hi everybody, welcome to the "the wall street journal report," i'm maria bartiromo, it's all about the jobs, the numbers are out and what do they mean? can buy and hold be an important investment strategy what about the u.s. and the impact? my conversation with one of the most powerful women in the world. the international monetary fund christine lagarde, talking about america. and a nation of wusses, what current politicians are afraid to say. why nobody is making the tough changes they need to make, "the wall street journal report" begins right now. >> here is a look at what is making news as we head into a new week on wall street, we had

another disappointing jobs number to report, the economy add'd just 80,000 jobs in the month of june, well below expectations. the unemployment rate held steady at 8. %. it made the economy the weakest for job growth in two years, adding just 75,000 per month, a third of the jobs created in the first quarter. well, that drove the markets down at the open on friday after hitting their highest level since early may during the holiday shortened week. >> bob i do mond is out after he resuned after the bank admitted to fixing a key interest rate. i can mond is an american, largely credited with expanding barclay's revenue. ford was up 7%, chrysler above estimates as well, rising 20%, toyota up 60%. but the news was not as couraging for sales in the month of june, several key retailers

coming in below expectations, including cost co costco, target and macy's. gus stoddard has a lot of money to worry about. the chief investment officer at vaqnguard. he is known as a pioneer in passively managed indexed funds. thank you for spending the time us with. >> thank you, maria. >> jobs numbers out on friday. the unemployment rate at 8.2%. the number of new jobs created. 80,000 jobs, what did you expect and what do you think this tells us about america's economy right now? >> it's amazing what a difference a day makes. the adp number came out the day before, and people were very excited about that number, which was up, so, in fact, when the labor department number came out, it was really just off a little bit from where people previously expected it to be, a little bit of disappointment. quite honestly, we have been expecting weakness throughout the summer. we think that the economy will

start to new jersey naturally improve in the latter part of the year, the latter part of third and fourth quarter. >> as the economy has worsened. the federal reserve said we'll be there if more stimulus is needed. we also saw global moves, european central bank, bank of china cutting interest rates. bank of england announcing its own quantitative eadsing. what's your outlook on the global economy? is it all up to the fed at this point? >> it requires a lot of coordinated intervention. the fed will certainly be taking into account the recent data. at the same time, europe is a very significant wild card out there. if europe experiences a severe recession it will be felt throughout the world. it's important europe addresses its own issues. china has moved to restrengthen their own economy. they are done fighting inflation. they are back in an easy mode and will start to see them start to move positively.

>> let me ask you about the money moving these days in terms of investor sentiment. vaqnguard, known for low cost, passively managed funds or exchange traded funds. what are you seeing in terms of etfs, wildly popular with investors. how much attention do you pay? does that dictate money moving into etfs or other money moving into this market? >> i don't really see too much quick movement based on recent economic number. what we do see, money tending to move when performance picks up. so we have actually seen very good cash flow into our etfs this year. it's been about -- a little less than half of our overall cash flow. a positive environment. it's going both into equities and into bonds. people are seeking some diversification. i would note that by and large, they are going for higher yielding equities. and that is a little bit of a

concern. >> let me ask you about the second half of the year. we had a choppy first half of the year. what do you see happening as we kick off the second half of the year with the economic uncertainty out there? >> i think you said it. the economic uncertainty will really determine what happens in the second part of the year. i think really it's important impossible to predict it right now. it will depend on the response on what the debt crisis is there. we don't know what to expect in the next three to six months. it is yet to be determined. but if we look at it a longer period of time, say three, five, ten years. the biggest determinative performance in the market over that period of time would be valuations. how much are you paying for a stock today, relative to its earnings? valuations are reasonablily attractive. we're reasonably optimistic on a five to ten year basis. we can get a historic rate of

return from equities. >> we really need in at these prices, valuable and attractive. b . do you think the long-term investor is thinking long term? they have been buffeted by scandal after scandal. what advice do you have for income this market? >> there is a whole spectrum of emotions that retailers are experiencing. on one end of the extreme, utter frustration, others are optim t optimistic about the future. our advice would be that really you have to think long term, what you think will provide the best rate of returno orver the next five years, ten years, 20 years, establish your asset allocation based on that. in our view it will probably be equities that provide the best return, if you have long-term horizon, you should have focus

on equities. people shouldn't focus so much on all the hysteria going on. that's typically a great time to invest. when everybody loved the market back in 1999, it was a lousy time to invest. hopefully we're seeing the opposite of that now. >> in general, you want a buy and hold strategy? a successful strategy still? >> yes. a lot of people say you have got to be flexible and go anywhere. and that's great if you -- if you are phenomenally intelligent and great market timer. unfortunately, most of us aren't. i don't know anyone who is. the people most successful are those who establish a long-term plan and stick with it. too often people respond to the moment. how many people do you know that sold out of market in march of 2009, right at the bottom? how many people do you know that bought in january of 000? trying to avoid those types of emotions where people are doing exactly the opposite of what they should be doing and

recognizing you won't be able to make those timing moves. accept the long-term rate of return. >> gus, good to have you on the program. thank you. gus stoddard joining us. up next, a stern warning to the america from the head of the imf. what she says we need to do and when we need to do it. and then taking stock of america's mojo. meeting with ed rendell. how the stock market ended the week. [ male announcer ] this is the at&t network. 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.

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focus lolo, focus let's do this i am from baltimore south carolina... bloomington, california... austin, texas... we are all here to represent the country we love this is for everyone back home it's go time. across america, we're all committed to team usa. welcome back. christine he will forward, the director of the international

monitor fund and former finance minister of france. i spoke to her about the imf report and a critical decision on a decision to directly inject capital into spain's bank. >> i think it was critical for two reasons. i think it is critical for two reasons, the investments from the imf to the banks, as a result it does not impact on the sovereign debt level of that sovereign, which is what spain was so concerned about. that is number one, number two, it goes directly to the bank, i mean they're going to define how it is organized and whether they hold shares, or any other instruments that would be convertible into the capital banks, depending on the status of the banks. it will consolidate the banks and help them to lend appropriately to the real economy. and it is what the esm should be doing with its money.

>> what else needs to be done in terms of creating that confidence that you have been talking about so much, to stabilize the markets? >> so direct involvement from the esm into the banks. that is under way. banking union, that is clearly the target. it is not enough. we think that fiscal union is the next step that they need to explore. the one step at a time process is is noiing annoying, disconcerting, we would like more time to digest. but that the way europe is built. >> and of course the ecb meeting this week, what would be more effective, lowering interest rates or expanding their asset program, their asset purchase program? >> what they're generally vocal about is the interest rate, that is talked about. we believe at the imf that the

ecb has room available in terms of the monetary policy and could actually use it. we're not sure that this is the best channel at the moment, because germany doesn't need the lowering of the interest rates set by the ecb, but italy and spain do. so you can't disassociate when you use that type of monetary policy. on the other hand, the purchase program is more selective and can be used in a different way. what about the u.s., you're out with a report talking about the risks of the u.s.? and there are some real heavy risks in terms of the possibility of going negative. tell us what is behind your report. >> first of all, we forecast growth at 2% in 2012, in 2013, 2.3%. based on assumptions that are

quite favorable, where some of the measures due to expire are actually extended for another year. so we have a generally -- we have a somehow positive set of assumptions to support a rather tepid growth. but if these risks were to materialize, if for instance, the fiscal cuts were effectively cut and not extended, the payroll cuts were removed, and -- and payroll tax were to resume, then certainly we would not have such a positive forecast for 2013. and if the two risks of the fiscal cliffs and the debt ceiling were to materialize, then we forecast hardly any growth at all in 2013. and possibly the beginning of the year in recession. so those are serious threats. >> it is quite extraordinary to me, actually, given what is going on in europe, that they have not been more vocal talking about the fiscal cliff. in fact, i don't think people are focusing on an agreement

where the tax cuts expire, the programs expire, it leaves us a month before the end of the year before these things could actually reverse. >> it would be ideal if an agreement could be reached, even for a set of temporary measures, not for the longer term, not on substance, but at least for an extension. because it would remove that uncertainty and consolidate confidence, which is so necessary. but i suppose most players because of the, you know, difficulty to cooperate, let's call it that way, assume that there will be a few tricks used by the treasury, for instance, not tricks. but tools used legitimately to push off into early 2013. the -- the critical time, so that the country's passed the election, and more serious things perhaps can be decided.

but from our point of view, removing uncertainty as early as possible so that the threat is removed would be fantastic. >> my thanks to christine lagarde. up next on "the wall street journal report." can america get its mojo back? i'll talk to a former governor who says we better do it, and soon.

well, the fourth of july is not typically when politicians take the rest of us to task. but my next guest has ideas of independence and leadership, taken from 30 years of politics.

ed rendell is with us, from the "america's us withes, how america's leaders lost the fugu to make us great." thank you, governor. >> my pleasure. >> the book takes on the wussification, what makes you think we lost our way? >> well, the wuss is something who lacks the courage to go with their convictions, i think that in washington today, we are in danger of falling off a cliff. there is no question about it. and the people have to say to their leaders, hey, trust us. we're smarter than you think. we can handle the truth. tell us the truth, tell us what has to be done. and we'll surprise you. we wouldn't necessarily wreak

havoc on you for doing things that are risky. but it is up to our nation's leaders to do what is important, put aside partisanship, and take risks. >> today we are ignoring some of the major issues we all face, like the big expenses of some of the entitlements. so how do we regain boldness and innovativeness, how do we avoid spending while balancing fiscal responsibility? >> there's a blueprint out there that's called simpson bowles. it say good effort to do everything we need to do to get rid of the federal deficit in the next 15 years and to really set the country on the right path. but first it takes presidential leadership. whoever is elected, president obama or governor romney, whoever is elected has to say

follow me. then bring in not only key congressional leaders, but the ones who have shown the ability to put partisanship aside and take risks. >> so why do you think the leadership? i mean, president obama had a chance to do this, simpson bowles, but it seems like they just blew off simpson bowles, how come we don't see that type leadership? >> because that requires stepping on toes, the senior's toes, the revenue, we're not going to get this done without some pain, and the key is to distribute pain fairly across the board. that everybody feels a little bit of pain to get the patient well. >> yes. >> and we can do this. and i think after the election, there is going to be a 2-5 month window where we can get this thing done. by the way, you said a key word, we also have to invest in our infrastructure. everybody knows that. we also have to invest in research and development. so at the same time we're making significant cuts and raising revenue, we have to make some targeted investments to get the country working again. >> unfortunately, you're not hearing that conversation. and i think if you were to hear

that conversation, i think you're right. people would buy into it. because they understand the issues of the day. let me ask you about the jobs pictures, because of course we got the jobs numbers out. they're weaker than expected. you're currently advising a technology firm. what do you think the job prospects are with technology right now? it seems as though it is one of the few areas hiring right now. >> yes, i think it is growing, and there will be jobs available for some of our young people. and i would say -- i know it is going to sound corny. but it is the time for all good men and women to come to the aid of their country. if you're a business executive out there sitting on cash, don't worry about the regulations, et cetera, let's do this thing for our kids and grand kids. let's go out and hire some people. it won't be the end of the world. maybe your profit margin will be a little bit reduced, but let's go out and hire. if we all had that attitude, it is amazing how quickly it would get done. amazing. and by the way, there are things

we need to do. infrastructure, we need to spend money on infrastructure. everybody agrees, there is no question about that. energy, we need the energy independent strategy that has to be done in a bipartisan fashion. that will create a lot of jobs. export, we're starting to recognize how valuable it is for our mid-sized companies and larger companies to export. it is not rocket science. what about the support for the economy, the president, that will be key in some of the rust belt, areas like pennsylvania, your state of ohio, michigan, wisconsin. how is the regional economy doing in this part of the country? and what do you think the big economic issues that will drive voters in november? >> well, in michigan and ohio, particularly, if i were the president i would be a single message. the auto bailout, turn the economies around. both michigan, and particularly ohio, ohio's unemployment rate, maria is 3% points lower since

the president took office. and a good hunk of that is attributable to the fact he had the guts to do the auto bailout. remember it was unpopular back then, but popular now, he stuck to his guns. >> great to have you governor. >> good to see you. >> up next, we'll take a look at the report this week, with the impact on your money. and then getting your claws on every on cheap eats may be easier than you think. what's behind the deep dive in lobster prices. we're off the coast maine, stay with us. but you should feel a little more super. metamucil. down with cholesterol.

check out the website wsjr.cnbc.com, and i hope you follow me on twitter and look for me on google plus. now a look at the stories coming up, that may move the markets and impact your money this week. on monday, we get a lot of earning season kicking off, second results from alcoa, j.p. morgan and wells fargo. preliminary results from chevron. and we'll find out about the big trading loss at j.p. morgan also. on tuesday allen & company retreat kicks offer in sun valley, idaho. and wednesday, more from the federal reserve meeting of the board of governors. international trade balance also on wednesday. on friday, inflation indicating price index report out, tracking the cost of goods at the producer level. and finally today, take a bite out of this lobster. that is cheaper than baloney, the prices there plunged to the lowest point in some 30 years,

as low as $4 a pound. the warm spring weather meant many of them shed their hard shells quicker than usual. meaning the prices dropped before tourists arriveded. act fast, you can eat like a kick king at these prices. and nascar ceo on the business of starting his engine, each week, wall street meets main street, have a great week everybody. i'll see you next week end.