welcome to "the wall street journal report," i'm maria bartiromo. jobs, jobs, johns. what's the dismal unemployment report mean to you and is there more chance of new action by the fed? what you should be doing with your money now. housing prices are down, rates even lower. is it time to get in? get real about real estate. a daring new chapter in the book business. how a best-selling author succeeded where big business failed. "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's a look at what's making news. a grim and disappointing jobs report for the month of may.

the economy created just 69,000 new jobs. well below expectations. the unemployment rate actually ticked up .1% to 8.2%. march and april numbers were revised downwards as well. this is the worst monthly number in a year. that helped push 10-year treasury yields to record yields yielding below 1.5%. more investors are guying government bonds which sends prices up and yields way down. it was a miserable may for the bulls on wall street. the dow suffering the worst month in two years falling about 6%. for the entire month, the dow had no back-to-back gains. for the week, the dow fell. mixed results for auto sales in the month of may as well. general motor sales up 11%. ford 13%. chrysler saw a gain up 30%. but still below expectations. toyota was up 87%. and shares of facebook hitting a new low this week. the stock fell below $27 a share thursday. after going public at $38.

two weeks earlier. i'll have an exclusive interview with james gorman, chairman and ceo of morgan stanley, about that facebook ipo and how he sees it, what went wrong. markets had a miserable month of may. how is june shaping and up what does the jobs report mean for your money? joining me is michelle gerard, rbs senior economist. two pieces of key economic data this week. the jobs numbers on friday, the revised gdp report, weaker than expected. were you surprised by the numbers? are we entering another soft patch? >> well, i tell you, i was very surprised by the employment report. the magnitude of the weakness in that report was -- i don't want to say shocking. if not shocking, just shy of. really through and through, we saw hiring slow across most sectors. we saw the work week decline. even the people who were working worked fewer hours, they earned less money. it was a very soft report that suggests that all of the

uncertainty that we're seeing globally is i think moving businesses to the hiring sidelines. >> so they're on the side lines right now. does this increase the possibility of more quantitative easing by the federal reserve? do you think? >> yes, we had this two-day meeting at the end of june. in the past the chairman has suggested if you didn't have sufficient job growth, job gains for example under 100,000 a month might certainly be criteria for engaging in more quantitative easing. now we've had two months, both april and may saw job gains less than 100,000. we've seen the inflation rate move down. the core deflator. which is close to its target. at its lowest level since last november. they've got some room they didn't have before on the inflation side. i think it's going to be very difficult. i think the markets are going to be looking to the fed to respond to these weak numbers and take some action. i'm not sure policymakers want disappointment them at this point. >> what can they do at this point? you're talking about interest rates at rock-bottom levels

already. what else can we see from the fed in terms of stimulus? >> that's the point. to undertake action to bring long-term rates down, they're already down below 1.5%. i think probably quantitative easing in this round will include purchases of mortgage-backed securities to bring mortgage rates down as far as treasury to the extent they can, to provide support for a part of the sector that is beginning to improve. >> that's what we'll look for. what about europe? starting to feel like a bad movie we're watching every summer. how do you think this ends? what kind of effect are you expecting on the u.s. from the european issues? >> i think the european issue is front and center right now in everybody's mind. it so is hard to try to figure out how this plays out. even people who are there and analyzing it full-time have so many different scenarios and i'm not sure. on one hand, greece can't leave, on the other hand they can't stay in, how does it play out. ultimately, i think, in order to really change the situation we're going to have to see the ecb and germany, for example, do things they don't

want to do. assume the risk of the other countries, expand the balance sheet as much as needed. there's still i think resistance to doing so and that's what we're waiting to see. did things get so bad you're actually seeing policymakers do things they're loathe right now to do. >> it's funny you mention germany. because even in germany you saw rates hitting zero, i believe, this week. in the treasury market you're seeing ten-year treasuries hit record lows. down to 1.5% as you just mention even below the rate of inflation. it's interesting to see so much money in treasuries and fixed income even though it's not really making money for you with these kinds of rates. >> it's all about the principle of preservation. germany just like the u.s. is viewed as a safe haven. there's a lot of liquidity sloshing around. that money needs to go somewhere. in this highly uncertain risk environment the u.s. treasury, germany, these bonds are becoming the beneficiary. it isn't about the return on your investment as much as just get the return of your capital. >> what do you think about equities here?

we saw a terrible month of may for deferred stocks. worst month since 2010. are you expecting a rebound for june? what are you looking for the second half? >> clearly we're going to be news-driven. as these events unfold this summer that's only going to determine the direction in the near-term for the markets. in a perverse way you could almost believe that the worse things get, the more likely we will see policymakers actually take the steps that are needed to finally move us past this. even the worse the data look here in the u.s. maybe the more likely we'll be to avoid the fiscal course here. there will be more incentive to extend the tax rates and push back the automatic spending cuts. in a perverse kind of way, even if it looks really dark in the near-term, ultimately that might be what we need to get us moving really in a sustained way to a better level. but i have to say, i think it's going to be a real nail-biter here for the next couple of months. >> we'll be watching.

good to talk to you as always. thank you very much. we'll see you soon. michelle girard coming to us from rbs. it's been a tough two weeks for facebook. the initial public offering two weeks ago was the most widely anticipated in years. a lot of people calling it a flop. the ipo was priced at $38 a share by underwriter morgan stanley when it went public. it's been down more than 25% since that. so what went wrong? this week i spoke to the man with all the answers, an exclusive interview with morgan stanley chairman and ceo james gorman. >> this is one of the most volatile openings to an ipo ever. it also happens to be one of the largest ever. it also happens to be one that affects an institution that is touching 900 million individuals around the world. so it's got hype going in every single direction. we spent the time, all the underwriters, putting together and trying to find the right pricing. obviously working with institutional shareholders and retail shareholders, establishing a pricing range, and was ultimately priced at the top of, not above, but the top

of the revised range of $38. >> i was reading your comments to your team here just the other day and you said there was unprecedented confusion and disarray in the opening hours of the facebook ipo. what happened? >> well, it was -- we thought we were opening with the market, shortly after the market was opening, and it was clear that the exchange handling the issue, nasdaq, was having problems. and those problems were being -- we were being updated every couple of minutes and delayed every few minutes and eventually they declared a go, everything could go, we could start proceeding with the transaction. and with that over the next couple of hours, there reigned enormous confusion, disarray. buyers and sellers didn't know what they were being filled at. >> we all knew this was a lot of hype around. we all knew this was going to be an enormous deal. so how did those mistakes happen? what do you want to say to the guy out there who thought he bought this stock at $38 or even $37, and in fact he got his statement monday at $42? >> well, i'd like to think that

firstly the group of people who thought they were buying the stock so they could get an enormous pop were both naive and bought it under the wrong pretenses. what any company is doing, why you're taking companies public, is to establish a long-term investor base. so to that individual i would hope that they haven't panicked during the flurry the last few days. >> why raise the number of shares? some of the hedge funds got annoyed by that. by raising the amount of stock. taking it up 25%. what was behind that? >> it's not terribly unusual to raise the number of shares. you go out with an expectation that there's a demand for a certain number of shares. a belief. but you don't really know. you need to go then do the work. that's what the road show does. >> my thanks to james gorman. up next on "the wall street journal report," is housing heating up? what record-low mortgage rates affordable prices could mean for you. is it time to buy? the fate of the local bookstore in an electronic age. one southern city's hometown girl means business. as we take a break, take a

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after falling off a financial cliff, is the american housing market bouncing back? there's optimism when it comes to the value of the largest asset most americans hold mean opportunity for buyers sitting on the sideline? let's talk to stan humphreys with zillow. stan, good to see you, thanks for joining us. >> good to be here. >> a lot of mixed signals. pending home sales weaker than expected. other areas of housing look better. where are we in the housing recovery? >> 2012 is going to be very confusing for consumers because we are in a bottoming process. during that bottoming process a lot of the indicators go in conflicting directions. generally we feel pretty good

about the pace of the recovery right now. while the monthly blips go up and down, if you look at it year to year, home sales are up 5% to 12%. penning home sales which was reported as being negative on a monthly basis was up 14% from last year. generally we're seeing strong home sales in 2012. and that's translating into improving prices as well. we're seeing real stabilization and a lot of markets and even the national numbers have been up now according to the zillow home index two months in a row. >> the direction is moving in the right place. zillow has data on 10 million homes across the united states, projecting gross in the next year in hard-hit places. arizona, florida, california. what are the markets you're watching and tell me where pricing has stabilized? >> so, yeah, i mean markets -- the good news some of these really hard-hit markets like the florida markets, miami, tampa, you look at phoenix, those are markets that we're actually over the next 12 months, we're forecasting growth rates of about 5% over the next 12 months which is great news because all

those markets are down more than 50% from their peak. so we're seeing -- california markets, los angeles is doing quite well. we believe it's already bottomed. markets like d.c. and new york we think have bottomed. the majority of markets we believe are going to bottom in 2012. nationally, though, we've got a little bit of home value decrease but modest. over the next 12 months we're forecasting about -- actually less than 1% decline nationally. >> prices are going down where? where are the prices still dropping? >> you know, the hardest-hit markets now that continue to be really mired in a very wrenching housing recession are the chicago market, atlanta is not doing all that great. those are two markets that consistently month after month continue to see pretty strong price depreciation, home prices are falling pretty quickly. over the next 12 months we forecast home values to fall 4% in each of those markets which is -- both of those markets are the two, you know -- have the highest rates of decline we think in home prices the next 12

months according to our forecasts. >> let's talk rates for a moment, stan. rates for 30-year mortgages hovering at an all-time low. what's your advice to consumers sitting on the sidelines in terms of getting a mortgage and taking advantage of these low rates? >> well, i think for any buyer who's been waiting to time their home purchase close to market bottom, i think it's time to start shopping in most of these markets. i think home buyers tend to focus probably a bit more than they should strictly on the home price itself and they think, i may wait on the sidelines another six to nine months until i can be shaurds there's going to be no further home value loss in the overall market. they do that ignoring what's happening with the financing rate. waiting another six to 12 months until you can be assured the home prices aren't going to fall any more exposes you to significant rate increases. so mortgage rates go up more than 100 basis points, that more than offsets a decline of 2% to 3% in the home price itself. so home buyers really need to think about the overall financing costs of the home, not strictly on the home price itself.

>> what about the number of foreclosures? it seems like this is casting a shadow over the optimism, the number of foreclosures, underwater homeowners in the u.s. collectively owe $1.2 trillion more than their homes are worth. tell me about this dark side. >> yeah, the negative equities definitely, you know, it's a key feature of the housing market right now. the $1.2 trillion in negative equity, it's not a problem that's going to go away overnight. it's going to hang over the market a few years. unfortunately the way it hangs over the market, the implications on the market are, one, it elevates foreclosure rates. so it's going to keep foreclosures higher than they would be otherwise. it also -- it introduces some real problems on demand and supply, where basically it suppresses demand because a lot of people are trapped in their homes, can't go and buy new homes. a lot of supply problems we're seeing in some of these markets like phoenix, for example, the negative equity rate is above 60%. the number of homes that are available for transaction are much smaller because a lot of people can't sell their homes to

put them on the market. >> we are watching this and we are still in it. stan, good to have you on the program, thanks so much. stan humphreys joining us. up next on "the wall street journal report," when her local book shop closed best-selling novelist ann patchett turned a new page and went into business herself. the author turned independent retailer joins me next. you can fi

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parnassus books in nashville, tennessee, is an outlier. it's the only bookstore in a city of 1.5 million people. since 2002, the u.s. has lost roughly 500 independent bookstores. 1 in 5. last year's borders bankruptcy claimed another 600 chain stores. is the neighborhood bookstore risky business? joining me now is novelist ann patchett, author of "state of wonder," "bel canto," and six other books as well as the co-owner of parnassus books in nashville, tennessee. great to have you on the program. >> glad to be here. >> thank you so much for joining us. you put $300,000 of your own money into opening an independent bookstore. you're already a best-selling, prize-winning author. why become a small business owner as well, putting your money on the line? >> i should say my partner karen hayes told me it would be $300,000. to date she's only taken $150,000. i'm only in for half at this

point. she's very good with money. because i was in a city and our bookstores closed and simple as that. i just didn't want to live in a city without a bookstore. i thought, i can afford to take a hit, if i lose it, it's fine. but it matters to me to have a bookstore. >> how's business? tell me about that. the store opened six months ago. what can you tell us about how the community has responded? >> it's been six months ago right now. and it's been crazy. because everybody said, you might as well be selling eight-track tapes and manual typewrite typewriters, this business is dead and gone. but every day we have people lined 100 we open the door, we've got a full house all day long. huge response to the store, to the events, to the children's section, to everything we're doing. and i think what it shows is that a little independent bookstore is more than just a place to buy books, it's also a community center. >> you were -- prior to opening parnassus, you were on a national book tour for your recent novel. what did the research and being on the ground, speaking to people, tell you about the industry and how things have changed? >> i've been on book tour for 20 years. for a long time.

and i knew that it had changed. i knew that the super-store, the 30,000 square foot bookstore, is probably over. it was never such a great system anyway. you paid so much in represent you never had enough for a great staff. smaller store, 2,500 square feet, brilliant staff, big readers, conversation. what did you just read? i can tell you what you want to read next. >> book clubs. >> absolutely. >> you plan on staying small? >> i am planning on staying small. >> because that's what's working today. it's also what you want. >> also, it's amazing. you can get just about every book you need into a 2,500 square foot store. we don't sell wind chimes, coffee cups. if you don't sell all the other stuff it's enough space. >> stick to your knitting. as a business owner how are you dealing with changes? technology?

do you have e-commerce, e-books? >> me personally? no, i don't. i sit in front of a screen and write all day. when i want to read i want to hold a book. i don't care how people read, i care that people read. i'm not a moralist, i don't think it's better to read a book -- but i think there are enough people out there like me that want to actually physically buy a paper book that we can easily support the store. and i have been proven right. >> everything you're saying underlines the fact that a novelist is a solitary job. how do you balance that with becoming an advocate for independent stores? >> i'm not sure i have because we've only been open six months. my entire adult life i've been trying to keep the wall up, keep a private life, a quiet life. all walls are down now. i'm on television, i'm talking about bookstores. but i am standing up for what i believe in. small businesses. and also my friends.

all these independent book sellers all across the country who have made my career, now i can stand up and say, you know what? the lowest price is not always the best value. if you want to create jobs in your community, you want to have a tax base for your community, maybe you need to pay a little more for your book than you do on amazon, but in return you've got a place for your kids to play, you've got story hour, author readings, community events, we've got a piano, a store dog. you know. >> i love that, love it. >> all my life i've been reading books and now i can force people to buy the books i love. >> we love that you're sharing that with us. good to have you on the program. ann patchett joining us. up next on "the wall street journal report," we'll take a look at the news that will have an impact on your money. breaking bread with the third richest men in the d. your chance to dine on steak and ideas at the buffett burr fay. usaa auto insurance is often handed down from generation to generation.

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for more check out wsjr.cnbc.com. follow me on twitter and google plus. look for @mariabartiromo. a look at the stories coming up in the week ahead that may move the markets and impact your money. wednesday the federal reserve's beige book will give us a look at the vibrancy of regional xhes across the country. federal reserve chairman ben bernanke will testify before congress. friday we'll find out if the u.s. is importing or exporting more goods when we get the international trade balance record. in there's no such thing as

a free lunch news, this year's auction for lunch with warren buffett kicks off online this weekend. the annual charity fund-raiser has an opening bid of $25,000. the winner plus seven friends get a somewhat private audience with the oracle of omaha at smith steak house in new york city. the ebay auction ends friday evening and all bidders must be preapprov preapproved. next week, join me for former president bill clinton right here. keep it here with wall street meets main street. i'll see you again next weekend.