we'll see you again next time. for more information about today's show, log on to our website inwinecountry.com. hi, everybody, welcome to "the wall street journal report." i'm maria bartiromo. the quarter comes to a close, the year off on to a powerful start. what's next for the markets and the economy? he is one of the most widely read and followed predictors of interest rates. my conversation with jim grant of grant interest rate observer. we talk gold, the fed, and the recovery. what's cooking with one of america's most successful chefs and restaurateurs? find out how he's giving back to those in need. "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. >> hi, everybody. i'm bill griffith. maria will be along in a few minutes with the rest of the program. first here's a look at what is making news.

as we head into a new week on wall street. fed chairman ben bernanke left the door open for more monetary easing this week. speaking in a conference in virginia he said the fed needs to remain cautious in deciding its next move and the economy still needs more help to encourage job growth. >> i don't want to deny that we've certainly seen some recent positive developments and what we're hoping for is whether or not those positive developments are sustained and whether they lead to a self-sustaining recovery going forward. >> well, that bernanke bounce pushed the dow higher on monday. in fact is it was up 160, its best gain in nearly two weeks. the markets then fell through mid-week. by friday the markets closed down. here's a look how the major arms finished the first three months of the year, the best first quarter since 1998.

best buy announced it will close 50 of its big box stores this year, test new store for t formats and lay off workers. the company dominated electronics retailing for much of the last decade but faces severe competition from online sellers. the markets were on fire this first quarter of the year. is there still more gas in that tank? for stocks? or is it too late to get in for the retail investors? joining us, jim paulson, chief investment stranlg gist at wells investment capital. welcome back. a remarkable first quarter for stocks, the best since 1998 for some market averages. do you think this run continues into the second quarter? >> i think it will. i think we're going to get a correction at some point. one thing to keep in mind is the market's come up a lot but it went down a lot last year. in a big way the first reverse was about a reversal of the decline last year that was based on two unfounded fears about an

imminent u.s. recession and about europe blowing the world up that proved unfounded. we came back to where we were. i don't know if the market is as overextended as we think based on how far it's come up in the first quarter. i still like the relatively modest valuation that we have, the relatively low interest rate hurdle, the excess liquidity out there, the underownership by a lot of investors. i think there's 84 upside potential through the year. >> first quarter earnings coming out the next few weeks, those who feel expectations door high, what do you think? >> well, i think earnings are going to grow, just modestly this year, probably in the 5% range. i also think that probably expectations are a little bit high. but i'm not sure the driving force will be earnings this year. i think it's going to be more about this valuation risings on earnings we already have. we started the year about 13

times earnings, now a little over 14, i think we might rise to 15 times earnings on a little over $100 earnings, a $1,500 price target. >> retail investor, evidence suggests they are not in this market participating right now. volume has been low, the lowest in about a decade. why do you think that is? where are they investing? and is it too late to get into the stock market for them? >> i think it's testament to the great 2008 crisis that has left a legacy of fear. and even though the stock market since march 9, 2009 lows is up over 125% total return you haven't convinced investors the water's safe. i think that's the reason you should be bullish about the future is that there's so many investors that have yet come into this rally. if we get up towards the old record highs, which is 1569 in the s&p, i think you're going to get a lot of people starting to think, am i missing out?

they could bring portfolio shifts back to the market. you're right, i don't think that's happened yet but i think before we end this market cycle you're going to see more retail involvement. >> it's a matter of confidence. >> right. >> there's a lack of confidence i guess in the economy. it's so important right now, isn't it. >> yeah, i think confidence has been our biggest issue in 2008, '09, recent years. it's probably our biggest asset now for the future. you know, if we could just raise confidence, we can get people to spend some of the dry powder they've been holding for a rainy day. it's not like we have to create the dry powder, it's there. we have to convince them it's okay. i think that's going to happen the next few years, a slow but steady rise in confidence. >> one of the biggest roadblocks to a higher confidence level is for example energy costs. gasoline prices as we know are continuing to go higher here. do you see that continuing? how big a factor is that going forward? >> if it continues, bill, it will become a bigger issue, i

think. i think where we are now, we can handle this. in part because the last couple times we had big spikes at the pump, in 2010 and '11, they were also associated with big spikes in mortgage rates. the slow-down in money supply growth. today, mortgage rates have stayed very low, money supply's growing at 10%, but we have higher gas prices. i think we'll be able to handle where we are now. but if it continues to roll ahead that could be an important issue later in the year. >> as we know, fed chairman bernanke this week reassured investors and consumers that quantitative easing was here to stay for the foreseeable future. they're going to keep rates low. should we be comforted by that or should we worry he knows something about the economy that we don't right now? >> i don't know. i don't understand what the fed's looking at, bill. i see job creation, the fastest it's been in this recovery. auto sales the highest level they've been, retail the best

they've done, confidence breaking out new highs. then a federal reserve which is still practicing and employing crisis-like policies. this is an economy that's no longer in crisis, but we have a federal reserve that still has a crisis mindset holding rates at zero. i think the fed needs to move itself away from crisis mindset closer reflecting the maturation of this cycle from crisis to a recovery and start moving away from those policies. >> let's make this meaningful to the average investor. in your view, how should they be allocating their assets to grow their money the best way? >> i'd still be overweighted stocks. you might have to live through a 5% to 10% pull-back. i think trying to call that is very risky and you probably won't get it right. i think the long-term for stocks is still good. you should be overweight there. wind the stock market right now, i'd look at being more psych

psychicalpsychic cyclically tied to the economy. lighten up on tech stocks, everyone likes them so well. lighten up on consumer cyclical stocks. maybe look at buying industrials or materials which haven't done so well of late. put capital to work in emerging markets which has gone out of favors. >> thanks for being with us. back to maria for the rest of the show. up next on "the wall street journal report," a man who has not been bernanke's biggest fan. jim grant of grant's interest rate observer. the sweet taste of success. the chef and restaurateur daniel bellow. >> what kind of a boss are you? are you a tough boss? >> i'm getting nicer and nicer. ♪ why do you whisper, green grass? ♪ ♪ why tell the trees what ain't so? ♪ [ all ] shh! ♪ whispering grass

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welcome back. jim grant used to say the latest thought provoking. he authors "grant's interest rate observer" and has strong opinions on the dollar and the

federal reserve. i spoke with him about going for the gold. >> the fed has an atlas complex. it thinks that unless it gets up in the morning and tells us all what to do in finance, somehow the world will stop spinning. the fed was instituted years and years ago, almost 100 years ago, as a central bank. it would tend to a very mundane set of duties having to do with banks that needed cash and had good assets and the fed would exchange its cash temporarily for good assets. but nothing about telling us what to do. and the fed has alighted into this business away from central planning, not central banking. it does this by manipulating interest rates. >> once again this week we heard ben bernanke say they're going to keep interest rates at low levels until 2014. i guess because of that the

market rallies. >> the way the fed operates is it materializes -- this is incredible. it's true. it materializes dollar bills from thin air, or more literally, from the keyboard of a computer. the fed decides that the world would be better off with $100 billion more. time was in the distant past, the government would have to go out and actually crank the press and print this money from a paper stand. now thanks to digital technology the fed and its counterparts around the world can materialize this money effortlessly. >> the average investor is watching lots of mixed signal. but still looking at the first quarter ending as the best quarter since 1998. so what's the big risk to the average american retail investor or even a consumer from the central bank policies? >> one big risk is the possibility of a serious inflation on account of the

aforementioned money printing. another big risk is that we all kind of collectively take the fed's bait. the fed wants us to help the economy by buying stocks, by buying real estate, by buying spafl. the fed wants us to become adventurous in finance. there's something actually to be said for some of those classes of investment assets. a lot of common stocks that based upon earnings, corporate profits, based upon global interest rates, are kind of okay and more than okay in many cases. the stock market as measured in conventional ways is rather appealing. certainly it's commandingly appealing next to the government bonds that we are offered. the proposition you are given as a bond investor is to accept 2% for 10 years, or 30 years -- 2% for 10 years, a little more for 30 years, when the rate of inflation is higher than the yields on offer.

the characteristic of this era in finance is a central bank that cannot stop meddling, cannot stop printing, cannot stop manipulating. >> let me ask you about gold. seems to be setting records. yet it adjusted for inflation, the numbers are not at impressive. why are you such a fan of gold? >> gold is an alternative to our present-day monetary arrangements. if you can imagine its price as being kind of the mirror image of the world's faith in such people as ben bernanke or fed guy or the people that run central banks the world over. so if you don't trust the money conjuring of the central banks you kind of migrate i think sensetively to gold, which is the age-old legacy monetary asset. it's what money was before they invented the printing press. >> i was intrigued by something you said earlier, about catalysts for the markets. last week, of course, the supreme court heard oral arguments for the health care

legislation. you said if the legislation gets overturned that would be a positive. >> this gets into subjective views of politics, of course. by way of preface and full disclosure, i am a democrat, libertarian, i am a believer in markets, i believe in the price mechanism. i believe that statism, which is the order of the day under this administration and under this fed, statism is a bane and a curse and to the extent it is rolled back through the supreme court decision or through the november elections it is hugely bullish for america and american markets. >> it might strike people as retro. how's the newsletter business going in this new digital age? >> for us it's terrific. our conference sells out twice a year. we do deliver, what do they call, online? i have been impugned as a kind

of a backsliding ancient with technology. it's true a little bit. but only a little bit. i happen to own an ipad. yes. >> come on. >> our business is great, thank you. >> my thanks to james grant. up next on "the wall street journal report," one of the most successful restaurant owners in the world lets me into the heart of his operation and his operation's heart. daniel ba lieu on diners across income brackets. first a look at how the stock market ended the week.

$125 dinners may earn you a reputation among the top 1% but daniel boulud, the french chef who owns elegant restaurants around the world balances his love of food with a unique commitment to his neighborhood. i got a taste of it all compliments of the chef. >> here we're preparing a dish dib of abalone. i wanted to make sure that everyone who loved cooking and had the passion remembered me for what i've done. >> it's just a love of the food? >> yes, very much. that's been a long love affair.

>> ban yedaniel boulud is home daniel's and six additional eateries in a growing empire. >> i learned cooking in lyon, born on a farm. >> was this always your plan, your vision for yourself? >> no. >> how did this happen? >> my plan was to go back home 25 years ago. >> what changed that? >> i fell into -- i fell in love with new york very early. and i said, well, if i stay here i better do well. >> in an office he calls the sky box he oversees his personal brand, a french-inspired food, cookbooks and catering business. his company runs restaurants in six cities around the globe. menus range from the $125 fixed price at daniel's to burgers and beers. how important is it for you to come up with different price points, a real diversity in terms of the scope of the restaurants? >> i think it's also about

expectations. daniel of course grew to become what it is today. it was a neighborhood restaurant. and from the neighborhood it grew to a city restaurant, to a national restaurant. and as i opened my other restaurant i kind of shared a little bit more that sort of passion for french soul food. >> how do you maintain cost efficiencies in the kitchen? are there rules that you have to stick by in terms of ensuring that expenses are not getting out of control? >> exactly, but what's the most important is that we can afford to sell it at the right price. meaning at the right price, at its price. we don't want to try to buy cheaper in order to try to be financially safer. we want the customer to feel that it's going to be the best. >> after building a reputation as one of the best in new york he expanded in the late '90s and discovered neighbors he could feed who might never make it into his dining room.

>> when i closed daniel on 76th street i wanted to do a closing party. i felt it would be good to give to it a charity who will do something good for the city. when i reopened daniel here, i wanted to do be a opening party again. and since then it's becoming an annual gala. >> $2,000. $3,000. $4,000. >> last weekend's the five-course benefit dinner raised $500,000. >> $25,000. >> he raised millions. where does that money go? >> the fund contributes to serving a warm meal at home to elderly new yorkers. to me, the elderly new yorker is the one who built new york, is the one who made new york what it is today.

i think many of them don't have family. they are a little bit isolated. so this daily meal delivered to them, this daily person coming to them to bring their meal, is kind of their family in a way. ricardo is going to be the chef. this preparation of lamb. >> spectacular. >> i think i could even take more garlic into that dish. >> and he treated me to a working lunch, tasting and refining dishes that will soon be on menus in montreal's ritz carlson. >> french cuisine, at the end it's always about the soul. >> you said you grew up on a farm in lyon. what did you learn about your career back then? >> i mean, i knew one thing, i didn't want to work on the farm. maybe because i was allergic to hay, allergic to a few things. we were always cooking for big tables at home. and my grandmother was always a

chef, stirring the pot all day. and i always enjoyed spending more time with her in the kitchen than on the field. >> we did add some garlic. a little bit more flavor. >> yeah, good flavor. >> what kind of a boss are you? are you a tough boss? >> i'm getting nicer and nicer. >> why? >> i mean, at the beginning i was just -- not by myself but everyone was struggling hard to try to make it. and i think today i feel more secure but never secure enough to believe that i should not worry about anything or not, you know, keep motivating my staff. >> there are great chefs and there are great businesspeople. you are both. >> being a great businessman, i think it's like in the kitchen. you have to surround yourself with talented people you trust, and they are also talented in their own field. so i can stay here, daniel, and stay in the kitchen as much as

possible. >> my thanks to chef daniel boulud. up next on "the wall street journal report," a look at the news this upcoming week that will have an impacact your mone. find us on facebook. create jobs in america. oil sands projects, like kearl, and the keystone pipeline will provide secure and reliable energy to the united states. over the coming years, projects like these could create more than half a million jobs in the us alone. from the canadian border, through the mid west, to the gulf coast. benefiting hundreds of thousands of families throughout the country. this is just what our economy needs right now. ♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional

to help you take charge. ♪

for more on our show and our guests wsj.cnbc.com. follow me on twitter and google, look for the handle@maria bartirobart row. >> monday we get a look at

activity in the manufacturing sector with the latest report from the institute for supply management. tuesday, motor vehicle sales will be out. that's for the month of march. as for the minutes from the latest meeting of the federal reserve's open market committee. on friday, the government releases the latest employment report with the total number of jobs the economy lost or gained in the last month. typically a market mover. the market will be closed that day in observance of good friday. keep it right here where wall street meets main street. have a great week, i'll see you again next weekend.

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