hi, everybody. welcome to "the wall street journal report." i'm maria bartiromo. egypt, earnings, and the economy. the what the three e's mean to your portfolio, and what you should do next. my conversation with america's wealthiest man and his new mission. what bill gates wants to eliminate from the world. and is luxury back? who is spending bic bucks on expensive cars, and why italy and california may be a marriage made in heaven. "the wall street journal report" begins right now. >> this is america's number one financial news program, "the wall street journal report." now maria bartiromo. >> here is a look at what is making news as we head into a new week on wall street.

u.s. employment rose far less than expected in the month of january, but the unemployment rate fell to the lowest level since april of 2009. the department of labor says the u.s. economy created just 36,000 new jobs last month. that was way below the estimates of 145,000. the government said severe weather may have played a role in the weaker than expected number. but the unemployment rate is now at 9%, the lowest in nearly two years, because there were fewer people in the workforce. jobs were top of mind for federal reserve chairman ben bernanke. in a rare appearance before reporters at the national press club, mr. bernanke gave a more upbeat assessment of the economy than he has in recent months, but he also said that the economy is still in a deep hole, and that it will take several years for employment to return to normalized levels. the markets smashing through some major milestones this week. on tuesday, the dow finishing above 12,000. the s&p 500 above 1300, for the first time in two years. the markets were flat midweek. the markets were up, though,

again on friday. more strong earnings news. exxon mobil blew away expectations. said it would restore dividend censorship since the oil spill disaster. mastercard surpassed. gm rose 23% compared to last january. that was better than expected. toyota up 17%. ford was up 13%, but still below expectations. chrysler rose 22%. the world is watching the uprising in egypt, but aside from the politics there is of course an economic impact of what is going on there. just what could it mean for your portfolio? joining me now is richard bernstein, ceo of richard bernstein advisers, whose firm is managing a mutual fund for eaton vance with a market cap of $135 million. rich, good to have you on the program. >> thanks, maria. >> thank you so much for joining us. let's get to egypt in a moment. but first, starting with the unemployment report that we saw out on friday.

36,000 new jobs created was much lower than what wall street was expecting. the unemployment rate, though, falling to 9%. what does this tell us about the state of the economy? >> i think there are mixed numbers in here. as an investor, these numbers are vastly improved over where they were a year ago. it's my opinion that if we were here in 12 years hence, we would say the same thing, that employment continues to improve over the next six months. i think that's what is important. >> slow and steady improvement in the u.s.? >> i think that's right. people don't realize actually that the united states may be the world's most improving economy right now. there is lots of problems going on around the world. you mentioned egypt. a lot of emerging markets are having problems. the united states things are actually getting better. maybe not as fast as people want, but they are getting better. >> what affect does the continued unrest in egypt and throughout the middle east have on the average investor? should we focus on this? >> most investors have been really primed to invest in emerging markets.

and it's been our opinion there has been a lot more risk in emerging markets than a lot think right now. egypt is one of those examples. if you look at where the egyptian stock market was, very overvalued with one of the highest inflation rates in the world. that's not typically a good combination, although other emerging markets aren't quite as dramatically priced as egypt was, there is still a lot of unanticipated risks. >> at least part of this uprising was caused by the rising price of food, the rising price of commodities really around the world. that's what you continue seeing. do you see that kind of unrest spreading? what is your take on inflation right now globally speaking, and how does that impact investors? >> right. if you look at some of the major emerging markets right now, if you look at india, india's inflation rate is up to 14, 15%. china 5% and growing. brazil is broing, about 6%. russia, all the emerging markets have a big inflation problem. what is happening is their central banks are tightening monetary policy in response. that is much more of a later

cycle phenomenon. in other words, early cycle central banks are behind you, they're trying to reflate the economies. late in the cycle trying to restrain the economy. that's actually what you're seeing in the emerging markets. >> meanwhile, probably the best part of the economic recovery in the u.s. has been the corporate sector. >> correct. >> we're seeing earnings season once again strong. this most recent fourth quarter reporting season, what does that tell you about investing? >> i think what is interesting about this reporting period right now is not only are companies reporting an increasing number of positive surprises, earning surprises in the united states, but now you're starting to see positive revenue surprises. in other words, companies in the united states are beginning to be profitable from sales growth, not just from cost-cutting. i think that is the most bullish news we've had in several weeks. >> right. well, we've got to see continued revenue growth. >> correct. >> it's spotty in some areas. it's not across the board. >> absolutely. >> so we've come a nice move for the market certainly. we had two milestones this week. dow 12,000, and s&p 1300.

>> right. >> so are the markets moving too far too fast do you think, or is this warranted given these improvements? >> well, i'm not a very good short-time market timer. could we have a little correction in the next month? maybe we could, maybe not. i honestly don't know. but the u.s. is the world's most improving economy right now. that bodes very well for the future here. and the fact that most investors don't realize that yet. it's been so drummed into our heads how bad the u.s. economy is. it's inconceivable to people that this good scenario could actually play out in the united states. i think there is still a lot of opportunity in the u.s. >> we should probably also point out that the measures we're looking at, the dow jones industrial average and the s&p 500, these are indexes comprised of multinational companies. >> correct. >> so they are deriving increasing revenue from those international markets. >> without a doubt. >> like brazil, china, india. so that could be one of the reasons that earnings look so good. so what sectors do you like

right now? >> i'll tell you, it's interesting. i may sound extremely bullish here, but small cap companies in the united states, those that are focused on the domestic u.s. has been performing the best. and you're seeing, again, an increasing number of revenue and earnings surprises, even among smaller u.s. domestic companies. >> that's important. >> it's very important in terms of my views of the united states. in terms of sectors verdict was a cyclical bent in our fund. we are overweight energy, technology, overweight consumer cyclicals and overweight financials. >> let's talk about some of your predictions for 2011. you say you're a big fan of the u.s. markets. but this you're you see japan will outperform china. what is behind that thinking? >> it's actually been going on for several years. people don't realize that. again, i view this kind of early cycle versus late cycle phenomenon, where we have in japan, you know, things are still starting to turn up. we're starting to see the beginning of a cycle, whereas in china we have real credit problems. we have a central bank that is tightening. i think japan is probably likely

to outperform china in the next 12 month. >> other predictions for 2011? i know you like consumer stocks. >> i do like consumer stocks. consumer stocks are very much tied to employment report that just came out and things like that. that's going to be a big driver. but if you want the risk for consumer stocks, it's clearly gasoline prices. and do gasoline prices start taking a disproportionate amount of salary and wages. that's something we're worried about. >> good to have you on the program. rich bernstein joining us here on "the wall street journal report." up next on the program, my conversation with philanthropists bill and melinda gates. what does the second richest man on the planet have planned for world health care? and taking a spin into luxury. a high-net worth consumers back and shopping for expensive new wheels? as we take a break, take a look at how the stock market ened the week. back in a moment. [ male announcer ] montgomery and abigail higgins

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since lead leaving microsoft in 2008, bill gates has become a full-time philanthropist, with his bill gates foundation. this week he released his annual letter to supporters, describing his plan to rid the planet of polio. last week at the world economic forum in davos, switzerland, i spoke to bill and melinda gates, about their work getting life-saving vaccines to people around the world. >> the thing we are so excited about is this decade of vaccines we announced last year at davos, we're seeing progress on that. but when you see it on the ground and see that instead of 15 to 20 years to get a vaccine out in the developed world, now it only takes one to two years to get out in the developing world, you know it's working. so in kenya, i met moms in health facilities who were finally getting this pneumonia vaccine for their children for the very first time. it kills 1.6 million children. we're getting it rolled out in

kenya. and i saw a lot of children who don't yet have access to the vaccines, a little girl that i saw was probably going to be dead later that night because she had such a severe case of pneumonia. you just can't get the access to the facilityious need to take care of it. the vaccines are crucial and we're getting them out. >> which is why one year when we talked you announced the largest commitment, $10 billion, one year ago towards vaccines. give us the progress report, where that money has gone. >> it's a whole decade that not only our commitment, but getting the donor governments, getting other philanthropists, getting other drug companies involved, we think we can have a pretty unbelievable impact. the polio eradication is part of that. that's driven by the vaccine. and we had a great year. we think we're within a few years of completion. nigeria got their cases down a lot. and as melinda said, new

distribution, always impatient. it's not happening quite as fast as i would like. but a very good year overall. >> at the world economic forum meeting you announced a partnership with the uk government, david cameron. how did that come about? tell me what you're trying to do. >> i think that's an amazing commitment of leadership. david cameron and his government said we believe in this kind of aid. we know that it's effective. we know that vaccines save lives. and we want to see polio eradicated. so we came together in a discussion earlier in london this year. and he said i'm going to double my commitment. we said we're in too. so they put in $60 million. we're putting in $102 million. as bill said, we made huge progress in india and nigeria. this gives us a chance to really see that happen. >> we've spoken before about certain technologies that have really made a difference in terms of getting the drugs where they need to be in a timely manner. talk to us about how technology has married with health care. >> well, the vaccine itself is a phenomenal piece of technology.

oral polio vaccine which used to cost only 13 cents a dose, the actual logistical chain getting this out is tough because you have to keep it cold. they call it cold chain. and then the tracking to try to figure out where are the kids that you're missing. you have to get almost all the kids. if you miss even 15%, you can't stop the disease. now we can actually look at the dna of the virus and sort of get a sense of where each case came from. and that's making us even smarter about wiping it out. >> and melinda, technology has also enabled education, which is another important area for you. talk to us about where the need is there. >> well, i think there are a lot of things in education where we can do a lot better in the united states in particular. and that's what we're focused on in the u.s. is the public education system. and there is a couple of things. one is teachers allowing videos to come in their classrooms so they can see how they're doing. and when we start to take apart their own craft of teaching.

it's not just about yes, i'm raising these kids' test scores, but how am i doing reaching all 30 kids in the class, or 25. when do i lose a child? there is a lot of ways that technology can improve in the education system in the u.s. >> why has the education system in the u.s. been in a decline for so long? >> actually, it's been flat. the math and reading scores haven't gone really up or down. other countries have fixed some of their mistakes, and some have actually moved ahead of us. the singapore region and china was top in the latest national ranking. other countries like finland, singapore always do a lot better. >> why is it that the chinese, the singaporeans have been really in the lead in this regard? what do you think the implications of the rise of china means? >> well, the more people in the world are educated, the more they go to college. the more innovation takes place globally. and so if you're worried about

your kid getting sick, the fact that more people are doing medical research, that's a good thing. the world all benefits. so if the entire world could be as innovative as the united states, that would be a great, great thing. there is not like sports where only one person gets the trophy. if children stop dying, if there is a cure for cancer, i'm not going to look on the pill and it will say made in some other country and say ho oh no, no, i don't want that. >> my thanks to bill and melinda gates. up next on "the wall street journal report," luxury rising, and riding. iconic sports car ferrari. la

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this is america's largest and most reliable network. verizon. built so you can rule the air. welcome back. are the world's wealthiest consumers ready to spend up? ferrari, the italian iconic sports car brand is seeing growth once again. joining me is marco, it's wonderful to have you on the program. >> thank you very much. >> thank you so much for joining us. so the u.s. comprises 25% -- >> 28%. >> 28% of ferrari's business globally. how are things going? what kind of sales did you have last year? what are you looking for? >> 2010 was the best year ever of ferrari north america. we had an increase of roughly 20%. so it's been one of the best

year ever. >> and we're talking about cars that are running about 200, $300,000 a car, right? >> yep. from 200,000 going higher. you are correct. >> in terms of north america, which cities or regions are the hottest right now within the country? >> usually for us the larger market in u.s. is california. but where we're seeing really picking up is in particular in the north california. so we have a new dealership just opening silicon valley and is extremely successful. and i mean, new york state is performing extremely well. >> really interesting. you know, we talk so much about asia and how china is rising. i know you spent a number of years in asia. what can you tell us? what is different about the way americans shop for cars versus the consumers in those emerging markets, china and other areas? >> specifically about ferrari, we are the newest in 50,000 year. we have 30,000 customers a year. and we have collected 40, 50

ferraris. chinese buyers are brand-new. they own i would say average age is 32 years old. in u.s. 50 years old. and in u.s. we sell our car mostly to men. only 1% of women buy our cars. in china almost 30%. so the wealth creation is very young. so basically, most of the people that buy our cars made their money in the last 36 months. so it's an impulsive buyer. here in the u.s. there is an incredible culture about our brand. 30,000 owners, but millions of enthusiasts. as i said before, the greatest collector. they have an incredible knowledge about the product. there is a great relationship with our company. so this kind of similarity. if you want to know about the similarities, both bought ferrari because the american culture, the chinese culture that. >> love to be number one. so i think ferrari embody those kind of features to be

competitive to be number one. >> for sure. and that's why in 2010, when you look at china and greater china, you're talking about hundreds and hundreds of cars shipped last year, right? >> yes. we shipped almost 300 units. and overall greater china has become the 50 biggest market for ferrari. >> so more than 500. close to 700. >> to china. >> let me ask you about the brand and the craftsmanship. because the brand prides itself on that craftsmanship as you just said. tell me about the customer experience. how many people does it take to make a ferrari? how is it done? >> every ferrari in the u.s. is different from every car. every customer like to customize his car. he manage on top of the msp, every customer spends almost 40,000 to make it his own car. we have customer say please, make the interior of your car like this. so i think more and more people showing 2010 is looking for

something is semi exclusive, semi unique. they don't want to go to their golf club and see the same car in the parking lot. this is one of the keys of success of our brand. >> really trlg. so the state of innovation is alive and well. >> yes. we talk about craftsmanship. but our country is best in class in research and development. we invest 18% of our revenues in research and development. so we really -- we can say the ferrari engineer are pioneer. we are not follower. we always bring the market out to technology. where we invest our money. so people are even recognize the reputation of our product and the technology, the money, the value that is suspended. >> and give us the history of the ferrari logo, the prancing horse. >> the prancing horse is an incredible. enzo ferrari founded the company in 1947. and the prancing horse logo came from the jet fighter, one of the

most brave pilot of the italian air force. and they know each other, and they gave enzo farrar the prancing horse. when he started to race, he put on his car this logo. it was a fantastic combination of braveness and entrepreneurship. >> that's a great story. marco, great to have you on the program. >> thank you. >> i hope you'll come back. marco martiacci joining us from ferrari. coming up a look at stories this week that have an impact on your money. and how early americans viewed themselves. stay with us. there's the life y. and the life you want to live. fortunately there's enbrel. enbrel can help relieve pain, stiffness, fatigue, and stop joint damage. because enbrel suppresses your immune system, it may lower your ability to fight infections. serious, sometimes fatal, events including infectio, tuberculosis, lymphoma, and other cancers, and nervous system and blood disorders have occurred. before starting enbrel,

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for more on our show and our guests, check out the website, wsjr.cnbc.com. now a look at the stories coming up in the week ahead that may move the markets and impact your money this week. as earnings season rolls on, we get the latest reports from cisco, kraft, coca-cola, pepsico and disney. friday the international trade balance will tell fuss the u.s. is importing or exporting more goods. and the university of michigan's latest reading of consumer sentiment will be out on friday as well. and finally today, what is a few million for the first map of the united states? billionaire philanthropist david rubenstein, co-founder of equity the carlyle group purchased back from 1784 at christie's for almost $2 million. he is loaning it to the library of congress for public display. the map was the first one

copyrighted in the united states after the revolution, and features the first appearance of the stars and stripes. at 43 by 48 inches, all 13 original states are well represented. virginia extends almost to the mississippi river. that will do it for us today. thank you so much for joining us. next week just in time for valentine's day. my guest chef jacques torres, the man known as mr. chocolate. each week keep it right here, where wall street meets main street. have a great week, everybody. i'll see you again next weekend. california should be proud.

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