hi, everyone. welcome to "the wall street journal report." i'm maria bartiromo. he is a wall street maven, famous for his surprise predictions. i'm talk to byron wean about what he sees next. what will happen with oil, and the second anniversary of the bull market. my conversation with the ceo of america's largest bank. why debit, credit, and checking will all cost you more, and why he says washington is to blame. and can america afford not to invest in innovation? we'll talk to young scientists about the problem of getting funding, and whether the u.s. will be left behind in the research war. "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. like most 2-year-olds, it can be cranky and moody. but the bull market celebrated its second birthday this week. the markets hit bottom on march 9th, 2009 after the financial crisis. since then, the dow is up better than 80%. the s&p 500 up better than 90%. but the question is will high oil and gasoline prices derail the rally? crude oil touching two-year highs this week, staying north of the $100 a barrel mark. and gasoline hit an average of $3.52 a gallon last week, 27% higher than a year ago. the markets had choppy week as a result. the dow tanked on thursday, down more than 200 points, its biggest decline since august. on weaker than expected news from china and more worries about the mid east. the markets rebounded on friday. forbes sought with the list of millionaires.

mexican mogul carlos slim ranked first. bill gates second, warren buffett third. there were a total of 1200 billionaires on the list this year compared to about a thousand last year. byron wien is a wall street legend famous for his list of ten surprise. he joins me right now to talk more about all of the issues of the day. byron, it's great to have you on the program. >> always good to be here. >> thank you so much for joining us. let me begin with this terrible earthquake in japan. what economic impact do you expect this is going to have? i mean, it's having an impact we see worldwide both long and short-term. so what is your take on this? >> well, japan's a third largest economy in the world. this is clearly going to affect the economy there. it's obviously affecting the mood and attitude of investors there. so i don't think you can assume this is something that is going to go away in a few days. that's the bad news. the good news is it wasn't in a key economic area.

it wasn't like it was in tokyo or kobe. so my view is that it's an important event, but it doesn't have long-lasting significance. >> meanwhile, this week we saw the two-year anniversary of the recent -- >> right. who would have thought. >> exactly. we've been on this bull run for two years. do you this keeps up? what do you think the next catalysts are for the markets, and do you feel like this rally that has been in place for so long has sustainability going forward? >> well, i think we haven't seen the highs for the year. on the other hand, the year's turned out with everybody feeling pretty good about things. and usually the market does best when people feel pretty bad. in march 2009 when this bull market or this market move started, everybody was negative. the surprise was that the market did well. that's because there were a lot of people who are skeptical

going into the year. and the market was put on earth by god to make fools of the greatest number of people. and so by rallying in january, they trapped a lot of hedge fund managers and so forth. i think we may get a correction near-term. but longer term, before the end of the year, we're going to see higher price. >> another surprise. we've got rising oil, rising gasoline prices. a lot of people debating now whether or not that's going to zap disposable income and choke off anni economic recovery just gaining traction. when oil goes up, stocks go down. are we better prepared this time for an oil shock than last time when oil rallied up to $147? >> well, if we get to over 130, maybe even over 120, then i think we could be in trouble. nene until then, i don't think so. >> how do you think the situation in the middle east plays out? we watch on television everything that is going on in the middle east.

the day of rage was friday. and of course we see this protesting situation throughout the region. what impact on the u.s. might we see? >> well, you know, we'll see how it works out. i may be sorry i'm saying this, but i think what we've seen is what we're going to get. we've seen egypt -- i think libya will change. there will be a regime change in libya. and we've seen bahrain and tunisia. i don't think that you'll see a regime change or an end of the kingdom in syria or in jordan. the wild cards are saudi arabia and iran. >> and of course let's take a listen to what prince in saudi arabia told me earlier today about the scene for that day of rage. >> let me give you an exact first-hand report of what happened today exactly in saudi

arabia, specifically in riyadh. i personally visited the two locations that were supposedly to have these demonstrations. i went there and saw all of the locations three police cars. the other one four police cars. i didn't find a single human being there after the prayers. in a nutshell, this whole thing was tempest in a teacup. >> so based on where the supplies are now, the level of supply, is oil justified at $100 a barrel? >> it is not justified. this is a panic situation because people are concerned about it. they don't understand what is going on. they are just worried about what is happening in libya. and i tell you also bluntly and blatantly. if ultimate protection of libya disappears, one country only which is saudi arabia can governor it immediately. >> let me tell you about your predictions for 2011. you see gross domestic product for the u.s. in 2011 rising to 255%. >> correct, unemployment dropping below 9%. >> correct. >> and the yield on the ten-year

approaching 5%. >> that hasn't happened. >> right. >> talk to us about some of your predictions and how you see this year playing out. it's got your top five right there. you think china uses currency -- >> that's an important one. that's a real surprise, that china's biggest problems are one, it's growing too fast, and inflation is too high. they can control both of those by revaluing their currency by a significant amount. nobody expects that i think it's a possibility. if we would only stop telling them to do that and let them make the decision on their own, they make the right decision. >> let's keep going. you say the s&p 500 near 1500. that's a move from here, for sure. strong m&a and a second half correction. gold above $1600, and china keeping growth below 10%. >> right. >> talk to us about all of that. break it down. >> gold over 1600. i just think more and more people are going to want gold as part of their portfolio. i've got oil going to $115.

and i'm optimistic that can happen without truncating growth in the economy. and finally, i don't think there will be a reenactment of the european financial crisis. >> byron, it's always wonderful to have you on the program. >> always great to be here. >> thank you so much for your insights. as always right on the money. byron wien. up next on "the wall street journal report," the ceo of the country's largest bank opened his window to the american economy to share with us what is happening as well as on the state of the consumer. bank of america's brian moynihan is with me next. next, are young innovators at risk? a look at scientists and tinkerers who may be coming up with the next big idea. as we take a break, take a look at how the stock market ended the week. back in a moment. ♪

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shares of bank of america rose this week after the nation's largest bank held its first investor day in four years. ceo brian moynihan had a bullish outlook, saying that the company's pretax earnings could approach $40 billion a year. he hopes to be able to restore a regular dividend to investors, pending approval from federal regulators. the bank first cut its dividend in the fall of 2008. i spoke with b of a's ceo brian moynihan about the road ahead, which have the best franchise. we have the strategies to grow it. we rebuilt the balance sheet after the crisis. and now it's just down to execution, and that's what we're after. >> let me ask you about execution. the company is the largest u.s. bank by assets, $2.3 trillion in assets. 83% of the revenues coming from the united states. what can you tell me about the consumer right now? >> we're seeing the consumers continue to move forward. so if you think about the broad issue, you're seeing unemployment rates come down.

you're seeing new claims for employment coming down. interestingly, the long-term employment, people who have been unemployed for a listening period of time come down. it translates to lower delinquencies. the reality translates into consumers are starting to take command of more credit, which is good, the credit where the consumers are, which helps them purchase. you're seeing the activity in the consumer from a credit and credit quality repairing their balance sheets progressing well. in terms of what they're doing with their money, they're out there spending. in february 2011, the spending is up 6% on our debit and credit cards versus 2010. and at 6% people say it's all gas prices. and the reality is the discretionary part has nothing do do with gas or food is up 5%. consumers are feeling better and spending more money on things that americans like to spend money on. >> that's all good for the economy and all good for the growing economy. >> correct. >> you have the best vantage

point. what about the mortgage business? we continue to talk about a housing market that has been unable to participate in this economic recovery. there is an outlook for a decline in activity. how does your outlook today compared to what it was just a few years ago? >> well, it's actually better than it was probably two years ago, and probably even better than it was one year ago in terms of stability. if you go back in 2007, you saw a tremendous house impact the economy. in two ways, right? you saw the borrowing the customers had and they went out and spent it. and you saw the other way was house building. that is one of the best local drivers of an economy is to build homes. all the materials come in, no matter where they come from the world, the fact of the matter is they have to be put up, and that takes entirely local people to do it, working on the site. that drove the economy. if you think now where we are, the consumer spending is back above the levels it was when people said the atm, house was an atm. it's back above that so that's recovered. what hasn't recovered is the construction industry yet. and i think that will have to grind through, because frankly, we shouldn't build as many helms

as we were building at this time because we didn't have the population growth. housing is stable. it may go up or down from here. but it's had the big fallout. now we've got to work our way through this. >> let me ask you about the regulatory environment. a lot of questions here. people are feeling like the rules are still to be written. the durbin amendment is obviously debatable, and the banking sector says it's going to take $12 trillion in revenue out of their business 23 you're not able to charge for debit cards. what kind of changes are you expecting as a result of dodd-frank and any other changes that come out of this? >> well, if you think about the business from a consumer business and then say the capital markets business, which would be the two big areas impacted, and there has been more impact on the consumer business, not only from dodd-frank, but from the card act and overdraft legislation, and then the durbin. >> the consumer protection agency. >> all of that is really baked into our fourth quarter. we started early '09 and said we've got to be transparent. we've got to be fair. we've got to be clear. all themes that the new bureau

and others will agree with. so and consumer advocates agree. we started changing our practices, put out a new accounts structure that gives us a chance to mitigate the impacts of these rules with time based on pricing structures that are clear to the customer, but we supply great service and ultimately we have to get paid. 6,000 branchs, 18,000 atms, 24/7 phones. an online capability that pays half the bills in the united states, bills are paid online through us. with more phones than anybody else. so we've been working on account structure that if we can't get paid one way, we'll work in way that is fair to the customer and they can understand it. >> so if durbin passes muster, we should expect fees going higher in other areas of business. you've got to recover that revenue? >> what durbin -- what the debit card represents is basically your checking account on a piece of plastic. and it gives you unbelievable access to go anywhere in the world. instead of giving a check that you would have had to do 30 years ago, you can give the

debit card. they take it. the system settles, the risk is on and off the table. it's tremendously effective way. if we -- we have to get paid for that because that's what consumers want. >> my thanks to brian moynihan. up next on the "wall street journal report," americans spend more annually on potato chips than on energy research. a nobel prize winning scientist weighs in on the innovation gap. and you can find us on you've got a strawberry pop-tart,

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the first step in winning the future is encouraging american innovation. none of us can predict with certainty what the next big industry will be, or where the new jobs will come from. >> here is president obama sounding the call for innovation during the state of the union address this year. the national academies of science recently described american competitiveness as a category 5 storm due to limited investment in scientific enterprise. we met one young scientist braving that storm in the hopes of making a medical breakthrough. as the recipient of a grant from the pugh charitable trust. >> running my own lab is really my dream job. what i am particularly interested in is a hepatitis c virus and how it replicates. what i hope to find are weak spots in its replication cycle that can be targeted with new therapies. traditional funding sources are a little antagonistic to innovation. they want you to do something that is going to work. the problem with that is you don't make the big discoveries. pugh wants you to take calculated risks to really try

something new that has the potential to be groundbreaking. >> joining me now, nobel laureate carol grieder and rebecca rhyme medical, secretary of the pugh charitable trust. ladies, good to have you both on the program. thank you for joining us. >> nice to be here. >> carol, the work of scientists or innovators can enable the later work of entrepreneurs. how would you characterize american commitment to science education today? how does that impact our economic competitiveness as well? >> i mean, i think it's very clear that economic growth is really driven by innovation. this report by the national academies written by nobel laureate in economics indicates that about half of the gdp comes from scientific innovation that drives technology that can then feed forward. so it's really an essential economic driver today. >> and rebecca, we just met one of your pugh biomedical scholars in that piece. that's a $1240,000 grant.

tell me about the program. what does it do to address risk to early scientists or innovators? >> well, when it was launched in the early '80s, it was to address the importance of innovation by the biomedical sciences. we like to think of it as an insurance policy for risk-taking. we pick the very best and brightest. we provide unrestricted report, and annually they come together and work with scientists and disciplines other than their own. and we've had a huge return on this investment. >> this program was started actually at the encouragement of one of our board members who worked in the tech sector. he said the real innovation in my country occurs with the tinkering that is going on in garages and basements, because we don't offer the encouragement and structure that we should to encourage this kind of discovery. 10 that's what this program tries to do. and we need to show young people that there is an exciting professional path for them. >> are other country morse focused on this than the u.s.? for example, in china are, we

seeing the kind of commitment that you're talking about? >> yes. i think it was quite clear from the report from the national academies that there are a number of different areas where china has clearly surpassed what has been going on in terms of patents and investment in education especially. and i think that investment in the early education is really very crucial. and a lot of people what people consider biomedical funding, you think of that as instruments in laboratories. really, that has to do with educating our young people. because what goes on in a laboratory isn't simply just experiments, but it's encouraging young people to ask those creative questions. so most of the budget from my laboratory really goes towards people, towards training young graduate students and post doctoral fellows to do those next creative experiments. >> remember car, how do public and private sector science innovation compare? >> the private sector plays a critically important role. investment by industry as well

as the government has plateaued. and unfortunately is declining. and this would just be a terrible tragedy to not capitalize on the enormous investment over 30 years that this country has made. we are second to none around the world in training scientists and in the biomedical sciences in particular. and what a waste it would be not to capitalize on that. not only for competitiveness in jobs, but for the well-being of the public. >> you know, carol, women are now getting the large numbers of advanced degrees globally. so are they represented in the sciences? >> well, unfortunately, there seems to be a little bit of a leaky pipeline for women. while at the level of graduate students and sometimes post doctoral fellows, there is about 50%, but as you go to higher and higher levels, the representation drops off. and this is unfortunate not just for the women, but really for the country as a whole. because you don't want to be losing out on half of your intellectual capacity. >> ladies, great to have you on

the program. thank you so much. such a fascinating subject and so important right now for growth in the economy. carol, rebecca, we'll see you soon. thank you. >> thank you very much. up next on the "wall street journal report," we'll take a look at the news this upcoming week that will have an impact on your money. and then who is the richest member of the 112th congress's freshman class? public servants with private wealth. stay with us.

for more on our show and our

guests, check out the website, wsjr.cnbc.com. you'll also find a link to my blog, investoragenda.cnbc.com. i hope you will check it out. now a look at the stories coming up in the week ahead that may impact your money this week. thursday the open committee market. wednesday the number of new residential units that began construction last month, as well as the producer price index which measures inflation at the producer or wholesale level. thursday, the consumer price index tracks inflation for consumers. and we'll get a sense of industrial activity when the latest index of industrial production comes out. that's also happening on thursday. finally, money and politics may be linked, but do you have to be a millionaire to run for office? the center for responsive politics released a report this week on financial disclosures of the 112th congress's freshmen. 60% of new senators and more than 40% of house rookies are millionaires. and the top of the list? connecticut senator dick

blumenthal. illinois's joe walsh trails the new class with a negative net worth around $300,000 in the red. walsh turned down congressional health benefits and he sleeps in his office when in washington that will do it for us today. thank you so much for joining us. next week my guest, movie mogul harvey weinstein, fresh off of his best picture win for "the king's speech." each week keep it right here where wall street meets main streak. have a great week, everybody, and i'll see you next weekend. my diet? well yesterday i had an apple turnover.

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