>> enjoy your long weekend, sara. >> and you simon. >> over to you, carl, for "squawk alley." >> 8:00 a.m. at the white house cyber security summit, in stanford, california, 11:00 a.m. on wall street, "squawk alley" is live. ♪ ♪ joining us for the hour this morning mike san it tele, senior columnist at yahoo! fi naps. kayla and jon are out look who decided to drop by. >> good morning. >> kelly evans what a free throw treat -- treat at post nine. >> treat for me.

>> dow above 18 k brent above 60, european gdp obviously pretty dmnice. hopes for a greek deal over the weekend. mike, are you ep couraged here? >> i'm encouraged by the way we got here fighting our way back. two weeks ago, kelly, we were talking about how it looked like last year in many respects you had the rough january, and last year we bottomed on february 3rd. this year might have been earlier. doing better actually to this point of the year than last year. i think it was when the macro huge volatility moves in other asset classes kind of callmed down and the cyclical stuff in the u.s. and the european stock market is doing well, it reminded me when the fed was doing its rounds of qe seemed like when it was pulling the trigger on that you were due for a growth pick-up. kind of a lagging thing. that might be what we're seeing in europe as well. >> how much is oil, my concern, and what sector powers us if forward for the rest of the year? >> those are totally good questions and we don't know. the index effect is tough right here. a lot of the bond equivalent

type stocks, the staples look tough right now, and so yeah, the cyclical stuff is doing great, autos, retailers at new highs so the domestic u.s. economy looks like it's carrying things, we thought that was going to be the story coming in. >> i made a list of all-time highs today, disney, estee lauder, home depot, low's, starbucks, sherwin williams, hasbro, not counting an ingersoll rand, things that are ostensibly leveraged in europe. are we reading that wrong? >> i don't know that you're reading it wrong. that stuff makes some kind of sense. the industrials have not been a leadership group. it's a dollar issue more than anything else. yeah, it's been what we've expected coming in terms of u.s. consumer tail winds despite mixed data but we used up a lot of energy to get here and not as if there's a lot going beyond. nasdaq 5,000 we will hear a lot about. >> we will hear a lot about how healthy is the u.s. consumer or isn't it? we're seeing a rotation in the way people spend today and as we

move through the retail part of the earnings season and we get big misses we're going to be reminded it's not on breakfast cereal and campbell soup. >> "usa today" poll people all the gas savings what did you do with it? nearly half said it made no impact, 30% say saving more, less than 20% say spending more. >> it's been a very rapid drop in gas prices. people don't extrapolate that out. >> the opposite is supposed to happen traditionally. you're supposed to see the most benefit from the consumer spending boom when they initially drop and it wears off. >> i don't think when you ask people if their behavior has changed or internalized the idea this is the new level for gas prices i don't think that's the case. the pay down of debt, yes, net slowdown in credit growth because people throw gasoline on their credit cards and float it and if you're paying less you're racking up less on the credit card. it comes out as a net saving. it's not as if you're throwing the money in the bank. >> interesting february you mentioned bottoming last year,

last two februarys have been pretty good. this will be the best february if were to end today since '98. >> not that short a month, carl. >> i know that's turning head, the idea that january was rough -- >> last year we did nothing until may. chopped around and lifted off in the spring. >> i was shocked yesterday to see we were almost close to record highs. goes to show what kind of feeling there's been. >> markets are a big story. cyber security today joining us from palo alto this morning, managing director of menlo ventures one of the top u.s. ventures in u.s. securities this morning. nice to have you back. >> nice to be here. >> is this dog and popeny stuff going on out there or will we be talking serious policy? >> it's a very important first step. i want to commend people when they take a first step but it's a mini step. we need to do more to make sure we take the threat of cyber security very seriously. >> eamon javers is there this morning. want to give us a curtain razor

what we can expect? >> good morning, from stanford, where we're expecting to hear from the president later this morning, going to be signing an executive order here focusing on information sharing between the private sector and the united states government and government intelligence agencies. it's all about speeding up the ability of government and the private sector to really respond here to the cyber attacks in real time and going to be hearing from apple ceo tim cook, a whole range of other ceos and top executives will be here. they're expecting about 1,000 people but a couple big names not here, carl, and that's raising eyebrows, ceos of google, yahoo! facebook, all are not here. they've sent lower-level cyber security experts to the white house cyber security summit and that is getting some attention here as people look at that as a little snub to the white house based on some of the nsa spying scandal fallout. still tension here between the silicon valley community and white house and the federal government. that's being worked out today and white house people tell me last night they think it's going to take some time for some of

that healing to take place an they're committed to coming here again and again to make that happen. >> i'm curious, eamon, pick up and ask, what to you would be the most positive outcome from the summit today and the most negative one in your view? >> well what's interesting -- >> sorry, vin go ahead. >> the most positive thing they're doing something. the negative outcome is that they're not doing enough. >> well, that's a pretty simple way to put it. know what i'm trying to say? what are we trying to see accomplished as a result of the summit when so much is focused on who's in the room and who's not and when you read through issues that range from preventing a cyber 9/11 to things that seem much more smaller and focused? >> i thinks the most important thing you're trying to do is make sure we have a framework to share information and that we do it in a way that companies can do it without liability. what they first need to do is recognize the importance and make sure we can get the information out so people can prepare. we are still not spending the

amount of time and sources on the cyber security problem. it's much bigger than people think. >> it's interesting you say that. all through the sony hank, mike, we looked at fireeye as a proxy. why wasn't it busting out? today highest since july. do you think at todays are changing? >> it could be. i wonder beyond policy standards what it's going to take. you see companies look at other victims of the stuff and still don't ramp up spending. i don't know if theres has to be some other catalyst. insurance companies say you have to build that much more of a robust system. i don't know what's going to be that catalyst. it seems as if like it's now kind of this board level idea as opposed to just in the i.t. department. >> that's a perfect question for you, has it risen to the level you don't des delegate these decisions. >> it has. ceos have gotten fired. amy pascal is a good example. i looked at the data from wpwc

5% of the budget is spent on security probably from 4% to 5%. that's like protecting a tiffany's with a dead bolt. we need to make sure we spend the right amount of money. this is a threat to our society. >> at the same time, another one of your points it would be a bad idea to transfer liability from the user to the software maker. eamon javers to flip this back to you, i'm sorry, eamon is clear, bring it back to you, is that one of the main concerns here about who ultimately as you say, you know, we have to assure we don't stump the industry, when you get robbed you call the police, talk about the equivalent as you see it? >> yeah. the point -- what we have today when you get robbed you call the police, a cyber threat you call the fbi, the fbi says you want to talk to private folks to help you. we need a better way of addressing that. the answer cannot be put the liability on the software maker. that's like saying i'll put it

on rolex if the watch gets stolen rolex is responsible. that doesn't help us. >> is this going to be the domain of the big players who are already well capitalized like the names we've mentioned already or still room for start-ups to move in? >> plenty of room. i mean there's a lot of innovation waiting to happen. there's great companies like palo alto networks and fireeye leading the way but a lot of the really interesting things are still happening, the start-up stage. we have companies like bit side, bubble wrap that are making big innovations in security. >> does it matter what sector they target? i mean is it -- if i have a security it firm, if my clientele is retail am i more valuable if my clients were banks or health care? >> no. this is interesting. when all the retail things were going on last year one of our companies actually assured that health care companies were most at risk and now you see the anthem hack. my feeling this is across

verticals. more than retail i worry about health care and utility, exposure to society is much higher. >> this brings up an issue with the life lock company, that grants observer drew its readership too this past week. one thing life lock does, who's watching this entity if they're the ones that have all your personal data, trying, of course, to help you keep it protected but ultimately needing to make sure that data is protected in their systems as well. who is going to be the entity or how much should we trust that these companies are doing all they can, whether it's our health records, whether it's our social security numbers, et cetera, to not be vulnerable to a hack? >> yeah, that's why i think we need a good standard and some way, like moody's does credit ratings, we need a security rating to really understand how secure is life lock or how secure is some of the other places in which information is being stored. >> that's an interesting idea. >> yeah. >> can't decide if i want to be a cto or if it's a good time.

i guess you would probably say it's a good time. >> it is a good time. it's an important issue for us to solve. one of the most existential issues of our snims wasn't it doug mcmillon of walmart that said the only blank check he days. is for security t >> banks say the same thing. >> any time your position is really on the ceo's radar and the board you get resources, priorities. >> not a lot of pushing on closed doors in that meeting. you're going to stick around. appreciate that. speaking of the white house, senior adviser valerie jarrett will be on "closing bell" this afternoon with one kelly evans talking cyber security. begins around 4:40 eastern time. next up, in china, companies usually hand out red envelopes of cash to workers on the event of the lunar year holiday on wednesday. this year alibaba's executive jack ma told his employees don't expect anything. he explained why on a blog saying in the past year, alibaba group has not had exceptional results and not any special

surprises. aside from going public objectively speaking we haven't been satisfied with our results in 2014, coming on a week where elon musk like said their any going to be the best, if not already, the polar opposites of confidence here. interesting, right? >> it's very interesting, very interesting the tone he decides to strike here. especially when, just surrounding the ipo there was this global celebration that there was this company that seemed to have no limits to its growth, where many people here weren't watching it. so i do think that it's quite interesting you want to kind of motivate and create this culture and never being satisfied. >> what about the double salary for february, 13 months pay, that's not nothing, right? >> yes, i agree. >> that's something. to some extent this is a company still looking to figure out how not to attract the wrong kind of attention, how not to get put in the same category, look at the gap between the performance of alibaba and apple since alibaba went public. i mean they've really -- it's

moved way against alibaba and in apple's favor. >> venky, is he being too tough on the troops? >> a little tough. i know what jack is trying to say. he's saying not good enough and as a shareholder of alibaba, you like that message. >> do you? i mean i wonder. a lot of other chinese names, baidu this week had a horrible week. but ma has always said, shareholders don't come first, right? >> that's right. >> that's the line. >> shareholders don't come first. look where they priced the deal. we can't anchor ourselves on the highs it reached out of the gate. not really alibaba's fundamental doing and they didn't have to work in the next several months to justify. that price paid on day one. >> i'm thinking as well, too, many of the issues raised since the ipo, i mean when talking about the quality of products sold extent to which the chinese government is involved, i -- they're under so much cuteny on so many -- scrutiny on so many fronts perhaps we're nitpicking on this one. >> i remember the day the ipo

jon fortt said here that jack ma needs more jack mas in china because so much scrutiny and attention to him. i would agree you would probably agree? >> there is a lot of scrutiny, but look, he has done an incredible job building the company to where it is today and ultimately, you know, the share d the stock market is kind of like a mission in the short run and a vain petition in the long run and eventually the results will speak for itself. >> venky, always good to talk to you. thank you so much. >> great to be here. >> we'll see what happens out west happens today. talking cyber security and a lot more. when we come back ahead of nba all-star weekend we will talk to the man behind the most successful basketball game of all time. that's chairman and ceo strauss zelnick will join us in a first on cnbc interview in a moment. kara swisher going to interview president obama on cyber security but first, she's going to talk to us, that's coming up in a few minutes. if you vice president done your valentine's day shopping yet

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with all-star weekend kicking off in new york city one of the hottest video games out there, nba 2 k 15 the highest rated sports game last year according to meta critic selling

5.5 million units to date. joining us in a first on cnbc is strauss zelnick chairman and ceo of the software the company behind the nba 2 k the franchise. great to have you on "squawk alley." welcome. >> thank you. thanks for having me. >> how big a deal is a weekend like this? do you see a noticeable boost in games played, interest around the franchise? >> it's a great question. yeah, this creates a lot of excitement for the brand and for our game and the ongoing engagement is a good thing for our fans, for all nba fans. yeah, it's a great thing. >> and just talk to us a little bit about interest in the nba generally. this has been a time of year when typically paying attention to the super bowl and football and the nfl has been in the headlines in so many ways. what about basketball? are you seeing a pick-up among younger people newer to the game, getting involved, loving the players, et set terra? >> yeah. actually the sport is so reactive these days, just as one

example, you have the opportunity to buy virtual currency if our games and to spend it on the games and that spending, what we call recurrent consumer spending up 90% year over year, one barometer of the explosion of interest. we're seeing max explosion of interest in the international markets. the highest sports rated title bigger than football and think it bodes well for the sport and for us. >> strauss, there's some i guess similarities to other kinds of media when it comes to sports being a bankable type of branded product. is it something that i think for you as a company, escalating cost for the rights, similar story to where the cable networks have to make sure you lock down the ip? >> look, everything that we do is expensive. it's expensive to make the best games in the business, which is our aim and more often than not our result, it's expensive to market them and obviously the rights are expensive. at the end of the day the best

rights arrangements are where it's a win/win the intellectual property owner creates value in the brand and where the licensee in this case, us, does great things with it. that's good for the brand, good for the consumers and naturally good for us. our relationship with the nba strikes a sound balance. you know, we know that we're very important fee payer to the nba as we ought to be. we also know that it's a good piece of business for us. it's a win/win. >> i wonder if someone pitched you on a new game, would you prefer a league-based game like basketball or another grand theft auto and have you guys disclosed how much of grand theft auto is being bought off the store shelves and how much is being bought on-line? >> yeah. well, i mean, everyone, to the just me, everyone would love another grand theft auto. grand theft auto stands alone. we would also love another nba but we're really thrilled with the grand theft auto we have. love to make it bigger. this addition, grand theft auto

5, sold in 45 million units. it's really the industry standard bearer and this basketball game is the highest rated sports title in the industry sold in 5.5 million units with room for growth for both. so i don't spend a lot of time wishing. i'm grateful for what we have the at our company and our goal is to make it better and bigger and always to improve the consumer experience. if we do that, the numbers follow. >> strauss, what's the lay of the land across gaming right now after a spaeight of companies like king digital doing okay today but ha had a volatile ride, the cheaper games, candy crushes of the world, ninja fruit slicing happening at the mall the other day. what is your sense about where people's interests are and what might be the next hot new thing? is it going to be like you said a new franchise under your roof or still too soon to tell? >> you know, i can't help the temptation. we launched evolve which we think is the new thing.

it just came out on tuesday blowing up at retail, blowing up on-line, it looks to be phenomenal. but to answer your question about the next new thing, look, what people think of as mobile gaming, really a lighter experience that one consumes it for a few minutes, maybe multiple times a day, is a different experience and we're thrilled to see that world expand because it's expanded consumers interest in interactive entertainment. we tend to make these very robust experiences that one engages in for a very long time, that people really love and really they see as entertainment experiences compared to getting involved with a motion picture or binge watching a tv series. that's different than a canned yes crush and both are good and anything that reflects the fact that interactive entertainment is the most rapidly growing category suits us fine and we think there are a lot of opportunities. the next big thing is always the next hit and we're more interested in that and

ecumenical about the form is free to play, mobile, console or pc. we want to bring consumers great properties. >> we wouldn't ask you to pile on to zynga which has issues today. bookings disappointed the forecast disappoints, analysts we will be talking to later in the hour calling for don matrick to go, but can you put a finger on what exactly the problem is and was? >> well, i talked about zynga publicly before they went public and they're a very different company today and don is an extraordinarily talented executive and you don't want to bet against don. it is a company in transition and sometimes when there's a transition and a turn, it takes a little more time than a market would like, but as i said, i would never bet against don. >> so you think, despite this call from btig today, that investors should stick with him, give him more time to turn this around, strauss? >> oh, i don't give stock

advice. i just talk about what i know. i know a little bit about entertainment. >> is there anyone you're pulling for this weekend? >> oh, i love all my children equally, thank you very much. >> strauss zelnick, tau for being here. really appreciate it. the ceo of take two interactive. with the nba all-star came this weekend and coming up here, speaking of begin zynga, btig out with the note we referenced, saying zynga's ceo must go. shares sharply lower after the company reported earnings, btig's rich greenfield will join us on "squawk alley." we're back in two. we are the thinkers. the job jugglers. the up all-nighters. and the ones who turn ideas into action. we've made our passions our life's work. we strive for the moments where we can say, "i did it!" ♪ we are entrepreneurs who started it all... with a signature. legalzoom has helped start over 1 million businesses, turning dreamers into business owners.

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it's going to be an interesting weekend in greece. simon hobbs here to talk about that. >> you know, this is a really important session, carl. you could be seeing light at the end of the tunnel for europe and the recovery. this is a seven-year high, broadly, across europe for european equities. let me show you the gdp figures. these are gdp figures at

annualized rates as you would report them here in the united states. look at the stunner for germany. look at the stunner for spain in the fourth quarter. and also, you see the divergence france and italy, not growing the same. when angela merkel talks about the need for structural reform, not qe, or the need for liber liberalization of the markets and economies in france and italy that's what she's referring to. the eurozone economy grew at an annual rate and pleased a lot of people. enable the german dax to break through 11,000, a fresh record high for the dax. it is the best performing of the developed stock markets so fares this year. europe, this is the stock 600, has gained 10%. this is where we are here with the s&p. a gain of 1.7% this year. even if you subtract off the 6% decline in the euro, by investing in europe or german equities you still have a 4 to 5% outperformance after a month and a half, worth mentioning.

banks are a key performer, so far today. they are higher. certainly leading the rally today. you have follow through on the ukraine situation and the cease-fire coming into effect on sunday with russia up 3%, other banks have done well because of the growth, obviously, and potential for qe in two months time. portugal a record low on yields today. energy stocks are doing well as brent remains above $60 a barrel. you see satoil now negative, not sure what's going on there. this is against the backdrop of what is happening with the greeks. looks like the greek prime minister yesterday in brusselss had a good summit. this him wrapping up with his news conference last night. no formal negotiations with the european union at the summit but he had a number of bilateral meetings. the greeks have asked for technical assistance which means the rest of europe is getting in on the books and talking to them. there are negotiations in brussels today between the greek

negotiators and the rest of the european union. you can see that the greek banks have rallied again today. this is, of course, the european central banks supplied them with 5 billion euros of extra liquidity alone because they changed the rules and can't put assets and collateralized and that sort of thing. they day look this could be it if you don't do a broader deal. the hope is there will be some sort of deal when the finance ministers meet on monday. monday would be really conveepts to have a deal with the greeks because whatever deal you have has to go back through the national government and ratified before the whole thing expires on february 28th. >> counting down at this point, thank you so much. simon hobbs. up next chinese smartphone maker chi xiaomi moving into the u.s., and kara swisher, her interview with the president of the united states. "squawk alley" is back in just a moment.

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i'm bertha coombs and here's your cnbc news update at this hour. greece and its international creditors have begun talks to keep the country financed. greece says it will do whatever it can to reach a deal with the eurozone. greece's current bailout program runs out on february 28th. here in the u.s. import prices fell 2.8% in january the biggest drop in six years.

export prices tumbled 2%, the biggest fall since october 2011. the national highway traffic administration says a record 63.9 million vehicles were recalled in 2014. that's more than twice the previous record set in 2004. coming up on "power lunch" brian sullivan is in texas drilling down on oil price and the economy. wonder what the rig count is on that. i'm bertha coombs, back to "squawk alley." thanks so much, bertha. in a few hours re/code's coextuv editor kara swisher will sit down with president obama at the cyber security summit. she joins us from stanford university. good to talk to you again. >> good to see you. >> the avevaters are out. i assume you keep them on for the interview? >> i don't think so. i have a little respect for the president, not you guys. >> that's always the question before a big interview. what do you hope to get?

>> well, you know, i think i would like him to talk pretty plainly about his success or failures in the technology area, his relationship with silicon valley, net neutrality, issues around privacy and, you know, a little bit about his own personal thoughts on technology and where it's going from ai to, you know, the use of selfie sticks. >> kara, same question we were talking about earlier, almost so many different elements of security i'm not sure how you focus on one. do you get a sense of what the president or the white house's agenda is going to the west coast today? >> i think consumer protection is one thing that's important. they have a consumer privacy bill of rights they've been working on and it's supposed to come out. the question is, is it protecting consumer and who owns the data? does the company own the data or the consumer own it? obviously the hacking going on, the security issues around hacking, not -- the sony hack got a lot of attention but there's one at anthem blue cross, one every day, is the government able to protect its

citizens in this way or what needs to be required and then all these issues around, you know, what the access to the internet that i think is important and the ability for citizens to use the internet in a cost -- in a way that's inexpensive because it's a critical part of the future. >> from a symbolic standpoint does this summit mean there's been some sort of de tant because silicon valley and the who us in a post-snowden era? >> i don't think so. some of the quotes i read, a "new york times" story i read pretty strongly still angry about the issues around back doors, around the zero day flaws, and all kinds of things around encryption. i think that's a really big flashpoint between apple and google and the government and many others. i think the question is, is -- are government initiatives like with the na nsa and other places hurting silicon valley businesses. the relationship is frayed. i will be asking him about that. >> kara, what do you read into the who's who of who's there and not there. is this just an interesting

conversational point or something more to it? >> i'm sure he would like the bigger names to be here. tim cook is here, a very big name. renee james from intel is here, the president, all kinds of top security people here. i just think, you know, the big names, mark zuckerberg from facebook, ma marissa mayer from yahoo! and larry page from google, they are not here. but you might not expect them at a summit like this and at the same time, probably two years ago, they would have been here. >> yeah. maybe they'll -- hopefully save their energy for the re/code conference, a different story. >> we'll see. >> let's move on to xiaomi preparing to bring products to the united states. we're wondering if we need to start getting ready to cover some big xiaomi/apple trial. how will this work? >> yeah. you know they're not bringing the phones here yet and i think the patent issue is one of the reasons. they talked about a range of things including the community, they call themselves an internet company. they don't like being called a handset company. that said there's all kinds of issues around the patents and

expanding in brazil and other fast-growing countries so we're not going to see handsets here but they're going to sell a lot of the accessories and different things like that. >> is there any anxiety you can pick up among potential competitors there about xiaomi as a threat overseas? that might be one issue for apple? >> yeah. yeah, i think that's where they're growing in the fast-growing countries and these communities they're building around the phones are interesting and how quickly they can iterate the software is really interesting. i think every company in silicon valley that makes phones is talking about iteration of phones and how you do them quickly. that's a good question for the future. google is working on various phones sort of plug and play and you pull pieces out of. i think the phone will see a lot of innovation coming and being pushed by companies like xiaomi around software. >> just a question related to that. a lot of in reading about when xiaomi might come to the u.s., seems to hang on how they will handle this patent question. can you just explain to me why it seems as though their entry into the u.s. is seen as sort of the opening shot across the bow in perhaps setting off another

round of patent be wars? >> yeah. you know, this never goes on. one of the things i think lynn bin said yesterday there's always patent issues in any place you go around the mobile market and that's going to be an issue. the apple/samsung thing going on since i was 12. i think these things are -- these things just continue and that's going to continue especially with the leadersed a they're trying to fend off incursions by the other phone makers and stuff, but it's inevitable to be a lot more competition in the mobile market as we move forward. >> finally we want to get your thoughts on the sad news of the passing of david carr at the "new york times" who was, obviously, a leading light for those ofs nous the media. >> yeah. >> why should everybody pay attention to what david did? >> oh, david is a wonderful guy. i saw him at ces. you know, david was one of the people that, you know, sort of the old-style reporter who was a dogged reporter, a wonderful writer, a tremendous person, great family man, and just the loss is massive. but he also changed with the times. he was not ever grumpy or angry

about the changes. he embraced social media. he was very active in all kinds of areas. and he kept the old stuff that was great and moved into the new era in just such an elegant and it interesting and quirky and i don't know, there's nobody like him and at the same time he taught -- he inspired a lot of journalists and others to be their own person and i think david, i just -- i can't believe it, i can't believe it actually, but he's just one of the greats and we all miss him. >> it was a shock when the news hit last night. >> yeah. >> the times posted a column he did in 2010 about how twitter would endure which is worth a read. he -- i'll saualways say he was paid to see over the hills and he did. >> he did. he was great. he always was like, again, he never -- a lot of old media people, he would -- i don't know where he would put himself, i don't think he had thought of old and new media would be grumpy about what was happening

and david embraced it and at the same time gast an eye on some of it. he was never impressed but never cynical. that's a really hard thing to pull off and he did it beautifully. >> kara, our thoughts of course with his family, david carr, dead at 58. >> absolutely. >> looking for your interview this afternoon. kara swisher of re/code. >> thanks a lot. >> and we'll be right back. 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. it's the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure.

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coming up at the top of the hour, u.s. stocks hitting new highs, plus green all around the globe. it has us asking, where in the world is the best place to invest? hopefully we'll answer. the founder of diapers.com taking aim at amazon again with a different delivery business model secured hundreds of millions in financing before the company has launched. joining the show. ing for the flowers, our traders reveal better $50 buys for their valentine's. all coming up on "the half." happy valentine's day, carl. >> michele, working a long day today. we'll talk to you soon. zynga shares getting slammed after the company's earnings miss. zynga's quarterly loss accelerated to $45 million. btig says it's time zynga bet a new leader and ceo don matrick must go. joining us rich greenfield of btig joins us. good to talk to you again. >> hi, thanks for having us. >> have you been this outspoken about them before?

>> look, i think there have been mistakes made and what's surprising about the company right now is that they appear to be making the same mistakes launching games too quickly, not doing enough consumer research on their games, and pushing them out. the same mistake that mark pincuss was making when leading zynga and don matrick, supposed to be brought in, despite not having experience in mobile gaming, he had been in the gaming world at xbox and long history in console gaming supposed to be the one that fixed this and zynga seems to be stumbling and making the same mistakes all over again. >> we just had strauss zelnick on here defending him and saying he knows what he's doing and it's a difficult job to turn this company around. >> look, everyone is entitled to their opinion. i think a lot very highly of strauss. in this case the challenges that they actually make a lot of money in some of their core franchises like farmville, poker, words with friends. what drives us crazy they take

all that cash flow and burn it by trying to develop the new hit franchise and they seem to be jumping all over the place to areas where zynga has no expertise and what's most concerning is that the management team led by don, has led to a 50% reduction in the profitability or in the revenue stream sorry of one of their most important franchises zynga poker q4 12 did 50 plus million now it's doing half of that level. they've made very big strategic mistakes and i think that all flows up to don. >> rich, for all of its problems, zynga is not in financial distress, right. they have more than half of the enterprise value in cash and real estate. do they not have time? s there's a super voting structure, not as if an activist can come and force change. so is there not time to figure these things out? >> look, you could have said the same thing under mark pincuss. this company has lots of cash, this company in their core games

actually makes a good amount of money. i think the question is, is there going to be the right leadership to create real shareholder value. look, there's way too much cash in real estate value in our minds to be short the stock at this point. i think the question is, we would love to have a reason to get excited but this management team is not getting it done and it's very worrisome when they're making big mistakes with core franchises like poker and when they seem to literally every time they do a conference call, they're going into new categories, whatever the new hot category of the day is, they're jumping into that category without any zynga expertise in that category. >> rich, unless i'm mistaken, pincus is still the chairman. would he pull a howard schultz and would you have a problem with that? >> if i were mark pin cuss i would fine don mattrick, take back control and figure out who should be running the company ping cuss knows it shouldn't be him but an expert in one of the categories zynga is trying to go

into, they need new management and the reality is we need somebody who is not getting paid the enormous sums that zynga's current management team is starting with somebody who is, you know, really incentivized for the long-term growth of the company, would be good for zynga shareholders. this could be a win win if you bring in the right person. >> certainly a lot of damage today and who knows where it would be without all the real estate we talk about too. thanks for coming to the phone. >> thanks for having me. >> rich greenfield. let's get over to the cme group and check in with rick santelli. hey, rick. >> hi, carl. everybody is talking about 2015, of drexel, i remember it well, there on that fateful day of 1990 when the lights went out but another anniversary this february, because in february of 2006 we brought back the long bond which had a hiatus from 01 to 06 and the point of today's santelli exchange. prior to get rid of the long bond used to be three londs bond auctions a year, february,

august and november. 1998 cut it back to only two, remember there were surpluses in the clinton years, even though as my guest this morning said, it was more of a raiders of the social security fund that really was one of the driving force but nonetheless, 1998 moved to t auctions left in '01 came back in february '06, february august, 2002, 2003, 2004, 2005, 2006, basically $80 billion worth of long bond s were never issued. fast forward to today, those $80 billion of nonissued long bonds are being felt. there's a glitch and the glitch is this. when we talk about yield, i always talk about the cash yields, the on the runs, what we most recently auctioned. if you're trading and hedging at the cme and a hedger's paradise to spread out risks to those that want to get involved, speculators or institutions or what have you, the cheapest to

deliver is an off the run and that off the run is where that glitch was felt those $80 billion weren't there. fast forward to today, thursday we learned the february has a balance sheet of $4.5 trillion. what's the breakdown? treasuries, right around 2.46 dlt. mortgages $1.74 trillion and agencies about $37 billion. what does that come out to in total? 4.57 trillion. so 80 billion versus 4.57 trillion. what do you think the unintended consequences and issues in the future, they could be large. another area. there's four reasons that lately that move treasuries in a big way which direction of stocks, data, what's going on in the three major economies of japan, china and europe, and the fed. stocks have been moving up, yields basically move up. datas has been kind of mixed. take that off the board. europe will probably keep yield down. a tie, up/down, think the fed will make the difference.

if you don't believe it look at 10/versus 2s have done. they've steepened a lot. back to you. >> tick tack toe, thanks so much. rick santelli with the santelli exchange. silicon valley the latest focus and the nationwide measles outbreak after a report that some of the day care facilities in the region have unusually low vaccination rates. our scott cohen is there to investigate in palo alto with the story. hi, scott. >> hi, kelly. from university avenue in the heart of silicon valley. this hit home this week, when we got word that a linkedin employee up in the san francisco office, had come down with measles, potentially exposing hundreds of bay area rapid transit commuters to the disease and then here in silicon valley, wired magazine started looking around at the day care centers on-site at a number of these firms and found some low rates. you had a google facility at 68% immunization, and a cisco center below 60%.

the experts say that threshhold for what they call herd immunity is 98, maybe 95%, and one disease expert tells us it's generally not a problem if you have low rates here or there, but right now, it's starting to get out of hand. >> we've always had these little pockets and through the years we've had, you know, travel -- unvaccinated travelers go to other countries and come back and find all these people in these schools, but it didn't go anywhere because the rest of the population had good level of immunity. >> reporter: google and cisco both say that these figures are probably snapshots and may not reflect the most recent immunization records turned in by parents. bright horizons, which operates a number of centers and was proactive during the ebola crisis sent out a letter last week to parents strongly encouraging them to make sure all their vaccines and children's vaccines,

particularly for measles, are up to date. there's also renewed effort here in california to tighten some of the exemptions that let people opt out and get this under control. >> interesting story with big ramifications. thank you very much, scott cohen out west today. when we come back, valentine's day out of the box. the co-founder of birch box is with us in a moment. equals great rates. it's a fact. kind of like shopping hungry equals overshopping. if you have a business idea, we have a personalized legal solution that's right for you. with easy step-by-step guidance, we're here to help you turn your dream into a reality. start your business today with legalzoom.

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as the countdown to valentine's day dixes down

deliveries for last print deliveries ticks up. day of beauty product deliveries. what product has the highest demand this holiday. cat ya beauchamp the co-founder of birchbox, a monthly subscription box service that offers sample sized beauty products and joins us at post nine. welcome. >> thank you. >> happy valentine's day. >> you too. >> what are people ordering? >> birchbox we have subscription for me and women and, of course, that's the biggest gift is the gift that keeps on giving so you can sign up. >> giving the subscription itself. >> the gift itself of getting a birchbox every month whether you're a man or woman seeing women do it for men but also seeing women buying a lot of gifts for women. it's a friends holiday too now. we have kits. lip kit called the lip tsaic selling for the holidays. >> you name it. >> right. >> any breakdown on demographics, men or women 90% or what is this. >> women the majority and majority of gifters. it's a great time for guys to be

gifting women. we see a lot of traffic on the site for this holiday from men. mother's day is another one we see a lot of men. >> in general in terms of deciding to get a monthly box like this, this is the kninaive guy, you have to have a certain amount of adventure, you want to have serendipity of finding new stuff, do people stick with it? >> you have to be up for discovery or the gift givers thinks your excited to discover. a lot of subscribers think this is something that might be if fun, but then they realize it's actually cutting through the clutter and making shopping for beauty or grooming so much more fun. so you have people who i think are surprising themselves and absolutely stay, stay for a long time. birchbox becomes a way of life for people. they start with a subscription and then buying full sized products and gifting the birchbox. it's a very compelling proposition to consumers and a great lifetime value for birchbox. >> you guys aren't five years

old yet and you're pretty big already. nearly $100 million in sales or maybe more than that at this point. >> we're not disclosing sales yet. we've grown quickly. the last number of subscribers we disclosed over a year ago over 800,000 subscribers, over 250 employees, just opened our first store. >> i'm curious when you do another round of fund-raising like recently we're talking millions and millions of dollars. is that all going into the product delivery or where does birchbox go next and how do you leverage the 800,000 subscri subscribers. >> the industry is a massive industry, over $40 billion in the u.s. and the fastest growing category within beauty is prestige and prestige on-line. our space, our sweet spot there are going to be a handful of multibillion dollar companies and prestige on-line beauty and we are gunning for number one. >> i'm thinking back to macy's which just bought blue mercury for $210 million in cash. they've been around since '99. >> yeah. >> started off a play actually. >> what's your appetite for

accepting a takeover offer. >> for birchbox the goal is inevitable. we have a business model that's beautiful, makes brands an efficient way to acquire customer so it's adding value to brands and makes customers discovery process so much better and you see them spending more in beauty. both sides of the platform are getting so happy e excited and seeing the value our dream for birchbox is inevitability. this is a company lasting, it clearly works, not a fad, and when we think about what we want we want the company to continue on. it's not just a feature. it's not just a blip. that's what we're focused on long term and how do we build a sustainable strong long-term business. >> we got to go. any disruption from the west coast port shutdown? >> not for us. >> thank you so much for joining us. congratulations on your success. see if you make it to the number one spot as you mentioned to be perhaps on the valuation in the not too d-too-distant future. >> thank you so much. >> a code on the markses here,

mike santoli, busted through 2093 now. >> friday levitation time and we're data-free except for greece really to deep into next week. >> monday closed, tuesday interesting. thanks for coming in. good seeing you, kelly. >> thank you for having me here. >> back to headquarters, michele caruso-cabrera and the half. ♪ welcome to the "halftime report." i'm michele caruso-cabrera in for scott wapner. today's starting lineup, steve weiss, managing partner of short hills capital, jim lebenthal is president of lebenthal asset management, josh brown, ceo of ritholtz wealth management, s sirrat and keith banks president of u.s. trust. welcome to our guests today. our game plan looks like this. mark took on amazon with diapers.com and now he's doing it again with his new company, jet. we'll find out ho