Are faring and as we do, given that employment number, the 10year note yield, Strong Performance for the equity markets in europe and there is a look at a yield that has come down a few basis points. Had been above 1. 6 yesterday. Crude up today reversing a slide recently. And well see how all the equity markets fair. The employment report ahead of the fed policy meeting later this month. Ladies . The Research Notes are flying in the inbox already. What are they saying in. Takes pressure off the fed, forget september, its not going to happen. Here we go again. Were in this perverse world where a disappointment on the economy, is very positive for equities. You see the rally, the dollar weakening, treasure yields go lower tells a tale of a fed that might not have to hike Interest Rates. Its not a total disaster in terms of the jobs report. If you break the report down it came in below consensus but were also coming off a strong stretch for june and july. Unemployment Holding Steady at 4. 9 . You saw gains in restaurants again in the Services Sector and financial in health care, some of the industries that have been creating jobs, but, of course, this was a high stakes one because it comes off a jackson hole meeting where janet yellen said the case was strengthening and as we march into the election. Is it weak enough to really potentially change peoples forecasts . Clearly thats the initial gut reaction. Its something that i would love to get [ inaudible ] his take. We will have him. Think about these jobs reports. Youre taking, obviously, this into account if youre the fed and a lot of other things, kelly, including retail sales, numbers today ism number. What is going on with the industrial part of the economy. Hard not to call it a recession if you take the fact that year on year the production numbers have been bad, manufacturing report comes out yesterday, only hope i guess would be its been below 50 before. In fact, before during this year and its recovered. January. The goods producing part of the report was not good. The productivity stuff broadly in this economy is not good. Thats the missing link. Wages missed expectations at 2. 4 from last year, the growth in wages. Ploog for a number around 2. 6 what we got back in july and we know that is the key component that the Federal Reserve is looking for in determining whether inflation or the prospect thereof. Help might come in the softer dollar if it moves down because of the discussion, a little help for maybe some of the exporters, a good side. We did see exports jump almost 2 , buried beneath the jobs numbers, but the trade deficit narrowed and that was important. Talk more about what jobs means for this market, and for investors, david kelly with us, chief global strategist at Jpmorgan Funds and on the phone tom pore selly, chief u. S. Economist at ubs capital markets. Tom, take that question, the weaker than expected jobs report, weak enough to take september and maybe december off the table for the fed . I certainly dont think it takes december off the table. I do think it takes september off the table, though. But, you know, again, keep in mind, my general stance on this. We have we think the fed should be engaged in a hiking cycle right now. Really, the question is, is this report enough for this fed to take a pass in september and we think the answer is yes. 150,000 jobs allin is actually a really nice outcome for an economy, particularly if your expectation is for it to continue to move along at 2 , which is what our call is. For this fed its probably not enough. I mean, the guts of the report were rather squishy. So we dont think that this report is enough for them. Why . What within the report do you think was squishy and why do you think the fed has a high bar . You know, i dont think they do. Let me be more clear. I think that bulk of the fed actually does not have a high bar. Weve heard it countless times from, you know, people we would sort of call centrists like williams, who have basically said 100 to 150,000 jobs is really a totally reasonable outcome and moreover, the point he has been making and others agreed, moving into the mature phase of the cycle where job growth is starting to slow down. Job growth has slowed down. Two years ago averaging 250,000 jobs, last year we were averaging 220,000 jobs this year averaging less than 200,000 jobs. Job growth is slowing down and thats something that i would argue the fed already recognized. As you look at the market reaction, dow futures up 52 points, do they have it right . Well, i think they have it right on the economy. The economy is doing everything the economy should do right now. It is stuck in third gear. Doing fine. This is 150,000 jobs, 151,000 jobs, that really is what this economy can introduce right now without the labor market tightening. As to take september off the table, i think september is still on the table. Because at some stage the Federal Reserve has got to prove that they are willing to look beyond the shortterm momentum of the economy and the level of Interest Rates relative to the level of the economy and a lot of fed members have been talking about the dangers of keeping persist abnormally low Interest Rates in causing asset bubbles and so forth so this looks like the economy is motoring along perfectly healthy, unemployment below 5 , inflation moving up. They ought to move higher now to give them a chance to lower rates when they need to. Because this is not an environment in which you should have an abnormal monetary policy. We have a very abnormal monetary policy. Tom, what do you think is going on with the productivity numbers . Yeah. Look, you know, this is its a much bigger conversation than i can get into the sound bite that probably this time amount requires. But what i would say is this, if you think about it from t the perspective of hours, right, just think about hours for a minute, we actually had a significant decline in hours, basically from like the 1970s through to the middle 1990s. From 1990, middle 1990s or so to today, hours have moved sideways. That doesnt make a whole lot of sense given the fact that youve actually had all of this sort of productivity happening, technology has come on board, et set terra. If you had a decline in hours, which i would submit makes a lot of sense, productivity would be 2 . If you had a fivehour decline in hours you would have productivity at 5 . Now, let me be very clear on this, and its hard to say all this in a little sound bite, what i can tell you im not saying people arent working 9 to 5. Thats absolutely true. Instead im saying are people actually working from 9 to 5. I think you had an adjustment in hours you would sort of the productivity outcome that most people seem to want. Sounds like the problem is were all on social media during the workday . I dont think thats really the problem. I think one of the big problems were not doing enough investment spending. Look at what productivity has fallen, number one reason is a decline in the capital or the growth in the capital labor ratio. So what weve got to do is promote more investment. That means lower corporate taxes and more trade to allow u. S. Companies invest here to sell around the world. We need a proinvestment policy if we are going to push productivity up. David, does this jobs report change your outlook as you deal with the equity markets and the fixed income markets . It leaves it about in the right place because if were this is as close to a soft landing as youre going to get actually. We have a soft landing. That is encouraging the equity market but its keeping rates so low you still have to be a little overweight equity versus fixed income. Its i think a good economy. People shouldnt, you know, hesitate to get invested because waiting for something better. It doesnt get much better than this in todays u. S. Economy. Does it change the direction of financials which have made a nice move higher and are the best performing sector for the week . I want to see what happens in september in terms of their logic. At some stage, the fed is worried nobody believes them. They say they are thinking about raising rates and worried keeping rates too low too long and dont move. At some stage they will make a hawkish move and will have a significant effect on Interest Rates and financials. We have to see what happens the next two weeks. I wonder if the awareness on the part of the fed about the fact that market might not believe them when it comes to hiking rates might lead them to do so . Sooner than you might think . Yeah. Look, i think its the irony of this whole conversation is, one of the things that we havent talked about was the Market Pricing for september and right now Market Pricing looking at my screen is 26 . That its an unfortunate sort of that we live in but that matters to this fed. I dont think it should matter. I think at the end of the day if the fed thinks that backdrop demands higher rates they shouldnt care where Market Pricing is and give the markets they should give the economy higher rates. But again thats just the sad state of affairs where we are right now. This does matter to this fed. Ill say it again, the fed should be fully engaged in this hiking cycle. We have said this for a very long time. But i think things like this actually do matter to this fed. Yeah. We will leave it there. Good discussion, guys. Thanks for joining us on jobs day. Tom from rbc and david kelly from jpmorgan. Got to keep a closer eye on workers. First reaction from the white house to this mornings jobs report. Labor secretary tomas perez live and first on cnbc interview. A rough morning for lululemon following earnings and outlook as the shares look poised lower. Another look at futures this hour, theyre now moving higher with the dow implied to open up 57, s p up 6, the nasdaq up 16. More squawk on the street from post nine at the New York Stock Exchange when we come right back. Thay the world does norevolve arnd you. Fi theerfect gift t of trillions of combitions. Anworking withhenew york gr to find treaents and am helping sesame et make education unique everyhild. Heo,y na is watson. Make education unique everyhild. Woing togethererwecahinkny. Heo,y na is watson. Theres nno one surfafa. E. No one way of driving but there is car that. Can conquer themll. The mercedesbenz cas five drivingod let you customiz the eering, ansuspsi to tnts, the mood youre in. Anthe road youron. E 20startmercedesbenz. The mood youre in. Narrator it wasnt that long ago. Years of devastating cutbacks to our schools. 30,000 teachers laid off. Class sizes increased. Art and music programs cut. We cant ever go back. Ryan ruelas so vote yes on proposition 55. Reagan duncan prop 55 prevents 4 billion in new cuts to our schools. Letty munozgonzalez simply by maintaining the current tax rate on the wealthiest californians. Ryan ruelas no new education cuts, and no new taxes. Reagan duncan vote yes on 55. Sarah morgan to help our children thrive. Check out shares of lululemon down sharply in the premarket after posting quarterly result last night that key Retail MetricComp Store Sales and online sales up 5 , below what the street was looking for around 5. 9 . Lululemon also raising Earnings Guidance in a range that was slightly below foeshgsz. You know i recently spoke to the ceo and have a lot to say about this report. What was light the Comp Store Sales and guidance. The reason, the executive gave on the earnings call, little bit slower traffic. They said theyre not immune to what else is happening in the Retail Industry. Having said that, this is a company that is still posting 14 Revenue Growth in a quarter and 5 samestore sales which is industry beating. The other point that im sure executive are frustrated right now that is not getting paid attention to, the gross margin improvement. They managed to grow that for the First Time Since early 2014. Its something that laurent pot de vin has been promising since he stepped in about two years ago and this quarter was what he called an Inflection Point on that front. Investors are ignoring that rise in profitability and they are looking at what was a weaker comp number. Thats because look at the stock, its been a moonshot, up 45 so far this year before today and pretty high short interest, about 18 of the current pretty high multiple as you know and, in fact, in this market it seems those high multiple stonkz stocks in particular are being signaled out for punishment. Ul ta, a favorite of my colleague jim cramers who pointed out the same. Not a bad report but if its not perfection given the mults. Crm, salesforce. Com, they did tweak the guidance but not fullyear guidance and stokts was punished. You have to execute perfectly. This fits into that trend, which is one we have seen in this earnings report, especially in a stock like lululemon. There are high hopes for the change of profitability. Potentially that was priced in because the ceo has been setting us up for that. In terms of other moves theyre making because this is a competitive market. You know about under armor and nike. And the new store concept chain called locals, smaller Square Footage, more targeted communities like aspen. A new designer on the bras and tank tops up double digits 13 . Some of the initiatives. This is what happens when you yeah. Im feeling a little out of the conversation here. Thats okay. A nice change. It really is. Yeah, im all for lulu mens whatever that would be. You dont know about the abc pants. Jim mentioned it the other day and i didnt want to know. Anti[ inaudible ] crushing. Apparently miraculous. Thank you for that. Sara eisen with the explanation of abc. All right. We wanted to hit cap as well. I dont know, i did see the shares right now, not looking down that much. Its funny, not so many so few companies at this point. The report Sales Numbers on a monthly basis but the gap still does and not particularly good. In particular, Banana Republic having a tough time. The overall comps were down 3 for august. Banana republic down 10 on the comps. Old navy doing better and did highlight that performance. Again they also had a setback with the fire burning through one of their Distribution Centers in upstate new york which supplies gap and banana merchandise to online and store customers in the northeast. A good chunk of their business, the shares down about 2. 5 as we keep an eye on the open. You got to give them credit for reporting the monthlies. The larger question what do they do with banana. And gap brand seeing decline in comps, maybe an improvement in the last year there. Gap in the tough spot talk about the trends converging in retail that changed the industry, caught between the fast fashion zara retailers and boom in Online Amazon and left in between and they cant seem to figure out how to turn it around. Even the old navy, which is a bright spot, only saw 1 Comp Store Sales growth. Not holding up what has been a weak Banana Republic. Its funny, j. Crew a competitor in some ways, pot a Public Company but does report results showed declines. Not as baaed in the past. For j. Crew its relative. Theyve struggled. The top line decreases, though, perhaps better than some had anticipated. I would think its a tough environment and has been for certain retailers in the mall but not all. Not all. With gap certainly. Its lost a quarter of its value in the last year. The question is, is it cheap enough. So many people waiting on the sidelines to see improvement. Theyve got the ceo in. Art peck who has been trying to change it and focus digitally and get new styles in. Back to school a lot riding on back to school this year. Whats interesting with aeropostale. For years in retail a little consensus that someone needed to buy a bunch of these things, roll them up, combine them, close a bunch of stores, whatever it is. Aeropostale starting to see that process happen. I wonder is it a template for what more is to come across. Gap has closed an enormous amount of stores over lets call it the last five to eight years. No. Theyve been closing stores. Theyve been trying theyve been trying to turn around the namesake brand. It was jim that said they have an identity crisis. People dont want to look normal anymore and wear these, you know, the gap jeans and the khakis. They want to wear the abc pants. Come on. I guess. The new normal. Now that i know what they are. All over that, david. When we return, the fallout from the epipen controversy prompted Hillary Clinton to announce a new plan aimed at cracking down on what she is calling excessive drug prices. And right after the opening bell, well talk to the labor secretary, tomas perez on todays jobs report. Have a look at u. S. Futures. On the back of that disappoi disappointing jobs report in rally mode. Dow up 62, s p up 6, nasdaq up 17. Much more squawk on the street from the nyse straight ahead. Thiss a mobile trading desk, so i can te my tding platfo wherever i go yoknow that t inkorswim amssly scs across all your devices. The markets hot sync youatformn andevice with thinkorswi only at td ametre. To win, every llecondover 200 matters. Ehour. Both on the track and thousa with the help at t, redul cing can share critil information out every binch of the from virtuallyousa anywhe. Bres areetting warm. Understo, ake biask 2 need to icks. Our brakes. Givi them the agily he speed ecion. In the wake of the epipen price controversy, Hillary Clinton announcing a new plan aimed to protect consumers from what she calls unjustified drug price hikes. Clinton says if she is elected she will create an Oversight Panel to monitor life saving drugs and the panel would be able to take a numb of Enforcement Actions including imposing penalties and fines on drugmakers. Clinton said, quote, over the last year or past year, weve seen far too many examples of