hi, everybody. welcome to the "wall street journal report." i'm maria bartiromo. earnings season is here. big companies tell us how profit able they are. what does it mean for the markets and your money. and what does bob woodward uncover in his new book about president obama and how he handles the economy. no act. it is a familiar face with an important concern. my conversation with matt damon about cleempb water around the world. >>s this the place where i feel i can have the biggest impact on people's lives. >> the "wall street journal report" begins right now. >> we will have that in a minute but first bill griffeth with a

look at the headlines. bill? >> here's what is making news as we head to a new week on wall street. the earnings season is upon us with mixed expectations. so far, that's what companies have been delivering. for example, financial giant jpmorgan chase beat estimates turning in a record profit. it sate housing has turned a corn canner. wells fargo beat expectations but fell short on the revenue side. industrial company alcoa met estimates but lowered the forecast citing slowing global economy and demand for aluminum. an ugly week for the markets. by thursday the dow was riding a four-day losing streak and the nasdaq had the first five-day downturn in three months. the markets were then mixed on friday. meanwhile, america's trade evidence widened in august as exports fell to the lowest level in six months. that deficit increased to $44.2 billion in august. an increase of 4.1% from july. it could be a sign that a global

slow down is decreasing the demand for american foods around the world. two retail giants are going head to head. wal-mart announcing it will start same-day shipping of its products for a flat fee of $10. a direct shot at amazon.com. wal-mart shares jumped on the news, soaring to an all-time high while amazon fell. earnings season is upon us. what will it tell us about the economy and what it means for your portfolio? joining me is joe lavorgna. he is the chief economist at deutsche bank. good to see you. >> same here. >> we are heading to the sweet spot of the earnings season. it looks like so far the consumer is holding up. global companies are facing weakness in china and europe. what are your expectations for the season? >> bill, i think q3 will be soft, as advertised. however, i think, bill, it will be temporary. i think a lot of the earnings weakness reflects concerns about

europe which effectively bled through the summer months and was an inhibitor to spending. and hiring. if europe has been displaced in large part by the ecb's actions i don't think it will be as big of a factor going forward. we look for some resolution of the fiscal cliff, which is probably weighing on corporate sentiment and i believe 2013 the earnings outlook will improve. >> do you think this earnings season is factored in our markets? >> yes, bill, i do. i think the equity market as a general rule is a decent discounter of the near-term future. we have seen weaker gdp numbers. i think earnings being soft is largely reflected in the market. >> it was five years ago this week the dow hit its all-time high. we saw a selloff this week. we are still not that far away from that peak of five years ago. do you think we will get back there anytime soon? >> yes, we do. i think you can definitely see record equity highs by year end.

even though the market has taken a long time to get back up top those near previous highs, keep in mind that multiples are much lower, interest rates are much lower, korptd balance sheets are in much better shape. yes, i think it is a matter of time before we break the old highs and set new lightly new highs. >> we are seeing a rebound in the bank earnings and data out there. do you think the recovery is for real? >> i do, bill. it wasn't long ago that people were saying the housing boost was because of weather. perhaps it is best seen in the home builders index. i think the housing market recovery is for real. we are seeing it in better pricing. that's helped consumer confidence. it will help household balance sheet and financial balance sheets them multiplier is significant and will continue to help the consumer spend as you eluded to earlier.

>> something else holding growth back is the fiscal cliff. you mentioned it earlier. it is looming for many businesses and toward out there. how do you think it will be resolved when it is all said and done? >> once the election is over, regardless of who wins, there -- they will deal with the cliff. if the president is re-elected the republicans will deal with it because they know the president's leaving in four years and if the republicans win, there will be running to try to fix things. i think it will be dealt. it might be a little messy. i don't think it is either party's interest to have these massive tax hike and spending cuts go in as currently planned. it will be dealt. the economy will avoid a recession. congress and washington in general is not that irrational. >> so many cross currents and headwinds. in your view, is the the u.s. the best house in a bad neighborhood right now? what should toward be doing right now in your view.

>> one should not panic. i would take money out of the bond portfolios and allocate in to equities and perhaps cyclical names and move away from the players that are rich. the u.s. is the best house in a bad neighborhood. the u.s. has done well and grown even if the world economy is soft as it is now. exports are a low share of gdp. if we can get some spark and resolution of the election and the cliff we will do that. companies are in a position to spend and consumers need to buy things they haven't spent much on the last few years. the outlook is good. you should be allocated heavily toward equities. >> always good to see you. thank you for joining us. >> thank you, bill. my pleasure. >> now back to maria with the rest of the program. >> thank you so much, bill. up next on the "wall street journal report," inside the obama white house during the biggest financial crisis in decades. celebrated reporter bob woodward

will join me. and actor matt damon on the job that is changing his life and impacting others bringing clean water to those without. as we go to break look at how the stock market ended the week. bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners. ke a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects.

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we are in countdown mode. a few weeks before another presidential election where the economy is issue number one. over the last four years of the obama administration's attempt to deal with the worst financial crisis in decades we have an inside report. "washington post" bob woodward is with me. the author of the "the price of politics." good to have you on the program. >> thank you. >> the book is spectacular. i want to ask you what happen you learned during the

reporting. the financial crisis and president obama's election seemed to be an ideal time when those two with iedologists could come together. was the opportunity wasted? >> look, the federal government's financial house is not in order. it's in total disorder. no business that you cover would ever accept $16 trillion in outstanding debt with the almost guarantee -- or in fact the fact that we will have to borrow another trillion or two where you have the congress, the republicans and democrats deadlocked on how to solve the problem. the question is, can you prevent what you foresee? in other words, we foresee anyone knowledgeable about this realizes we are on the edge of not just a fiscal cliff, but a calamity. >> you went through the whole long debt ceiling debate, which was really upsetting even from

business, from being down here on wall street during that time. the markets were in a standstill. the business community was in a standstill and i feel we are going through that again right now with the fiscal cliff. >> the whole idea here was to force congress to reach agreement through the super committee, which was set up last year. john boehner, the speaker, harry reid, the democratic leader, mitch mcconnell the republican leader in the senate were all saying publicly and privately, oh, this will be worked out. they will come up with the deficit reduction plan of some kind. they totally failed. so they came up with this sequestration which is especially let's decide what all of us hate the most and put that in the deal so we force some sort of rational agreement. well, the irrational kind of mutual assured destruction is what we now have in law.

where we are cutting defense. where we are cutting things like biomedical research with an ax. it makes absolutely no sense. no person who thought about some of these thing thes would agree wit. but that's exactly where we are. >> one thing i think the president has been unable to do is lead these two groups together. because you can't constantly sit there and watch everybody fighting. what about all of the people who are hanging in the balance? >> i asked the president about this. he says -- he blames the republicans and so forth. >> and they blame him. >> and there's blame to go around. there's no question. but this is so important. this is like fighting the war. you need bipartisan approach and fighting a war is painful and expensive. and doing these things will be painful. you asked the right question about the average person out there who has a house, investments, a bank account,

anything of value is all put in jeopardy because we can't bring some order to the federal house of our money. and it's troubling and sad. >> when i speak to ceos they tell me they are invited to the white house to speak to the president, like for example, health care ceos they were invited to the white house to speak to the president about this health care situation and give him ideas. they tell me, they get there and he dunn listen to them. he does a speech, a photo a and they leave. they feel they are not being listened to. i think the president has an antagonistic relationship with the business community. >> he's never closed the deal with them. i have examples. ivan sidenberg head of the round sglabl the ceo of verizon. >> he was the ceo of verizon during this period and they invite him to the super bowl. he comes and talks to the president for 15 seconds and the president sits down in front

with his buddies and sidenberg feels totally used. you talk and done this to the ceos about the way the white house works. and the head of ibm made this point to rahm emmanuel when rahm was chief of staff in the white house. he said you have a ceo, the president but you don't have a coo, a chief operating officer, one person whose job is to get done. >> which is what phil bill daly left. >> exactly. he did not have the authority as chief of staff. >> do you think it is an ideology that the president has. he just believes business is bad. this is the way we need to run the country and a doesn't matter what anyone else says, i mean why? >> what he doesn't absorb and come up with a plan to execute it, it is all kind of seat of the pants operations.

oh, let's do this. let's do that. and there's no long-range plan. as you know in business or any large institution you need a long-range plan that faces the real problems you have. we are at a very difficult time in our political and economic history. >> no doubt about it. as you write so eloquently. great to have you on the program. bob woodward joining us. "the price of politics.." coming up, inside the big bet matt damon is making on the business of philanthropy. how he is harnessing the power of

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every day several times any one of us turns on a faucet and the water runs. for many places of then planet it is intermethod mitt tent and possibly dangerous. >> matt damon's role a as an advocate for needy communities in the developing world to control their own water is making a difference. >> every 20 seconds a kid on our planet dies because of lack of clean water and sanitation. three kids a minute. >> walk us through the enormity of it. what does a life without access

to clean water look like? >> your life revolves around skavageing for water. girls won't be in school. they will spend their entire day trying to get water for the rest of the family and also the issue of latrines and toilets. girls stop going to school when they hit puberty if this is not a toilet there. >> matt damon and gary white cofounded an organization, water.org. it is dedicating to ending the water crisis among the poor. >> the fact that 443 million school days are lost every year because kids are sick from contaminated water or collecting water. >> the water in the toilet is cleaner than the water most people are drinking in this situation. >> you have been working on it 20 years. it is that we don't have enough water on the planet, the water is dirty? where's the issue begin? >> there's definitely enough water on the planet. the challenge is making sure the

water is clean and where people live. in the united states, there's water scarcity in certain areas. we have the political framework, the policies to deal with that. we have the money frankly. we still pay more than twice as much for our cable bill than for our water bill here. >> tell us about water.org's agenda. how does it work. >> people aren't equally poor. er 800 million people that don't have access to water aren't all in the same boat. the municipality will be piping water right by people's houses but they don't have access it to. people working, holding down jobs are taking time off of work to stand in a line at a designated time to get their water. gary pioneered an idea water credit. if you can take out a loan and buy your time back, all right, so 75, $100 loan, that five hours you are wasting you can go do your job and the loans pay off quickly.

>> they are repaid at 967% rate worldwide with this. we're approaching 400,000 people who have gotten access to water and a toilet through microfinance and through their own resources that haven't having to be served by straight charity. we are all about trying to piggyback on existing infrastructure rather than recreating things. how do we work in the stream of the natural forces like the market and the power or the base of the pyramid as citizens and customers. >> more people paying less for water means more consumers with money to spend. wright and damon estimate the world's poor, primarily in latin america, asia and eastern africa represent a $12 billion market opportunity, almost totally overlooked. >> what's the pitch to business and how do you get the buy in so they can put their resources in to the mix? >> i send gary in. >> the funding has come from the

philanthropic efforts of pepsico and mastercard. >> it is trying to get the philanthropic cost down per customer served. >> take pepsico for instance. they gave us an $8 million grant to scale up water credit. what we find is that cost per person reached with the toilet or water connection drop theed from 36 to $24 per person in our first effort with the pepsico foundation. so they reupped at a higher level, and now we have that per person cost down in the next grant to $10. we can bring solutions in that are smarter and more market and business oriented that can give more bang for the buck that resonates. >> once people start to see the positive effects it starts to change their behavior and their understanding and perception of these things and suddenly problems that seem like you are going to be pushing the boulder

up the mountain go wait a minute, we can beat this thing. >> water is life and the role of a lifetime for one of hollywood's most bankable stars. tay monday's trill trilogy of films earned a half million dollars. >> we probably don't know anyone who has been thirsty. i have to remind myself it is an everyday reality for some people. it is nothing you are not reminded of here water is everywhere do you get surprised when you see what is going on and do you get as horrified. >> yeah, yeah. it is also uplifting. we were in haiti earlier this year and i talked to a girl who was my oldest daughter's age. we just put a well this her town. she was gone a couple of hours every day to collect waemplt i said is this going to give you more time to do your home work and she said i don't need more time to do my home work. i'm the smartest in my class.

and she said it in a way that only the 13-year-old girl -- you knew she was the smartest in the class. i said what are you going to do with the extra time and she said i'm going to may. i have four girl and they don't ever worry they won't have time to play. >> you have had such enormous success. you don't need to put your name to this. you don't need to spend so much time doing it. why do it? why is it so important to you? >> it is the place where i feel i can have the biggest impact on people's lives. i have four girls myself. i want them to see who their dad is and be proud of that man. >> we will have more of my conversation with matt damon next week including a surprising look at the hbo bio pick of liberace. >> you look great in it. >> i have some good wigs. >> we will have a look at the news this week that will ve an impact on your money. and you can fooik find us on facebook. nagement system

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more more on our show and our guests, check out cnbc.com. look for me on google+ @maria bartiromo. we are in the thick of earnings season. third quarter reports are coming out from citigroup, goldman sachs and bank of america.

microsoft, verizon and general electric. on monday the winner of the nobel price in economics will be announced and retail sales for september will be out on monday. friday the 25th anniversary of the black monday stock market crash. the dow jones industrial average dropped some 22% back on october 19th, 1987. my guests next w k christine lagarde. keep it here where wall street meets main street. see you next weekend.