welcome to the wall street jou journal report. i'm maria bartiromo. i will talk to the architect of america's affordable care act, zeke emmanuel. the great ral of 2012 is it for real? what could derail the powerful push or are things better than we think? record lows again it could be time to refinance your home. we will tell you how to figure it out and what's right for you. "the wall street journal" report begins right now. here is look at what is making news as we head into a new week on wall street. the market melt up goes on. the dow jones industrial average had its best day on in two weeks on thursday and close ted highest level since may of 2008. about 100 points away from dow 13,000. the nasdaq on fire as well,

hitting a 12-year high this week. the average is moving on easing concerns out of europe and encouraging economic data in the united states. the markets continued up on friday. the fed appears open to another round of bond purchases to keep interest interest rates low and boost the economic recovery but the minutes released this week show that the open market committee was divided because of concerns about inflation. americans are still shopping but not quite as much as some economists were looking for. retail sales for january rose by .4%, slightly lower than expectations. two years after it nearly collapsed into financial ruin, general motors posted the largest yearly profit on record. the automaker made $7.6 billion in 2011. in spite of the big numbers, earnings fell short of analyst expectations with shortfalls in europe and south america. lorts of signs of hope for the markets and the economy but my next guest says things may not be as bright as they seem. david dar israelis the chief investment strategist with morgan stanley smith barney. he joins with a lot more. good to see you.

thanks so much for joining us. seen a powerful rally in stocks so far this year. nasdaq up 13% or so. what is behind it and would you buy into it here? >> the three rs are behind it resolve, resilience and recovery. resolve is the european central banks. you have reported from calf voce and elsewhere about the problems in greece, portugal. ireland's bonds this is amazing. in july, ireland's bonds were yielding 15%. they are down below 7% now. they have taken medicine. taken the medicine. italy's bonds have fallen. rae sill yep has been the jobs

numbers, housing numbers, you reported now, home sales next week, we will see how they come out, the housing starts, construction, empire state, philly fed -- >> i'm amazed the u.s. consumer borough, not on a wild spending spree but the numbers hanging in there. so the three rs have been so far able to hold the three ds in check, deleveraging, desell letter racial and disfunctionality. >> do i want to buy stocks or wait? >> the profit number will come in lower in our humble opinion than the street is expecting. this going gangbusters, people will have to rethink the lower profit. morgan stanley's chief strategist, he is looking for profits to grow 2.7% this year. >> that is not very much.

>> no the street is looking for 9%. >> 9%? >> 9%. we are looking for 2.7. next year, another 11, consensus, we are looking for only 3%. you put those two years ago, at the end of 2013, we are looking for the s & p to earn, earned last year, $97, looking for it to earn $103 in 2013. at the end of 2012, if you put 103 dollars times 12, that put the market well below where it is today, 1350. >> what i hear you saying, we are looking at a global slow down, things are better this u.s., we have a global slow down it is about to impact corporate earnings, which has been the strongest part of the recovery. >> the driver. >> you are staying is not priced into the market because the market is up, has much higher expectations? that tell mets market is going to sell off. >> with he would use this as an opportunity to get out of some of these financials that moved so brilliantly and so broadly. european and u.s., sell those stocks and buy back into some of

these big dividend-paying global gorillas, talking about the consumer staple stocks, still overweight that. talking about technology, still overweight that, maria and talking about health care. these companies have impreg emergency balance sheets, fortress balance sheets, lots of cash, cash flow generation, ability to raise the div depends. >> somebody said the other date dividend payers is a crowded trade. i said so what people like to get regularly, you know, regular income and dividends. you are still getting your dividend. he said, no, the fact is the dividend payers have not performed well in the last year. i check it had it is true. you are getting a dividend but the performance wasn't there. >> the crowded trade aspect just in general, i would say breathing is a crowded trade. you going to hold your breath your whole life because everybody sells breathing? there is a place for cop theirianism and a place not for contrarianism. we think this is a longer term multiyear trend so companies have been sitting on that cash, husbanding it. they have been worried.

the fact that we did not have a deadlock here at the end of this month on the payroll tax holiday. at the end of this year, morgan stanley's economists, maria, looking for a fiscal pothole in 2013. that means the obama health care taxes will go up. >> right. >> he is also in his budget called for some things, doesn't mean they are going to pass. secondly, the expiration of this payroll tax credit and thirdly, the expiration of the bush era tax cuts. we think that will clip the 2013 economic numbers by anywhere from 1 to 2% over what it should be at this point. >> you are a lot more steady and sort of i don't want to say negative but certainly cautious than you have been before, david. and i thank you for being here. always great to have you on the program. >> thank you. >> david darst, morgan smith

barney. one of the key figures behind the president's health care legislation, dr. zeke emmanuel, is with me. later, getting the most out of your mortgage. are you missing out on ways to save. we take a break, take a look at how the stock market ended the week. back in a moment. [ tires squeal, engine revs ] ♪ ♪ ♪ [ male announcer ] not everything powerful has to guzzle fuel. the 2012 e-class bluetec from mercedes-benz. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. 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.

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two years since the passage of the patient protection affordable health care act, health care and reforming it in the united states still controversial. my next guest was one of the architects of the plan, special adviser to health policy to the office of management and budget. dr. zeke emmanuel is currently a professor at the university of pennsylvania. doctor, good to have you on the program. >> thank you he very much for being here. >> the white house released the

president's budget for fiscal year 2013 this week aiming to cut $360 billion from medicare and medicaid over ten years. what is your reaction to the plan? >> we do have to cut medicare and medicaid. i think some of the cuts make sense, kind of speed up introduction of generic biologics could we can get generic drugs fast near the marketplace. some of them are better fraud and abuse enforcement, which we know we definitely need and using much more modern techniques, predictive techniques of who's cheating. some of them are straight forward cuts in how much they are paying, various, like skilled nursing facilities and things like that. >> are you expecting the cuts to medicare to continue because of increased costs? >> well, we are going to have to -- what i would like to do is modernize medicare there are a number of things, been on the books since 1965, a number of things with he can do to modernize the system, that would both improve the quality of

care, improve the efficiency of care, delivery to medicare beneficiaries and reduce cost. >> tell me about that how do you modernize it with these challenges of expenses? >> i think one way that the congressional budget office has shown has the most promise is bundling payments. instead of paying for each individual activity, say you have a hip replacement and you pay for the workup of the hip replacement x-rays, pay the sur general separately, anesthesiologist separately, the operating room, the hospital stay, and then the posthospital rehabilitation, you put into one price and you measure the quality and you let the hospital with the doctors try to figure out how to deliver ter more efficiently. we have done some experiments than and actually improved quality and reduced cost. >> really glad you brought this up, bound ling this is something that came up in a conversation this week had that with the head of a major hospital and he said where is the evidence that these new aca, the affordable care act, payment and delivery models, like bound ling, are

actually going to impact cost, cut costs? >> okay. so on the bundling, as the congressional budget office showed, that does -- there has been a lot of experiments with it at medicare. medicare is running ace demo, acute care episodes testimony mothers bundling 29 separate cardiac surgical procedures like by pass turnedry, stem placement, pacemaker, eight orthopedic procedures. my complaint, only doing it in 11 hospitals. i think that's ready for prime time, where we do have evidence that it improves quality and reduces cost 5 to 10%. i think that is actually the big challenge of the system, implementing things that have been shown in small scale to work. >> let me switch gears, ask you from the patient side of things. you worked on the president's health care reform agenda for two years. what do you think is the most important thing, the average patient out there does not know about how this reform is going

to be impacting their care and their coverage? >> i think by 2020, care for all americans is going to be substantially better because of the affordable care act. first, by 2020, we are awful going to have interoperable electronic health records that every doctor, hospital, health care facility we go to will have access to that a direct result of health care reform, actually came in the recovery act. have better coordinated care so doctors are going to be working bet we are hospitals, going to have fewer hospital-acquired infection and other mistakes like drug/drug interactions, falls in the hospital. going to have fewer hospital readmissions so that when a patient gets discharged, really better cared for. we are going to have more information about what interventions work and which interventions don't work and which patients they are better. all of those are going to be a lot better for -- lead to better care for patients and i think the other thing you have to see is that the system is now going to focus on the sickest

patients, ensuring they get the best quality care, 'cause that's where the money s. >> i have got to push back on the price, expense for companies f this is so positive in terms of impacting cost, how come we are seeing so many waivers? talking roughly 1200 companies have received waivers from participating in this health care reform, many of them employees -- employers of low-wake workers, hhs estimating 4 million people, actually. these companies are ranging in size, not all small.scan, talking about mcdonald's, you know, labor unions, the teachers union, they were allowed to get awaiver from this legislation. so if companies and people can opt-out of it, what is supposed to be national reform? how it can that work? >> 1200 companies is a small number of the millions of companies in the united states and if i've got it right, the waiver you're referring to on mcdonald's is a short-term waiver, not a long-term waiver that allows the transition to

the full implementation in 2014. >> but they were going -- >> more smoothly. >> because they were given the waiver because they said, look, we are actually considering not offering health care benefits to our employees. that is definitely not what the president wanted, companies coming out saying it is not too expensive. we can't offer benefits. i think this is an effort on the administration to be more flexible in implementation, smooth the path to implementation but we should remember by 2014 we will have the exchanges in place, subsidies for people who can't afford to buy insurance. there is going to be a mechanism. right now, one of the problems in our system we don't have a good mechanism for getting people pool to get them the cheapest price to make sure that if they have a disease, they are not given either an outright denial or an exorbitant price they couldn't possibly afford. so, i mean, rather than just in and say, well, look, we are only two years in this and there are all these issues, i agree there are all these issues but right time to evaluate a major change like this is not in two years it

is in ten years. the real question that your audience ought to ask themselves and businesses ought too ask themselves in 2020, are we going to be at a much better place? the alternative was not the greatest health care system in the world with no problems. the alternative was a health care system with a lot of problems, uncontrollable costs, quality that was very uneven and the affordable care act is definitely -- not perfect, definitely a step in the positive direction. >> your take on what's happening at the supreme court right now, so if the supreme court rules against the mandate, again the the mandate that individuals have to purchase insurance, how does that impact the rest of aca? >> first of all this is an open and shut legal case. talk to every constitutional lawyer this is open and shut. >> really? >> the commerce clause gives congress the power to regulate health insurance and so the called necessary and proper clause which says congress can do whatever is necessary and proper to affect that clause says that congress can do this.

working to get people pre-existing conditions insurance? the supreme court is going to rule it constitutional. i have two very large bets with billionaires that it is going to be constitutional. >> you think it is? >> yes. either i'm going to be a very poor man -- >> other side of that bet. how will premiums, with or without subsidy relief, how are they actually going to stay affordable going forward for the average person? >> the only way premiums can stay affordable going forward is if health care costs moderate going forward and the only way for health care costs to moderate going forward is for us to figure out better ways of delivering care but thank are cheaper but higher quality. that's why when we started this discussion, focused in on bundling, the affordable -- the accountable care organizations 'cause they are the key to keeping health care costs down and therefore, premiums flat. so the public, if they really want their premiums to stay flat, should say, yeah, let's try different ways of paying doctors, that's going to be important to my having a lower emememiupr >> all right.

we will be watching. dr. zeke emmanuel, grate to have you on the program. >> great to be here. >> appreciate your time. up next on the "wall street journal" report, more rates lower than ever s it a good time to refinance? we will have advice on getting the most out of your biggest asset. find you the on facebook, look at wsjr with maria. [ male announcer ] with stamps.com, you can print real u.s. postage for all your letters and packages. it gives you the exact amount of postage you need the instant you need it. can you print only stamps? no. first class. priority mail. certified. international. and the mailman picks it up. i don't leave the shop anymore. [ male announcer ] get a 4-week trial plus $100 in extras including postage and a digital scale. go to stamps.com/tv and never go to the post office again.

welcome back. the battered housing market has seen mortgage rates pushed to historic lowsome now the time to take advantage of those numbers and come out ahead of your bill?

joining me now, money magazine senior writer donna rosado, here with advice on refinancing. great to see you. >> you, too. >> mortgage rates unprecedented lows right now. what is going on in the mortgage market? >> that's right. you see the 30-year fixed mortgage rate around 4% and 15-year loans at 3.5%. those are amazingly low rates and seeing more people trying to take advantage of them. of course, something like 43% of people are refinancing into shorter term loans, 15 or 20-year loans. that's the highest percentage since 2003. >> so, what is the refinance option? who is the refinancing option best for in that case? let's go to a shorter, you know exmaturation or who is this best for right now? >> if you moved to a shorter term lope, 15 or 20-year loan, going to have a higher monthly payment, make sure you can afford it tends to be for someone later in their career, someone who can afford the higher rate but really looking

to pay off debt, maybe move into retirement, but just a good financial move. it is also good for someone who is going to stay in their home and wants to pay it off t is worth it. you will save tense of thousands of dollars over the life of the loan, interest. >> talking about real numbers, big numbers if, in fact, you make this change. but there are fees involved and you know, so how complicated can this get? >> the big thing to know, you will be paying more each month but some things customized mortgages, get a little closer, say if you want to do a 20-year or 21-year or 22, you will pay more in fees to do that, but if you are looking to stay in the home a long time or retire in that home, a great move to get rid of debt faster. let me get you with what the government did revamping the home affordable refinancing program or harp with changes that will go into effect this march. >> that's right. >> is this going to help underwater home owners? >> people are saying that is harp 2.0 and it really will.

a lot of people have wanted to refinance, about 11 million people have not been able to refinance because they are underwater, they owe more on their mortgage than they -- their home is worth. the program is revamped no matter how underwater on your mortgage, you can qualify for this home but you do have to be up-to-date on your payments and purchased the home before 2009, june 2009. >> so, that's the date. so, you mentioned paying off the mortgage what about paying lump sum to get a lower rate? who is that appropriate for? >> someone who has -- say you don't have enough equity in your home. lenders have stricter requirements, people who have 20% equity in your home. if you don't have that you might consider paying points up front, paying 1 to 2% of the loan, so paying up front for that loan in exchange for a lower rate. another thing you can do is do a cash-in refinancing. go into the closing with some

money to -- own money to pump up equity in your your home. have a better shot getting the lower ray. >> donna, thank you for being on the program. >> thank you. >> great to sigh and have your insights. up next on the "wall street journal" report, the news this upcoming week that will an impact on your money. sweating palms, racy pulse, aching head, how to tell if banking is bad for you. hazard duty in the office coming up. stay with us. and it holds all day. ♪ take the fixodent 12 hour hold challenge. guaranteed, or your money back. ♪

more on our show and guests, check out the website. i hope you will follow me on twit and google plus. look for @mariabart roam moment now the stories a week aneed may move the markets and impact your money. all u.s. markets are closed for the federal holiday. later in the week, earnings out from home depot, kraft foods home depot and hewlett-packard. friday, we get the number of new homes sold as well as the university of michigan's latest reading on consumer sentiment. finally today, is the stress of working on wall street enough to make you sick? a usc business professor studies entry level investment bankers for a decade and found the fast pace and long hours took a significant toll on their health. 80 to 120-hour workweeks survived four years before the bankers' bodies turned antagonistic, in terms of the study. every person observed developed

a stress-related physical or mental ailment ranging from weight gain and insomnia to heart pal at this time passion and arthritis. maybe a case where hard work is not its own reward actually. that will do it for us today. thank you so much for joining me. next week, hope you will be here, can there be an end to illness? i will talk to the doctor who says what we know about living healthy may be wrong. join us for that interview each week here where wall street meets main street. have a great week, everybody. i will see you again next weekend.