francisco, california, 11:00 a.m. on wall street and "squawk alley" is live. ♪ joom to "squawk alley" for a friday. nick joining us, columnist with "the new york times." great to see you this morning. kayla tausche out today. jon fortt here at post nine. interesting market session. we're off the highs, but s&p is getting attention. start with twitter, shares soaring after the company beat last night and that is a relief for ceo dick costolo who has been under fire for the lack of a clear strategy to monetize

those users. user growth slowed in the fourth quarter where the company blamed an apple ios upgrade and we asked costolo about that as well as the pressures from irn vesters in an exclusive interview. take a listen. >> it was two distinct things that happened. one, in the upgrade from ios 7 to 8, there's an auto pulling mechanism for safari users that authenticated into twitter that previously auto pull, the tweets -- pulled tweets down for those and that was 3 million users, that auto pulling went away in ios 8. we don't expect to get those 3 million users back as we indicated on the call. the second issue a bug related to the way twitter is integrated into ios. it's not a one-size-fits-all fix for us. we've been working hard the moment we saw that bug on our end and, you know, we've

recaptured a bunch of those users but over a million as we mentioned on the call did not come back. >> it's been a while, but anthony nodo did have a famous dm that went out to the world, your cfo, with the benefit of time. can you talk about what that was all about and did you ever say to him, what was that? >> no, i didn't say to him, what was that, because we've all had our own experiences with dm fail. hopefully those will -- dm fail is when you meant to send a private message and you end up sending a public tweet. didn't have a conversation about it. >> some use it as an example of a platform still to some difficult to use? >> yeah. look, we've been clear about the fact that we have a lot of work to do to make it easier to use twitter. one of the reasons i'm so excited about instant timeline is it's going to make it easier for people to drop into the platform andet high value experience without having to figure out what are the 30 accounts i should follow.

that goes for a number of other things across the platform. it's a design issue that we know we need to address and we're going to address it. >> you confirmed the google deal on the call. i don't think you're giving terms. i doubt you'll tell us about potential licensing fees. you've been down this road before. why is it different this time? >> yeah. i think there's one big specific difference about the previous relationship we had with google and this new deal we have and that's because we're now really pursuing this total audience strategy of our logged in user base that more than half a billion people to come to twitter as a logged out users who are starting to organize experiences and content for, and our syndicated audience. >> let's talk about dick costolo for a moment. as you know, last few weeks, there have been -- >> thank you for pronouncing my last name correctly. >> a lot of people have been calling for change at the top. >> ongoing struggle.

>> couple weeks ago, bob peck of sun trust said there's a good chance you would be gone by the end of the year. stock jumps 5%. your reaction to those who want it see you gone? >> listen, if you're going to be the ceo of a public company you better develop a thick skin. that's the world we live in i'm focused on two things, making sure that leadership team, the people working for me and the next level of leadership und he them are working well together and pushing the company forward and improving our pace and quality of execution and secondly, making sure that i'm taking the time to look out ahead of the next hill and around the next corner to be able to prepare the team for the opportunities ahead of us. that's what you have to focus on as a leader and you have to do that while pushing all the outsides noise to the side and focusing on the task at hand. >> can you sit here and tell me that you will be in this chair on new year's eve? will you be ceo by the end of

the year? >> we're going to pick dates that different people want to point out and say i am or not going to be here is silly. i love leading this company, i love doing it, i love the team i've got around me, i'm excited about coming into work every day and nothing i would rather be doing right now. >> jack dorsey with high-profile tweets defending you in the past few days, dick. did he tell you in advance he was going to do that? >> jack and i have dinner regularly. in fact, we have dinner at the same restaurant at the same table at the same time on tuesday night. so it's that regularly. so jack and i had had conversations about it back and forth at various times. it was not a major topic of conversation. but in one of the recent dinners he mentioned like hey, i really want to send out this tweet storm about xyz and we went back and forth on that and, you know, i said sure. you should do that. make sure, you know, it would be interesting if we talked about

these kind of things going on in the company right now. >> all right. so with all of that, stock is up 16% this morning, guys, taking you back. it's about a four-month high on twitter and whether or not it's a squeeze, people still asking questions about this ios 8 issue. jon, asking about granularity in the google deal. >> to me, on ios 8 it's clear these were low quality users, no matter what you want to say about it. these 4 million people were not highly engaged twitter users or they would have just gone back to their phone and resigned in or gone to their pc and signed in. so i'm not really sure how to parse that. what i wonder about looking at the numbers, first of all, they blew out on revenue. give the revenue team credit again. i wonder about the quality of these engagement metrics going forward. they're not going to report timeline views any more. they've been saying monthly active users are not the greatest number. at the same time how are we going to know if they're turning down the quality in terms of who they're counting as a user and

there are more in there. it's going to be harder to know. >> nick, is the fascination and obsession with user count still the most important thing? >> i think for this company, you know, the investors for the first time they should get a pat on the back for not paying attention to user numbers. i don't think we can calculate them. the only thing we can calculate twitter with is revenue. they're doing an amazing job with that. as far as monthly active users or engagement or all these different things, i just don't think it's a number you can add together. >> not the most encouraging thing if i'm an advertiser. >> yes, but maybe there's a way they can do it for advertisers. look, maus, 4 million users is pathetic quite frankly, right. it's what the problem is, is twitter is not trying to get new users anymore. twitter is trying to get old users. in the early days of twitter when going on oprah and there was fan fare everywhere and the cover of "time" magazine they

were having -- what they were doing was getting 500,000 new people a day. it didn't work and they left. it's about getting those people back. i don't see how they're going to do that in the next few quarters. >> nick, i don't know if you're hearing the same things i'm hearing from people who are connected to twitter, basically saying they're probably around 150 million core twitter users, people who actually tweet on a semi regular basis. these are people driving the service forward and frankly they're not tweeting a lot more than they were a couple years ago. the aggregate number of tweets twitter talks about, 500 million i think it is, hasn't gone up that much. don't they have to move the needle on that and they're not giving us the numbers to be able to tell whether that user is more highly engaged. if i'm an investor or advertiser how do i know what health of this company really is? >> you're absolutely right. i think one of the problems has been engagement, hasn't grown in the ways that it had in the

past. i think one of the reasons for that quite frankly is for the core user base, the 150 million users using the service every day was an internal memo that dick sent out where he said one of the biggest problems on twitter is, you know, people bullying each other and saying mean things and the kind of the culture of just attacking other users. why would you want to go to a service where that is predominantly the culture there. that's been one of the problems for that core user base and why they haven't continued to grow as far as their use of it. >> and explains the language dick used in the memos, embarrassed, ashamed, ab surb that the company has not done better. let's take for a moment those investors who believe the model will work, whether about user growth or monetization or what not, does the management team feel stable to you given what dick just said about him and jack? >> you know it's interesting. i know there's been discussions on the board, the board is notorious for push ceos out and

discussions about it this time but what you are seeing if you look over the last quarter dick has kind of, you know, gone around with a fire hose and said let's get stuff going here. so they've put out a bunch of new things. they have group dms, they have video features coming, they haves this deal with google. there are a lot of things that have happened in the last quarter and hopefully we'll start to see them take place in the next quarter that will bring in more revenue. still the biggest problem is that mau number and i really honestly have no concept of how they're going to grow that. >> yeah. lot of challenges and yet so much opportunity it's an amazing story. excuse me. next up, nick, a great piece on google glass in the times the headline why google glass broke and you chronicle the ri and fall of glass and place a lot of the blame on sergei in particular. talk about that. >> yeah. it's interesting. when google x started, you know, several years ago, the executive team at google came up with this

idea for 100 futuristic things they should do. the number one thing, to build some sort of wearable computer. no idea what it was going to be. they brought in sebastian who was the first guy that built driverless cars and said build this lab and started building these glasses and sergei got involved and what happened was there was a split very early on and it was the idea was we know this thing we built is not ready, not even close to ready, but we want to start testing it and sergi wanted to test it in public and how the public reacted to it. he ended up winning all the google x people didn't want do that, wanted to do it in private and the thing back fired from there. >> this is the sort of thing, this development process, the sort of things companies do but normally we don't see it. arguably we shouldn't have seen all this stuff happening. tony comes more from an apple culture working on the ipod and iphone and indications we're hearing he's not going to put new glass out there until it's ready.

always frustrated me this seemed more like a marketing campaign than a product. called a product, really only on sale for about eight months and then it was pulled. what can we learn, perhaps, lessons for the future and how we look at these innovative things that aren't ready yet, that people get all excited about? >> i think that problem is google is the antithesis of apple. if they built google glass and they are working on google glass patent for virtual reality headsets or when working on that we don't see any of it until it is a 1,000% finished product. google under sergey is different. sergei in an interview with "businessweek" and pointed to the glasses and said these things are basically done and the reporter almost fell out of his chair. they wanted to build and beta things in public and i don't think that works when looking at these kinds of technologies and the kind of money investment they're putting into the r&d products. tony fidell running nest,

overseeing the google glass project, he is not going to put anything out until its is 1,000% finished like the apple folks. >> does it allow someone else to do an end run around them? >> it possibly could. i mean they definitely showed their hand when they put google glass out. i think it was a bad idea and a lot of the google x folks i spoke to, half a dozen people that worked on glass, they all think the same thing. they thought that the version they put out was a very, very early version, two to it three to maybe four very versions later should have been the public product that came out. sur g sergei wanted to get it out. >> i had a neighbor working on google glass in engineering who wouldn't wear them in public when i lived out there. >> sergei is the same thing. he was seen on the new york city subway, i got to try his own, saw him at conferences, now he's not wearing them. the guy that made them, the guy that was the biggest cheerleader for them who gets to sign the

checks and say what happens isn't wearing them you have a problem. >> have a good weekend. nick built. we want to check on the markets. right now, dow up 42 points off the high, shares of linkedin soaring after earnings and revenue topped estimates and the company saw a nice increase in the number of businesses using its service to evaluate potential employees. that's going to be an all-time high for linkedin this morning. yelp down big even though profit and revenue did beat expectations probably because the company gave a disappointing earnings forecast for the rest of the year due to slowing subscriber growth. lot of double digit moves up and down, expedia, yelp, twitter. talk about gopro later on. >> all about the guidance of these companies. >> when we come back expedia another stock struggling after earnings and revenue did miss. the ceo is with us to break it down in a cnbc exclusive in a moment. gopro taking it on the chin, down over 10% thanks to a weak outlook and the resignation of its coo kara swisher with us to

explain what gopro can do to turn things around. shocking revelations about russian spies on wall street. are there more of them out there? the doj sounding the alarm and will join us later on this hour. "squawk alley" continues in a minute. opinions. there's no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple, unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score, powered by starmine, will help you execute your ideas with speed and conviction. and it's only on fidelity.com. open an account and find more of the expertise you need to be a better investor. e financial noise financial noise

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welcome back to "squawk alley." watching shares of the maker of

the turbo tax software. the stock is moving to the downside after the company said it has temporarily halted transmission of state tax returns after seeing possible increases in suspicious activity. the statement came after minnesota's tax department said users who filed state taxes electronically via turbo tax were informed a return had already been filed. intuit is in the process of working with state governments to resolve issues but the shares trading down by about 3%. back over to you. >> wow. their most important product and season. thanks, dom. shares of expedia falling about 11% this morning after earnings came in below wall street forecasts fourth-quarter profit falling more than 30% year over year due to the stronger dollar and intense competition in china. joining us exclusively the president and ceo of expedia dara khosrowshahi. thanks for joining us. first of all, let's talk about china. huge market. everybody wants to be in there.

what kind of investments are you having to make in order to grow there and kind of get the foothold that you want and how long before those start paying off? >> well, it is a very, very competitive market. we talk about china being the wild wide east around here. and it's competitive because it's a huge market and an attractive market. a travel market worth over $100 billion, on-line penetration still early, only around 20% are the estimates we've seen, and the growth there is enormous. we want to be in that market and have a majority stake in a separately traded company with a terrific management team and that company is well capitalized over $300 million in cash and we are in a mode right now of g aggressive. aggressively we think that the competition in the market will continue through this year and next year, the competition is going to settle

down a bit, but at this point, we're investing. we saw growth in china accelerate in the fourth quarter and we're fortunate enough to have a separate pool of capital, separate majority opened business right there, that is operating on its own with a great management team. >> now, dara, looks like gross bookings just hotel, gross bookings up 24% year over year, which is good, but the amount of commissions that you are able to get paid, if i understand this correctly from the bookings was down. is that take rate going to come back up or is this the new normal? i mean once it's used to giving you >> international bookings especially took a hit because on average the foreign currencies

we work with are down 10% year night. second a lot of the new markets in which we're in, the average revenue for room night for those hotels is lower than the average revenue for room night for the u.s. hotels that we have. the third factor for us, loyalty programs we're expanding really, really aggressively. for example, the hotels.com loyalty program has over 50 million members, you get one free room night for every ten room nights you book, which is a great deal. more and more consumers booking on those loyalty programs and as a result we're giving them something back which hursts our revenue for room night but ex l accelerates unit growth and more consumers coming to us direct. great investment, happy to make that investment on a long-term basis. >> are you modeling in any relief on 4 x for the coming year? we had jack welch on one of the

shows this year and argued one of the companies that have been dying to go more international, more international, over the past couple years are suddenly glad they have anything domestic. has it changed your view in what it means to be an overseas company? >> no. you know, about half of our business is overseas, half of the business is domestic. and we like that balance. listen, right now i'm loving our u.s. business. it's really strong. it's even stronger because we have travelocity bookings inside our fold as well. i'm happy we a domestic business that's healthy absolutely, but we're going to continue to invest internationally. it's an opportunity because every dollar that we invest now goes further internationally, some of the international companies may be a little weaker and we'll take advantage of that an we think we can balance kind of these short-term investments we can make to drive long-term growth, regardless of currency. our outlook for the year going forward was, ebitda growth of 10 to 15%, not including china,

that's a good growth rate to have on a long-term basis and, you know, hopefully we'll keep that up for some period and hopefully do better. >> all right. well, you're telling us what to expect and we will keep tracking it. dara khosrowshahi, ceo of expedia, thanks for joinings us exclusively. all right. up next, what a move for pandora. shares sinking down now 17% after the company reported slow ad revenue and a weak forecast for the rest of the year. can pandora turn things around? we'll take a closer look when "squawk alley" comes right back. if you're running a business, legalzoom has your back. over the last 10 years we've helped one million business owners get started. visit legalzoom today for the legal help you need to start and run your business. legalzoom. legal help is here. there's nothing more romantic than a spontaneous moment. so why pause to take a pill? and why stop what you're doing to find a bathroom? with cialis for daily use, you don't have to plan around either.

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that's the value of performance. northrop grumman. welcome back. pandora shares are tumbling right now. the music streaming service missed analyst estimates struggling with slow ad sales. joining us right now by phone with more is rich greenfield, media and technology analyst at btig. rich, tell me, looking at this quarter you got to wonders especially with apple coming on strong, with beats integration

into itunes this year, pandora doing pretty well with audio ads in the quarter, does it get any better for pandora or does this just become a challenge to their business model this year that might not go well? >> look this is a company that basically doesn't make money today or any substantial money today. where competition is rising, you know, lots of companies who don't need to make money on music that's an important point for your viewers, whether it's google, whether with what they're trying to do with youtube, amazon with the amazon prime music service, apple now with beats, lots of companies who don't need to make money on music are using it to expand the time they spend or you spend within that company's universe. pandora just faces an ever larger barrier in terms of competition. they will face more and more competition and the other key point is that you've got advertisers, to your point, does it get better or worse, advertisers have a whole new

playground of video options facebook, tain gram, twitter, look at their numbers, across the board, there's so many options beyond the audio only world of pandora. so i think they're just in for more pain as you go forward. >> is this an existential threat here, rich? >> no. i mean look, i think the reality is, just this has been a company that's been talking about how they are going to, you know, long term be the winner and the reality is, music is a really competitive space and they tried to distinguish themselves from spotify or amazon prime music or beats and the reality is, all of these music services are competing for your time and attention. there is just so many choices for the consumer and the switching costs are low, pandora is nice, but you know what, if you have amazon prime, amazon prime works pretty well for lots of consumers. there's just greater competition by the day. they aren't really making money now. and everyone who owns the stock is betting on a valuation three

or four years in the future, a hard thing to do to make the valuation case, especially when you have potential royalty rates going up notably next year. >> to get pragmatic about it, where is the value here? music genome project seems to be a nice job, pandora does a really nice job streaming the order of songs together. how much value does that have if you're an investor thinking about breakup value or if this gets sold how much is it worth? >> when you look at the seize of their universe of monthly users, probably a core valuation you can think about a couple billion dollars. we've pegged that take out value at $10 a share, which is why we've had a consistent sell rating on the name. you can buy it for asset value. not buying it for the actual content itself. anybody can be -- rich greenfield could open up a music service if you wanted to follow radio rules, anybody could be in this business. the reality is you would be buying it for its market share

on smartphones today. maybe it's worth a couple billion dollars sold at $10 a share. >> rich greenfield with btig. rough day for pandora. thanks for joining us. >> thanks for having us. >> rick springfield as i like to call it. to the close in europe in the uk and across continental europe. stocks mixed. in reaction to the jobs number. broader markets finished on the plus side. the telecon equipment maker reporting improved profit margins on track to achieve positive free cash flow by the end of this year. shares of greek banks slumping amid a standoff between greece's new government and creditors. eurozone finance minister due to hold a key meeting on the greek situation next week. that drama far from over. when we come back check out gopro hit hard after a weak outlook for the current quarter. kara swisher of re/code will join us on that. today's big move in twitter still up 15% when "squawk alley" continues. welcome back to

"squawk alley." kara swisher, co-executive editor at re/code joins us this morning as she does on all fridays. good morning to you. good to see you. >> how are you doing? >> pretty good. twitter a big story as you know. >> yeah. >> shares are up on the heels of the strong earnings report.

we talked to twitter ceo dick costolo and we asked him the problems that users stay and engaged on the platform what does he think about it? here's what he said. >> it's not a one size fits al correction. there's a number of complex and fairly detailed steps we have to take people through to get them back into that tightly ingrated experience on ios if they've experienced the bug and so frankly we're pretty happy with the volume of people we have gotten back into the platform, given the steps we've had to take them through and the work on our end to correct the issue. >> did his explanation on this ios thing satisfy you? >> it's just -- it's a thing they've got to deal with. in moving over to ios 8 they had issues around how people were pinged and who was active and who they count as active. they had a fine explanation. it adds to the level of confusion of where user growth

is and with all these companies not just twitter, gopro, yelp, it's user growth and product innovation are the two things that wall street is most concerned about and so they said they're going to be on track for the user growth for next quarter. they're seeing good signs of that now that they've fixed this. they think they're still under pressure over this issue that continues to plague them. even though they make great money they're doing well from a business point of view no question. he's doing a great job with that. >> i'm curious about your take on this tie up with google and dick's explanation of that. from what i understand when they last did the sort of thing five plus years ago it didn't really lead to logged in user growth, didn't really lead to revenue boost and part of their concern was, google wasn't willing to limit how they used the information from twitter. they wouldn't limit it to just search results. they wanted to use it throughout their products and twitter was concerned there could be some strategic damage done to twitter

there. are things really that different now because they're doing this logged out user thing to make this deal that much better for them do you think? >> it's interesting. that was a bad breakup then. that was a really contentious thing that happened between them. twitter was watching out for itself. look at yelp. yelp has been under google siege for years now and doing -- has managed to survive and i think they felt that they needed to have this hookup, needed to be within the search element. it's still important, especially in mobile and it was sort of a must do kind of deal. at same time it's a question, will google help them grow, will it help them with the user growth, help them in many ways. the rumors about google buying them will continue. that's a persistent rumor that's been on wall street. not a bad idea, actually. so i think it's kind of an interesting situation that they're in with them, but, you know, it's a google world we all live in it in terms of search and twitter has to have -- they tried to do things with bing but

it's not enough. they need to find growth everywhere. >> kara, got to ask you, you wrote a piece last week about costolo's tenure about the threat of activists at the door, the quote, of course, that rings in our ears that dick is on the eighth of his ninth lives. does any of this in the quarter change that calculus? >> i think he answered a lot of questions. he's a super competent executive. he gets beaten up by cramer and others but he has done an amazing job with the advertising and things like that. the question is, is the product innovation and the user growth and they go hand in hand. i think he still hasn't answered those questions. he has a great guy in charge, kevin wheel, and that's terrific. but it's, you know, i think the question is, where does twitter fit in over the course of time and the question is, can it continue, you know, independently as it wants to, seems to want to, or does it need a bigger push or be part of a bigger thing. that's a good question. it still -- he's done a very good job in lots of ways. anybody in this job would get

sort of pilloried about that. we'll see how he does. he has a lot of choices himself too. >> that's true. >> next up big moves for a lot of tech companies this morning as you know, gopro, yelp having rough days while on the flip side, linkedin a new all-time high. let's do gopro. holiday pretty good but this outlook is not, why? >> growth in the first quarter. that's it. i mean they had a great people -- every kid in america bought a gopro and now not any more kids in america to buy gopros. it's product innovation and growth. will people keep buying its products, continue to innovate, very much like apple and everyone else. you have to have new products to keep people excited, new accessories, new experiences, new things, that's pretty cool. you know, i think it's a question of whether they can continue and they were warning that the growth in the first quarter no surprise after a holiday quarter is going to be slower and wall street immediately reacts to that worry

about gopro. >> if we take a step back and look at gopro how far up they are from the initial ipo price, forget that they were up near $100 at one point and cut in half stock wise, the margins are pretty good. people are buying their higher end cameras, guiding conservatively, but i know you were kind of skeptical of them out of the gate. has your look at gopro changed as a hardware company over the past few months? >> yeah. i have been thinking about their media. everyone's debating of being the next youtube i think this company has the chance to actually create product, individual and media in a way that i haven't really thought carefully about before. i think it will be a difficult thing, it's not an easy thing, but watch people use this thing and what it results in and it's a little more than just the device. that said they're selling the device at a nice margin and everything like that and the question is can they keep people excited about creating these things and creating more and then i wonder what happens to the media.

they have tony baits in there now, now going to take -- the coo left so tony is probably taking over a lot of those jobs. a lot of interesting people involved that has media background. i'm nrds that part of the business. the question is can they monetize it the same way. >> right. speaking of rumors, i mean they also have to deal with the notion of apple coming in with hardware competing hardware of its own. >> right. >> we know camera on a stick, that's what we called it on the day of the ipo. at least that's what a lot of the bears called it. >> that's what they do well. apple can come in but doesn't mean they'll make a product as good as this. this is no the a flip camera. this is a discreet product different than others, something that you can -- >> i would be shocked. >> if they came with their own product. >> i would be shocked if apple did come in. they like to come in to markets that aren't well served. gopro did an amazing job this holiday season coming out with a high-end hero 4 plus camera professional grade, mid-range

camera not just a dumbed down version of their high-end camera. they're strongly positioned. they've got margins. i'm curious if they can push into a market like chinap that has a lot of products but boy, they've done pretty well. >> but still with devices what next? >> software. >> software. >> exactly. i know but i'm saying that's the question investors have. they're happy with this but now what? >> yeah. >> that's a good question to ask. >> i use the remote software on my phone to control the cameras and it could be a lot better. the process of transferring videos and photos is chunky. >> it's an interesting product. cnbc wants me to wear one all the time and just broadcast. >> that would be some good footage. you don't want to know. >> linkedin at $270, all-time high, almost 14% gain today, doesn't get the attention. why not? >> i'm sorry? what? >> linkedin. >> yeah. >> for the quarter and the stock performance. >> yeah.

linked in keeps expanding and doing well and adding. it's got a defensible business. i think it's interesting that he just quietly in the background just continues to excel at turning in things that investors like. you know, they add to products, continue to innovate. here's a good example, they're not innovating in the explosive way that everybody is staring at like the latest whatever. but they innovate very slowly a and strongly and improving the product and expanding it to other areas. jeff weiner, a really interesting low-key ceo who really does move it forward and i think investors like that. very reliable way. >> you think they're strong on the product side now? they have some changes at the executive level over the past, gosh, i don't remember. >> yeah. >> but it's been a few months. do you get the sense that they firmd up on that line? >> yeah. i think the product is innovating. p i like a lot of the content products they're doing. i don't have my head wrapped

around where it's going. jeff used to run yahoo! media. you forget he was a media executive for a long time and thinking about this in terms of media, not just job search, and they have a lot of directions they could go in. again, if you think about a competitor there really isn't one. like a big one that you would say oh, watch out for apple, watch out for google. there is nobody in the spa space that is doing what they're doing as well. >> deep nashar who was doing a lot of their product leadership and left and jeff weiner is running it himself doing a fine job. >> yes, he is. >> kara, good stuff as always. great weekend to you. >> thanks a lot. >> kara swisher joining us from re/code. thanks a lot. >> coming up, a blockbuster story, a russian spy ring, trying to get inside information on wall street. so are there more spies still out there? we're going to ask the department of justice that very question in a few minutes. but first, rick santelli, on this fine morning what are you watching? >> well, jon, i think the first place to start is i'm watching

10-year notes have a 30 basis points week in terms of change. 1.64 last week, 1.94 today. we're going to talk about num rolling. there was a time when the only thing we cared about was jobs jobs jobs. maybe we were wrong. why? come back after the break. opinions. there's no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple, unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score, powered by starmine, will help you execute your ideas with speed and conviction. and it's only on fidelity.com. open an account and find more of the expertise you need to be a better investor. today, his doctor has him on a bayer aspirin regimen

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up with the top hour will today's jobs report bring the fed into play and how stocks will react if that happens. twitter shares up sharply after earnings. is ceo dick costolo off the hot seat? we wi'll do bait the just ahead. the biggest gopro bull on the street with the stock getting clobbered coming up in a little more than ten minutes. see you then. >> sounds good. thanks. in the meantime to dominic chu and a quick market flash. >> carl, earlier we talked to you about bookdale senior living and told you activist investor tom sandell was calling for changes to increase shareholder value. brookdale has responded saying they are considering suggestions here. the stock up by about 5.5%. interesting brookdale responding to sandell. back to you. >> thanks a lot. let's check in with rick santelli on this friday. >> hi, carl. let's start out, of course, looking at how the market digested the numbers this morning. here we sit at a 1.92 yield,

been a bit higher, at 1.30 basis points up on the week and settled at 1.64. through a variety of santelli exchanges we've talked how the technicals didn't seem in tune pushing yields closer to historic yields around the 1.40 level. any close above 1.86 should be a lot of trapped longs and a lot of longs came in the market buying kicking and screaming because they've been fighting the market for several years. with regard to 30-year bonds they're well through their 2.36 level. there's the technicals. let's go to the real topic today, nummerology. the reason we were all screaming five years ago, jobs jobs jobs, because jobs jobs jobs brings wage wage wage. i understand that the data was good and i'm going to poke a little fun at not only the good

data but maybe the not so good data. seasonally adjusted and nonseasonally adjusted and we're going to continue to try to bring you glimpses into what the world doesn't look at with regard to new merology and on the seasonally adjusted data 147,000 add on revision over the last couple months, 267 on manufacturing payrolls. what few people talk about is the fact that on the nonseasonally adjusted there's two areas to look at. if we look at the household survey, the labor force inkreensed by 529,000 but the unemployment increased by 1.16 million. establishment survey nonseasonally adjusted non-farm pay rolls down 2.75 million. it's apples to oranges an these two have to converge like a spread relationship in the marketplace and that's what we're going to continue to focus on many that i talked to think that the real issue is going all the way back to last year's snowstorm that affected gdp and made it negative. that the seasonalities to try to get that gdp right, have pushed out into other areas of the

marketplace. back to new merology. it's about jobs because it's about wages. that's what it's about. if we look, wages have been for the most part over the last five years they have been flat. if we look at housing, which is another area that is important to all of us, that for the most part hasn't improved nearly at the pace we think. so the reason new merology needs to be kicked if jobs are improving but the reason that they're improving isn't pushing through to the only reason we monitor them, there needs to be issues there. if we still have 10 million people that we need to pull back in the work place no matter how much improvement we've had or the fact that for the most part wages have been stagnant these issues a aren't going to go away. it's more than new merology. it's what's behind the numbers and how we create policy that i think needs to be challenged mores especially on the press conferences we need to ask questions about that. back to you. >> all right. rick, thanks for helping us sort through it. it's going to be a long fight to

sort through all of it i'm sure. up next after the takedown of a russian spy ring in new york the question remains, are there still spies on wall street. we're going to ask the department of justice that question in just a moment. "squawk alley" will be right back. take a deeeeep breath in... and... exhale... aflac! and a gentle wavelike motion... ahhh-ahhhhhh. liberate your spine... ahhh-ahhhhhh...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. yoyour friends have your back. your dog's definitely got your back. but who's got your back when you need legal help? we do.

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one suspected of spying on wall street. so are there more out there? eman javers sat down with the assistant attorney general for national security. he is live in washington with more. >> hi, jon. the department of justice has a new warning for wall street. i sat down exclusively with the assistant attorney general for national security just a few minutes ago here at the department of justice in washington, d.c., and he said spies are out to get the information that wall street firms have. i asked him, how many national services, national spy services, are active on wall street and he said he couldn't give us an exact number but there are multiple national intelligence services operating op wall street and i asked him how those spies get the information they're looking for from wall street. here's what he said. >> they're trying to map out everything they can about how the stock exchange works and to gain financial intelligence and they're trying to do that for a variety of purposes. the message to our firms out to

be clear, they want what you have. >> how do spies penetrate wall street firms, penetrate the institutions on wall street? what kind of techniques are they using? >> so again, ranges the gamut from sex to greed to people who are disgruntled. these are the type of things that they'll -- >> the weak link inside the firm? >> exactly. >> now jon, he also said there's no wall street firm out there positioned to handle a foreign intelligence service on its own. he recommends wall street firms go to the department of justice and the fbi to cooperate if they think they have somebody inside the firm who might be leaking information to a foreign intelligence service. >> wow. how is this different from all sorts of other people who may not be spies, but want information that wall street firms have? is this a different type of threat? just in terms of the data loss? >> well the sophistication and the tactics and the skills really of the foreign intelligence services are what's so concerning to the department of justice. these are very active spy services that have years worth

of history of penetrating american institutions so that's one thing, but the other thing that carlin said that i thought was interesting in the interview, national spy services and we're not just talking about russians here, he wouldn't name any other countries but said there are others, those services sometimes will be working in cahoots really with officials back home to corrupt the profit from information that they're seeing on wall street so it's just like old-fashioned insider trading that's been going on for years in washington, but now in -- in wall street, but now done with a spy twist to benefit the benefactors back home. >> unbelievable. like the cast of "the americans" only on wall street. thank you so much. when we come back, big tech names taking a hit this morning. the dow is up 35 points. back in a minute. it's a fact. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda.

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it's a fact. kind of like shopping hungry equals overshopping. keep an eye on big movers today. we talked about gopro, pandora and yelp, getting hit hard. linked in unbelievable performance, all-time high up 14%. you heard kara swisher talk about how they've been quietly and sutley delivering. >> and can't forget about twitter after your exclusive, up 17%, even better than linked in. >> close to session highs. >> some getting squeezed. >> next week a lot of food companies, kellogg and whole

foods and kraft and so forth, but some tech. tesla reporting next week, cisco, we always know john chambers comes to play when it comes to guidance. aol as well. >> and gopro. >> see what gopro does this afternoon. let's get back to head quarters, scott wapner, and the half. ♪ welcome to the halftime show. meet our starting lineup for today. steve weiss, managing partner of short hills capital, jim lebenthal here, too, president of lebenthal asset management, josh brown is the ceo of rit holtz wealth management and john najarian co-founder of ohm and also hanging out is ben wills his from princeton security groups on the floor of the exchange. senior reporter steve liesman is here on the desk as well. our game plan, looks like this. #stocksurge. twitter shares up after the earnings beat, but is it enough to silence the company's