become to "the wall street journal report." i'm maria bartiromo. earnings helped juice the market but are there worries ahead? should the federal reserve raise the rates? i'll talk to one of the smartest guys in the room. myconversation with the new ceo of johnn & johnson. what's your plan to turn around that reputational risk? the challenges and the road ahead for alex gore ski. a grammy award winning musician on inspiring new innovators. "the wall strereet jouournal re" begins rightht now. >> this is america's number one financial news program. "the wall street journal report." now, maria bartiromo. >> take a look at what's making

news as we head into a new week on wall street. an important measure of the size and strength of america's econy is out leased on friday. the first read of the gross domestic product was a disappointing one, though. it showed an annualize the growth rate of 2.25% for the first quarter, slightly below expectations, also down from the fourth quarter's 3% growth. business inventories were down, consumer spending was up. america's most value company blew past earnings expectations on tuesday. apple posted a brought of $11.6 billion in the first quarter. it sold 35 million iphones and nearly 12 million ipads. that september the stock soaring back about $600 a share wednesday. adding some $40 billion in market value in one day. pretty sweet. the nasdaq as a result climbed on the news having the best day on the year and its biggest gain in four months. with a more than 2% increase in nasdaq. the dow spiked rising another 100 points on thursday.

but apple wasn't the only earnings news. among dustrial companies, 3m beat estimates as did united technologies, boeing and caterpillar. another indication the internet is hot. amazon.com smashed through estimates doing very well. exxonmobil missed as did u.p.s. is there a disconnect between the strength of corporate america and the strength of the u.s. economy? one doing well, another not so much. mohammad el aryan, ceo of pimco. thank you so much for being here. what do you think about that? we got the gdp friday, up 2.2% on an annualized basis, slightly disappointing. were you surprised by it? what does it tell us about the economy right here? >> i think it tells us a couple things. first, it tells us we are nowhere near escape velocity. so we. hoping consensus was 2.5%, it came below th. it's simply not fast enough for

a robust recovery. but it's also told us that the comp cyst sister has worsened. if you see what the engine was, maria, it was personal consumption. personal consumption went up not on the basis of income, but on the basis of savings less. the savingsdown from 5.5 to 3.9. bottom line, it's not fast enough. and the engine that's driving us is not a sustainable engine. we need more business investment. that's absolutely key. >> and of course, we need that business investment, and yet we're looking at a pretty strong earnings season so far, right? what are your expectations for the rest of the earnings season, and what do you make of the strength of corporate america right now? >> so corporate america is as strong as we've ever seen it. and by here, i'm referring to the big companies. they have massive cash reserves on the balance sheets that turn down the debt, that contained costs, and they're selling to the most dynamic parts of the world. what corporate america needs to

do is withstand the head winds that are coming from the economy here, and of course from europe. so it's a tug of war. and that explains why the market sometimes is a risk on, and another day have a risk off mode. >> i want to a ask you about europe. because this is really, once again, a problem for investors. i feel like the last time we spoke, we were about the european central bank's lending facility, that the ecb's action took the negative urgency of liquidity off the table for the european banks. yet now we see rates moving higher in spain, wewe see an election in france which may go towards socialism, and perhaps impact the whole eurozone economy. has europe once again become a problem for the global economy? >> yes. the central banks, it's the ecb or the fed, the most they can do is build a bridge. but it has to be a bridge to somewhere. so the ecb came in very

aggressively under what's called the ltro, the long-term refinancing operations, and it imposed tranquility. but it's temporary tron quillty. what europe needs to do is deal with the fundamental issues of too little growth and too much debt. and these are complicated. and until they do, we're going to have these recurrenent conces about europe. and let's not forget, last week we also saw a two-notch downgrade in spain which indicates that the rating agencies are remaining very worried about this. >> it's interesting because when you look at what canada did last year, they basically moved the retirement age up from 65 to 67. and t they said, nobody who's about to receive social security is iimpacted. this is not going to impact people for 20 years. but in doing that, even though they're not taking action right away, they got the buy-in from the people. and they inspired confidence by making the people believe that they're actually doing something about their debt. this country has yet to do that.

>> that's correct. you're absolutely right in the sense that we have strategic choices to make. and they're not that hard to make, guys, just get moving. the problem is that we are stuck in a tactical mode. our political system has become very short-term so they're not even willing to look beyond and do the strategically important things. canada was able to dit, germany was able to do a few years ago. and hopefully after november, we will be ablele to do it too. >> this is the issue. let me ask you about the federal reserve. the fed of course last week leaving interest rates unchanged at near zero during their meeting. some are saying it's time to normalize ratetes, start raisin rates even, given that we are seeing better economic data. are you in that camp? how do you feel about the fed action? >> so if we lived in a perfect world, and we're not. but if we lived in a perfect world, we would be getting very nervous about the fed artificially keeping interest rates low. there's a lot of collateral

damage and unintended consequences associated with this. the fed would be allowed to normalize interest rates because, and this is critical, because other government entities were doing what they were supposed to be doing. and that's about the reform of education, labor retraining, public finances, lots of things. housing. lots of things we need to do. so in a sure world the fed should start normalizing rates because other agencies are stepping in. when we go to assured to what's likely to happen, what's likely to happen is that the other entities are going to stay on th sideline, they're not going to do what they're supposed to do, and as a result the fed has no choice but to remain in this very activist mode thatt has unfortunately both costs and risks as well as benefits. >> all right. how do you want to invest in this vironment, then, given all of this? what should investors be thinking about right now? even the retail investor who has not exactly embraced equities,

what should they be doioing? >> don't get fooled by adlines. this is not all-in, all-out. this is a rld where you want to be very differentiated. because we have strong companies, because we have strong sovereigns, this is a time to be very selective. so look for companies, look for managers that stress the following. first and foremost, cash buffers. cash is very important in this market, especially for companies and for sovereign. second, high operating margins. third, low financicial leverage. and fourth, exposure to the most dynamic parts of the world. there are comes that offer that, there are many sovereignats tha offer that, and the important thing is to be very selective at that stage. >> always great to have you on the program, we appreciate your time today. >> thank you, maria. >> mohammad el aria joining us from pimco.

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welcome back. the new ceo of johnson & johnsn says he'll improve the health care giant's public image. j and j's been on a rough ride with huge recalls of tylenol and other medicines which have impacted the company's reputation and share price. i spoke to the new chief executive alex goreski about his plan for the first day and on the job. >> over the last couple of years wewe've had our challenges. and all of us are disappointed. and at the same time, we're all absolutely committed. and i take personal

responsibility and accountability as i do i think all e employees of johnson & johnson for getting things right. first and foremost we've got to address the operational issues with our over-the-counter consumer brands. we've taken n a number of steps er thehe last 18 months over, how are we designed as an organizazation? what kind of plans and processes do we use with quality, with manufacturing? for example we've returned the tylenol severe cold, tylenol nus, tylenol children to the marketplace. we're working closely with the fda as well as our outside partner quantec. what we've seen when is we get products back on the shelf, customers are really demanding them. i think there's a lot of opportunities for us to be very optimistic about. for example, our pharmaceutical area, over the last five years we've probably had more new innovative brands launched than just about any other major pharmaceutical companies. products like zytega for

prostate cancer. ananother product that's recent launched is zyrelto in our cardiovascular area. we're working on key coronary syndrome. we're expanding on the hiv platform. >> the medical device business more than any other business is closely tied to economics. so when things went down in 2008, you really saw a sharp impact on that business. how's it going? >> it is unique that over the last few years, particularly with the significant macro economic issues anand the econoc downturn, i think we have some pretty good insights into what's happening with utilization. and for the first time since we've been tracking data, we actually saw elasticity in demand relative to what was going on with the economy. but whether you looked at hips, knees, sports medicine, all the aesthetics particularly, anything where there was an elective nature to the procedure, or people could de r

defer, delay procedures, due to not being insured, being unemployed, being concerned about the environment, we saw a drop in those procedures. >> even though they're in incredible pain and they have to get a hip replacement, a knee replacement, they don't have the money, they don't want to be out of work, et cetera. >> the operative point is they're probably delaying it from happening. because eventually, they're going to have to have that procedure. so what we're seeing is that's a dynamic that clearly the medical device and technology field has been dealing with the last couple of years. we see a difference. that tends to be more in the development markets. the developing markets of brazil, russia, india, china, you're seeing growth rates three or four times the rates you're seeing in developed markets. so we think over the long-term, maria, just because of demographics and the surge we're going to see in the united states, japan, western europe, in the aging population, and we all know we consume about fivee

to seven times more health care once we turn 65 than we do before we're age 65, there will be increased demand. it may have been delayed but that we'll represent a significant opportunity for us going forward. >> let me ask you from an investment standpoint, you've got investors watching and they want to know whether or not they should bee supporting the stock buying the stock. what are you goingto do for shareholders in the next two yeyears? what should they expect? >> i think the most important thing i can do is not necessarily focus on the stock pric but 's abouteally focusing on what can i do to drive innovation? >> that leads to growth. >> absolutely. the other area is globalization. wewe're really focused on, whil 55% of our sales come from outside the united states in about 60 different countries, what can we do to drive that to an even greater degree? particular whennou think about the people who have been brought out of poverty in china, now around 300 million, dblingg over the next 15 years.

that's a brand new market almost the size of the united states. >> my thanks to alex goreski. up nex grammy winning musician john lelegend musician john lelegend how a new genation of sadly, no. oh. but i did pick up your dry cleaning and had your shoeshined. well, i made you a reservation at the sushi plplace around the corner. well, in that case, i better get back to these invoices... which i'll do right after making your favorite pancakes. you know what?t? i'm going to tidy up your s side of the office. i can't hear you because i'm also making you a smoothie. [ male announcer ] marriott hotels & resorts knows it's better for xerox to automate their global invoice process so they can focus on serving their customs. with xerox, you're r ready for real business. ♪ there'll be the usual presentations on resesearch. and development. some new members of the team will be introduced. the chaiairman emeritus will distribute his usual wisdom.

and you? well, you're the chiefef life offic. you just need the ght professional to help you take chaharge. ♪

music and matath goand in hand in a lot of ways. ♪ won't you say, say >> i was a math geek, loved

chemistry. evenen now, runningng my own organization and looking at tht business side of things, think the analytical skills i learned from math and science classes are still helpful to me now. we've got to make sure that we're connecting the ds so thatat kids can see whe t their educion now will pay o off i the future. >> tomorrow is a nationwide contest for schoolols in which samsung is ging awaway $1 million of technology. laptops, tvs, interactive smart boards, printers, whatever best suits that school's needs. we set this program upup as a w to encourage kids to get excited about science, technology, engiering and math. >> i think we canan develop the next bill gates s and steve jo but we have to make anffort to do that. it takes input from society and community to do that. >> are innovators born or made? my guest says innovation is the most important job school of the 21st century. tony wagatner at the technhnolo

and entrepreneur center at harvard, author of "creating innovators: the making of young people who will change the world." thank you for joining us. our economy is dependent on the consumer. why is innovation so critical right now? >> we have to become a country that produces more, better ideas to solve more, different kinds of problems. we've always had great innovators but we've never produced innovation at a kind of skill that i think is required to transition economy away from a consumer-driven economy. >> how do you do that? what's missing? supporting those students who may create the next big thing and change the world, as you write? >> today, information, knowledge, is free. it's like air, water, growing exponentially, changing constantly. the aim of education should no longer be merely to transmit content through the teacher. it must be instead to develop the skill and the will that is required for using that content. the world doesn't care what our kids know, the world cares about

what they can do with what they know, which is a completely different education problem. >> an important point to make, how do you do that? how do you make innovation a skill, how do you teach it? >> the first point is we need to teach what i call the seven survival skills which i wrote about in my last book, "ththe global achievement gap." content is important but we need to use that to teach skills like critical thinking, problem solving, agility, collaboration, so on. and we can do that. the best schools are already doing that. but the problem is we need an accountability system that assesses those slls and not just ntent acquisition. because sadly, what gets tested is what gets taught. >> you talk a lot about the importance of play, the importance of passion. >> yes. >> purpose. why are those things important? >> this gets to the will side, the motivation side. where i came to understand is i interviewed these young innovators. the culture of schooling as we know it is radically at odds o the culture of learning that

produces innovators. we rely on extrinsic rewards and incentives for learning. carrots and stic. money for grades. all that stuff. these young innovators are far more intrinsically motivated. when i look at what parents s a teachers did to encourage that motivation, it was much more about this arc of play to passion to purpose. >> in the book you profile a number of young innovators. this is really one of my favorite parts. 120 something who was involved on the development of iphone. tell bus that. >> here's a kid who's passionate about science, his parents totally support his passion, believe that's more important than mere academic achievement. he goes to exeter for their science program because that's his passion but he gets bored. he doesn't find there's enough science. he drops out at the end of 11th grade. he gets into stanford, he got a combined bs/ms program. two courses shy of graduating he takes a class, interdisciplinary

electrical engineering, mechanical engineering, and computer science. he learns to collaborate for the first time, he learns to integrate these different academic disciplines, to solve problems. gets drafted by apple to be product manager for the first iphone. two courses shy of graduating. here a two-time dropout. and he's now working for sun run installing solar panels on homes. >> he e was part of the company that's changing the rld. >> that's right. that's exactly right. >> apple, all of its innovative products. what are your observations in terms of how the education of a young person shld change, shift, in terms of leading toward that ry path, that innovative path? >> the sad thing is that when i interviewed all of the teachers and mentors who made the greatest difference in the lives of young innovators, i discovered they were outltliersn their institututions. fosing on colollaboration more on individual achievement. focusing on interdciplary studies and problelem-based

learning more than speciazation. focusing on students creating, not just consuming in the classroom. most importantly, focusing on intrinsic motivations and learning how to take risks and learn from mistakes. all things their colleagues don't do. so i really think we need to rethink the culture of learning in our classrooms. k-16. >> great, great insights. tony, great to have you on the program. "creating innovators," tony wagner joining us. >>up next a newss this week that will impact your money. then reaching for the stars and beyond. how a 21st century galactic gold rush could impact your energy policy. staying active can actually ease arthritis symymptoms. but if you have arthritis, staying active can be difficult. prescription celebrex can help relieve arthritis pain so your body can stay in motion. because just one 200mg celebrex a day can provide 24 hour relief for many with arthritis pain and inflammation.

plus, in clinical studies, celebrex is proven to improve daily physical function so m moving is easier. and celebrex is not a narcotic. when it comes to relieving your arthritis pain, you and your doctor need to balance the benefits with the risisks. all prescription nsaids, like celebrex, ibuprofen, naproxen, and meloxicam have the same cardiovascular warning. they all may increase the chance of heart attack or stroke, which can lead to death. this chance increases if you have heart disease or risk factors such as high b blood pressure or when nsaids are taken for long periods. nsaids, including celebrex, increase the chance of serious or stomach and intestine problems, such as bleeding and ulcers, which can occur without warning and may cacause death. patients also taking aspirin and the elderly are at increased risk for stach bleeding and ulcers. do not take celebrex if u've had an asthma attack, hives, or other allergies to aspirin, nsaids or sulfonamides. get help right away if you have swelling of the face or throat, or trouble breathing. tell your doctor your medical history and find an arthritis treatment for you.

visit celebrex.com and ask your doctor about celebrex. for a body in motion.

check out wsjr.cnbc.com. follow me on twitter and google plus, look for @mariabartiromo. stories coming up in the week ahead, earnings reports will be out from dow components feeser and kraft foods. also visa, mastercard and whole foods. mondayay the latestt figigures personal income and spending. tuesday the latest monthly auto sale figures will be out. on friday, the labor department will issue the market-moving employment report. find out how many jobs the economy lost or gained in the last month. space, the final frontier for invesrs? a west coast startup called planetary resources announced this week it is developing spacecraft to mine asteroids between mars and jupiterfor

natural resources like water and miminerals as well as comommodi like gold and lat numb. backed by an investor group that includes google's ladies and gentlemenry page and eric schmidt and film director james cameron, the company plans to launch the first tell popes looking for high-value targets by 2014. boldly going where no man has gone before. that will do it for us today. thank you so much for joining next week, men and wom a and their money. advice for wealth and wisdom between the genders. keep it right here where wall street meets main street. have a fantastic week,