hi everybody, welcome to "the wall street journal report." i'm maria bartiromo. it is the dog days of summer for the markets, but our investors and businesses are waiting for the u.s. economy to come off the fiscal cliff. what the waiting games mean for your money. the best ideas in the world are locked in people's head. >> i go inside the person who wants to take on your ideas for the world's biggest companies. and the clock is ticking before school, the retailers are reaching out. is it enough to get parents to spend? "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, in spite of a sleepy summer season,

the u.s. stock market had the strongest rally of the month on signs that the broader economy may be improving. retail sales rose in july, the largest in a month, consumers spending more than 400 billion. among the retailers reporting earnings, home depot, macy's and target, all beating expectationings. walmart, however, included a warning in the release that american consumers are buying less and buying closer to need. germany said they're doing everything they can to maintain the euro, the remarks sent the european markets higher, putting the dow at the best number in four years, in spite of the low volume of august trading. and a status update, social network facebook reaching new lows this week as investors were free to off load their stakes, facebook is off from the debut. and changing the way we

watch television, there is speculation they're looking at consumer talk box for live con at the particular time. the stock of the nearly 600 billion company reached new highs this week. and expectations high that the federal reserve will announce new stimulus at the meeting this week. this week, they expressed being skeptical, they told print reporters that the fed can only do so much to have a sustainsed impact on unemployment. i spoke to the dow expert richard fisher. >> i don't believe any amount of stimulus will deal with this uncertainty and inability of companies to budget and plan. the real issue is asking congress, republicans and democrats to get their act together. the business community can't plan for future, you know that businesses plan on a three-year plus budget cycle, even quick

fixes to the fiscal cliff have an economic effect. >> so how does the market respond to this? david sowerby is the market sales expert, good to have you on the show. you heard richard fisher, talking about the fiscal cliff, the end of year tax cuts expiring and the mandatory cuts from the debt ceiling fight go into effect. what is the danger of this waiting game? to employees, investors and consumers, how do you think it plays out? >> i think the dallas fed president's comments were spot on, that the fed can't do it alone. nevertheless, in the absence of any fiscal remedy in the near term, the fed will have to continue to do it alone. they will have to provide morely liquidity to easing the economy, because right now they are the only game in town. ultimately that has proven positive to stock prices because that money that the fed has put

into the economic system has found its way into higher prices for stock prices as well as more speculative bonds. and that is probably going to continue. the market is still looking attractive to me over the long-term. perhaps it has gotten a bit ahead of itself in the long-term, but the fed will have to ease more and make an announcement between now and the election. >> but what is the impact, david? when you think about the fact that interest rates are already at rock bottom levels, i know you expect another round of easing from the fed, but will it actually have an impact and move the needle on unemployment? >> it will have an impact, modestly, the first major easing after the financial crisis in late 2008 had the biggest impact. quantative easing will have less of an impact, banks are lending more, slowly, and that will find

its way into better economic activity. >> but do you think we're getting ahead of ourselves? the fundamental story of the economy really has not changed. we have not seen a real change to the european crisis. so where are we in this economy? in your view? what should we are cautious about and optimistic about? >> we should be very cautious, the fact that europe is in a recession and will continue to be weaker than expected because they're just simply not getting it right for their long-term solution. china, becoming a slow gross profit environment will probably slow more, probably more than what the u.s. expects. the u.s. is the only bright economy, and growing at half a percent adjusted. so there is still some challenges with respect to the economy. what is positive, i look at the micro basis and the individual companies that are generating very good profitability, putting

that into perspective of the viewers, above the long-term averages. net profit margins are at peak levels with cash flows expanding, that is where i get more optimistic. >> and also the corporations you are talking about are sitting on big amounts of cash, so they have the wiggle room but are not moving that money right now. i guess uncertainty ahead of the election. do you think money starts to be loosened in terms of putting b jobs on the payroll and putting jobs into arraigned arnd, and r >> if you're the ceo and you control the purse strings of your company. and you're looking at january one, the prospect of 600-700 billion tax increase because of the expiration of the tax cuts, the extensions, to name just a few, then you're uncertain.

particularly in my home state of michigan when it comes to the impact on the motor vehicle sales. that leads the cfo and the ceo to be cautious with the ample amount of cash they have on their balance sheets. i think they will spend, because the cost of borrowing remains quite low. but with regard to future hiring and a stubborn low 8% unemployment rate, that will stay at that level, i think into 2013. it is going to be slow in its recovery. >> well, you're based in that politically important state in michigan, the politically environment weighing of course heavily on the economy and vice versa. how do you think the selection of paul ryan plays out on governor romney's ticket? is that playing well in the regional economies in the country? >> i think it frames the debate that this election will squarely be on fiscal issues, on tax policy -- that is going to be so important. and to bring it home to stock

investors. i have looked since the mid-'60s. years after tax increases, stock prices grow 5% below their long-term potential years after tax cuts, stock prices grow above their long-term potential, between 4 and 5%. if we have the prospects that this 6-700 billion dollar fiscal cliff is not solved in some form by january one, then you will have tougher sledding for stock prices and the economy in 2013. >> all right, we'll leave it there, david, great to have you on the show, we'll see you soon, david sowerby, joining us. up next, how a former high schooler turned an idea into a spring board for thousands of investors. i went home and convinced my parents to re-mortgage their house to let me start my first company. and where kids are spending,

as fall approaches. we'll be right back in a moment. [ male announcer ] at scottrade, you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying... [ all ] i'm with scottrade.

welcome back, did you ever see a product on a store shelf and think i could have thought of that? turning your idea into big business may be the big thing in industry. i visited with one company with a high tech way to solve low tech problems. proving that the crowd is king in start-up nation. >> the best ideas in the world are locked in people's heads, we developed a company where everybody with great ideas doesn't have to bring about the realities of bringing them to life. >> if somebody has an idea, a light bulb moment, how do you get involved? and what is the process? >> it starts with the question, what problem are you solving? every great product in the world starts with a great problem. >> from cords to kitchen spatulas, starting up with ben kaufman, as an entrepreneur, he

taps the wisdom of the crowd. >> we wanted to develop a new consumer product every single week. so immediately, we had inventors and people with ideas right away. they come up with the best ideas on a weekly basis, and those ideas moved through the product development process. the best of the best wind up on retail shelves all over the world. >> we have the quirky inventor. >> and the revenue goes back to the community of inventors and creative people who helped us come up with the ideas. >> so many people are trying to harness the crowd and the social media, how do you did that? >> the community helped us every step of the process, choosing the names, the type of product. then when you post your idea on quirky, of course you tell your family to go vote for it. every time you buy a unit off the shelves, a,000 people get

paid. >> so what are the most successful products that you can think of. >> one product we love is the pivot power, it was submitted by a student from milwaukee, wisconsin, who needed to create a power strip. we sold close to a million units of it. jake is going to be making probably 4 or $5,000 this year. >> since 2009, quirky's community has developed more than 200 products, available at consumer retailers. what work is done right here in this lab? >> we're doing everything from design, to packaging, photo shoots, everything it takes to bring a product from stores. >> i guess every inventor gets the bug early on, you're 25 years old? >> i am. >> tell me about when you started your first company, it was in high school?

>> it was, i was in math class, trying to figure out a way to listen to my ipod instead of my teacher, so i went ahead and made a product out of ribbon and gift wrap and convinced my parents to re-mortgage their house to let me start my first company. which they did, everybody has ideas on products, the idea of bringing it so life is very complex. i thought all i needed aways the second mortgage -- needed was the second mortgage from my parents. but in reality, i needed to learn all the different steps that just kills ideas. and that is why the products you see on the shelves, the most major retailers are not the best ideas in tell world, just the best ideas from a company that has the shelf space. i think our model is most disruptive to a company like proctor and gamble, they said we have not created anything new or meaningful in quite sometime. and that is funny, because we

create those every single week. >> tell me about the idea, how it got from a college student to stores. >> hi, my name is jennifer, i am hoping that these milk crates and two other additions. >> i thought what if we added on features to let people make it modular, make it something that they want themselves. >> and this is a gateway, this is a seat, with the seat accessory, plus, metal casters, you can put drawers there, and accessories on the side. >> so where does this lead? what do you think you will do with this? how do you see your business evolving? >> as a business investor, i think the design of quirky and the design in general will change to a more collaborating

approach. >> reinventing the milk crate was actually a huge opportunity. >> so what is the biggest challenge for you being a 20-something-year-old executive? does it every intimidate you? >> no, a little overwhelming, every now and then. we're pretty old school business and make physical goods that you can hold in your hand and drop on your foot. that is different, and more complex than creating a website or a mobile app. >> entrepreneurs are pretty important to the economy? >> creating, the innovativeness, all that comes out of people that don't have the hesitation that big companies have. >> my thanks to ben kaufman, of quirky.com. and looking at back-to-school shopping, how you can find the best prices and what stores are looking at. as we take a break we'll look at the stock market at the end of the week.

abigail higgins had... ...a tree that bore the most rare and magical fruit. which provided for their every financial need. and then, in one blinding blink of an eye, their tree had given its last. but with their raymond james financial advisor, they had prepared for even the unthinkable. and they danced.

see what a raymond james advisor can do for you. [ male announcer ] to hold a patent that has changed the modern world... would define you as an innovator. to hold more than one patent of this caliber... would define you as a true leader. to hold over 80,000... well, that would make you... the creators of the 2012 mercedes-benz e-class... quite possibly the most advanced luxury sedan ever. ♪ join mercedes-benz usa on facebook for the best summer sweepstakes. welcome back, by age 17, the average child has outgrown 1300 articles of clothing, at a cost of some $14,000. at that rate, we're looking at

the back-to-school shopping, joining me, daniel kulle, h&m north america president. jason, last weekend, i want to ask you about this, the teen vogue branded the back-to-school shopping a national holiday, tell me about it. >> we declared it a back-to-school saturday, a first ever holiday, where we got people to get out to shop for the best of fashion and beauty, great day. >> and do you think it is big enough? like a consumer experience to make it similar to a black friday? >> that is our goal, long-term, we created this day with that in mind, three out of five years, becoming a black friday, a cyber monday, part of the indicator of how the economy is doing in the back-to-school season. >> daniel, how is it doing? was it a success? >> really good, we really loved the initiative on teen vogue. we had a lot of shoppers for back to school, the season started out very well. >> how important is back to

school for you? >> really important, the big ba basis teenagers, and so the kick-off coming up here in august, it is an important month for back-to-school customers. >> what do you hear from the clients, jason, what they're looking for? what they may want to buy this season? >> the consumers want value, and an experience in the store. they need a reason to shop right now, because the economy is really in a slow pace, that is why we created the holiday experience. >> so how does the teenager shopper fit into your customer base? >> they, overall, it is a fashion quality at the best price, serving the babies all the way to the grandmothers. and teenagers, it is a very important one, they show the trends, speak out in the streets, telling where to shop. and they have the current fashion every day. >> jason, technology has changed

things, social media has changed the way people shop. >> yes, this has so much influence, you have kids that go to the store, they buy something. when they buy it into their social network, whether it is pintarest, because of social media and because of their emotional phone which they have glued to their head everywhere they go. >> that is amazing, the mobile trend. >> that is true, they text people, for dresses and coupons and discounts on the fly. they're tweeting what they buy after they make the purchase. it is pretty phenomenal. >> have you changed the way you operate because of this huge social media situation? >> sure it is important that the brand for the teens become relevant, the products need to become relevant, and push fashion advice and beauty to her on her mobile phone while she is there for her shopping experience. >> i guess the same is true for you, daniel, have you made

changes in terms of social media and how the things have changed? >> that is right, we see where we have increased our resources, especially the focus on the social media. we see the customers around there and try to inter act with them, telling the customers in the stores, what do you think about our quality, and fashion? so this is a very good way to be hands-on with the customers directly. >> what about the growth for h&m north america? what are the plans. >> the plans are, we have 250 stores at the moment, heading for another 35 stores this year. and we see we have a very strong growth in our stores and also the newer stores we open up. and the newer markets. and of course, we are very happy to finally be going to florida and texas, where we have our stores. and they are very strong states so we see a huge potential of growth down there. >> what do you see for 2013?

>> very dgood, if we continue te brand, h&m north america is growing in america, and of course we can sell more to the economy. >> it is such an important segment to the economy, for you both. thank you for being here, thank you, daniel kulle and jason wagenheim. and did you know that technology has not changed since 1975? the world's richest man is flushing the world for bathrooms, stay with us. sweet! [ male announcer ] the solid thunk of the door on the volkswagen jetta. thanks, mister! [ meow ] it's quality you can hear and feel. that's the power of german engineering. right now during the autobahn for all event get great deals

on a 2012 jetta. get great deals i've been fortunate to win on golf's biggest stages.on. but when joint pain and stiffness from psoriatic arthritis hit, even the smallest things became difficult. i finally understood what serious joint pain is like. i talked to my rheumatologist and he prescribed enbrel. enbrel can help relieve pain, stiffness, and stop joint damage. because enbrel, etanercept, suppresses your immune system, it may lower your ability to fight infections. serious, sometimes fatal events including infections, tuberculosis, lymphoma, other cancers, and nervous system and blood disorders have occurred. before starting enbrel, your doctor should test you for tuberculosis and discuss whether you've been to a region where certain fungal infections are common. don't start enbrel if you have an infection like the flu. tell your doctor if you're prone to infections, have cuts or sores, have had hepatitis b, have been treated for heart failure, or if, while on enbrel, you experience persistent fever, bruising, bleeding, or paleness. [ phil ] get back to the things that matter most. ask your rheumatologist if enbrel is right for you. [ doctor ] enbrel, the number one biologic medicine

prescribed by rheumatologists.

skepti . for more on our show and our guests, check out the website, wsjr, and look for me at maria bartiromo on twitter. and moving the markets and impacting your money. on wednesday, we get the minutes from the last federal reserve's open market committee. also out that day, existing home sales for the last month on wednesday. on thursday we get new home sales from the nation's realtors, and on thursday, they are looking at the usda situation, due to the drought. meanwhile, bill gates has his eye on a new machine. the toilets. this week, their foundation awarded a prize to the california institute of technology for building a

solar-powered commode. more than a billion people don't use toilets, leading to significant issues. they produced a waterless toilet for those parts of the globe. and who knew that flushing money into toilets may be just what the world needed. thank you for joining us, next week, we have columnist frank rich. each week, keep it here, where wall street