Lets end it on a happy note. Have a great weekend, everybody. Thanks for watching street signs. Closing bell is coming up next. See you monday. Hi, everybody. Happy friday. Welcome to the closing bell. Final stretch for the week. Im Maria Bartiromo at the New York Stock Exchange. S p 500 today struggles to close at the fiveyear high it hit yesterday. Final hour of trading decides what happens. Nice to see you again, maria. Im scott wapner in for bill griffith. Back on monday. We are tracking the market. Also following several other big stories at this hour. Forget pay day. This is tax hike day for america. Uhoh. Nearly every working american saw the government take more money out of their paychecks today. How that fallout could shape the debate on spending cuts versus higher taxes. Then wells fargo kicking off the banks and this earning season. Its cfo here to talk to us first, and the business of the fluff as it sweeps across america. Running low on vaccines and tamiflu. The Dow Jones Industrial average really trading fractional moves up, up just a fraction as you can see there. Very much a slow move for this major average on this final day of the week, 13,474 last trade on the blue chip average. Nasdaq composite higher, though barely by twothirds of a point as you can see there. 3122 and the s p 500 looks like this. With a similar chart pattern, though fractionally negative on the day. Well, the Standard Poors 500 inching towards a froese fiveyear high again. Is it time to put new money to work in this market right here . In today krebl exchange Michael Pento from Pento Portfolio Strategies and David Katz Ma from matrix and michael kajino of family funds and our very own Rick Santelli joining us right now. Michael pento, im going to go to you first. Youve been overly negative on the market, yet you still have the climb of the wall of worry, and now we find out that we had the second best weekly inflow into equity funds ever. What does that tell you about where investors think this market is going . Ive been extremely negative on the economy, and i know im going to be right in the long run, but we went long, heavily long in early january because we realized woe live in a world dominated by kamikaze keynesian counterfeiters and they have mad to up the money supply in japan, europe, the united states. For instance, the u. S. Money supply is measured by m 2 and its growing at an 12 annualized rate. Not going to bonds, not stocks. Were very long the stock market here. Rocking the miami vice look today. Like that. Long the stock market, michael, but you think the economy is going to have trouble so basically youre looking that the market trading on free money. Listen, look at japan. Their debttogdp it 237 . Their manufacturing is falling. Industrial production is falling. Who cares . The markets up 23 in the last two months because shinzo abe has grabbed their central bank by the throat and said start printing and they have done it to the tune of over 100 trillion yen. So rick, the stat that i brought out at the very top here, this tremendous amount of money flowing into equities, second biggest ever on a weekly basis, does that tell you that were about to see the great exodus from bonds into stocks . It could be the largest sucker trap in history because, you know, i look at that 20year chart last hour with mandy and some people us testing fiveyear highs, i get that. A technician might look at it and say its a big to be top. Its a fiveyear double top so you need to be careful. Id almost be more apt to buy a breakout on a dip should we get above some of the historical levels than buy at the top when we test it and i agree with mr. Pento. The problem is japan has been in this game a long time, and, unfortunately, if youre looking to trade the stock market based on economic fundamentals i think that you could be right and run out of money and go broke before the trade works. What do you see about all of that, david katz . How are you allocating capital here . Wow, we disagree with a lot of things that are said or whats going to be driving the economy or the market. We actually think that the economy is in pretty owe good shape, and if washington doesnt shoot themselves in the foot in the next two months, which is a possibility, but if they dont, we think the economy is going to do well this year. We think stocks will go higher. Inflation is relatively tame, pes relatively low. So even were at a fiveyear high, higher and we went down. We think the market is poised to do better over the next year and actually over the next three to five years. Michael, where are you putting money to work right here at a Portfolio Manager . Well, were putting it all over the place because we run a diversified funds so precious metals, shorterterm bonds because of the potential of higher rates and high grade corporates as well as equity markets, both u. S. And nonu. S. In the short term the stock market can outperform while the economy does not, but in the longer term those two things are going to come back to equilibri equilibrium, so, you know, the market is at a high here, corporate earnings in q3 were very weak. I think q4 earnings will tell a lot, and i think the political dynamic coming up in march is going to be interesting. I dont think they will strike a great grand bargain thats going to be, you know, a good thing for markets over a longterm structural basis. I think they are going to do whatever little they can and tweak the edges and fight a lot about it before they do anything so i see sort of anemic growth continuing, and with the higher taxes that have come in to play beginning this year as a result of this deal they cut, plus the obama care taxes, those are significant headwinds on Economic Growth in 2013. So you raising cash then, michael . Were strategically selling and reapplying in other areas that are beaten down as part of our overall diversified strategy. David katz, what do you like best in the market right here . With Bank Earnings starting today, with wells and youll get a flood of them next week. Thats probably going to set the tone for where the market goes next, right . Its going to be both the financials and the industrials as they come in. In terms of what we like for the upcoming year, we think financials which had a very good 2012 are due for a repeat, also for a good year. We dont think the earnings season is going to drive them higher. We think they will start to move higher after the earnings season as they look at the 2013 outlook, not last quarter. Also like energy. That was a laggard, we think thats due for a catchup and industrials should also do well in the upcoming year. In terms of washington and the dysfunction, how much of an impact are you expecting this debt ceiling debate to have . Were quite worried about it. We hope they dont shoot themselves in the foot. The good thing is the market saw in december even though there was a lot of fighting, ultimately they did the right thing so maybe it doesnt have to sell off as much before. Im sorry, what does that mean . Shoot themselves in the foot . Does that mean they should do the right thing and stop borrowing 1 trillion a year. Michael, youre right. We already shot ourselves in the foot. Shooting ourselves in the foot would be coming up with a deal before the deadline, not a week after the deadline after they scare the bejabers out of everybo everybody. In 2011 they raised the debt ceiling and promised to cut 1. 2 trillion. Guess what . They punted on that one. Now they are one sequestration in arrears. They owe us two and were not getting any. Thats not shooting ourselves in the foot. Its shooting our children in the head. I would argue that they did the i would argue they absolutely did not do the right thing. They probably should have let things lie and started over for something bill bigger and more structural. If you look at the last two years, youve got a tax hike and delayed sequestration of spending cuts. Right. So what did you get . You got a tax hike . Im not sure thats in the best interest of the economy. Well wrap this up. Ill give you a chance to take back that somewhat uncolorful statement that you just made. We dont think you meant it in any literal way. I think not a time i think our economic policies are suicidal for the country in the long run. Okay, all right. Thanks, everybody. Theres a way to make a point and another way to make a point thats all im saying. Just saying. The s p 500 struggling to close at a new fiveyear high after yesterdays victory above it. Bob pisani in the middle of the action. I know you were impressed with the inflow numbers into mutual funds. Im very hopeful, though its only one week out of the year, but we had the highest inflows in several years in stock mutual funds, etfs continuing to get inflows. Take a look at materials. China, consumer inflation, much higher than expect the. Not good. Maybe a less chance of a stimulus so material stocks, like aluminum stocks, take a look at them all on the weak side. Some of the Iron Ore Companies concerned that some iron ore prices might are more weaker than anticipated. China stocks, speaking of china. A huge run in the last month. The fxi, the etf for china has had big volume recently. Up about 15 , so already people are anticipating china doing better next year. Maybe, maybe not, but its already run there. Banks, well, look, a very simple story. You always get a selloff on the first day when the banks start trading. Wells fargo came out. Wasnt bad. Nobody sees any upgrade to see their outlook on wells fargo based on what happens. Net interest margins still compressed. Loan growth still pretty modest. Not bad. Just not any reason to keep buying them right now. Finally for the week, guys, lets call it digestion. After the great week we had last year, maybe a little digestion is in order. Back to you. All right, bob. Thanks so much. Have a good weekend. 50 minutes to go before we close it up on this friday. The dow is clinging to a onepoint gain. Markets arent moving that much ahead of big earnings. Big earnings. Wells fargo reporting a jump of 24 in fourthquarter profits. Why is the stock down . Well, well find out what wall street is worried about when we talk with the company ceo. Apples show they will become chinas biggest market. And after the bell the flu sweeping the country. Flu shots are selling out. Well talk about a top farm suital company on the front lines of this scary outbreak. Welcome back. Wells fargo leading the banks lower despite better than expected earnings. Kayla tausche with more. Reporter the heart of the bank do two things, take deposits and reinvest that money as loans to make a return or Net Interest Margin which is the simplest margin of bank profitability. No wonder with wells fargo seeing this metric decline for two straight quarters, rock bottom Interest Rates is pretty bleak. Deposits jumped faster than expected and faster than they could lend them back out and they put it in treasuries and other low risk shortterm securities and hence the lower yield, but with all banks in this business its no wonder the sector is down today, but its unlikely the problem is the same for other banks since the share of deposits coming into wells fargo has to come from another bank. Maria . All right, kayla. Thanks very much. More now on wells fargo numbers and how things look moving forward with timothy saloon, wells fargo chief executive officer. Tim, thanks for joining us on the program. Thanks for having me. We want you to characterize what happened in the last three months and tell us how business it. Tell us that the mortgage lending business is concerning wall street. Whats going on . Can you walk us through it . Sure. We had a terrific quarter, and it was another record quarter for wells fargo. As you mentioned, our earnings were up 5. 1 billion, up 24 year over year. Earnings per share was up 26 year over year, and at 91 cents that was our 12th consecutive quarter of earnings growth, and our seventh consecutive quarter of record earnings. The good news is that our earnings were very broadbased. Our revenue was up 7 . We saw a good loan growth at 17 billion in the quarter across our wholesale and our retail and our Wealth Management business. We saw very Strong Deposit growth, as were you talking about, up 50 billion in the quarter. Our operating leverage, which was really the true margin of the business pretax, preprovision, was up over 900 million year over year and credits improved so it was a great quarter for us. As it relates to mortgage, the Mortgage Business is terrific, but its not the primary driver for our earnings. But youre making fewer loans. I mean, you dont seem to be addressing i guess what wall streets bigger concerns appear to be today after you beat earnings. The stock is down. They are worried about loan growth, Net Interest Margin was worse than expected. You know, fair question. I think when you look at our loan growth, we actually had the strongest quarter of loan growth in the last few years at 17 billion. Sure, the net interest was down ten basis points, but the fact of the matter is the primary reason for that was because our deposits grew. That was eight basis points of the ten. Well take that problem all day long. We love growing deposits because what that dpos does is it grows relationships and grows customers and allows us to grow our fee income over time and you saw that this quarter up 16 year over year. Looking out over the next couple of quarters and into the next year, how are you going to offset what many are calling stubbornly high expenses whether it be the pressure on margins that were talking about, the Net Interest Margin or really just the expense side of the business with the mortgage settlement continuing to stay at levels that you would, of course, like to be lower . Well, i would disagree that our expenses are stubbornly high. In fact, if you look at year over year. Our operating efficiency improved 190 basis points, and our operating efficiency was well within the guidelines that we had set of 55 to 59 . In fact, when you back out the cost of the independent floesh youre review settlement and the 250 million doe nation that we made to our foundation, our expenses were actually down year over year pretty significantly, and they have been coming down over the last couple of years. You discussed expenses on the call, and there were a handful of analysts probing you about higher expenses that you would like to get lower. What went on in the call then, tim . Well, if you look at our expenses on a sequential basis they were up. If you look at run rate, the run rate was about 12 billion. Again, if you just look at that run rate, it would put us at the low end of our expense efficiency rate target, close to 55 , 56 , but having said that, we still believe our expenses are high. We continue to want to make improvements in that, but at the same time we dont want to turn away good revenue, and thats what weve been able to accomplish. Sure. You made a peculiar statement on the call as well that i would love to get you to expand upon. It took a lot of people by surprise when you said that the fiscal cliff was a net positive for loan growth. I think most people would assume the opposite. Yeah. Fair point. What we saw in some of our loan growth was that many of our customers were anticipating the tax changes that were widely discussed in terms of Capital Gains going up, in terms of other tax rates going up, and what happened was some of our customers took out loans to pay dividends. The potential concerns about income tax rates also impacted sales of companies, and we had the opportunity to finance the buyer, so all in all it was a net positive. Not a big positive, but a net positive to our loan growth in the quarter. Yeah. Tim, at the rick of being so short term, we talk about the quarter and we really dont want to be that short term, but let me ask you about the business Going Forward and how you see investors benefiting here. We know youve got the ccar and already submitted the capital plan. A lot of people hoping for or hoping for a Dividend Increase and more money paid back to shareholders through buybacks. How are you envisioning investor benefits in the next several quarters and couple of years . Well, maria, youre right. We just submitted our 2013 capital plan. We have a very good capital plan. Weve got a great story to tell. 12 consecutive quarters of earnings growth. Reduction and risk across the board. Improvement in liquidity, improvement in capital levels. Were well above the minimums that the Basl Committee has set and the fed has set for us. A great story to tell. In our capital plan we requested an increase in capital return to shareholders. Well know the answer to that at the end of the quarter. Well leave it there. Always nice to have you on the program. So appreciate your time today. Thanks, maria. Thanks, scott. Timothy sloan. Next week, dont miss my exclusive sitdown with the chairman and ceo of wells. John stumpf will be with me at 4 00 p. M. Eastern on thursday. Final stretch of trading for the day. A market thats a mixed, up search points on the dow drills. Apple says china will be its number one market but can that happen without a less expensive iphone . And research in motion has been one of the biggest comeback stories in recent months. The stock up better than 10 today alone. Going too far to fast . Check it out next on closing bell. What are you doing . Nothing. Are you stealing our Daughters School supplies and taking them to work . No, i was just looking for my stapler and my. This thing. I save money by using fedex ground and buy my own supplies. Thats a great idea. Im going to go. We got clients in today. [ male announcer ] save on ground shipping at fedex office. Sven gets great rewards for his Small Business how does this thing work . Oh, i like it [ garth ] svens Small Business earns 2 cash back on every purchase, every day woohoo so thats ten security gators, right . Put them on my spark card why settle for less . Testing hot tar. Great businesses deserve great rewards [ male announcer ] the spark Business Card from capital one. Choose unlimited rewards with 2 cash back or double mil