Transcripts For CNBC Squawk Box 20150109

Situation very closely. He will have to make the final decision on what to do next. But he did admit the french authorities did know ta these attacks, attacks like this were a possibility. Well continue to update you as things progress. All right, hadley, thank you very much. We will continue to follow in this morning. Obviously, this is a rapidly developing situation. Michelle Caruso Cabrera is back at cnbc headquarters and following these developments as well. A little more we can add to hadleys reporting is we believe they are holed up in some kind of print works. Thats what reuters is reporting that large building that we see there, its not quite clear what that is. It is a small town of only 8,000 people, but its an industrial down. One of the wires interviewed a plumber who lives several doors away from apparently where the situation is unfolding. He said this morning, he did not go to work because he heard gunfire and then the municipality has posted on their website that everyone should stay home at this point. The eyewitness described helicopters in the air hundreds of police in the street clearly a situation that he was very concerned about because his mother was right nearby the the location where apparently the hostage situation is taking place. Additionally, home grown terrorism, this is a situation that europeans and European Security leadership had been incredibly concerned about when this situation broke out in iraq when the kurdish officials would warn the world and say, listen, we know that there are european europeans fighting here they are training here. They could go back to europe and the United States and that could be what unfolded here. According to Security Officials within france telling the Wire Services there that one of the individuals appeared to have gone to yemen at some point for several months back in 2011. Born from algerian parents who were living in france they are, of course, french born so they had the ability to travel back and forth with their pass poured which would get them into any country in europe. So the situation emblem attic of what has been a great concern of the hostage situation in the middle east is would the situation spread . We should say that these individuals so far all indications are that they are connected with al qaeda, not with isis. We know there has been a break in the relationship that isis was an outbreak of al qaeda, people who were not satisfied with al qaeda, that they werent doing enough they werent violent enough. So this is another tract well follow on this story about whats happened within the terrorist groups within the middle east. Michelle, i think it was al qaeda, Arabian Peninsula that they had been affiliated with back in 2011 b, at least one of the brothers, said. These two brothers were on the american nofly list for years. The very day that the attack took place Angela Merkel was in england meeting with the Prime Minister there and the concerns all about whether or not the uk wants to belong to the eu and have a full membership. Thats one of the big sticking points. Absolutely. When you look at the rise of the party within the united kingdom, a lot of it has to do with immigration, fears of immigrants. Its actually an economic argument for people on the ground and from his party, a safety argument, as well. Concerns about who is getting into a group, who is crossing our borders, who is getting in here. But at the same time they have open borders with the european union. If you have a european passport you can cross from country to country. These individuals were french they went back to the country where they were comfortable with. If these suspects went through the country where they were most comfortable, the situation arises to more antiimmigrant sentiment that we had seen. Protests in germany, across germany, about immigration there and whether or not there are skiert concerns could give rise to parties that has been against more integration or the free crossroad boarders, as well. So there will be political implications, as well, for this. Thank you so much michelle Caruso Cabrera watching this situation for us. Switching gears to business headlines, we have three big stories were watching this morning. The december jobs report coming up at 8 30 eastern time. Polled forecasters likely added 240,000 jobs. Then theres a big activist evening taking place. Peltz has been calling for a breakup of dupont. In a statement, he says the dupont board has not held management accountable for repeatedly missing earnings revenue. In response dupont has added it has market leading stocks under its dhan and says its board are will review and make a recommendation. I talked to peltz last night. Theyre working it. If you look at that charts theres no question that dupont has outperformed the s p and arguably its peers over a period of time. Nelson peltz says that he effectively and a five year. He takes credit effectively for the last two years of the Stock Movement because he says that and we broke it here. July 2013 been youll see that that stock took off and had a couple of different runs along the way. He says hes been acknowledge stating behind the scenes and shareholders know it and thats the reason the stock has performed the way it has. Dupont, of course, is spinning off or has announced plans to spin off its Performance Chemicals business and has sold its coding business. So they have made moves along some of the lines that nelson peltz would want but what he really wants is for the company to split into two, into a growth business, and that is the fies that is now on. This is a huge fight. This is one of the Biggest Companies thats ever been attacked by an activist investor. More than 68 billion market capitalization for the company. Yes. There are questions about whether you can go after a dow component up until maybe the last year or so. All of a sudden if you have activist investors targeting a microsoft, targeting a dupont that changes the scenario. It means no one is safe. In this case hes been there for two years. The one distinctition to be made is, a, hes been there and two, hes been waiting for two years. I dont know if you want to say patiently or not. Apparently there was a meeting a year ago where he said well give you a year to figure it out and they have felt that he said they would take credit for the gains they made in july 2013. Im sure Ellen Coleman would say she would take credit for that as well. Operationally, they have not hit. Targets revenue and they have constantly missed the actual running the business, theyve missed it. The stock has gone up. Therefore you raise the question, why is the stock going up if business is below target . It used to be hard to determine whether oil prices helped or hurt. Then they have stuff where they benefit from iowa personally. Now, allergan when it was all said and done, was almost this market cap. It got up there. Over 60 now. These guys are getting embolden emboldened. Allergen, that was a way of boeing able to attack a bigger maybe it is not safe at this point. I want you to invite ellen and nelson to come on together. In the spirit of together or apart. Its a wild threesome, arguing with stand up both sides. Well im not sure hes trying to break up that company. Hes okay now . I dont know why we got a lot of new flavors for doritos. I dont know what the state of play is on the pepsi side. The kids like the purple doritos. The purple they taste the same. Do they . Theyre a little hotter. Purple . Is the natural color purple . Its the purple bag. I dont know whats actually in it. Youve seen those in restaurants, too. They come in all colors. Lets give you a final headline for the morning. Minneapolis fed president kocherlakota says the drop in oil prices ask good for the u. S. Economy because its putting money in peoples pockets, but hes noting it is affecting places like north dakota. Charlie evans is going to join us. Hes going to be with us on the set right here at 8 40 eastern time. The prescription out of there, do you avoid the mr. Kocherlakota why did you skip mariana . Kocherlakota thank you. I just you know. Youre good. Youre good by me. Becky and i get up about 5 00 and we look over there, look at the names, look over anchor reads, things like that. Did you ever see these guys theyre always like this. Theyre always i wonder what i saw a guy yesterday, i think it was, jake tapper and he got done and he was done with the broadcast. To look cool he looked down and when youre done with the broadcast, what the hell do you have to write . Its very awkward when they take a shot of you by yourself on the set. Sometimes ill start talking. I admit, i have struggled with this because sometimes you want to kickback and go but jake he got down and said lets turn it over to wolf. And i think he went, god, i really love myself. Ive struggled with this myself. Im so young when theres only you on the set and they take a shot of you and youre sitting there by yourself, it is very awkward. I cant write any more. It hurts. It hurts. Stocks to watch this morning, starbucks is indicated a little lower. The chief operating officer is taking an extended unpaid leave of absence. Troy alstead, he earlier served as cfo, as well. He helped lead the coffee chains biggest structure took it from 20 its all the way back to 81 and change now. And General Mills plans to shut down two plants and cut 500 jobs, part of an announced effort to reduce costs and a small oil and gas producer. You know its it could be house, how come. But you know what . Dont even bother because its only 600 million and it used to be seven and its now a dollar. As i said, 615 million market cap. Its dropped 50 since november and december. It has a one handle now. Halcon. Pgd. We take a look at the markets this morning. Look up halcon. Do you want me to look at that note again . Im thinking rite aid. Thinking. Lets check out the futures this morning. Take a look at what has been an incredibly volatile week. Youll see. Morning dow futures are indicated lower once again. The nasdaq down by 3. 5, dow jones down 43. This comes after a strong session yesterday with the dow up another 323 points. S p yesterday up by 36 points. It all came after some comments from the fed and the ecb policymakers that sparked a very strong rally ahead of todays jobs report. With yesterdays Market Action the dow, the s p 500, the nasdaq all wiped out their 2015 losses with the strongest gains in three weeks. They closed near the session highs and this is not something you would have expected to be looking at a positive gain for that first week. After the first couple of trading days. Take a look at europe this morning. The ftse down by about 0. 5 . Similar declines in france and in germany. This came after strong Market Action yesterday for these markets. If you watch what happened last night in asia it looks like the nikkei ended up barely higher up by about 30 points. The hang seng was higher as well, about 0. 3 . Oil prices down to about 6 cents. Crude oil throughout the day yesterday, but it did manage to close up about 14 cents for the yen. Up for the second straight day sitting at 48. 72 for wti. With the tenyear note for the first time in nine sessions yesterday, youll see at 2 . 1. 9 the 7 . And the dollar this morning, the dollar index was up again yesterday for the seventh straight session. The dollar is down against the euro still at 1. 1817. Dollar yen is at 119. 24. Bryant gumbel is the worst writing on the air. He looks so calm now, doesnt he . Call works for him. Note to self. Its because its so awkward when youre sitting on a set by yourself. Note to self writ more on air. If youre looking at the prompter, it looks like youre looking at the piece of paper. Yeah. Thats a the icon for some is is too much. Well it also makes you look like youre not just a prompter reader if you look down in between. Like, oh let me think of this myself. Back to you. Okay. Back to the business at hand this morning, retail giant macys announcing it is closing 14 stores, cutting jobs this spring. The Department Chain making plans to use those savings to invest more in technology and workers for the online side of the business. Shares at macys at this hour they went down from the aftermarket fair. Their stocks sliding before the bell. In the third quarter, here to give us a read on all of this our Favorite Retail analyst, dana telsey ceo of telsey advisory group. Good morning. Good morning. Congratulations on your new home. Thank you. How close are we to your home . Very. Much easier now. Help us with this. The announcement pressuring the stock. Essentially, theyll save 100 million in the future. Right. And somehow the stock goes down. Overall samestore sales came in and the fact that cost savings, again, what does it means for the bottom line . It will cost about 100 million up front. But its offset given the fact that theyve had store closures affected by the Growth Initiatives, the pay back on the Growth Initiatives is what Everyone Wants to say. What you can say to macys they deliver and theyve been delivering. You saw that announcement and you said was that expected to you . Were you saying, im happy that theyre doing this . Were you saying a fan of macys. I saw it i say its a continuation of their journey of becoming an omni channel retailer. And i looked at it and saw, look at the Growth Initiatives theyre talking about where its potentially building an offprice business, its consolidating a Management Team for the merchandising teams and managing teams. There is no differentiation between buying for online, buying for the stores. Youre going tol to the vendor with one pencil and being able to place the order. Its a much more seamless Business Model than it was in the past. At least i think thats what many retailers are going to lead to. Macys is ahead of the game. Is there any explanation . Explain the disconnect between your view and whatever the market the market anticipates view is yesterday afternoon. Markets are wondering about sales, theyre wondering about the earnings guidance. We had what happened yesterday. Take a look at some of the moderates. Jcpenney comes in at the upper end. We had have very good Sales Numbers better than expected. Why do you think macys was only in line . I think the Online Business doing a billion dollars in sales. I think traffic was tough as we went through the Holiday Season and a big day was bigger. The Holiday Season at the beginning of november where we had thanksgiving day, the lows were deeper and christmas. So i think they executed. I think they probably gained some market share. We havent seen what the margins are yet, butover all, i bet you growth margins are in a good place. Are you still at market share . It feels less than a margin gaining, more of a market share gain. It is. Its funny. We were talking before. If you think its fewer but better, youre looking at macys, youre looking at Companies Like limited. Youre looking at whats happened on the side. We dont have the ultimate end game of all these retainers to invest in. Lets talk about bed, bath beyond real quick. I havent been there in a while. Andrew likes to you walk in and there and you cant walk out on a rainy weekend, you know, when its cold or something, you have nothing to do. People watch games and stuff, i go to bed. But youre not going to go to youre not going to go with a written list are you . Are you going to write down as you walk . Im actually not going to go. You know what i bought in the bed, bath and beyond one time . A scraper that you pitt fill with water. You actually the heard you push it comes out and the whole its amazing. But thats the only thing ive ive paid for things there. I was going to invite joe and becky. Yeah, no. I went there to hang out. How about linens and things . How do you choose . It doesnt matter. Lynnings and things or the containers. How do you choose tv between oxygen and lifetime . Its complicated. It depends. Army wives . Then i have to decide. You always wind up buying more than you thought you would spend at bed, bath and beyond. Thats the problem. You walk around and things you never knew existed you buy. Amber i got it its weird. All right. Very serious people talk about her. Im not serious . Is there a what youre saying . Good fellows . What am i, a clown . Do i need you . Thank you for coming in. Thank you very much. Congratulations on your new home. Thank you. Were going to hang out at bed, bath together. Normally i was going to say he throws your favorite around. They look at anyone who is here at the time, favorite analysts. But with you, i think we mean it. Not i think you mean it. She is your Favorite Retail you dont mean it . Shes been around a long time. I dont try to play favorites. Thats the thing. Coming up, were going to talk employment report expectations and why todays numbers are so important. It always is for the market. Especially were counting on us being better than the rest of the world, our economy, so we better keep adding jobs. And why Energy Stocks would be the hit of 2015. Squawk box will be right back live from the Business Capital of the world. Live from new york. Its friday morning. With oil prices, you would assume energy might be the last thing you want want. But David Rosenburg argues now may be the time to get into Energy Stocks. In his words, we have never seen two down years in a row outside of recession. If youre of a bearish mindset for the Energy Sector for the coming year, youre making an implicit on a u. S. Recession. Joining us now, michelle and peter. Mishlg, in the laugh few days weve used the expression that bull markets dont die of old age. They die when we do something wrong. And expansions dont die of old age. What causes the recession to follow a boom time is it night and day or is it because something goes wrong . Its because something has gone wrong. That is what the u. S. Is going for rye in and out. There is no significant imbalance. We dont have any sector that is outperforming so strongly that it looks unsustainable and might falter. The biggest risk i always say where else to the u. S. Expansion is something sterm. Some Global Situation that doesnt necessarily see through in terms of exports, but hits the financial markets, tighten ss financial conditions. And peter, we need people to point out what could go wrong and youve been you know for at least a year or so talking about different things. And i dont know where you stand on the fed right now because in the last four or five months since they ended qu its gone pretty well. And inflation is obviously not the problem. So people that were worried about the feds action turns out to be Something Else. They pushed too much people out in assets they shouldnt have been buying. It can take years before the chickens come home to root. But at this point, i have database im almost with Goldman Sachs opinion markets should follow with some really good timing. I hope youre right. Really . I dont think you do because because then you would be wrong. I dont mind being wrong. Id obviously rather have a bull market and a vibrant economy. When i see Oil Prices Fall 50 it might mean something with supply. This is the lowest level since march 2009. Emerging markets are taking it on the chin. Europe, wars pan, china, latin america, all slowing. The strong dollar potentially impacting u. S. Corporate profits. The oil and gas tri going into recession. When i see all these clouds form, i think you have to start paying attention. And i dont think that the end of qe is no longer a factor. I think the last few months of the year it was given a pass because of the possible seasonals. But i dont think its a coincidence that a lot of these macro things are beginning to happen just as qe has ended. I dont see why we know about fracking and we know about supply and we know were going 9 Million Barrels a day. Until we get definitive evidence that its not just supply thats caused it until we see something, some data point that shows that its demand thats causing it why not just embrace it . Why look for something why be half empty . Lets be bullish. I think its the can he cline that i think is worth noting. Shale is an amazing thing, but shale did not come out of nowhere. China or europe . Its going to have to get significant and most people say europe is now showing signs of finally coming out of something. Im concerned that the u. S. Economy not going into recession, but succumbs to the weakness overseas. And that instead of getting to that 3 plus type gdp, weary main stuck in this 2, 2 1 2. And that would be a deflationary, horrible japan im not worried about deflation like the rest of the world is. To me, the deflation were seeing is good deflation. Were lowering the cost of living for a lot of people. Draghi says we need higher inflation. Do they need Higher Energy prices . No. They should be embraceing low Interest Rates in europe. But instead, draghi wants to fight it. Every can you not country strike to weaken the currency is a double edged sword. It works for us for a while. That obviously has an impact on consumers and companies there. All this discussion i have to say, weve struggled with this so much because from my standpoint, i think the u. S. Expansion itself is on i think, very solid fooding. But i look at the performance of markets. In my whole career i agree, markets have a way of sniping things out before we see, oh its the demand number. That is very unsettling to me to some point. Ing there something you cant help but ask yourself is there something that im missing that the markets have picked up . And its hard i have to say, thats what we spent a lot of time trying to ask. Domestic lit we there does not seem to be anything that looks particularly risky. Obviously, overseas theres a lot of areas that you could point to. There is something very different when the markets in it could be as simple as we finally cartels slowly lose control. And as it starts coming down it feeds on itself. These countries have to sell twice as much oil now. They have to sell twice as much just to pay for the budge. Theres a disconnect. That might be good. Something has to be wrong. Either the fed is going in june or Inflation Expectations is heading lower. Something has to give. It takes the onus off the is fed. Make it got ahead of itself. Being the preimminent economy in the world, we should be rewared for our markets in that and that should continue. I think if you look at forward earnings and oneyear earnings, yeah the market looks faultily valued. But that since markets remain a fairley elevated level. There are also off sets to that. The meetsan price to sales, median price to earnings youre at the second highest since world war ii. We can stayover valued. Thats on one years earnings. That assumes, again, 10 high Profit Margins where they store these levels about 6 to 7. Market cap gdp, priced to sell priced to median eps. Youre talking about the second highest valued market since world war ii, only to 2000. So the market is very overvalued. It can stay that way. Theres velthsd margin of safety with respect to the context. The fed has told us in a statement, Janet Yellens press conference and the minutes, that theyre looking past this declining inflation. So in a few months if you have a 5. 5 type Unemployment Rate 5. 3 is the natural rate. The fed is going to have a tough time explaining to themselves and to the world how they still have rates at zero. Yeah. But even now, its silly to have rates at zero, quite honestly. So i still i think it comes and japanese bonds, thats all theyve got to point to. I look at that more as a problem for the fed, not necessarily as a benefit. If wage pressures start to occur, at least on higher skilled workers, companies are going to want to raise produces and goods to offset the labor costs. So i think the fed doesnt want to be sduk at zero. They have no bullets to deal with any downturn and zero is to me the same policy. I think they want to get off zero zero. The question is, i think its about wages. Theyve told us they have to be reasonably confident inflation is going up. Even with the low Unemployment Rate, if you dont see wages moving up theyre confident in inflation moving up to their mandate is not going to be Strong Enough to warrant the information to cover they need to move off zero. So i think the wage and inflation story is key in terms of timing and fed action. Okay. Michelle, thank you. Do you like it here . I think this is grey great. I love the vibe. Were cooler now, arent we . Just the whole background is almost like were players. People at home are able to i love youre able to say arent we hotter now . People at home realize it and its clear through the tv. I feel it here. Its in hd. Yeah. Thats the only problem. It should be fairley wide. When we come back this morning, google has its hands in all kinds of markets, but its latest target might surprise you. Here is a hint for you. A well known gecco might be taking notice. Right now as we head to a break, take a look at yesterdays s p 500 winners and losers. E financial noise financial noise financial noise financial noise things continue to move quickly in france. An operation is under way to capture the paris magazine massacre suspects. Michelle Caruso Cabrera is at cnbc World Headquarters following every twist and turn of the story. Good morning again, michelle. Good morning, joe. French antiterrorist police have surrounded a small town in northern france, a town of only about 8,000 people. Helicopters are hovering overhead. At least one person has been taken hostage in a print works with the two men believed to have carried out that terrible attack two days ago. Earlier Police Chased a skrek at high speed towards paris as authorities appeared to be closing in on the two brothers. Gunshots were heard, Police Trucks amored vehicles on this area close to the charles de galle airport. The down is called dammartin of engoele. All residents are to remain at home, children are to remain in school. They hunt for the individuals they believed were behind the horrific attack that we saw two days ago. Johan bardeau is a plumber would doors down from where the hostages are believed to be held. He said the police are everywhere. Theyve blocked all the zones, there are helicopters overhead. He says the Police Presence is impressive. We are learning more about these individuals. A senior official told reuters that one of the two suspects who were both french sons born of algerians, no confirmation from them whether he trained with al qaeda in the Arabian Peninsula. The suspects are both in their early 30s. They were police surveillance. One was jailed for tramping to fight as part of an islamic shell. Sources close to the investigation saying the two brothers who were sewing you here, said and cherif kouachi, they were both in yemen for several months. U. S. Forces say they did train with al qaeda. Both of these brothers were listed in two u. S. Security databases, a highly classified database containing information on possible counterterrorism suspects and they were on the nofly list which is much much smaller. Ive just been handed two pieces of paper here a wire report a french official says phone contact has been made with the two terror suspects who are holding the hostage northeast of paris and the lawmakers say that theyve been told that the they want to die as martyrs. So once again, the two suspects holed up in the print works in the north of paris. Right now, theyre believed to have made contact with them. It is an ongoing situation which we would watch as it unfolds throughout the day here in this down, demartinengoele. Former assistant agent in charge of Fbis Joint Terrorism Task force and coo of the siffon group, don, you just heard the latest. And that is that theres phone contact and they want to die at martyrs. We dont want anybody else to get hurt, obviously. That is probably the most important thing. How important is it that we try to get these guys alive so that they can be questioned . Right. I think that is going to be the top priority for the French Security forces. They want to capture these guys. Theyve been involved in recruiting other people into the terrorist pipeline, no doubt they have a network. They have other information that would be valuable. So that would be the priority. But the number one priority is the safety of the french hostage hostages. And secondary priority after that is to try to capture these individuals alive. Well, its walking i would imagine its walking a fine line and, you know these guys could easily die as martyrs by their own hand. If theyre not doing that then they probably want to take someone with them as theyre trying to be apprehended. Then we get to worrying about more damage that these guys were able to do. I dont know how you do this. You could drop a bomb on them throw an rpg in there or something and take them out, but theyre going to have to try and go in there and apprehend them which is going to put them at risk. Yeah. A hostage situation is the very most risky situation for tactical officers. But i find it a bit interesting. They say they want to die at martyrs and i dont and i dont doubt their commitment to that. However, theyve had many opportunities to do that thus far. They are negotiating to a certain extent. At least theyre talking, maybe not negotiating, but talking. And theyre buying time. Theyve been on the run. Theyve kind of had this ad hoc plan that has, you know seemed to be well planned out at the beginning of this and now its kind of unraveling farther down the road. And as they get more wore out, stressed, tired, hopefully this will give the vance advantage to the authorities that these guys will make more mistakes maybe give the Security Forces the opportunity to do an assault in such a way that theres no more loss of life. All right, don, i know you have to run. We appreciate your time this morning. Thanks. Thanks. Still to come this morning, weve got a huge line of newsmakers. Joining us on the set, dick marsons, Larry Summers and chicago fed president Charlie Evans. Squawk box is coming back live from new york city right across the street from the storied radio city music hall. Well be back in a moment. Welcome back to squawk box. Google said to be testing Car Insurance sales. It reportedly holds licenses in 29 states. It could let drivers pick policies. Coming up when we return what the neighs employers need to know about the millennial on this jobs friday. At the top of the hour media mogul dick parsons stopping by our new home here in new york city. Were going to get his takes on everything from media consolidation and before we do that here is a look back on this day in history. Welcome back, everybody. Millennials are now making a habit of breaking tradition in the workforce. They would rather make 40,000 a year at a job they love rather than 100,000 a year at one they think is boring. Thats according to a report from brookings. A firm from millennial brandings say 60 of millennials leave the company theyre working in less than three years. Joining us is the ceo and cofounder of a company that helps millennials navigate their careers. And you happen to be a millennial yourself. Youre right in the middle of the 27 to 34yearold age group. I do. Thank you so much for having me. I look forward to discussing whats been doing on. I find that almost shocking that think that 2 3 of people would rather take this 40,000 versus 100,000 a year job. It makes me think that millennials dont have the same responsibilities that earlier generations have. If you have house payments kids you dont have the luxury of thinking like that. Millennials are a really interesting group. On the one hand theyre burdened with student debt at unprecedented levels. On the other, theyre being dubbed the purpose generation. They would prefer professional development and the social impact of their company over things like their salary. Our proprietary data that we gathered from surveys substantiates that as well. The purpose of a company is the most important thing that they consider when they enter. So theres an interesting combination of factors at play here. And it creates confusion. What they are about. What do you think is really driving most of this . I think millennials have entered a difficult time in the economy. For the most part theyre in the first ten years of the workforce. Theyve entered ore session or postrecession. And and they are on the one hand coming in to a lot of social and Environmental Issues to be solved. Theres a certain sense of responsibility there. And on the other hand try to think about the practicality of how theyre going to manage their student debt and how theyre going to advance as financially savvy adults. Get to the second part of that. You can be as idealistic as you want, but theres a realism that comes into play. Maybe theyre getting married later. Or having children later, but at some point give them time. Its cute. But give them time. You know . So its really interesting because theres this rhetoric that millennials will quote, unquote, get over the hump of being this way and things will slide back into how they were before. I think i was a millennial once. I want to know the difference between if you were to do it by 20 to 34 if youre between 31 and 34 and how they are different between the ones between 20 and 24. I would love to understand that as well. I think theres a piece here thats a bit of a hidden variable. Many millennials are looking for a way to reconcile themselves. Theyre saying i might not be able to find the opportunities that i want that are aligned with my purpose in existing companies, and so im going to turn to a freelance model or an entrepreneurship model to fulfill those constraints at once. So we have data from the coughlin foundation that says 54 of millennials have started a company or intend to in the next two to three years. Theyre turning to alternative ways to earn a living to reconcile these challenges. And then theyll become familiar with the profit incent i. I was just going to say we saw a study on the opposite side of this just two or three days ago that said private ownership of companies of young people under 30 has come down materially. So im not sure which one to believe. When you look at that study in the wall street journal, i think that the difference though, between that and what the coughlin foundation is demonstrating is theyre looking at equity holders. Theyre looking at people with stakes in companies. If youre a freelancer working at an agency creating an alternative life path that way, you might not be counted in the data which might change the picture a bit. Thank you for being with us. We work with you every day on getting more on profit incentive . Youre 37 38 . Yeah. Hes coming around. Every day i see a little move being made. Chipping away. Coming up we will have the latest on the manhunt underway in france at this hour for the suspects in the magazine massacre. Plus dick parsons coming up. The countdown is on. Just 90 minutes remaining until the latest jobs figures. What you need to know ahead of the report. Big lineup to talk jobs in u. S. Economy with dick parsons and Larry Summers. And the manhunt in france. The latest in the efforts to catch the suspects from the deadly shooting in paris. The second hour of squawk box begins right now. Welcome to squawk box right here on cnbc first in business worldwide. Our guest host this morning, dick parsons, former time warner chairman and ceo as well as former citigroup chairman. Were going to get to dick in just a second. But before that weve got a bit of news. Thats right. Right now lets get an update on the hunt for the suspects in the shootings at a french newspaper earlier this week. Michelle joins us with more right now. Helicopters can be seen overhead and at least one person is held hostage in a small business, a Printing Company by the two men believed to have carried out the attack on the paris satirical journal two days ago. Witnesses report hearing gunshots and seeing Police Trucks ambulances Armored Vehicles on the area. Antiterrorist forces have blocked all entry to the town which is only 8,000 people. One security official telling nbc news they have made contact with the hostage takers and are talking to them. They are both brothers in their early 30s. They have said they want to die as martyrs. The source said he believes the French Forces believe theres only one hostage inside the business at this point. A spokeswoman from the town says the reason they established contact with the suspects was in order to negotiate the safe evacuation of a school near the printing plant where the men are cornered. She says the suspects agreed to allow the evacuation of the school. The men are suspected in the attack of the magazine Charlie Hebdo that left 20 people dead. On another note Counterterror Police said yesterday there was no firm link to the events on wednesday. But now dow jones is reporting that there is a connection between the shooter who killed the Police Officer and the two brothers, the kouachi brother who is are believed to be the prime suspects at Charlie Hebdo. Thank you very much. We will continue to monitor the situation in france and bring you any developments along the way. Now were going to turn to the u. S. Economy. Today is the big jobs day. Steve leisman tells us what to expect from the big numbers well get in an hour and a half. Its the most important data point of the month coming up. Theres a lot on the line this month. The u. S. Has been the shining city on the hill we the lights of those other global economies in the valley below burning only dimly. So a strong u. S. Jobs report will help solidify the sense in the market that somehow the u. S. Remains immune from that overseas weakness and the overall trajectory of the u. S. Economy is upward. Heres what were looking for. Nonfarm payrolls up 240. A tick down in the Unemployment Rate to 5. 7 . Average Hourly Earnings up 0. 2 . Adp ruz right in at 241 for the private sector. So the question economists are asking is if borrowed from december with early hiring for the Holiday Season. All you need is a number of 159,000 which would keep the twomonth average at the stillstrong 240 k which is pretty much the average from january to november. Economists are going to be comfortable with the number in the midones. The jittery market probably less so. One of the things were looking for is wages. Whether the idea of being a tighter job market should finally result in meaningful gains and hourly pay. That would bring the fruits of this expansion at long last to the middle class. We saw just a blip of that in november with a bump to 2. 1 . Nothing to write home about, but better than the 2 thats prevailed. You can see from the chart, 3 plus was more the norm before the recession. And wage gains at that level would not be seen as inflationary by the fed. My ching is the fed is just not feeling the heat right now from the 0 Interest Rate policy. You have plunging Oil Prices Strong dollar and low u. S. And global inflation. They have taken the edge off the argument of how on earth can they be so low with the economy so strong. That argument, i think, is going to be called into question if we print another 300kplus. You think theres a real chance we get a number below 200,000 . No. There are no prints that way. My only point is the way economists will look at it theyre going to average the two months. Its possible to get a strong retail number. In general, november tends to be revised higher. If you get theres a lot of downside adding here. Youre still averaging plus 200,000. It would be the 11th month in a row north of 200,000. The argument has switched to not its going to be inflationary, but it is causing people to go into places where they shouldnt be going. Whether its countries, whether its emerging markets, whether its individuals. Pushing them out of what about 80 a barrel Bottom Line Oil wells . That would probably be another place. To taper emergency markets. So there are people who are benefitting from it. The other is if we do hit a slow patch, all our bullets are gone because we havent built up anything to cut back down. Thats an argument somers made at length over the weekend. My question to you is if there is overall sort of slack demand or if we can, like raise demand with all this free money globally is it possible theres bubbles being built if demand just in general absolutely. Theres no doubt its happening. Right . You know how the market works. If you are getting a free lunch, if its free give me three of them. Thats the way the market works. Weve seen this over 30 years as a Business Reporter these bubbles happen all the time. Does it create Systemic Risk . Its one thing to have a bubble in the oil market but does that if you dont use inflation as the canary in the coal mine what is your indicator for the bubbles . Yes, joe, we have none. We are not practiced at the art of triggering Monetary Policy based on perceptions of Systemic Risk. Thats why the fed has been using this word which i say there is no track record of using leaning on the banks so we dont know. We have no clue. There are a variety of new metrics that have come out. None of them are tested. All of them are out there and theyre all relatively low on the risk scale in terms of signaling broader Systemic Risk. But it is obvious and clear. The thing that will whack us is the thing we aint looking at. Okay. Do you know what do you have something . Can you help . Can i add to the conversation . Help can i introduce you first. Sure. Oh i forgot that ad where it just has a picture of you. What was that in the wall street journal . It was just a picture of you. Shes going to be at our conference. Thats all they put. I think they forgot to put my name on there. It was you and who else was it . A couple of your other favorites. Bernstein. Effing bernstein. Rebecca patterson is here. Cio of bessimer trust. Youve got to remember one of these days. Cio is more important than the ceo. Our guest host for the hour dick parsons former chairman and ceo of time warner. He just seems more comfortable in here with all the big powerful stuff around here. Dont you . Youre like a fish out of water in englewood. In the presence of kings and queens. Exactly. So inflation may not be what were supposed to be worried about with this policy but if the fed is just so sure were fine, then maybe Something Else that they dont even have any fear of . To steves point, a lot of institutions have come out to try to understand where the next bubble is coming from. We learned enough that we need to look. So you have the imf that puts out metrics, treasury puts out metrics. I think i agree with steve. Whats going to get us next time is something were not monitoring yet. I think about etfs. Just absolute explosion of them. Is that going to be the next structured note crisis where moms and pops own things and theyre not all the same. I mean just in highyield credit theres Something Like 17 u. S. Highyield etfs. Theyre not all liquid. They dont have the same counterparty risk. They dont have the same methodology. When we get a down market you have to sell them. You might not be able to sell them at a price you should. So there going to be things like that. This week alone the philippines issued a piece of paper, government debt. They were looking to issue 1. 5 billion worth of debt. The subscription amount was closer to 6 billion. Thats the search for yield. Thats going to build up bubbles. So theres going to be things out there that are building. Wont hurt us today or tomorrow but its the things that will start the next downturn. Dick you had to think about this a lot. You ran that. And then you saw remember the valuation of aol . You may have seen that. He always does this to me. You know . Im sitting here minding my own business, bam you know how crazy things can happen in terms of does zerp have consequences . Does it bother you . Lets go back to the dime. That was a long time ago. I was on the fed advisory board. You go down once every three months and talk to the fed government. Most of whom were asleep at the time. But greenspan was the chairman. The only time he would wake up and listen was he wanted to hear from the field whats actually happening on the ground. Got a lot of smart people down there who are highly quantitative and look at all the statistics and numbers but have no relationship with whats going on on the ground in the marketplace marketplace. So of course there are going to be bubbles. There are going to be empty spots because they dont yield to the kind of analysis that the fed does which is you know trailing as opposed to leading. So, yes, it bothers you. And yes, what steve said its the thing youre not looking at. And yes, there are bubbles created. On a scale of one to ten are you at a four or something . I am. When you said when greenspan finally woke up and listened . I said he would stay awake for this one. He just did that so quickly. It was the most outrageous thing. Wed gather every three months bring us in the hallowed halls and you sit there at this 400footlong table with the seven fed governors over here and eight or ten of us over there. And most of them would be asleep. But alan would listen. So hed keep his eyes open . He actually would come awake. Hed say sit nupup in his chair. I had this thing i called the restaurant index. That tells you something if youre in a consumer business. Or i stayed on one time with what was happening with cable subscribers subscribers. Whats happening with real people with real dollars. They dont capture that until months after the fact of it. You know. I mean youre in the restaurant business. Do you know whats happening with consumers . What theyre spending . The reason i said four instead of six or eight in terms of the bubbles being created, i think things feel pretty good. And from the following perspective. Yeah there are problems. There are bubbles being created. But my favorite american everything is relative in life. Come over here i mean you know, if you have trempbls to make as to where to put your capital, where to invest where to stay. You may just say were the tallest midget but thats okay. Compared to Everything Else were looking good over here. I like that. I agree with that. I think Foreign Investors see that too. And the result is going to be that were probably going to get more capital coming into our bond market and our stock market this year from overseas because we are tall relatively speaking. And thats going to keep pushing up the dollar which is going to be good for purchasing power and letting the fed go slow for awhile. Andrew, remember we had to tell you about youngman. You did. Did you study up just a little bit . No. You still thats a guy you need to know. You need to he sounds pretty active. Take my wife please was a good one. Sir, can i get a table near a waiter. Thats a good one. Im A Jackie Mason man. I said doc i think im a dog and he said well get down off the couch. I know one more too but ill tell you on break. And in closing ill just say maybe rogoff was right about the depth of the financial crisis. Now youre that this no that this much demand was so hurt that these unprecedented moves globally with all this accommodation, maybe its just filling the hole that was created. I dont know if thats true. But for this not to have been more disruptive it had to be a big hole or something is still going to happen. The u. S. Is doing i think relatively well. I think the risk to the u. S. This year is if overseas and the fed said this in its minutes this week. The risk is Foreign Policy makers dont do enough or theres not enough momentum there that it pulls us down. If they can muddle through, i think this is going to be a pretty good year. I agree with that. A cat goes into the Surgeons Office at midnight and says you know doc, i think im a moth. And the guy says im a surgeon, im not a psychiatrist. He said i know, but i saw the light was on. Thats good better than hows my wife compared to what. Thats insulting. I hope you dont say that to her. Not more than once. Rebecca, thank you for joining us. Dick will be with us the rest of the hour. When we come back much more from our guest dick parsons on the battle to dominate the rapidly changing world of media. Then former treasury secretary lar Larry Summers on jobs. Also though at 7 40 we have House Minority whip steny hoyer. Hell be talking keystone and the new plan. Squawk box will be right back from a snowy new york city. It is coming down. U. Welcome back to squawk box. Mel karmazin joined us yesterday and we got his take on what he thinks should take place. A cbs and time warner merger. The deal that should get done the deal that should be absolutely would be the best deal i would invest money in would be the combination of time warner and cbs. Okay . That is a match that makes such great logic. Okay . Time warner has a studio. Warner brothers. Cbs doesnt have the studio. They have cnn. Shareholders including National Amusement in my opinion would be better off if cbs and time warner were to combine. Lets check out the media landscape and what better person to do that with after that comment than dick parsons, the former ceo of time warner. What do you make of mels comment . As mel said in logic its probably almost compelling. Almost. Almost compelling. Because when i was there, we looked at some kind of combination with broadcast network. Cnn being the primary driver. But also you know you have to think about Warner Brothers as a factory. They produce content. Then what you need is distribution. Big broadcast networks distribute content. So it makes sense on paper. Youve been around awhile. How many deals get done just because they make sense . Do you think theres any shot that that transaction takes place . One day, possibly. My view of the media landscape right now is everybody has hit the pause button. They want to wait and see what happens with comcast, time warner cable, at t direct. They want to see what the s. E. C. Does with these things. Are they going to follow the president s lead . Are they going to go in a whole new direction . Are they going to try to carve out the middle . People want to see what kind of conditions are put on these things. How does dick parsons handicap the answers to those questions . Not what you want to happen. I think you want those transactions to happen. What do you think will happen . I think and the reason we have its been quiet because the s. E. C. Is trying to figure out where do i chart my course. Hes going to be between the polls. Hes not going to be where the president is or before he entered the fray. My guess is there will be some conditions, but they wont be therefore comcast and at t will be able to sign up to those conditions and get those deals done. If those deals do take place, then do you think theres a domino effect afterwards . Yes. And then does the cbs and time warner well that would depend people wonder what happens through the sort of Sumner Redstone empire. Well eventually i dont know when eventually is. Say, three to fiveyear time frame. Eventually Sumner Redstone empire becomes part of a larger thing. Because, you know a stand alone broadcast Network Although les has done a terrific job. And remember, les used to be a colleague of ours in our tv business. Probably the best guy in tv right now. So they know each other. Theyre simpatico in terms of how you run and move things. And i think that ill sound partisan, but cbs needs us a lot more than we need cbs. I dont mean us. The former us. Time warner. Was it a mistakes for cbs and viacom to split up . Big serger is better. I dont think it was a mistake. At the time investors liked it. Theres still a sentiment out there. Remember, time warner has been disaggregating. Its been offloading assets. We want purer play investment opportunities. Let us decide how to put the portfolio together. So theres a counterbalance to this. But i think mels logic is unassailable. But whether it happens, when it happens, thats up to two guys who arent even here. We are going to continue this conversation. Youre going to stick around a little bit for the rest of the hour. So we appreciate that. Thank you. Figure out the s. E. C. Too. Its february, isnt it . Yes. I think the chairman down there, he wants to come out of this with something for him. Were off the air, right . No, were on the air. Oops. Hope you all were listening. Yeah were off. What do you mean . Youre never off. I think that were still on. Hes got to figure out where he wants to position the fcc in this play. Hell want to place them in a place of significance. I hear ya. I think thats true. At the same time theres no glory in killing all these things. I think the trends are inevitable. So how to carve a path where they show theyve still got some of their longterm objectives. But where they dont smother. And there are more democrats than republicans. There are even some democrats with this last election that said hes going to be gone in two years. I dont care about him. Remember . That could be the case. It could be. Coming up two more big names in our lineup in the next half hour. Former treasury secretary Larry Summers and steny hoyer weigh in on the economy. Take a deeeeep breath in. And. Exhale. Aflac and a gentle wavelike motion. Ahhhahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just four days. Ahh four days . Yep. See why speed matters, at aflac. Com. Tdd 18003452550 [ male announcer ] your love for trading never stops tdd 18003452550 even on the go. Tdd 18003452550 open a schwab account and you could earn tdd 18003452550 300 commissionfree online trades. 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Tdd 18003452550 coming up former treasury secretary Larry Summers says the economy performing 10 below its potential. He will tell us what it will take to get back on track. As we head to a break, look at u. S. Equity futures. You can see things starting out in the red. Dow would open off about 62 points. It is snowing in new york city. Were back in just a moment. Thats right. Its just that im worried about you know hidden things. Ok, whys that . No hidden fees from the bank where no branches equals great rates. The evolution of luxury continues. The next generation 2015 escalade. These ally bank ira cds really do sound like a sure thing but im a bit skeptical of sure things. Whys that . Look what daddys got. Ahhhhhhhhhh growth you can count on from the bank where no branches equals great rates. Outside our studio right now where its snowing right here in midtownman tat han midtown manhattan. A manhunt to catch the suspects in the newspaper terrorist attack. They are cornered inside a Printing House northeast of paris. Theyve take an hostage and are telling police they want to die as martyrs. They have surrounded a town of a small town near the airport. It is a massive operation. Authorities have evacuated a school nearby midday. The spokeswoman for the town telling that to the associated press. The men are believed to be the masked assailants who opened fire on an editorial meeting at Charlie Hebdo leaving 12 people debt in central paris two days ago. At least three helicopters hover overhead. And the airport has closed two runways to avoid interfering. The towns residents are being told to stay inside. The siege in the town unfolded after the suspects hijacked a car earlier today in a nearby town. When we have more we will bring it to you. Back to you. All right michelle. Thank you very much. Among the many things we have been watching here the drop of oil prices is another. Its good for the economy, according to the minneapolis fed president. He says he believes the economy can continue to grow even if the World Economy weakens. Well hear from chicago fed president Charlie Evans today at about 8 40 eastern time. And peltz wants to add four directors to the board. The cap of more than 67 billion makes it one of the largestever targs by an activist board. Making a recommendation to shareholders. But i will say the fight is already on. The company defended its performance under chairman and ceo Ellen Kullman. Can i ask this is not your transaction, but you dealt with carl icahn coming after you and you were a big company at the time. What do you think is happening here . Well and should boards listen to this . They have no choice but to listen. And not listening is a very bad thing. Its the democratization of the process. Its more people wanting to have their voices heard and points of view reflected and respected in board rooms. This is one way to do it. I dont know enough about i know nelson pretty well because he and i had some chats as well. Yep. But, you know activist shareholders feel that they have a story. This is a way to get their story out in front of a group of other institutional shareholders. When youre looking at these big companies, 80 of the stock or 70 of the stock is held by institutions. So if you can and those institutions are relatively few in number compared to the 57,000 individuals who have stock. So if you can corral two dozen of them you can really make a big difference. In an instance like this Ellen Kullman would say the stock has performed. Nelson peltz would say it performed because were there and the numbers havent held up. Thats going to be the fight. And shes going to say im inside and i dont think and i know the numbers and we shouldnt divide this company in two. Hes going to say, but this isnt working out. It needs to be two. Theres shareholders and theres shareholders. There are people who still invested longterm. There are still people who say i think this is a good company. I want when i die i want to leave this to my wife and im going to tell her dont ever sell it. Its a great company. Its going to increase in value. Youre going to be fine forever. Then there are people who say, well, you know i have a fund. Ive got to have returns for my investors quarterly, annually so i need a certain amount of churn. I need a certain amount of moving in and moving out. Theres shorter term focus. Some might want to harvest it earlier. Exactly. Ackman was in the other day saying nothing i do works unless the shareholders go along with me on it. That doesnt mean that the ceo or the company in place couldnt have a good strategy. An activist comes in with a get rich quick scheme like what was it on the simpsons . The monorail. Convinces the shareholders that hes right and the company ends up being zroid ordestroyed or less than it could have been. Activists arent always going to be right just because shareholders give them the okay. But then the question becomes is democracy just messy . And you got to hope that most of the time it works. Theres no guarantees youre doing the right thing, i dont think. You know . And the people who have a longterm perspective, they can be right. But theres a Different Group now who has shorter term perspective. Increasingly theyre represented by the institutions who get measured by their investors. You guys you notice this . Joe, where we going with this . I was right with you until that. Where id like to go is that place in italy. If youre going to ask me somewhere. Ill tell you where were going in the immediate shortterm. Just an hour until the get the latest read on the jobs in america. Our next guest says hes unsatisfied with how the u. S. Is performing. Joining us is former treasury secretary Larry Summers. Thank you for being here today. Good to be with you, becky. You said you think the economy is underperforming what it should be. Why dont you explain that view. Were doing much better than we want. Were doing much better than the rest of the world. But were not doing well enough. We havent had a year of 3 growth in a very long time in the United States. And if you look at what the bond market is saying with Interest Rates coming down as much as they have it suggests continuing concern about underlying growth in this economy. So weve got to be focused on equitable growth for the years ahead. Weve got to be doing more to get the economy growing more rapidly and making sure that everybody shares in that prosperity. Yes, we can take satisfaction from whats happened but if you look at forecasts for the median term for the u. S. Economy, theyre now down below 2 . Thats not going to keep us in the place in the world we want to be. Thats not going to get middle class families the kind of improvements in their living standards, the kind of expectation that their children will lead better lives. That all of us as americans want. We can look back and see that since the advances in gdp is because of the global recession, what happened in 2008. But lets forget about the past. Lets talk about how you can fix this and how you get back to that growth. To start with we need to be investing in the future on a much larger scale. There is no reason why a time when we can borrow money for ten years below 2 and a time when construction unemployment is at unusual highs is a time were investing less in renewing the countrys infrastructure than at any point in a generation. Look at Kennedy Airport and look at any place you fly to from Kennedy Airport. It doesnt make any sense for us as a country. We have an air Traffic Control system in this country that is based on vacuum tubes. Vacuum tubes that arent in anybodys tv set anymore. And we all experience more delays than we need to. We waste more energy than we need to. We expose to safety risks that we dont need to. Those are two examples. But if you look at our ports, if you look at thousands of schools across the country, we are just not investing in the way we should. Ill never forget the Public School i visited in oakland where i gave a talk about the importance of education. I said the kind of things that dick parsons that you say frequently. And a teacher took me aside and said secretary summers, that was a very good speech. But how should the kids believe that when theres paint chipping off the wall of their classrooms . Weve got tens of thousands of Public Schools in the United States that need to be renewed. Theres work to be done moneys cheap to borrow to do it. And there are people there who are ready to do it. And people will say sorry. Im listening and its almost impossible to agreedisagree with what youre saying. Youre talking about public sector. And that well with the finite amount of capital in the world how much of the investment of the future that will pay off for our children what percentage should be Government Investment and which percentage should be private Sector Investment . Joe, thats a good question. Right now in our country, way over 3 had4 of the investment were making a private Sector Investment. No question about it we need more private Sector Investment. We need more private Sector Investment with respect to energy. We need more private Sector Investment to build out broad band. We need more private Sector Investment to further assure the pervasiveness of informs technology. As i said many times, confidence is the cheapest form of stimulus. Thats why its important that we legislate tax reform. Thats why its important that we address a range of regulatory issues. So absolutely the market is telling us something very strong. The market when its telling us that the real Interest Rate from the tips the index bonds, the correct for inflation for 30 years is way below 1 theyre telling us that weve got a lot of supply of savings and not a lot of demand for investment. Although that could be a reflection of and increasing demand for investment. Im sorry, becky, what was that . Let me ask you a question. I actually would go beyond what joe said and say its almost not assailable. Your logic is not assailable. We need all of the things youre talking about with investment. We had an effort some time ago to try to open up some of these public Pension Funds. I mean they are the Pension Funds for state employees, et cetera. And theres 3 trillion. Right . Of assets. And were trying to get more of that targeted to the kinds of infrastructure and other longer Term Investments than currently just going into the market looking for a return. Sort a repeat of the conversation we just had. And we made no progress. Is there a way of tapping into that till more effectively than we have in your judgment . I think there probably i think some of it goes to the specific rules on those Pension Funds. But more of it goes to somebodys got to put up the money for the pieces that arent going to generate a return. Build a new parking garage and you can get money for the fees on the parking garage. The markets capital is good at financing that. Problem is whos going to fix the potholes in the roads in brooklyn . Whos going to deal with the paint chipping off the walls in the school . Its a good point. And so the real shortage is with respect to the infrastructure thats essential for our society that doesnt have an immediate Business Model. We should do any and all. We should do keystone. I know its a small part. Maybe 30,000 jobs. But private infrastructure public infrastructure, we need it all. Thats sort of the thing that frustrates joe, i agree with you on public private. We need it all. And i agree with your instinct which is we need to do the environmental regulation faster so we can get the project moving. On the other hand, joe, i want you to think about something. Okay. President obama made youre on dangerous ice there, larry. I know i am. I know, but i want you to hear this. We move more quickly on deep sea drilling than any Democratic Administration ever had. And three months later you had mccondo in the gulf. We moved more quickly on Nuclear Power than any Democratic Administration ever had. And three months ago you had fukushima in japan. So yes, i am for speeding this up. Yes, it is crazy that so much oil in the United States is being moved on train tracks rather than in pipelines. Yes, it is we have the potential to be saudi arabia with respect to the World Oil Market and we need to allow the free export of oil. And all of that will cause infrastructure and will spur job creation and its the right thing to do. But respect the need to be careful about evaluating the environmental aspects. Because we have seen the price of hurrying before. Thats not antibusiness. Thats not antiinvestment. Thats just being responsible about making public policy. Secretary summerers, thank you. Well put. Maybe well continue this conversation in davos. Thank you. Go to oh. Okay. I think we lost him. Right before he accepted our invitation to come on. Audio guy. Coming up congress is in session. House minority whip steny hoyer joins us next to talk keystone, and the now me. Based on 6 different criteria. Why did a panel of 11 automotive experts. Name the Volkswagen Golf motor trends 2015 car of the year . Well give you four good reasons the allnew Volkswagen Golf starting at 17,995. Theres an Award Winning golf for everyone. Congress back in action this week. First up on the agenda immigration, keystone and obamacare, tax reform. Joining us now House Minority whip steny hoyer. You know you were i say this every time. Im going to continue to call you leader. You never tell me not to. I wish somebody would call me leader. Anyway leader we just had a discussion with secretary summers. I heard that. A lot of it yeah. Its almost like we need to figure what to do with energy. People say should we do hydrocarbon, solar, wind renewable, batteries, what. And they say yes, all. All of the above. I think we should do the same with infrastructure. Private, public. So we have to try and do something that the private sector is you know doesnt necessarily address. But we should also make it easy for the private sector to build out as well. I know keystone is just one issue, but its one of the things if we wonder if its only going to be public works if the president doesnt veto. Well i think we need to move ahead on Public Investment private investment, tax reform which will have an impact on that. We need to do that in a bipartisan fashion. And im hopeful that well do it. On keystone as you know im for keystone. As you also know nebraska still has a pending Supreme Court case as to whether or not the legislative action theyve taken to enable the line is appropriate. So were going to have to find that out. But im hopeful that this matter will be resolved in the near term one way or the other. Because one of the things Larry Summers said that i agree with is confidence is in and of itself an economic booster. And what weve been doing in washington for too many years is undermining confidence. For instance tria was allowed to expire. The good thing we did with over 415 votes was to approve it this week. Frankly, we could have done that six months ago. And we should have done it six months ago. But its never too late to do the right thing. I was pleased to see that that legislation passed. Id like to see the export in export import bank. All of which would boost confidence in the private sector. So that i agree with larry that creating confidence in the private sector that the federal government is on a stable path on which they can rely i think would be a tremendous boost to the economy. How about this . You probably are for a lot of the trade stuff. And the president s for what you want to do. And we keep readings the president is going to have trouble with the left side of the of your party, the democrats. At this point, do you think that the rift in your party is just as detrimental to us getting something done as you probably would have said the tea party or those elements are responsible on the other side . Is it just as bad . Well a trade has always been an issue as to whether or not we are protecting american workers, whether were requiring labor rights to be recognized with our trading partners so that were not going to the bottom on terms of labor. We also have urged environmental rights be viewed so that our competitors are not polluting the economy. Is that music in the background i hear . Can you believe that steny . Youve seen larry when hes on before. Hes great, but hes got a lot of, you know he has to explain in detail. Were going to have to have you back. Calling you leader should make up for it. But im sorry, sir. Were going to have to call you back. That is the music and i cant control it. But thank you. Appreciate it. You bet. Coming up umption in china impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price we understand the connections of a complex, Global Economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. We want to thank our guest host for the past hour dick parsons. Hope youll stop by now that were on the way to breakfast. Youre in town. Coming up in the meantime, the employment report hitting the tape in just a little more than 30 minutes. Our jobs panel convening next. The final countdown is on. So ally bank really has no hidden fees on savings accounts . Thats right. Its just that im worried about you know hidden things. Ok, whys that . No hidden fees from the bank where no branches equals great rates. These ally bank ira cds really do sound like a sure thing but im a bit skeptical of sure things. Whys that . Look what daddys got. Ahhhhhhhhhh growth you can count on from the bank where no branches equals great rates. Jobs and volatility. Decembers employment report will be the focus in todays session as investors look for key labor indicators that could sway the fed. Our panel ready to make predictions, break down the numbers, and give their analysis. Plus a cnbc exclusive. Chicago fed president Charlie Evans on the fed Interest Rate challenge. And apples stock surged after staggering numbers from its app store. Best day for them since april. Find out if the stock is a buy. Final hour of squawk box live from new york begins right now. Welcome back to squawk box here on cnbc first in business worldwide. Im becky quick along with joe kernen and andrew ross sorkin. It is a big jobs friday. Well get you caught up in just a moment. But look at the futures this morning. Weaker with the dow futures down 60 points below fair value. S p futures down by 6. 5 points. Nasdaq down by 8. 5 but this is after the gains yesterday that puts us in positive territory for the week. If you look at whats happening in europe right now, at least at this hour there are some declines there with the cac down. 75 . And were hearing stuff basically every couple of minutes, breaking news this morning. A french antiterrorist forces surrounding a building where they believe the two men suspected of attacking the Charlie Hebdo satirical weekly are holed up. Michelle carusocabrera joins us. Just in the last few minutes we learned there are now two hostage situations underway in france. Several people are being held at a kosher supermarket in eastern paris after a shootout involving a man with two guns. There are unconfirmed reports that this is the same man of killing a Police Officer yesterday. Hes connected to the two suspects from the Charlie Hebdo attack. What were showing on the left is actually the situation in eastern paris where theyre trying to move towards that supermarket. Now, to the original story that weve been covering all morning, two brothers suspected in that magazine terror attack are cornered inside a Printing House northeast paris. We think they have taken one hostage. There could be more. They are telling police, quote they want to die at martyrs. Security forces have surrounded the small Industrial Town of only 8,000 people which is near Charles De Gaulle airport. Authorities evacuated a nearby school around midday after the suspects allowed safe passage. A spokeswoman for the town telling that to the associated pretss. At least three helicopters hover overhead and two runways are closed at Charles De Gaulle to avoid interfering with the standoff. The men are believed to be the masked assailants who opened fire at the satirical weekly Charlie Hebdo which has a history of lampooning the prophet muhammad. It was considered to be one of the worst terrorist attacks in frances history. The news is coming fast and furious. Well bring it to you as soon as we get it. Back to you. All right, thanks. More on this in just a couple minutes. In the meantime lets get to our jobs panel. We have predictions in just a bit, but right now we want to focus on the broader economy, the labor market and the fed. Joining us is the former council of economic chairman. And kevin is senior fellow and economic director of policy studies at the American Enterprise institute. Folks, weve had a few opinions around the table already today. Dick parsons was here with us. And he said he thinks the economy is doing pretty well. Hes not too concerned about things because here in the United States things are humming along. However, we just spoke with Larry Summers. He thinks we are underperforming what we should be. Kevin, ill ask you. How do you respond to that whos right . Well right now my q4 number looking at all the numbers is closing in on about 4 . And if you have a 4 Fourth Quarter after the other data weve seen this year normally people would be crowing about it. I think Larry Summers has been warning about secular stagnation for awhile and so maybe its going to take a lot of good data for him to get off this negativity. Hes locked into an argument that hasnt been working very well except for that one quarter last year when it was so snowy like it is today. So i think that the economys fundamentally sound. That gdp growth is way north of what we expected when we were talking about the new normal. And there are a lot of good reasons for that. Diane, what do you think . Oh im actually optimistic. Not quite as much as kevin on the Fourth Quarter. But 3 plus, you take out the second quarter, thats the best sixmonth growth weve had since 2003. Got to go back to 1999 to see that kind of growth. The problem is were still healing from the great recession. So i think we are doing better. We do have more selfsustaining traction in the u. S. Economy. Thats really important. Lower oil prices have been a net positive as well. And i see a lot of tail winds going into 2015 even though we still have the tremors coming out of europe and some of the Global Situation not being as stable as we like. This is part of Larry Summers argument to make sure theyre looking at ways to reinvest for the future. He says we should reinvest for the future. Its hard to argue with some of those things. Where do you think we stand right now . I think were closing in on full employment. I think were not quite there yet. I think the economy is underperforming compared to potential. But i think were getting up there pretty quickly and i think we could raise potential by investing more infrastructure today and more education and training. And also by helping the longterm unployed. So let me ask all of you if youre looking at the jobs trajectory weve been doing fairly well. Alan, well start with you again on this. Is this something that begins to start to put some pressure on the fed in terms of when of the think about raising rates . I think it is. I think that the slack has been coming up pret the quickly. And particularly the longterm unemployed, i think are not putting as much downward pressure on job markets. So i think were going to see wages grow more strongly. But i think the Federal Reserve is in a pretty good position. The inflation rate is a little bit below their target. So theyre at kind of a turning point. I think theyll probably act in the middle of next year middle of this year now if things continue to go the way we think theyre going to go. I think theres no chance the fed moves this year. This whole year . The economys great, but this oil shock, this positive oil shock is going to cut any kind of inflation risk down to zero. At the same time europes in recession. Chinas missing its targets and Central Bank Policy coordination is going to make it so the fed is going to have to sit back. I think the inflation risks are not going to be high this year. If oil doesnt reverse itself. Is that okay . We talked all morning we wont have bullets if we get a slowdown here. Yeah i think there is a time for normalization. But youre not worried about it. You are like parsons. Parsons says hes a republican. Hes not a republican. And youre not an aei, i dont think. So you have no problem with zerp forever. Im not. But you ask me what the fed are going to do low pressure wlp. It could end badly. Now youre coming back. They move too late. Is inflation the only thing that could go wrong by staying at zero for too long . I think this year the only thing is you start to see next year. Again, the Oil Price Shock is a massive negative shock on inflation. Their target is two, two and a half then theyre going to be way below that. Do you think it always ends badly and its because theyre too late why wouldnt you start . Im not saying i wouldnt start. Youre asking me what is the fed going to do. Theyre not moving this year. We want opinions whether its right or wrong. Its right to start moving a little bit soon. If we would move a quarter of a point then youre saying and if you did, what would the implication be for these numbers . It would be very very small. If you said we we can afford it. We want to get everybody used to the fed moving a little bit. Were trying to get you to that place. Took you time. Now that weve bullied kevin into this. When did you become a milk dud . Did somebody call you an angry republican or something . Lets cut taxes. Get back to that. Diane, will the fed raise rates this year and should they . I think they will. I think they should. Well see their patient gradual approach. I have it a little later. Ive always had it later. And i think its going to be late and ive got 75 basis points by the end of the year. That wont kill the economy. I think its an important move to make. I think it is important for the fed to normalize. They dont want to move too soon because they dont want to move too soon and then have a back track. And i do think i agree with alan that we are coming up on a point where we will see some wage pressures. Their threshold is higher than this is. I hope hes right. I hope were closer than that. At the end of the day were splitting hairs. If we see the fed move in the second half of 2015 or 2016 in the course of history that that sixmonth window wont make much difference. It may make some huge potential changes for what the market sees things. If we get to july and august and the fed has not moved, i would think the market has some serious reactions to that. I think if the fed makes it clear its about ready to move thats the issue. If it makes it clear theyre going to wait things out, that is an entirely different scenario. I think the hard issue for the fed, too, that weve seen all this safety out there. Weve got the federal budget deficit narrowing right now. Our supply of treasuries is not huge going into the market and demand is still strong with europe in turmoil. So that narrowing of the yield curve is also a bit troublesome for the fed. We certainly dont want an inversion. Theyre not going to get an inversion this year. But i think that is another troublesome issue with the low inflation we have. Alan let me ask you quickly. You didnt say when you think the fed will move. You think it happens this year . Oh yeah. I think the middle of this year. Mid2015. Im sorry. I missed that. Im sticking with what i said. You worked for the president. Diane said i need to go to fox. And both of you are more than the aei guy. If you can explain this to me. Youre asking me what the squishy people appointed by obama would do. All right see. We woke a sleeping giant. I like that. All right. So were going to talk just a moment more about more from our panel. Well talk more about their panels and predictions about the jobs number. But the jobs report is now just about 18 minutes away. I think he got something in his ear from one of the Board Members of aei. Coming up the latest on this mornings developing story. A french town looking like a war zone right now. The tragic story and well keep following it. Here are the futures, though ahead of the big jobs number well get in 18 minutes. Nasdaq down about 8. 5 point. S p 500 down seven points. All that may change depend on what the numbers are. Were back in a moment. Financial noise financial noise financial noise i am never getting married. Never. Psssssh. Guaranteed. You picked a beautiful ring. Thank you. Were never having kids. Mmmmmm. Breathe. I love it here. We are never moving to the suburbs. We are never getting one of those. We are never having another kid. Im pregnant. I am never letting go. For all the nevers in life state farm is there. The Volkswagen Golf was just named motor trends 2015 car of the year. So was the 100 electric egolf, and the 45 highway mpg tdi clean diesel. And last but not least the High Performance gti. Looks like were gonna need a bigger podium. The Volkswagen Golf family. Motor trends 2015 cars of the year. Lets get more perspective with retired colonel jack jacobs. Earlier we werent really sure about the hostage situation. They said they want to go at martyrs. French Authorities Say they have a hard i would say, road to hope athoe at this point. They want to take them alive nop more tragedies. But i mean what do they do . Hows this going to work out . Well, usually these situations end badly. Its extremely difficult to capture the bad guys alive and save the hostages. Invariably there are casualties involved. These guys you know theyve got no place to go in any case and the likelihood is its not going to end well. All the Tactical Training the fire support, the overhead the helicopters, the intelligence cordoning off the entire town all that stuff notwithstanding usually it ends badly. What really frightens me 88,000 people involved in the manhunt. These are two guys with ak47s that were able to do this. Theres ak47s you know i dont know whether you call them loose ak47s or you can. Theyre everywhere. So any two people at any time given the right training can have the whole world watch this horrific situation . Yeah. Its really kind of interesting. We have a tendency to focus on these guys being well trained. It doesnt take a lot of training. This is not the invasion of normandy. Is this days months worth of training . Couple of months. You go through basic training. You start off knowing absolutely nothing about anything. And in six to eight weeks how do you get ak47s in france . They have the strictest gun laws. But criminals can always get guns. They certainly can. Is this an intelligence failure . The reason i ask is if theyre on all these watch lists and i assume we have lots of people on watch lists, how do we monitor them . And is there a way to monitor them be rt . Thats a great question. Theres a big difference between information and intelligence. We have all the information we need we just need to sort it out and put it into finished intelligence. In this case in france they not only had all the information, they also had the finished intelligence. And we had been watching them. When we say were watching them, we dont have a cop car tailing these two gentlemen every day wherever they go. No, but in france they can follow the telephone conversations everywhere they go. How many people are on this list . A very large number. Is that a hundred, a thousand, ten thousand . Thousands. So our ability to actually monitor these people in a meaningful way i assume is a challenging project. It is challenging. But through the process of elimination and doing serious looking at who these people are and what theyve done you can narrow it down so youre following the people who are really significant. These guys were really significant. We knew that. The french knew that. At least one of them spent time in jail. I mean he was more than a petty criminal. Look you clearly have to blame them. Therest theres no question. But why arent we looking at ourselves saying where did we make a mistake and what do wu do about it . Internally were doing that but at the end of the day you just do so much because the political culture is such that it really wont permit us to do the things we really need to do to prevent this from happening. If you think its not going to happen or cant happen here, it certainly can. You made a lot of arguments around the civil liberty issues. Its a challenge. The balance between Civil Liberties on one hand and safety on the other is a real challenge. And we have to pay some attention to that. Okay. Colonel, thank you. Thanks for having me. Suspects have vowed to die as martyrs. Were on the scene this morning as this tense hostage situation is taking place. Hadley . Good morning, andrew. We have just arrived on the scene here just 30 miles northeast of paris in the town behind me two brothers are holed up in a printing business. They are surrounded. There is no way out for these two brothers. On the way here hundreds of armed vehicles Police Officers lining the roads. You can see behind me hundreds of Police Officers here trying to secure this town, trying to make sure no other hostages are taken. Nbc news is inside the town. We understand at least one hostage has been taken by these two brothers. There may be more as many as five, maybe seven. We understand this printing business, people were working in the business at the time that the hostage situation occurred. There may be as many five working at that time. We also understand from french authorities the most important thing is the safety of those hostages. They do not plan to move in unless these negotiations break down. We do know they are talking to the suspects. You also have to remember france president Francois Hollande has the last call on what is going to happen today. Thank you, hadley. We will continue to monitor this. At the same time were also watching what the markets have been paying attention to. We have predicts from the jobs panel. That job report is just minutes away. The official clock and the countdown is on. 8 21. Nine minutes, a little under nine minutes before we get that number. By the way, make sure you stay tuned to squawk box after the jobs number. Well have fed reaction from chicago fed president Charlie Evans. Stick around. Is there such a thing as a sure thing in business . Some say buy gold. Others say buy soybeans. I say, buy comcast business internet. Unlike internet providers that slow down when traffic picks up, you get speed you can rely on. Its a safe bet. Like a goldplated soybean. Reliably fast internet starts at 69. 95 a month. Comcast business. Built for business. Were now just minutes away from getting the widely watched december jobs numbers which means its time to play predict the payrolls with our panel. Everyones got their prediction sticks ready to go. You dont have one on you. But we are. Were going to start to alan and ask you for your prediction, please. Alan . I hate making predictions about the monthly numbers but since you require me to my best guest is around 225,000 jobs which is a solid report. I think the Unemployment Rate will continue to edge down. It looks to me like its continuing to heal. I dont think well see numbers like last month of over 300,000. I think were due for lower numbers just by chance given the volatility in the numbers. Diane . I dont have a stick, sorry, but 240 on the total and 5. 7 on the Unemployment Rate. Obviously we will watch for the revisions if we see a down to november. And we know reversion to the mean is unfortunately one of the biggest guiding tools on these numbers. Rick, your numbers, sir . Well go 233,000. Okay. Weve got to move around quick. Kevin . 275. I think the data works. Look at you. Look at you. Mr. Leisman . 250. Okay. Well hold you to it. Joseph kernen . I love new york. Thats a nice sentiment. Did you draw that yourself . Yeah. I love new york. I heart new york. Nice. Okay. Miss quick . I go with 260. It makes me nervous to hear rick go low because hes been close with these. And im the pessimist of the group. There you have it. 200. Nobodys under two. Thank you, everybody. Were going to have much more from our jobs panel right after the numbers come out in just a little bit. We are also monitoring that situation in france. Hostage negotiations continue at this hour and we will bring you any updates along the way. Up next though we have the december jobs report. We have the numbers, analysis, and what it means for your mo money. Right now as we head to a break look at the u. S. Ekquity futures. Stick around. Squawk box will be right back. Barbara just bought a bike. She wrote a tweet about it. You cant learn much from that. But take data from millions of tweets combine that with your companys supply chain and sales data. Apply ibm analytics and expertise, and all of a sudden, you can learn which bikes to build what to make them from, where to sell them. Because barbara and the world just told you how to build a better bike. Theres a new way to work and its made with ibm. Welcome back everybody. Were just a few seconds away from the jobs report. Weve been watching the futures ahead of the numbers and they have been weaker all morning long. Right now dow futures off by about 70 points. Cnbcs Hampton Pearson is standing by at the labor department. He has the numbers this morning. 252,000. December nonform payrolls increase by 252,000 jobs. The Unemployment Rate is 5. 6 . Average Hourly Earnings decreased by. 2 . So we have the overall number in line with consensus but a down tick in the Unemployment Rate and a down tick in average Hourly Earnings. We had significant revisions. October and november an additional 50,000 jobs over what was previously reported. Including an increase in that blockbuster november number from 321,000 to 353,000. Novembers hourly average earnings were also revised downward. Now the new number it was an increase of. 2 . Revised downward from 0. 4 which was the original number for november Hourly Earnings. Year over year weve had a 1. 7 increase in average on Hourly Earnings. For the calendar year the jop gains, 2. 9 million jobs. Thats the largest calendar year gain in job growth since 1999. Back to december by category big pops across the board. Professional and Business Services, plus 52,000. Construction up 48,000. Food services and drinking places added 44,000 workers to payrolls. And the Health Care Sector added another 34,000 jobs. The average workweek unchanged to 34. 6 hours. Very little change in the seasonal adjustment as far as the Unemployment Rates. It was. 1 lower for 3 of the 11 months. Longterm unemployment 2. 8 million. The Labor Force Participation rate did drop last month down to 62. 7 . The so called real Unemployment Rate is now down to 11. 2 . The lowest since september of 2008. Back to you guys. All right. Lets get some reaction from our panel. Rick steve alan krueger, diane swonk, and kevin hessett. You know how myth busters says dont try this at home . The plus or minus on my model is 50,000. Thats over since 2000. And im very happy to be there. I just made it up and i was close. I was closest. 250. Oh, i got 260. I just totally made it up. So all my work is for naught. Heres the thing. It actually is not good for my model in the sense that the prior month which my model was still at 220, whatever it was, went further away. This strength in november is interesting to me. And the thing that jumps off the table is just when you think you understand the dynamics of the job market which is that is stronger job market should lead to higher wages and attract people back into the workforce. What happens . You get a stronger job market you get not only a downward revision to the november earnings. You get a negative number for december. And you have more people leave the workforce and a decline of the rate. I submit that understanding the market is a job for brains bigger than mine. Kevin . Thats why youre going to me . Exactly. Its a low bar. Yeah. If we add the upward revision basically it was closer to my number than yours, right . So we got a little bit extra before. I think its a very strong labor market. And that its been a strong labor market for a long time. But a pushback how strong can it be with these weak wage numbers . There have to be weird compensation things if we dig into the data. Whats going on is we hired a bunch of low wage folks at retailers and other stuff like that that changed the average. I think in the end if were going to take an unemployed person and give them a job, theyre probably not the highest wage person in society. So i think it kind of makes sense. But i agree with what alan said earlier. With gdp growing, with unemployment going down and the employment soaring like this. Tough start to see wages. Alan youre brilliant, but not to put you on the spot your models not working either in the sense that you were suggesting that its the shortterm rate and whats happening in the economy. And i would think under the frakwork that youve laid out, alan, we should have rising wages. Ill take half credit. Certainly the wage number is the puzzle. I would look for revisions there. Im not quite sure whats going on. I wouldnt be surprised if that was a big enough shift in the last couple months. On the other hand on Labor Force Participation, this is what i expected. Thats true. I think what were seeing is the withdrawal from the labor force. Thats why i think its important to keep the longterm unemployed to search for jobs to help get them skills so they can get better jobs in the force. I think thats a big loss to the km i. Diane, is this a is this goldilocks for the fed . Strong job growth . No. No. No Wage Inflation at all . No they want Wage Inflation. Remember . You know its not goldilocks steve. The importance here credence to mary daly at the San Francisco fed who works for John Williams whos with voting now on the Federal Reserve that this year might be harder to get the wage gains wed like to see than we had hoped. Im expecting the Unemployment Rate to dip below 5 this year. And i know many within the fed system who now think 5 or lower may be where full employment is. I dont know that im there. This data suggests we need more work. Diane, when do we see like a net positive from the plunge in oil . Im trying to connect the dots of how you finally hire people. To offset the jobs we lose when they pull back. Right. You saw some of that. The food and drinking establishments continuing to hire i think that is related to what we saw in terms of oil prices coming down. And i think thats good news. The construction employment up that was another good piece of information. And i think thats important. On the professional Business Services side we have seen a major shift away from temporary hires to more permanent hires. Accountants, architects a lot is compliance. Theyre hiring a lot of accountants. Whats interesting on this is a couple of things. One is we will get a pop. It will be interesting to see what 25 states in 2015 are planning to create minimum wages. We have hired a lot of lowwage workers out there. Its a point that kevin made earlier in the conversation. Can we [ overlapping speakers ] i want to ask rick something and kevin about this. Ive got two long pieces in the journal ive got to read to understand this 30 40 hour thing thats going to get vetoed. Would that hurt unemployment . Its already helped employment, joe. Then why veto it . It hurts hours. It hurts hours. It helps the numbers of jobs. We saw in the Retail Sector hiring up because of fears of that they hired more people and cut back on their hours. The journal, kevin, seems to say the president is having it both ways. So the question is the Health Mandate kicks in if someone has more than 30 hours. You lift that to 40 hours, maybe there are people that work 43 hours that lose some hours so its not a net positive. If you look at the distribution of hours that youll see, the 30 hour thing was way more marginal than the 40 hour thing. Well, weve seen it. People were talking about like the restaurants its where people usually work a 30 hour workweek. They actually work 43, 48. Rick are you still there . Yeah im here. What you calibrate is what you get. If you calibrate 30 hours, youll have people working less. If you calibrate 40 hours, youll have people working more. In terms of impact, what employers have to do insurance, how it fits in. This is what e the government gets for tinkering fop try to give 30 Million People more health insurance, they take giant swaths out of the machine of the u. S. Economy which has always been calibrated to 40 hours unlike france. And, you know its in hand with what the fed is doing. You look at wages. You look at globalization. You make macro conclusions that theres no shortage of uneducated, low Skilled Labor in the world and you can move things around pretty good. And theyre surprised. Back when i traded in the 80s 250 was about the same number it is today. But things are much different. This is the new normal. And if were going to sit on slurpee forever, were not going to have this be our new normal. Were going to have bubbleicious issues that will come back to haunt us like the notion of low paying jobs which is a shame and parttime. The administration wont even admit that dynamic. Everybody can see that its real. Okay. Rick, well leave it there. Well hand out some gum during the commercial break. When we come back, from the windy city to the big apple. Chicago fed president Charlie Evans is in studio. Hes going to be with us giving his reaction to the jobs data where Interest Rates may be headed and the feds assessment of the economy. Squawk box returns in just a moment. In my world, wall isnt a street. Return on investment isnt the only return im looking forward to. For some every dollar is earned with sweat, sacrifice, courage. Which is why usaa is honored to help our members with everything from investing for retirement to saving for college. Our commitment to current and former military members and their families is without equal. Start investing with as little as fifty dollars. Welcome back. For more reaction to the jobs report Steve Leisman is here and he has brought a special guest with him. Yeah. Its a great pleasure to have chicago fed president Charlie Evans. Just to react to that number that just came out and see if we can help folks process it. I know you want to take a step back and think about it for awhile, but the market is immediately processing it into fed policy and what the outlook is. Let me get your first thoughts on the level of job growth that weve seen which is they revised up that big 321,000 number and came in with a strong 250. But also if you wouldnt mind putting that in context of the weak wage growth thats out. I think employment growth has been very good for quite a long time now. And thats an important criteria for us to judge success. If you go back to september 2012 when we announced open ended quantitative easing additional purchases, we said we needed to see substantial improvement. Weve seen that and weve seen well over 200,000 for a long long time. Good Good Progress on employment rate going down. Thats good. Economic activity seems to be strong. And so feeling pretty confident about the outlook. How big a story is the decline in the Unemployment Rate . And you know the criticism is how is it possible that youre still at zero with a 5. 6 Unemployment Rate 200,000plus jobs month after month. This is what . The 11th month in a row weve done it. How is it possible that zero nothing is the appropriate Interest Rate . So weve seen Good Progress like i mentioned earlier. And continues with the Unemployment Rate. Its really come down quickly. I think what we have to keep in mind in terms of the overall stance in Monetary Policy is we also have to be paying attention to inflation. And that wage number you saw this morning going down is somewhat indicative of the low inflation pressures that weve been seeing. Earnings growth you know on average its been 2. 25 across a variety of measures. Now its lower for average Hourly Earnings this morning. I think if were going to get inflation up to our 2 object i have objective, well have to see wages increase more. I think thats indicative of the dilemmas were facing. I want to explore that patience on the sense that you have said that you dont think the fed should raise rates this year. Does this make you more firm in that notion . When i answer the question thats posed to us on what appropriate Monetary Policy is in order to hit our objectives, it comes out for me that we shouldnt be raising rates before 2016. If things transpire as im expecting. Im hoping inflation is going to pick up. I think we need to see more of that. So yeah i think id like to have more confidence were going to get to 2 by 2016 would be great. 2015 seems like the minimal allowable thing. To get there, i think we need continued accommodation. We always talk about zerp and what the risks are to be in for too long. Im just wondering when youre discussing, all sitting around is the only risk you ever discuss in terms of inflation, do you ever say maybe thats not what is going to be the negative outcome from being at zero too long . Maybe its going to be something we dont really understand. People would say in 2004 the fed was at zero for too long and it ended up 2008. Is it possible that theres money going too far out to risk spectrum we merging markets or something . We so you do talk about it . We talk carefully about what the ramifications of our policies are for the economy, inflation, financial markets. For all of the components. I disagree with your characterization of 2004 from low funds rate to 2008. Has nothing to do with it . I dont think thats causality. Theyll be talking about that for the rest of time probably. Decades for sure. But i do think that you know, weve got a lot of accommodation in place right now. We should have goaloriented policy. Were getting closer on the economy. Although, even at 5. 6 im inclined to think that sustainable unemployment is 5. 25 and less than that. Given how europe has been are you guys Walking Around like this just wow, we acted fast hard aggressively. Look at the amateurs over there. They dont know how to do extraordinary things. When i look at europe thats not what i see. When i look at europe i say i dont want to get to a situation like europe is in and i want to make sure we get inflation up to our objective. If it moves down thats a challenge. Can i ask you quickly, though how much attention to you pay to global events Global Markets . Or is it an entirely u. S. Based scenario . We Pay Attention to anything and everything that can affect the u. S. Economy and us achieving our mandates and global effects are very important. So making sure that the slow Global Economy isnt going to slow the u. S. Economy. The effect on cost and things like that. Currency markets too . Like the strong dollar . We look at what relevant costs are for manufacturers and consumers and everything. And prices are going to be part of that. Were also looking at implications for the u. S. Were cognizant of the implication it has on the rest of the world and we Pay Attention to it because it has a rebounding effect on the u. S. Too. What about the signal when you look at low Interest Rates, low inflation . Do you feel thats a signal that the market is feeling that the Economic Growth is not what it appears to be . So im definitely very concerned about the tips data. Its moved down a lot in terms of future inflation and break evens. Its really very low. And thats either an assessment by investors that theyre expecting continued very low below our objective inflation for another five years beyond the next five years. Or that the cost of low inflation is potentially much higher than theyve ever experienced before. And the cost of high inflation is not. And so they dont need to be compensated for that. And so that really worries me. If we ended up in a low inflation environment and it was very costly, that might be associated with a global theyve got similar events. That would be much more troubling. I dont see why we should be in a hurry to move off our current accommodative policy. We ought to be confident we are going to get inflation up to our 2 level. We ought to see wages growing in the 3 4 range. That would be associated with structural productivity growth and average inflation we are hoping to get. Id have a lot more confidence that we are on the right track if we had that. President evans, thank you so much for being with us today. It really is a pleasure. Steve, thank you for bringing him. All that cheap money got us this studio by the way. We could not have afforded this. Thank you. So accommodative. I hope it was a big investment that moved a lot of jobs. That would be the point now, wouldnt it . Thats how it works. Systemic risk all through this. When we return the latest on the dangerous situation in france. Multiple hostage situations as we head to a break though, check out the futures. They did turn around. Dow looks like it will open down about eight, nine points. Financial noise financial noise financial noise financial noise. Weve got breaking news out of france this morning. A manhunt. Shootings and multiple hostage situations. Michelle carusocabrera has the information. The Police Released a be on the lookout for two suspects for the Police Officer shooting yesterday. Telling nbc news in addition to being connected to the shooting yesterday, these two individuals are connected to the two other suspects in the mass murder at the magazine headquarters two days ago. If you are just joining us there are two hostage situations under way in france right now. Several people being held at a kosher supermarket in eastern paris after a shootout involving a man armed with guns. There were unconfirmed reports the man and now perhaps the woman we saw in the picture were the same as the suspected of killing that policewoman in paris yesterday. The two photos we showed you could be the same people inside the kosher supermarket holding as many as five hostages there. The reports are they are also connected to the attacks earlier at the weekly newspaper Charlie Hebdo. This comes as those two brothers who are suspected in that magazine terror attack are cornered inside a Printing House northeast of paris. Theyve taken a hostage, as well. They are telling police they want to die as martyrs. Security forces surrounded the small Industrial Town where they are holed up only 8,000 people. Its near Charles De Gaulle airport. It is described as a massive operation, as well. Authorities evacuated a nearby School Midday after the suspects agreed by phone to allow the children safe passage. We are showing pictures of paris. These are live pictures from paris near the supermarket hostage situation. Its a very complicated situation at the moment. Two hostage situations with two suspects in both locations. We are waiting to see how they are unfolding. All these individuals now being confirmed by police they are connected to the earlier shooting this week. Back to you. Okay. Thank you, michelle. What can be said . Its a crazy story. Market reaction to the jobs report. I wonder if it comes to a head today. Would you think so. These situations dont last for long. If there is any way to save the people they will. A look ahead to mondays big show. Welcome back to squawk box. Its been a great couple of days in new york right across from radio city music hall. The Financial Capital of the world opened up with open arms. Many were here this week sharing their perspectives on whats going on in the markets and business. Monday, we have another big lineup. Bill simon ceo of walmart u. S. , gary parr and ron baron. Starting 6 00 a. M. Eastern time. They said come back here for sure . They said come back here for sure. This is it. We are going to go downtown and send it off to squawk on the street. Have a great weekend, everybody. Good morning and welcome to squawk on the street. Im david faber along with jim cramer. We are live from the new york stock exchange. Carl has the day off. We are going to have more on the situation involving that french terror suspects or a number of them in a moment. Taking a look at futures after the december employment report showed better than expected job creation last month. You can see its not doing too much for the equity markets at this point. It has been a stronger week for the markets, much stronger than last week