hi everybody, welcome to the "the wall street journal report." i'm maria bartiromo. it i is all about the jobs, the crucial economic report is out. understanding the numbers and what they mean. plus, can buy and sll hd be. >> the international monetary fund christine lagarde t talks e stern warning to america. and reaeally a nation of wusses? what one politician says that current politicians are afraid to say. why nobody is making the tough choices that need to bmade. he wall street journal report" begins right now. ththis is america's number o financial news program, "the wall street journal report." now,ar maria bartiromo. here is a look at what is making news as we head into a

new week on wall street, yet another disappointing jobs number to report, the economy added just 18 thousand jobs in the month of june, well below expectations. the unemployment holding steady at 8%, it added just an average of 75,000 jobs per month, about a third of the number of jobs created in the first quarter. that drove the markets down on fray, afteter hitting their highest level since may. bob dimon is out, resigning as ceo of barclays this week after the bank admitted to fixing a key interest rate in london. auto salings reved up in june, gm saw a betterer than expected increase, 6%, ford up, chrysler as well, rising 20%, toyota up 60%. but several key retailers

came in below expectations, including costco and macy's. and gus sauter, the chief investment officer at vanguard, known as a pioneer in the managed index funds, gus, good to have you on the program, thank you for joining us on the program. thank you. >> so we got the jobs numbers out on friday, the unemployment rate at 8.2%, the number of jobs created, another big disappointment. 80 thousand jobs, what did you expect? and what do you think it tells us about the economy right nono >> well, the adp number came out thday before, people were very excited about the number, which was up. in fact when the labor departrtment number came out it was really off a little bit from where people had previously expected it to be, a little bit of disappointment. it didn't surprise us. we expected weakness throughout the summer, we think the economy

wiwill start too improve in the latter part of the year, perhaps the latter part of the third quarter and fourth quarter. >> and as the economy has gotten worse, the federal reserve says we will be there if more stimulus is needed. we sawaw global moves, the bankf england and china, what is your outlook on the global economy? and is it all up to the feds at this point? >> wewell, i think it needs a l of coordinated help. the fed will take into account the recent data. at the same time, europe is a very significant wild card out there. if europe experiences a severe recession it will be felt throughout the world. so it is impornt that europe addrses their issues. i think china has moved to restrengthen their economy, they were done fighting inflation, i think they're back now in an easy mode. and we'll start to see them start to move positively.

>> let me ask you about the money moving these days in terms of investor feelings, vanguard known for its low cost, passively managed funds, how much attention do you pay to individual economic data like a jobs number, and does that dictate money moving into etf's or this other money marketet? >> you know i don't really see too much quick movement based on an economic number. what we do see is money tending to move when performance picks up. so we have actually seen very good cash flow into our etfs this year. it has been maybe a little less than half of our overall cash flow. so it has been a positive environment. the good news is, it is going into both equities and into bonds, i would note that by and large they are going for higher yielding equities. and that is a little bit of a

concern. >> let me ask youbout the second half of the year, we h a choppy first half of the year. whato you see happening as we kick off the second half of the year, with the economic uncertainty there? >> well, as i think you said, the economic uncertainty will determine what happens the second half of the year. it is really impossible to predict right now. i think what the response is coming o out of europe, addressg the european debt crisis there, quite honestly, we don't know what to expect in the next three to six months. i think it is yet to be determined. but if we look at it in a longer period of time, say three to five years, the biggest determiner over that period of time would be valuations, how much are you paying for a stock today, relative to its earnings. and vavaluations are reasonably attractive. we are reasonably optimistic on a five to ten year basis. >> so you really want to be in

at these pricices, bececause pr are valuable and attractive. but you really want to have a long-term horizon. what about the retail investment? do you think that is long-term thinking, they have been hit by scandals, the latest in the key interest fixing rate in london. what do you have for advice in this market? >> yeah, i think the whole retailer investment, some are frustrated. others are really optimistic about the future. and our advice would be that really, you have to think long-term. what do you think is going to provide the best rate of return over the next five years, ten years, 20 years? and establish your asset allocation based on that. in our view it will probably be equities based on the long term. so you probably should have commitment to equities.

i would just suggest that people don't focus too much on all the his teri going on, that is typically the time to in vest. when everybody loved the market in the '90s, it bass a bad -- was a bad time to invest. >> so you want to have a buy and hold strategy? >> well, a lot of people say you have to be flexible and go anywhere. that is great if you're very, very intelligent and a great market timer. unfortunately, most of us are not. in fact i don't really know anybody who is. we find the people who are successful establish a long-term plan and then just stick with it. too frequently, people respond to the moment. you know how many people do you know that sold out of the market in march of 2009 right at the bottom? how manyeople do you k know that bought in january of 2000? it is trying to avoid those types of emotions where people are doing exactly the opposite of what they should be doing, and just recognizing you won't

be able to make those timing moves. so just accept the long-term rate of return. >> gus, good to have you on the program, thank you. >> thank you maria. >> we'll see you soon, gus sauter. >>and upup next, from the international monetary fund, what she says we need todo. and political mojo, talking to former pennsylvania governor and self-described nonwuss, governor ed rendell. off vim etnam inin 1968. over the south p pacific in 19. 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 e military, veterans and their families is without equal.

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"the wall street journal report". welcome back, christine lagarde is perhaps the most prominent woman in finance

today, the former finance minister of france,, thiss week spoke to her about the outlook of america's economomy, and the fund to directly inject capital into spain's banks. i think it is critical for two reasons, the investments from the imf to the banks, as a result it does not impact on the sovereign debt level of that sovereign, which is what spain was so concerned about. that is number one, number two, it goes directly to the bank, i mean they're going to define how it is organized and whether they hold shares, or any other instruments that would be convertible into the capital banks, depending on the status of the banks. it will consolidate the banks and help them to lend appropriately to the real economy. and it is what the esm should be doing wiwith its money. >> what else needs to be done in terms of creating that

confidence that you have been talking about so much, to stabilize th markets? >> so direct involvement from the esm into the banks. that is under way. banking union, that is clearly the target. it is not enough. we think that fiscal union is the next step that they need to explore. ththe one step at a time proces is a annoying, disconcerting, we would like more to happen, because that is the spirit of the times, to move fast, and to even digest before we have even swallowed, but that is the way europe is built. and has developed over time. >> and of course the ecb meeting this week, what would be more effective, lowering interest rates or expanding their asset program, their asset purchase program? >> what they're generally vocal about is the interest rate, that is talked about. we believe at the imf that the

ecb has room available in terms of the monetary policy and could actually use it. we're not sure that this is the best channel at the moment, because germany doesn't need the lowering of the interest rates set by the ecb, but italy and spain do. so you can't disassociate when you use that type of monetary policy. on the other hand, the purchase program is more selective and can be used in a different way. what about the u.s., you're out with a report talking about the risks of the u.s.? and there are some real heavy risks in terms of the possibility of going negative. tell us what is behind your report. >> first of all, we forecast growth at 2% in 2012, in 2013, those are quite favorable with some of the measures due to expire are actually extended for

anotheyear. so we have a generally -- we have a somehow positive set of assumptions to support a rather tepid growth. but if these risks were to materialize, if for instance, the fiscal cuts were effectively cut and not extended, the payroll cuts were removed, and -- and payroll tax were t resume, then certainly we would not have such a positive forecast for 2013. and if the two risks of the fiscal cliffs and the debt ceiling were to materialize, then we forecast hardly any growth at all in 2013. and possibly the beginning of the year in recession. so those are serious threats. >> it is quite extraordinary to me, actually, given what is going on in europe, that they have not been more vocal talking about the fiscal cliff. in fact, i don't think people

are focusing on an agreement where the tax cuts expire, the programs expire, it leaves us a month before the end of the year before these things could actually reverse. >> it would be ideal if an agreement could be reached, even for a set of temporary measures, not for the longer term, not on substance, but at least for an extension. because it would remove that uncertainty and consolidate confidence, which is so necessary. but i suppose most players because of the, you know, difficulty to cooperate, les call it that way, assume that there will be a few tricks used by the treasury, for instance, not but tools used legitimately push off into early 2013. the -- the critical time, so that the country's passed the election, and more serious things perhaps can be decided. but from our point of view, removing uncertainty as early as possible so that the threat is

removed would be fantastic. >> myhanks tohristine lagae. upext o "ththe wall street upext o "ththe wall street jour [ male announcer ] let's say you need to take care of legal matters. wouldn'tt be nice if there was an easier, less-expensive option than using a traditional lawyer?? well, legalzoocame up with a better way. we took the best of e old and combined it with modern technology. together you get quality services on your t ter, wiwith total customer suppor. legalzoom documents have been accepted in all 50 states, and they'r're backed by a 100% satisfaction guarane. so go o to legalzoom.com tody and see for yourself. it's law that just makes sense. use the points we earn with our citi thankyou card for r a relaxing vacation. ♪ sometimes, we go for a ride in the park. maybe do a little sightseeing. or, get some freshsh air. but this summer, we used our thankyou points to just hang out

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well, the frth of july is not typically when politicians take the rest of us to task. but my next guest has ideas independencend leadership, taken from 30 years of popoliti.

ed rendell is with us, from the author of america's wusses, what it takes to make us great. great to have you, governor. >> my pleasure. >> the book takes on the wussification, what makes you think we lost our way? >> well, the wuss is something who lacks the courage to go with their convictions, i think that in washington today, we are in danger of falling off a cliff. there is no question about it. and the people have to say to their leaders, hey, trust us. we're smarter than you think. we can handle the truth.th tell us the truth, tell us what has to be done. and we'll surprise you. we wouldn't necessarily wreak havoc on you for doing things that are risky. but it is up to our nation's

leaders to do what is important, put aside partisanship, and take risks. >> today we are ignoring some of the major issues we all face, like the big expenses of some of the entitlements. so how do we regain boldness and innovativeness, how do we avoid spending while balancing fiscal responsibility? >> i don't agree with everything in simpson bowls, but itis a goodffort to do everything we need to do to get rid of the federal defeficitn the n next 1 years and to really set the country on the right path. but first it takes presidential leadership. whoever is elecd, president obama or governor romney, whoever is elected has to say follow me. then bring in not only key congressional leaders, but the ones who have shown the ability to put partisanship aside and take risks. >> so why do you think the leadership?

i mean, president obama had a chance to do this, simpson bowls, but it seems like they just blew off simpson bowls, how come we don't see that type of leadership? >> because that requires stepping on toes, the senior's toes, the revenue, we're not going to get this done without some pain, and the key is to distribute pain fairly across the board. that everybody feels a little bit of pain to get the patient well. >> yes. >> and we can do this. and i think after the election, there is going to be a 2-5 month window where we can get this thing done. by the way, you said a key word, we also have to invest in our infrastructure. everybody knows that. we also have to invest in research and development. so at the same time we're making significant cuts and raising revenue, we have to make some targeted investments to get the country working again. >> unfortunately, you're not hearing that conversation. and i think if you were to hea that conversation, i think you're right. people would buy into it.

because they understand the issues of the day. let me ask you about the jobs pictures, because of course we got the jobs numbers out. they're weaker than expected. you're currently advising a technology firm. what do you think the job prospects are with technology right now? it seems as though it is one of the few areas hiring right now. >> yes, i think it is growing, and there will be jobs available for some of our young people. and i would say -- i know it is going to sound corny. but it is the time for all good men and women to come to the aid of their country. if you're a business executive out there sitting on cash, don't worry about the regulations, et cetera, let's do this thing for our kids and grand kids. let's go out and hire some people. it won't be the end of the world. maybe your profit margin will be a little bit reduced, but let's go out and hire. if we all had that attitude, it is a amazing how quickly it wou get done. amazing. and by the way, there are things we need to do. infrastructure, we need to spend

money on infrastructure. everybody agrees, there is no question about that. energy, we need the energy independent strategy that has to be dodone in a bipartisan fashi. that will create a lot of jobs. export,ñi we're starting to recognize how valuable it is for our mid-sized companies and larger companies to export. it is not rocket science. what about the support for the economy, the president, that will be key in some of the rust belt, areas like pennsylvania, your state of ohio, michigan, wisconsin. how is the regional economy doing in this part of the country? and what do you think the big economic issues that will drive voters in november? >> well, in michigan and ohio, particularly, if i were the president i would be a single message. the auto bailout, turn the economies around. both michigan, and particularly ohio, ohio's unemployment rate, maria is 3% points lower since the president took office.

and a good hunk of that is attributable to the fact he had the guts to do the auto bailout. remember it was unpopular back then, but popular now, he stuck to his guns. >> great to have you governor. >> good to see you. >> up next, we'll take a look at the report this week, with the impact on your money. and then getting your claws on cheap is eier th you think. off the coast of maine, stay with us [ male announcer ] summer is here.

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. check out the website wsjr.cnbc.com, and i hope you follow me on twitter and look for me on google plus. now a look at the stories coming up, that may move the markets and impact your money this week. on monday, we get a lot of earning season kicking off, second results from alcoa, j.p. morgan and wells fargo. and we'll find out about the big trading loss at j.p. . morgan al. and tuesday's moguls is kicking off in sun valley, idaho. and wednesday, morere f from th federal reserve meeting of the board of governors. on iday, inflation indicating price index report out, tracking the cost of goods at the producer level. and finally today, take a bite out of this lobster. that is cheaper than baloney, the prices there plunged to the lowest point in some 30 years, as low as four a pound.

ththe warm spring native meant that many of the lobsters shed their hard shells quicker than usual, meaning the prices were lower. and act fast, forgot the burgers and hot dogs, you can eat cheap at those pric. and nascar ceo on the business of starting his engine, each week, wall street meets main street, have a greatweek