hi, everybody. welcome to the "wall street journal" report. i'm maria a bartiromo coming to you from davos, switzerland, i site of the economic forum. where to invest around the world. we will talk to a woman who oversees over a trillion dollars in asset management. where she is finding opportunities right now. then my conversation with george soros what he says about europe, freedom and investing today. then the sweet smell of success from the man that runs estee lauder why profits are in fashion for him right now. the "the wall street journal report with maria bartiromo" begins right now. >> this is america's number one financial news program, "the wall street journal report with maria bartiromo." now maria bartiromo. >> the u.s. economy grew at the

fastest pace since the second quarter of 2010. the commerce department releasing the fourth quarter gross domestic product on friday. it showed an annual increase of 2.8%, a sharp acceleration from the previous quarter but below expected by economists. it is the broadest measure of the strength and size of the u.s. economy. the federal reserve finished a meeting this week and said it would keep interest rates low until 2014. the fesd committee said the economy is expanding moderately and it sees slow global growth. that helped to push the markets up on wednesday. the dow reached an eight-month high and the nasdaq nearing a six month peak as well. a huge week for earning in technology. apple blasted expectations, surpassing estimates by 30%. netflix beat as well. yahoo was in line with estimates. among industrials, boeing beat

expectations. caterpillar crushed estimate and 3m beat as well. joining me more on the markets and investing around the world is jes staley and mary callahan erdoes. good to see you both. thank you for joining us. >> hi, maria. >> i feel like walking around davos, meeting people in panels all i hear about is the european debt crisis. this is the wild card in terms of investment community. are you worried? >> you have to have a good degree of concern. the structural challenge of the unified monetary system with a nonunified has create aed problems for europe. the political capital to help the eurozone is enormous and we shouldn't under estimate it. the european central bank as everyone has been talking about in december took a bold move and moved out a cannon to give

liquidity to financial markets across europe to buy the politicians time to address the structural challenges. so are we concerned? yes. are we worried? much less than people were a couple of months ago. >> looking at the market activity in 2011, a lot of nervousness, whether it is europe, the u.n., even china the engine of growth for the world has slowed down. what are you hearing from toward? >> it is funny when you come to davos, you can get depressed with all of the things you hear about. but this year has more optimistic tone than in years past. it is remarkable it is only january 27th and we already have over 12 mandates that are over $100 million in global emerging markets n credit, commodities. people are moving from defense to offense. >> what's the worse-case scenario if we don't see a deal for greece come march? their a huge bond payment due

march 22nd. is the date is d-day. will we see a dislocation in the market if greece defaults n your view? >> if you look at how greek paper is priced right now, default, voluntary or nonvoluntary is very much priced in to the market. the resources that are available to the european union to germany, to france are pretty significant. there's not like a drop-dead date in march. they could push this down the road for a number of months and quarters beyond that. it gets messy but i think people expect a pretty rough conclusion to what is going on in greece right now sglets move to the u.s. mary, we had data out on friday, the end of the week, america's fourth quarter gdp up 2.8%. the fed committing this last week to keeping interest rates low for an additional year through 2014. when i heard the fed say we are going to keep rates low until 2014, i thought when do you hear

the fed give a specific year they are going to keep rates. maybe things are worse than i thought in the united states. what are you seeing in the u.s.? >> that's one thought. but the reality is that providing a lot of liquidity as are the european banking system to provide for opportunities for the markets to make money. so you look at the earnings of the companies that are doing quite well and we have a chance of p.e. multiples to expand. we are seeing people put more in the equity markets and energy, technology. there's money going in to china, private equity. money in to u.s. real estate. i think people are being selective about where they can find opportunities and they are looking forward to a better 2012. >> i think it is fair to say between the european central bank and the move by the federal reserve, the world's two largest central banks have thrown down a challenge. they are adopting policies that are going to drive for growth.

they are expanding their balance sheets to historic levels to try to get there. on one level you start to ask the question you ask them what are they seeing that makes them nervous that the broader market is not seeing. there's clearly commitment to growth. they don't see inflation on the horizon so they are committed to push the economies forward. >> in terms of the risks for the year, you have to anticipate whatever it is out this. what keeps you up at night? what do you worry about in terms of the potential risks for the year? >> you worry about the banking crisis that happens in the eurozone. everyone's working very hard to make sure that's not the case. what you worry about is what you don't know. >> right. >> we spend hours stress testing our balance sheet as well as our clients' balance sheet and think we have assessed the risk but you don't know what is out this and you do your best to do that and people want to get out there and get going. >> what can we expect in terms

of business in 2012? are you seeing a robust lineup of business? >> the emerged countries are still doing pretty well from china, brazil, india. there's a lot of, the balance sheets of those countries are in good shape. there's growth there. we are seeing a lot of activity. the dialogue in the sbooits united states is robust. corporations have a lot of cash. the economy is beginning to move. we are one of the largest -- actually the largest small business lender in the united states. our loan book is at 70% over this the time last year. so, the u.s. consumer, i think, is doing better. if there is a surprise it is not for the u.s. economy this year. >> you have been talking about people wanting to look at china and emerging markets to put money to work and credit as well. where are the opportunities for toward. >> first step is credit.

there's tremendous opportunities in credit. >> that's where your get yields, right. >> that's exactly right. it depends where you want to be in the spectrum but there is a lot of opportunities and a lot in the public markets as well. many of the portfolios are up in public equity markets, hedge funds up 3, 4% and strong momentum that we hope continues thought the year. >> we will leave it there. great to have you on the program. thank you so much. mary callahan erdoes, jes staley joining us. america's banks were a prime topic of conversation this week in davos. i spoke to the ceos of three of the biggest most important financial institutions about housing, the economy and their outlook. here they are in their own words. >> the year started, i would say a little firmer. the environment feels to me like the u.s. is in a little better shape than the markets appreciated and now the markets are catching up. >> in terms of capital, are you

expecting to raising capital this year? >> i don't think we will raise capital. morgan stanley is through the damage zone. we have gained share in our core institutional businesses and look forward to moving ahead with the smith barney acquisition over time. >> we have a couple of years working through some some properties but let's start with what we try to do, modify to help people stay in their homes. we have done it a million times. when we can't do that short sale or ultimately the worst outcome is foreclosure. >> those businesses that are dear to the emerging market consumer or geared toward global trade or banking, they are doing well. it is almost as if the banking business as two segments, those that are market related and those related to the unlined growth trend. we will have to watch that. up next on the "the wall

street journal report with maria bartiromo," the european crisis and the impact on the continent and around the world. billionaire investor george soros on the changes he sees ahead. later in the program, making the most of makeup. the head of the world's second largest cosmetics company outlook on the booming business down the road. americans believe they should be in charge of their own future. how they'll live tomorrow. for more than 116 years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms. when they want. where they want. doing what they want. ameriprise.

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that's where we are at the moment, at this juncture, the euro partners have to agree on more. and from the imf point of view, we believe there should be more growth and deeper integration. >> that was international monetary fund managering director christine lagarde on the tough road ahead for the european political and business leaders. europe's financial crisis is a huge topic here in davos this week. i sat down with famed billionaire investor george soros and got his ideas on taming the turmoil in europe.

>> the european union itself actually resembles a financial bubble. you know, it's self-enforcing on the boom side and then self-enforcing on the negative side. so you had this period of integration where the leadership was pushing for further integration. and then you had a period of stagnation and after the crash of 2008, you started a period of disintegration. when angela merkel said we will guarantee the financial institutions but each country has to do it on its own, not europe wide. it has to be country by country. that was the first step in that process. it was the beginning of the euro crisis. things have gotten worse, declining economic activity which is now occurring because of the credit crunch.

it will reinforce the political disintegration and that would be fatal politically. >> how does the your row look different? who are the players? >> you will have to have more integration. you'll either have disintegration and euro falling apart, which would have catastrophic consequences and really potential meltdown, worse than you had in 2008, a real disintegration, or you have more integration. but now, it's something that is forced upon the people. it has to be something that actually inspires people. for that, you have to recapture europe as a, what i call a fantastic object, something that is desirable, that is actually

beneficial, which is it. what kind of european leadership you have will be much more important. i think it would be possible to have the president of the european commission popularly elected, without changing the statutes because you could have the parliament refuse anybody else other than a popularly-elected president. >> that would act as a real catalyst. >> that would be the beginning of a true european politics because right now all the politics are local, right. and the decisions are european. >> we haven't spoken yet about the united states. but you are right about the turmoil happening in the united states, as well. are you seeing improvement, in any way with, in the u.s.? >> i think the economy is showing considerable signs. i think for instance the glut of

cheap natural gas is making a big difference in making america, american manufacturing more competitive. you see strength in manufacturing, which is really a reversal of the trend of the last 20 years. after all, you now have had three years of adjustments. so it is beginning to settle down. >> my thanks to george soros. up next on the wall street journey report, how a cosmetic company in new york changes the women think of their faces all over the world. beauty consumers and big payoffs beauty consumers and big payoffs with the ceo of estee

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strength? >> the company has always been strong. we have 20 great brands super quality product and fantastic people but in 2011 we were able to put this excellent -- in the winds and they are coming from emerging markets, new channels, from the digital world. we have taken many costs of out of the system and reinvested the money in to more profitable growth. and the mix of this has been working well for us. >> what does this tell us about women around the world? >> first of all, women around the world are beautifully different, one from another. the companies that can understand this and serve this best will continue to win in the future. take chinese consumers are patient nate for skin care. in prestige markets, 70%, china market is about skin care. for example, very different from the u.s. or europe where fragrance is much bigger or

different from brazil where -- is a. so women are different and we try to serve the differences. >> do standard of what is beautiful differ around the world. in china you are saying they are focused on skin. what about brazil, india? tell me some of the changes. >> in china focused on skin. a chinese woman will do seven steps of skin care in a day if she can afford it. this is because the skin, the face, the face and the skin on the face are symbol of beauty, a symbol of social status, of health. there's a lot in the expression of the faces, a lot about the skin. in brazil, as you mentioned, for example, people are passionate for makeup, particularly makeup for the eye and lips. there's huge differences within the country, in india half of

the country will be lips and middle east will be about eyes and brazil about everything. so big difference. >> that's really interesting. how do you refine the shopping experience in order to meet these demands? what i'm talking about is on-line, airports, departmenting stores. do you have to change the way you market and the way you sell in the different venues? recently you started to list product prices at makeup counters, is that right? >> that's right. the big difference is that prestige cosmetics are about great quality products but also a service, service that makes the product fit the individual is the ultimate one to one marketing. in our service we educate people how to use the product and fit each product for the kind of skin and makeup habits that you have. what is changing is we are offering a ton of products and services by country to different consumers. >> what a rich history east es stee hudder has.

estee lauder founded the company and built the business and brought products to the stores and gave makeup lessons. how do you preserve the legacy of this rich history and innovating in the 21st century. >> it is about creative, entrepreneurship and values which are about always being the best. great quality. we are preserving this and bringing it to the next level. for example we will bring the best to the rest of the world and we are continuing to do this and taking the best of china, brazil, italy and france and bringing it to the rest of the world. >> what do women want what you can't market to them, anything? >> you know, women -- really anything. women are getting wealthier and wealthier around the world. it is published that women will have more available income for dollars next year because more women are working, more women graduating the university and more brilliant careers in their

lives some they are wealthier. when people ask what is your preference on how to spend the money, the answer is food, fashion, cosmetic and beauty. we are the third preferred category of a group of people have a trillion dollars more to spend. not a bad position to be. >> my thanks to fabrizio freda, ceo of estee lauder. we will look at the news that will have an impact on your money and as we takekaze a break we will look at how the stock market finished the week.

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for more on our show and our guest, go to wsjr.cnbc.com and hope you follow me on twit and google+ @maria bartiromo is the handle. we will get fourth quarter earnings reports from dow, exxon, pfizer and merck. the latest figures on personal income and spending will be out. on tuesday a look at the housing market with the price index and voters in florida go to the ballot box for the primary on tuesday. wednesday the first of february we get sales for the month of january. and the jobs report tells us the

unemployment rate and how many jobs the economy lost or gained in the last month. typically a market mover. that will do it for us for today. thank you for joining us this week. next week, a special program. the author of a news-making new book about the first family and life in the white house. each week keep it right here where wall street meets main street the. have a great weekend, everybody. i will see you next weekend.