hi, everybody. welcome to "the wall street journal report." i'm maria a bartiromo coming to you from davos, switzerland, i site of the economic forum. coming up in the program, where to invest today around the world. we'll talk to a woman who oversees over a trillion dollars in asset management. where she is finding opportunities right now. then my conversation with iconic billionaire george soros what he says about europe, freedom and investing today. then the sweet smell of success from the man that runs estee lauder why profits are in fashion for him right now. the "the wall street journal report" begins right now. >> this is america's number one financial news program, "the wall street journal report with maria bartiromo." now maria bartiromo. >> here's a look at what's

making news as we head into a new week on wall street. the u.s. economy grew at the fastest pace since the second quarter of 2010. the commerce department releasing the fourth quarter gross domestic product number on friday, it showed an annual increase of 2.8%, a sharp acceleration from the previous quarter but below the 3% expected by economists. the gdp is the broadest measure of the strength and size of the u.s. economy. the federal reserve finished a two day meeting this week and in a statement said it would keep interest rates low for an additional year until 2014. the fed committee said the economy is expanding moderately and it still sees slow global growth. that helped to push the markets up on wednesday. the dow reached an eight-month high and approaching a post-crisis high. the nasdaq nearing a six month peak as well. a huge week for earning in technology. apple blasted expectations, surpassing profit estimates by 30%. netflix beat as well. yahoo was in line with estimates. among industrials, boeing beat expectations.

caterpillar crushed estimates and 3 m beat as well. joining me more on the markets and investing around the world is jes staley cp of morgan base and marry callahan erdoes. good to see you both. thank you for joining us. >> hi, maria. >> i feel like walking around davos, meeting people in panels all i hear about is the european debt crisis. this is the wild card in terms of the investment community. are you worried? >> you have to have a good degree of concern. the structural challenge of the unified monetary system with a nonunified fiscal system in the eurozone has created real tough structural issues for europe. that being said, the political capital that has been spent to build the eurozone is enormous and we in the united states shouldn't underestimate the capital that has been spent. the european central bank as everyone has been talking about in december took a bold move and

really rolled out a cannon to give liquidity to financial markets across europe to buy the politicians time to address the structural challenges. so are we concerned? yes. are we worried? much less i think than people were a couple months ago. >> looking at the market activity in 2011, a lot of nervousness, whether it is europe, the u.s., china, the engine of growth for the world has slowed down. what are you hearing from investors? >> it's funny when you come to davos you can get very depressed with all the things you hear about and worry about. but this year has more optimistic tone than in years past. it's remarkable that it's only 4 january 27th and we already have over 12 mandates that are over $100 million in global emerging markets, in credit, in commodities. people are moving from defense to offense. >> what's the worse-case scenario if we don't see a deal for greece come march?

they've got a huge bond payment due march 22nd. is the date, sort of d-day. will we see a dislocation in the market if greece defaults n your view? >> if you look at how greek paper is priced right now, default, voluntary or nonvoluntary is very much priced in to the market. the resources that are available to the european union to germany, to france are pretty significant. there's not like a drop-dead date in march. they could push this down the road for a number of months and quarters beyond that. it gets messy but i think people expect a pretty rough conclusion to what is going on in greece right now. >> let's move to the u.s. mary, we had data out on friday, the end of the week, america's fourth quarter gdp up 2.8%. the fed committing this last week to keeping interest rates low for an additional year through 2014. i tonight know about you, but when i heard the fed say we are

going to keep rates low until 2014, i thought when do you hear the fed give a specific year they are going to keep rates. maybe things are a lot worse than i thought in the united states. what are you seeing in the u.s.? >> that's one thought. but the reality is that providing a lot of liquidity as are the european banking system to be able to provide for opportunities for the markets to make money. so you look at the earnings of the companies that are doing quite well and we have a chance of p.e. multiples to expand. we are seeing people put more in the equity markets and energy, in technology. there's money going in to china, private equity. there's money going into u.s. real estate. i think that people are being selective about where they can find opportunities and they are looking forward to a better 2012. >> i think it's fair to say, between the european central bank and the move by the federal reserve, the world's two largest central banks have thrown down a challenge. they are adopting policies that are going to drive for growth.

they are expanding their balance sheets to historic levels to try to get there. on one level you start to ask the question you ask them what are they seeing that makes them nervous that the broader market is not seeing. there's clearly commitment to growth. they don't see inflation on the horizon so they are committed to push the economies forward. >> in terms of the risks for the year, you have to anticipate whatever it is out this. what keeps you up at night? what do you worry about in terms of the potential risks for the year? >> well, i mean, you worry there's a banking crisis that happens in the eurozone and everyone's working very hard to make sure that's not the case. what you worry about is what you don't know. >> right. >> we spend end also hours stress testing our balance sheet as well as our clients' balance sheet and think we have assessed the risk but you don't know what is out this and you do your best to do that and people want to get out there and get going. >> let me get your take on the pipeline as you see it in terms

of investment banking. what can we expect in terms of business in 2012? are you seeing a robust lineup of business? >> one of the other things about day voes we need to call on, the emerged countries are still doing pretty well, from china, brazil, india. there's a lot of, the balance sheets of those countries are in good shape. there's growth there. we are seeing a lot of activity. in the dialog in the united states is quite robust right now. corporations have a lot of cash. as people have. the economy is beginning to move. we are one of the largest -- actually the largest small business lender in the united states. our loan book is at 70% over this the time last year. so, the u.s. consumer, i think, is doing better. if there is a surprise it is not -- it would be for the u.s. economy this year. >> you have been talking about people wanting to look at china and emerging markets to put money to work and credit as well. is that what you would recommend? where are the opportunities for

investors? >> the first step is credit. there's tremendous opportunities in credit. >> that's where you get yields, right? >> that's exactly right. it depends where you want to be in the spectrum but there is a lot of opportunities and a lot in the public markets as well. but the private markets, out of the gate this year first of all, many of the portfolios are up, hedge funds are up 3%, 4% and you're seeing very, very strong momentum. we hope continues throughout the year. >> we'll leave it there. good to have you on the program. jes, great to have you on the program. thank you so much. mary and jes, joining us. america's banks were a prime topic of conversation this week in davos. i spoke to the ceos of three of the biggest most important financial institutions about housing, the economy and their outlook. here they are in their own words. >> the year started, i would say a little firmer. the environment feels to me like the u.s. is in a little better shape than the markets appreciated and now the markets are catching up.

>> in terms of needing to raise capital, are you expecting to sell assets? >> i don't think we will raise capital. morgan stanley is through the sort of damage zone. we've gained share in our core institutional businesses, and we're looking forward to getting this ingration with smith barney done and looking forward to that acquisition over time. >> with housing it's going to take time to work through everything, we have a couple years of working through inventories of properties. we try to modify whenever we can to help people stay in their homes. we have done it a million times. that's a million times we've had people stay in. when we can't do that short sale or ultimately the worst outcome is foreclosure. >> those businesses that are geared to the emerging market consumer or geared towards global trade flows or banking they're doing well. it's almost as if the banking business has two different segments to it, those that are market related and those related to the unlined growth trend. we will have to watch that.

up next on the "the wall street journal report," the european crisis and the impact on the continent and around the world. billionaire investor george soros on the changes he sees ahead. later in the program, making the most of makeup. the head of the world's second largest cosmetics company on the beauty's booming business around the globe. mornin'. i guess i'm helping them save hundreds on car insurance. it probably also doesn't hurt that i'm a world-famous advertising icon. cheers! i mean, who wouldn't want a piece of that? geico. ah... fifteen minutes could save you fifteen percent oh dear... or more on car insurance. laces? really? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes. [ male announcer ] now there's a mileage card that offers

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topic in day voes this week. i sat down with famed billionaire investor george soros and got his ideas on taming the turmoil in europe. >> the european union itself resembles a financial bubble. it's a self-reinforcing on the boom side and then self-reinforcing on the negative side. so you had this period of integration where the leadership was pushing for further integration. and then you had a period of stagnation and after the crash of 2008, you started a period of disintegration. when angela merkel said we will guarantee the financial institutions but each country has to do it on its own, not europe wide. it has to be country by country. that was the first step in that process. it was the beginning of the euro crisis. things have gotten worse,

declining economic activity which is now occurring because of the credit crunch. it's going to reinforce the political disintegration and that would be fatal politically. >> how does the euro look differently? who are the players in your view? >> you will have to have more integration. you'll either have disintegration and euro falling apart, which would have catastrophic consequences and really potential meltdown, worse than you had in 2008, a real disintegration, or you have more integration. but now, it's something that is forced upon the people. it has to be something that actually inspires people. for that, you have to recapture

europe as a, what i call a fantastic object, something that is desirable, that is actually beneficial, which is it. what kind of european leadership you have will be much more important. i think it would be possible to have the president of the european commission popularly elected, without changing the statutes because you could have the parliament refuse anybody else other than a popularly-elected president. >> that would act as a real catalyst. >> that would be the beginning of a true european politics because right now all the politics are local, right. and the decisions are european. >> we haven't spoken yet about the united states. but you are right about the turmoil happening in the united states, as well. are you seeing improvement, in

any way in the u.s.? >> i think the economy is showing considerable signs. strengths. i think for instance the glut of cheap natural gas is making a big difference in making america, american manufacturing more competitive. you see strength in manufacturing, which is really a reversal of the trend of the last 20 years. after all, you now have had three years of adjustments. so it is beginning to settle down. >> my thanks to george soros. up next on the wall street journal report, how a cosmetic company founded in queens, new york, changes the way women think about their faces all over the world. beauty consumers and big payoffs with the ceo of estee lauder. you can find us on facebook. look for wsjr with maria. more power.

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welcome back from davos, switzerland. the business of beauty is nearly $400 billion industry around the world. it's growing, as well, as more consumers in emerging markets are looking in the mirrors and making shopping lists. fabrizio freda is the ceo of estee lauder. is that the second largest cosmetics company in the world. great to have you on the program. >> good morning. >> so the estee lauder company

owns 28 brands more than 140 countries and saw a 40% growth in your stock in 2011. tell me what's behind the strength? >> the company's strong. we have 20 great brands with super quality products and fantastic people. but in 2011 we were able to put this excellent boat in the wind and the winds are coming from emerging markets, the winds of growth are coming from new chinas, the digital war and we have taken many costs out of the system and reinvested this money into more profitable growth. the mix has been working well for us. >> what do you think this tells us about women around the world? >> first of all, women around the world are beautifully different, one from another. and i think the companies that can understand this and serve this best will continue to win in the future. take chinese consumers are particularly passionate for skin care. in prestige markets, 70%, china

market is about skin care. for example, very different from the u.s. or europe where fragrance is much bigger or different from brazil where makeup is a prominent role. so women are different and we try to serve the differences. rather than standardize them. >> do standards of what is beautiful differ around the world? tell me about the differences. in china you are saying they are focused on skin. >> yeah. >> what about brazil, inya? tell me some of the changes. >> absolutely. in china they're focused on skin. a chinese woman will do seven steps of skin care in a day if she can afford it. this is because the skin, the face, the face and the skin on the face are symbol of beauty, a symbol of social status, of health. there's a lot in the expression of the faces, a lot about the skin. in brazil, as you mentioned, for example, people are passionate for makeup, particularly makeup for the eye and lips.

people -- there's huge differences within the country, in india half of the market will be about lips. in middle east will be about eyes. in brazil about everything. big differences. >> that's really interesting. how do you refine the shopping experience in order to meet these demands? what i'm talking about is on-line, airports, department stores. do you have to change the way you market and the way you sell in the different venues? you only recently started listing product prices at makeup counters, is that right? >> that's right. the big difference is that prestige cosmetics are about aspirational brands, great quality products but also service, the service that makes the product fit the individual. it's the ultimate one to one market because in our service, we educate people how to use the product and fit each single product for the kind of skin, the kind of makeup habits that you have. what is changing is we are offering not only different

products but different services by country to different consumers. >> what a rich history estee lauder has. estee lauder founded the company in 1946, built the business, bringing her products right to stores. she was giving makeup lessons. how do you preserve the legacy of this rich history and innovating in the 21st century. >> the legacy of this beautiful system was about creativity, entrepreneurship and the values which are about always being the best. great quality. we are preserving this and we are bringing this to the next level. for example, for many years, we have been bringing the best of american innovation to the rest of the world. now we are continuing doing this but also taking the best of china, the best of brazil, best of italy, france, and bringing this to the rest of the world. >> what do women want that you can't market to them? anything? >> you know, women -- really anything. women are getting wealthier and wealthier around the world. you know it's been published women will

have more available income for dollars next year because more women are working, more women graduating the university and more brilliant careers in their lives so they're wealthier. when people ask them what is your preference and how you would spend this money, the answer is food, fashion, cosmetic and beauty. we are the third preferred category of a group of people have a trillion dollars more to spend. not a bad position to be. >> my thanks to fabrizio freda, ceo of estee lauder. up next on "the wall street journal report, the news of this upcoming week that will have an impact on your money. take a look at how the stock market finished the week. [ mujahid ] there was a little bit of trepidation,

not quite knowing what the next phase was going to be, you know, because you been, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talking about, well you know, i won't be, and i get the chance to spend more time with my wife and my kids. it's my world. that's my world. ♪ metamucil uses super hard working psyllium fiber, which gels to remove unsexy waste and reduce cholesterol. taking psyllium fiber won't make you a model

but you should feel a little more super. metamucil. down with cholesterol. when bp made a commitment to the gulf, we knew it would take time, but we were determined to see it through. today, while our work continues, i want to update you on the progress: bp has set aside 20 billion dollars to fund economic and environmental recovery. we're paying for all spill- related clean-up costs. and we've established a 500 million dollar fund so independent scientists can study the gulf's wildlife and environment for ten years. thousands of environmental samples from across the gulf have been analyzed by independent labs under the direction of the us coast guard. i'm glad to report all beaches and waters are open for everyone to enjoy. and the economy is showing progress with many areas on the gulf coast having their best tourism seasons in years. i was born here, i'm still here and so is bp. we're committed to the gulf

for everyone who loves it, and everyone who calls it home. for more check out the website, wsjr.cnbc.com. hope you follow me on twitter and google plus at maria bartiromo is the handle. look at the stories coming up in the week ahead that may move the market and impact your money this week. fourth quarter earnings reports this week from dow components exxon, pfizer and merck. on monday the latest figures on personal income and spending will be out. on tuesday a look at the housing market with the monthly home price index from s&p case-shiller and then voters in florida go to the ballot box for

the national primary on tuesday. wednesday, the first of february, auto sales for the month of january and friday the jobs report tells us the unemployment rate and how many jobs the economy lost or gained in the last month. typically a market mover. that will do it for us today. thank you for joining me this week. next week, a special program, the athor of a news making new book about the first family and life in the white house. each week keep it here where wall street meets main street. have a great week everybody. see you next weekend. ♪

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