good morning. it is 8:00 a.m. at apple head quarters in california, 8:00 a.m. on california and "squawk alley" is live. ♪ ♪ good tuesday morning. welcome to "squawk alley." joining us kevin o'leary, chairman of o'leary funds and investor on "shark tank." kayla tausche at post nine, jon on vacation. it's all about apple today.

shares gone to an all-time high, $128 and change as the news flow continues, the market cap worth almost three quarters of a trillion dollars as jony ive gives a revealing interview to the new yorker over the weekend, talked about the apple watch but the news part may have been the reveal apple is in the process of redesigning its stores. ive has been working with angelaant on a redesign and says he consulted with jj abrams on the design of the light saber in the latest "star wars" movies and kevin so much news over the weekend, the journal with a look at the watch and how that's coming together, throwing out some production numbers. feeling more excited about it or no? >> i'm being forced to sell my positi apple position to keep it at 5%. i have certain covenants and how i invest. this has me a seller now. i will go back to full weighting when i get a dip or opportunity. i'm selling into the strength. my concern about this story is

to go back and remember in the late '90s when microsoft was a $620 billion company, we would sit here and talk about how it was impossible for anything to go wrong, world domination software and look at what happened. today we have an ever more concentrated revenue and cash flow from one product, the iphone. i'm not saying things are bad and i'm a shareholder that's happy as can be, but i will selling into this strength. >> you have to hold your nose when you do it? >> i've learned over many decades, carl, this is the right thing to do. when you fall in love with a stock, it will often break your heart in a horrible way. a 5% discipline weighting in a portfolio is prudent. i'm selling into the strength. >> a lot of fund managers last year learned the hard way for what it would not be like holding apple. now a lot of people are following suit. do you think that apple stock has become a crutch of sorts? >> those are the guys that lose 18 to 30% when it turns around

because they're so overweighted. if you let a stock become more than 5% weighting in the portfolio you're insane as far as i'm concerned. you're taking risk beyond market risk. you just have to have discipline. i have discipline. i regret watching it move up every day but i'm forced to remember the history lesson of microsoft. go back and look at that chart and weep like a baby. >> apple's market cap is twice that of math, a feat both companies thought was not possible about a decade ago. >> it is an inbred disease of investors to fall in love with technology stocks. it happens every decade. i'm excited about this company and 5% shareholder and i will be tomorrow even if it goes up another 5%. this thing has been moving 5% a week. that's a lot for the market. >> what if it were 2%, would you be buying or go? >> i have to sell down into the 5% weighting. it's a mandate i learned years ago, protects me as an investor. if it keeps going up i'll keep

selling. still have 5% weighting and redeploy the capital somewhere else. i've lived through this before. >> later in "the new yorker" piece jony ive reveals tim cook has a low opinion of google glass saying, quote, we always thought the glasses were not a smart move from the point of view people would not wear them. they were intrusive instead of pushing technology to the background as we've always believed. we always thought it would flop and so far it has. harsh. >> he's right. you look like a dork wearing those. you have to figure out if it's not a consumer product it's a dork vertical only small percentages will buy it. until they can make the glass so ubiquitous in terms of the fashion sense it will never fly. i would never wear that anywhere. i think the thing is going to concern me about the watch. i collect watch. the only jewelry a man can wear pep i'm not going to switch to a toy. i want it to do something i

can't do with a traditional watch. i'll see how that works out. >> that is the fear. the criticism of google glass, not something they were developing behind the scenes and realized when it flopped, if, in fact, google shares that belief, they wouldn't release it to the public. they tried to sell it. they marketed it very heavily. and of course we know that they're rolling it back now. do you worry apple will see the same fate with the watch or do you trust apple's research capability and their design capability to put something out there that consumers didn't know they wanted before? >> what i would like to see is an investor with apple in the quarters ahead show me diversification of revenue and cash flow. i would like to see apple pay be a bigger part, apple watch, replace tablets were. don't show me d. >> replace what tablets were. tablets aren't going away. >> the large format, iphone 6 plus i just switched to last weekend, the reason i did that, i don't want the weight of that tablet in my bag anymore. so look, i'll never buy a tablet. this thing is monstrous, big

enough. i don't need a tablet. i need them now -- now i worry we'll be 80% one product. show me the car idea. i like that. i can see a version of where there would be apple cars driving around manhattan, driverless, where i would pay to use them and advertise to me in five years. i'm into that. >> is there any trade? you're capped out at 5s%. are you moving on to like options? any way you connect? >> the whole point if you go back historically and look at what happens to you when you let a position, particularly one where there's so much euphoria around, i can't find an institutional buyer that doesn't love this stock. i can't see a sell anywhere. i can't see any warning signs. apple apple apple. you got to sell into that. you know what's going to happen. it's coming to a theater near you. >> you're saying sentiments at an extreme regarding the stock? >> it's only because i'm a vampire and seen the movie before, over and over again, and

we forget how brutal it was when those corrections occurred back in 2001, 2002, 2003. when all of a sudden microsoft lost its way for a decade. dead money. where money went to die. could that happen to apple? i don't know. when you can't find a seller, you got me. i'll do it for you. >> finally jony ive mentioning he listens to none other than cnbc during his drive every morning and speaking of driving apple could be closer to making a big jump into the car business as kevin mentioned. our phil lebeau is in chicago with details on that. good morning, phil. >> hey, carl. this has been the talk of the weekend, whether or not we'll see an apple icard some point in the future. we have talked with sources who confirm there are a number of people at apple researchers engineers now working in what's called project tighten. that would include several hundred apple workers at a secret facility in silicon valley looking at how they can expand apple's auto footprint. that's the key here. expanding the apple auto

footprint. remember, it was a year ago that we saw apple roll out car play and with the idea that you can take your iphone and really your apple ecosystem if you will, when you're on the road, whether it's plugging in your iphone and then having it all of your information come up on the dashboard, car play is just the beginning of what apple is looking into. is it possible that apple could build an icar and manufacture a car? we've reached out to the company over the weekend for a comment the company said we do not comment on rumors and speculation regarding anything involving project tighten or the possibility of an icar but it's clear what we're seeing from apple here along with what we've seen from google and tesla, is the orientation increasingly shifting in the auto industry toward the silicon valley. you have the google prototype out and it is a prototype. it does not mean google is going to manufacture automobiles. tesla growing sales. and really becoming a disruptive force within the automotive

indust industry. at the same time every automaker is working on autonomous drive technology. it is coming. make no mistake about it. that's a key reason why apple is expanding its research into this area. is it possible that apple at some point could come up with technology that rivals what we're seeing from google and some of the automakers and suppliers? absolutely. there's no doubt about that. when you look at shares of apple today, carl, i know a lot of people have been e-mailing me and tweeting, they're going to build an icar. think about this in the auto industry would you rather be a manufacturer, even if you have strong sales of a couple million that would be huge, would you rather do that or rather be able to take your software and your ecosystem and sell it to automakers around the world global auto production is going to top $90 million this year. put the two into context when you're thinking about what's possible for apple. >> a nice perspective. thank you for that. kevin, a lot of people wonder for a company that likes to be

vertical as they can be, if they can do this alone, should do this alone? >> i don't think they should do it alone. the technology exists. uber works. i used uber twice last night in manhattan to get around. nothing that stops apple to set a platform for apple driven cars with no driver. driverless cars. they could build two or three acre farm outside of the city, 20 miles outside of the city and have 2,000 cars servicing guys like me in manhattan off my iphone. the thing that would be interesting to me as an investor, if you take me to the city every day as a commuter you've got me for 45 minutes. you know what my profile is like from the phone, what i buy, you know what i'm interested in and advertise me and what music i want to hear. >> sounds scary. >> i like it as an investor. you've captured me an hour and a half of the day that you control the ecosystem in. that's interesting to me. i think that car can exist in the next five years and all go out to the farm to be recharged at night, use the technology bmw

or do a deal with tesla. why be manufacturing a lousy margin business like cars. >> apple as phil mentions expanding auto footprint still waiting on reports and details of what that might mean, but we do know, kevin, that google and uber are looking into driverless cars. if apple, google and uber had a driverless car which would you ride in. >> the one of least resistance. i was thinking of this morning. i know for certainty i'm going to drive into manhattan and back three times a week. if you gave me a good deal and had all my information in the phone and all i had to say is tap, pick me up, go with apple because they already got my stuff. i'm in their ecosystem. play the music, give me me steely dan music for 20 minutes and then do e-mails and advertise to me okay. that's capturing my mind's time for an hour and a half and i think there's a place for that in apple's world. medicine and cars are, as you

age, what you do with a lot of your time. trying to stay healthy, working out, and driving around all the time. now, if somebody can drive me back, i don't have to be back of the wheel, i can drink more wine at the end of the day. makes sense to me. >> wish we had time to cue steely dan before we go to break. >> more from you, sticking around for the half hour. >> we want to check in on the markets at this hour. mostly lower, of course. we did have athens, negotiations with european creditors abruptly breaking down yesterday. we will wait and see, nine days away from a dead line for the talks to be consummated. that's giving a jolt to the market data wasn't awesome see the markets are lower. dow down by about 46 points, amex the biggest loser. s&p down by about 5 points and nasdaq down about a quarter of a percent there as well. check out gopro, shares are actually rallying which is not what you normally see when a major lockup exploration actually comes due as it has

today. today early investors could potentially unload about 76 million shares. you can see gopro up by about 7.5% which would lead you to believe that not as many sellers, if any sellers, carl, are actually coming to the table despite that deadline. >> when we come back shares of box taking a hit after a ton of analysts released their calls on the stock this morning. early box investor will join us and break it down in a moment. two months before it hits stores the apple watch looks different than advertised. we're going to tell you what you need to know. don't expect to see the amazon drones any time soon. we'll find out why later on. kevin asked for steely dan and that's what we will use to go to break. "squawk alley" is back in a minute. i've been called a control freak... i like to think of myself as more of a control... enthusiast. mmm, a perfect 177-degrees. and that's why this road warrior rents from national.

i can bypass the counter and go straight to my car. and i don't have to talk to any humans, unless i want to. and i don't. and national lets me choose any car in the aisle. control. it's so, what's the word?... sexy. go national. go like a pro. so if you get a trade idea about, say, organic food stocks, schwab can help. with a trading specialist just a tap away. what's on your mind, lisa? i'd like to talk about a trade idea. let's hear it. [ male announcer ] see how schwab can help light a way forward. so you can make your move, wherever you are. and start working on your next big idea. ♪

box underwriters kicking off their coverage of the file sharing site this morning. right now shares are taking a hit, down by just about 3% or a little more than that. as we have neutral ratings or roughly neutral ratings from raymond james, jpmorgan, morgan stanley, wells fargo, credit suisse which was an underwriter of the company's ipo rates it outperform. joining us is an original backer of box, hercules growth capital founder chairman and ceo manuel enriquez. good to see you here. >> thank you for having me. >> given the ratings seems like there's a tepid view of the company from wall street, but you notched a record on realized

gain on the ipo. >> look, i think that box is going through a growth phase that has to justify its valuation and prove out the business model to sustain the growth and convert the user base into a revenue that is sustainable and prove that can scale the business. i think that's a challenge for many companies that go public in today's market with what i consider to be a healthy valuations out there. it's going to be up to them to execute on that. >> there's a lot of competition especially on pricing for the cloud space in general. do you see box competing in the long run there or do you see them eventually being a takeout target from your vantage point? >> you know, clearly when you build a company, you build it with a multiple strategy of building it to sustainability and also takeout strategy. i think that box has a long way to go before it actually starts looking at potential takeout opportunities. clearly this space is

competitive and they've shown their ability to build out the enterprise phase effectively. >> one of the things that struck me on the day of the ipo is how important it is to differentiate what they're doing from drop box and the name, the marketing, how much overlap there is. did that bother you? >> we looked at drop box many times and we chose to go down the enterprise route first. you know, box made a conscious decision early on in the process it was going to focus on enterprise applications and build a sustainable what i consider to be a sustainable business model on sharing. as we know cloud is such an integral part of our economies today while drop box is a very good franchise and application, but they've got their grassroots in the retail and consumer space and they propagated -- their strategy to give it out for free and get into high schools and elementary schools and it's a foundation of education in this country using a drop box platform. box decided to go more secure enterprise application. >> help me understand why this

doesn't become over the next 36 months a complete commodity? total commoditization, crushed margins? they're going to have higher customer acquisition cost, doing $15 million in sales i have five options to have the same service in the cloud, i'm going to pick the guy with the lowest cost assuming the quality remains the same? what's the investment thesis in new dollars coming into this if it paid a dividend which it doesn't. >> sure. take the most obvious gorilla in the room, google. google had a cloud storage application for three years and yet to really make any meaningful inroads in that area, google has the might, dollar, brands and they're having a tough go at it. box has continued to propagate on the enterprise level. amazon has its own solution at the enterprise and consumer level and microsoft trying to go more into that area. i think you're right in the long term over 36 months, i think

there are consolidation that will happen and margin erosion will occur. >> are you seeing startups across your portfolio, tech, clean tech, life sciences shifting toward the enterprise ditching the consumer focus? seems like companies have more money to spend, more lucrative space to be in, is that happening across the board? >> when you look at sustainability of your revenue models the consumer, we have a lot of things with security going on in the world. cyber security concerns. the consumer applications will be given away for free so with privacy issues people don't want their personal data being monitored. you can't have free and not have privacy concerns. there will be a conflict and that conflict is happening. that's where you're seeing a convergence of focusing towards an enterprise application or solutions. if consumers want free applications they have to tolerate some visibility of privacy issues. you have to monetize that. >> some people still worry that

this build out in the cloud is worse than the build out of the internet in the '90s and early 2000s because rates are so low and capital cheap. do you think that's anywhere close to being true? >> i think it's true and seeing hardware driving that, that ability to have, you know -- you can go to microsoft azor and user, amazon user server. so you have other fundamental problems going on as a country which is telecommunications, network neutrality, will become obstacles on encouraging capital expenditure and rather than having regulatory constraints we need to make the pipes bigger because we're demanding netflix on the fly, content on the fly, pushing the enterprise and to distribute processing off of the cloud devices, cloud computing we have more consumers relying upon streaming of content so rather than restricting the pipes we need to actually increase the pipes because there's so much demand for content on the edge. >> manuel, we're just scratching the surface. we could keep going the whole

hour. great to have you. come back soon. >> thanks for having me. >> manuel enriquez of hercules growth capital. >> no end in sight of uber's domination of the taxi industry. we'll explain why. "squawk alley" back in two. ♪ when it comes to medicare, everyone talks about what happens when you turn sixty-five. but, really, it's what you do before that counts. that's thinking time, when you ask yourself, how do you want this to go?

see, medicare doesn't cover everything. only about eighty percent of part b medical costs. the rest is on you. so, get started on an informed decision. [ male announcer ] consider an aarp medicare supplement insurance plan insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, these plans could help pay for some of what medicare doesn't. that could really save you in out-of-pocket medical costs. so, call now and request this free decision guide. just a little preparation could mean a lot down the road. make sure you have the information you need to go long™. think about this -- do you want to choose your doctors? avoid networks? what about referrals? [ male announcer ] all plans like these let you visit any doctor or hospital that accepts medicare patients with no networks and virtually no referrals needed. hey, you've made health insurance decisions before, but this time, you're doing it on your own. so, the partner you choose is big. [ male announcer ] unitedhealthcare insurance company has over thirty years experience and the commitment to be by your side. call now and discover how an aarp medicare supplement plan

could go long™ for you. these are the only plans of their kind endorsed by aarp and nine out of ten plan members surveyed say they'd recommend their plan. having the right information is just smart. do you really want to leave something this important up to chance? [ male announcer ] remember, medicare doesn't cover everything. the rest is up to you. so, call now, request your free guide, and explore the range of aarp medicare supplement plans to choose from based on your needs and budget. sixty-five may get all the attention, but now is a good time to start thinking about how you want things to be. [ male announcer ] go long™.

interesting little wrinkle here in the auto business today. let's get to phil lebeau. >> carl, we have breaking news from the ford motor company hiring of a long-time wall street veteran and industry veteran john casea he will lead mobile strategy effective march 1st and reporting to mark fields as ford tries to map out a different strategy globally for the auto company casesa was with guggenheim partners where he led the auto partners as they were managing dealings in the auto industry and for years he was one of the lead analysts for merrill lynch. a lot of people look at this and say this reminds me of gm hiring

steve gur ski a number of years ago at the time people said why would gm hire gursy, turned out to be a great move and ford is hoping to replicate that with john casesa, regarded in the industry will lead ford's mobile strategy. >> thanks so much, phil lebeau with a development in the auto space. another development in case you missed it, taxi medallions are no longer a safe investment according to jefferies. the average price has fallen about 20% since peaking in 2013. jefferies blames the arrival of car apps like uber which is only increased supply and forced prices lower. jefferies recommends going long u.s. banks and shorting taxi medallions but if you were shorting medallion financial corp one of the only publicly traded stocks in the space you would be getting crushed up 8% actually on better than expected profit. >> just looking at your face, kevin, having talked about uber a few minutes ago.

>> yeah. i think this is a tough trade. it's hard to short a medallion when you think about it. the actual inventory of these things is a controlled by government and regulation giant. >> privately at auction. tough to get to. >> i think the investment thesis should be negative. you don't need a medallion to have a car and the trend is not your friend in that regard. they worked for decades but now i think the -- they will be down another 20% the next year. >> the thesis that -- the thesis that jefferies lays out go long u.s. banks, ostensibly because they will be leasing more cars, they will be potentially underwriting an uber ipo leading private placements what do you think about that? >> it's too long a stretch. i mean, the -- if you think about what bank portfolios really are made up of, carl owns a fraction of what drives that balance sheet. what i'm having a hard time with now in the banking sector the

theme that somehow as a society we should keep stealing money from the balance sheets by litigating them to pay for all the sins of the last 15 years. it's a big headwind and i'm not a fan anymore. i'm hoping some of the larger banks, starting to see it with the insurance companies, saying let's test this in court, fight back, fight for 20 years. like the tobacco companies did when they first got accused of cancer and sued by the attorney generals. let's turn it around. the financial sector is besieged with negative infrastructure issues and i think that's bad. this what is makes our country great. let them make profits so i can make more profit as an investor. >> taxi is a small cap stock, $250 million, can be volatile, especially with all the issues -- >> never short a stock with a market cap that small. you're going to get slaughtered either way. >> thanks so much. >> kevin o'leary joining us for

the half hour. close to 11:30, europe about to close. timen will walk -- simon will walk us through that. >> european equity markets have not fallen out of bed after the greeks failed do a deal with the rest of the group in brusselss last night. the investor confidence index came through in germany at a year high. the current confidence surging. partly because, of course, of the european central bank is going to launch qe in a month's time. in brussels everybody is reconvening today for completely unrelated matters. the greek finance minister arriving earlier in the knowledge that greek prices down 2.8%, deflation there. he still thinks europe can come together overs the next 24 to 48 hours. but it's actually this guy i once to show you, the dutch finance minister, and the head of the euro group, the man that appears to be solidifying the rest of europe's position and effectively giving the greeks an ultimatum. the deal is you need to extend the deal your last government struck with us and we will

negotiate around it. we don't have time, is the view, to do a deal with you. by the way, the friday is the deadline, greeks, in order to do that deal so we can pass it through the national government. that's essentially where we stand. jpmorgan is suggesting that the greeks are looking increasingly confused, sometimes they say yes, we will' accept the extension, other times they won't, and not clear on what they want to bond on to. we'll see how things play out. amid reports that the greek banks are continuing to hemorrhage deposits as you might expect, that goes without saying, these guys might leave the eurozone with you may not want your euros in greek banks in case they become drachmas. the ecb will look to see if it needs to supply further emergency rules now that it's changed the rules on them and they are absolutely on a very short leash here, they could let them go, presumably they won't. most people in europe the earnings season continues. remember when ups was going to

buy tnt express not good. intercontinental reported today, keurig, said it wouldn't actually be selling, back to you. >> thank you very much. >> when we come back it isn't out for another two months but changes in store for the apple watch. we're going to explain. don't expect to see those amazon delivery drones any time soon. why the feds are grounding the program before it even gets started. dow is down 29 points and "squawk alley" will be right back. sometimes romantic. there were tears in my eyes. and tears in my eyes. and so many little things that we learned were really the biggest things. through it all, we saved and had a retirement plan. and someone who listened and helped us along the way. because we always knew that someday the future would be the present.

every someday needs a plan. talk with us about your retirement today. whto have an unlimited mileage warranty on a certified pre-owned mercedes-benz? what does it mean to drive as far as you want... for up to three years... and be covered? it means your odometer... is there to record... the memories. during the mercedes-benz certified pre-owned sales event now through march 2nd, you'll get complimentary pre-paid maintenance and receive your first two month's payments on us. only at your authorized mercedes-benz dealer. these days, the most important person in your business could be a software developer. so, how's the app coming? we've got to make something great. how's the app coming? we've got to do it fast. let's do this on bluemix. you can build apps with analytics, big data, even ibm watson. that could give us the edge. let's do this on bluemix. it can provide code for you. we could be first to market. because being best is priority one. being first is priority one.

there's a new way to work and it's made with ibm.

casesa i'm sharon epperson. here's your cnbc news update at this hour. a federal judge has temporarily blocked president obama's plan to protect millions of undocumented immigrants from deportation. the judge said the white house had not complied with procedure. the justice department said it will appeal. greece's prime minister said his government was in no hurry to reach a deal with the eurozone and not willing to compromise on its promise to end austerity. talks broke down yesterday. chesapeake energy filed suit against its founder and former chief. it alleges he stole confidential data during his last months on the job to launch his new oil and gas company. he calls it a baseless legal action. >> horton finance professor says the fed should wait until the end of the summer to raise interest rates rather than in

june. the reasons why go to cnbc.com. coming up on "mad money," jim cramer talks with david steiner at 6:00 p.m. eastern on cnbc that's our news update for this hour. let's get back to "squawk alley." thanks, sharon. welcome back to "squawk alley." joining us dennis berman, business editor at "the wall street journal". good to have you back. >> good to see you. >> talk apple in addition to the jony ive news, the journal has a deep dive on apple, the watch, with the headline what exactly is an apple watch for? the story talks about how apple is dropping a lot of the health technology for the watch because it was too complex or didn't work. apparently apple wants 5 to 6 million watches ready for the first quarter with the cheapest model accounting for half of the production order. a lot don't believe they can get that many made in time but we'll. >> or demand for it. interesting in the story there's

the lovely turn about in the story when they talk about the arms and the ability to monitor blood pressure, moisture on the skin, it was impaired by some physical traits of people, harry arms among them. the question in the story, what will we do with this thing? apple's end response is you'll do a bunch of things, use apple pay, maybe get alerts but the original intent basically changed over time. that's what's important about the piece. >> health relies on other developers apple will carry jawbone and fit bit and other technology. do you think there was a point where the company said we don't need anything proprietary on the health side to make this work? >> well, i think that's a fair point. my guess is over time either apple or others will get there. looming over the horizon is the federal food and drug administration. and if you do certain things like test glucose for diabetes

testing, you will be regulated as a medical device, and for good reason. if you get the glucose meter wrong you can kill people. that makes sense from that regard. over time, kayla, it's going to happen. these things will be truly medical devices. it may take a few years and the fda will have to play along, three, four, five years but it will happen. >> nine to five with the story they're apparently holding workshops with developers trying to get the apps built in time for the launch and then a story of just whether they really want to be mass market luxury or not? whether a $4,000 apple watch is something that angela and jony think will move? >> we've learned from the last quarter results of apple that it is as bad a mass marketing company as we can get. the volumes in china and around the world. i personally i'm going to say it now, i would love to know what you think i don't want an apple watch. i want them to convince me why i

do and i use apple pay for the first time yesterday to buy a bag of chips on a vending machine and it was incredible it was absurd but incredible. i'm open to being convinced the apple watch might work for someone like me. right now i'm not it. for the mass market question, yeah. a small segment of the market that wants to buy a $4,000 gold watch and fill that demand. >> when you a product that is $349 or $4,000, how do you market the necessity of something that wide a range? i mean, so many different price points, so many different consumers for so many different reasons? >> right. >> if you can't pinpoint one are reason to buy something, is that a problem? >> never underestimate people's desire to show their status. >> don't underestimate that by the way. >> never underestimate it. if you have a choice between a tiny mer say tease smart car and

s 500 you probably go for the 500. i think the question for them, can they -- do the products look different enough for that status to be conveyed, like $4,000 product will look different than $350 product and that i think is tbd. >> next up amazon drones we hardly knew, a new proposal for drones at the faa would prevent them from operating across the country. include bands of flights over people and operators and require for prior approval for air traffic control over many urban areas. the faa is accepting public comment on the regulations over 60s days but are they going to keep this on the drawing board? is that as far as it's going to go? >> this is an interesting period. so many groups with interest in the drone issue. overall at least from what our reporter showed, most people are okay with the rules that were proposed. the issue of flying over people

and flying with -- without visual sight of the drone will be the prime things that become the main issue around the commenting. again, i would say over time, we will have drone traffic unaided by eyesight and sort of free to roam that will happen in the united states skies. it's going to take time but there's no doubt that it will happen. whether it's delivering an amazon package that's going to be a little more. it will happen. >> will the u.s. have to take example from the emerging markets on this? because companies like amazon say oh, regulations here in the u.s. don't matter because we can do it india and sdmooin i don' believe that. they're trying to put pressure on the u.s. the u.s. market is what matters. the u.s. aviation regulation is the best in the world, so they can say we're going to fly teps of thousands of drones around india. i don't believe that. i think the u.s. market is essential to getting credibility around the world and jeff bezos is masterful at putting pressure

on. >> it is the third biggest gainer on the nasdaq 100 year to date ahead of apple and electronic arts behind only netflix really. >> right. >> and that first quarter was darn good. one comparison i'll make to you all is this, in 192, radio operators were run by all types of amateurs, frequencies colliding with each other, the federal government had to step in. later became the fcc and that will be the same process for drones. all sorts of collisions and problems out there, but over time, it will be solved and there will be drones flying over your head. >> you think the faa is willing to revisit the rules over and over again, whatever we get is not set in stone? >> i would say probably this iteration they may not be, but over time as the software and the technology gets more advanced, there will be iterations over time and it's going to happen. >> finally big news at the journal, a lot of us -- alums surprised to see after 27 years

the marketplace section changing to a name called business and tech. you explain why but tech is a big part of that. >> tech is a very big part. some ways the media equivalent of "squawk alley," you guys realized here at cnbc, technology is a part of every business, whether it's trucking or consumer goods or marketing or tech itself. it's getting deeper and deep near what companies do and what they have to be good at. this is an evolution for us after 27 years to recognize that that's how people are thinking about the business. >> what type of stories will we see under the tech map given it's no longer a sector? >> here's the thing that gets me excited, which is, less gossip about silicon valley and more about real people in the real world grappling with how technology affects their business. whether it's a black car driver in new york trying to figure out what is uber doing to me or a farmer in the field to use

climate data to see how it affects planting his fields. >> still call it the second front? >> yes. >> that's key. >> tennidennis always good to s you. >> you're going to stick around the half hour. >> yes. >> what is the top phone company in china? the answer might surprise you. first, rick santelli, what's on your mind today? >> the holidays not necessarily the holidays that you may be thinking of, as i look at the dax, the cac, italian stock market, even considering their currency losses for 2015, they're still up more on the year than the dow and s&p. what's up with that? i call it the hunt for santa claus. why? you'll see after the break. in my world, wall isn't a street. return on investment isn't the only return i'm looking forward to. for some, every dollar is earned with sweat, sacrifice, courage.

which is why usaa is honored to help our members with everything from investing for retirement to saving for college. our commitment to current and former military members and their families is without equal. start investing with as little as fifty dollars.

so open an account with schwab. and when a market move affects, say, a cloud computing stock you're holding, we can help you decide what to do. with tools that help you see how market activity is affecting your positions. so when the time comes to decide whether to scale in or scale out... you can make your move, wherever you are. and start working on your next big idea. ♪ and start working on your next big idea. just because i'm away from my desk doesn't mean i'm not working. comcast business understands that. their wifi isn't just fast near the router. it's fast in the break room. fast in the conference room.

fast in tom's office. fast in other tom's office. fast in the foyer [pronounced foy-yer] or is it foyer [pronounced foy-yay]? fast in the hallway. i feel like i've been here before. switch now and get the fastest wifi everywhere. comcast business. built for business. coming up, is the tech sector partying like it's 1999 with the nasdaq back near record levels, should you bust out the balloons or take cover? apple, a big part of the reason the nasdaq is surging. another all-time high today. despite news that some major hedge funds are lightening up on the stock. should you? our call of the day is a bearish outlook for two top performing retailers. that and a lot more, carl, see you in about 15. >> all right. see you soon. >> let's get over to the cme group, rick santelli is in chicago with the santelli exchange. rick? >> good morning, or should i say

who ho, ho, ho. when i talk to people who are investors in this building that have connections to the floor, when i talk to sources around the globe, it's all about obviously trying to make some money. that's what it's about. but i remember not that many years back where the topics would go to balance sheets and fundamentals, now the topics, especially of late are things like chinese new year but more important, more important, the march date for the beginning of european qe. so the hunt for santa begins. what am i referencing? we've had a got run if you look at our dollar, s&p, even our nasdaq, after basically not being at the 5,000 level for more than a decade, 13, 14 years, it's actually getting close to testing it. but, we're forgetting about santa. investors aren't looking for fundamentals and i understand that, europe's fundamentals even though they may be improving today, they're not nearly as aggressive as the fundamentals of the u.s. that doesn't mean a lot for investors on the hunt for

central bank holidays. case in point the charts, 10-year charts, the euro versus the dollar, over a 10-year span the euro is weak. now let's look at the countries that share the euro and their equity markets. by the way, every one i'm showing with euro weakness has a higher year to date percentage it's up than the nasdaq the dollar the s&p. so let's look at a 10-year chart of the dax. let's look at the cac about ready to break out but not at all times. same true for the italian stock market. switch fweers to another part of the world a 10-year chart of the dollar/yen. dollar having a hard time getting over 120 but that's a lofty hurdle. see on the 10-year chart the yen is weaker than the japanese may like it to be but they're an export economy. the nikkei, also barely but also up more than our three indices are. look at the nikkei over ten years.

granted it's nowhere near the 39,000 level it peaked at around christmas of 1989 but ready to go through some important levels. so really, the moral to this santelli exchange is, the reason you hear so many analysts looking to europe is because they're looking for santa. and santa is going to make an appearance in march so be careful as to what disengaged markets in the u.s. may look like when the flow starts to take over. back to you. >> a good reminder from our santelli clause. thanks so much. when we come back, forget action figures drones one of the most popular gifts for kids this year. live to the biggest toy convention of the year, for a closer look in just a moment. "squawk alley" is back in a minute. [ female announcer ] who are we? 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. and we're here to help start yours.

president obama sitting down for a wide ranging interview with re/code editor kara swisher, obama in silicon valley to speak at the white house summit on cyber security. swisher asking about that topic as well as privacy, jobs in the tech industry and in a lighter moment the president's personal use of tech. take a listen. >> do you wear any wearable shirts or health devices or things like that? >> not yet. >> you missed the google glass thing by the way. >> well -- no comment. >> no comment. >> when you -- what devices do you think you would use once you leave office?

you like a selfie stick. >> right. as buzzfeed showed, actually the first time i used that when we were in hawaii for vacation i had given my photographer pete suza had a gopro and folks were starting to use selfie sticks so -- >> do you use any other technology? just basically the ipad? >> basically the ipad, although, you know, i don't have a fit bit yet but i work out hard. word is that, you know, these apple watches might -- >> get one right away? >> might be a good companion for my workout. i'm going to see and test it out. i don't want to give tim cook too big of a plug here. >> yeah. you just did. >> until i've seen the product. >> that is an endorsement however you look at it. interesting stits sith down interview between kara and the president from the toys of the leader of the free world to toys that might be in a home near

you. 2015 toy fair to hear from morgan about the tech on display. morgan? >> and kayla, there is a lot of tech. drones are not just for adults anymore. we have a number of companies peddling these aerial devices. this is odyssey's neb beulah cruiser. that company has more than two dozen models on sale. these are drones moving from the air to land. another company to check out is onkey drive. this company makes toy cars part toy and really part video game maker. these cars don't fall off the track because the track reads code. this is a company that had an exclusive deal, distribution deal, with apple until last year. since then it's become one of the top selling toys on amazon and in toys r us. in terms of smart devices, v-tech rolled out a couple goodies. they have an action camera, think like gopro for kids. also a smart watch that uses

video to record stuff. in terms of -- but it's not just these new products and newer companies that are doing -- that are adapting tech. we're seeing a lot of classic companies and classic toys start to get tech makeovers as well. one great example of that is mattel. a company that's struggled to keep its brands relevant and we've seen sales slumping in response to that. this year a couple things it's rolled out. the first a new partnership with google to basically bring a virtual reality twist to its classic view master toy. perhaps most interestingly is its new hello barbie. so barbie sales have been slumping some time. we've seen those sales on the decline. the company has partnered with toy talk to create a barbie doll that actually can hold a conversation with you, using a cloud based software. have a look at that. >> hello, barbie. welcome to new york. >> i love new york. don't you?

tell me, what's your favorite part about the city? the food, the fashion or the sites? >> so, talking barbie still a prototype, hello barbie, but that is coming out this year. keep in mind it's not just tech toys. we're seeing building sets according to mpd group is still the top selling toy category. back to you. >> thank you very much, morgan. barbie does need all the help she can get. apple not the top smartphone vendor in china. who is in a moment. anything? no. you? no. aflac! what are you guys looking for? claims! legend has it these hills are full of 'em. it can take months for an insurance claim to surface. claimin' takes patience. aflac paid my claim in one day. they got some new-fangled kinda one day payin' machine? hehehehe yea, i got aflac at work. aflac... in just one day, we approve and pay.

one day pay, only from aflac. aflac... the smartest or nothing. the quietest or nothing. the sleekest... ...sexiest, ...baddest, ...safest, ...tightest, ...quickest... ...harshest... ...or nothing. at mercedes-benz, we do things one way or we don't do them at all. the 2015 c-class. see your authorized mercedes- benz dealer for exceptional offers through mercedes-benz financial services. know your financial plan won't keep you up at night. know you have insights from top investment strategists to help set your mind at ease. know that planning for retirement can be the least of your worries. with the guidance of a pnc investments financial advisor,

know you can get help staying on track for the future you've always wanted. so this is a great opportunity for an upgrade. sound good? great. because you're not you, you're a whole airline... and it's not a ticket you're upgrading, it's your entire operations, from domestic to international... which means you need help from a whole team of advisors. from workforce strategies to tech solutions and a thousand other things. so you call pwc. the right people to get the extraordinary done.

♪ samsung,. in case you missed it according to idc xiaomi was the top smartphone vendor in china of 2014. they had a 14.7% compared to 12.3% for apple and despite lagging apple still posted its highest quarterly market share on the heels of strong demand for the iphone 6. xiaomi managed to hold on to the top spot thanks to demand for its lower priced handsets. leap frogging samsung tim cook says it's a bunch of bull that people only want cheap phones but they're duking it out.

>> $46 billion the private market valuation for chieh, lar xiaomi largest on a new list, the market takes this for real, a real company, they might have some intellectual property issues when they move their products abroad but they're for real. >> a different chapter. good seeing you. dennis berman. back to headquarters and scott wapner and the half. >> thanks so much. welcome to the halftime show. our starting lineup for today, joe terranova is senior managing director at virtus investment partners. pete najarian co-founder of ohm, neely gilbert cofunder of capital and stephanie link has a new gig. want to tell us about it or read it? >> go ahead. all yours. >> stef is joining tiaa asset management next week as a managing director and portfolio