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Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. One big, beautiful breakup. I don't know, Trump said more and then Elon said you're on the Epstein list. Elon Musk said bring it, basically. The most powerful man and the richest man in a very public clash. And House Speaker Mike Johnson on the sidelines of a feud between two congressional houses on the massive spending and tax cut legislation and in the thick of another. It
The drama on social media and the drama in Congress. Plus... U.S. job creation slowed last month, but not as much as we expected. We break down the numbers and what they mean with a whip of CNBC reporters like our pal Rick Santelli and Mike Santoli.
I do think it's pretty close to the sweet spot in terms of monthly job gains. And experts, from Nuveen's Sarah Malik on the markets. How the Fed going to think about it? It gives them a little bit of breathing room. They don't have to rush to cut rates. To Republican Doug Holtz-Akin. I don't see the Fed cutting anytime soon.
and Democrat Katie Richards. A lot of the uncertainty that's created by the tariffs and other kind of chaotic management of the economy by the Trump administration is only going to start really impacting the labor market on a slower timeline. All that ahead. It is Friday, June 6th, 2025. Squawk Pod begins right now. Stand back, you buy in three, two, one. Cue, please.
good morning everybody welcome to squawk box right here on cnbc we're live from the nasdaq market site in times square i'm becky quick along with joe kernan andrew is off today all three of the major averages were down slightly yesterday but week to date all three of them are actually up for the week to date so we'll see how things shape up on this friday morning trump had a conversation yesterday with
With President Xi Jinping. But, you know, that's way down here on the on the back burner. But intimated that the the rare earth and minerals situation that he had spoken to President Xi about it and that it was going to be handled in some way. I don't I don't know. It was a friendly conversation. It was an hour and a half long.
I don't know what we can glean from that, but he didn't say, wow, we're never talking again. They plan to talk and meet. Xi invited him to China, and then he invited Xi to the United States. So there's... De-escalation. Maybe. That's the play for it this morning. On that front. A de-escalation. Last Friday...
Elon Musk got a key to the city, not the city, but he got that beautiful little key and it was all smiles. That was Friday. Today's Friday. So that was under a week's time, under a week's time, under a week's time. We'll talk about we'll talk more. But let me tell you what happened.
Because you may not have heard a possible cooling of tensions between President Trump and Elon Musk after a bitter public feud yesterday. Politico reporting that White House aides has scheduled a call between the two men for today for his part.
Elon Musk responded positively last night to an ex-post from investor Bill Ackman, whose bill is everywhere now. Ackman said Musk and Trump should make peace for the benefit of the country. And we're stronger together than apart with Elon replying to that. You're not wrong.
The genesis of yesterday's blowup appears to be appeared to be President Trump criticizing Musk's recent attacks on a signature tax and spending bill. And Musk unleashed a barrage of social media posts with one saying without his help, Trump would have lost last year's election. Later in the afternoon, Trump threatened to cancel Musk government contracts for his part. Musk said that President Trump's tariffs would cause a recession in the second half.
of the year. And then he answered a post saying we need a third party and we need to impeach Trump. And then
I don't know. Trump said more. And then Elon said, you're on the Epstein list. And that's. Trump canceled his contracts, his government contracts. And Elon Musk said, bring it, basically. You know, like. Yeah, make my day. Make my day, I think, was what he said. And then said he was going to cancel the. It was shocking and sad. More than anything. It's, you know, President Trump is very. He hits back hard and he's.
He's mercurial and he's kind of a badass. Thin-skinned and for him to look measured in-- - I wonder where you were going with that. - Well, for him to look measured yesterday takes something, but you've got the richest guy, the most powerful man in the world theoretically or hypothetically and the richest man in the world.
There's no accountability for the richest man in the world. I don't think anyone could say anything to Elon. You saw what he said with David Faber about advertisers, or maybe it was Andrew. Go F yourself. Yeah, go F yourself. So he's used to not having anyone tell him anything. I don't think I'd take that attack with the president of the United States necessarily. No, I mean, it's just not wise. But it also makes me wonder...
You know, I've defended Elon a lot. He's got a crazy personal, you know, who knows? I don't know drugs. I don't know what goes on. What you said this morning. Well, I said, don't do drugs. Which was pretty. I said to someone yesterday, yes, I've got some bad window paint. No one knows window paint because they didn't, they didn't.
You know, they didn't live in the 70s, but it was LSD, but bad batchers. I mean, that was crazy yesterday. That was that was it was unwise, suboptimal, as you said. Suboptimal. That's that's my word now. But the Epstein thing, see, I think that is that's reckless. And I don't think he would know who's on that list. I don't think I'd say it if I didn't know.
And if he was on that list, I think either Hillary or Biden or when the Democrats were in power, if they knew that, they would have used it. President Trump has done some of his own things where he's said things where it's like, what? Oh, yeah, that's what I'm saying. To make him look measured is...
But I think it's bad to throw someone, if you don't know, to make that allegation. And I think if it really was, if the list exists and Trump's on it and people had possession of it over the last 12 years, it would be out by now, wouldn't it? Who knows? I mean, they tried to pee pee tapes. I mean, if you had Epstein concrete tapes.
He doesn't help his case by saying things like he might consider P. Diddy. You know what I'm saying? Get him off the hook. Speaking of P. P. Diddy. This is a situation where...
Yeah, let's hope it calms down. And it did seem like that was coming from Elon Musk yesterday. You mentioned the Bill Ackman that he responded to. There was another one with a guy who only had like 134 followers saying, you know, knock it off, chill out. You guys both need to walk away for a couple of days and come back. And Elon responded positively to that as well. This call set up for today is good news. Look, this took about $34 billion off of his own net worth yesterday, Elon Musk's.
But and a quarter of a trillion off SpaceX isn't publicly traded. That would be the one where you would expect an even bigger impact if the government contracts go away on these things. And while you hope that they can calm things down, because this was unbelievable to watch yesterday. I can't imagine that President Trump is going to forget this, even if he forgives him. He can. He does. This might have gone too far. But in the past, he's it's possible for him.
to do that whether whether this what when uh i just don't know this is a bridge and they will have the same close right whether it's a bridge too far as i mean that's really hard to come back from but um but yes we we will see where this kind of plays out hopefully it'll be a little quieter today tesla shares instantly if yeah i think it was a quarter of a trillion yeah it was if you're looking at right now the stock down 17.8 percent for the week to date
That was all based on yesterday. Now, when I looked at this earlier today, it looked like it was indicated to open higher this morning. Yeah, 14 points or so. I was reading something today that suggested that the number of puts on this, the people taking bets on that, exploded yesterday to 4 million contracts. That's the highest since the 2020 pandemic.
Yeah, and here it is. This might all those things get it up. See, it might all need to be covered, right? All those shorts might need. Right. And maybe that's a swing to the downside to have all of those that expectation. But man, this was destructive in nature, self-destructive in nature. And nobody. But even if they do reconcile, it just makes it where, you know, they're both so impulsive at times and destructive.
You know, you wonder how long it would be a sort of a you'd worry about the truce or the detente. Right. Ross Gerber, a very early backer of Tesla, said he sold some stock yesterday on this because he was concerned about it. And because he thinks the board's not going to do its job and kind of rein Elon in when it comes to being on social media like this. We've seen this arise in the past, but this is obviously the largest and most visible problem.
Once again, I was like last Friday when we were played and I was outside, you know, and the sun sort of half asleep and things started happening. And then it just watching the the the how it went from. Oh, wow. And one thing I will say, we've talked earlier about this, but.
Trump mentioned yesterday, no one knew the inner workings of this bill better than Elon all along. And he never had a problem with it until this other stuff started happening. And I've said I got my own problems with the bill. You know, it's a great day to have Mike Johnson, the speaker. The speaker of the house. I don't know whether he talked directly to Elon. I know they were texting.
I think they're supposed to have a phone call even last night or today. I was thinking if we couldn't have the president or Elon Musk on the phone, this is the guy I'd like to speak to. Well, all week long we've been talking to Republican senators who have had their issues with the bill and questions about what's going to happen. Speaker Johnson is the one person who can kind of answer how the House will respond to what the Senate is doing right now. He's pretty...
Louisiana's really not the Midwest, but he's got a Midwestern
He's calm, cool, and collected. Yesterday, he did put out a tweet defending this bill, too. I think he has taken it personally that Elon Musk has come after him and said that he's changed on some of these issues. But again, very measured guy. And, you know, an angry tweet from Mike Johnson doesn't rise to the level of a kind tweet from most of the rest of us. He was defending the bill yesterday. Apparently, there's something happening at 8.30, too. And we have former Fed officials to talk about. But it's a big jobs number.
or an important child's number. We'll see how big it is, whether it plays into that ADP report that we saw. Oh, my God. Don't blink.
Walmart expanding deliveries by drone. In the coming year, the company says that it plans to launch the option at 100 stores in Atlanta, Charlotte, Houston, Orlando and Tampa. That will make five states, including Arkansas, with drone deliveries. The machines have a range of up to six miles from the store. And so far, believe it or not, some of the most frequently delivered items include. OK, fresh fruit. I can get that.
Pet food, even though it's kind of heavy, it would seem to have a drone carrying it. Ice cream. It'd be a milkshake. Yeah, by the time you get it to you, it'd be swished around. And eggs. You've got to have a lot of faith that this is going to come in. And I guess if you are a frequent customer and you do it again, I would love to be able to get some of this stuff delivered to me. I'm a little concerned about all the drone traffic in the air with this stuff carrying heavy dog food or something. Hard-boiled eggs, maybe. Yeah.
Hey, it's impressive. If eggs are one of their most important, one of their most often delivered items along with ice cream, it means you must be fast and accurate. Bro, can you get some cannabis? You know, they drop that off. Whoa. It seems so futuristic. It's kind of amazing. What a world. What a world. Coming up, how many of these are?
Are they going to be everywhere? Like in the Jetsons? Yeah, and Amazon's doing it too. Although Amazon's latest thing is they're not talking about these automatic driving vehicles and a robot gets out and delivers it to you too. Are you going to be like this walking around outside? That's what concerns me. The idea of all these drones carrying heavy stuff. Right. Tees will be next.
Coming up, more on the breakup heard 'round the world, and what House Speaker Mike Johnson knows about the Musk-Trump feud, and he responds to concerns about the national deficit, like from his fellow Republican colleague, Senator Ron Johnson. He'd like to cut, you know, $8 trillion overnight, some huge figure like that. So would I. We don't have the votes to do that. And if you did that that quickly, it would actually do real harm to the U.S. economy. So we have to do this in a step-by-step sequence
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This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts.
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President Trump publicly feuding with Elon Musk over the White House's big bill. NBC News reporting that there are no plans for Trump and Musk to hold a phone call today, as had been reported earlier. A White House official says Trump is not interested in a call with Musk. The Tesla CEO trained some of his social media fire yesterday on our next guest, House Speaker Mike Johnson. And Mr. Speaker, thanks so much.
for joining us this morning. What a day, what a 24 hours, what a year, what a life. I don't know we were going to talk about the bill, obviously, but can we at least touch on this and what you know? I thought you were supposed to have a conversation yesterday with Elon. Did that happen or was it just text?
Well, we exchanged text messages yesterday. I spoke with him at length on Monday, and that's why the kind of the blow up that happened this week was very surprising, disappointing to me. We had a very friendly conversation. I really like Elon. He's a friend. I've come to truly respect his acumen. The Doge effort was heroic, patriotic, helped us find a lot of savings and abuses that Congress was not able to uncover previously. So huge contributions. And look, we can have policy differences. We hear
have that here in this building every day, but it's not personal. It shouldn't be personal. I don't tell my friend Elon, I don't argue with him about how to build rockets, and I wish he wouldn't argue with me about how to craft legislation and pass it, but we've had some good discussion. I thought it was helpful, fruitful, but it's just disappointing. I hope it all resolves today. Look, these are two titans. I respect them both. I'm
of course a huge fan and supporter of president trump i was with him in the oval office yesterday afternoon when some of this was unfolding and he was disappointed i was disappointed i just hope it resolves quickly for the for the sake of the country well mr speaker one of the the points that the president made early on yesterday was that um elon was intimately involved with the what was in the the uh big beautiful bill uh
and was well aware of it, if there are shortcomings in terms of, and you've had to deal with your caucus. I don't know what's possible. I don't know what's possible in the Senate, but we're all well aware of the obstacles to getting a perfect bill. And I think Elon Musk, he must have had those conversations with him. So he was familiar with it. Suddenly, the hyperbolic language he used to describe the bill even last week,
Where did that come from? And what do you attribute that to?
I really don't know. The point is well taken. We worked to craft this legislation over about 14 months. We began this in March of last year, working to craft a reconciliation package using 11 different committees in the House. They each worked in their area of jurisdiction and developed that policy over months and months of long discussion and deliberation and finding consensus on it.
each of the committee's came out with their individual pieces of the large reconciliation bill over a series of of months and weeks i mean all this text was out in the public everyone knew exactly what we were talking about uh... there was nothing done under uh... you know late at night other than uh... a long session to get to the final vote and that's because the democrats try to stall it in the rules committee so look everyone had plenty of time to review and digest what was in the legislation i'm i'm i'm sure you on new uh... what was in it as well and a look at it
The American people are sort of caught up in the drama of this, but I don't think at the end of the day, tweets and social media posts really determine what's the most important to the American people. I think what they're concerned about is what we all promised on the campaign trail, what President Trump was elected to do, the mandate that we got by 77 million popular votes,
and that is to make sure that border is secure, to rebuild our military industrial base at a very difficult time. That's the only new spending in this bill. The rest of it is securing historic tax cuts for the people, making the tax cuts permanent,
permanent, having a pro-growth set of infusion into the economy, jet fuel to the economy, which is what this bill will provide, and at the same time, a historic level of savings for the American people. It's a fiscally responsible product. It is the first in a series of steps to get us back on a sound fiscal trajectory. And I think, Joe, it's a very important message for us to send to the bond markets, the stock market, investors,
job creators, entrepreneurs, risk takers around the world and here, of course, in the U.S. economy. The Congress is serious. We have steady hands on the wheel. We're going to address the debt problem at the same time as we are making the economy work again. We can't wait to get that done.
Speaker Johnson, this week, you know, Elon's one thing, but you do have to get through the Senate. And this week we have a series of senators who have come on this program to talk about their concerns with the bill, including Ron Johnson and Rand Paul, who both have said they will not support the bill in its current status because they think it adds trillions of dollars to the deficit.
Their words, not mine, no matter how you want to spin this or how you want to do the math. Obviously, it's different depending on the growth prospects that come to it. But these are two senators whose support you need who are saying they will not give it at this point. What's happening in the Senate? They also have support from others like Rick Scott and Mike Lee. Do you know where things stand and how you might be able to wrangle some of the Republican senators on that front?
Listen, I love Rick Scott, Mike Lee, Ron Johnson. I mean, they're good friends. We have lots of discussion about this. We are all deficit and debt hawks. We're concerned about the fiscal trajectory of the country. The national debt is the number one national security threat. We have to address it.
But here's what I think Ron is missing in all of this. He'd like to cut $8 trillion overnight, some huge figure like that. So would I. We don't have the votes to do that. And if you did that that quickly, it would actually do real harm to the U.S. economy. So we have to do this in a step-by-step sequence of steps. Look, I liken this to an aircraft carrier. You all have heard my analogy. I mean, we did not get in this situation overnight. The U.S. economy is like a large vessel on the sea. You don't turn it on a dime. It doesn't
It takes a mile of open ocean. But this is the largest turn on that wheel that we've had since
since I've been alive, I mean this is the largest cut in spending that any legislative body on the face of the earth in all of human history has ever achieved. We did that by a long deliberate process of getting everyone there. Remember, I have a very diverse Republican caucus. I've got people from very different districts across the country. They all see the same problem set with different lenses. And I've got a concoct 218 votes, currently 217 votes.
to get something across the line. So we did that, we reached equilibrium, we achieved this massive achievement with the package. And I told my Senate colleagues at their lunch Tuesday two weeks ago, two days before we passed the bill here, that listen, remember that I'm crossing the Grand Canyon on a piece of dental floss, okay? I've got a very delicate balance among all the interests
And if you load it up with too many changes or modifications when it comes back over, then we're not going to be able to balance that. So I've encouraged my friends to, you know, put their fingerprints on it, but do it as lightly as possible. We had Senator another Johnson. That's a very common name. So I think the most common. But we had Senator Ron Johnson on a couple of days ago. And I'll tell you, he will you your friends, you like him and you listen. He can make a pretty compelling case.
for two bills. And he says, well, all I want to do is get back to pre-pandemic spending levels. And there's no one who doesn't sit there and go,
What are we doing? You know, where we had a six hundred billion dollar deficit. Now we're stuck at two trillion. I don't even know how that happened. So you're nodding and I'm nodding and going, yeah, that makes sense. So do the do the easy part first, extend the tax cuts and then go line by line in the second bill. But I just thought of something. You'd still have the same caucus with that second bill, wouldn't you? So whatever.
Whatever constraints are on you and obstacles that you have right now, why wouldn't they rear their ugly head? And in the Senate, you'd have the same problem in the Senate. So you're basically dealing with what you can with with the hands that you've been dealt.
That's right. And the reason I advocated for the one bill strategy from the very beginning is because I know my team here, right? I mean, the job of the speaker in an era with razor thin majorities is that you've got to know your members and you've got to know their districts to a granular level so that you can build that consensus that's necessary to get the product delivered. And we've been doing that here. And I told my Senate colleagues, it's much more complex in the House than it is the Senate. I know they have the same debates, but
I've got more than 170 additional personalities in districts to deal with and they do, right? So it's a complicated balance, but everyone here wants to reduce spending. All of us want to return to pre-pandemic spending levels. I mean, we do, but you have to do that in a sequence of events. We have a plan.
Okay, this is the first of a multi-step process as I mentioned. We're gonna have another reconciliation bill that follows this one, possibly a third one before this Congress is up 'cause you can have a reconciliation bill for each budget year, each fiscal year, so that's ahead of us. We're also doing rescissions packages. We got the first one delivered this week from the White House and that will codify many of the doge cuts
There'll be a series of those that come along. And we have the actual spending bills, the regular appropriations process upcoming where we will spend less money. This is the team that will deliver and return us to fiscal responsibility. But it takes us a little bit of time to do it. What are you hearing from your colleagues in the Senate? It's likely about SALT.
I mean, they've got you've got, you know, your own issues with your caucus. I mean, Susan Collins and, you know, Josh Hall. What are you expecting to come back? What are going to be the priorities for what the Senate changes? And then when it gets to your guys, I'm how big is your hat with the rabbits? How many rabbits are in the hat that you're always dealing with? Mr. Speaker, you got you got a few left in there.
Well, look, it's a lot of prayer and patience that delivers this. I wish I had a magic hat. They've written my eulogy about ten times, and they've discounted our Republican majority, and everyone said we couldn't do all this, but we keep delivering. And the reason we do is because I sit, spend a lot of time listening to everyone, taking in their opinions and their preferences, and at the end of the day, we find that compromise. The SALT part was a big piece of this, right? It took us about a year to come to that equilibrium point. We were able to get it through the House, and
And I understand my Senate Republicans over there, my dear friends over there, they're all from red states. They don't have a lot of tolerance for that. They don't like it. I'm from a red state. I'm not in love with the idea of a higher salt cap either. But I told them the reality is our majority in the House Republican Conference runs through states like California, New York, and New Jersey. They're not red states. But my team members who win in those districts are
are critical for us to maintain the House majority. If we don't get this bill passed, not only are the American people going to have the largest tax increase in U.S. history descend upon their heads at the end of this year when all this expires,
But all these other pro-growth incentives in the economy won't happen. And small business owners and job creators and entrepreneurs will not expand their businesses. Wages won't go up. The job participation rate will remain low. And inflation will continue to increase. We won't have the solutions. But also remember, if we don't deliver on this and we don't deliver a little bit on salt relief,
then we're not going to have the House majority. And if we lose the House majority, the Democrats take over, they will impeach Donald Trump. I would forecast probably on the first few days of the new Congress next January, in January '27, and everything will go to chaos. So this team has to stay in power. This team has to stay working on our plan to get our fiscal trajectory back.
And it all begins with the one big beautiful bill. Everybody who is criticizing this is playing with fire. We have got to deliver this product. We promised the people we would. I think we will by July 4th. Very quickly, one of the questions that's been asked about Elon Musk falling out and the potential for other business leaders to potentially take his side, I don't know if that would happen or not based on some of the things he said yesterday, but Elon Musk thinks he helped get that majority elected. Do you agree with that?
Elon was a big contributor in the last election, but this was a whole team effort. I mean, President Trump is the most consequential political figure of his generation, of modern American history. He is the one responsible for that. But we all worked hard. We delivered the House majority. I traveled the country nonstop. I did over 360 campaign events in 250 cities and 40 states and logged enough miles last year that circled the globe five and a half times. I mean, I contributed to it as well. All of our House representatives
Republicans did. They worked so hard and we delivered for the people. And we made them promises and that's what we're fulfilling in the one big beautiful bill. Everybody needs to remember the reason we're using reconciliation is because it is the way around the 60 vote threshold. You only need 51 votes in the Senate. If we don't do it in reconciliation, reconciling the budget and saving these costs, saving money for the people,
then we've got to do regular order. And Chuck Schumer and the Democrats are not going to help deliver the American First agenda. So all these big campaign promises we made will be jeopardized if we don't get this thing over the line and we don't do it quickly. Yeah, I mean, he got elected in 2016. It's close in 2020, obviously, and the whole...
I mean, I don't for lack of a better term, the whole MAGA movement predated Elon Musk. He kind of joined the movement to everyone's surprise. So that doesn't make a lot of sense to when it comes back to the House. Mr. Speaker, would you rather have who are you more worried about your your hawks or the parts of your caucus that are in those seats?
districts that voted for Kamala Harris. Who do you think you can convince easier? Would you rather have more cuts or fewer cuts when it comes back to you? If I were king, I would make massive cuts to the federal government, but I'm not. We're in a deliberative body, and it's designed to work slowly. To get it done, what would you prefer? Well, to get it done, look,
I have equal concern among all those caucuses and subgroups because they all have a big say. And when you have a three-vote margin, you've got to treat them all with equal weight, and I do that. So we'll see. We'll navigate it. We'll thread the needle no matter how small, but I'm encouraging my Senate colleagues to try to make that as easy as possible. Don't complicate it for us. I'd hate to say that
This getting these two gentlemen back together is your responsibility. That's overstating it. And I don't want to put that on you. But if anyone can do it, maybe it's you. And you got to do all these other things to the speaker. But, hey, you wanted to be speaker. And you still you still want to be. You think about I never did. What? Look, this is I'm a wartime speaker. OK, everybody says you having fun or fun. No, but we're going to get the job done. All right.
Once again, great having you on, especially today. We got to you know, we have an employment report coming to that we didn't get to talk about. But next time.
Next on Squawk Pod, the May jobs report. CNBC's Steve Leisman on a roller coaster to decipher the numbers. It took me a while to find where the jobs were, Becky, because there's a whole bunch of negatives at the top of this report. And Rick Santelli on the reaction across the board to this measure of the U.S. economy. All the other issues, the emotional issues, the touchy-feely issues, we can put them on the front page of every newspaper, but the market isn't necessarily going to pay attention. We'll be right back.
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You're listening to Squawk Pod. And it is the first Friday of the month. The U.S. Labor Department releases monthly jobs figures, as well as an updated unemployment rate on that day. Today, we are bringing you our full jobs panel discussion. It might be a lot of voices to keep track of, but our Becky Quick does a great job keeping everyone in line. Here we go.
It is almost time for that May jobs report. Rick Santelli is going to be covering that for us. But again, Rick, a lot of questions around this, particularly after those weaker than anticipated numbers for the ADP report that came earlier this week. Absolutely. Now, ADP doesn't necessarily correlate highly, but it's something to pay attention to. 139,000 jobs created on non-farm payrolls for the month of May, a smidge higher than we were expecting.
and in the rear view mirror, well, there are some revisions. We lose 95,000 over the last two months. All right, let's proceed now with the unemployment rate, which remains at 4.2%. If we look at the
Earnings from a month-over-month perspective, it comes in up four-tenths. Up four-tenths. Much better than expected. We were looking for up three-tenths. In the rearview mirror, at least up to this point, I don't see revisions. Up four-tenths. That would equal January of this year, which was the best read to find a higher read. You're back into August of last year.
Last year. Now, let's look at average hourly earnings on a year-over-year basis. Hotter than expected, 3.9. That's a couple of tenths better we're looking for. One-tenth higher than the 3.8 in the rearview mirror. That equals the first two months of the year, which were the highest. To find a higher number, you're going to D's of last year when it was 4%. Average...
weekly hours worked and we want to always pay close attention to this. 34.3 is wild. It's the rear view mirror. It's the windshield. It's what we arrived at this time around this month. And that means we have three 34.3s in a row, which is building. It was 34.1 and 34.2 in Jan and Feb, respectively. Labor force participation rate, all
Always a welcoming event. We want to bring more people in. It comes in at 62.4. This is a miss. This is the first real miss. That's a couple tenths light, both in the rearview mirror and against expectations. It equals...
the lightest read of the year, which was in February to find a lower number. You're going all the way back to the last month of 2022. And finally, drum roll please, we're gonna look at what I call U6, the underemployment rate, because the actual employment rate I already gave you at 4.2 is considered the U3. So U6 comes in at 7.8.
That means that we have back-to-back 7.8s. The lowest read was 7.5. That was January of this year. Interest rates are moving up. Listen, 139,000 isn't off the charts strong, but it's stronger than the market was looking for. And even though you can say that we're losing a bit of steam on job creation, what you can say is
that you cannot say that it's happening quickly. And you cannot say it isn't accompanied by a mixed bag of other economic fundamentals. Some point to slower glide path, some point to better glide path. Interest rates on the week, and this is important, a two year close to 390 last week. So we're basically up close to six basis points. A 10 year close to 441 last week. It's basically up two basis points. Pre-opening equities,
They like this number. Back to you. Ah, Rick. Okay, thank you for wrapping that all up. Stick with us. We want to bring in some more people from our jobs panel. First up is Douglas Holtz-Akin. He is American Action Forum president and former director of the Congressional Budget Office. Kitty Richards is senior fellow at Groundwork Collaborative and a former Treasury Department official.
Sarah Malik is Nuveen CIO and the head of equities and fixed income, and of course our very own Steve Leisman and Mike Santoli. Steve, we'll go to you first. What did you see that really jumps out at you in this report?
It took me a while to find where the jobs were, Becky, because there's a whole bunch of negatives at the top of this report when it comes to the durable stuff and the manufacturing down 8,000, retail down 6.5. But the jobs were created where the jobs have been created. I'm looking here, just found it in the nick of time here. Healthcare, up 6%.
78,000. I'm just about to get to leisure and hospitality up 48,000. There it is. So that's where the jobs were and that's where they continue to be. Kind of interesting that you had that retail decline, 6,500. Not a big number, but quite
The question is whether or not how they're dealing with all the tariff situation. You did still have an increase in transportation and warehousing. That was up about 6,000. So that's a good number. Kind of up and down. To me, the revisions may be pointing the direction of the weakness that we're expecting to get.
They were still positive numbers, but now we seem to be settling down into a lower run rate here on jobs. Still enough to put the people who are coming into the workforce to work. And that's why you have your steady unemployment rate. Looking at the work week, it's been kind of steady at this 34.3 number, which is a bit low.
But, you know, we'll take it, Becky. We're navigating a lot of confusion for businesses and we're hearing terrible anecdotes from businesses, but not showing up dramatically in the jobs numbers.
Okay, let's dig at this from another direction too. Mike, we are seeing the stock movement at this point. Stocks came back a little bit. Rick pointed out that yields came a little higher as well. I guess the good news here is maybe the economy is stronger than we had been anticipating post-ADP.
Right, Becky, and certainly stronger than perhaps some folks were leaning, given some of those negative inputs like ADP. I do think it's pretty close to the sweet spot in terms of monthly job gains. Maybe you want it even a little bit stronger to get a more emphatic equity reaction with those downward revisions. But this is.
It's fine. It enables investors to kind of, you know, kick their acute concern for a weakening in the economy ahead by several weeks, right? We're not seeing it in the hard numbers just yet. And that's probably important because the Federal Reserve has expressed.
No real interest in acting anytime soon. So if you have a wait and see Fed, you want the real economy to hang in there. Yesterday, the S&P was down about half a percent. Half of that decline was Tesla alone. So today, in the equity futures, you're getting back all of that and a little bit more as the market, let's keep in mind, is up 23 percent in two months off that low in early April. So a rest would not be surprising after this move.
Doug, I guess the question it does beg, though, if the economy is stronger and if the jobs market is strong, you're not looking at higher unemployment. Is that really a reason for the Fed to cut rates? We've looked at the inflation side and said, OK, inflation has not been high. Maybe the Fed could cut rates. But if you look at the unemployment picture, I guess the question is, should they? I don't see the Fed cutting any time soon. You know, most of this stems from the tariff impediment.
in position and that's a second quarter phenomenon and I think we'll see the the evidence is we'll see the price increases in the second quarter but I think the deterioration on the employment mandates going to be in the third quarter and so feds going to hold because the first thing they're going to see is higher prices. I mean we've had studies out of the New York Fed the Atlanta Fed where they've talked to businesses in their districts and the majority are passing along the tariffs as higher prices and so that's going to show up quicker. That's what the Fed has to worry up up front.
Second half of this year, they're going to talk about cuts, but not yet. Kitty, you agree that the second half of this year will bring job cuts? I think that, as Doug was saying, a lot of the uncertainty that's created by the tariffs and other kind of chaotic management of the economy by the Trump administration is only going to start really impacting the labor market on a slower timeline. We are starting to see some of the softening.
I hate to see the labor force participation dropping while unemployment stays steady. The revisions downward from the last few months are putting us on a trend for lower job growth. But a lot of the job cuts really come from those increased prices for inputs that
are only going to start working their way through the system and pull back an investment due to the uncertainty of what's going to happen over the next few months. And that really takes some time to really impact the labor market. Hey, Rick, who do you think is going to tell the stock market about the chaos if it hits new highs?
near term. I think everybody will keep calling it that way. And anybody who has a 401k should keep their fingers crossed that they keep doing it. That contrarian viewpoint keeps fueling more upside. And I would like to point out something with respect to this, quote unquote, deteriorating job picture, that three month moving average of nonfarm payrolls
is four thousand less than a hundred thirty nine thousand that we had today so i'd just don't see that there's this you know added uh... negative impetus by all the headlines that are out there i'm not saying that they're not all accurate there's not uncertainty but the market certainly seems to be much more built about it than many of the analysts what what why do you think the market snap back to it what is it i mean the markets not stupid
Maybe it goes back down in Tesla lows, Rick, but what do you attribute it to? Just the level of skepticism and negativity? It was bound to happen. Yeah.
Listen, your partners in business don't need to necessarily personally like you or think that maybe your last couple of traumas or outbursts are good. They just need to realize that you're their best business partner. The U.S. is the place to do business. The dollar is the currency to do business in.
the other issues the emotional issues the touchy-feely issues we can put them on the front page of every newspaper but the market isn't necessarily going to pay attention it's going to pay attention to business real business which isn't driven by emotions and it isn't driven by G do you like me or not they're doing business with us because we're the only
only alternative with the rule of law and all the other issues that many of the newspapers and the websites say has deteriorated. And I totally disagree. And I think the market does, too. Sarah, as an investor, what do you think about that? There's three ways this number is going to impact the markets. The first is the S&P going to six thousand. Second is how
how the Fed's going to react. And third is what's going to lead us, which is tech. So I think this is a relief for investors. The S&P likely hits its next hurdle, which is 6,000. We cross that and we stay there. Second is how the Fed going to think about it. It gives them a little bit of breathing room. They don't have to rush to cut rates because what we were worried about is that employment markets tend to crack faster
right when a recession starts. So if the Fed waits too long and employment markets show too much weakness, likely the Fed would fall behind the curve. Third is what's led us out of the recovery since Liberation Day has been tech stocks. I think that continues to lead. We just saw Broadcom report last night. We're hearing basically that there's insatiable demand for artificial intelligence. I think tech continues to lead from here. And looking at this number, what's important is health care jobs
coming in at 78,000. That's been a big leader for this number year to date. Every month we've seen about 60,000 jobs created by the healthcare industry. And that is an acyclical industry that shouldn't be impacted by tariffs. So that's a positive and should be a driver of the jobs market going forward. Hey, Doug, what do you think about what Rick was just positing, this idea that it's okay long-term, that we may be dealing with some cross-currents at the moment, but that investors will still come here, businesses will still come here?
Well, I think Rick's right that people care about doing business, but business just got a lot more expensive with China, 30% or higher. We're on a pause with those tariffs. He's our Republican guest. Doing business has gotten more expensive. Where would we find you, Aiken? You're our Republican guest. We've got Kitty on the other side. Hold up your end of the bargain. I'm an analyst. You've got to pay. Okay.
Hey, you got to do the numbers, Joe. This is just about the numbers. That's all there is to it. That's why I went to Rick. That's why I went to Rick. It's like four against one. Anyway. But Rick is right about one thing. I mean, there's no question. The market's pricing the overall economy. The bulk of the U.S. economy is services. I hope you didn't sell your stock at the low, Joe. I hope you didn't sell your stock at the low. The good sector is deteriorating.
The good sector is deteriorating. That's a concern. Services are hanging in there. And that's why I think it's the second half of this year where the weakness might show up.
And that's because you think the tariffs will still be on at the current levels at this point? What happens if there is some solution by July 9th? Go ahead, take that one. That's a very hard call. I mean, at the end of 90 days, we have the pivotal moment when the president has to decide what he's going to do with the reciprocal tariffs.
which in their original launch were clear overreach and a very danger to the outlook for the economy. I truly hope he doesn't go back there, but I don't know what he's going to do. And I don't know what the courts are going to allow him to do. And so it's really hard to gauge that out. Kenny, I guess I would ask best case versus worst case scenario and what you tell people about that.
At this point, I think the really important risk to the economy we need to pay attention to is what's going on in Congress. So I think we're absolutely right to look at the jobs report and see the strength in the health care sector. Currently, Republicans in Congress are trying to take millions of people's health care away and do it to— Oh, come on. Yeah, I mean, that's going to be a real problem. There are analysts saying that that is going to filter through the local economies and cause job losses.
It's going to be a real drag on local economies across the country if that bill passes. And it's going to make it much more expensive to invest in clean energy, which is going to spike electricity prices. Clean energy is uneconomic. Clean energy can stand on its own two feet. That's why we have such big deficits. We want to pay for things that people don't want.
The tech growth that you're talking about, the artificial intelligence growth that we just heard about driving the economy, requires massive amounts of new electricity, more than we can create by spinning up new gas turbines over the next couple of years. We're seeing huge deployment
of wind and solar at utility scale, including in a lot of red states, that is helping to bring down the price of electricity. If we don't continue that utility scale deployment, we are going to see electricity prices spike over the next few years just because of rising demand. And that's going to also be a real drag on economic growth.
Hey, Mike, what do you think from the market's perspective right now? I mean, you've watched kind of the ebb and flow, the up and down, the volatility rise on these things. What do you think the next thing that we'll be watching for beyond this jobs report? Well,
Well, I mean, we have the brute force of massive technology company earnings growth that are partly supporting what we've seen in the markets. What the market does is it kind of processes, you know, uncertainty and policy flux into, OK, let me get the weight of the evidence probability for how things are going to turn out here for the private sector. And for now, it's seeing a pretty steady as she goes economy at the moment.
with maybe a little bit of downside to some earnings coming down the road. But here's the thing. The stock market got to 6,000 like seven months ago. We've had two quarters of really good earnings growth from there. Credit markets are great. The rest of the world's stock markets are making highs. Everything seems like it's fitting together at the moment. So I don't think you have to jump through any hoops to say there's something extraordinary going on that the market is managing perfectly.
to do pretty well right here, all things considered. So, you know, I think that if there were going to be negative impacts from policy, we just don't know them yet or they haven't hit yet. And so I think that's why the market is reserving judgment on that. Steve, I'll ask you finally, just in terms of the numbers, we keep saying, okay, this is the one that could show us any of these concerns. This is not that number. Does that mean it's not going to come? Or do you think it comes down the road? What's happening here? No, I mean, I...
I think what I hear the Republican or conservative side of the argument at the table is that
We're going to have a massive tax increase on imports, and there's going to be no economic effect. I just find that hard to believe. I think there is going to be an effect. How big an effect? I don't know. I think that the report was a reasonably good one. I think the downward revisions that you had to the prior months tells us there is brewing weakness. You did have a bit of a pop in Jabba's claims, a bit of a pop.
been continuing claims. I do think it does show up. You've had a lot of uncertainty. Maybe what's happening is people are waiting before they make any rash decisions when it comes to their employment. You have the same kind of employment that you had in the previous administration, which I would point out the current administration complained was not good deployment. So you have essentially health care and leisure and hospitality. You do have 22,000 lost in government.
I think it is still to come, Becky, but maybe not as much as we had thought because businesses find a way to adjust. I would just reserve judgment and not give the all-clear signal just yet. Who's we?
So, Rick, you got any final thoughts? I got to hear you chortling in the background. Yeah, you know what? I have final thoughts. Here's my final thought. Anybody who talks from bullet points or talking points, you know, toss them away. Here's the only bullet points I like to use. It's the market. I'm not talking from bullet points, Rick. I don't know what you're saying there. I'm not talking about you. I didn't talk. Did I say Steve Leisman?
Okay? When I hear that we're kicking people off healthcare, you know, people need to do better research on exactly where we're going, where we've been, and in the past, how we've arrived at various functions between welfare and entitlements. You know what? We can't afford to continue to help people that don't really need the type of help that
some of the bullet points say they need. Because if we keep doing this, folks, and this is important, we won't be able to afford to help anybody. All right, folks, thank you to our entire jobs panel. Doug, Kitty, Sarah, Rick, Steve, and Mike. We'll see you guys later.
And that is Squawk Pod for today and for the week. Thank goodness it's Friday. Thank goodness it's Jobs Friday. Squawk Box is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern or get the best of our show right into your ears when you follow Squawk Pod and listen anytime you want. Check out our new three times a week bonus podcast,
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