hi, everybody. welcome to "the wall street journal report." i'm maria bartiromo. it's all about the benjamin. ben bernanke. what he t told congress about t economy and what it means to your money. my ctroversial interview with bill clinton about tax cuts, private equity, and why the white house wasn't happy about it. >> secrets to a success startup. my conversation with the founder of e-tailer gilt groupe. and what went right. "the wall street journal report" begins right now. >> this is america's number one financial news program. the "the wall street journal repo." now, maria bartiromo. >> here's aa look at what's making news as we head into a new week on wall street. we're ready but we're not doing anything yet. that was the word from ben

bernanke this week testifying before a congressional committee. he said if the economy needs help, if europope worsens, the d is prepared to step in. >> the situation in europe poses significant risks to the u.s. financial system and economy and must be monitored closely. as always, the federal reserve remains prepared to take action as needed to protect the u.s. financial system and economy in the event of financial stresses. >> the fed chairman's testimony helped cool the marks thursday hich habeen hoping for a clearer sign of additional easing. the dow had its best day of the year wednesday up better than 280 wed. the markets continued to rise friday. 30-year mortgages hid 30.67% and that continues to boost prospects for home sales this year. changes brewing at starbucks. the company will start selling single-serve coffee pods in the stoerts. starbucks plans to intrododuce s single-serve coffee machine this

fall. the bulls were back and forth but it's not exactly time to breathe easy. that's what jason trennert says. he joins me now. it's wonderful to have you on the program. >> thanks for having me. >> let's start with the fed. chairman bernanke this week, the testimony before congress, he basically said, we're there. the fed is ready to do more to help the economy if and when europe worsens, though of course we know this is not imnent. was that what the marks wanted to hear? do you agree this is where things are going with stimulus? >> i have no doubts fed will be there if there's some sort of big financial dislocation on the part of europe. the problem as it stands now seems to me is that you have diminishing margin on return of quantitative easing or more easing on the part of the fed. interest ras are already so low one wonders what more monitor stimulus can do. that's also what chairman bernanke was suggesting which is to say, listen, it's more on you at this point, if you really

want the economy to grow. monetary policy has probably run its course. we can help with liquidity, we can't help out with larger structural changes that need t be undertaken. >> we've been covering this fiscal cliff a lot. on my program, on cnbc, basically looking at this issue where at year-end, tax cuts will expire, spending programs will expire, the need to raise the debt ceiling will be an issue. bernanke's urging congress to avoid these severe fiscal tightening in the near term. do you think anything happens before the elections? everybody's talking about this. >> sadly, i don't think so. i mean, we have washington in office, i would say the chances are 100-1 that they're kind of successful in dealing with this. the big implication of this, though, is that for defense companies and health care companies that face the sequestration of thespending, they're going to have to allow, because of work rules, they're going to have to let employees know by september tt there's a significant possibility of them

being laid off early in next year -- in 2013. so oddly the bigger impact for the fiscal cliff could be more felt in 2012. >> wow. >> rather than 2013. so ultimately i think most peoplele believe the can will bc dded down the road. obviously you have to do that in a lame duck session of congress in eight weeks. it's hard to have a good outcome. >> another story was china cutting interest rates which i thought was interesting. first time since 2008 that china actually lowered interest rates. that helped startrt rally in stocks thursday. where dowe go from here? is this all central bank boosts from all over the world, where china cutting rates or ecb or the fed? >> i think so. europe is clearly already in recession. the u.s. in my view isn nominal gdp terms very, very weak. china has something other countries don't have, though, it has money. and it doesn't necessarily worry about a return on capital. so the fact that inflation is moving down in china means that

it wouldn't surprise me if you sasaw more fiscal stimulus with china to get people working. in my view china isn't that big a worry. >> but you are worried about europe? >> very much so. >> tell me what's going on there. >> i think you've gotten to a point where the bill has come due and you're going to have to figure out whether the creditor nations, germany, finland, netherlands, are going to pony up and actually get more fiscally integrated with the rest of europe and that is a big, unresolv question. the elites want it, the political elites want it. whether the populists, the average man on the street, really wants that, no one knows. i think greece, the greek elections on june 17th, will be very important too to determine whether the peripheral nations really want reform, really want to be part of the union. so these are very unhandicapable events because they're political. the economics and financial part of this is clear. what the politicians and constituencies choose is really very much up in the air.

>> what do you do from an investment standpoint at this point? the retail investor in the face of all this? >> have to say, sorry to say this, but i think cash is not a bad option for the retail investor because i do think over the next six months, sounds like hyperbole, but this could be one of the mt importantt periods in economic history over the next six months in terms of how you resolve europe, the fiscal cliff. cash i think you should have more cash than usual. then i think it's consensus-type idea but if you are in the equity market, you want to be in as high a quality company as you can with balance sheets that can withstand whatever kind of tempest that winds up coming about as a function of these big mac row concerns. >> sounds like you think we could be in for a sell-off? >> i think it's going to be a rocky summer, i don't see anything in the offing that could suggest that you would have a runaway bull market. i think there could be periods which are cyclicly strong.

you're at the point you need structural change to get a start of a bull market. >> great to have you on the progm, thanks for your insights, wonderful to hear from you, jason trennert. the nasdaq announced a $40 million compensation fund to address the glitches caused by the problematic initial public offering of facebook. then member brokages with angry clients say that doesn't go far enough to offset the costs which could be up to $200 million, they say. i spoke to ceo of nasdaq about the day one difficulty of getting f facebook to the publi and that stock's wild ride. this was is biggest ipo in your history. who's in charge? where re you? >> well, certainly the people who run the operation day to day were in charge. it's important to recognize that we have several open lines going. one was an open line to our customs. a separate open line internally to nasdaq. and there was rampant communication going through both lines. anand that was the way to do it.

understand it's important to note this ipo, we've brought in 450 tim before quite successfully. obviously not with the volume we saw with facebook. the key decision we had to make was that we couould operate thi cross. and that was the input we got from really seasoned nasdaq people. we can run this cross which we did do. >> is anybody's job on the line? whose head is going to roll? >> we have to come out of this as a stronger, better organization. we've been in intensive discussions internally. clearly we can improve. >> is your job on the line? >> that's not for me to say. i think my track record the last nine years speaks for itself. >> my thanks to bob gryfeld. bill clinton talks tax cuts and private equity. why my interview with him may have driven a wedge between the white house and the former president. life in the a startup nation how one internet founder found r what women want. to mind for me

is my high school math teacher, dr. gilmore. i mean he could teach. he was there for us, even if we needed him in college. you could call him, you had his phone number. he was just focused on making sure we were gonna be succecessful. he would never give up on any of us. ne was earned off vietnam in 1968. over the south pacific in 1943. i got mine in iraq, 2003. usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection, and because usaa's commitment to serve the military, veterans and their families is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve.

this bridge. your new car probably rode thesed rails. that shipment you just received was tracked by satellite. we build and maintain. we invest and innovate. so we can deliver what america needs. this year alone, freight rail companies plan to spend twenty-three billion of their own money, not taxpayer dollars, to build bridges, maintain track, and develop new technologies to keep freight rail and our economy moving. there's a lot riding on these rails.

make no mistake about it, formerer president bill clinton said he is in favor ofextending the bush tax cuts which expire year end. he does not exactly see eye to eye with presidentnt obama whent comes to the role of private equity. i spoke with bill clinton this week in an interview that generated controversy about taxes, the budget and reducing america's debt. >> we should ha a long-term debt reduction plan and you can have a balanced budget unless you have three things. you've got to have growth, spending restraint, and an adequate revenue stream. and so it's a question of how you think you get these things. >> how about this upcoming fiscal cliff? a lot of people are worried and the markets hav been reacting to the idea that these bush tax cuts will expireear end along with the spending programs that will expire. should those programs and those taxuts be action tended?

>> what i think they should do is to find a way to keep the expansion going. and i think the -- as weak as it is here, you know, unemployment in the eurozone i think is 11%. and germany's doing well. but a lot of the small countries are doing extremely well. many of which are not in the euro. but they're trying to figu out a way to promote growth. and what i think we need to do is to find some way to avoid the fiscal cliff, to avoid doing anything that would contract the economy now, and then deal with what's necessary in the long-term debt reduction plan as soon as they can. which presumably it will be after the election. >> so does that mean extending the tax cuts? >> well, i think what it means is they will have to extend -- they will probably havave to pu everything off until early next year. that's probably the best thing to do right now.

but the republicans don't want to do that unless he agrees to extend the tax cuts permanently, including for upper income people. and i don't think the president should do that. that's what they're fighting about. i don't have any problem with extending all of it now, including the current spending levels. they're still pretty low, the government spending levels. but i think -- they look high because there's a recession. the real issue is not whether they should be extended for another few months. the real issue is whether the price the republican house will put on that extension is the permanent extension of the tax cuts. which i think is an error. >> something's got to give, though, right? if we don't deal with this by november you probably don't deal with it until 2013, and in the meanwhile, sort of the markets and the economy hang in the balance. >> we don't want to do anything to throw the markets any more than they already are. but what i think the president

is right about is not wantingngo make any commitments that will constrain our ability to have a long-term debt reduction plan. because two years from now, three yes from now, five years from now, we need to be bringing this deficit down when the economy grgrows because then you'll have the private markets needing capital and if the government's taking so much of it to finance the debt interest rates will go through the roof. so the trick is to promote growth now while they're literally zero interest rates and to keep your options open to deal with the deficit in a responsible way going forward. >> you've been very fair-minded and sort of in the middle of the aisle. you've been recently complimented, bain capital and romney's record. it seems these attacks against private equity, against wealth, have turned people off. >> well, the american people are remarkably -- one of our great characteristics is we don't resent other people doing well, we want people to do well, we ke it when people make money.

but we want them to do it in a way that benefits the overall economy. you have examples of private equity doing good and bad things over the last decade. you can look -- if you go in and there's a company that's not doing well, it's failing, and you buy it and you have to impose some economies there and cut-backs because you're trying to turn it around so it can thrive in the economy, whether you succeed or fail, that's a good thing to do. and you can't do it. if you go in and buy a company and intentionally load it up with debt, loot its assets, then the people lose their jobs and their retirement and they lose the jobs earlier than theywould have and they lose benefits they otherwise wouldn't have lost, that's a bad thing. so to make a judgment on that, you have to know a lot of facts about every case. >> is tax policy fair right now? the president talks a lot about fairness in taxation, and yet the top 1% or 5% pays 40% of the

tax, 50% of the people pay no income tax at all. what should tax policy look like? >> first of all, a minimum tax of 30% is not all that high. if you look at the percentage of gdp going to taxes in america, compared to every other wealthy country in the world, there are only -- of the top 31 countries i think we're 29th in the percentage of total tax take. as a whole in the country, our tax rates are not out of line. and what -- the problem in having this conversation now is, when i was president, we had a booming economy. most people didn't resent those tax rates. keep in mind, even middle income people are paying slightly higher taxes when i was president, everybody was. >> so what is your idea to get this economy back on track? i mean, everybody wants to hear what you have to say. you oversaw an economy during the best of times. the last president to balance

our budget. >> i think -- in the country, you've got this european thing is having a bigger impact than people know. >> how much is europe and how much are the president's policies? >> the thing that's cost jobs here has been degrees' policies. if congress had enacted his jobs plan we know we'd have 600,000 more state and local workers still working. we know we'd have an infrastructure program going which would have some more jobs. the jobs numbers would have been better there. the only part of the jobs plan that congress enacted was to continue the payroll tax cuts that had been previously instituted. so i think that that's a problem. i think we could get quicker recovery if we could reform the corporate tax laws. lower the rates, broaden the base, and offer the corporations a chance to bring the money back free now if they would invest at least a portion of it in the infrastructure back where theyy get a very good return on

investment, very good. and then weould put the american people to work. >> my thanks to former preside bill clinton. after the interview, mr. clinton apologized for those comments and his office issued a statement clarifying his remarks saying, "he supports extending all the cuts in 2010 as part of the budget agreement but does not believe the tax ts for the wealthiest americans should be extended again." sources tell me that statement came after pressure from the white house to change his stance. up next on "the wall street journal report," another internet company that may be worth billions. how gilt groupe too shopping by storm. one of the founders of the one of the founders of the luxury e-tailer joins me ♪ ♪ here we are, me and you ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask yo fininancial professional how lincoln financial

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welcome back. gilt.com is the online address for one of the technology industry's hottest startup stories. 2007 gilt started bringing discount luxury fashion to online consumers with high noon flash sales and ensured lunchtime would never be the same again. alexis maybank is founder and chief strategy officer at gilt groupe and co-author of "by invitation only." great to have yo on the prram. >> thank you for having me. >> it's a great story and particularly in this world of technology startups the book tellth the startup story of your daily online sample sales e-commerce site. we live in a pretty entrepreneurial world already.

why do you think gilt groupe was such a success and really resonated? >> one, we hit a chord with consumers. many of our 5 million members, men and women, are putting this into their daily schedule so that urgency of our sale process really helped. but in terms of the way we started, the most common form of failure comes from a team that doesn't gel. we had a team that was not just skill complement to one another which is what everyone focuses on, more importantly, personality complements. we really coveredach other's blind spots. >> this was something that you wanted. you were always looking for designer clothes at discount prices. yes, my cofounder an i used to sneak off our day jobs in new york to go to invite-only designer sales. we knew there would be other customers nationally that wanted to shop this way. we took this experience and parlayed it into gilt groupe. >> what a girl's girl, that's what i'd do too. 5 million customers reportedly worth $1 billion. has yet to turn a profit.

take us through your vision. what's your take on the growth of the business? how do you make money? >> our core business is doing very, very well but we've -- because of the competitive industry we are in right now, the need for growth, the need for scale, we're continuously investing in new businesses. whether that's expanding into travel, home, other categories for us, or whether it's investing more in technology that keeps us on the forefront. mobile shopping is key for us. is a huge form of how people are shopping on our site today. investing further in the use of data to make our experience the most personalized shopping experience on the web is really key to how we move forward as a business. >> you're a founder of gilt but you've hd many individual jobs. i've been a ceo, head of marketing, e-mail customer support. how has that converty shaped how you've seen this company? >> there are two types of founders. one that wantsts to be at the hm

no matter what. another type wants to see the business grow as large as can no matter what role, helping and aiding it. i've watched founders as an early member of the ebayay teamo through different roles. early on, i would say this to employees that i was hiring as well, in a hyper-growth business, our roles could change as frequently as once every six months. you're signing up for that. if you watch employees fight against it, it could cause a lot of turnover, a lot of churn. flexibility is key to our culture and i was living it and breathing it. >> what's hot right now in terms of designer apparel or -- >> it's all about brights for the spring and summer. go long on that. >> okay, good advice. great to talk with you. >> thank you for having me. >> alexis maybank joining us next. take a look at the news that will have an impact on your money. take a look at how the stock market ended the week.

how math and science kind of makes the world work. in high school, i had a physics teacher by the name of mr. davies. he made icphysics more than theoretical, he mad it real for me. we built auitar, we did things with electronics and mother boards. that's where the interest in engineering came from. so now, as an en agineer, i have a career that speaks to that passion. thank you, mr. davies.

for more on our show and our guests wsjr.cnbc.com. follow me on twitter and google plus. look for @mariabartiromo. now a look at the stories ming up that may move the markets and impact your money. on monday, apple's worldwide developers conference kicks off in san francisco. techies will be watching for new pruct and apication announcements. on wednesday, jpmorgan ceo jamie dimon will testify before the

senate banking committee about jpmorgan chase's multi-billion dollar trading loss. total retail sales for may and the key indication of wholesale inflation. the consumer producer sales out on the 13th. the 14th cpi tracks inflation at the consumer level. and that will do it for today. thank you for joining me. my guests next week, former chair of the council of economic advisers laura tyson will be here. keep it right herere where wall street meets main street. have a great week, everybody, i'll see you next weekend.

that fridge in your kitchen may have crossed this bridge. your new car probably rode these rails. that shipment you just received was tracked by satellite. we build and maintain. we invest and innovate. so we can deliver what america needs. this year alone, freight rail companies plan to spend twenty-three billion of their own money, not taxpayer dollars, to build bridges, maintain track, and develop new technologies to keep freight rail and our economy moving. there's a lot riding on these rails.