What we were seeing in the second half of last year. I want to add to the conversation were already having on the outlook for the markets. We havent felt the impact of fiscal tightening yet. Were going to have to watch the consumer very closely. Well be having pretty Big Government spending cuts with the sequester. I think we need to be a little cautious in the first half of this year. This wont be a linear rally in the stock market. The first half is going to face some pretty big headwinds from the economy, so im cautious about the next few months here. Cautious about the next few months, so does that translate into taking money out of stocks . Is this rally that weve been seeing, even though we saw fractionial losses today, is it justified given these expectations that you think the economy turns downward . I think if you look just at the earnings picture and ignore whats going on in washington, the markets should be up even more. I mean, theres plenty of room for stocks to rally, and i do think once we get past this miss call austerity the rally will resume. We have to keep in mind that the market up until now has not seen really weak data, and its about see some very soft consumption numbers. Have you a 200 billion tax increase this year and a 110 billion sequester. These are not small fiscal tight things. It means that first and Second Quarter are going to be very weak. Its no longer going to be talking about the risks of the fiscal cliff. Were actually getting about half of the fiscal cliff, so i think youre supposed to be cautious for the next few months. And thats not necessarily what were seeing in investor behavior right now, margie. The same question for you. Is this justified given the fact that we are headed into the next couple of months where things will get tougher . We know that were garnishing defense cuts coming. We know that the Fourth Quarter was weak because everybody was in lockdown moved. Do you want to lighten up on stocks, or not . May have a few little bumps in the road. Frankically i welcome Government Spending cuts. I think that would be very positive long term. When you look at way from the government and look at what companies are doing, company results. Global competitiveness, hard to get discouraged especially when they are cash flow yields. The opposite of the pes are really better than what you would get in the bond market with the 7 earnings yield. You dont have to think long to know that thats the place to real put your money. Rick santelli, how do you think this plays out . I think belttightening is good. We cant artificially try to get rid of all of the hiccups. The recessions and the turndowns. I think we need to let the capital get reallocated by the private sector, and i do think the tax increase you know, think back to candidate romney. He said if you let these taxes go up youll lose hundreds of thousands of jobs. I think in hindsight hes proven to be somewhat correct. Yeah. Well keep watching in terms of what the job numbers say post these defense cuts. You think were going to get a big cut in defense and that will mean layoffs . What about defense stocks . Yeah. I think when you look at the complexion of the fiscal conservatives and how small of an appearance they have in the two houses and, of course, none in the white house, that the sequester represents the only spending cuts they are going to be able to tactically do, and i think it has to be perceived in that way. Isnt it interesting, eric, that at this point were really not talking about the dysfunction in washington as much as we were even though we do have the debt ceiling fight on the horizon. Thats taken a back seat to this momentum in stocks. Yeah, absolutely. I think that investors should be braced for a potential pullback, but trying to trade it i think is perilous. Look, would i have expected a fairly significant pullback in december based on the uncertainty of the fiscal cliff debate. It didnt happen. I think that we were at that time telling our clients to look through the potential weakness and focus on the value and the fact that equities are very likely to be higher in a year from now, concentrate on the longer run, invest, dont trade and we think youll be well served by that. Give me your best idea right here then, eric. Well, i think equities. Simply the equity trade. What do you remember want to do, etfs, my spector sectors, etfs, how do you do it . Very broadly. Were an active manager and use a multimanager approach so were broadly diversified across countries. Emerging markets looks better than developed and procyclical stocks look better in general. Weve got the facebook numbers out, guys. 17 cents a share is the number were getting on revenue of 1. 59 billion. The estimates called for a profit of 15 cents. 15 cents is the estimate and actually a beat of 17 cents a share for the actual. Revenue coming in at 1. 59 billion verse an estimate of 1. 93 bill crop. Want to get reaction now. Julia boorstin digging through the numbers, shes going to let us know what she gets as she continues to look through this press release right out of facebook. Whats your reaction to the facebook numbers . I would say honestly its a pleasant surprise, a meaningful beat on the consensus number. My estimate was a bit below consensus. When you saw was facebooks ad revenues went from a million per day to 3 million per day at the end of the quart, a 1 billion annual run rate. I was skeptical as to whether they could continue through that acceleration through the Fourth Quarter, and what the numbers tell me they did. Go ahead. I wanted to bring you some highlights of the earnings report. Revenue came in at 1. 15 billion, up 40 from a year ago, and expectations were revenue of 5. 3 billion. Mobile comprised 14 of ad revenue in the prior quarter in q3, so theres the headline here. Theres a statement from Mark Zuckerberg saying we entered 2003 with good momentum and will continue to invest to achieve our mission and become a stronger, more valuable company so theres a little note there. Maria, hes acknowledging some of the criticism he didnt care about the value of the company. Ill continue to dig back through these result, and well be back shortly. Roger kay, jump in here on what were hearing on mobile as well as advertising, as well as the overall earnings in the revenue. Whats your take on the quarter from facebook . Looks to me like they have actually made the corner, maria. The fact that they got their mobile advertising up to 23 of revenue is really good news. A lot of analyst were looking for numbers around 25, but 23 is g good, up from 14. Really struggling with that for a long time, and now it looks like they have the formula. I think they are just beginning to monetize the 1 billion user base that they have got, and theres lots of room to move here so i feel quite good about it now. So, would you put new money to work at facebook value at 28, 28. 86 . Yeah, right. I think, you know, the real floor on the thing was around 20, and i think from there its got room to go up. Though, it was very, very richly priced when it first came to market, its still below that price. It can you go g through 38 and beyond given this kind of growth momentum. Go ahead, julia. Interesting numbers here on facebooks user base. Daily active users were 618 million on average. Thats an increase of 28 year over year, but its mobile, where facebook is really showing the most growth. Mobile active users were 680 million, an increase of 57 year over year. Maria, this is the first time that mobile daily active users have exceeded web daily active users for the first time so that shows a shift in facebooks user base. Another couple of interesting things here, if you look at the nonadvertising revenue, payment from fees came in at 256 million, quite in line with expectations, and then advertising, which is the other part of that business, that was up 84 im sorry, advertising represents 84 of total revenue but it was a 41 increase from the same quarter last year so facebook is showing growth both in advertising and in its payments business and thats the fees that it gets from games like zengas games. And thats why credibility is so important, a. B. See anything in these numbers that cause concern because the stock is down 6. 5 right here, even though everybody is talking about how positive this quarter looks. What is the cause for concern . Not at all. I think the point that your other guest made about expectations might have been 25 adds revenue and came in at 23. 23 is in line with what i was expecting as im looking through the numbers so that tells me the core business actually outperformed as opposed to the mobile slightly missing the whisper number. The core business is just the standard the ads as well as they are ent ecommerce with facebook gifts which they began to emphasize more in the holiday season. Thats supposed to be a big deal. And then recently graph search or a social search tool within facebook if they can change users behavior and get people to use facebook in that way and provide a quality search experience, theres a share that will be taken from google over time. Growth of 25 is a slowdown, some feel, so are you worried about saturation . The way im reading these this is more like 35 total topline growth, which, again, a bead of consensus. Maybe there was a whisper number or expectation that the mobile percentage was closer to 25 or higher, but a lot of people dont get about this stock is that in the ads business, when dollars are allocated to mobile, many advertisers are allocating away from desktops so there is some cannibalization. Some of the paid app installs, purely incremental, are beginning to gain direct. Got to go to jon fortt, would you buy this stock at 30 . Yes. No published recommendation. Thats fine. Below 20x, 20. 13 ebitda you can still. Qualcomm out with earnings as well and jon fortt here with that angle. I know what it is, its the operating margin. Jon . Big beat buyout by qualcomm. The street expected 5. 9 billion in revenue, 1. 13 eps and qualcomm turned in 6. 02 billion and 1. 26 in eps. Also, guide abswell above the street for the coming quarter. Just got off the phone with paul jake objection notes from what he said. The chip set business and 3g, and 4g more than doubled quarter and out of emerging markets also doubling for them. He says he feels like they are in a good position on chip sets. The fab issues that they have had getting supply from tsmc have cleared up now and they are getting good supplies from other suppliers who they had dialed tsmc was having some issue. He said just in terms of the overall smartphone ecosystem very healthy. Operators are looking for new options out there. They are operators eager for blackberry 10 but too soon to see exactly how that will fare. Asked him about the tablet market, the ipad mini starting to come out with lte units getting broader geographic distribution. Qualcomm chip sets not in that, but thats not pointed out quite yet. Big move in qualcomm. Thanks a lot, jon, well be watching that. A lot more market moves after the break. Stay with us, and then its not a some by apocalypse, its the refi apocalypse. Some analysts say its upon us. Find out why and who is in danger next. And everybody is waiting for the great rotation from bonds to stocks, right . But its not happening yet. Coming up the bond Queen Alexandra lebenthal will give us her take on why bonds are doing so well and how long it will last. Stay with us. [ male announcer ] at northern trust, we understand that if you pick three people, odds are theyll approach everything in their own unique way including investing. So we help clients identify and prioritize their life goals. Taking that input and directly matching assets and risk preferences against them. The result . A fully customized plan. We call it goals driven investing. You have unique goals. How about a portfolio specifically designed to achieve them . Expertise matters. Find it at northern trust. [ male announcer ] dont just reject convention. Drown it out. Introducing the allnew 2013 lexus ls f sport. An entirely new pursuit. Makes it easy for anne to manage her finances when shes on the go. Even when shes not going anywhere. Citibank for ipad. Easier banking. Standard at citibank. To deposit checks from anywhere. [ wind howling ] easier than actually going to the bank. Mobile check deposit. Easier banking. Standard at citibank. Welcome back. No dow 14,000. Bob pisani on why the market faded in the last hour. Over to you, bob. Ill make it simple for you, maria. We have quantitative easing but no growth. Thats the problem. Some traders were puzzled and even angry about why we didnt see a drop in the market on the crummy numbers on the gdp. Well, there was a drop but wanted to see what the fed had to say. When the fed didnt say anything new, thats when you took profits. The close made more sense to me than the open did, maria. Take a look at cyclicals, market leadership groups, thats the groups thats outperformed. They were the weakest today, your industrials and energy and material stocks and transportation stocks. Look at the transports there. All were notably weaker. Theres your sector, and those are the ones with the biggest move up. They make the sense on the down side. Home business, ryland terrific numbers, all Home Builders with terrific numbers but there was profittaking today. The problem is on the valuation. Finally, maria, hold on the tenyear note there. Look at that. Below 2 . Back to you. All right, bob, thank you so much. Back with me is eric from russell developments and our own rick santelli. Very good to see you. Let me kick this off with you, eric. Surprised we took a breather today . No, actually given the negative number on gdp expected the market to react a little more violently to the downside. I think it gives you a sense that the market feels like there is no other asset class for them to invest in and theres a little bit of a crisis fatigue. Not that those things arent things to worry about, just that worrying hasnt made money over the last year. Thats a good point. A lot of people wrecks pecting a bigger drop, but theres so much firepower in this market. Rick santelli, how do you see it . Do you think well see a similar story when we get the jobs numbers out on friday . I think the jobs numbers will be spotty. I find it fascinating. Not one person has mentioned adp so the gdp moved adp off the front page and below the fold. Listen, the reason we have fair value is the s p cash, for example, closed at 4 00 eastern. The futures just closed at 4 15, and if we can show a chart s p futures right after the cash close, they made new lows and closed within threequarter points of the new lows. Might give you something to look at for tomorrow morning. Thanks, gentlemen. See you soon. Facebook shares moving on the heels of the quarterly result. Lets get to seema modi recapping the latest action in tech. Reporter all eyes on facebook and its earnings report. A beat on its top and bottom line. Mobile active users also up. Seeing the stock move lower though after hours. Remember, the stock has already gained about 30 over the last three months, so perhaps were seeing the stock higher, excuse me, but the stock is up 30 over the last three months so perhaps investors are looking at the levels right now. Conference call starts at 5 00 p. M. Any commentary about its ability, of course, to monetize mobile, that is what the street is looking for. Lets switch over to qualcomm, a leader in the mobile chip sideways. A big beat on its top and bottom line. Raise 2013 outlook as well so were seeing that stock move higher. Aside from that, big movers in tech. Interesting price action looking at amazon versus apple. Apple reported disappointing earnings one week back and saw the stock sell off. Last night amazon reported a quarterly profit that fell 5 and the stock a big mover in tech. Amazons consolidated segment operating income as a percentage of revenue, basically a metric used to measure profitability, came in sharply higher which basically shows that amazon is finding new ways to expand its profit margins. You can see amazon shares up roughly 5 on the day. Back over to you. Thank you so much, seema. Is it panic time in the refi market . Our housing guru diana olick up next on the refi window as Interest Rates creep higher and later all about bonds. Is Alex Lebenthal worried that bonds have seen their best days . Bubbles and picks from her in the muni bond space. Shes speaking with us exclusively next. Stay with us. All stations come over to mission a for a final go. This is for real this time. Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. 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Mortgage rates on the rise, and if that trend continues, it could be devastating for the refi market. Diana olick now with a reality check on the markets. Over to you, diana. Reporter Mortgage Rates