hi, everybody, welcome to "the wall street journal report." i'm maria bartiromo. in this market, the slowing economy. more and more worries about a double dip recession. what you could do with your money now. investing that might tell why. exploding money mifshlgs in the new book, "don't buy the bull." and it's the real deal. how more and more cities are becoming more and more bike friendly. getting to work without getting to the car. "the wall street journal report" begins right now. >> announcer: this is america's number one financial news program "the wall street journal report." now, maria bartiromo. >> making news as we head on into a new week on wall street, investors watched and listened

closely on friday to a major speech by federal reserve chairman ben bernanke on the state of the economy. mr. bernanke said that the feds' open market economiy is prepared to provide more monetary stimulus if necessary if the economy deters rates significantly from mere but he questioned whether the benefits of more stimulus outweigh the costs. the economy grew at a much slower pace this spring than previously estimated. the commerce department revised its estimate of the gross dopesque product for the second quarter. it showed the economy expanded at an annualized rate of 1.6% between april and june. that's down from an initial expectation of 2.4%. but that is still not as bad as some economists were looking for. the markets fell to their lowest level in seven weeks on tuesday. closed below 10,000 on thursday for the first time since july 6th. but the dow rebounded on friday. more signs of a slowing economy especially in the housing market. two important indicators showed big declines this week. existing home sales fell more

than 27% to a 15-year low, well below analysts' expectations while new home sales tumbled unexpectedly in july by 12.4%. that's an annual rate of 276,000 homes per year, the lowest since the government started keeping data in 1963. two pieces of important economic news on friday, the revision of the gross domestic product numbers and the speech by federal reserve chairman ben bernanke. here to help us understand what it all meese is the chief global strategies and stu schweitzer, global market strategist with jpmorgan asset management. thank you for joining me. on friday, we heard ben bernanke give an outlook on the economy. what did you think about what he said? of course, he continues to say that the fed is going to be there regardless of what happens if, in fact, we see another leg down in the economy. how did you see it? >> that's what he did say and i found there was nothing surprising, maria, in terms of what he said compared with his

testimony to the senate and house earlier in the month. namely, he's ready to do whatever is necessary economic growth is subpar, inflation less than expected, all of those things. so, to me, there was no surprise, but i'm -- wondered why he didn't have anything more to say on friday compared with what he did earlier in the month, so it was a disappointment to me. >> okay, so it was a disappointment. and you know, stu, we continue to hear that chairman downgrade his assessment of the economy. do you think that the risk for double-dip recession is growing? >> well, it's clearly higher than most people thought, including i, myself, but i think the fed chairman made very clear what the problem is. it's a dual problem. on the one hand, a lack of job growth, but maybe more fundamentally, it's the fact that people have balance sheets that still need to be repaired further. we came into this whole mess with too much leverage on the part of too many people and as the fed chairman pointed out, we've made some progress in the

right direction with the savings rate back up to the neighborhood of 6%, but we've still got more to go. >> and, of course, we got the revised gdp report out on friday as well. annualized growth of 1.6% for the second quarter, way down for the 2.4% number initially. what does that tell us in. >> i think it is saying that the double dip is now becoming almost a certainty. that's been a forecast, a risk i've been talking about for a year, maria, and in the last six mothers that has become my highly rollable view. i think we have reached the stage where it's almost inevitable and the reason for that is that economic growth is slowing. the consumers are not spending, so i wouldn't be surprised to see zero growth in the third quarter and negative in the fourth. >> what are the implications of that? the markets obviously have been focusing on jobs, the lack of jobs. i know you have specific thoughts on job creation, but what are the implications on a practical level of a double-dip recession for all of us in. >> i think the practical level

is, for those of us who are invested in stocks, the prices are probably too highly valued today if a double dip should becomes an actuality. the second point is it's going to be more government for the get the economy off because the fiscal policy has reached its end and market policy near zee oh interest rate and quantitative easing i don't believe can work. >> what can be done to sfim late the economy? a lot of people are talking about the fact that we don't have much, many bullets left, if you will, in the gun of the federal reserve. so, what, in fact, can be done to get this economy moving again, in your view? >> well, maria, i think that the likelihood of a double dip is much lower than what sre has suggested because this economy is, in a fundamental sense, healing itself. too slowly for anyone's

satisfaction, but nonetheless, we have people who don't have to pay as much out every month because interest rates have come down and we see a big mortgage refinancing wave taking hold now. not everybody can refinance, but a lot of people are getting more discretionary income by cutting their mortgage payments. >> what do you do, then? who do you want to invest in this period of uncertainty, stu? >> well, i think you don't want to be, try to be a hero in here, but the world has, basically, thrown in the towel on this expansion and there are a lot of people who are afraid that they don't want to be the last person left to do so. but i think this is a time when so many people are so extremely negative that it pays to take -- to hold some equity here, not as much as in the old days, perhaps, when people had 60% of their portfolio in equity, but i think it pays to continue to hold some equity here because too many people have given up and equity evaluations are fundamentally attractive. the other area that i think is quite attractive in here is the

credit space. high yield, high yield bonds remain very attractive to me. >> sre, what do you think, giving you believe that the risk of a double dip is, in fact, higher than what stu is believing, how do you want to invest? >> yeah, first of all, i think the recent, before i go on to talk about how to invest, maria, i think the near inevitability is coming from the fact that in this cycle, the consumer spending is becoming so important that unemployment, i think, is the leading indicator, not a lagging indicator, like we were all taught in our economics textbooks. once you take that into account, i think in terms of investments, you need to be very, very selective on the equity side. perhaps, there are areas which you want to be very defensive in, like health care, for example, which are likely to do well. second area that might work after a bit of time is consumer staples, but areas like consumer durables, consumer discretionary areas are not going to work

well, in my opinion. second, high yield might well get hit if you're talking about a double dip with two or three quarters of negative growth and then the companies' credit standings go down. i don't think to suggest a slowdown which is self-correcting, this is something which needs significant structure and changes, maria, in terms of the employment. >> really, really important insights. great to have you on the program. stu, good to see you again. we'll see you soon, gentlemen. up next on "the wall street journal report," dispelling the biggest money myths that may lead to money mistakes. how to find the best course in this new normal. and seeing the world on two wheels. is building a 20th century city as easy as riding a bike? >> people definitely give i was look when

when it comes to the new

normal, do your investment strategies keep up with the changing times? how to gained money advice that works for you than against you. here with us is the thousand of "don't buy the bull." good to have you on the program. >> thanks for having me. >> why do you think there's a lot of bull out there when it comes to professional advice? >> i don't want to call it bull. it's really old financial advice, old myths that have still being talked about and yet, we live in this very different world, this very different stock market, this very volatile time and yet, people are still being told the same thing. >> let's take a look at some of those myths that you address. all debt is bad. it isn't. >> no. absolutely not. i mean, look where mortgage rates are. it's an opportunity for people to buy a great house right now at a very low rate. and yet, we're being told by some people out there that they should not buy unless they can pay cash for a house. that's crazy. or to finance an education, you need to have debt in order to better yourself. so, there's a good use for debt. >> some debt, but credit card

debt is a different story. >> no, don't go buy shoes on your credit cart. that's not good debt. but to start a new business, to fund and education, to buy a piece of real estate. those are all really good reason. >> another myth, it's okay to use private mortgage insurance. >> right. this is where i have an issue. if you really can't afford to put 20% to 30% down on a house, then you shouldn't be buying the house and that's really, i think, part of what got us into some of this debacle in the last couple years and just know that if you don't fit into the category of buying a house with enough cash down, it's not your time. >> okay. myth, never use an adjustable rate loan. >> yeah, this is a huge one. >> this is really what got us in trouble. >> it did but it's still a good product and pa ga structure for people who have volatile income streams. if you're a business owner from one year to the next, you may be able to pay down a mortgage much quicker, reduce the amount of monthly cash flow that you're taking out of your pocket when you take it down. or if you're a salesperson and you get a big bonus at the end

of the year, it's a way to plunk it down in a mortgage, that structure can work really well for you if you know how to use it. >> for some people. >> for some people. >> you tell a story in the book about helping a stranger that you saw on the local news channel, on television, who could no longer afford her own home. how can you find the right money and investment advice and steer clear of myths? tell me first about the stranger that you helped. >> well, it was a woman and a child who were literally homeless. they were living in a hotel room and had about two days' worth of money left for the hotel and so, i called the station and asked if i could get in contact with her and, so, ended up helping her, finding her a place to live, tried to give her some coaching to find a job. it was a great experience. it was a great learning experience. i will say that looking back, it's probably not a safe thing for most people to do, but it certainly was something that

sort of spurred the book, too. >> what satisfaction. so, that spurred you to write the book, "don't buy the bull." >> absolutely, this was a woman who had been very successful. she had been on television as an espn reporter, so it tells me that a lot of people can end up in a bad place because of making the wrong financial decision. she had no money in a 401(k). she had nowhere to turn. and so, this is where she ended up. >> amazing. it really is the story of, you can be up and then tomorrow, you'll be down. >> cassandra, congratulations on the book. "don't buy the bull." up next, lose the car, grab the bike! find out where you need to go. tell you all about it. [ male announcer ] when meg whitman arrived at ebay,

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hotel and restaurant workers and find ways to help. i was born in new orleans. my family still lives here. bp is gonna be here until the oil is gone and the people and businesses are back to normal... until we make this right. i bike. i'm a fashion design. i started this business 12 years ago. we also do a bridal collection. we have bridesmaids. the brand is sold in roughly 150 stores around the country. general generally, i'm in dresses and i found that wedges are the best heels to wear because they're the easiest when you put your feet down. biking is fantastic. it's fantastic for the environment. fantastic for your health. it has so many benefits that i think that any city that's not

considering how to deal with congestion problems, that they're really doing a disservice to people that live there. it has truly given me the key to new york city. it's just constant adventure. >> joining me now is new york city transportation commissioner, jeanette, a bike commuter herself. great to have you on the program. since you've taken the job, you have really shaken things up and that's what i love about this story. you have had a fairly progressive approach to transportation. tell me about that. >> well, it's really about balance. when you think about all of the things that have changed in the city of new york over the past 50 years, crime is down, our schools are much better, the one thing that hasn't changed until recently was our streets. and, you know, no business would still be in business if they hadn't done something different in 50 years and so, player bloomberg has asked us to take a big picture look at what we can do to make our streets more livable, more sustainable, and better for business and that's really what we're in the process of doing. >> you make such a great point because it's true, no changes in 50 years sounds a little nuts,

but, of course, we've had tremendous change in this city. so, what are your goals in terms of changing street life? >> what we're trying to do is give new yorkers more choices. it's interesting because the majority of trips in new york city are under three miles. and so, we're building in choices whether people take a bus ride, whether people can get on a bike and get to where they need to go faster, making better walking environments and you can see the places we've got all over the city. we're rebalancing the streets to get them where. >> commuters using bikes has doubled since 2002? is that right? >> yes. >> you've seen a huge impact. >> we've spent a lot of time investing in our cyclic infra structure. we've put in 200 miles of street lanes in the past three years. we've passed legislation to encourage businesses to put bike parking in their building and improving the design of the bike lanes and making it as safe as possible for minute who wants to

get on the bike to do so safely. >> how hard was it to change the culture? i mean, this is a culture of carmentality, isn't it, this country? >> i think there is an understanding to do the same thing over and over again and expect a different result is not a smart strategy. if we're going to accommodate a million more people by 2030, we're not going to do it to accommodate a million more cars, we have to make it easier for people to take a business, ride a bike, make it he's-year for are people to walk from place to place. >> tell me about the plan. the bloomberg administration wants to build an additional 50 miles of bike lanes each year. how difficult is that? >> what we're doing is connecting the bike lanes so we're making it possible for you to go from point "a" to point "b" without having to get off of a really safe system. biking is not for everybody in new york, but what we've seen is when we create safe lanes, we see many more people using them.

that's why we've had a 63% increase in biking. when we get the cycling infrastructure where people get to where they want to go, we think that we're really going to have a really low-cost, easy option to build in a whole new form of transportation into the street beds of new york. >> which is, of course, what we need. by the way, across the country, i'm looking at this on average, states spend about 1.tuesday% on federally provided transportation programs on bike programs. that's a great little stat. >> yeah. it's really interesting to see all of the world class cities are investing in bicycle infrastructure. you see what london's doing, what paris is doing. you see what's going on in spain and barcelona and big cities across the united states. i think they understand that they have to find more sustainable ways of getting people around, healthier ways of getting people around and it doesn't cost a lot of money to do so. so, if we're going to continue to grow and thrive, we need to actually do these kinds of investments and it's extremely important to create an attractive public realm because

it's important for the business community. the best and the brightest can live anywhere, capital can go anywhere. so, creating a city and a place where you want to be and linger and enjoy is an important part of the competitiveness strategy for cities. >> people need to get the bikes. >> and then people need to get the bikes. >> let's take a look at what we have here and bring in caroline. good to see you. thanks for joining us. you're the director of bike add vo ka see at transportation alternatives. can you tell us what's here? >> yes, as the commissioner said, bike communities are booming all over the country. it's good to know there are a lot of great options for commuting bikes. this one is a folding bike. as you can see -- oh, look at that. if you need to make part of your bike commute on a train or a bus, a folding bike can be a great option. >> that was a nice-looking bike. >> exactly. they've made a lot new great commuting bikes. on this bike, there's a place to store juror briefcase. on the front there's a rack as well. >> if you want a basket.

>> another great thing -- >> can you put a whole grievecase in there. >> another great thing about this bike, if you're riding to work in a suit, you don't want to be hunched over like lance armstrong. this allows you to be upright. >> that's an important point because people have back problems. >> the great thing about this bike is it's simplified for the rider. the chain is actually made of rubber. you don't have to use grease which means you won't get grease on your pant leg when you're riding to work. and there's an internal hub which means there's not a lot of moving parts. you don't have to fuss with it. all your gears are inside the back of that metal case in the wheel. >> have you seen a big increase in bike sales and the number of people wanting a bike given what the commissioner's saying? >> absolutely. i think the demand is driving all these new styles of bikes in this country. and -- >> and bike businesses are booming. you're seeing an incredible quadrupling the number of bike shops that are out there. and operating all sorts of move amenities. >> sure.

>> special helmets, cool-looking caps, you know. 98-looking bags, dresses, poncho. >> why not? it's cleaner, it's cheaper. it's certainly better for our city. >> sure, absolutely. and it can be fashionable which i think is the most exciting part about it. >> what a great story. caroline, thank you for joining us. commissioner jeanette, appreciate you joining us. when we come back, we'll take a on a news in the upcoming week and that will affect your money and the market. and then a look at how the stock market finished the week. it was a real shock. i remember being at the hospital thinking, "i should have done more to take care of myself." you should've. that's why i'm exercising more now. eating healthier.

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wednesday it's september 1st, september first. total car and truck sales for august will be reported then. on friday, the highly anticipated jobs report will be out. we'll find out how many jobs the economy lost or gained in the last month as well as that unemployment rate. that's the show for today. thanks so much for being with us. my guests next week, labor secretary hill today soliz. each week keep it right here where wall street meets main street. have a great week, everybody. i'll see you next weekend.

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