was right and right first. Well announce that winner later in the show. First reaction from the white house on the numbers. Jason fuhrman will join us after the opening bell. Jack lew says the u. S. Will hit its legal debt limit around november 5, in five weeks time in a letter lew says the federal government would likely have less than 30 billion on hand to pay its bills at that point. The secretary says i respectfully urge congress to take action as soon as possible and raise the debt limit. Im sure the treasury secretary is a decent and honest man but there will be a question here as to whether thats political maneuvering. November 5th puts the debt limit deadline just after you reelected the speaker of the house. And whoever it is will have this massive backlash if boehner has not done a deal from his own right wing to not raise the debt limit and put the party, the Opposition Party in turmoil. 30 billion in cash they see on november 5. There are days the government spends double that on a single day. Thin levels of cash. What strikes me, its ban long time since we had a fiscal battle. We had a few years of relative calm. But we have a few deadlines coming up. October 29th, authorization for the spending on the highway trust fund. And this government is only funded until december 11th because of that stop gap measure passed this week. Buckle up. When we come back, we have jason furman on the jobs numbers. Futures were up 109 on the dow, now down almost 200 as we look for some market weakness when the opening bell rings in about 17 minutes. 15 minutes to the opening bell on wall street. The picture does not look pretty. Negative reaction to that weaker than expected jobs report that we got for september. Dow futures down 215. S p down 27. Nasdaq down 59. 142,000 jobs created in the month of september. Economists looking for a number that was above 200,000 and a lot of other weak numbers. The danger here, this is where there may be opportunity, the markets are moving to factor in greater weakness than exists. The jury is out on where we are with china. This is one jobs number, some revisions down, that may pressure the market. If you look at the industry, hotel chains are at 52 week lows, despite the fact that the commentary from executives is that business is sound and it will be for two, three years. The market there is moving ahead of where arguably the fundamentals may be in the market. I would question on whether overall we will be doing that today. We wanted a weaker dollar, we will get it, at least today. A lot of fed speak as well. Williams has spoken about how he saw no acceleration in global risk. And that a lift off was still possible in october. Bullard speaks, then fisher at noon. Thats the clarity well be looking for today in the middle of the session. Well monitor the tone. He has prepared remarks. I wonder if hell take questions or revise them at all. If hes going to reassure people, he has to say theres no rate rise coming. Thats not what fisher does. He tells people that it will be data dependent and one could be on the way. If youre going to be reassuring, dont raise rates and tell people you wont raise rates. That will reassure the market. I think they have a communication problem on their hands. I was in d. C. And the imf talking to world leaders, they dont see anything. They are backing it up saying the data in the u. S. Is not showing it. My question would be whether janet yellen has the correct character in the job because i wonder if you had a more bombastic leader of the fed who could generate more confidence that we might be in a different situation rather than this data dependent consensus view she brings to the table, wearing her heart on the sleeve. If you look back at volcker, it was a much stronger performance. I wonder if that would change where we are. We are where we are and janet yellen has the job. When we come back, the take on the markets from mark cashin. Well look at futures. This is the fourth straight disappointment on nfp and the sixth in seventh months. Heres a look at futures, decidedly negative after a good premarket. Investors were not counting on the miss we got on jobs. 142, well below the 200 expected. Lets bring in art cashin. I doubt you were surprised. Not much. A couple of things. If you look at the trim tabs data, it hinted it would be a lower number. If you looked at the sixmonth moving average over the last year, its been decelerating. People have overestimated what the payrolls will be time and time again. I think ive ive been saying i didnt think the fed will raise rates this year. I still dont think they will. I wonder about the Market Reaction. There are those who believed if they told you it would be this low a number that would state feds hand and we might get a positive reaction because rates are not going up. I think the concern is this ambivalent feeling. Why isnt the fed moving . Is the economy much weaker than we fear . When they saw this, they were like it does look weaker than we fear. If you throw in with it the layoffs announced over the last month and a half, theres a palpable feel that things are slowing down. Art, when she did that huge news conference, when she was talking about weakness t wasnt labor market weakness. Wasnt the basic message were kind of there with the labor markets, im worried about what mark markets will do and what china will do. This is the other half now that they were not talking about. Correct. This is the part they thought was unsettsettled and now its unsettled. The dollar almost 1 lower than the euro and the japanese yen. So this tells you the fed is pushing out when theyll hike Interest Rates. Does it mean this is all well be talking about for the next year again and not paying attention to corporate stories, Economic Data . I think if the data continues on this level, you wont be talking about a fed hike. It wont be a debate. It will be an accomplished fact. Well wait and see. Im interested to see the tone that fisher takes. You know, hes tried to keep this hope alive that we would have it. We could have it. Could it be, just for the sake of argument, that the fed has confused everybody to the extent that were overreacting on the markets to weakness that is not as bad as we think, be it in china or this economy and longer term this is a buying opportunity . They confuse the narrative so much, that now actually is the time to buy. Its not as serious as you might think. Youre saying that transparent fed has been misleading in what theyre doing . We have albertsons pricing. Putting some shares out to be offered. First data. Theres a report out today, china is considering resuming ipos over there. Would you expect a run here before the market truly closes its doors . I think people see the opportunity and try to rush in. It is a fact of human nature, when you see an opening closing, instead of Walking Around it, people run between the two cars coming together. The temptation is to constantly grab an opportunity before you miss it. Well see you later today. Okay. Opening bell and white house economic adviser jason furman on the jobs number after the break. vo rush hour around here starts at 6 30 a. M. On the nose. But for me, it starts with the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. If an electric toothbrush was going to clean better than a manual. He said sure. But dont get just any one. Get one inspired by dentists. With a round brush head. Go pro with oralb. Oralbs rounded brush head cups your teeth to break up plaque, and rotates to sweep it away. And oralb delivers a clinically proven superior clean vs. Sonicare diamond clean. My mouth feels super clean. Oralb. Know youre getting a superior clean. Im never going back to a manual brush. Youre watching cnbcs squawk on the street live from the Financial Capital of the world, the opening bell in just about two minutes or so as we wrap up this week, second trading session of october with negative news as the jobs number is a miss at 142,000. Unemployment is steady at 5. 1. We were not expecting august to be revised down. Its almost always revised higher. We were looking for something resembling earnings, didnt happen. Even the work week, which we have come to take for granted was lower. Amazing. The only thing i would add is the Labor Force Participation rate ticked lower. Icing on the cake there. You mentioned stocks. This is the third down week for the dow and s p 500. Interestingly nasdaq had the worst we