2015 and squawk box begins right now. >> live from new york, where business never sleeps, this is squawk box. >> good morning and welcome to squawk box here on cnbc. i'm becky quick with joe kernen and andrew ross sorkin. police are processing the scene from two shooters opened fire on a holiday party. one male and one female were killed in a shoot out with police a few hours after the massacre. now the investigation turns to who motivated the couple to commit such carnage. we'll be joined in just a moment. >> first a couple of the big market stories this morning. the ecb is meeting in frankfurt right now. then president mario draghi will hold a news conference 45

minutes later. expected to expand the central bank's bond buying program. they're also looking for a deposit rate cut. the euro is under a bit of pressure. let's also take a look at european stocks at this hour. you're looking at a picture of -- well, things look increasingly better. this is the injection issue that we always talk about. we're also watching the energy markets this morning, opec ministers are gathering for a meeting tomorrow. reuters reporting saw day rab i can't is going to be proposal the cartel cut output by 1 million barrels a day next year. they resisted calls for any market intervention. oil trading right now, wti is at 40.73. here are a few of the other agenda items likely to drive trading. fed chair janet yellen will be testifying before the joint economic committee meeting at 10:00 eastern time. lots of data including weekly

jobless claims. and factory orders and a number of consumer names on the earnings calendar coming up including quarterly results including kroger, sears and five below. u.s. equity futures amid all of this are -- there you have the board. dow to open up a lot higher. nasdaq up about 43 points and the s&p 500 up about 16.5. >> oil up 2% and if it's still at 40.70 and it's up 2% that means i quickly deduce the close. >> below, yeah. >> and yesterday it's always -- we never know what the attributed sell off, 155, the dollar was strong. there's a lot going on. they're going down. we're going up over here with the fed. >> right. >> but you see something like what happened in san bernardino and start wondering, coming here. wetill don't know whether it's coming here but increasingly, if

we do start worrying about that you wonder about the dampening effect on economic activity if terrorism -- >> and it's on the markets. >> we're being very careful. we're being careful as characterizing this as terrorism at this point. at this point we're going to wait until we know things before we start making other assumptions. now have to do stocks to watch. it seems like such a small thing to do with so many things going on, doesn't it? but this is who we are. this is who we are. costco, wildly held and posted better than expected same store sales for november. u.s. comps excluding gasoline rising 6% year over year. a company called dyax is getting regulatory approval to be acquired by shire. the company getting a pop after it announced the early

termination -- i'll say it again -- the early termination of an antitrust waiting period. avago shares trading higher this morning in the chip maker's quarterly results topping expectations helped by it. i guess it's a spicy type of dip that you can put the chip -- no, no, no. this is not -- this is not a -- what's that -- that green stuff? >> guacamole? >> no, the green spice. >> cilantro? >> no, people use it. >> new sirachi favored chips. >> isn't it green? it's greenish. >> i don't do hot stuff. >> this is a technology -- it is good technology to make chips flavored like that but in this this case, these are microchips. >> driven by it's calvin kline and tommy hilfiger businesses.

it's your father's shirts and it's your father's -- why not use -- >> andrew is calvin kline for sure. >> those brand names are more. >> that's right. i forgot. >> today too. >> absolutely. >> do you have that many? >> you know -- >> how many -- they're expensive. they're $50 t-shirts. >> you can buy them on sale. >> you can buy them on sale. >> thank you, becky. she knows. we have a discount. >> you're not usually embarrassed by admitting you look for things on sale. >> i brag about it. >> that's good. >> it's a virtue. >> it is. >> and shares of verint systems getting hit today. earnings and revenue are falling

short and the company is lowering it's full year view. pandora under pressure. the internet radio company announcing a 300 million convertible debt offer and if it's convertible it means equity and sometimes you see a stock come down. knocked down about 75 cents but that does represent over 5% today. >> let's get back to today's developing story. a california shooting rampage leaving at least 14 dead and 17 wounded. jane wells is on the scene in california and jane, bring us up to speed on what you know there. >> well, 16 dead becky if you include the two suspects. presumably they have begun retrieving the bodies inside the center up the street from me overnight. we don't know that for sure yet but that was the man after the bomb squad was able to neutralize explosive devices that the two suspects left behind. here's what we know and what we don't know. it's confirmed by the man's

brother-in-law. this is 27-year-old syed farook. he was a county public health employee. had been for five years. he was at the party yesterday. the holiday party inside the build wrg most if not all the killing took place. the other dead suspect, tashfeen malik, they had a young daughter together. information about the suspects, as far as we know at this point, none were found there but as they approach this home yesterday late afternoon they saw a black suv with utah plates speed off. they pursued it and apparently according to reports the woman malik was driving while farook opened fire. there was a shoot out involving 21 officers, both suspects were killed and suspects were well armed and it appears at this point all the weapons were purchased legally.

>> both suspects were armed with what was essentially a 223 caliber assault rifle. one was called a dpms model 815. the other was a smith and wesson mmp 15 model and then both suspects were also armed with semiautomatic handguns. >> there was a third person that at the scene they questioned. it does not appear at this point that maybe there is a third suspect in this case but we don't have that confirmed. we do not have any information about the 14 that died. was it work place violence or terrorism. both or neither? farook, a u.s. born citizens recently visited saudi arabia. whatever that means.

police say he left the party after what was apparently an argument and then returned later with malik dressed in masks and dark clothing and opening fire. listen. >> i think that based upon what we have seen and based upon how they were equipped there had to have been some degree of planning that went into this. so i don't think they just ran home and put on these clothes and grabbed guns and came back on a spur of the moment. >> now, police are supposed to brief us again later this morning and we hope to get more information about the victims, the suspects, the motive, but it appears at this point that this is the first coordinated mass shooting involving more than one person since columbine back in 1999. back to you. >> you know his girlfriend or wife and is it true or not or do

you know whether it's true or not that he returned from saw day r -- saudi arabia. i read that he brought back his wife. >> it's not clear. one story said they have been married for two years and they had a young daughter which they dropped off at his mother's place yesterday saying they were running out doing things. it's not clear when he when to saw d saudi arabia. if they were already married. all of this we don't know and if it's relevant we don't know. >> well, right. okay. we don't know anything about what's relevant at this point. >> former fbi assistant director, thoughts on this, i won't try to lead you into anything. what's your thoughts on this?

>> it's still an open issue as to whether it's terrorism but it does appear to be our worst nightmare here in the u.s. we have been anticipating and hoping this isn't going to happen. hasn't happened. and look this is the availability of guns, mental illness, possibly mental illness, maybe some heavy recruiting on someone already very susceptible. so they'll be looking at it hard of course. the fbi was very careful not to classify it as terrorism last night and could be a combination of a he have heavy grudge and pushing them over the edge by other influences. >> as far as the gun control issue, there's not a lot of no fly zones so either way

radicalized in saw day rab i can't, god knows, just possibly, whatever but even if that's true, the easy availability of ak-47s or ar whatever they were that that obviously is going to be an issue that you can probably say for sure, chris, that any computers that the suspects had are being looked at now. i'm sure there in full force looking at everything that they can possibly find out about these two. >> correct. i mean, it's all hands on deck for the fbi evidence response teams and the other investigators. they'll be looking hard at phones and social media and computers. they'll bedy sektding this person's life and social network. both of them and they'll know a lot. i would suspect by midday. they probably won't put a lot out but we know a lot of things

tend to leak out with this many agencies working on it. >> i don't know if you have a solution to making soft targets. this would be dead last in a place for disabled adults to try to get help but would be on your last list for a place where you would think that would be a target for someone. we're at risk and it's a fact of life these days. >> so true. but as we say you can't protect all the potential soft targets. this is a soft target as a

thing. there's lots variable. and we have a situation we have to deal with here. quickly mobilized and lots of them too. it's amazing what they do they're into action. there's a couple of hundred yards. so how do you even get close enough to -- you have to hand it to them all right chris, thank

you. hopefully we don't see you soon. >> coming up when we return a live report from frankfurt where the ecb policy makers are meeting today. this could be a global market game changer. we'll tell you why, next. first as we head to a break check out the euro right now. stay tuned you're watching cnbc squawk box right here first in business worldwide. nsh surprise!!!!! we heard you got a job as a developer! its official, i work for ge!! what? wow... yeah! okay... guys, i'll be writing a new language for machines

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. welcome back to squawk box everyone. today's top market story, the ecb meeting in frankfurt. that's where we find julia.

good morning. >> good morning becky, the big question here in frankfurt is how does mario draghi pull arab bit out of the hat. let me tell you what's already priced in by investors at this moment. a 14 basis point cut in the deposit rate. this is the rate that banks get charged for parking cash with the european central bank at the moment. a 12 billion euro increase in the amount of bonds and assets purchased on a monthly basis. that takes the limit up to 72 billion euros. the other thing is up to a six month extension to the qe program so it's taking us now into the first quarter of 2017. so given that that's what is already priced it will be a tough job here for mario draghi.

and the other conversation here is that the german central bank is saying we don't need any at all at this time. but what good is it given everything he has thrown at this situation so far failed to lift inflation meaningfully. that's a question i'll save for the press conference next time. we wait to see what he comes up with. back to you. >> thank you. obviously we'll be watching. from the ecb decision, the falling crude prices and surging dollar we have a full plate this morning. and allison deans who is consultant at deans advisory and cnbc contributor. yesterday the dow was down by 158 points. this morning it's up by that much. stock market trying to figure out what it thinks about the

fed's move at the same time we're watching ecb. >> market is expensive and it's not cheap and if yellen is going to raise interest rates it lowers the market but my view is if yellen thinks things are strong enough to raise interest rates a little bit the economy is improving and corporate profits should start to improve which will help the market but because people relied so heavily the near term reaction will be that people will pull back. >> if there was a pull back of five to 10% would you change your mind? >> 5 to 10%. my sense is right now the outlook for s&p earnings is about 5 or 6% growth. 5% pull back gets you a nice total return from the type of volatility and risk in the market. >> so not far from where you would be buying. >> yes. >> we just heard that everything that the ecb has thrown at it has not moved inflation. it's helped them from the perspective of the euro getting weaker which helps their exports and helps them compete against the united states.

>> dangerously low inflation. whenever i see -- i mean, it's unfortunate the ecb is meeting right now. i mean, what if the fed members start thinking about dangerously low inflation. that's for the ecb. i just worry that central banks are out once rates get down to zero. there's not a lot. they're very interventionists but there's not a lot they can do. draghi got a lot of bank for the buck a year ago at this time. stock markets took off waiting for qe to come. it's materialized but then what else can you do at this point? but, you know, i'm still hopeful that we're going to go our own way here in the u. s. and fed chair yellen will, knock on wood, raise rates in a couple of weeks. we'll see. maybe the jobs report can push that off. >> to me they look like they're pose pois poised to go. but there's also a lot of questions about the economy

right now. what do you think about where we stand economically. >> expansion or recession and we're still going is it okay. is it okay? how could it not be okay? recession ended a long time ago. i would counsel people. there's a lot of cross winds from exports being weak and the strong dollar but sounds like they're going to go anyway. the most timely indicator, bernanke christened it such is job lay offs at companies. you can have all the other stuff going on. truck traffic down or rail carloadings are down or energy are out there but lay offs start jumping unemployment claims coming out at 8:30 this morning. probably not going to look at it much with draghi but until layoffs come the economy is fine. it's just worries. >> so go ahead and jump in. >> well, you know, other reports as well is wage growth started to occur.

that's important as well. and that's the indicator that yellen has been looking for. we're seeing improved employment but now we're seeing people making more money. they might feel more comfortable spending more than we do as americans. >> how close sli the market tied to oil prices at this point? every time the oil prices go up you see markets pick up. oil up by 1.5% and that correlate with the futures too. >> at this point i think oil prices aren't low enough but now people are look at it as an economic play. people do worry about global slow down accelerating but if oil prices is an indication of how people feel about the economy. >> what stock do you like the most? >> i'm not stock specific but i would say continue to look in the growth area but consumer staples i think are very attractive right now. technology continues to be an interesting area of growth and i would focus more domestically and not multinationally. >> what about health care? that's something we heard again and again from people but the

situation may have changed already. the equation may have changed from the valuation of some of the stocks. >> i find health care very difficult to follow. maybe it's too personal but i just find that their pricing doesn't make sense to me. that i think the government is going to get more involved despite the plan to do less. i just feel like it's an industry that looks overly rich and the growth process aren't as great. >> what do you expect to hear from yellen today? more of the same? >> i think so. they're close to going but there's no promises. the one thing that bugs me about her thinking is that she keeps putting it off. one of the lines in the sand he put for action is full employment unemployment which was 4.9. it's 5.0. i hope it's not the case that unemployment is still 5.0 on friday and she says oh not quite close enough yet. maybe wait until march. i don't know. i hope it's not put off any longer. >> chris, allison, thank you both for coming in today.

>> okay. coming up, a war of words. russia's vladimir putin delivering an annual state of the nation address to his country's parliament today complete with a strong warning to turkey. we'll have a live report from overseas next. first as we head to break, check out the european markets at this hour. stay tuned you're watching squawk box on cnbc. first in business worldwide. tuc why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction,

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welcome back to squawk box this morning. our top story today, california shooting rampage leaves 14 dead and 17 wounded. police are still processing the scene for two heavily armed shooters. one male and one female suspect were killed hours after the massacre. jim is a retired atf special agent in charge and law enforcement analyst. we're trying to make sense of this jim. we haven't called it terrorism but there's questions about that. there's questions about access to gun, mental health. there's all sorts of issues to address here but fireworks think of the single one at the top of your list, it would be what? >> i would say the moe stif mixed. we try to assign one motive to violent crime but i don't think that's what we have here and in

many cases we have mixed motives. looking at it right now from the information all day yesterday and it's developing it seems like we have a real string of revenge. it's a very targeted event. they went right at a particular group of people at a particular time and it was very well planned but the christmas party was a known event. the guy, farook was an employee there so we have a real string of revenge through this and we also may have some ideological motives. terrorist type motives. so that's what seems to be whether mental health is in there if it is, could be down the string a little bit but i would say right now maybe some revenge and some ideology coupled with that. >> often times we throw up our hands and say these are soft targets. can't be stopped. if there was one single thing you can do to stop what seems

like an increasing sense of mass shootings what would you do? >> it's hard to say a single thing because the world is full of so many reasons. what we have in society is when people have a grudge is ammunition ready to go out and murder, anything that disturbs them seems to be mass murder. on a terrorist side too it seems like the answer people think is mass murder. how do we stop it? there's ways to stop it at the beginning through trying to counter the ideology, the recruitment, feeding terrorists on the ideological side and on the grudge and resentment side, we want to train our children that when we were all coming up, you know, there's a lot of set backs in life. we admired people who overcame

the set backs when we think about our fathers and grandfathers and the heros we have in every culture it's those that were knocked down and got back up but it seems now people get knocked down and they don't get back up. they two right to mass murder. >> you know, you were involved i see here with waco and th the unibomber case, is there a thread throughout all of these that you put together? >> it's hard to say. they all have a little different thread. the human mind has so many reasons for people to do things. waco we have a cult, death cult. thought he was god and was abusing children and stock piling weapons and he was a very difficult character. where the d.c. sniper, we had mixed motives there as well. initially wanted to kill mohammed's ex-wife but launched into this super cell of murder.

so there's all a little different thing, you know of what happens. >> jim, what happens next in terms of -- just walk us through in terms of how this investigation unfolds? >> a lot of investigation going on today. you know, the biggest crisis in the business. this is a joint operation center we call it. it's run and set up there somewhere in san bernardino. maybe at the pd. the commanders of all the agencies, fbi, state police, san bernardino city county police and neighboring city police agencies are all there and what they're doing is running down every lead on all of these people to see if they can come up with the motive. >> how quickly do you think we'll come to an answer because of course there's -- i don't know if it's binary but if there is a sense that this is terrorism then it changes the

entire discussion nationally in this country about what would be the first home grown terrorist on our own soil. if it's not, it probably turns into a political discussion about guns and mental health again. >> yeah. it's going to be messy. it's not going to be a clean, absolutely clean motive because of the targeting and maybe some of the ideology. it's going to be messy. that's the way it's going to come out. it's not going to come out real simple. we may find some writings from these people and one thing andrew is this woman who he just married in the spring, farook, this malik woman that came from saudi arabia, her background may show a lot of strains of radicalization and she might have gotten that into this relationship because he been working there for four or five years without any big problem. although he was a religious problem he didn't have any indications from what we heard. she might have been very active in the conservative side of

islam and pushed those ideas as well and then a revenge motive that's something we might see. >> jim, we have this day and age it's crazy. i don't even think it's that much of a stretch to call it at the very least isn't it domestic terrorism if we find out that it didn't have anything to do with saw day rab i can saudi arabia. it was planned. they were in fatigues. ieds being constructed in their house. really, could i have to go back and retract it was domestic terrorism if you were to make that leap at this point? everybody is afraid now and worried. that's what terrorism does. >> no, you wouldn't be wrong about that at all. terrorism is murder for a political purpose, to do some type of political type purpose. to influence a population or a government. that's what terrorism does.

so if it happens in the united stat states, internationally inspired domestic attack, you wouldn't be wrong at all. 14 people slaughtered in a conference room, that's terror. >> right. well, we're loath to go there for some reason. we're not loath to go to some of the other -- when peopsome peop politicize the mass shooting, that started yesterday. there's still smoke in the air before some people were talking about using it as a way to push an agenda again which i just find -- it's incredible because the other -- to actually point it the other way, we may have to wait six months. i don't know if ft. hood to this day has been classified as

anything. the president still says disgruntled employee rather than some type of terrorism. >> ft. hood is internationally inspired terrorism. he was connected directly. >> but you know the point i'm making. i don't know if i've actually heard that from certain reporters. anyway, thank you. >> when we come back this morning, russia's vladimir putin doesn't minutce words saying turkey will regret downing the russian bomber in syria. a live report after this. first though as we head to a break take a look at the futures looking at big gains after yesterday's steep losses. the dow was down by 158 points. this morning picking most of that back up. the futures up by 135 points. s&p futures up by 15 and the nasdaq up by 40. stay tuned. squawk box will be right back. the

. >> welcome back to squawk box. his annual state of the nation address to the country's parliament today. and joins us from london with the highlights. jeff, wow, with oil prices at $40 this is really tough. did he mention that at all or is it difficult economically in russia at this point? >> absolutely. this figured in what president putin had to say. he acknowledged that oil prices are not helping the russian economy but he did say that the russians need to fall back more on their own domestic resources and try to exact further deficiencies from their own economy and not figure that the oil price is going to get stronger any time soon but the

economy probably figured less in this speech than the issue of turkey and the relations with turkey and i want to bring up some of the key points that were mentioned as far as turkey is concerned and the downing of the russian jet bomber. and the key messages, turkey will regret what it did. we cannot ignore the aiding of terrorists. so this is the claim made previously that turkey is buying oil from isis. the turks though saying that is not true and moscow's response will go beyond food embargoes. so the language very uncompromising at this stage but a little bit of a back story. let's just point out that foreign minister lavrov is expected to meet with his turkish counter part at the osce conference. so maybe behind the scenes there's a little work being done here. one other message important

president putin saying that the war against isis in syria will not be won by one nation alone. ie, we need to work with the u.s. lead coalition. let's just hear what he said. >> one country can't beat terrorism. especially when the world's borders are open. and the relocation of people. terrorists have constant financial support. the threat of terrorism is growing. >> so there you go. the message from president putin uncompromising as far as the position of turkey is concerned. we will look at further ways of getting retribution for the deaths of our aviators and on that broader message we still want to work with the west to try to focus pressure on the isis terrorist group in syria and in iraq. back to you guys. >> thank you for that. let's get you caught up this morning on some corporate news at this hour. disney raising it's semiannual

dividend by 8%. the dow component now has the dividend yield up more than 1%. a mixed quarter for sears. retailers revenue topping estimates. posted a bigger than expected loss and box shares under pressure. revenues increasing during the quarter but not as much as cost, by the way, fascinating piece i just read, i want to say in the new york times this morning about the idea that box went public and everybody gave them a hard time but now there's a whole push by all the other venture capitalists that think that even though people call this a failed ipo that many of these unicorns perhaps should go public now while the markets are still open and that we're going to look back at this moment and say that they should have gone public. that the ubers of the world should have gone public to protect themselves and suggesting even the lift, which is sort of the little unicorn or little guy in the uber lift thing should go public.

>> markets get tighter from here. you're not looking at that scenario. >> two years from now if they're still in the private markets they go to zero much quicker. that's the point of the piece. it's interesting. lockheed martin is delaying a planned spin off until early next year. it expects to divest the assets. the retailer also announcing a new ceo. we are watching shares of yahoo! again today. reports say the company is draws interest for its core internet business. among the names mentioned verizon and iac interactive. >> surprised how much that stock moved yesterday? >> i was surprised. something ultimately does happen to it but i don't think it's going to happen tomorrow. >> i watched an interesting discussion on squawk alley yesterday. almost hit the fan. just that everybody thinks that they know what to do with it and there's some value there but really once they get in there, it's hard to imagine anyone

really does know what to do. someone is going to pay up. someone is probably going to pay up. i can do this. i can do this and they'll repay it because she's not in it -- marissa has tried. i don't know if anybody could have done a better job with that situation. but hope springs eternal that they know how to work this because of yahoo!'s glory days from the past. there must be a way to monetize it but is there. >> either in the journal or the new york times there was an article that it's hard to turn around a technology company once it starts down the path of lesser and lesser returns. this was a path set ten years ago and longer and that the only successful case you can point to is apple. >> i'm going to give credit to a guy, john donahue who ran ebay. ebay was a tech turn around when people said that tech could not be turned around but this is a particularly tough one. >> amazon has been a turn around

it's entire existence because people have been nonbelievers in that all the way up to today. sometimes you were worried about the lack of my profitability and how could it keep going and it just has, right? >> it continues. >> but also that's because investors have given it this -- blessed it in a way. >> this was his plan from the get-go. there's been no bait and switch. >> the revenue growth -- >> marissa would have a hard time saying we're not going to have revenue growth or anything. >> it's a different story. jeff said this from the beginning. my goal is to get bigger and bigger and eventually there will be profits but my goal is first to dominate the world. >> yes. >> thank you andrew. coming up, opec countries meeting in vienna. so will top producer saudi arabia finally sign off on a cut to its output?

john is here again. he will offer his analysis. that was a great name for him to pick. and anyway, stay tuned. you're watching squawk box on cnbc. i'm going to say this again, we never get tired of this. i actually do a little, but we're first in business worldwide. take my word for that. >> proud of it. >> very proud.

crude trading above forty a barrel this morning after dropping below that mark for the first time since late august. you got your thirty-nine yesterday. that's -- that's right as you need to be in this business. that's for sure. good job. >> declare victory and go home, right? >> you could if you want, but don't. >> i won't. >> saudi arabia going to cut? >> no. they will if iran, iraq, kazakhstan, mexico, and others cut as well. they cut to lock. >> is there a reason to think that won't happen? is that, li like herding cats? >> absolutely. especially for the iranians thinking they are robbed for the market share and volume in the last decade because of the sanctions, iraqis desperate for money, you don't see putin playing along very well with everyone. >> the saudis will be the only who cut and stick to it is farfetched?

>> they say, if you want to join in with us, we'll do did, but it's an impossibility. it's just -- that's why it's only worth sixty cents, here at forty and change, basically, and, you know, there's not going to be consensus around that. it's beginning to fall apart. >> what happened yesterday falling blow forty? what does that tell you? >> it tells me what we've been talking about here, that there's an absolute glut for all the talk that the u.s. falls, now sixty percent from the high, u.s. domestic production actually rose week on week. we're still at nine million barrels. it's not coming down. i tell you guys, this is the month to watch, though, that the bigger wells are supposedly coming offline, especially in the shale plays. we'll see. the talk of the rigs, other things, there's a massive glut. we did not reduce the u.s. stockpiles of crude oil even with the refineries up at the run rate to over ninety two

percent. this they don't work off in this environment, that speaks volume. >> demand is something we don't have to think about. it's just this slow one percent rise a year. it's just like we don't have to worry about whether china's weak or negative interest rates in europe, weak there, the dollar is stronger. that does not matter? it's all about supply? >> mostly about supply. the worries in china do not help, and commercial pmi number last night was negative again. that's not helping either, joe, and the dollar strength is not helping either. >> neutral or negative for the price? >> kbaexactly. >> when does screaming start for the exporting? >> already start. the industry is claiming that's a sign for what bails them out. they are selling barrels into an already crowded market, so -- but, you know, would it help stabilize them potentially? i have reservations about it from a security issue. i tend to agree -- >> becky does too.

>> not like corn where you grow another crop the next year. they are gone they are gone, longevity, but i appreciate this is a free market situation where they should have the right to potentially tap any market they can. >> when does the war on climate change and the move to renewables finally kick in where we do not use hydrocarbons anymore in ruining the map plan and just using all the other stuff? we declared war again in paris. when is that going to take hold where this is really going to hit the price of oil and gas? >> not in our lifetime. >> i'm beginning to live a long time, my friend. >> it's a century or more, joe. i mean, the fact -- >> that's a long war. we'll be under water by then. >> eighty percent goes to transportation. i don't see that nut getting cracked. the efficiency, the bang for

your btu buck is ridiculous. >> what do you think when you hear that, then? n they like to talk? kicking around theories? what do you think spending a week on that? >> i think they are trying to attack dirtier fuels like coal. >> right. which has a will the of other negative aspects. >> right. as you see in beijing right now. >> exactly. pollution and sulfur dioxide, hideous. >> the debate goes beyond just fos till fuel burning and things like methane from cows and others contributing to the situation. >> how old are you? >> you know, i'm old enough -- >> not just cows. >> the rest of us folks. >> it's not just us cows. how old are you? >> i'm a beef guy. >> then it's not just cows. >> i try to stay away from the fiber. >> okay. >> thank you very much. >> if that's what you mean. >> coming up when we return, the

morning's top stories and the latest from california where the investigation continues right now into the shooting rampage leaving four teen people dead. back in a moment.

details on shootd ers we'll get the latest from the saep. breaking news moving the markets, ecb set to make app announcement on interest rates, could be deeper rate cuts and additional easing. the decision and instant reactions. breaking jobs data, challenge on november layouts hits the tape, and we'll break down the numbers of ahead of tomorrow's big job report.

the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." welcome back, everyone. this is cnbc, first in business worldwide. among our top business stories this morning, the ecb is meeting in frapg furthnkfurt with a dec rates, and the big news when r mario draghi has a news conference with a lot of questions. among the moves, expansion of the bond buying program and deposit rate cut. the equities are looking towards all of this. you can see the cac in france sup, and germany, dax up one

percent, and ftse up by one and a quarter percent. you see the market is picking up a lot of the ground that it lost yesterday. yesterday, the dow was down by one hundred fifty-eight points, and now it's gaining. s&p futures up by fifteen, and nasdaq up by thirty-eight. ministers gather in vienna tomorrow, and reuters reported that saudi arabia proposes the cartel cut output at one million barrels a day next year. the kingdom rejected calls despite low oil prices to hold on to the market share. wti this morning above forty dollars, a gain of one point seven percent. janet hill is testifying before the joint economic committee this morning. yesterday, she told the economic club of washington an interest rate hike is proof of the economy's recovery. >> okay. new developments overnight following the deadly rampage in

san bernardino, california yesterday, leaving fourteen dead and seventeen wounded. we have the latest. good morning, jane. >> reporter: hi, andrew. sixteen dead including the two suspected gunmen. we called the police department coroner overnight to see if they retrieved the body inside the regional center where this took place a block up the street from me. this is close as they let us. last night, they had not gotten to the point yet because the bomb squad was neutralizing what appeared to be a bag with explosive devices that suspects left behind. you are looking at a photo of twenty-seven yard sian from associate media, this, is him according to his brother-in-law. he was at a holiday party here with his coworkers, then left, perhaps after an argument before returning with his wife or partner, and they have a young

daughter, she is the mystery woman. we know nothing about her. both were killed in a shootout with twenty one police officers after police investigated the home where they believe the two lived. they saw an suv speed off. both had two assault rifles and two high powered handguns. what was the motive? workplace violence? terrorism? we don't know. police are not ruling anything in or out. going through the house overnight, still an active crime scene, coworkers tell the "l.a. times" there was no sign he was fanatical in any way, and his brother-in-law was at a loss for words. >> i just cannot express how sad i am for what happened today. i mean, i -- sympathies to those who lost their live, and very sad that people lost their life, and there's victims out there. i wish speedy recovery to them,

and, again, i'm in shock something like this could happen. i have no idea. i have no idea why would he do that? why would he do something like this? i have absolutely no idea. i'm in shock myself. >> reporter: we do not have any ids yet on any of the dead victim, but witnesses describe just chaos inside, that two people come in dressed in some sort of clothing to disguise their appearances, masks, guns blazing, everyone hits the ground, and then things are very quiet for about five minutes before the doors burst open again filled with police, but, again, we are learning more about the u.s.-born citizen from illinois, pakistani patients, went to school here, living the american dream. we do not know really anything about this woman yet. who instigated this?

who was the leader in this? how did they coordinate? what got them to the point. police say it was planned and did not get homad, go home, get rifles, and take. there was planning involved. we hope for more information later in a briefing today for a motive. one other thing. i mean, we got reporters from all over the world now descending into the area. there was a reporter from france, reporters from japan. you see all the morning crews there. this is where police have been coming to brief us, and at some point later today, this morning, we'll get more information to bring to you guys. back to you. >> all right, thank you very much, jane wells on location. joining us right now,s former director of the central intelligence agency, and director, you heard all the same information we heard. what do you think about what most likely happened and what worries you the most? >> well, it's very early, all the footnotes and cautionary notes, but, obviously, this was

preplans because of the reports, and a neighbor saw something suspicious but did not let anyone know because they were worried they look like they were profiling someone. well, here's the case in which political correctness is not only stupid, but turned out to be really dangerous, but got fourteen people kill. then, also, somebody on the good side of helping find these people called in with a tip that they, the police should go to an address in redlands, california nearby, they did, and according to the press stories this morning, that began the gunfight and so forth that produced what happened. i think that's really -- people talk about workplace violence, but presumably that means you just kind of go crazy with no preparation or whatever. it was applied to the major in

fort hood, texas who killed thirteen of his soldiers, not likely that he was just on the spur of the moment, deciding into something, and they called it political correctness, and none of the people killed got compensated or their right compensations that they have a right to, and so yet another case in which political correctness has kept justice from being dopne. >> this raises all kinds of concerns if this is, indeed, the first home grown terrorist activity seen in the united states. i mean, that makes it much more complicated from the law enforcement perspective of trying to prevent things from happening. what tools do we have, what are we doing, and what should we be doing? >> well, listen to the people who say, if you see something,

say something. that's a much better guide than being politically correct. i think it's tough because if given their names of these killers are from the middle east, are from one -- apparently visited saudi arabia, picked up the woman that he may have marry ed or had as a companiocompanio have to start working closely, all of us, with real moderate muslims of whom there are a great many in the united states to make sure they are helping when somebody starts acting crazy, we can all of good americans, whether jewish, christian, atheist, muslim, whatever they are, need to work together. this business of not talking about something is deadly. >> we just heard, though, we heard the comments from his

brother-in-law who said he was shocked. >> yeah. >> this is not something even family members picked up on before hand. >> that's true in a lot of the cases. people hide their motives and change overtime, but that just means that you're not going to catch everybody, but you got to level with people about what's going on. you can't pretend it's not happening over never use words like jihad and so on. >> is there a way that law enforcement agencies would be able to track this? how do you feel with what we're able to do just in terms of what you watch, what you're able to intercept at this point? >> the best guide would be real, and i'm emphasizing real moderate muslims who can tell you, can tell the police if there has been some visiting preacher in the mosque who exhorted everyone to jihad or whatever. we real moderate muslims are who

we need to work with most closely. not owl terrorism is originated with muslims, but a lot of the attacks around the world, paris and otherwise, are and we have to level with that, call it straight, and work with the muslim community particularly and that major part of it that wants to help and wants to be good americans. >> are we less safe than we were three weeks ago before paris happened, and i guess i ask that because did these sort of attacks bring up copycat attacks? >> yes, i think they bring up copy cat attacks, and we are less safe because of isis, and isis has an idea reaching around the world, terrorizing, and whether or not this was isis or some other organization, it did not appear to be a spur of the moment impulse given the amount

of prior planning going into it, so, yes, i -- i mean, we have to deal with isis both in the middle east and here. we can't just do one. we can't just bomb over there and think that's going to solve the problem. we can't just do better job of law enforcement here. we've got to deal with isis both abroad and here at home. >> director, i know it's early, but appreciate you joining us for insight this morning. >> my pleasure. >> okay. coming up, we're going to get a read on the markets, approximately forty billion under manager, and raymond james buying deutsche bank private client division, and paul riley is joining us, and the ecb making an announcement, a move on interest rates and additional easing measures? talking about all of that when "squawk box" returns. ideas are scary.

they come into this world ugly and messy. ideas are frightening because they threaten what is known. they are the natural born enemy of the way things are. yes, ideas are scary, and messy and fragile. but under the proper care, they become something beautiful.

welcome back to "squawk box." futures higher, rebounding from yesterday. up more last time we checked. we lost yes, but gave back one hundred twenty three today, whether or not janet yellen's comments yesterday in being

maybe more hawkish, whether that's helping this morning, i don't know. yields are inching up after the fed chair yellen signalled conditions seemed to be in place for a rate hike at next week's fomc meeting, and bill irving is joining us now. it's amazing, bill, because we're all children, and, you know, the last time they thought about raising it, it was not in the fed funds market. we were not prepared enough. we were not prepared enough, so now they've done it. we get it. by the way, you're a portfolio manager at fidelity investment, which managing about forty billion in assets, but we're prepared. it's in the market now, is it not? >> well, my experience several years managing money is thanks are rarely fully priced in. i don't know how the market's going to react. i guecon -- i guess she will ra,

but the open question is, can she convince the market that this is not the start of a steady rate cycle? there are interesting cross currents there. on the one hand, i would say the fed already started tightening monetary policy two and a half years ago with the taper tantrum, which tightened financial conditions, raised the value of the dollar, hurt the manufacturing sector. you know, we had the ism manufacturing on monday. it was not a pretty number. inflation's running well below target. are the conditions where it makes sense to raise rates? there's interesting cross currents. yes, they raise rates with high probability. should they raise rates? interesting cross currents. >> you're talking your book. you got all the books and other the months. when you say they are worried it might be the beginning of something that moves us higher

in a staep estained way, if we eight, we're back at two percent at some point. that's the end of the world? there's a difference between a sustained increase to what is a relatively low historical fed funds rate of two percent. that's not going to kill anyone, a sustained move to six percent? you're going to lose all your clients? >> well, i think there is an important distinction with what happens to the policy rate in front of the yield curve and longer term rates. i don't think anybody expects a ten year on longer rates moves as much as the feds fund rate might move. in that sense, i don't think that the start of this hike cycle means that, for instance, mortgage rates are going to rise a lot. i think the housing market will sustain, will take this quite in stride, and we'll continue to be supported by continuing gradual

loosening of lending standards, modest increases in home prices, or, sorry, mortgage rates, and, you know, continued income and employment gains allowing more people to buy a house. >> i'm worried. you're not worried about a flattening yield curve? citi talked about a recession, and others are talking about it beg given manufacturing numbers coming out recently. you want the long end to stay low even if they go up? >> well, it's not whether i want it to stay low, but i think first of all, that's what is priced into the market if you look at forward rates, they suggest the yield curve is going to flatten as the fed raises rates. that's consistent with what's happened in historical previous tightening cycles. i just think that is a matter of course that what typically happens in a tightening cycle.

it's not what i'm worried about, but the likely outcome. look at inflation expectations, they are still well below the fed's inflation goal of two percent. look at break evens or even survey based measures of inflation. there's potential for the yield curves to steepen if those inflation expectations move closer to target. >> don't you talk to any of your equity compatriots up there? there might be asset inflation built in the system at this point. >> there could be a little bit of asset inflation, but i'm not sure what you mean. i guess my point of view would be very accommodative monetary policy has certainly been supportive of risk assets including equities and probably home prices as well. >> yeah. >> but i think that's part of the fed's playbook. >> do you do mostly the fannie

mae stuff or fixed income? >> so i'm involved with the diversified mortgage funds investing in both fannie, freddy, jenny loans, private label mortgages, and so forth. >> what looks good to you know? above par because of the higher yield, or looking for total return with things at discount? anything that looks good with yye yields down? >> yes, there are things that look good. i would say mortgage backed security -- government related mortgage backed securities look pretty expensive at this point. i mean, some of them, actually, a lot of them, fifteen year mortgages, if you account for option costs, customers can prepay if rates fall and they want to refinance, if you take

out the option cost, they have yields through treasuries, more expensive in treasuries in many cases. those we try to stay away from the expensive ones, on the other hand, some of the mortgage backed securities offer spreads thirty points over treasuries which is ho hum, go to the nonagency space for wider spreads there. we are seeing opportunities in commercial mortgage backed securities. some of the legacy mortgage backed securities from before the crisis, you know, picking through the rubble there. there are opportunities. some of the corners of the markets, less liquid corners of the market there are opportunities there where you can pick up, for instance, floating rate securities that offer spreads over libor. shouldn't have a lot of interest rate sensitivity. >> you related to the guy who

wrote that hotel new hampshire? >> no, not related. not related. >> you don't know. an ancestry.com. you live in new hampshire? >> no, i live in massachusetts. in the boston area. >> all right. what's the feeling? who wins the primary up there? can you tell me? >> you know, we keep an eye on political markets and try to figure out how that's going to affect, you know, the markets, and i think it's going to be an interesti ining race. i'm not expressing a view on that. >> all right. tried to throw curve balls. you handled it. good job. thanks. this morning, the big movers, list of stocks to watch is next including possible tax issues in europe for mcdonald's. we'll be right back.

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welcome back, everybody, stocks to watch this morning. pvh earnings beat the street dr driven by businesses, but the cost cites the dollar, a decline in international tourists and softness in traffic trends. mcdonald's is the fourth u.s.

company under scrutiny. still, the sock is up by half a percent today. dyax acquired by shire, and the shares are popping after the company announced the early determination of an antitrust waiting period. the stock up over twelve percent. when we come back this morning, breaking jobs news. the challenging report on november layoffs is minutes away, and raymond james announced they are buying the private client services division of deutsche bank. "squawk box" will be right back. wallapop makes it simple to sell anything!

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folks, we have news just in from europe. belgium authorities say they arrested two people, a french national and a belgium national in connection with the paris attacks. the french national was arrested at the airport while boarding a plane to morocco.

we are awaiting further details on this and will keep you up to date on further information. breaking news on layoffs from challenger gray and christm christmas. the number of planned layoffs fell to the lowest level to thirty thousand, and more than a quarter million job cuts announced by u.s. base firms, and majority of cuts in november were due to restructuring followed by business closings and cost cuttings. a broader snapshot of the job cuts year to date, the industries with the most layoffs are energy and government followed by retail, and the states with the most layoffs this year, texas and california, follow by washington, d.c. that's, well, maybe that's to be expect. we'll get more on the jobs data this morning with weekly jobs claim, and tomorrow, of course, the november employment report. turning back to the top story, the deadly rampage in california, focusing on safety

issues so-called soft targets. we are in maryland. good normorning. >> reporter: good morning, guys, soft targets, millions of possible attack sites, and there's no way to guard all of those sites. there's just not enough security guards, not enough resources in the country, and americans would not want to live that way. you know, when you talk to authorities about what happened yesterday in california, they say there's no known motive at this point. the possibilities include some kind of workplace violence or possible terrorist attack, a terrorist motive here. in both cases, the authorities say if somebody shows up at your workplace or venue with a machine gun and starts firing, there's just not that much people can do to defend against that, but there are steps that people can take in advance, and in the case of workplace shooters, they talk about the so-called psychological path to violence as somebody with a disgruntled ideology or a problem with people in their

workplace goes on that path of violence, makes the decision, there are steps along the way, usually threats made that make them an obvious person that people ought to focus on early on. in terms of terrorist attacks, of course, there's a lot of steps terrorists take to scope out the target, to plan the attack, and those are the opportunities to stop these kinds of attacks, guys, not once the shooting started or the shooters arriving at the scene. in terms of what to do, though, if this happens at your workplace, they say, simply two factors, speed and distance. get as far away as quickly as you can from the shooters, don't duck and weave or any other action, just get away as quickly as you can, guys. that's the grim reality of the situations that many americans are finding themselves in more and more these days. >> it's tough because you obviously look at your coworkers, let's all get out, i mean, i don't know. you can't just turn your back and run from every single person

you're with. you know, and then you get out and everybody else goes, and i don't know. it's a tough one. >> reporter: one of the things they saw, joe -- go ahead. >> i was going to say we have woolsy on, and he's not director anymore, but he was not afraid to go to the notion that we're just too afraid to do any type of profiling whatsoever. i can just tell you, we know that in israel, they had success, and they are not shy about admitting they are going to consider every possible clue or anything that might predispose something, but it's a fine line between profiling and, you know, a lot of innocent people will be profiled that shouldn't be profiled, but then you wonder if this were more common, what the hell are we supposed to do? >> reporter: one of the things that security guards in israel do outside of soft targets, i'm told, is sort of very in a friendly way, but aggressive

way, they patrol outside the venue on the street leading up to the area. they talk to people. they engage with people. they ask questions. how are you doing today? what's beginnigoing on? what brings you to the event today? that helps security see who is nervous, who doesn't have a good reason for being there, who can't give a good answer or a friendly smile. those are the people they want to hone in on the few feel outside a potential attack side. that aggressive interaction with people in a friendly, nonprofiling way is one thing they do to spot somebody with an evil intention before they get the opportunity to carry out the attack, get to them, twenty to thirty feet before they are prepared to act. that way you intervene before this happens. once it starts, it's just very, very difficult, as we saw yesterday, for authorities to do anything about it while the attack is in place. the key is, finding the people with the intent beforehand that doesn't necessarily mean racial

or religious profiling, but it looks for people with that kind could be. >> things change quickly. i'm thinking about nsa issues. i have not seen rand paul around after paris. he's not been making that point about snowden, a hero, any of that. >> reporter: well, there was a debate of end kripcryption, and authorities said in several instances the people involved in the terrorist attacks might have used encryptive devices, and silicon valley companies are defending their use of unbreakable encryption saying, look, we can't add back doors that allows bad guys more access into our computers and systems. >> all right. thank you. >> reporter: you bet. turning back to business news, a deal this morning, raymond james acquiring the private client services division of deutsche bank. we are joined now in a cnbc

exclusive interview. paul, thank you for being here today. >> thank you for inviting me. >> what about the deal makes sense? what led you down the path? >> the good cultural heritage. it goes to the conservative long term client focus, our number one criteria. secondly, deutsche bank because of european pay regulation like a lot of the other european banks really had difficult operating this type of business, and they wanted a good home for the employees. there was a good match. for us, we said our focus is to grow in the northeast and in the west, and this brand is strong and most of the advisers are in the northeast area. >> any exposure or just u.s.? >> it is the u.s. business. >> okay. there were questions, people had been hearing about a potential for a deal like this back in october, and i think this a conference call at that point, you pointed out, and said, look, any deals you do, you look for fifteen percent return in equ y

equity. is that what you get in the deal? >> depends with we can keep the advisers. now, that's pretty aspirational to keep many, but we think the culture's fit, good home for advisers, and if we keep a good percentage, we should have a good shareholder return. >> there is a story in "politico" today looking at the rules. labor department proposal that's going to more tightly regulate investment advice, and there's been real pushback from the industry because a lot of people in the industry think that this is unfairly tarring the hundreds of thousands of financial advisers out there. what do you think about this? >> we have been up front in the hearings, testifying in all of them. it's not good rules for small advisers that takes away the choice, raises the cost, and, you know, the dol cited the examples where there are advisers that don't do the right thing for clients, but the vast majority do, and we don't think it's good regulation for clients, and that's why we've

been opposed to it. >> rules themselves, we have not paid attention to them on this program. what do they do? >> well, they basically take away commissions. they take away certain products. they -- the impact of them, though, raises costs because of the risks that firms have to take by looking at retroactively how products do. it limits what you can really offer to clients. n now, the final regulations, we saw a suggested rule. the dol said they would rewrite them based on comments, but it's a black box until they come out. >> from what i understand about the rules, it limits choice to some degree, but limits choice because the argument is those products are not as successful products or failed products, and so it's better ultimately for the investor if the products were not available, no? >> well, that's the argument. some products have too much commission, so we, twenty years ago, limited commissions received on annuities. we trying to, in as many firms, take out the conflicts. you can always cite examples

where it does not work, but there's plenty of examples. you want to buy apple stock in the retirement account for twenty years, why charge a fee every year. >> what's the maximum you get on annuities now? >> what's the maximum? i don't know what the loads are, but -- >> user fee eight percent, just six percent? >> we are lower than that. >> lower than three percent? >> i don't know what the exact number is. >> you talked about the deutsche bank brand strong, but you're not keeping the brand, right? >> we use it initially. >> you are? >> we allow employee advisers to self-brand with our bran. we have an independent channel and plan to use in the area, and we're committed to keeping the brand, alex brown, a division at raymond james, forever is a long time, but we'll see what the market says about the brand. >> it's been difficult to figure out whatt eto do as an investor whereas three years before, but what do you do these days?

>> hold the course, be divers y diversified. hold the stocks. slow movement, but if interest rates go up, we wait a long time, the fixed instrument types of things are more risky. stay diversified. as a whole, clients have held out pretty well with their disblidi disciplin disciplines. >> paul, thank you, congrats on the deal. >> thank you. more details on the story told you minutes ago. belgium authorities arrested two more in the french attacks, they happened sunday, but now announced. there's eight suspects linked to paris attacks or in brussels behind bars. the latest on ecb rates minutes away, movement on interest rates as well as expansion of the quantitative easing program. look at european equities at this hour. we're back in a moment. thirty

ecb releasing sbrae ining is in minutes. steve? >> reporter: this is for folks who want to play the draghi deliver game at home. write down, cut, increase, extend.

those are the three things we look for. cutting the deposit rate, oh, i've seen numbers like fourteen basis points, making it more negative. increase amount of monthly purchases, numbers from eight to fifteen billion euros, increasing the amount of quantitative easing, and, finally, extend, extend the time of the purchases or the minimum time they may purchase from september, but extend the collateral they would purchase. there's been all sorts of discussion there. so a lot is being looked for from mario draghi. pay attention to the forecast coming out, and it's just now -- they cut the deposit rate tto to .33, and less than what the market looked for, the averages out there, but they did go from

minus.22 so we are looking for three things today, only one of which is expected to come out as a rate decision, and they delivered on that, perhaps a touch less than the market expected with a ten basis point decline in the deposit rate. we'll look for whether or not they increase the amount of purchases and whether or not they extend the minimum purchase time and type of collateral in the press conference. andrew? >> thank you, steve. for more, let's bring in our managing director at ek asset manager, cnbc contributor, of course, and you go directly to the iphone. what did you look at? >> the euro, rallying, which i thought it might. he didn't throw everything but the kitchen sink into the decision, but it was a very m moderate rate cut. understand the german bunds are trading negative, and he's not under the level. it's going to be difficult to see how the ecb is going to -- >> is that a mistake in your

mind? >> here's the thing, though. i think all the talk about inflation, all the talk about rates is for growth. the irony of life right now is that while the ecb is more coopera accommodative using qes, pmi is at the best level since 2009. we're on the way towards way rate hike. i think they feel at this point they have done enough to accommodate. there's growth in the eurozone. they don't need to throw everything in, but there's so much front running ahead of this. people anticipated weakness into this that a natural shortcoming squeeze is very much in play, i think. >> others think you hit party this week. >> that's why i don't think we hit it because everybody thinks so, and as a matter of fact, we saw now is the exact opposite of it, short covering in the euro. i will say this, i don't normally because i'm not a big macro guy, but the one idea

that's screaming opportunity for me right now is a paris trade of short dow, long dax next year. ultimately, this is very, very good for european stocks because the euro will be low, and if yellen raises rates, you see the dollar strengthen. >> hedge that, though, if you look at dollar strength, i mean, opposed to euro weakness? >> maybe, but i don't think the dollar strength -- i think the out performance in european stocks will be greater than whatever dollar strength you get. i just think it's an interesting tradement i don't think stocks go higher. >> i have to pause. steve has more information for us. >> no, i want you to look at the ten year on the bund right there. that is also moving right along with the euro. i have a question for boris as to whether or not we should expect now at the conference call, press conference for the

mario draghi to increase there as well. increase purchases, extending it, and it strikes me this got away from draghi. why go ahead and increase when the fed went the other way? it's not for him, but benefitted what he tried to do, maybe he got out over his skis with his committee here? >> no, he didn't. fed did a lot of heavy lifting for him. that's right, steve. >> right. >> there's a possibility to extend. he wants the option to have more qe if necessary going forward, but as you said, i think he -- you know, the ecb's a leaky central bank, and yesterday, there were leaks saying they would not downgrade economic forecasts, meaning that we're really not seeing downward surprises from the euro so far. there's short coverings if they do not do more than what we've already seen. >> okay. >> okay. >> we are leaving the conversation there, boris, thank you. >> thanks, guys. >> nice to see you. we'll have, of course, more on the story later this morning when draghi begins the news

conference live here on "squawk box." up next, this morning's big movers, list of stocks to watch after a quick break. back in a moment.

welcome back, a developing story this morning, the deadly rampage in southern california, jay gray joins us this morning from san bernardino with the latest. jay? >> reporter: good morning, andrew. the investigation cometing here right now. slowed a bit overnight because

three home made explosive devices resembling pipe bombs were found at the scene here, just behind me. they had to disable those using robo robots. now inside, though, the investigation is continuing. really in three different areas. that scene, the roadway, where the police confront the and eventually killed the suspects, and their home in redlands where police and federal agents are going through trying to find anything they can that may help them piece together how and why all of this happened. there's an investigation that officers say is going to take some time here. they predict that it will be weeks, if not a month before they begin to piece together some of that information in. >> okay. thank you, to nbc's jay gray. appreciate it. we hope -- i imagine we'll come back to hem, but i hope there's not another story. >> coming up, a live report again from san bernardino, bringing you the latest

information on the suspects who were killed in the gun battle with police late yesterday, and later, our market story of the morning, the ecb president giving a news conference expected to announce additional quantitative easing measures to boost europe's economy. that's interesting. tomorrow, you know what it is, employment friday. we'll be right back.

big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern. at ally bank no branches equals great rates. it's a fact. kind of like ordering wine equals pretending to know wine. pinot noir, which means peanut of the night.

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fourteen people gunned down in san bernardino. what was the motive? is there a link to terror? can attacks be prevented? tackling that with the latest from the saep straight ahead. watching the ecb, draghi's news conference minutes away and what it means for the money. breaking news on jobs this hour, the latest on the drama, and more pain from the nation's retailers. the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york, this is "squawk box." welcome back to "squawk box" here on cnbc, first in business worldwide. i'm becky quick with joe and andrew, and we are less than ninety minutes from the opening

bell on wall street. futures looking strong, but, of course, it's off the highest levels of the morning. you can see at this point, we are still up, but by ninety points and this comes after theering cb. >> what do you want? do you want more qe over there so that asset prices go up, or is that weakening the -- >> that strengthens the dollar. that hurts us. >> what do we want to hear from them? >> i think bulls would like to see less from the ecb. >> really? >> i think so. >> i don't know. >> they like wherever it is -- >> you heard from boris he's looking at stock gains in europe and frankfurt in particular. >> wherever free money is flowing, they want more. they want more punch bowl. >> if you're involved in the american business, you don't want a stronger dollar more than what we already got. >> i don't know what we're going to hear. i don't know which way.

>> call multinational ceo. based in the united states. >> they want to hear less. >> here's the stories investigators talk about this morning. the european central bank set to announce more measures to help the european economy at its news conference, set to begin in thirty minutes, unchanged in the meeting, but cut the deposit rate, and yellen testifying on the state of u.s. economy before the joint economic committee. that's beginning at ten eastern time, and we have several economic reports on tap, weekly jobless claims at the bottom of the hour, and ism nonmanufacturing index at ten eastern with october factory orders, joe? california police say the couple suspected of shooting dead fourteen people appeared to have planned the attack -- that's for sure -- jane wells is in san bernardino now with more.

hi, jane. >> reporter: there's assault weapons, handguns, and it appears they may have been legally purchased. we hope to get more information, though, on fourteen victims who are dead. we don't know yet if the bodies have been removed from the facility up the street. police have not. able to do that as of last night because they were busy neutralizing what appeared to be explosive devices left behind by the suspects. here's a live picture of san bernardino, there are three active crime scenes investigated. the original crime scene where fourteen were killed. suv, the home where they lived, which police are looking into over the night. we only have a few details on one of the suspects, and we have a picture of him from social media that confirmed by his brother-in-law this is the twenty-eight-year-old syed

farook, a u.s. citizen, he was at the holiday party yesterday, worked for the company for five years, and police said he was at the party and left before the shooting. >> he was at the party. he did leave the party early under some circumstances that were described as angry or something of that nature. that is the information that we were following up on when we encountered him back near this residence in redlands which led to the pursuit and the officer involved shooting, and as we have now confirmed, he's one of the deceased. >> reporter: all right. what you will see now is where the gun battle between the two suspects and police took place. the other suspect is a twenty-seven-year-old malik. we know nothing about her. may have met her in saudi arabia. nay have a child left with the grandmother, they said they had

a doctor's appointment. according to the l.a. times, this is what we have, police have not said, but the response on the ground after it happened was massivement here's the scanner chatter first from the original shooting location and then the shootout with the suv. >> we have at least twenty victims. we can see one guy down. one guy in the back of the car for the update. we have the suspect vehicle stopped. we can go ahead and extract. stand by. wait for the bear cat. >> right now, we have one down outside the car, one down inside the car. from what we understand, one's on the run. >> reporter: that one on the run may not be related to the case. it appears there were only two suspects at this point. we hope to get briefed by police later again, fourteep dead, we do not have confirmation of any names yet, and we don't know if the bodies have been removed yet, seventeen wounded including

a police officer. we'll wait for more information, again, all night long, the fbi's been saying it could be terrorism, maybe not. we hope to get more information on that this morning. guys, back to you. >> okay, thank you for that, jane, and here with us is a security consultant, former new york state senator who wrote homeland security laws for the state, and what's the start? your perspective? it's hard to speculate. what do you think is going on here? >> the first rule is you let the investigation take you where it takes you. the key mistake you make is to presume that you're going to go in one direction or not. look at everything. you have active crime scenes. there's a lot of information to be taken, and until we're in the guy's house, look at where he's been looking on the net, who he talked to, where he traveled, how and why did he get the guns? you won't know for sure, however, in this point in time, given all the things we have, the fact they had tactical vests, they went to the party, went home, you know, had these weapons and then they put

explosive devices in here, you know, it's like mumbai, terrorism, self-radicalized. what we refer to is inspired, but not necessarily instructed. you go, i'm going to go and join the fight. >> but that, then, begs to question, we're treating it as a one off situation here in the united states at the moment, and should we be? and, by the way, there's. all sorts of other mass shootings in the country, but not related to terrorism. >> right. what's isis do? a worldwide advertising company. they are seeking to recruit folks in western societies. go, get involved. think about what a force multipli multiplier it is for them where they don't set up a cell like in paris, get people organized. they say to somebody, get up off the couch with a gun, go and commit violence. >> that's more difficult to track and to try to prevent. >> correct. that's actually much larger problem for security and law enforcement. now, usually, the trade craft

associated with those types of attacks is much, much less than a hard and sell that's been working and preoperational surveil lapse, but nonetheless, it's incredibly deadly, and the biggest thing is where next? people say, well, why this place? >> right. >> the arguments could be it's app opportunity. it was a target of opportunity. >> i think one of the reasons why there's at least some skepticism around this being -- unless we call it domestic terrorism, clearly, but something connected to something larger going on with isis or something else, is it the location seemed so different than what people would have normally would have been something that people would have gone after. >> the default for a lot of people is that this is like an al qaeda inspired, isis inspired attack, and this is part of some grand scheme. it could just be the fact that the narrative is, make people afraid. spread the fear. go to places where americans wouldn't expect you to attack. attack a soft target. you know, anywhere.

that's always been a thing we wondered about. can you hit a school, all these things? it's not happened, thank god. now this raises the question, certainly, are we entering into a new phase? certainly, paris signalled a new phase for europe. >> therefore, the question begs, what do you do about it? if it is terrorism, there's one whole conversation that has to happen, and if it's not, there's still another conversation that's already begun to some degree about gun control, about mental health and other issues. >> first of all, what we don't do is we don't panic. you know, we -- i try to tell this all the time. americans in particular have a much better chance, unfortunately, of being hit by a car, or involved in a car accident, getting heart disease. it's important to recognize terrorism is to make you afraid. that should not be the sponge. soft targets are a concern. there is a baseline of security we can do about awareness, intelligence, you know, joint terrorism task force is involved in this now. we're going to find out what

they knew beforehand, if anything, what was in the community. you know, it is a different world tea, but it's not about eliminating risk, but managing it. we live with risk all the time. that's really the kind of mind set we need to get to. >> where do you land on gun control debates? >> so when i was in the new york state senate, i was one of the sponsors of the assault weapon bill marrying what the feds had done. i always believed you don't need to have assault weapons here. the part of the debate, though, that i think is lost, if this is, in fact, turns out to be terrorism, is that these bad gu guys, they don't care. pipe bombs are illegal. what do you do there? >> right. >> laws wouldn't stop it. if i commit mass murder, i'm not going to stop and say, oh, you make it harder to get guns, but look what happened in france. france, it's hard to get weapons there. it didn't stop them. it's a predictable political response because you got to

respond to something, but whether or not if it's the solution, nobody believes it's thee solution. >> although president obama made a point where he talked about people who are on the no-fly list can get access to guns. >> you know, that has always. a big debate. my point in that is, that no-fly list has really need eed an overhaul for years. it's one data point, by the way. also, if you're on that list, and them you get stopped, and you have a gun, now what happens? are you arrested? you're not convicted of anything. once you pull that thread; there's other issues to be addressed before that is again a solution. >> michael, thank you for joining us this morning. appreciate it. >> thanks for having me. when we come back, an economics professor and former chairman of the white house counsel of economic advisers joins us. don't forget, draghi speaks in a matter of minutes bringing you the news conference as soon as it gets started. by the way, check out the euro

today after what we heard from the ecb. you'll see that at this point it's not the reaction some people had been anticipating. we'll see if it sticks after draghi talks. stick around.

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look ag the future, green arro arrows, things looking up, not as high as twenty minutes ago. nasdaq up twenty-one, and s&p up eight points. >> the euro's rallying, why isn't the market adding to the gains? >> you think? >> this goes to the -- they want more punch! leave the punch bowls open. what's wti doing? >> i don't know. >> if it's going up, that's helping -- after an initial pop, it's now come back down. >> fed chair janet yellen testifying before the joint economic committee, and the professor of economics and public affairs at princeton

university and former council of economic advisers chair under president obama and steve leisman joining us from cnbc headquarters. allen, you're at princeton. you're probably not all like your associates, but i don't know at this point, where were you on whether the fed should go up at this point? should we stay at zero longer just to make sure more people are employed or is it time to move? >> i think we're getting very close to full employment. i think it would be prudent for monetary policy. >> you were early and born out with the studies that there was not as much flak as janet yelp thought, right? do you look back saying that was good work? >> yes, sometimes you get them right. >> and you think we know enough now to say unequivocally that was the right analysis? leisman's here. i'll ask him. where are they, you know, what

is the body collective say about whether allen was right? >> we didn't know yesterday that janet yellen was going to talk specifically about the issue. she did, and i want to play for you the sound for janet yesterday, joe, if you don't mine. listen to what the chair said, speaking directly, and really dissing allen. listen. >> oh, no. >> i believe that a significant number of individuals now classified as out of the labor force would find and accept jobs in an even stronger labor market. >> okay. she didn't mention him right there, but that's -- >> i heard it. >> you heard it? i heard it. exactly. she said he was wrong. >> yeah. >> and now, al he few charts, j. >> yeah in. >> first, the odds of i forget which is first, but if you -- right -- drop out, what's the odds? rising, but not for those you see there who have been up employed. the jobs dropping out are rising. in other words, if you're

unemployed fifty-three weeks, you move out of the labor force from being unemployed. that's the opposite of what yellen said. it's exactly what he said. we didn't bring you on for a victory lap, but speak to the chart here. >> well, this is what i anticipated. that is the normal cyclical pattern seen in the last recovery as well. as the recovery goes on, long term unemployed gets discouraged and leaves the labor force, and the main difference now is that we just had a much higher share of long term unemployed, and i point out, john williams in the speech yesterday, i thought got it contactually right, president of the san francisco fed, when he said he doesn't anticipate a labor force pretis -- participation rebound. >> he's washed up, beard on the sofa, not in the work force rs but i come forward and say, joe,

here's a half million dollars to come back to work. no matter what the price, they are not coming back? >> no, i wouldn't say no matter what the price, but there's a lot of cross currents. dominant one seems to be that we still have a large number of long term unemployed, and increasingly, they are leaving the labor force still. if you look amount the chance of people rejoining the labor force after they have left, it doesn't tend to rise much as the economy recovers. >> yeah, guys, go to the next chart, odds of dropping back in. let's say you are out of the work force, you can see there it's very flat for those who have been unemployed. it is on the rise. in other words, if you've been out for five weeks, the odds of coming back in are rising, whereas they are very flat if you've been out for a long time. >> well, all of those people are in the labor force. if they are unemployed, they are counted in the labor force. the odds if you're long term unemployed, finding employment, unfortunately, is still quite

low, and once they leave the labor force, not searching for a job, there's very low chance they come back even as the recovery continues. >> leisman, on the coach, do i have premium cable? >> well, i don't know if you can afford it, joe. you got a beard, a bathrobe, down and out. >> do i have netflix? if i have that and premium cable, i'm not coming back. >> i think you lost your membership at the golf club, joe, because you can't afford it anymore for the kids' education. you're done. >> with all this in mind, should we be happy because wages go up? is that the fed behind the curve and we need to be sad? >> there are signs of banks going up. hourly earnings up over the last twelve and a half months, and there are real wages growing,

which i expect given the degree of tightness in the labor market. happy or sad? it's a sign that the economy's recoveri recovering. i think it's unfortunate redidn't do more to keep the long term unployed engaged in the labor force or do more to encourage them to search for a job or provide training in some cases, but we are where we are, and given that, that's a healthy sign the economy's strong enough to start to normalize monetary policy. >> all right. the only thing to fear is fear itself. what -- once people see that we're going up, how high we going? what's the terminal point for where we go? going to two, that's okay, but seven might not be okay. >> you know, joe, i really don't know where it's going. i suspect it's going very slowly, and i think for the next year, monetary policy's still going to be very accommodating for the economy, so once we get past the initial jolt of we're

getting off of zero, we'll see very low real interest rates. >> can we get your take on dr draghi. underdelivered this morning. i think he got boxed in here. with the fed going the other way, likely to hike here, he didn't have to do anything in the differentials going to go in his favor, both in terms of the currency, in terms of interest rates because the fed was moving. does it make sense to you he needs to do more? >> well, he understands the situation in europe much, much better than i do. my impression is that he is concerned about deflation, well below the target, and that's what he's focused on. he was late to qe. i think one of the reasons why our economy's in a stronger position than theirs is because bernanke as chairman of the fed realized that inflation would remain low in that he could continue to use extraordinary

monetary policy to boost the economy, so i think you're right that the fact that we're moving in the opposite direction mean the ecb needs to do less than it otherwise would do, but i don't think that implies that it needs to do nothing. >> steve, what -- what's the market -- you said -- if you characterize draghi, you said he was not as accommodative as some people in the market would like, and they would maybe the target would be up more if he had indicated he was going to do more than what he said, is that what you're saying? we don't care if the dollar goes higher. we want more qe wherever it is? >> i'm not saying that, joe, if that's what you're saying. you asking me? i just think -- >> you said he disappointed in how much he was doing. >> one of the classic cases, joe, you've seen it before, where expectations just get out of control. he mentions something, and them the market took off, and increasingly, in fact, somebody reminded me when he first spoke,

the expectation was for exactly what he did today, which was ten basis points. then he goes ahead and lets the expectations get away from heim looking for fifteen to twenty points on negative side increasingly, and then he delivered the ten, and it's disappointing. the euro rallies, not what he wanted to do. he wants the parity, but it got out of control. he didn't overdeliver as he has in the last few times. >> but hooe's not started talki yet. >> great point. >> the market, what's it doing? >> the dow? >> yeah. >> started at -- >> came back a little bit. earlier it was up seventy, now up eighty. maybe you missed the conversation we had. they want more or less? >> dennis writes about the ill-liquidity in the market now,

going for the euro in a matter of minutes, and that's two hundred basis points that's astounding. >> wow. okay. all right. thank you. you never sent me the admission's guys name down there. [ laughter ] every time you're on, i ask that. >> still young, i thought. >> she is. he is too. i'm still gauging the whole, you know, are there safe zones in princeton? any demonstrations? what's going on down there? you all right down there? >> that's a whole spreparate conversation. >> it is. we said it all week long. we have a safe zone here on set if anyone wants to come in here. >> is he actually at the school? >> i don't know. >> that's right. that's the one they wanted -- >> that's part of the conversation. >> i don't know. >> come on back to talk about that next time. in the meantime, when we come back, can youtube take on netflix and amazon?

the google owned company may be looking to strike deals with studios. details after the break. check out the futures after the ecb rate decision. draghi speaks in minutes. dow up ninety points. we return in a moment.

welcome back to "squawk box." youtube is looking to secure the rights to tv shows and movies to stream on the new youtube red subscription service allowing to build up a catalog of on demand video to rival netflix, hulu, and amazon prime, and instant video. they have begun meeting with movie studios and production companies in recent months. not clear which studios youtube spoke to thus far, but, of course, it's another entrance into the content game. when we come back, jobless claims and ecb president draghi's news conference. we'll be right back. wallapop makes it simple to sell anything!

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welcome back to "squawk box"! rick santelli here live on the floor of the cme with breaking news. initial jobless claims moved up nine thousand, and, listen, we're basically comping the early seventies, everything else is splitting hairs. come on. i think the issue that would change the market place, if i came out here and said it was four hundred thousand, that would move the market.

in the other direction, it's like compression of dynamics that have not changed, gdp is flat at two and a half percent. that's the puzzle. we just need people that twill put pieces together to come up with a prettier picture, and interest rates hovering at two hundred twenty and pressure in interest rates as well. drag draghi's press conference is eagerly awaited. the two year note yield moved all the way down to minus forty so that's a big selloff in europe. back to you. >> all right, rick, thank you very much. we are watching mario draghi who is about to speak. press conference eagerly awaiting what he has to say after the news we got earlier on the rate cut. let's listen in to what mario draghi has to say. >> the vice president and i are very pleased to welcome you to

our press conference. we'll now report on the outcome of today's meeting of the governing council, which was also attended by the commission vice president. based on our regular economic and monetary analysis, we, today, conducted a thorough assessment of the strength and persistence of the factors that are currently slowing the return of the inflation to levels below, but close to two percent in the medium term, and re-examined the degree of mop tear accommodation. as a result, the coup sill took the following decisions in the pursuit of its price stability objective. first, as regards to key ecb interest rates, we decided to lower the interest rate on the deposit facility by ten basis points to minus, and the rate of

the marginal rate facility remains unchanged at their current levels of zero point five percent respectively. second, as regards, no standard monetary policy measures, we decided to extend the asset purchase program. the amount of purchases of sixty billion euros under the program are now intended to run until the end of march, and in any case, until the governing council sees a sustained adjustment in the part of inflati inflation, consistent with its aim of achieving inflation rates below, but close to two percent over the medium term.

third, we decided to rain vest the principle payments on the securities purchased under the asset purchase program as they mature for as long as necessary. this will contribute both to favorable liquidity conditions and an appropriate monetary stance. the technical details will be communicated in realtime. fourth, we decided to include in the public sector purchase program euro denominated market instruments and local garments located in the euro area in the least of assets that are eligible for regular purchases by the respective national central banks. fifth, we decided to continue conducting the main refinancing operations and the three month longer term refinancing

operations as fixed rate, and procedures with full allotment for as long as necessary and at least until the end of the last reser reserve spirit. today's decisions were taken in order to secure a return on inflation rates towards levels that are below, but close to 2% and anchor inflations. the latest projections incorporate the favorable financial market developments following our last monetary policy meeting. they still indicate continued downside risk to the inflation outlook, and slightly weaker inflation dynamics than previously expected. this follows downward revisions in earlier projection exercises.

the persistence of low inflation rates reflects sizable economic slack weighing on domestic price pressures and head winds from the external environment. our new measures will ensure financial conditions and further strengthen the substantial ease and impact of the measures taken since june, which have had significant positive effects on financing conditions, on credit, and on the real economy. today's decisions also reenforce momentum of the euro area's economic recovery and strengthen its resilience against recent global economic shocks. the governing couns will closely monitor the evolution in the outlook of price stability and if warranted, is willing and

able to act by using all the instruments availability within its mandate in order to maintain an appropriate degree of monetary accommodation. in particular, the council recalls that the asset purchase program provides sufficient flexibility in terms of adjusting its size, composition, and duration. will the me now explain the assessment in greater details starting with economic analysis. euro area real gdp increased by point three percent quarter on quarter in the third quarter, following a rise of point four in the previous quarter, most likely on account of the continuing positive contribution from cop consumption alongside more muted exports.

the most recent survey indicators point to an ongoing real gdp growth in the final quarter of the year. looking ahead, we expect economic recovery to proceed. domestic demand should be further supported by our m monetary policy measures and therefore, favorable impact on financial conditions as well as by the earlier progress made with fiscal consolidation and structural reforms. moreover, low oil prices should provide support for households, real disposable income, and corporate accountant, and, therefore, private consumption and investment. in addition, expendtures are likely to increase in support of refugees. however, the economic recovery in the euro area continues to be

dampened by subdued growth prospects in emerging markets and moderate global trade. the necessary balance sheet adjustments in a number of sectors and by the sluggish pace of structural reforms. this outlook is broadly reflected in the december euro system staff macro economic projections for the euro area, which foresee annual real gdp increasing by one point five percent, and 1% in november. the staff projections prospects for real gdp growth are broadly unchanged. the risk to the euro area growth outlook relating particular to the heightened uncertainties

regarding developments in the global economy as well as to broader geopolitical risks. these risks have potential to weigh on global growth and foreign demand for euro area experts and on confidence more widely. according to euro stats estimate, euro area annual inflation was .1%, unchanged from october, but lower than expected. this reflected somewhat weaker price increases in services and industrial goods mainly compensated by a less negative contribution from energy prices. on the basis of the information available in current oil futures prices, annual hicb inflation rates are expected to rise at

the turn of the year, mainly on account of these effects associated with the falling oil prices prices, and in the coming years, inflation rates are seen to peak up further, supported by the previous monetary measures and supplemented by those announced today. by the expected economic recovery and pass through of past declines in the euro exchange rate. the council will closely monitor inflation rates over the period ahead. this broad pattern is also reflected in the december euro system staff macro economic projections for the area which foresee annual hicb inflation t at .1 percent.

in comparison with the september macroeconomic projections, the outlook for hicb inflation has been revised down slightly. turning to the mop tear analysis recent data cop firms solid growth. >> breaking in quick to recap what mario draghi has done and why it looks like the currency market is disappointed here. he did extend the purchase program until march from september. that was expected. he delivered. they did include the debt of regional and local governments in the purchases. that was expected. he did deliver. he announced this new thing, which was reinvesting the proceeds as long as needed. that's the principle -- sorry, the interest they get on the debt that they hold, hadn't seen

commentary expectation on that. where it looks like he did not deliver is increasing the amount of purchases. they were currently doing sixty billion euroowe, and looks like they maintain that level, although, should go up somewhat by reinvestment. look at the euro now, really screaming. remember, we started the day, and now it's really a sharp move. i saw that the u.s. stocks seemed to sell off in sympathy with that. did not see what happened with bonds. that's the area where he did not deliver. >> watching the markets, steve, as you point out, the euro, by the way, the dollar index hit a two week low after those comments, and also take a look at what happened to the european markets. the european markets, if you look at stock markets, gave back all of the gains and then some that we'd seen today. you're looking at the dax down, and cac is up, but worth pointing out all markets were up

higher earlier. again, a lot of impact on equities. >> so say that the jury's not out anymore. so we know what -- we know what the people want, all right. >> well, absolutely. >> steve, supposedly the strong dollar, blah, blah, blah, the market goes from up to down twenty on that. not only that, uh-oh, they are going down when we're going up. that's going to cause all kinds of dislocations. suddenly, they are not going down nearly as much as we thought they were, and we don't know if we're going up. no onemen menwants that. it's always about the easy money, steve. it's about the free lunch. it's about the punch bowl not taken away with the traders, and it's, like, disgusting. >> i don't know who you are angry at? the market? me? the central banks? >> you. >> to me, it was -- me, okay. it's okay. if i can serve that purpose for you, joe -- >> angry at people that think -- that think all they -- it's bad to live on a sugar high forever

or to have, you know, to be injected main lining the crack, the easy money crack. come home to roost. >> coming home to expectations, joe, he let expectations get out of control, and -- >> making the point, steve. he was not easing enough. we wanted a weaker dollar. i thought that would help? >> we do. we do. we do. >> market sold off today. >> i think, joe, we want to get back to the q&a because maybe they clarify how much reinvestment here is going to be adding to the monthly purchases. it's a matter of a central bank talking to the markets. the u.s. fed does a much better job than the ecb does. >> fiscal policies should support the economic recovery while remaining in compliance with the fiscal rules of the european union. full and consistent implementation of this stability and growth fact is crucial for confidence in our fiscal frame

work. at the same time, all countries should strive for a more growth friendly fiscal consolidation. for a more growth friendly composition of fiscal policies. we are now at your disposal for questions. thank you. >> there's a microphone in the front row. brian blackstone with the wall street journal. with the deposit cut today, are you at the lower bound, or is there more room to cut that rate, and my second question is, it seems like what you've done is a little bit on the low end of the range of what the financial markets had expected in terms of your stimulus pack

capti package today. why not do more given how much you warned about the risks of low inflation? why not raise the monthly purchase amount or cut the deposit rate more? thank you. >> thank you. well, let me say, let me tell you how we came to take the decisions we've taken. in the last governing council, we decided to assess whether the degree of monetary accommodation that we had achieved until then was adequate or needed to be recalibrated. we -- this size showed three conclusions. the first is that we are witnessing a continuing recovery, gradual, but continued recovery driven mostly, as i said a minute ago, by consumption. the growth rates in this year

have been .3 in the past three quarters. it's been driven by monetary policy, and second, less fiscal, less head winds to the fiscal policy, and third, very importantly, are the oil prices, of course, which are supporting real disposable income. also, our policies are affected in the inflation front because if you observe, especially in the last month, we observe that the -- for one -- i won't say the first time, but after a long time, the correlation between the measures and oil prices decreased or just disappeared, so overall, the conclusion about our policies was that they have been affected.

let me also, while i can dwell on that later, showing you figures how effective these policies have been in improving the credit conditions and improving the financial markets' conditions, and in supporting what we have seen so far happen in the real economy. the question, then was, have they been effective enough for us to be confident that we would reach our objectives about inflation within the horizon that we have planned? the answer we gave ourselves was not enough. we have to do more. let me say this very clearly. we are doing more because it works. not because it fails.

we want to consolidate something that's been a success. and why were we -- why did we come to this to consolidate sog that's been a success. why did we come to this conclusion? we said the last macroeconomic projections implied a downward revision. this downward revision comes after long series of downward revisions in inflation. also, the projections contained the fult of our policy. they had a downward revision. we had a date of inflation, which was likely lower than expected. so for a variety of reasons, we decided our monetary accommodation needed to be

recalibrated so as to have a faster conversion so our inflation objective to 2017 horizon. now, what did we do? we took several decisions just illustrated. one of them comes pretty new, namely the reinvestment of principal payments. that is quite important he measures. it says we intend to maintain the degree of monetary accommodation and favorable accommodations for the liquidity for longer horizon than we have been saying so far. which means the conditions of a quite abundant liquidity and high access liquidity will continue for a long, long time.

we shouldn't discount another fact that we have not been discussing so far, that there are a series of what we call autonomous factors coming into play in the years ahead which tend to reduce the excess liquidity. so there are several of these. one is the repayment of the tall tro. another one is the demand for bank notes and the bonds purchased under the s&p program that may dum. we counter act this reduction and we may do more than offset these reductions, which means that the conditions for this liquidity will ensure that the bonds we purchased and we are purchasing and will be purchasing will stay on our balance sheet for a long time. these are very significant

decisions. we are confident that these decisions, actually, are adequate to achieve our objectives. we decided this cut in deposit rate, we think it is adequate. >> leanna trig, market news. you explained your reasons. financial markets appear to be disappointed. what is the reason there? do you think that something went wrong on your communication in the run-up to the decision? did you perhaps overestimate your ability to convince fellow policymakers to decide something more aggressive or do financial markets not understand yet how pure full these measures

actually are? >> the second question, could you perhaps give us an idea about the discussion on the governing council and whether the decision today or all the five decisions were unanimous. thank you. >> no. they were not unanimous. it was a very large majority in favor of this package, very large. on the first, no, i don't think so. i done think our communication was wrong. i think these measures need time to be fully appreciated. we'll see. >> mr. president, you have said many times and today too that

q.e. is working better than expected. at the same time, you have also said that inflation is getting back to where you want it to be, slower than you thought. so how do these two things square up? is this because the euro economy works differently than you thought? the second question is, over here in frankfort, last month, you said that you want to bring inflation back to close to 2%, just under 2%. is this -- can this be read as a sign that you wouldle tolerate some overshoot for too low inflation for too long? thank you very much. >> the answer to the second question is that our inflation rate ought to go to close to 2% but below 2% over the median

term. once they take into account the fact that it was well below 2% for a long time. on the second point, we do say and we just said that our q.e. has been quite effective. let me give you a few figures. the market-based financing conditions showed a fairly significant success of our policies. common bond yields failed by about 120 basis points between june, 2014 and now. we have the same decline in yields on bonds issued by firms, by banks. the declines and cuts in the rate have enhanced the power of the transmission channels. the most important thing is the fall in the cost of credit. the cost of credit for the euro

area fall for the whole of the euro area, bank lending rates fell by approximately 80 basis points. to achieve that under normal circumstances, one needs a reduction in interest rates by 100 basis points. the transmission channel of this reduction to lower lending rates has been faster. for so-called vulnerable member states, such reduction was to up 140 basis points. credit has become much cheaper. credit volumes have become much bolder for houses and firms across the area. spreads have been going down for between large borrowers and small borrowers and in the

countries. all these measures have had an effect on the economy. let me give you a figure produced by our stat. in absence of our measures, inflation would be at least half a percentage point lower next year and about a third of a percentage point lower in 2017. also, the impact on gdp is very sizeable. our measures are contributing to raise gdp by almost 1% in 2015, 2017. so i think we rightly claimed that our policies have been effective. take a look at what's happening as mario draghi has been speaking. about an hour and a half ago, they are holding the refinessing

rates steady at 0.05. they trimmed the deposit rate by 10%. the market is not getting the boost they were hoping. you are seeing the euro at a seven-week high through this trading session, high at 109. it was as low as 1.05 before the initial announcement. take a look at what's been happening in the european stock markets. >> you could excuse that for being down. they need a weak euro to export more. >> it was up by about 1.3%. >> why should we be surprised? when china eases, our markets go up. wh when euro eases, our markets go up. we just want easing. >> we were looking at the dow futures up by 150 points in negative territory. now, up 27 points. take a look at the two-year note. that yield rising dramatically.

a five-year high for the two-year note. check out what's been happening with oil prices. this was unrelated. wti gaining back some ground it lost yesterday. up by 1.85% by 40.68. "squawk on the street" begins right now. good thursday morning. welcome to "squawk on the street." three big stories coming to a boil this morning. an opec meeting begins and the ecb, which delivers a disappointing expansion of policy. futures have been whipsawed very quickly. europe is down as much as 2%. we'll watch that. the ten-year yield, around 2.22.