hi, everybody. welcome to "the wall street report." i'm maria bartiromo. we'll talk to one governor about his business friendly state, pensions and balancing the budget. >> if new york can do that, everybody in america can. >> and my conversation with marcus samuelsson about the rebirth of harlem. ""the wall street journal" report" begins right now. here's what's making news. a new blow to the major financial institutions this week in the united states and around the world. moody's investor service issued a long-anticipated ratings

downgrade of 15 major banks including five based in the united states. they are morgan stanley, goldman sachs, jpmorgan chase, citigroup, and bank of america. the news could have been worse for morgan stanley. the bank lobbied against a more severe downgrade. but the ratings cuts are likely to raise bank borrowing costs, which would be passed on to customers. after a two-day meeting this week, the federal reserve announced it is extending so-called operation twist, which is a program to buy long-term bonds and keep interest rates low. the fed's move disappointed the markets, which were hoping for a more decisive move. and by thursday, the dow jones industrial average plummeted more than 250 points. it was the second worst day of the year. but the markets rebounded on friday. crude oil tumbled below $79 a barrel this week for the first time since october. the slowing global economy and decreased demand is pushing prices lower. that's translating into lower gasoline prices, and it will will put more money in consumers' products. microsoft trying to take a

bite out of apple introducing surface this week, a major strategic shift for the software giant. is the economic news all gloom and doom, or are there any bright spots? henry mcveigh, head of global and macro asset allocation at kkr, a global investment firm with roots in private equity. great to have you here. >> thank you. >> let me kick it off with this global story. you're just back from spain, is that right? >> yes. >> and asia. >> asia. >> i want to hear about your trip because the worry out there is that everything is slowing. china was the engine of growth for the world. that's slowing. what do you think is going on out there? >> why don't i start with china, then we'll work towards europe. the message from china is that growth is slower than the consensus. so estimates need to come down. i think the big story is that the export economy in china, they've been the manufacturer to the world. that's starting to slow down. they don't have demand from europe. they don't have demand from the u.s. so i would expect that to start to affect people's perception of china as a growth engine.

i still think it will be the single biggest growth vehicle out there, but it just won't be -- if growth was here, it needs to come down. i think we'll go through an adjustment period. >> what did you see in spain? everybody is worried about spain and the eurozone. >> i think spain -- there's reason for caution there. i think it's a little bit -- you have a new administration that came in, trying to get their arms around not only a banking crisis but also a government crisis in terms of overleverage and fiscal deficits. so i would expect spain to continue to be a problem area. unemployment is very high. and really they're dealing with some structural issues that i think are going to plague the country for some time. >> so the federal reserve's action this week expanding or extending the so-called operation twist program, more stimulus. >> yeah. i think it was a nonevent. i'm glad you brought this up. when i travel around the world, whether it's brazil, turkey, china, i think the central banks are being asked to do more than just dictate monetary policy.

we're being stretched in multiple directions, control growth, control loans, and it's too much. the governments need to get their houses in order in these countries and help the private sector. kkr and its 80 businesses globally, we want to work with different industries and different managers, but we need the governments to collectively to do a better job to help out to create a growth environment. and i think that's a message that you'll hear from anybody that's in the markets or in the economy in terms of running businesses, which is there's a lot of good things the private sector is doing, but now is really a time for the governments to step up and create a path of growth so that we can get out of some of this kind of funk that's been plaguing the global economy. >> and we can say that about the u.s., as well, because the federal reserve has been the one providing stimulus, but we've got the this fiscal cliff at the end of the year. we need governments to start focusing on it. >> think about the fiscal cliff as another example, which is we don't know whether we're going to have a 1% deficit next year or a 4% deficit in terms of growth.

starting the year with a 4% deficit, which is nothing cha e changes that's what you'll have, that's never happened in the history of the united states. think about it. if you're trying to run a business, small business, large business, you want to know what the playing field is. i think from our standpoint, we are more cautious on growth next year and one of the reasons is not because we don't see our industries doing well or our companies doing well, but we just are struggling with what is the playing field in terms of the growth imped mmts that will be dictated by either government taxes or some change to health care or social security or medicare. so these are all things we're focused on as a firm to make sure we do the best job for investors to understand those issues. >> we need clarity on these issues. >> yes. >> let me ask you about the bank downgrade. moody's investor service late thursday night downgrading the ratings on all those banks. what does that tell you? i know we were anticipating this, expecting this to come. stocks traded down ahead of it and tried to rebound. >> i think you have to look at the forest and not the trees.

the trees analogy would tell you, this is good, it's not as bad as what people thought, but think about the idea that a financial institution is near junk status. that's a bold statement. and so i think what's happening is we're having a reshaping of the financial services industry, and they're being delevered. they're being more regulated. they're being asked to change their business models, and that's creating issues with the rating agencies. unfortunately, i think that's a structural issue, not a cyclical issue. my take is i think it's more reflective of the environment we're in in that just the financial services industry we knew during the 1990s and during the 2000s is going to go under significant change and reform. >> what do you do then as an vor-in this environment? a lot of headwinds throughout. >> but i through there are a lot of tons to make money. i would focus on three themes. one is yield, two is growth, and three is thinking about inflation hedge. when you think about the macro landscape, corporations are

actually in great shape. and we want to be exposed to corporations either through some of their corporate bonds, i think those are -- there are opportunities there. i think some of the deleveraging we see in europe is creating wonderful opportunities for a special situations group. and i think you also want to have some type of real assets, something that -- whether it's real estate or energy infrastructure, something that is -- can work in an inflationary environment but also can provide you dividend income along the way. >> great to talk with you. >> thanks for having me. >> henry mcveigh from kkr. up next on "the wall street journal report ", i'll talk to the chief executive of america's corporate capital, delaware. and later the chef born in africa, raised in europe and found a home in harlem. the economic renaissance of this legendary new york neighborhood. one dish at a time. [ tires squeal, engine revs ]

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more than 60% of u.s. publicly traded companies and more than 60% of them are in delaware. delaware's governor is with me today. wonderful to have you on the program. >> thanks for having me. >> tell me about the environment for business that your state provides and how it's helping the bottom line there. things are going well in dell delawa delaware. >> they're going well but we want to keep making things better. the bottom line is we are very business friendly. to the extent anyone who's watching the show is thinking about where they want to expand, come talk to us in delaware. >> can you be too accommodating to business?

there's this whole debate, main street, wall street. tell me about, you know, the corporate tax rate. you have an 8% corporate tax rate, but there's a perception that companies that may incorporate there, that diminishes revenue opportunities in other states. >> the companies that choose to incorporate in delaware do so because they really understand our law. we've got the best business court in the country, and we've got a terrific division of corporations, which is very efficient. but businesses want to locate in our state because we've got a great workforce. >> there are jobs. when you look at the unemployment rate, lower than the national average. >> lower than the national average, but we don't allow ourselves any time for self-continue graig self self-congratulations on that, because there are still people in our state who would like to be working and who are not. my job is to put myself in the shoes of the people who create the jobs, focus in on the things they care most about, and execute it. >> how do you do that? tell me how you create jobs. >> the main thing is to recognize that government doesn't create the jobs.

our role in government is to create the nurturing environment that businesses want to be in. so we listen very carefully to what they're telling us across industries, whether the old du upon, which used to be chemical but now moving towards biolodge cha -- biologicalliey based materi, amazon broke ground on a major distribution center. we are just as excited about the smaller businesses in our state. our job is to make sure our businesses, entrepreneurs, business leaders across a range of industries find delaware to be attractive. >> this is so important because we're having this debate on aings in nal level right now. how do you create growth. one idea is to, you know, raise taxes for business. and the other idea is to make it what you ore doing, encourage business to create jobs. let me ask you about this whole debate we're having on a national level about fiscal responsibility. you know, spending, obligations like social security, medicare. what is is the biggest challenge

to you in terms of keeping your balanced budget for the state? >> well, of course, at the state level it's different because 49 of the 50 states including delaware, we are required to balance budgets. so it has meant during some really difficult times that we've had so make some tough decisions. a few years ago. painful, but we mad to cut the pay of our state employees. you know, our view all along has been to take a balanced approach. and businesses get that. the folks who are creating jobs get that. and what they care most about -- i know there's a big, big focus on some other issues, but workforce is what it's all about. the ceo of gallup recently wrote a book called "the coming jobs war." there are 3 billion people in the world looking for jobs, 1.2 billion jobs available. we are in a global war for jobs. it is that simple. >> that's really a good way to put it, actually. what does that pro business environment in delaware, what does that teach you about educating the next generation of workers, ensuring that u.s. workers have what they need, the

skill sets they need to actually thrive in this uncertainty? >> we spend a lot of time making sure that what we're teaching in our schools, our community college, career and technical schools, that there's a linkage between what we're teaching and the skills that are actually valued in the marketplace. so there's a lot of interaction with local businesses who can tell us what are the skills they need. sometimes we actually help -- ask for their help in writing the curriculum, particularly at the community college level. the skills linkage is critically important. >> what do you make of the president's relationship with the business community? he's perceived as anti-business. >> i'm asking business leaders to take a hard look, because, i mean, in my experience, he's done a couple really important things. just recently, he signed the jobs act, which makes it easier for smaller companies to go public. critically important because there's a lot of research that says a lot of job creation takes place right after an ipo. this is something he signed not too long ago. he's had a big focus on export promotion, a focus on foreign direct investment, and of course he made some really tough

decisions that proved to be the right thing with regard to saving the automobile industry. so those are tough decisions, and i think people ought to be taking a hard look at that. >> do you think that the two sides will come together in terms of, you know, addressing this fiscal cliff? we know at the end of the year the tax cuts expire, spending programs expire, companies will be forced to cut workers when they're not going to get that federal money and those spending programs expire. are they going to address this fiscal cliff? >> you know, i certainly hope so, and for those of us in states -- and we realize how dependent we are upon what goes on at the national level, we are certainly expecting them to have the same kind of functional relationships with many of us have certainly that we have in delaware. >> great to have you on the program. >> thank you. >> thanks for joining us. up next on "the wall street journal report," i take a walk through harlem. >> i grew up in the restaurant business. my dad has a restaurant in brooklyn. i was the choate check girl.

how math and science kind of makes the world work. in high school, i had a physics teacher by the name of mr. davies. he made physics more than theoretical, he made it real for me. we built a guitar, we did things with electronics and mother boards. that's where the interest in engineering came from. so now, as an engineer, i have a career that speaks to that passion. thank you, mr. davies.

a renaissance in harlem is revitalizing street life to the iconic neighborhood. marcus samuelsson is committed to the change. the youngest chef to receive three stars from "the new york times" provides over a hotspot many harlem blending flavor, people, and business in a way that brings new meaning to soul food. >> think about the harlems.

harlem has 19% unemployment. u.s. has, what, 8.2%? it's very important a place like red rooster is here because we hire from the community. it's hot. swedish meatballs. can we pick up one more rum, please? >> you describe the menu as comfort food seen through the eyes of an immigrant. >> absolutely. >> how does this business represent who schnurr. >> everything i do is really a reflection of my journey. >> marcus samuelsson's journey has led to red rooster, the new york restaurant he opened in 2010. >> we have three customers, right. >> and where the ethiopian-born chef adopted bay swedish family with his older sister at age 3 pays tribute to a global appetite. >> who taught you first how to cook? >> my swedish grandmother. my grandmother helga. my mom was a very good cook, but my grandmother was an amazing cook. i remember as a kid, you know, having mom's food but then going to my grandmother's house and

really eating. in america right now we're throwing away 33% of our food. but everything can be used. chicken one day, chicken soup the next day, chicken dumpling the third day. that's food. that's a chef. >> helga, i'm in love with helga already. the recipe that turned an african orphan into the most recognized black chef in america is what 42-year-old samuelsson writes in his memoir, "yes, chef." >> africa, it will always be in my heart, and so much of my energy and drive i think i got from africa. i'm really lucky and fortunate to be connected to so many things, whether it's sweden, ethiopia, or being an american. >> let me ask you about harlem, because people watching hear the word harlem and they have the specific idea in their head about what harlem is. what does harlem mean to you? >> it's my favorite neighborhood in new york city, and it spoke to me. the history here spoke to me. i lived here five years before i opened my business. i walked every neighborhood. >> walking streets made famous

by duke ellington and langston hughes, eight decades after harlem's cultural renaissance, samuelsson was an outward success. a food personality and cookbook author, he was also cash poor from a dissolved business partnership. he was selected to cook the obamas' first state dinner while having no new york restaurant to call his own. >> the financial downturn taught us a lot in this country. it taught me i have to have a neighborhood i love, which is harlem. >> how did you get that first round of financing? was it tough convincing people to believe to-in you as you stuck to your passion of cooking? >> i said it's not so much investing in me. do you want to be part of something, changing the footprint of dining in new york city. if new york can do that, there's a harlem in every city in america. for me, it's very clears a an american. the emerging new marks are the inner cities of america. we culturally understand and have responsibility to the innocence of america much more than we have to brazil or russia or china.

right here, people have the same aspirations as they have in other parts of town. find the connective tissue. hire in those communities. go in. >> some half million people live north of the 125th street thoroughfare. once a scene of urban blight and violence, harlem is now home to more than 30 national chains that includes not one but two applebee' applebee's. to samuelsson, this means a strong consumer base he opens is inspired by their friendly neighborhood celebrity chef. >> the food system exists in new york city, an incredible gulf between people who have a lot of good food options and those that have none. the days i can buy fresh apples in harlem as easily as i can buy soda, we've achieved something. >> down the block from sylvia's, a 50-year-old soul food institution. there's an influx of new independently owned restaurants, cafes and restaurants. is this part of your inspiration, so many entrepreneurs around you? >> i think all the

entrepreneurs, you know, my west african guys tell me stuff from the street, the mystique of harlem. as a chef, say you know what, i live in harlem, my restaurant is here, people can come to it. once they see this harlem where old and new harlem fits in, they'll have a positive environment. but it's also about jobs. what i love about a restaurant, you can't outsource it. >> so this is a real vibrant crowd for lunch, huh? >> every day. people come in from all walks of life. some are harlemites, some come from upper east side. you treat everybody the same. everyone. down the corner versus, you know, you have the president. you treat them the same. how are you? >> oh, god! >> nice to see you. doing good? >> i watch you all the time. nice to see you in person. >> thank you. >> so tell me about 125th stroet. how much do you walk outside and see sort of old harlem, see

devastation and upset? >> oh, harlem is not just devastation. we have some of the best writers in the world that came here. james baldwin, for example. look at the apollo. look at the brown stoens here. there's so much history here that we have to preserve, and then fill it with good, fill it with yummy, delicious foods, and people just smile when they think about harlem. and, you know what, i have to bring you uptown. >> my thanks to marcus samuelsson. up next, the news that will have an impact on your money. and what about vacation islands? the billionaire who bought a piece of paradise. in here, every powerful collaboration is backed by an equally powerful and secure cloud. that cloud is in the network, so it can deliver all the power of the network itself. bringing people together to develop the best ideas -- and providing the apps and computing power to make new ideas real. it's the cloud from at&t. with new ways to work together, business works better.

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for more on our shows and our guests, check out ore website. and follow me on google and google plus. look at stories that may move the markets. earnings reports out from nike and troubled blackberry maker research in motion. monday we'll be watching the supreme court for its ruling on the affordable care act. the high court has indicated that a decision would be released before the end of june. we're hearing it happens next week. realtors will report latest numbers on the new home sales that is out on monday, as well. on tuesday, the s&p schiller index will be released. thursday the final reading of first quarter gross domestic product, typically a market mover. finally today, talk about location, location, location, the hawaiian island lanai has

been bought by billionaire larry ellison. the oracle founder and sixth richest person in the world purchased 98% of the 50th state's smallest accessible island. boasting 3,000 residents, 50 miles of coast, and no traffic lights, lanai's listing price was close to $600 million. ellison reportedly is paying cash. that's the show for today. thank you so much for joining me. next week, join us from the ideas festival where leaders in business and politics will be meeting. keep it right here. wall street meets main street. have a great week. [ male announcer ] we imagined a vehicle that could adapt to changing road conditions. one that continually monitors and corrects for wheel slip. we imagined a vehicle that can increase emergency braking power when you need it most. and we imagined it looking like nothing else on the road today. then...we built it. the 2012 glk.

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